The gold price traded quietly during the Far East trading day on Friday, but developed a slight negative bias as the afternoon wore on in Hong Kong trading...and once it dropped below the $1,600 spot price mark at 9:50 a.m. in London, the gold price plunged eight or nine dollar in short order. The London low was noon local time...and then it rallied a hair into the New York open.
Then at 8:30 a.m., gold jumped back over the $1,600 spot mark, where it ran into a wall of not-for-profit sellers immediately...and within twenty-five minutes was down over twenty-six bucks from its high just minutes prior. The high...which came around 8:40 a.m. Eastern time...was $1,611.20 spot.
After the hammer fell, the gold price more or less traded sideways until about 12:15 p.m. in New York...then the got sold down some more from there, with the low of the day [$1,575.40 spot] coming shortly after 1:00 p.m. The gold price recovered about eight bucks from that low...and closed at $1,582.40 spot...down $21.50 on the day. Net volume was around 150,000 contracts.
It was pretty much the same story in silver, so I'll spare you the play-by-play on that. Silver's low price tick [$26.86 spot] came about five minutes before the 1:30 p.m. Comex close. The high tick [$27.86 spot] came at 8:35 a.m. From the low of the day, the silver price recovered about two bits into the close.
Silver closed at $27.10 spot...down 60 cents from Thursday's close. Net volume was around 38,000 contracts. Silver had an intra-day move of a dollar yesterday...and is down over $1.40 since its high tick in London on Thursday, which came about thirty minutes before the Comex open.
The dollar index opened on Friday where it closed on Thursday....around 82.80...and then traded absolutely flat until the open of the Comex trading session at 8:20 a.m. in New York. From that point it took six hours to climb to its high of the day, which was was around 83.42...and then backed off a hair going into the close, finishing the week at 83.38...and down 58 basis points on the day. Gold got smashed for twenty-six bucks during the first twenty minutes of that rally in the dollar index...and then traded mostly flat for almost the entire balance of the dollar index rally.
As Jim Sinclair said yesterday..."Anyone who does not see Friday's gold market as a rig, is blind or brain-dead." He would be right about that...and would equally apply to Thursday's trading day in both gold and silver as well.
The gold stocks gapped down...and then stayed down for the rest of the day, but managed to recover off their low. The HUI finished down 3.31% and, for whatever reason, the finance.yahoo.com website did not provide an updated daily chart for the HUI yesterday...as it was M.I.A. all day, so this little dinky one from Kitco will have to do.
The silver stock got hit pretty hard once again...and Nick Laird's Silver Sentiment Index closed down 2.41%
(Click on image to enlarge)
The CME's Daily Delivery Report wasn't much to look at yesterday, as only 3 gold and 6 silver contracts were posted for delivery on Tuesday. The CME's Preliminary Report for Friday's trading day showed that there were still 1,863 silver contracts open in the July delivery month.
The GLD ETF showed a tiny withdrawal of 13,640 troy ounces of gold...which may, or may not, have been a fee payment of some kind. There were no reported changes in SLV.
The U.S. Mint had another smallish sales report. They sold 1,000 ounces of gold eagles....and 100,000 silver eagles.
The Comex-approved depositories [which, by the way, are exactly the same warehouses mentioned in the CME's Daily Delivery Report three paragraphs above] showed that 597,988 troy ounces of silver were received on Thursday....and 245,773 troy ounces were shipped out the door. The link to that action is here.
Since I'm on the subject, the metals delivered in the Daily Delivery Report just change ownership [and maybe location] inside the Comex-approved warehouses...and the silver mentioned in the previous paragraph is physically shipped on and off the exchange on a daily basis. Very little gold is ever shipped in or out of the Comex-approved warehouses, which is the main reason why I never report on it. Beside which, as Ted Butler has pointed out for years, there's lots of gold in the world, but silver is basically hand-to-mouth, which is most likely the only reason that the in/out activity in silver is as frantic as it is.
Well, because of the Independence Day holiday, there was no Commitment of Traders Report yesterday, so I'll report on that in Tuesday's column.
Here's a chart that Nick Laird sent me last night. It's the "Transparent Precious Metals Holdings" as of the close of business on Friday...and the chart is pretty self-explanatory.
(Click on image to enlarge)
I have the usual number of stories for a Saturday, so I hope you can find the time to wade through the ones that interest you.
Some of the nation’s biggest retail chains reported on Thursday that sales growth slowed in June, as shoppers held back amid wavering consumer confidence and unemployment.
