With London shut for the second day in a row...Spring Bank Holiday on Monday...and on Tuesday "so peasants can celebrate their 60 years of serfdom commonly being promoted as the Queen's Jubilee." as U.K. reader Tariq Khan said in an e-mail to me yesterday...it was another quiet day in the gold market.
Gold traded within five bucks of $1,617.50 all day long. Net volume was very light at 91,000 contracts...and gold closed in New York at $1,616.90 spot...down $1.40 from Monday. Nothing to see here, folks.
The silver price wandered around the $28.20 spot price mark for many hours before New York opened. The low of the day [around $28.10 spot] came shortly before 10:00 a.m. London time...and then rallied quietly from there...closing in New York almost on its high of the day.
Silver finished at $28.53 spot...up 27 cents. Net volume was a very light 24,000 contracts.
The dollar index fell to its low of the day [82.31] shortly after trading began in the Far East on their Tuesday morning...and then about 3:00 p.m. in Hong Kong it began to rally...and by 10:00 a.m. London time it was up to the 82.90 mark, where it stayed until 1:00 p.m. in New York. Then it weakened a hair into the close. The dollar index closed up about 25 basis points from Monday.
The gold stocks opened about unchanged...and then flopped around for a bit before making it into the plus column permanently around half-past lunchtime. The HUI finished up 0.62% on the day.
The silver stocks did pretty well for themselves, too...and Nick Laird's Silver Sentiment Index was up 1.28%
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It was another quiet Daily Delivery Report from the CME yesterday, as they reported only 30 gold contracts posted for delivery on Thursday.
There were no reported changes in the GLD ETF yesterday...but an authorized participant added 970,196 troy ounces of silver to SLV yesterday.
Over at Switzerland's Zürcher Kantonalbank at the close of trading on Monday June 4th, they reported an increase of 24,531 troy ounces of gold in their gold ETF. But their silver ETF had a big withdrawal of 1,802,300 ounces.
The U.S. Mint had a small sales report. They sold 115,000 silver eagles...and that was all.
The Comex-approved warehouses reported receiving 596,287 troy ounces of silver...and shipped 1,245,514 ounces out the door. The link to that action is here.
Here's the gold/silver ratio chart since December 11, 2011. The chart is courtesy of Australian reader Wesley Legrand.
Yesterday's historic Venus solar transit brought out all the shutterbugs last evening...and here's a photo that Nick Laird sent me late yesterday as it was happening..."I focused the binoculars on the sun with them showing their image on a piece of paper...and then used the shadow of my hand to make the black part to aim the image on." No one reading this will still be alive the next time Venus crosses the sun in December 2117.
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I have the usual bunch of stories for you today, so I hope you have the time to skim the highlights.
The WSJ's Jon Hilsenrath -- whom Cardiff Garcia has dubbed "Fedwire" -- reports that more Fed action is now officially on the table due to the slew of weak incoming data.
There's no guarantee that it will happen, or that if it did happen it would be at the June 20 meeting, but the presses are being warmed up.
This story was posted on the businessinsider.com website early yesterday evening...and I thank Roy Stephens for sending it along. The link is here.
Former Treasury Secretary Henry Paulson is backing U.S. Securities and Exchange Commission Chairman Mary Schapiro’s effort to impose new rules on money- market funds.
In a letter that the SEC published May 30 on its website, Paulson highlights excerpts of his 2010 book, “On the Brink,” which provides his account of the financial crisis. Paulson’s letter covered the period between Sept. 16 and Sept. 19, 2008 when Bank of New York Mellon Corp., BlackRock Inc. (BLK) and Northern Trust Corp. (NTRS) reported requests for “billions in redemptions” from their money funds. Such requests exacerbated a credit crisis that began earlier that month, he wrote.
Paulson, who was President George W. Bush’s Treasury Secretary from 2006 through 2009, has mostly avoided the debate over financial regulation since he left office. He encouraged Schapiro to use his letter to help bolster her argument that money-market funds should face tougher regulations.
This Bloomberg story from Monday was sent to me by West Virginia reader Elliot Simon...and the link is here.
Losses attributed to the whale now are believed to exceed $4.2 billion, according to an estimate made Tuesday by Ed Najarian, an analyst with International Strategy & Investment Group Inc. Read full story about J.P. Morgan losses .
At more than twice the initial estimate announced by J.P. Morgan and its chief executive, Jamie Dimon, in May, the loss now is expected to slash second-quarter earnings at the bank by another 30% to 65 cents a share, according to Najarian.
