Gold ticked higher right at the 6:00 p.m. Sunday night open...but that lasted less than a minute before the high-frequency traders showed up...and had gold down about a percent in less than an hour.
The price recovered strongly from there, but remained below Friday's closing price for the balance of Far East and early London trading.
The New York low came at the London p.m. fix at 10:00 a.m. in New York...and the subsequent rally got stepped on at 11:30 a.m. Eastern right on the button...and the gold price more or less traded sideways from there.
The 11:30 a.m. New York high was $1,631.20 spot...and the low at the fix was $1,612.90 spot. Of course the intraday trading range was slightly bigger than that.
Gold closed the Monday trading session at $1,628.70 spot...up $2.00 on the day. Net volume was reasonably light at 114,000 contracts...but would have been much lower except for the fact that it was five to ten times normal in the first hour or so of Far East trading on Sunday night.
Here's the New York Spot Gold [Bid] chart on its own...as the 11:30 a.m. New York high price spike doesn't even register on the Kitco 24-hour chart. But it shows up clearly below.
Of course the silver price was more 'volatile' at the open on Sunday night in New York, as the price blasted through $29 spot like a hot knife through soft butter. But as you already know, the not-for-profit sellers were waiting...and had the price down almost seventy cents within an hour or so of its spike high.
Silver quickly recovered, but only made it back above Friday's closing price for a few minutes before it was taken lower...and continued lower right up until the absolute low tick of the day [$28.21 spot] which came at about 8:40 a.m. in New York, about twenty minutes after the Comex opened.
Silver rallied in fits and starts from there, with the high price tick of the day [$28.96 spot] appearing to come about 11:50 a.m. Eastern time. From there, it got sold down a bit before trading sideways into the 5:15 p.m. close.
Once again, silver wasn't allowed to close above the $29 spot price market and finished at $28.74...unchanged from Friday's close. Net volume was 29,000 contracts, with over ten percent of that coming in the first couple of hours of trading.
Based on the price action...and the huge associated volume...it's a no-brainer to see that JPMorgan et al were very active at the Sunday night open in New York...and then again before lunch in New York.
To give you an idea of the volume numbers, after about ninety minutes of trading on Sunday night, gold volume was around 7,500 contracts...and silver's net volume was just over 3,000. On Monday night [last night] after four hours of trading, gold volume was around 4,500 contracts...and silver's net volume hadn't reached 700 contracts.
The dollar index dropped a bit over 40 basis points like the proverbial rock at the open...and then recovered unsteadily from there...hitting its Monday high [82.07] a few minutes before 1:00 p.m. Eastern time.. From there it rolled over a bit into the close...finishing the day around 81.93.
From its absolute low, to its absolute high, the dollar index gained about 90 basis points...but only finished up about 35 basis points from Friday's close. If you can find any correlation between the dollar index and the gold and silver price, I'd love to hear from you.
The gold stocks gapped down over a percent at the open...hit their lows of the day at the London p.m. gold fix...and then turned on a dime. The high price tick of the day came shortly after 2:30 p.m. Eastern time...and then got sold off a hair into the close. The HUI finished up 1.60%.
The silver stocks put in a respectable performance as well...and Nick Laird's Silver Sentiment Index closed up 1.82%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 44 gold and 3 silver contracts were posted for delivery on Wednesday. Nothing to see here.
But there was lots of activity over at both GLD and SLV yesterday. GLD reported that an authorized participant added 135,864 ounces of gold...and a chunky 1,940,108 troy ounces of silver were added to SLV. Both those numbers are pretty impressive, actually.
There was no sales report from the U.S. Mint.
As I mentioned on Saturday, there was no report for Thursday from the Comex-approved depositories in any metal...and if they posted that information on their website anytime yesterday morning, I didn't catch it. But they did provide the update for Friday. They took in 256,868 troy ounces of silver...and shipped out 787,173 ounces of the stuff. The link to that activity is here.