A survey by Thomson Reuters of 18 retailers showed that sales at stores open more than a year were up 2.5 percent in June, well below the 7.7 percent increase recorded in June 2011. The same-store sales results surpassed Wall Street analysts’ forecasts of a 2.4 percent rise.
Retailers have seen lower spending over all by domestic customers, a drop in consumer confidence as millions of people remain out of work and fewer tourists are willing to spend amid a global economic slowdown.
This story was posted on The New York Times website on Thursday...and I lifted it from yesterday's edition of the King Report. The link is here.
More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery.
The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration.
The disability ranks have outpaced job growth throughout President Obama's recovery. While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits.
This story was posted over at the investors.com Internet site yesterday...and I thank reader 'David in California' for sending it. The link is here.
Katherine Mangu-Ward, editor of Reason magazine enlightens Maria Bartiromo about Countrywide's bribes on CNBC yesterday. This 4:39 minute video is posted on the cnbc.com website...and I thank reader 'Tom in Thailand' for sending it along. The link is here.
David Green, the head of the SFO, said on Friday he had "decided formally to accept the Libor matter for investigation".
The FSA and US regulators fined Barclays 290m last week for attempting to manipulate the key rate as part of a wider investigation that includes a number of banks.
The Chancellor told Parliament last Thursday that the SFO was in talks with the City financial regulator over the scandal.
On Monday, the SFO said: "Now that the investigation into the issue of regulatory misbehaviour has concluded, the SFO are considering whether it is both appropriate and possible to bring criminal prosecutions ... we hope to come to a conclusion within a month."
This story was posted on The Telegraph's Internet site early yesterday afternoon local time...and I thank Roy Stephens for his first offering of the day. The link is here...and the embedded graph is worth the trip all by itself.
Barclays Plc was sued by an investor who claimed her futures-trading business was harmed by the bank’s admitted manipulation of the Euro Interbank Offered Rate.
A copy of the complaint, which also names JPMorgan Chase and Citigroup Inc. among other defendants, was provided by Hagens Berman Sobol Shapiro LLP, the law firm representing the investor. The filing couldn’t be independently confirmed yesterday on the website of the federal court in Manhattan.
As part of settlements with U.S. and U.K. regulators, Barclays has admitted rigging the London interbank offered rate, or Libor, as well as the Euribor, its equivalent in euros, as early as 2005.
In testimony to the U.K. Parliament this week, Robert Diamond, who resigned as the bank’s chief executive officer, apologized and said 14 Barclays traders were involved.
“Based on what we’ve seen so far, the rate-fixing scheme was apparently an open secret within Barclays, leaving a broad trail of evidence of the banks’ complicity,” Steve Berman, a lawyer for the investor, said yesterday in a statement.
The investor, Karen Kalaway, was the principal of Riff-Raff Trading Inc. in the Chicago suburb of Inverness, Illinois. Her lawsuit seeks to represent all U.S.-based investors who bought or sold Euribor-related financial instruments from Jan. 1, 2005, to Dec. 31, 2009.
I thank West Virginia reader Elliot Simon for sending me this Bloomberg story that was posted on their website late last night...and the link is here.
Greece has dropped plans to ask for easier terms for its second bailout, after being warned the plea would be turned down, the country's finance minister said.
The country is "off-track" in carrying out structural changes demanded by lenders -- the European Commission, the International Monetary Fund and the European Central Bank -- Yannis Stournaras told reporters after a 50-minute meeting in Athens with the lenders, known as the troika.
"We can't ask for anything from our creditors before we get it back on course," said Stournaras, who was sworn in hours before the meeting.
"There is light at the end of the tunnel but it is a long tunnel," he separately told the Financial Times.
This UPI story was filed from Athens yesterday...and is Roy Stephens second offering of the day. The link is here.
Spanish and Italian borrowing costs soared back into the danger zone as traders bet that the policy action by central banks was inadequate defence against the continued political and financial chaos in the eurozone.
The yield on Spain’s benchmark 10-year bond rose above the 7pc bail-out level amid fears that opposition in Germany and Finland could crush the rescue plans agreed in Brussels last week.
The Finnish finance minister, Jutta Urpilainen, said her country was not prepared to keep the euro “at any cost.” She said the euro was “use for Finland”, one of the eurozone’s last remaining AAA-rated countries, but added: “Collective responsibility for other countries’ debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms.”
European stock markets fell sharply, the euro dropped to its lowest level for three and a half years against the pound, and the yield on Italian 10-year bonds rose to 6.25pc, despite the move by the European Central Bank, the Bank of England, and the Bank of China to pump liquidity into their economies.
