Gold rose and fell in Far East trading on Wednesday...and by the time that London opened at 8:00 a.m. BST, the gold price was back to unchanged from Tuesday's close in New York.
Then the price popped about five bucks at the London open...and slowly worked its way higher from there. Another rally of some size began early in the London afternoon, about ten minutes before the 8:20 a.m. Comex open...and that lasted until 8:45 a.m. Eastern. From there it got sold down until a few minutes after 10:30 a.m. in New York.
Then away it went to the upside once again, with the high of the day [$1,612.10 spot] coming shortly before the close of Comex trading. From that high, the gold price got sold off about seven or eight bucks by 3:30 p.m...and then traded flat into the close.
Gold finished the Wednesday session above the $1,600 mark at $1,604.80 spot...up $23.70...but it was up over $30 at one point. Gross volume was pretty big, but once all the roll-overs and spreads were subtracted, the net volume was only around 139,000 contracts.
Silver's price path was virtually identical, with the inflection points coming at the same times as gold. The only difference was minor. Silver's high tick of the day [$27.68 spot] came a few minutes after the Comex close...and from there the silver price gave back some its gains going into the close of electronic trading.
Silver's low, around $26.80 spot, came at the 8:00 a.m. BST open.
Silver closed at $27.34 spot...up the magnificent sum of 38 cents. At its high, silver was up 68 cents. Net volume was a surprisingly low...around 36,000 contracts...and that's if the CME's volume numbers can be believed...and if my calculations based on those numbers are correct.
The dollar index hit the 84.05 mark for the second time in about twelve hours, with the second time occurring just a few minutes before London began to trade at 8:00 a.m. local time. It was mostly down hill from there...with a slight bounce in mid-morning trading in New York...and then the index fell to its low of the day around 3:00 p.m. Eastern....and closed around 83.63, a decline of about 37 basis points from Tuesday's close.
If you can find much co-relation between the dollar index and the precious metals prices yesterday, I'd love to hear from you. It was obviously other news that was driving the precious metal markets yesterday.
The gold stocks gapped up at the open...and then pretty much traded sideways until around noon in New York. From that point a rally developed that peaked out shortly before 2:30 p.m. Eastern time...and then they got sold off about 1.5 percentage points going into the 4:00 p.m. New York close. The HUI finished up a healthy 3.05%.
The silver stocks were on a tear, although there were a few red arrows here and there. There were some impressive percentage gainers in the junior producers...and the odd large cap producers as well. Nick Laird's Silver Sentiment Index closed up 4.18%.
(Click on image to enlarge)
The CME's Daily Delivery Report was a little more exciting yesterday, as 7 gold and 118 silver contracts were posted for delivery on Friday. It came as no surprise to me that the big short/issuer was Jefferies...and the big long/stoppers were the Bank of Nova Scotia ...RJ O'Brien ...and JPMorgan with 10 contracts. The link to yesterday's Issuers and Stoppers Report is here.
There was another withdrawal from GLD yesterday. This time it was 67,904 troy ounces. There were no reported changes in SLV.
The U.S. Mint had a semi-decent sales report yesterday. They sold 2,000 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 200,000 silver eagles.
Over at the Comex-approved depositories on Tuesday, they received a tiny 3,128 troy ounces of silver...and shipped 670,704 troy ounces of the stuff out the door. The link to that action is here.
Gold rings in a Seoul, South Korea jewellery store.
I have the usual number of stories today...and I hope you have the time to read the ones that are of the most interest to you.
Sales of new U.S. homes unexpectedly dropped in June from a two-year high, a sign the market is being held back by a lack of inventory after builders curtailed projects.
Purchases fell 8.4 percent to a 350,000 annual rate, the weakest since January, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 74 economists was 372,000. The decline was led by a record plunge in the Northeast, where the number of properties available last month was the fewest for any June.