In doing so, the obvious analogy between the London whale and the great whale of fiction, Moby Dick, is becoming stronger. Consider Captain Boomer’s exhortation that the whale (the trade) isn’t intentionally causing harm. “What you take for the White Whale’s malice is only his awkwardness.” Or Starbuck’s warning, which could be made to the traders in the bank’s chief investment office. “Moby Dick seeks thee not. It is thou, thou, that madly seekest him!”
This short story was posted on the marketwatch.com website yesterday...and I thank reader John Diamond for bringing it to my attention. The link is here.
Federal debt will double by the middle of the next decade and reach more than twice the size of the entire U.S. economy by 2037 unless Congress changes course on taxes and spending, the Congressional Budget Office said in its latest analysis Tuesday.
The CBO said it’s the country’s worst fiscal picture since a brief period during World War II, when spending ballooned to fund the military campaign but returned to normal soon after the war ended.
“In the past few years, the federal government has been recording the largest budget deficits since 1945, both in dollar terms and as a share of the economy. Consequently, the amount of federal debt held by the public has surged,” the nonpartisan agency’s analysts said in a grim review of the government’s budget challenges.
This story was in The Washington Times yesterday...and I thank Scott Pluschau for sending it. The link is here.
2008 was a practice run, or a warning shot across the bow, compared to what is coming over the next few years.
2008 did not demonstrate what a liquidity crunch really means, but this time we are going to find out. As with many aspects of financial crisis, Greece is the canary in the coalmine, demonstrating what happens when liquidity disappears and it ceases to be possible to connect buyers and sellers or producers and consumers.
As we have said before, and for a long time now, money is the lubricant in the engine of the economy in the way that motor oil is the lubricant in the engine of your car, and you know what will happen to your car if you drive it with the oil warning light on.
This op-ed piece was posted Monday evening on the businessinsider.com website...and I thank Roy Stephens for sharing it with us. The link is here.
They have been joined by others – including David Cameron and Ed Milliband – calling for decisive action to "solve" the crisis. Germany must do "whatever is necessary" to prop up the edifice.
The break-up of EMU certainly threatens deeper recession in Britain and elsewhere. It will be the biggest threat to banking systems since the collapse of Lehman Brothers and the political implications are very uncertain. However, the longer EMU continues in its present form, the greater will be the ultimate political and economic turmoil. Six more months inside EMU and Greece may well become a failed state.
In or out of EMU the outlook for Greece is dire. It is certainly in a worse state than Iceland (which is recovering) because of the time it has suffered inside EMU but the sooner it exits the better (the same is true for Portugal, Spain, Italy and Ireland, all of which are probably insolvent within EMU). Outside there is at least the possibility of recovery, and the resumption of growth within the eurozone would be a significant contribution to solving the wider world crisis.
This story was posted in The Telegraph late on Monday afternoon...and is Roy Stephens third offering in today's column. The link is here.
No, Germany has not agreed to a "banking union".
It has not agreed to mutualise the costs of bank bail-outs, knowing perfectly well that this means 'Eurobonds lite' and the start of a slippery slope towards debt pooling.
It has not cleared the way for use of the EU rescue machinery (EFSF and ESM) for direct recapitalisation of banks – which is what Spain wants to avoid having to bear the contingent liabilities of its crumbling lenders on sovereign shoulders.
Germany has not moved one inch towards fiscal union of any kind. It may do so (I make no prediction). It has not done so yet. Europe faces exactly the same problem it has had since the start of the crisis.
Germany has agreed to explore extra supervisory powers for a European banking authority, in the "medium-term" once umpteen other conditions have been fulfilled.
This was posted in The Telegraph yesterday...and is another Roy Stephens offering. The link is here.
There they are again: the traders with sad eyes and the stock price displays showing jagged lines sloping downward. In the last 10 days, the DAX, Germany's blue-chip stock index, has fallen by 16 percent. On Monday it fell below the 6,000 point benchmark for the first time since January and has continued its plunge on Tuesday. Has the crisis, which for so long seemed to leave Germany untouched, finally reached Europe's largest economy?
That is probably the biggest problem the Germans have in the now two-year-old euro crisis. For Germans, it was always a crisis that belonged to others -- the Greeks, Portuguese, Spanish and Italians. That is, those who didn't have their finances in control and were expected to kindly atone for it by adopting the German model. Back home in Germany, by contrast, the economy was booming and people had work. In a sea of misery, Germany was an island of bliss.