This story was posted on the telegraph.co.uk Internet site late yesterday afternoon BST...and is also courtesy of Roy Stephens. The link is here.
Europe is now in the third year of its sovereign debt crisis and the prospect of a breakup of the single currency no longer seems as far fetched as it once did. But from the perspective of most Germans, the euro crisis is still something that mainly affects other countries, namely Greece, Spain, Portugal, Italy, Ireland and now Cyprus.
But although the German economy has shown itself to be surprisingly robust, with unemployment falling and tax yields rising, Germany will not be able to withstand the negative trend in the euro zone for ever. "The crisis in the euro zone is catching up with the German economy," commented Ferdinand Fichtner, chief economist at the German Institute for Economic Research, earlier this week. Indeed, the institute has just dropped its growth forecast for the German economy for 2013 from 2.4 percent to just under 2 percent.
Now, a new survey conducted on behalf of SPIEGEL ONLINE shows that Germans are worried about the crisis and the response by the German government. Their main concern appears to be inflation, with 69 percent of respondents saying that the prospect of significant price increases was a serious concern for them. Only 30 percent said they were not worried, while 1 percent had no clear opinion on the matter. Inflation is a hot-button issue in Germany because of memories of the hyperinflation of the inter-war years.
This story was posted on the German website spiegel.de yesterday...and is Roy's fourth offering in today's column. The link is here.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and BlackRock Inc. closed European money market funds to new investments after the ECB lowered deposit rates to zero.
JPMorgan, the world’s biggest provider of money-market funds, won’t accept new cash in five euro-denominated money- market and liquidity funds because the rate cut may result in losses for investors, the company said in a notice to shareholders. Goldman Sachs won’t accept new money in its GS Euro Government Liquid Reserves Fund, and BlackRock, the world’s largest asset manager, is restricting deposits in two European funds.
“The European market environment is in uncharted territory with such historically low -- or even negative -- yields for high-quality issuance,” Goldman Sachs said in a memo to fund shareholders, citing the ECB’s rate cut. “It is not currently feasible for our portfolio managers to deploy capital without substantially diluting the yield for the existing base of shareholders.”
This Bloomberg story from late yesterday morning was sent to me by Casey Research's own John Grandits...and the link is here.
The European Central Bank is almost out of conventional policy options and will have to turn to measures it finds deeply unpalatable if the euro zone crisis intensifies, or watch the bloc slide towards the abyss.
By cutting its main interest rate by a 1/4 point to a record low 0.75 percent on Thursday and reducing the rate it pays on overnight deposits to zero, the ECB has almost exhausted its normal ammunition. Beyond that are only options it dislikes.
Some economists expect another cut in the main interest rate to 0.5 percent but after that the ECB must essentially employ its balance sheet to help the euro zone economy.
That means buying government bonds — an option opposed by Germany's Bundesbank, the ECB's biggest stakeholder — or else offering more cheap loans and exposing the bank to risks that many of its policymakers already find worryingly high.
This CNBC story was posted on their website yesterday morning...and I thank Elliot Simon for sharing it with us. The link is here.
As per usual, Nigel doesn't pull any punches...and this King World News blog from yesterday is certainly worth reading. The link is here.
The Vatican scandal over shady bank accounts and millions in suspect transfers began shortly before sunrise on June 5 on Via Giuseppe Verdi, a picturesque street in the old part of Piacenza, a town in northeastern Italy. An elderly gentleman in a tailor-made suit had just left his house with a leather briefcase dangling from his right hand. He was on his way to his car.
It was to be an important day for Ettore Gotti Tedeschi, who had recently been fired as the head of the Vatican bank -- even if it turned out differently than he'd expected.
Tedeschi was planning to go to the Vatican on that morning, but he never got there. The 67-year-old banker missed the high-speed train to Rome, meaning he couldn't, as he had planned, get into a taxi at the Italian capital's central station for the short journey across the Tiber River to the Vatican. There, he had hoped to take the documents out of his briefcase and hand them over to a confidant of the pope.
Instead, Gotti Tedeschi found four men waiting for him in the street -- not a hit squad as he feared at first, but investigators with the Carabinieri, Italy's national military police force. Even before he reached his car, they presented him with a search warrant and escorted him back to his house. For several hours, they searched through his sparsely furnished, cloister-like home office. At the same time, other officers were searching through Gotti Tedeschi's office in Milan. Among the objects they confiscated were two computers, two cabinets' full of binders, a planner and his briefcase.
