The gold price didn't do much of anything through all of Far East, European and North American trading on Tuesday. But then about one minute before 2:00 p.m. Eastern time, the bid disappeared, sell stops were hit...and that, as they say, was that.
By the time the low was in [$1,637.90 spot] an hour later, the gold price was down very close to forty bucks from Monday's close. Gold gained back about nine bucks of its loses going into the close of electronic trading in New York...and finished at $1,645.80 spot...down $31.20 on the day. For such a big price move, net volume wasn't overly heavy...around 143,000 contracts.
The silver price on Tuesday was far more volatile...and far more interesting. The price hardly moved from the $33 spot price level all night long...but at 9:00 a.m. in London, about 20 cents got carved off the price.
The next rally of any substance began around 1:00 p.m. in London...about twenty minutes before the Comex open at 8:20 a.m. Eastern time. It was obvious from that point onward that the silver price really wanted to sail...but as you can tell from the saw-tooth price pattern during the Comex trading session, even the smallest price advance was running into 'resistance'...especially the vertical price spike that occurred just minutes before the Comex close. Then JPMorgan et al showed up at 2:00 p.m...and that was it for the day.
The high tick...$33.42 spot...came at 1:25 p.m. Eastern time. Sixty-five minutes later the low price tick was in at $32.40 spot. The silver price gained back 28 cents from that low, closing the New York electronic trading session at $32.68 spot...down only 31 cents on the day. Net volume was in the neighbourhood of 37,000 contracts.
The dollar index trading just under the 79.00 mark right up until a few minutes before 2:00 p.m. in New York. The index went vertical...and by the time the high of he day was in precisely sixty minutes later, the dollar index had gained just under 70 basis points. The index gave up a bit of those gains going into the New York close, but not a lot. When all was said and done, the dollar index was up a hair over 50 basis points yesterday, which is hardly a big move in the grand scheme of things.
Yesterday was another example of 'ramp the dollar/kill the precious metals'...as the both events began simultaneously...which is impossible in the real world. What happened yesterday was a mini version of the drive-by shooting on February 29th.
The gold stocks opened lower yesterday...and the share price action pretty much reflected the move in the gold price that began about one or two minutes before 2:00 p.m. Eastern time. At one point the HUI was down over four percent...but managed to reduce those loses going into the close. The HUI finished down 3.34%.
The silver stocks got it in the neck as well...and Nick Laird's Silver Sentiment Index closed down 3.15%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 313 gold and one lonely silver contract were posted for delivery on Thursday. In gold, the biggest short/issuers were the Bank of Nova Scotia and Goldman Sachs with 172 and 98 contracts respectively. The biggest long/stopper by far was JPMorgan with 165 contracts in its client accounts and 136 in its in-house trading account. The Issuers and Stoppers Report is linked here.
There were no reported changes in GLD yesterday...and there was a minor withdrawal from SLV...only 135,735 troy ounces, which I would guess was a fee payment of some type.
The U.S. Mint had a rather smallish sales report. They sold 2,000 one-ounce 24K gold buffaloes, along with 125,000 silver eagles.
After a busy Friday, there wasn't much activity over at the Comex-approved depositories on Monday. They didn't receive any silver...and shipped a smallish 109,320 troy ounces out the door.
I have fewer stories for you today, which I'm quite happy about.
Looking back over the latest few weeks of economy data, something stands out: Things are playing out almost 100% different than what people expected
The weekly retail data has been great. Today's number was one of the best in a year. We had a few dicey weeks right when the gas surged, but everything's hunky dory on this front.
On the other hand, the big stuff has not been good. Every single piece of recent housing data has been a miss...and then today, it came out that the March auto sales numbers dipped sharply from February. Also, construction numbers beyond housing have been poor.
So basically, the high-frequency consumer stuff has been fine, and the big money, investment stuff has backslid. We'd rather have it be the other way around.
This short Joe Weisenthal piece was posted over at the businessinsider.com website yesterday...and it's Roy Stephens first offering of the day. The link is here.
The Murtha Airport in Johnstown, Pennsylvania is a prime example of taxpayer spending that refuses to die. Representative John Murtha steered some 150 million of taxpayer dollars to this eponymous airport over the last decade and despite the fact he died more than a year ago, the money keeps on coming.
Three years ago, we first visited the tiny airport, and found a monument to pork barrel spending: An airport with a $7 million air traffic control tower, $14 million hanger, and $18 million runway big enough to land any airplane in North America. For most of the day, the only thing this airport doesn't have is airplanes.
This yahoo.com story was sent to me by reader 'Roger'. The video runs 3:28 minutes...and is worth your time. The link is here.
Legendary oil man T. Boone Pickens warns supply constraints could send oil prices back to all-time highs by this summer.
