As you already know, the trading volume and price action in the Far East on their Wednesday was comatose at best.
That all changed the moment that the high-frequency trading began at the London open...and JPMorgan et al really worked the gold price over pretty good from that time onwards, with the low of the day coming at the precise moment that Comex trading closed in New York at 1:30 p.m. Eastern time.
The gold price rallied a bit in the electronic trading session that followed, but wasn't allowed to get too far. Gold closed at $1,620.40 spot...down $25.40 on the day. Net volume was immense...around 190,000 contracts, so there was lots of spec long liquidation yesterday.
I thought I'd toss in Kitco's New York Spot Gold [Bid] chart. On this chart it's hard to tell whether the low price tick on Wednesday was at the London close [11:00 a.m. Eastern] or the close of Comex trading at 1:30 p.m. Not that it really matters, I suppose.
But the long knives were really out for silver yesterday, as it was already down about one percent going into the London open. The low price tick came a handful of minutes before the Comex close.
That low price tick printed $30.91 spot...so 'da boyz' banged the close pretty good...dropping the price over 40 cents in about fifteen minutes.
From that low, silver managed to recover 45 cents...and closed the day at $31.36 spot...down $1.32 from Tuesday's close. The intraday move was $1.77. Net volume was pretty chunky as well...around 53,000 contracts.
But the carnage wasn't just limited to just gold and silver. Platinum and palladium got it in the neck as well...although palladium refused to co-operate until the Comex open yesterday, when it got an additional shove, before dutifully following the rest of the metals sharply lower.
By the close of Comex trading in New York yesterday...gold was down 1.54%...platinum was down 2.63%...palladium down 2.91%...and silver was the winner, down 4.04%...but silver's intraday low checked in at -5.4%.
The dollar index rallied about 50 basis points between the Far East open on Wednesday and the high tick of the day, which came about 9:00 a.m. Eastern time. From that high, the index gave up about twenty-five percent of that gain, closing up a bit over 35 basis points...but still under the 80.00 mark at 79.75.
The dollar index gain was totally irrelevant to what was going on in the precious metal markets...but the main stream media, ignorant of the real story, hung their analysis on the easiest thing around...the dollar and general stock market conditions.
The gold stocks gapped down hard at the open...and pretty much followed the gold price from there. The Comex close low is the stand-out feature on this chart...and the stocks closed well off their lows. But that was little consolation, as the HUI closed down 4.30%...but was down well over 5% at one point.
The silver stocks got smacked pretty good as well...and Nick Laird's Silver Sentiment Index closed down 3.82%.
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The CME's Daily Delivery Report showed that 859 gold and 3 silver contracts were posted for delivery on Monday, April 9th. Merrill was the big short/issuer with 800 contracts...and JPMorgan was the big long/stopper with 432 contracts in its client account...plus another 350 contract in its in-house trading account. The Bank of Nova Scotia was a distant second at 49 contracts. The link to the Issuers and Stoppers Report is here.
Despite the 2-day smack-down in gold, there were no reported withdrawals from GLD for the second day running. But that certainly wasn't the case over at SLV as another big chunk of silver...1,893,552 troy ounces...was withdrawn. That's a hair over 4.0 million ounces withdrawn in two days.
Thanks to some help from Nick Laird, I'm now in a position to offer weekly updates to the Zürcher Kantonalbank gold and silver ETFs. For the week ending March 31st, their gold ETF added a smallish 5,851 troy ounces...and 147,090 troy ounces to their silver ETF.
There was no report from the U.S. Mint.
There wasn't much activity over at the Comex-approved depositories on Tuesday. They didn't receive any silver...and only shipped 299,292 ounce of the stuff out the door.
Silver analyst Ted Butler picked a good day for his mid-week commentary for his paying subscribers...and here are a couple of free paragraphs.