The investigators were pleased. While they made but little headway in their corruption investigation involving a client of a company Gotti Tedeschi had once headed, an Italian subsidiary of the Spanish banking giant Santander, they stumbled upon something else in there search which proved to be spectacular.
Somebody is going to make a movie out of this some day...and I'll be one of the first in line to see it. They say that truth is stranger than fiction...well, that's certainly the case here. This 2-page essay was posted on the spiegel.de website on July 2nd...and is perfect weekend reading material. It's a must read for sure...and I thank Washington state reader S.A. for bringing it to our attention. The link is here.
The details of the decision which will be released in a communiqué from the monetary authority is a step further in the so called “dollar clamp” which the administration of President Cristina Fernandez has been implementing since last year to compensate for the scarcity of dollars and her pledge to repay all bonds maturing this year in “US dollars”.
Central bank sources however pointed out that the measure is not extensive to long term deposits or current accounts in foreign currency. The latest move banning the purchase of dollars for savings is an “indefinite suspension”.
The Argentine tax revenue office or AFIP will continue with the current system of allowing dollar purchases by importers and for other purposes following on specific requests. In reality since last June 14, it was impossible to legally purchase US dollars for savings since no authorizations were granted.
This story was posted on the mercopress.com website on Thursday...and I thank Casey Research's Louis James for bringing it to my attention...and now to yours. The link is here.
China on Thursday cut interest rates for the second time in a month, a surprise move that analysts said may indicate the world's second-biggest economy was slowing more quickly than expected.
The changes, which take effect from Friday, will see the benchmark one-year lending rate drop by 0.31 percentage points and the deposit rate fall by 0.25 percentage points, the central bank said in a statement on its website.
The cut will effectively adjust the one-year deposit rate to 3.0 percent and the one-year loan rate to 6.0 percent, the bank said.
The central bank did not immediately provide a reason for the rate cut, but analysts said China's economic planners may have acted after analysing data for the second quarter that is due to be released next week.
This AFP story was picked up by the news.yahoo.com Internet site on Thursday...and is another item I stole from yesterday's King Report. The link is here.
Let's start with a bomb. Over 10 days ago a new brand of coup d'etat took place in Paraguay against elected president Fernando Lugo. It was virtually unnoticed by global corporate media.
Anything unexpected? Not really. A March 2009 cable from the US Embassy in Asuncion, revealed by WikiLeaks, had already detailed how oligarchs in Paraguay were busy devising a "democratic coup" in congress to depose Lugo.
At the time, the US embassy noted political conditions were not ideal for a coup. Key among the plotters was former president Nicanor Duarte (2003 to 2008), severely bashed by progressive South American governments for having allowed US Special Forces in Paraguayan soil to conduct "educational courses", "domestic peacekeeping operations" and "counter-terrorism training".
This US Special Forces drive was happening decades after "one of our bastards", notorious dictator-general Alfredo Stroessner (in power from 1954 to 1989) had allowed the set up of a giant US-owned semi-clandestine landing strip near the Argentina-Brazil-Paraguay Triple Border - later to become part of the war on drugs, and then the war on terror.
So it's a no-brainer which was the first government to recognize last Friday's coup plotters in Paraguay: the United States of America.
The American Empire is still at it. Uncle Sam does 'the dirty' to another hapless South American regime. I thank Roy Stephens for sending me this weekend reading material earlier this week. It's posted over at the Asia Times Internet site...and I consider it well worth reading. The link is here.
Spooked by China's persistent assertiveness in confronting its Asian neighbors at sea, Japan and Russia are beginning to seek rapprochement to promote cooperation on security and economics in East Asia.
Despite little progress on a decades-old territorial dispute, the two nations aim to achieve closer military cooperation to counter China's naval expansion. They are also accelerating bilateral moves to strengthen ties based on economic and energy pragmatism.
Russo-Japanese relations deteriorated to the lowest point in decades after Dmitry Medvedev, then Russia's president, visited Kunashiri Island, one of the four disputed islands, in November 2010, triggering fierce protests from Tokyo. He became the first Russian president to dare to do so. At that time, many Japanese saw populist Medvedev as taking advantage of the Sino-Japanese confrontation over the Senkaku Islands, also referred to as the Diaoyu Islands in China. He appeared to have preyed on the weakness of Japan's diplomatic muscle.
The nagging territorial dispute has prevented Japan and Russia from concluding a postwar peace treaty. The area at issue, called the Southern Kurils by the Russians and the Northern Territories by the Japanese, consist of three islands - Kunashiri, Etorofu and Shikotan - and the uninhabited Habomai group of islets. The Soviet Union seized the islands a few weeks after Japan's surrender in World War II on August 15, 1945. The islands are believed to be rich in natural resources, such as oil and gas, and the area is a major fishing ground.