He argued that increased production from Saudi Arabia would not be able to offset the impact of tighter supplies caused by Iran sanctions.
This very short piece was posted over at the businessinsider.com website yesterday...and is Roy Stephens second offering of the day. The link is here.
Global Finance is publishing a sweet list of the world's top 50 safest banks in their April issue.
Rankings were determined by credit rating and balance sheet. Only major institutions qualified.
Main takeaway: American banks are really not safe at all, at least compared to their global peers.
Not a single U.S. bank figured in the top 20...and just five are in the top 50.
This is another businessinsider.com story from yesterday...and another Roy Stephens offering as well. It's a one-minute read...and it's worth it. The link is here.
This is the shortest item I've ever posted. It contains two graphs...and two sentences containing 14 words in total.
The sentence that accompanies the first graph reads "What you see with one-minute bars." The second graph is accompanied by a sentence that reads "What the algos see in 9.5 seconds."
This is computer-driven trading...another name for high-frequency trading. Both charts are worth a minute of your time...and expand them to full-screen size for maximum effect...especially the second one.
This zerohedge.com piece was sent to me by reader U.D. yesterday and is a must read. The link is here.
So here it is again, clean, simple, precise...and so easy it can be printed out and pinned to one's wall - the chart below from Citi's Matt King puts everything in its proper perspective (if in a slightly optimistic light).
The first two columns show the "impact" of Lehman and the Greek PSI - i.e., the amount of debt that was eliminated. These two tiny bars are what nearly caused the end of Western civilization (per Hank Paulson), and led Europe on a two year voyage to preemptively offload Greek exposure to European (and American) taxpayers.
That's the good news.
The bad news is the column on the far right. This is the amount of debt that in Citi's estimate, has to be "reduced" across the four major developed markets for the world to return to a sustainable debt level. That's right: $30,000,000,000,000. By 2016. And after that it just gets even more parabolic.
This zerohedge.com piece was sent to me by Australian reader Wesley Legrand. Not only is it a must read, but I suggest you read it very, very carefully as well. The chart tells all...$30 Trillion worth. The link is here.
“People that are assuming it (QE) is off the table based on these minutes are wrong. I would really fade this trade. I don’t see why gold would be getting crushed based on these minutes. I looked at the minutes and yes, the Fed didn’t come right out and say QE3 is coming. They are not going to do that. They are never going to do that.”
"They know that complicates what they are trying to do. The Fed is trying to stimulate the economy with inflation, without letting people know there is inflation. It would complicate this charade if they were to telegraph their intentions because that would make prices rise even faster."
This blog was posted over at the King World News website yesterday...and the link is here.
This past Sunday I had the good fortune to be interviewed by Dr. Dave Janda over at WAAM 1600 all-talk radio out of Ann Arbor, Michigan. The interview runs about twenty-five minutes...and it's posted over at the davejanda.com website. The link is here.
Unemployment in the euro zone reached its highest level in almost 15 years in February, with more than 17 million people out of work, and economists said they expected job office queues to grow even longer later this year.
Joblessness in the 17-nation currency zone rose to 10.8 percent - in line with a Reuters poll of economists - and 0.1 points worse than in January, Eurostat said on Monday.
This Reuters story was filed from Brussels on Monday...and I 'borrowed' it from yesterday's King Report. The link is here.
Many German politicians and tax collectors are furious about Switzerland's decision to issue arrest warrants against three German officials who bought a stolen CD with tax data. The move has gone down well in Switzerland, where politicians have praised the country's assertiveness. But it is unclear how the Swiss authorities will proceed -- the main witness is dead.
I ran a similar story to this in yesterday's column, but this one is far more in-depth. Like yesterday's story on this issue...it, too, is posted over at the spiegel.de website...and is another Roy Stephens offering. The link is here.
Yesterday the finalists for the Wolfson Economics Prize were announced.
This year, the prize is offering £250,000 to whoever has the best idea for an orderly breakup of the Euro. There was also an honorable mention to 10-year old Jurre Hermans of the Netherlands.
I don't know about you, dear reader, but his solution probably makes as much sense as the rest of them.
This story really had some legs yesterday...and showed up in The Guardian, The Telegraph...and even The Wall Street Journal. This particular copy of the story, complete with drawings, was posted over at the businessinsider.com website yesterday...and I thank Roy once again for sending it. The link is here.
The first story is headlined "Uruguay willing to trade rice for Iranian oil". The second bears the title "Japan refiners decide to continue buying Iran oil"...and the last story is headlined "Gilani renews commitment to Iran pipeline". All of these stories are worth skimming...and all are courtesy of Roy Stephens
Prime Minister Wen Jiabao of China said on Tuesday that the nation’s biggest state-run banks have too much power and ought to be broken up because they earn far too much money.