"The exact methodology being deployed that enables the dominant commercial traders to pull this scam off repetitively, aside from outright collusion, is High Frequency Trading (HFT). HFT is the collusive bundling of advanced computer hardware and software that is so advanced and powerful that it has achieved the power to move prices sharply with little actual trading required in setting prices. The way HFT works is that the collusive trading programs suddenly flash great numbers of contracts for sale. But before much actual selling occurs, all the other traders in the market see the great volumes of contracts apparently offered for sale and these other traders withdraw buy orders and start entering their own sell orders to get ahead of the great wave of HFT sell orders offered. Then a not so funny thing happens. Most of the time, very few of the HFT orders originally offered for sale get filled or executed. Instead, they are quickly cancelled. There’s even an operative term for this practice that’s perfect – spoofing."
"Most of the HFT orders are never filled, nor are they ever intended to be filled. These spoof orders are intended to scare others into selling so that the dominant commercial traders can buy gold and silver contracts. And make no mistake, this phony HFT activity has been successful, to the great shame of the regulators at the CFTC, who know that this manipulative trading is against commodity law. The proof that it is manipulative trading lies in the data published by the CFTC. That data shows the big dominant commercial traders are always the big net buyers on the big down days. It is not possible for that to be coincidence; it as close to cause and effect as is possible."
Here's a chart that was posted over at Zero Hedge that I found in yesterday's King Report...and this is what Bill King had to say about it...and the report from the U.S. Census Bureau..."Once again we must note that PMI surveys continue to overstate US manufacturing activity due to perverted seasonal adjustments, Chicago’s different model (ARIMA 11) and survivor bias. We must also add that PMI surveys are opinions, not facts or actual measurements of activity. Much of the ‘great’ factory production and PMI surveys is due to auto sales. We have relentlessly warned that the much publicized ‘great’ auto sales are not sales to end users; there are deliveries to dealers. This is evinced by record and increasing GM auto inventories…Yesterday GM reported disappointing auto sales (11.8% vs. 20% expected) for March even though its dealers’ inventories soared almost 36,000 to a new record of 713,008 (86 days, 124 days for pickups)."
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It was a rather slow news day again yesterday, which always suits me just fine. I hope there's the odd story in the list below that you find of interest.
Investors looking for more Federal Reserve intervention can pretty much ignore the economic data and train their sights on one area: the stock market, and how much of a drop it will take before the central bank comes to the rescue.
While central bank action ostensibly is geared toward using monetary policy to control the levers of prices and employment, the era of quantitative easing has brought with it increased focus on how the equity markets push the economy, and not the other way around.
As such, Chairman Ben Bernanke and his fellow Fed officials will be paying great attention to whether the sharp stock decline Wednesday, as well as the market's generally lackluster performance the past three weeks, signals a need for more stimulus.
So, it has come to this. When you see commentary like this in the main stream media...you know that the stock market as a price discovery mechanism is done for. This CNBC story from yesterday is a must read...and was sent to me by West Virginia reader Elliot Simon. The link is here.
The Commodity Futures Trading Commission, which made the charges, said that it is also requiring J.P. Morgan to make changes to ensure they handle segregated customer funds in the future and to release customer funds upon instructions from the agency.
The order notes that two days after Lehman Brothers filed for bankruptcy on Sept. 15, 2008, the huge collapsing firm asked J.P. Morgan to release its customers’ segregated funds. In response, J.P. Morgan “improperly” declined the request, the CFTC said.
“JPMorgan continued to refuse to release these funds for approximately two weeks thereafter, only to release the funds after being instructed by CFTC officials. The CFTC order does not find that there were any customer losses,” the CFTC said.
Twenty million is just a licensing fee for JPMorgan to carry on doing what it has always done...whatever it wants. I thank reader Scott Pluschau for sending me this marketwatch.com story from yesterday...and the link is here.
A bill authored by a Southland lawmaker that could potentially allow the federal government to prevent any Americans who owe back taxes from traveling outside the U.S. is one step closer to becoming law.
Senate Bill 1813 was introduced back in November by Senator Barbara Boxer (D-Los Angeles) to “reauthorize Federal-aid highway and highway safety construction programs, and for other purposes” .
After clearing the Senate on a 74 – 22 vote on March 14, SB 1813 is now headed for a vote in the House of Representatives, where it’s expected to encounter stiffer opposition among the GOP majority.
This CBS story was filed from Los Angeles yesterday...and I thank Casey Research's own Terry Coxon for bringing it to our attention. It's worth skimming...and the link is here.