This is another story from the Asia Times earlier this week...and a must read for any student of the 'New Great Game'. It's Roy Stephens final offering in Saturday's column...and the link is here.
The lure of gold in India is an age-old phenomenon. Stringent legal or physical measures to curtail the appetite for gold did not succeed in the 40 years after Independence; they only encouraged smuggled imports at a very high cost.
Ultimately, gold policy was liberalised in the reforms period, starting in the 1990s.
A spate of measures was introduced to wean away households from putting their financial savings into gold, so as to conserve foreign exchange and increase the use of paper-based financial products. But these have not led to the goal of curtailing gold consumption and imports.
In the recent past, measures such as hiking import duty, dissuading banks from dealing in gold, and discouraging non-bank financial companies from extending their gold loan portfolio have been tried. But if experience is to offer any lessons, such efforts will be in vain.
Here's a must read story that was posted on thehindubusinessline.com website...and is embedded in this GATA release. The link is here.
This King World News blog was posted in the wee hours of this morning...and just made it in the door before I hit the 'send' button. I haven't read it yet, but when John Hathaway is talking, everyone in the gold world should be listening. The link is here.
"Anyone who does not see today's gold market as a rig is blind or brain-dead," mining entrepreneur, market analyst, and gold trader Jim Sinclair writes on Friday. "All the lying and conniving mean only that the price will go higher. Just as Morgan's 'whale' could not fight the market, the cartel cannot fight gold as we have a flight away from all fiat currencies."
Jim's commentary is posted over at the jsmineset.com website...and is a must read as well. The link is here.
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The winds of recession are increasing in intensity across the globe. The grand fight between central bank debt monetization and the natural order of economic cleansing is about to enter a deeper, darker circle of hell. - Bill King, King Report...06 July 2012
Today's 'blast from the past' was completed in 1824...and is this composer's most famous work...and one of the most famous pieces in the entire classical music repetoire. This 4:55 minute presentation is in a flashmob setting with the participation of 100 people from the Vallès Symphony Orchestra, the Lieder, Amics de l'Òpera and Coral Belles Arts choirs.
Everyone knows this work...and I know you'll enjoy it. I was wrong, this is Roy Stephens final contribution for the day...and the link is here.
Well, as Jim Sinclair said, anyone who didn't recognize yesterday's [and Thursday's] price bashing in gold as a rig job "is either blind or brain-dead." Of course that goes for silver and the other precious metals as well. Sadly, there are still quite a few people who fall into that category...especially the silent co-conspirators in all of this...the large cap gold and silver mining companies. A lot of the smaller companies are well aware of what's going on, but even they won't speak up in public...and when one of them finally does develop the gonads big enough to do it, they don't do it very loudly. As my good friend John Embry has said over the years..."the mining companies are either ignorant, naïve, or complicit."...and he's disgusted with the whole lot of them.
The attempt by gold to break above its 50-day moving average was thoroughly crushed by JPMorgan et al. What they started on Thursday morning in London trading, they finished on Friday...just over 24 hours later...and where we go from here price wise, is anyone's guess. Here's the 6-month gold chart.
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Silver got within a dime or so of its 50-day moving average on a couple of occasions, but that was it...and here's the 6-month chart for that.
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How long we have to wait around in no-man's land is hard to say. We are in the 'summer doldrums' don't you know? Of course, dear reader, you know perfectly well that if the precious metals were left to their own devices, they would be priced many orders of magnitude higher than they are at the moment. Neither silver nor gold are anywhere near their inflation-adjusted price of thirty-plus years ago. Gold should be around $2,600 the ounce...and silver around $165 per troy ounce...and that's using the B.S. inflation figures from the U.S. government. John Williams over at shadowstats.com has some even more eye-watering numbers for gold and silver based on the true inflation rate, which I shan't mention here.
Anyway, that's all I have for today...which is more than enough. But before I hit the 'send' button on this column, I'd like to remind you one more time about the upcoming "Casey's Fall Summit - Navigating the Politicized Economy". It's being held over three days...September 7-9th at the Park Hyatt Aviara Resort in Carlsbad, California. It's being co-sponsored by my good friend Eric Sprott...and it will be well worth attending...and like every other Casey Research summit, it will sell out quickly. You can find out more by clicking here.
Enjoy what's left of this weekend...and I'll see you on Tuesday.