“There’s one down month, but I think we’re still in an uptrend,” said Bob Baur, chief global economist at Principal Global Investors in Des Moines, Iowa. “Housing has clearly bottomed.”
What are these guys smoking...or are they dreaming in Technicolor? This Bloomberg story was posted on their Internet site early yesterday afternoon...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
As Britain tanks by 0.7pc in the second quarter (much worse than Spain at 0.4pc), it is worth keeping a close eye on the very ominous turn of events in the US.
The Richmond Fed's twin indices of manufacturing and services – a very good indicator at the onset of the Great Recession – collapsed this month.
They are now falling at a steeper pace than in early 2008. Current activity in manufacturing fell 16 points from -1 to -17. That is a major shock.
This Ambrose Evans-Pritchard blog was posted on The Telegraph's website late last night...and is a must read in my opinion. The charts alone are worth the trip. I thank Roy Stephens for his first offering of the day...and the link is here.
In their 1998 megamerger, Citicorp and Travelers Group execs clinked flutes over the advent of the financial supermarket: one-stop shopping for investment banking, certificates of deposit, proprietary trading, and the subprime falafel that wound up poisoning the entire economy. Sanford “Sandy” Weill, the architect of that deal, went on to have a hellish decade. In 2002, his name featured prominently in Eliot Spitzer’s conflicted equity-research investigations. Weill stepped down as Citigroup’s chief executive officer a year later and relinquished his chairman title in 2006. By 2008 and 2009, with his collapsed supermarket having received more government bailout money than any other bank, Weill became above all a cautionary tale of hubris that led to the meltdown. (Time magazine named him one of the 25 people to blame for the financial crisis.)
On Wednesday morning, the 79-year-old Weill, one of the 20th century’s most acquisitive bankers, stepped up to the microphone to endorse … breaking up the banks. “What we should probably do is go split up investment banking from banking, have banks be deposit-takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” he remarked on CNBC.
This story showed up on the businessweek.com website yesterday...and I thank Washington state reader S.A. for finding it for us. The link is here.
Applauding U.S. Rep. Ron Paul for having gotten the House of Representatives to pass legislation for a full audit of the Federal Reserve, the New York Sun had this to say last night:
"What is shaping up is a historic opportunity for the Congress to open up the question of the Fed, the whole question of the dollar, on the eve of the centenary of a central bank on whose watch the dollar has lost nearly all of its value. The audit isn't the only process through which Congress is starting to assert its monetary powers in the Constitution. Congressman Kevin Brady has a bill, the Sound Dollar Act, that would, among other things, repeal the misguided Humphrey-Hawkins Act, which requires the Fed to conduct monetary policy with an eye to employment and return it to a goal of price stability. Congressman Paul himself is pressing the Free Competition in Currencies Act, which would end legal tender and permit the introduction of privately issued money. Auditing the Fed, though, is the right place to start, so the Congress and the voters can get a true picture of where we stand at the end of a century in which the Fed had its way."
The Sun's editorial is headlined "Ron Paul's Triumph"...and I stole this story from a GATA release yesterday evening....and the link is here.
Interviewed by Lars Schall for Matterhorn Asset Management's GoldSwitzerland Internet site, former Assistant Treasury Secretary Paul Craig Roberts says the Federal Reserve is probably manipulating gold and silver prices to prevent them from further undermining the value of the dollar while the Fed does so itself with its policy of zero interest rates. The interview with Roberts is headlined "All Investment Avenues Are Rigged"...and I borrowed the headline and the introduction from a GATA release as well. The link is here.
This week, Alex Daley of Casey Research interviewed former U.S. budget director David Stockman...and gets him to remark that Federal Reserve intervention has destroyed the money and capital markets.
The interview is posted at the caseyresearch.com Internet site...and it's a must watch. The link is here.
The top lawyer appointed by Barclays to investigate the culture of scandal-hit Barclays bank has set up an email account to hear complaints from staff and customers first hand.