This story showed up on the spiegel.de website yesterday...and is another story courtesy of Roy Stephens. The original title to this story was "Why Germany Must Give Up Power to Save the Euro". The link is here.
Tourism, Greece’s second largest industry after the shipping industry, and already in a downdraft, is taking another hit as tour bus drivers will go on strike for four days next week; wage negotiations have deadlocked, as owners demand that drivers take a 50% cut in pay and benefits on top of the 20% cut they’ve already suffered.
The National Organization for Healthcare Provision (EOPYY), Greece’s state-owned health insurer, hasn’t paid pharmacists for months and owes them €540 million. In turn, pharmacists are refusing to sell medications to insured patients, including cancer patients, unless they’re paid in cash—and even hospitals are reporting shortages.
And unpaid bills are now threatening Greece’s electricity supply. State-owned Electricity Market Operator (LAGIE), a clearing house for power transactions, hasn’t paid independent power producers for electricity it bought from them. They, in turn, haven’t paid their natural gas supplier, Public Gas Corporation (Depa), which now doesn’t have the money to pay its supplier.
Greece is toast. This businessinsider.com story that was posted on their website yesterday evening is a must read in my opinion. It's another Roy Stephens offering of course...and the link is here.
President Vladimir Putin and his Chinese counterpart Hu Jintao broke ground on a new bilateral relationship. Given the regional challenges, Russia and China have more in common than ever before.
Putin kicked off his visit to China amid an optimistic atmosphere in which the Russian and Chinese leaders expressed their enthusiasm for the present and future state of bilateral ties.
The Russian leader confirmed that cooperation had reached a new level and quality.
"Thanks to joint efforts we raised the level of Russian-Chinese cooperation to unprecedented height and quality," the Russian president said.
This story was filed on the Russian Times website late yesterday afternoon...and I thank Roy Stephens for sharing it with us. The link is here.
In the first four months of 2012, imports were 239,174 kilograms from 27,114 kilograms a year earlier, according to Bloomberg calculations. China doesn’t publish such figures." In other words: in the first four months of 2012, Chinese purchases have increased by an unprecedented 782% over the same period in 2011.
This story was posted over at the zerohedge.com website on Monday...and has some new information that I hadn't seen posted anywhere else. Of course it was Roy Stephens who sent it along...and the link is here.
A new and potentially significant source of demand is that of demand from Iran.
Iran imported a massive $1.2 billion worth of precious metals from Turkey in April alone.
Turkish exports of gold, precious metals, pearls and coins to Iran rose to $1.2 billion in April from a tiny $7,500 a year earlier, according to figures released by the state statistics institute in Ankara yesterday.
This is a massive increase in demand and suggests that there may be official involvement in the imports from the Central Bank of Iran.
This trend continued in May when Turkish gold imports leapt by 150% in May due to unrelenting demand from sanction strapped Iran.
Turkey imported 19.47 tonnes of gold in May, up from 7.78 tonnes in April, according to data released by the Istanbul Gold Exchange on Friday.
All this data and more, was posted over at the goldcore.com website yesterday...and I thank Roy Stephens once again for finding it. The link is here.
The first is with Egon von Greyerz...and the GATA headline read "Deflationary implosion imminent without massive money creation". The second blog is with Gabelli & Company's Caesar Bryan. It's entitled "Gold to be Viewed as Risk Free Asset in This Chaos". And lastly is this blog with Citibank analyst Tom Fitzpatrick. The headline reads "Four Key Charts & What to Expect in Markets Going Forward".
The Indian government's attempts to curb gold demand, since gold already represents 72% of India's current account deficit, appears to be working. India's demand for the precious metal is estimated to fall by 4% in volume and rise 4% in value in 2012, according to a report by global bank, Morgan Stanley.
The research report expects volume demand to drop 13% for urban India and rise 4% for rural India.
Morgan Stanley conducted a survey of 2,019 urban and rural gold buyers across 16 Indian cities for urban consumers and 8 Indian states for rural consumers.
I wouldn't bet the ranch on the findings in this survey...and you'll discover that the headline is somewhat misleading once you've read the whole story, which is well worth your time. It was filed from Mumbai yesterday...and posted on the mineweb.com website. The link is here.
Inquiring minds are watching an interview by Max Keiser with Hugo Salinas Price on a plan to back Greek currency with silver.
In the first half of the video, Max discusses unelected bureaucrats "running a gulag casino state" for their own benefit, financial terrorism against Ireland, and the simply-but-true [yet seldom initiated] concept that "bad debt banks should go bankrupt".