As you know, I've never been a big fan of SLV or GLD...but I ran across something in Ted Butler's weekend commentary which caused me to change my mind. The website is aboutag.com...and the webpage in question is entitled "Silver ETF [SLV] Bar List Analysis". When you bring up that page, then you click on the 'Date/Link' of your choice on the left hand side...the current date is as of 13 June 2012...and there is more data on that page than you'll ever want to know. I was totally blown away. Just judging by the quality and breakdown of the data alone, I'd say that SLV is legit. I can't guarantee that, of course, but I was impressed to pieces...and if there's a similar site that tracks GLD, it is unknown to me at the moment.
But having said all that, I still wouldn't own this fund for the simple reason the custodian of record is JPMorgan. Since they and their minions have a license to rig silver prices with impunity, there are other choices as far as physical metal funds go...and I've made mine. For me, it's a matter of principle, as I still have some.
Reader Scott Pluschau has posted a short blog on his website entitled "Gold is on the doorstep of a major multipoint trendline"...and the link is here.
With all eyes on Greece in particular...and Europe in general...almost all of today's stories, come from the other side of the Atlantic ocean. I have a lot, so the final edit is up to you once again.
Here is the full just released Q&A from Goldman's Jan Hatzius, who just happens to be a Pound and Pence drinking buddy of former Goldmanite Bill Dudley, who just happens to run the New York Fed. Connects the dots.
Implicit is that a big dollop of Large Scale Asset Purchases is imminent. That said, if the Fed does disappoint on June 20, and merely extends the maturity of bonds that it will sell as part of a Twist extension from 3 to 4 years, as the bond market appears to be implying (as first warned by Zero Hedge), then all bets are truly off.
On the other hand, note where Goldman says: "However, it is also possible that the program would be specified as a "flow" of purchase of perhaps $50bn-$75bn per month." If that happens, gold is going to $2000, $3000, hell, $10,000 very soon, as it means the Fed will not stop printing ever again. Period.
Well, that certainly fits in with "QE to infinity"...and we'll know more by Wednesday afternoon once the FOMC meeting is done. This zerohedge.com story from yesterday evening is courtesy of Bob Fitzwilson...and the link is here.
I write before knowing the outcome of Greece’s election. For what it is worth, I doubt that Greece will elect a manipulator who knows he cannot tear up the bail-out Memorandum and keep the euro by holding Europe to ransom.
The Bundesbank’s Jens Weidmann could hardly have been clearer. “We must not allow any country to blackmail us,” he said.
If Syriza admitted that euro exit is the price that must be paid to restore sovereignty and a viable currency, one might cheer them on.
What Alexis Tsipras invites is the worst outcome: rupture on hostile terms; a return to the Drachma without stabilisation support. He is trifling with his nation’s fate.
Ambrose Evans-Pritchard posted this blog on The Telegraph's website just before 6:00 p.m. BST on Sunday...and is Roy Stephens first offering of the day. The link is here.
Europe’s establishment is delighted by the victory of New Democracy and pro-asphyxiation bloc. This relief is unlikely to last much beyond today, if that.
Greece’s new leaders have a mandate from Hell. Almost 52pc of the popular vote went to parties that opposed the bail-out Memorandum in one way or another. There is no national acceptance of the Troika’s austerity policies whatsoever.
The hard-Left Syriza party of Alexis Tsipras is arguably more dangerous in opposition, now fortified with big bloc of seats in Parliament. He can lacerate the government without responsibility as the state sheds 150,000 public sector workers, a fifth of the total.
Twenty-four hours...and one Greece election later...Ambrose has this to say in yesterday's edition of The Telegraph. I thank reader David Ball for sending it...and the link is here.
Eurozone relief rallies seem to last ever less time. The latest one – in response to the Greek election result – barely saw out the hour. With Spanish and Italian bond yields back above 7pc and 6pc respectively, stock markets are again in trouble.
As markets are correctly surmising, the narrow New Democracy victory in Sunday's election is actually not in any way a helpful outcome for the intractable euro debt crisis. It solves nothing; basically, Greeks have voted for guerilla warfare over the terms of the bailout package rather than outright confrontation.
