It was a pretty quiet trading day on Thursday as well. After trading flat up until just after 11:00 a.m. Hong Kong time on Thursday morning, gold got sold down to its low of the day [around $1,755 spot] about eight hours later at 11:15 a.m. in London.
Gold rallied from there...except for the slight dip going into the London p.m. gold fix. The rally ended just before noon in New York...and gold traded sideways from there into the 5:15 p.m Eastern electronic close.
When all was said and done, gold closed at $1,768.50...down $1.20 from Wednesday's close. Net volume was in the area of 150,000 contracts.
Silver's price path was identical to gold's...with the low, high and London p.m. fix prices occurring at precisely the same moments as gold. The Kitco gold and silver charts for yesterday look virtually identical. From its early morning Far East high to its late morning London low, silver traded in a 2 percent price range yesterday.
The silver price closed at $34.64 spot...up 7 cents from Wednesday. Volume was a very high 49,000 contracts.
The dollar index opened at 79.11 on Thursday morning in the Far East...and traded pretty flat until minutes after 10:00 a.m. Hong Kong time. From that point, a rally of some substance got under way...and its zenith [79.66] came just a few minutes before 10:00 a.m. in New York.
From that high, the index went into a slow decline...and by the close of trading in New York late Thursday afternoon, the dollar index had shaved about 24 basis points off that gain...and the index closed at 79.39...up 28 basis points from the open.
The gold stocks gapped down about 2 percent at the open, with the absolute low tick coming at precisely 10:00 a.m. Eastern time...which was the precise moment of the London p.m. gold fix yesterday...and the exact New York low price ticks for both gold and silver.
The subsequent rally lacked enthusiasm but, by the end of the trading day, the gold stocks had gained back a bit more than half their losses. The HUI closed down 0.71%.
It was very much a mixed bag for the silver stocks yesterday, but the ones that mattered did somewhat better for themselves...and Nick Laird's Silver Sentiment Index closed up 0.43%.
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The CME's Daily Delivery Report was unexciting yesterday...and that's being kind, as only 2 gold contracts were posted for delivery on Monday. We're starting to run out of delivery month...and there are still 495 silver contracts open in September. One has to wonder what the short/issuers are waiting for. Maybe physical silver to deliver, perhaps?
The GLD ETF reported that an authorized participant[s] added another 96,949 troy ounces of gold yesterday...more than three tonnes. That's quite a bit.
Yesterday I reported that there was no addition to SLV on Wednesday. That, in fact, was not correct, as they didn't update their website with Wednesday's data until almost midnight Eastern time...and I missed it, as they always update it during normal business hours...before 5:00 p.m. Eastern time.
As it turns out, authorized participants added 1,356,384 troy ounces of silver to SLV on Wednesday...and then added another 1,840,792 troy ounce on Thursday. Over the two days, they added 3.20 million ounces to SLV. That's a pretty decent amount, but there's still much more owed than that.
There was no sales report from the U.S. Mint.
Over at the Comex-approved depositories on Wednesday, they reported receiving 1,400,928 troy ounces of silver...and shipped 941,679 ounces of the stuff out the door. The link to that activity is here.
Here's a new chart that Nick Laird sent me yesterday. This is the average intraday price moves for gold for the entire trading month of August 2012.
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Here's how it compares to the trading pattern for all of 2010. As you can see, there's quite a bit of difference in the pattern of how gold traded in August 2012 compared to how it traded during 2010.
(Click on image to enlarge)
Since yesterday was the 20th of the month, The Central Bank of the Russian Federation updated their website with August's numbers...and they reported that their gold reserves actually declined 100,000 troy ounces during the month. Their reported gold reserves now sit at 30.0 million ounces. Here's Nick Laird's most excellent chart updated with that data.
(Click on image to enlarge)
I have the usual number of stories...and I hope you can find the time to read the ones that interest you the most.
Wall Street lobbyists are awesome. I’m beginning to develop a begrudging respect not just for their body of work as a whole, but also for their sense of humor. They always go right to the edge of outrageous, and then wittily take one baby-step beyond it. And they did so again last night, with the passage of a new House bill (HR 2827), which rolls back a portion of Dodd-Frank designed to protect cities and towns from the next Jefferson County disaster.