Anthony Salz, the former head of Freshfields law firm, has been given nine months to complete his review which will be wide-ranging and cover every part of the bank, from the investment bank to the high street operations.
He has also secured assurances from the bank that his review will be published, as he called for evidence from any interest parties via the email address: SalzReview@barclays.com.
Salz, who sits on the Scott Trust, owner of the Guardian, will continue his role as executive vice chairman at the investment bank Rothschild. He will report to the deputy chairman Sir Michael Rake, who continues to chair easyJet and BT, but has pulled out of the race to replace Marcus Agius as chairman after he resigned in the wake of the record-breaking £290m fine for attempting to manipulate Libor.
Looking at this man's pedigree, you have to wonder if this will all get swept under the rug. U.K. reader Tariq Khan, who sent me this story, feels that's what will happen...and it's hard to disagree with his logic. This story was posted on the guardian.co.uk website early on Tuesday evening...and the link is here.
German Finance Minister Wolfgang Schäuble is battling domestic opposition to rescue a planned tax treaty with Switzerland that could mean billions in additional revenues for Germany. Meanwhile, many tax evaders are moving their money from Switzerland to Singapore and Shanghai.
Time is running out for both tax evaders and investigators, with just 162 days left before a new tax agreement between Switzerland and Germany is scheduled to come into effect on Jan. 1, 2013. That leaves just a little more time for German tax dodgers to squirrel away their undeclared income somewhere else, and just a little more time in which the country's tax investigators can purchase CDs of bank customer data, and make any tax cheats they find pay up.
Both sides, in fact, would rather the new tax treaty never came into effect at all. Then everyone could simply go on as they did before, both the persistent investigators and their slippery prey.
In fact, precisely that scenario might come to pass. A debate has arisen in Germany over the past two years concerning fairness in taxes in this age of digital data records that can be copied in an instant and turned into commodities. Whether the bilateral agreement will indeed come into effect is more uncertain now than ever.
This rather interesting read showed up on the German website spiegel.de yesterday...and I thank Roy Stephens for sending it. The link is here.
The beleaguered country will have to refinance billions of euros worth of government bonds in less than a month and requires international assistance — which may not be forthcoming — to repay the money.
International inspectors arrived back in Greece on Tuesday to assess the country’s austerity programme with European officials warning that it was “hugely off track”.
David Cameron is now receiving daily written updates on the deteriorating situation and was warned earlier this week that a Greek bankruptcy in the next month is now a serious possibility.
This story showed up on the telegraph.co.uk Internet site late on Tuesday evening...and I thank Scott Pluschau for sending it. The link is here.
The euro crisis has returned with a vengeance this week, with Greece potentially facing bankruptcy, Spain teetering towards a bailout and even Germany at risk of losing its top credit rating. A group of prominent economists are calling for a radical restructuring of Europe and the euro zone to prevent a disaster of "incalculable proportions."
"We believe that as of July 2012, Europe is sleepwalking toward a disaster of incalculable proportions," the New York-based Institute for New Economic Thinking (INET) stated in a report warning leaders they need to move faster and more decisively to save the common currency. Otherwise it could very well disintegrate.
The study's publication on Tuesday couldn't be any timelier, given the recent dramatic developments in the euro crisis. Greece's recession is proving to be far worse than previously expected, it is getting tougher for Spain to raise money on the markets (on Tuesday, interest rates on 10-year Spanish bonds rose to an unsustainable 7.6 percent) and Germany's top triple-A rating is also at risk.
These 'distinguished' gentlemen have a keen grasp of the obvious. This story was posted on the spiegel.de website yesterday...and is Roy Stephens last offering in today's column. The link is here.
The first blog is with Gerald Celente...and it's headlined "Gold & The Greatest Bank Robbery In History". The second is with Jean-Marie Eveillard. It's entitled "Gold Shorts Getting Torched, Don't Lose Your Position". And lastly is this blog with John Hathaway...and it's headlined "Hathaway Predicts Gold Will Now Move Substantially Higher". The Hathaway blog is a must read.