This short story, with an excellent chart, is another item from the telegraph.co.uk website...and the second offering from Roy in today's column. It's worth the read...and the link is here.
David Cameron has warned Greek politicians that a delay in forming a new Government “could be very dangerous”.
Speaking on board the plane taking him to the G20 summit in Mexico, the Prime Minister said that if Greece “wants to stay in the eurozone” then the country’s politicians “have got to get on with it”.
Yesterday’s re-run of the Greek elections was narrowly won by the New Democracy party which supports the principle of agreeing to austerity measures in return for an international bailout. It is hoped that the party can form a Coalition with other parties who will back sharp cuts in public spending.
Talk, talk, talk...what else can the G20 do? Well, they can print more money...and that's precisely what they'll end up doing. This story was posted around 1:00 p.m. BST yesterday...and I thank Roy once again for sharing this article from The Telegraph with us. The link is here.
British businesses are turning against greater integration in Europe and would like to see a “renegotiated” free trade area.
In a stark warning to the Government that any economic union as a result of the eurozone crisis could have negative effects on the UK, the director general of the British Chambers of Commerce, John Longworth, said that the balance of advantages of the single market were being damaged by the weight of regulation.
In a survey of 7,500 businesses to be released tomorrow, the BCC found that 35pc of all exporters believe that Europe should be a free trade area without the Brussels-led social legislation that many feel hamper their business.
Just over 20pc supported an economic union and just 6pc supported being members of the single currency.
This story was posted in The Telegraph late on Saturday night...and I thank Roy for bringing it to my attention. The link is here.
Socialists took control of France’s parliament for the first time in ten years on Sunday in elections marked by high voter abstention.
The Socialist Party (PS) together with left-leaning independents won 314 seats in the lower-house National Assembly, compared to 191 seats for the centre-right Union for a Popular Movement (UMP), giving President François Hollande’s party an absolute majority of the 577 parliamentary seats, exit polls showed.
The Socialist tally, combined with that of its left-wing allies, will give Hollande the backing he needs to implement promised reforms. The Senate is already controlled by the left.
Hollande has pledged to raise taxes for France’s highest earners in order to reverse cuts in public spending, with additional expenditures for the state school system, among other sectors.
This Roy Stephens offering was posted on the france24.com website yesterday...and it's worth skimming. The link is here.
Yields on 10-year Spanish bonds surged to a record high of almost 7.3pc as investors ignored the victory of pro-bailout parties in Greece's elections.
The closely-watched two-year yield rocketed by 65 basis points in a matter of hours, signalling a near-total collapse of confidence in Spain's €100bn (£80.3bn) rescue from the EU last week to shore up its banking system.
Cristobal Montoro, the economy minister, warned that Spain is now in a "critical" condition and pleaded with the European Central Bank to act with "full force" to defeat markets hostile to the euro project.
This Ambrose Evans-Pritchard story was posted on the telegraph.co.uk website just before midnight London time yesterday...and is a must read. The link is here...and, as always, I thank Roy Stephens for sending it.
The head of Denmark's central bank has warned that the Danish krone is coming under intense pressure from investors seeking a haven in Europe and betting that the currency's peg to the euro could be cracked by the crisis.
Nils Bernstein, the governor of the Danish central bank, said that the upward pressure on the krone was the most severe he had seen in his seven years as governor, and warned that negative interest rates could be on the cards if the problem continues.
"You can see from our history that we like to keep the krone within a narrow band, half a percentage point or less," said governor Nils Bernstein. "I think we have to tools to continue to do that, and if it is necessary to move into negative interest rate territory, we will be ready for that."
This subscriber-protected story was posted in the Financial Times of London yesterday...and is posted in the clear in this GATA release. The link is here.
IMF chief Christine Lagarde said on Monday that member states had promised a total of $456 billion (361 billion euros) for its new crisis fund, $26 billion more than a target set in April.
China, which had held back on how much it would offer for months, will contribute $43 billion, according to the IMF.
"With today's announcements by an additional 12 countries, a total of 37 IMF member countries... have joined this collective effort, demonstrating the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability," Lagarde said.
"Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism. As a result, total pledges have risen to $456 billion, almost doubling our lending capacity."
Well, dear reader, I wonder how many of these countries had to borrow the money to donate it. I note that, except for China, Christine didn't provide a detail list of countries...or the amounts they contributed. And not that I want to put to fine a point on this, but $456 billion might only bail out Spain for a bit...and that is all.
This very short AFP story was posted on the france24.com website at 6:00 a.m. Paris time this morning...and the link is here.
The timing couldn't have been more carefully chosen. While Egyptians were focused on the emerging results of their first free presidential election held on Sunday, the ruling military council issued eight amendments to the country's interim constitution that effectively secure the generals' power.
The move means that the Supreme Council of the Armed Forces (SCAF) will take on parliament's lawmaking duties until the parliament -- which was dissolved on Saturday -- is elected again. At the same time, the military council has also taken charge of the national budget and the development of a new constitution. The new president, to whom the council says it wants to hand power over to at the end of June, will have no sway over the country's military forces. Already on Tuesday, the army gave itself far-reaching legal authority through a sort of emergency law, which will allow them to try any Egyptian before a military court. The military now holds legislative, executive and judicial power -- at least in part.
The country's citizens had been fixated on the votes being counted on live television for the presidential election, but then the outrage spread quickly.
Roy Stephens sent me this story from the German Internet site spiegel.de yesterday...and it's worth reading. The link is here.
Sudan's police used tear gas and batons to break up protests in Khartoum on Monday, witnesses said, after President Omar Hassan al-Bashir unveiled tough austerity measures to plug a budget deficit.
Sudan has avoided an "Arab spring" but anger is rising over spiraling food prices among a population strained by years of conflict, poverty and U.S. trade sanctions.
The Arab-African country has been struggling with economic crisis after losing three-quarters of its oil production, the lifeblood of the economy, when South Sudan seceded a year ago.
This Reuters story was filed from Khartoum in the wee hours of the morning local time today...and I thank reader Scott Pluschau for sending it. The link is here.
On the day she was supposed to have appeared before prosecutors for questioning last month, an executive of a shuttered South Korean savings bank hanged herself with her scarf in a Seoul motel.
The woman, identified by the police only as “Kim,” was a credit officer at Mirae Mutual Savings Bank whose chairman was caught fleeing to China in a fishing boat three weeks before. She’s the latest casualty of a scandal that has been eating at the periphery of Korea’s banking industry for more than a year.
So far, regulators have closed Korea’s 20 weakest banks. Prosecutors have uncovered illicit lending and lax oversight, leading to indictments of nearly 200 people and at least two jail sentences. Four bank executives have committed suicide, according to police. More than 88,000 depositors and bondholders, many of them retirees, saw 1 trillion won ($857 million) of their savings in excess of insured levels vanish.
This very long Bloomberg story was filed from Seoul early this morning local time...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
The rate at which the majority of the eurozone is descending into insolvency is accelerating. The rescue package for Spanish banks, which appears to have been provisionally set at a figure designed to impress the markets, hardly even produced a dead-cat bounce. All it has achieved is to draw attention yet again to the helplessness of the authorities in dealing with multiple debt-traps. So what is the answer?
It depends on the purpose behind the question. If it is to seek a genuine solution, then the answer is to cut public spending rigorously in all countries that depend on markets to fund budget deficits or to roll over existing debts. Only a convincing budget surplus is going to lead to falling borrowing costs. The objection to this solution is partly political and partly on the grounds of neoclassical economic prejudice. The former persists in placing social objectives above economic objectives, while the latter has been convincingly proved to be wrong. Otherwise, please talk us through how a government actually knows best to kick-start an economy into recovery, without ignoring the accumulation of past evidence. Explain why it is that those countries, driven by the consumption so loved by Keynesians and monetarists alike, have turned into basket-cases, while economies driven by a savings culture persistently confound all neoclassical theory by making their citizens better off, in every case.