Jefferson County, Alabama was the most famous case – the city of Birmingham went bankrupt after being bribed and goaded into taking on billions of dollars of toxic swap deals – but in fact it was just one of hundreds of similar examples of localities being duped into suicidal financial deals by rapacious banks and financial companies. The Denver school system, for instance, got clobbered when it opted for an exotic swap deal pushed by J.P. Morgan Chase (the same villain in Jefferson County, incidentally) and then-school superintendent/future U.S. Senator Michael Bennet, that ended up costing the school system tens of millions of dollars. As was the case in Jefferson County, the only way out of the deal involved a massive termination fee that might have been even more destructive than the deal itself.
To deal with this problem, the Dodd-Frank Act among other things included a simple reform. It required the financial advisors of municipalities to do two things: register with the SEC, and accept a fiduciary duty to respect the best interests of the taxpayers they are advising.
Sounds simple, right? But Wall Street couldn’t have that. After all, if companies are required to have a fiduciary responsibility to cities and towns, how in the world can they screw cities and towns? The idea was a veritable axe-blow to the banks’ municipal advisory businesses.
The rest of this must read Matt Taibbi tirade was posted on the Rolling Stone magazine Internet site yesterday. I thank Ulrike Marx for providing the first story in today's column...and the link is here......along with the usual 'pithy prose' advisory.
The Federal Energy Regulatory Commission has accused J.P. Morgan Ventures Energy Corp. of misleading regulators and said its authority to sell electricity might be suspended.
FERC issued an order today that directs the unit of New York-based JPMorgan Chase & Co. (JPM) to show that it didn't violate FERC regulations and explain why its authorization to sell electric energy and related services at market-based rates should not be suspended.
"That can be more serious than a penalty, that could be more serious than disgorging profits," said Susan Court, principal at SJC Energy Consultants LLC in Arlington, Virginia, and a former FERC enforcement director. "That could entail a lot more money than just paying a penalty."
The order is part of FERC's effort to increase transparency and eliminate manipulation of the electricity market. The agency is investigating JPMorgan's power trading in California and the Midwest. That investigation came to light when FERC went to court seeking internal e-mails from JPMorgan, saying the bids from the company might have resulted in at least $73 million in improper payments to generators.
This Bloomberg story from yesterday was picked up by the finance.yahoo.com website yesterday...and I thank Scott Pluschau for sending it our way. The link is here.
By now everyone has heard the infamous Mitt Romney speech discussing the "47%" if primarily in the context of how this impacts his political chances, and how it is possible that a president "of the people" can really be a president "of the 53%." Alas, there has been very little discussion of the actual underlying facts behind this statement, which ironically underestimates the sad reality of America's transition to a welfare state.
What we did want to bring attention to, is something else that Mitt Romney said, which has received no prominence in the mainstream media from either side. The import of the Romney statement is critical as it reveals just what the endgame may well looks like.
In response to an audience question, Romney had this to say..."[The] former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing—which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up. We're living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who's loaning us the trillion? The Chinese aren't loaning us anymore. The Russians aren't loaning it to us anymore. So who's giving us the trillion? And the answer is we're just making it up. The Federal Reserve is just taking it and saying, "Here, we're giving it." It's just made up money, and this does not augur well for our economic future. You know, some of these things are complex enough it's not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind.
The rest of this story is posted over at the zerohedge.com website...and I thank reader Michael Cheverton for sending it along. The link is here.
Federal Reserve Bank of Dallas President Richard Fisher said the central bank’s third round of bond purchases will probably fail to create jobs while risking higher inflation.
“I do not see an overall argument for letting inflation rise to levels where we might scare the market,” Fisher said yesterday on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “We have seen a sharp rise in inflation expectations. If you let this get out of hand, then I think we will have a market reaction.”
Fisher, who doesn’t vote on monetary policy this year, opposed the Federal Open Market Committee decision last week to expand its holdings of long-term bonds with open-ended purchases of $40 billion of mortgage debt every month in a new round of quantitative easing. The Fed, led by Chairman Ben S. Bernanke, is seeking to boost growth and reduce 8.1 percent unemployment.
This Bloomberg story was posted on their website yesterday morning...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
Federal Reserve Chairman Ben Bernanke trekked to Capitol Hill on Wednesday to caution Senate lawmakers on the economic dangers of the looming "fiscal cliff," the nearly $600 billion in planned spending cuts and tax hikes that will bite at the start of next year unless lawmakers act.
Bernanke, who has publicly warned that dawdling by lawmakers was putting the U.S. economy in peril, spoke to members of the Senate Finance Committee for about an hour behind closed doors in a meeting requested by the panel chairman, Democrat Max Baucus.