Most summits are mush-mouthed affairs full of pleasantries. Tuesday's "Three Amigos" summit was different: a litany of how President Obama has alienated our neighbors.
You wouldn't know this from reading the mainstream media, which reported the disastrous summit with anodyne headlines like: "Obama talks trade, energy with Canada, Mexico leaders at Summit" (Associated Press) and "Obama, Mexico's Calderon vow more drug crime cooperation" (Reuters).
Obama's neglect of our nearest neighbors and biggest trade partners has created deteriorating relations, a sign of a president who's out of touch with reality. Problems are emerging that aren't being reported.
This story was posted over at the Investor's Business Daily website on Tuesday...and I thank Elliot Simon for his second offering of the day. The link is here.
The battle between Greece and the vulture investors is about to begin.
Fresh off the largest debt restructuring in history, the Greek government is preparing to confront a small, well-financed pool of holdout investors who are refusing to swap their bonds and take a 75 percent loss.
These investors, who probably represent about 2 to 3 percent of Greece’s privately held debt, are betting that Athens and its European supporters — contrary to their public pronouncements — will prefer to pay them back in full rather than let the bonds default.
And that, analysts say, would create a dangerous precedent, not only angering the investors who took large losses last month but raising the prospect that Europe is ready to cut deals with hedge funds holding on to risky sovereign debt.
No surprises here, as I already knew this was coming. The story was in Tuesday's edition of The New York Times...and I thank Phil Barlett for sending it along. It's worth the read...and the link is here.
Returning after a week in Berlin and Frankfurt talking to the German policy establishment, it is very strange to read the entries to the Wolfson Prize on EMU break-up, brilliant though they may be.
Yet if anything is clear in Berlin, it is that Germany’s elites think they have basically solved the crisis by pushing through debt relief for Greece, by imposing their Fiscal Compact on Europe, and by beefing up the firewall to €700bn (actually just €500bn).
They are on a different planet from City grunts at the coal face of global debt markets, who mostly suspect that Euroland’s cancer is in brief remission, and who know that Europe is going to pay a very high price for forcing banks, insurers, pension funds, and sovereign wealth funds to accept a 75pc haircut on €200bn of Greek debt – the biggest act of expropriation and theft in history.
Wow! Ambrose takes no prisoners in this column. It's definitely a must read...and I thank Roy Stephens for bringing it to my attention. It's posted over at The Telegraph, of course...and the link is here.
The Pirate Parties of Europe may still form a very small part of the political spectrum, but they are an extremely vocal section.
Slowly but surely, they seem to be becoming the party to watch in European politics. The German party recently won 7.4 percent of the votes in a state election last month, beating the FDP (the junior member of Chancellor Angela Merkel's ruling coalition) by miles (they could only scrape together 1.2 percent of the votes, Spiegel Online reports).
This very interesting story was posted on the businessinsider.com website yesterday...and I thank Roy Stephens for sending it. The link is here.
A man shot and killed himself in the middle of Syntagma Square in Athens this morning, the location which has been the center of protests in Greece.
Dismayed with austerity measures, Dimitris Christoulas wrote in a suicide note that he could "see no other solution than this dignified end to my life, so I don't find myself fishing through garbage cans for my sustenance," according to Athens News.
Greeks are suffering the consequences of harsh austerity measures demanded by core European countries led by Germany.
This is another story that was posted at the businessinsider.com website yesterday...and I thank Casey Research's own Alex Daley for sharing it with us. The link is here.
The first one is headlined "Iran to double ower exports to Turkey within 45 days". The second headline reads "Iranian economy minister blasts monopoly in international financial system". And lastly is this story headlined "U.S.-led sanctions on Iran difficult for India to join". I thank Roy Stephens for all three of these news items.
The first is with Gabelli gold fund manager Caesar Bryan. It's headlined "Gold and Silver Plunge, Europe in Continued Crisis". The second is with Bill Fleckenstein...and the headline to that reads "The Fed is Trapped, Stock Market & Gold".
With the Indian government stating that it would delay the implementation of hiking the excise duty on non-branded gold jewellery, the bullion strike in India has been officially called off. Jewellers in Mumbai and several parts of the country were back to their stores Monday afternoon, expecting a revival in demand.