This short essay was posted over at the goldmoney.com website on Saturday...and the link is here.
The opening day of the G20 summit was threatening to deteriorate into a fractious row between eurozone countries and other non-European members of the G20, notably the US, as EU commission president José Manuel Barroso insisted the origins of the eurozone crisis lay in the unorthodox policies of American capitalism.
As Europe's leaders came under intense pressure to act decisively to cure the euro's ills, and a campaign gathered pace to relax some of the austerity programmes laying waste to countries with unsustainable debt levels, Barroso said Europe had not come to the G20 summit in Mexico to receive lessons on how to handle the economy. Asked by a Canadian journalist: "Why should North Americans risk their assets to help Europe?" he replied: "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.
"This crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."
This story was posted in The Guardian this morning...and I borrowed it from this morning's King Report. It's certainly worth skimming...and the link is here.
The world has ventured so far into uncharted territory in its collective response to the global financial crisis that we have no clear precedent at our disposal from which to discern the ultimate result.
But that doesn't mean we are incapable of identifying the likely consequences of all this government largesse created in response to the specter of systemic deleveraging throughout our precarious financial system. The intentions of all key government and central banks engaged in this battle against deflation remain both explicit and crystal-clear: They will continue to undertake whatever extraordinary measures they consider necessary to thwart the deflationary beast lurking in the shadows.
This short essay was sent to me by The Motley Fool's Precious Metals Analyst, Christopher Barker on Saturday. In his covering e-mail he had the following to say..."Hi Ed - Roger Lipton sent me a copy of the new edition of Harry Browne's classic that he's published with a new forward by James Grant. It was my pleasure to promote the book within a macro discussion of devaluation in our current context, and the role of gold and silver in preparing for same." It's worth reading...and the first two paragraphs posted above, set the tone. The link is here.
The prospective buyer of the London Metal Exchange has warned that it will clamp down on the lucrative metal warehousing business that has attracted investments from Goldman Sachs and Glencore.
Hong Kong Exchanges & Clearing, which on Friday announced an agreement to buy the 135-year-old group for £1.4 billion, said it was planning to change the rules governing the LME's network of warehouses in an attempt to shorten the wait to take delivery of metal.
Long queues to remove aluminum from LME warehouses have sparked angry confrontations between consumers of metal, such as Coca-Cola, PepsiCo, and General Motors, and warehouse owners, including Goldman, JPMorgan, Glencore, and Trafigura.
Here's another subscriber-protected story from the Financial Times...this one from their website on Sunday. It's posted in the clear in this GATA release...and the link is here.
Inflation is a natural consequence of loose government monetary policy. If those policies get too loose, hyperinflation can occur. As gold investors, we'd like to know if the precious metals would keep pace in this extreme scenario.
Hyperinflation is an extremely rapid period of inflation, but when does inflation (which can be manageable) cross the line and become out-of-control hyperinflation? Philip Cagan, one of the very first researchers of this phenomenon, defines hyperinflation as "an inflation rate of 50% or more in a single month," something largely inconceivable to the average investor.
While there can be multiple reasons for inflation, hyperinflation historically has one root cause: excessive money supply. Debts and deficits reach unsustainable levels, and politicians resort to diluting the currency to cover their expenses. A tipping point is reached, and investors lose confidence in the currency.
This essay by Casey Research's own Alena Mikhan and Jeff Clark showed up in yesterday's edition of Casey's Daily Dispatch. It's worth the read...and the link is here.
The first is with James Turk...and it bears the headline "Gold Will Shock Investors by Soaring This Summer". The second blog is with Stephen Leeb...and Eric King gave it the headline "The Greates Bull Market, a Gold Standard & Silver Shortages". The last is with John Mauldin...and it's entitled "The Real End Game, We're Coming to the End".
The Perth Mint's Bron Suchecki says that gold prices are determined less by demand than the withholding of supply. “If you look at the gold market, there’s quite a lot of above ground gold in stock. Mine supply is 2,800t, but the total amount of gold held above ground is 170,000t. So what matters is whether the holders of that above ground stock are going to sell or not. If they sell then that could easily overwhelm the marginal supply that’s coming out of mining companies.”