"I believe strongly that nothing of consequence is ever solved when somebody tries to do something alone. You got to work together. My whole goal here is to get senators working together and it is happening," Baucus said after the meeting.
Bernanke declined to comment.
This Reuters story was posted on their website early Wednesday evening...and was subsequently picked up by finance.yahoo.com. I thank Donald Sinclair for digging it up on our behalf...and the link is here.
You put Jim Grant on TV and someone mentions the Fed and the result every single time is the equivalent of waving a red curtain in front of a rabid bull.
The above headline is Grant's summary of the current predicament of anyone who wishes to trade these "markets"...and it may as well be the best synopsis of the New (ab)normal.
And aside from an odd detour into Government Motors, Grant once again hones in on the only true antidote to central planner idiocy, gold: "the best thing about gold is that it's got no P/E multiple. Gold is a speculation on an anticipated macroeconomic outcome, the systematic debasement of currencies by central banks. Why wouldn't they do QE4? What intellectual argument do they have against doing it again, and again, and again."
This must read Zero Hedge posting has a must watch CNBC video interview between Grant and Bartiromo embedded in it. And if you scroll down a bit more, you'll find a 32-minute video interview with ex-Federal Reserve Chairman Paul Volcker. I thank reader U.D. for bringing this excellent story to our attention. It's entitled "Jim Grant: We Are Now All Lab Rats of Bernanke...and the Fourth Branch of Government"...and the link is here.
In a new report entitled Gold: Adjusting For Zero, Deutsche Bank analysts Daniel Brebner and Xiao Fu paint an incredibly dark picture of the bind the global economy is in right now.
Brebner and Xiao are pretty frank about how levered up the financial system is at the moment, and they warn that the next shock will be totally involuntary and unexpected.
This short businessinsider.com story was posted on their website during the New York lunch hour yesterday...and I thank Roy Stephens for his second contribution in today's column. The link is here.
It appears increasingly probable that the permanent euro bailout fund, the European Stability Mechanism (ESM), will be able to start its work in just a few weeks time. Last week, Germany's Federal Constitutional Court gave its green light for the ratification of the ESM Treaty, but it attached some conditions. SPIEGEL ONLINE has learned from government sources that European Union ambassadors of the 17 euro-zone member states plan to sign a so-called "interpretive declaration" in Brussels next Wednesday agreed to last week by the currency union's finance ministers.
The declaration is to clarify that the upper ceiling for a nation's liability established in the treaty can only be exceeded with the permission of that country's parliament. The declaration will also strengthen the rights of parliaments in obtaining information from ESM.
With the declaration, euro-zone states plan to address the central conditions set by the German high court on Sept. 12 to allow Germany to ratify the treaty.
One more step down the "Print, or Die" road for the people of Germany. This spiegel.de story from yesterday was sent to me by Donald Sinclair...and the link is here.
Imagine if I told you I could reduce my own body weight by 80 percent or more, on paper, through a series of calculations utilizing my own proprietary mathematical models, the details of which are so complex and highly prized that I couldn’t divulge them.
You would be right not to believe me, and might think I’m nuts. Yet this, in essence, is what regulators let banks do all the time with their balance sheets. Huge swaths of assets are allowed to vanish, making too-big-to-fail financial institutions seem leaner and safer than they are.
Under the system known as risk weighting, banks get away with this because they are allowed to stipulate that some assets carry little, if any, risk. Many government bonds, for instance, fall into the riskless category for purposes of determining regulatory-capital ratios. So a bank can assume it won’t incur losses on them, which allows it to keep a lower capital cushion. The flaw here is that rule-makers aren’t good at predicting what kinds of assets might blow up. Some governments, especially in Europe, are in awful shape and pose a real risk of defaulting.
In other words, the notion of risk weighting is a farce, at least the way it is practiced now. Yet it carries the imprimatur of the Basel Committee on Banking Supervision, the Swiss body that writes capital standards for most of the developed world. Thankfully, a U.S. regulator has stepped up to say the world should scrap the Basel committee’s standards.
This op-ed piece by Jonathan Weil was posted on the Bloomberg website late yesterday afternoon. I consider it a must read...and I thank Ulrike Marx for sending us this story. The link is here.
Amid fears of more violent protests in the Muslim world, the German government has announced it will close its diplomatic missions in the region on Friday, the Islamic holy day.