Max also blasts Christine Lagarde who herself pays no taxes, yet harasses Greek citizens to pay theirs.
In the second half of the video, about 13 minutes in, Max conducts the interview with Hugo Salinas Price.
This story is posted over at Mike Shedlock's website...and I thank Roy Stephens for his final offering in today's column. The link is here.
On Monday, Jim Rickards had a story posted over at the usnews.com website. It was headlined "Calls for a U.S. Gold Audit Miss the Point". Here are the first three paragraphs from it...
For those who comment on the role of gold in the international monetary system, one of the most frequently asked questions involves the existence of the U.S. gold hoard. Officially the U.S. Treasury is in possession of 8,133 metric tons of gold stored mostly in two large depositories—Ft. Knox, Ky. and West Point, N.Y.—with smaller amounts on deposit at the Denver Mint and the Federal Reserve Bank of New York.
Yet, as a writer and speaker on the role of gold, the most frequent question I encounter is, "How do you know the gold is actually there?" or some variant. The suggestion is always that the United States long ago dumped its gold on world markets to suppress the price and that the vaults in Ft. Knox are actually empty or, at most, filled with tungsten bars lightly coated with gold paint.
Invariably these critics point to the fact that the Treasury will not permit an audit of the gold as proof of their suspicion. A proper audit would verify both the quantity and purity of the U.S. gold hoard. Ideally, each gold ingot would be individually numbered and tested and at the end a reputable nongovernment auditor such as a major accounting firm would attest a complete inventory of separately numbered ingots. This should be a fairly straightforward task. The failure to conduct the audit is perennially advanced as evidence that the gold does not exist.
Of course this is an absolute must read...and I dug it out of a GATA release yesterday...and the link is here.
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Drilling Intersects 102 Meters of 1.97 gpt Gold at Columbus Gold’s Paul Isnard Gold Project; Drilling Confirms Depth Extension of Gold Mineralization
Columbus Gold Corporation (CGT: TSX-V) (“Columbus Gold”) is pleased to announce results of the initial five (5) core drill holes at its Paul Isnard gold project in French Guiana. The holes confirm depth extension of gold mineralization below shallow holes drilled on the 43-101 compliant 1.9 million ounce Montagne d’Or inferred gold deposit at Paul Isnard in the 1990’s and support the current program of resource expansion through offsetting open-ended gold mineralization indicated by the earlier holes.
Robert Giustra, CEO of Columbus Gold, commented: “These drill results validate Columbus Gold’s approach to adding ounces with a lower-risk drilling program designed to infill and to extend the mineralized zones to 200 m vertical depth from surface; a depth amenable to open pit mining.”
Fourteen (14) holes have been completed (assays pending) by Columbus Gold in the current program and drilling is progressing at the rate of about 3,000 meters per month with one drill-rig on a 24 hour basis. Columbus Gold plans to accelerate the current program by engaging a second drill-rig as soon as one can be obtained.
Please visit our website for more information about the project.
As I mentioned at the top of this report, it's been very quiet these last couple of days...and I would assume that a lot of that would come from the fact that London was basically out of the picture for both Monday and Tuesday as Her Majesty was celebrating her 60th year on the throne. I have a certificate that was given to our Grade 1 class in 1954 in memory of her coronation in 1952...but I digress.
I was delighted to see that the precious metal shares finished in the plus column once again...and as I said from the podium in Vancouver on a couple of occasions this past weekend, it's my belief that deep pockets are buying at this point in time.
Since we managed to get through Tuesday without much fanfare, precisely what happened on Friday should be in this Friday's Commitment of Traders Report, as the cut-off for it came at the close of Comex trading yesterday. Whether Friday's action was a short-covering rally, new technical longs being placed, or "all of the above" will be known.
I note, as I put the finishing touches on today's column, that there has been some activity both in Far East trading...and the early morning London session as well. As I hit the 'send' button at 5:15 a.m. Eastern time, gold is up about $15...and silver's up about 65 cents. The dollar index has been declining during most of that time period...and is down 27 basis points at the moment. Volumes in both metals are monstrous. Gold's volume is north of 45,000 contracts...and silver's net volume is already past 10,000 contracts. It's obvious that these rallies are not going unopposed, so it appears that JPMorgan et al are once again stepping in as sellers of last resort...especially now that gold's 50-day moving average has been broken to the upside with some authority.
It could be an interesting day in New York...and I await the 8:20 a.m. Eastern time Comex open with great interest.
See you here tomorrow.