The remarks, delivered during a national radio address while the prime minister was traveling in southern China, were unusually bold and appeared to be a direct challenge to others in the nation’s Communist Party leadership to speed up reforms of the nation’s financial system.
According to China National Radio, Mr. Wen said: “Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital.”
This story, filed from Shanghai yesterday, was posted over on The New York Times website and is courtesy of reader Phil Barlett. The link is here.
Yesterday's pounding of gold amid the announcement of the Federal Reserve's minutes was "pure manipulation ... executed almost without camouflage," gold advocate and mining entrepreneur Jim Sinclair told King World News last night. But, as it is manipulation "against the tide of the market," Sinclair adds, it will fail as gold goes to $4,500. May we all live to see the day.
I thank Chris Powell for wordsmithing both the title and the introductory paragraph. Jim's comments are well worth reading...and the link to the KWN blog is here.
Pelangio Exploration Inc. (PX:TSX-V; PGXPF:OTC) announced the results of seven diamond drill holes totaling 1,574 metres from its ongoing drilling program at the Pokukrom East zone on the Manfo Property in Ghana. Highlights of the results included:
· 1.19 g/t gold over 113 metres, including 9.05 g/t gold over 7 metres;
The results continued to confirm a higher grade, shallow north plunging core of Pokukrom East zone with an open plunge of 600 metres from near surface in previously reported hole SPDD-088 (7.01 g/t gold over 19 metres) to 210 metres depth in the holes reported this week. Warren Bates, Senior Vice President Exploration, commented: “These are our best holes on the Manfo Property to date. These holes represent the north-plunging core of higher grade mineralization at Pokukrom East, now demonstrating an open plunge length of 600 metres.” Please visit our website to learn more about the project and request additional information.
Well, I can't add too much to what Jim Sinclair had to say yesterday. If you honestly believe that what was in the minutes of that meeting had anything remotely to do with the hit on the metals yesterday, then I have a bridge that I can sell you.
With gold, silver, platinum and copper all shows signs of a break-out to the upside, JPMorgan et al showed up in force to crush these rallies in their tracks. This was especially easy to see in silver.
As I said at the top of this column, every rally attempt in silver during the New York trading session got hit before it could go anywhere. And the big smack came at 2:00 p.m...which was half an hour after the cut-off for this Friday's Commitment of Traders Report. Coincidence? I think not. As you know, they pull this stunt all the time.
In my daily conversation with Ted Butler yesterday, he was wondering out loud just how much technical fund long liquidation there was associated with that engineered price decline...as we were pretty much all cleaned out to the downside as it was...and the volumes in both gold and silver were not particularly high. If they'd cleaned out a lot of leveraged longs, the volume would have been significantly higher than it was.
And as Ted also pointed out, 'da boyz' are still in control of the metal markets...and show no signs of backing off at the moment. To quote a couple of sentences of what Ted had to say in this column yesterday..."Can the commercials still collusively rig prices lower? Of course, they can, but that will only make the set up better...Just make no mistake, this paper trading on the COMEX is the sole determinant of short term price movement. This is price setting, pure and simple. This is also about as far removed from the price discovery function of futures markets intended under commodity law as can be imagined."
When charges were brought against the Royal Bank of Canada on Monday, CFTC Enforcement Director David Meister had this to say..."Today's action should make clear that the CFTC will not hesitate to bring charges against even the most sophisticated market participants who unlawfully exploit the futures markets for their own gain."
Should one laugh...or should one cry?
As reader R.A. Lee, who sent me the above quote yesterday, said..."It gave me such a warm and fuzzy feeling, that I could barely contain myself."
That's one way of putting it.
In overnight trading it was easy to see that the high frequency traders were out and about early. Around 10:30 a.m. Hong Kong time, there was the smallest of spikes in the dollar index...and that resulted in a three dollar sell-off in gold...and almost 50 cents in silver. After that, gold and silver prices were comatose until the open of London trading...and then down went the prices again.
Volumes in both metals [as of 5:19 a.m. Eastern time] is significantly higher than this time yesterday. The dollar index is up a magnificent 22 basis points from Tuesday's New York close...and half of that was from that small spike in early Hong Kong trading.
As I hit the 'send' button, gold is down a hair over fifteen bucks from yesterday's close in New York...and silver is down almost 70 cents, and is now just below the $32 spot price mark.
Yep, as Ted Butler said..."this paper trading on the COMEX/GLOBEX is the sole determinant of short term price movement. This is price setting, pure and simple."
With JPMorgan et al stomping about this early in the trading day, I'm not overly optimistic about what might occur during the Comex session when it begins at 8:20 a.m. in New York.
I think I'll take the blue pill before I hit the sack.
See you on Thursday.