This is the first time I've seen what Bron actually looks like...and you can listen to what he has to say in this 2:10 minute youtube.com video. It's posted over at the perthmintbullion.com website a week ago...and the link is here.
Worried over the flow of savings for investment in gold, Finance Minister Pranab Mukherjee on Saturday said there is a need to spread financial literacy to encourage people to invest in market instruments.
Pointing out that India's gold imports surged to $60-62 billion in last fiscal year, the minister regretted that people are investing in gold with the expectation that the value of their investment would appreciate.
"Quantum of import of gold ... is a clear indication that a large section of the community ... wants investment in a dead asset only with expectation that the value would appreciate," he said while speaking at a Zee television award function. The minister further said, "Time is ripe to motivate our educated upper middle class to climb from saving mode to wealth-generation mode.
This guy is obviously dreaming in Technicolor. The story was posted over at the IBNLive.com Internet site on Sunday in India...and I lifted this story from a GATA release. It's certainly a must read...and the link is here.
Atasay, a Turkish jewelry maker, will work with Turkiye Is Bankasi, the country's biggest bank by assets, and Turkiye Garanti Bankasi, the biggest listed bank by market value, to collect gold jewelry from the public to be stored in gold deposit accounts, Hurriyet newspaper reported.
Atasay's 400 shops in Turkey will hand certificates for gold jewelry brought in by customers who open gold deposit accounts for the equivalent Turkish lira amount at the banks, Hurriyet said, citing Atasay chairman Cihan Kamer.
Atasay is also in talks with Turkiye Halk Bankas AS, the largest listed state-run bank, TC Ziraat Bankasi, the biggest state-owned bank, and Denizbank, a lender taken over by Russia's OAO Sberbank, to start similar arrangements, Kamer said, according to the Istanbul-based newspaper. Banking industry deposits have declined over the past year.
This short Bloomberg piece was filed from Istanbul on Monday...and I thank Roy Stephens for his last offering in today's column. I borrowed the headline from the GATA release of this story...and the link is here.
Major Economic Change to Hit America Hard as Early as This Month
An unbelievable phenomenon is set to sweep the nation as early as this month...
The railroad age… the steel age… the electronics age… the technology age – this phenomenon triggered them all. And now it’s taking shape again!
Watch this special, time-sensitive presentation now for full details on how it could affect your job… your lifestyle… and your wallet.
There is of course no guarantee that this proposed European Redemption Pact will ever get off the ground. But in the longer-term, something resembling it is going to have to be introduced if the world does not want to see its present monetary system implode completely. It is the first CONCRETE evidence that Europe, and Germany in particular, is starting to seriously think about the inevitable necessity of re-introducing Gold as MONEY. - Bill Buckler, Gold This Week...16 June 2012
Well, here we sit once again. Everything is just as bad, if not worse than it was on Friday. The old cartoon with the bearded old man walking around with the sign "The End is Nigh" is very apropos right now...as that is precisely where we are.
Nothing will come from the G20 meeting in Los Cabos...and nothing from the FOMC meeting that begins today. The only answer they have is the printing press. It's "Print, or die", which sooner or later ends up being "Print, and die." There is a limit to how far they can kick this can down the road...because sooner or later there just isn't any road left...and that's pretty much where we are at this point in time. And it doesn't matter what the 'powers that be' do from hereon in either financially or monetarily...because if it doesn't involve gold in some way, shape, or form at some point...they are done for and they know it.
Neither gold nor silver did much in Far East trading during their Tuesday. Both metals popped a bit at the London open, but those rallies were put in their place almost immediately. I'm only guessing, but I'd say that all the precious metals are being held on a pretty tight leash at the moment. As of 5:10 a.m. Eastern time, volume is pretty light in both metals...and the dollar index isn't doing much.
I'm only guessing, but whatever significant price action we do have today will most likely occur during the Comex trading session in New York because, as Ted Butler says, it's the only market that matters.
See you tomorrow.