With further escalation of protests expected after Friday prayers, Berlin is also considering whether to provide additional security for German diplomatic facilities, Foreign Minister Guido Westerwelle said.
Many embassies are closed on Fridays in the Islamic world in honor of the holy day to begin with, but a number of German diplomats have received specific instructions to avoid embassies that day. "We have intensified security precautions everywhere in the region, and in some cases increased security personnel too," Westerwelle said.
The news came as backlash continued against the controversial anti-Islam film "Innocence of Muslims," followed by additional unrest in reaction to the publication of Muhammad caricatures by French satire magazine Charlie Hebdo , which added fuel to the fire on Wednesday. Paris subsequently announced it would shutter its embassies in sensitive areas on Friday as a precaution too.
This is another story from the German website spiegel.de...and it's courtesy of Donald Sinclair. The link is here.
The ruling parties of Catalonia have sought guidance from Brussels on the legality of secession from Spain, requesting a “route map” for membership of the European Union and the euro as an independent state.
It is the latest move in a fast-escalating clash between Catalan nationalists and Spanish nationalists, the latter backed by King Juan Carlos and the Spanish military.
Jose-Manuel Garcia-Margallo, the foreign minister, threw down the gauntlet, calling Catalan secession “illegal and lethal”. He warned that Spain would use its veto to stop the region of Catalonia becoming an EU member “indefinitely”.
The constitutional crisis has eclipsed the parallel drama of a Spanish bail-out request from the European Stability Mechanism. It is no longer clear whether premier Mariano Rajoy can deliver on any austerity deal with Brussels.
You can't make this stuff up! This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk Internet site late yesterday evening...and is a must read for sure. It's another article courtesy of Ulrike Marx...and the link is here.
The first blog is with Ben Davies...and it's entitled "This Move in Gold Will Take it to $2,400 - $2,500". The second is with Keith Barron. It's headlined "The Only Way They Can Stop This is Bring Out a New Currency". And lastly is this blog with Robert Fitzwilson, the founder of The Portola Group...and it's entitled "The Central Planners Are Going to Need a Bigger Boat".
A rapid oil price drop on Monday, September 17, took traders by surprise.  Who exactly dumped some 13,000 contracts of CME's West Texas Intermediate crude oil contract and 10,000 contracts of the Intercontinental Exchange's (ICE's) Brent/BFOE crude oil contract into the market cratering the price by more than US$3 per barrel?
While the identity of the seller(s) remains obscure, the Saudis lost no time in announcing to the market that they see oil as over-priced and are prepared to increase production until the price falls below $100/barrel. Grateful market pundits reported with alacrity to this hoary old chestnut.
A more likely reason for the price move than these Saudi Jedi mind games is now emerging. On Tuesday, Catherine Ashton, lead negotiator for the 5+1 (the permanent members of the United Nations Security Council plus Germany) involved in talks with Iran over its nuclear policy, met Iran's Foreign Minister Saeed Jalili for "informal" discussions, which were said to be constructive, and in respect of which Lady Ashton will be reporting to her colleagues next week in New York.
What was not widely reported was firstly, the short notice of this meeting, and secondly, the fact - very significant in diplomatic terms - that for the most part it took place in the Iranian consulate, which is legally Iranian territory.
This short, but very interesting story showed up on the Asia Times website early this morning Hong Kong time...and I thank Roy Stephens for sending it. I would think we will find out soon enough whether there's any truth to this. The link is here.
Lonmin shares dropped sharply on Thursday despite thousands of miners at its Marikana platinum mine in South Africa returned working after a six-week strike in which 46 people died as pay protests flared up at nearby mines.
Striking workers from Anglo American Platinum's (Amplats) Rustenburg mine barricaded a street with burning tyres as a police helicopter hovered overhead and armed officers backed by armoured vehicles and water cannons were on stand-by close by.
Amplats, the world's biggest platinum producer, is threatening legal action if the wildcat strikers do not return to work on Thursday.
"(The) operations are already under considerable economic pressure", Amplats said in a statement. "Any further delays in returning to work will only increase the risk to the long-term viability of these mines."
This Reuters story was posted on the telegraph.co.uk website yesterday afternoon BST...and is Roy Stephens final contribution in today's column. The link is here.
Workers at an AngloGold Ashanti mine in South Africa have started an illegal strike, a company spokesman said on Friday, signaling spreading labour unrest in the mining sector.