The strike by jewellers and retailers began on March 17, immediately after the Union Budget, to protest the government's decision to impose excise duty on non-branded jewellery and doubling of the import duty on gold to 4%. Market estimates have placed the loss at a staggering $2.1 billion.
Bachhraj Bamalwa, chairman of the All India Gems and Jewellery Trade Federation which had given the call to strike, said the government had assured that no jeweller would be forced to register to pay excise duty, and that no coercive action would be taken.
This story was filed from Mumbai on Monday...and is posted over at the mineweb.com.za website...and the link is here.
Gold imports to India, the world's top importer crumbled more than 55% in March, with jewellers shutting down their establishments across the country demanding a rollback of the duty hike proposed in the Union Budget.
"The country would have imported just 15 to 20 tonnes of gold in March as against 45 to 55 tonnes that is usually imported on a monthly basis,'' said Prithviraj Kothari, president of the Bombay Bullion Association. He added that the high price of the precious metal also deterred fresh purchases.
Imports of the precious metal shrank to 90 tonnes in the January-March 2012 period, as against 283 tonnes in the corresponding quarter of last year. In January 40 tonnes of gold was imported, while in February around 30 tonnes was imported. The jewellers strike and the import hike in March depressed demand further.
This story, which is well worth the read in my opinion, was also posted over at the mineweb.com.za website...and the link is here.
New Pacific Metals Corp. reports on a re-evaluation of prior drill results from its 100% owned Tagish Lake Gold Property, Yukon Territory, Canada, which includes the Mt. Skukum Mine, a past gold producer, and two advanced stage projects: Skukum Creek and Goddell. At Goddell, a team of New Pacific geologists has prepared a series of cross sections from data contained in prior NI 43-101 technical reports, revealing an intersection in drill hole 97-41 of 64.69 metres (38.42 m true thickness) grading 5.75 g/t gold; another three drill holes intercepted intervals greater than 30 metres long with grades in excess of 5 g/t gold. The new geological interpretation for the Goddell Project identifies a previously unrecognized target, the P.D. Zone, which remains open in all directions. New Pacific is currently synthesizing results from over 120,000 metres of surface and underground drilling and more than 4,800 metres of underground workings, and is developing plans for an aggressive exploration and development campaign in 2011. New Pacific Metals Corp. is focused on near-term, high margin opportunities in Canada and China. Please visit our website to learn more about the company and request information.
What good fortune for those in power that people do not think. - Adolf Hitler, as quoted by Joachim Fest
With the North American stock markets in the tank yesterday, it certainly provided all the cover necessary for the engineered sell-off in all the precious metals to really gain momentum to the downside. Without doubt, the sell-off in the equity markets, combined with the dismal performance of the metals themselves, added to the negative bias in the precious metal shares as well.
It certainly had little to do with the dollar index, as it is up less than a full cent from its low just a handful of days ago...but such are the fig leafs that JPMorgan et al hide behind as they do the dirty.
Silver hit a new low for this move down...breaking just below the $31 spot market about 1:25 p.m. in New York yesterday afternoon. Looking at the 6-month silver chart below, I'm wondering [from a technical point of view] if 'da boyz' painted a double bottom here. Time will tell.
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Gold took out its old low of about three weeks ago and, without doubt, we're at record low levels for the Commercial net short position in gold after the price action of the last two days.
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Tomorrow is Good Friday, so the markets should be closed tighter than a drum in both London and New York and, without doubt, we probably won't see the Commitment of Traders Report until Monday at the earliest. Along with the COT report comes the latest Bank Participation Report as well.
Since today is the last trading day before the Easter long weekend, it's a pretty good bet that it will be reasonably quiet in the gold and silver markets...as traders head out early. It certainly turned out that way in the Far East...and now that London has been open for more than two hours, there is not much in the way of price action. As I hit the 'send' button at 5:18 a.m. Eastern time, gold is up about four bucks...and silver a dime or so. Surprisingly, volume in both metals is pretty high already, so the high-frequency traders are certainly out and about. The dollar index is up about 10 basis points.
Despite the holiday schedule, I will have a column on both Friday and Saturday, although there may not be much in the way of content.
That's all I have for today...and I'll see you here on Friday.