"The night shift embarked on an unprotected strike at Kopanang and the morning shift didn't go down either," company spokesman Alan Fine told Reuters.
The workers had not yet communicated their demands to the company, Fine said.
You just read the entire Reuters story that was filed from Johannesburg. It was picked up on the mineweb.com Internet site early this morning in London...and the link to the hard copy is here. I thank Ulrike Marx for sliding this story into my in-box in the wee hours of this morning.
Sudan opened its first gold refinery on Wednesday as it seeks to improve the quality of its rising gold exports and offset the economic damage inflicted by the loss of most of its oil revenues.
The country is increasing its gold production after losing three quarters of its oil output when South Sudan became independent in July last year.
The government hopes the new refinery in the capital Khartoum will help it to produce gold to international standards and reduce the amount of gold smuggling to overseas markets such as Dubai. Producers would receive more money for the higher-quality gold, thereby reducing the incentive to smuggle.
The refinery will have a daily production capacity of 900kg of gold and 200kg of silver, its head Mohamed Osman al-Zubeir said at the opening ceremony. This more than doubles the previous forecast for the refinery's annual gold capacity, to 328 tonnes from 150 tonnes.
This mineweb.com story from yesterday was sent to me by Donald Sinclair...and this is his final offering in today's column as well. The link is here.
Bundesbank President and economist, Jens Weidmann, hasn't exactly kept quiet about his lack of support for the ECB bond-buying program. But this week he put it into a context which the public would be able to understand, and ‘shocked' Europeans by relating the program to that of making a deal with the devil.
Weidmann refers, as many have before him, to the ‘Faustian pact', called so thanks to Act I, Part II of Goethe's 1832 play ‘Faust'. In the play the Devil, Mephisto, convinces the Holy Roman Emperor to print large amounts of paper money rather than use gold. In the short term, the money printing solves the emperor's financial problems, but it soon leads to rampant inflation.
Inflation is an invisible thief, it leads to disposable incomes falling, savings decreasing in value and interest rates becoming effectively detrimental to those who try to be sensible with money.
Whilst Weidmann did not refer to Draghi's, or anyone's money printing exercises, he warned "If a central bank can potentially create unlimited money from nothing, how can it ensure that money is sufficiently scarce to retain its value? This temptation certainly exists, and many in monetary history have succumbed to it".
Mr. Weidemann understands the situation perfectly...as do you, dear reader. This must read offering was posted on the mineweb.com Internet site early this morning BST...and the link is here.
Avrupa Minerals Ltd. is a growth-oriented prospect generator focused on aggressive exploration for valuable mineral deposits in politically stable and prospective regions of Europe with a growing pipeline of prospects in Portugal, Kosovo and Germany.
Share structure and cash on hand (12/31/2011):
Please visit our website for more information.
If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State. - Joseph Goebbels, Minister of Nazi Propaganda
It's a bit of a stretch to pin yesterday's price action in gold and silver on movements in the currency. All in all, it was just another day off the calendar, as Ted Butler is wont to say.
I was somewhat surprised to see that Russia's gold reserves actually declined last month, as that's only the third time in the last six years that they've actually sold some of their gold reserves. Maybe they'll make up for it in the final four months of the year...and we won't know the final number for 2012 until they report December's purchases on January 20, 2013.
Today we get the Commitment of Traders Report that really matters, as it will give us a pretty good snapshot of just how bad the commercial net short positions have become in both gold and silver since this rally began a bit over a month ago. Last Thursday's big rally will be in it...along with what happened on Tuesday, as there was decent price action on that day as well. Whatever the numbers show, I'll have a report for you tomorrow.
In Far East trading on their Friday, both metals managed to put on a bit of a rally...but that all ended the moment that London open, as the dollar index...which had been heading south all night long...had another perfectly timed out-of-the-blue rally...and both gold and silver slid a bit. That all ended less than ninety minutes later when the index did a 30 basis point face plant. Both gold and silver have popped a bit...and the dollar index is now down about 23 basis points. Volumes in both metals are way up there once again. As I hit the send button at 5:15 a.m. Eastern time, gold is up about six bucks...and silver is up almost two bits. The last couple of Fridays have proved to be interesting as far as price action goes...and it will be equally as interesting to watch what happens in New York when trading begins there at 8:20 a.m. Eastern time.
With gold and silver shares moving higher, there's still an opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take out a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
Enjoy your weekend, or what's left of it if you live west of the International Date Line...and I'll see you here tomorrow.