Gold - and perhaps silver which tends to move in parallel with gold - may provide the answer. It is inbuilt into the psyche from one's mother's knee, even in the West, as THE medium of value which people strive to own and control, which is why its price movements generate so much media coverage, despite there being plenty of other investments which are just as, if not more, volatile. Gold stars and gold medals- all denoting the very top in value or achievement are part and parcel of our everyday lives. We are brought up on childhood fairy tales, many of which revolve around gold and its value and tales of pirate and goblin, or leprechaun if you're Irish, gold and silver. There are so many instances where gold as a store of wealth is being hard-wired into our brains. And perhaps rightly so.
The ‘gold is in a bubble' merchants reckon that gold has already had its day, but in this writer's view gold's day is yet to come this year, next year, sometime - but definitely not never! And every increase in sovereign debt brings this time closer. It's a question of how long governments can keep on muddling through by printing more and more money, thus debasing their currencies, and keep the populace on side, as to when this day will actually come. When it does come some respected observers think that gold price growth could be explosive, but in reality one hopes not too much so as this would truly signal global financial Armageddon has arrived. Let's hope and pray some of the prophets of doom have miscalculated, and by some miraculous means we are all guided into a soft landing. But prayer may not be enough.
This most excellent article was written by Mineweb's General Manager and Editorial Director, Lawrence Williams...and was posted on their Internet site in the wee hours of yesterday morning...and I just didn't have the room for it in Tuesday's column, so here it is now. I thank reader Donald Sinclair for digging it up on our behalf...and the link to this must read essay is here.
GoldMoney's Alasdair Macleod this week interviews Cheviot Asset Management's Ned Naylor-Leyland about the financial markets and elicits concurrence that central banks are likely intervening surreptitiously in the gold market just as they're always intervening in the currency markets. The interview is 22 minutes long and I borrowed the headline and Chris Powell's introduction. It's posted at the GoldMoney Internet site...and the link is here.
In a post-LIBOR world, it becomes very difficult for reasoned and well-informed individuals to argue that powerful bankers won't periodically lie, cheat, or deceive where they perceive an opportunity and a motive to do so. This was, in my view, the key takeaway from that still-emerging scandal.
This applies to central bankers as well as those of the too-big-to fail variety. Former Vice Chairman of the Federal Reserve Alan Blinder could not have been much clearer when he conceded: "The last duty of a central banker is to tell the public the truth."
Similarly, a regrettable subset of our storied financial history reminds us that government officials at all levels, elected or otherwise, are prone to absconding or misrepresenting the truth as it pertains to important economic or monetary matters. When Richard Nixon severed the convertibility of the U.S. dollar to gold in 1971, he presented the move as a "temporary" emergency measure. I hope nobody out there believes Nixon ever intended to restore gold's link to the dollar after revoking it.
This story was written by Christopher Barker...and posted over at the Motley Fool website on Tuesday...and the link is here.
Hong Kong’s largest gold-storage facility, which can hold about 22 percent of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global Ltd.
The facility, located on the ground floor of a building within the international airport compound, has capacity for 1,000 metric tons, said Joshua Rotbart, general manager for the Hong Kong-based company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds, jewelry, fine art and precious metals, said Rotbart.
“Hong Kong is a very important center for gold, especially because it acts as a doorway to China,” said Sunil Kashyap, head of Asia-Pacific foreign exchange and precious metals at Scotiabank. “Current international hubs are in New York, Zurich and London. There’s still a need to set up an Asian hub for physical gold. The trend is for more people to look at storage and trading in Asia, when it comes to physical metal.”
This Bloomberg story was filed from Singapore early on their Thursday morning...and I thank West Virginia reader Elliot Simon for being the first one through the door with it. It's very much worth the read...and the link is here.
Aben Resources (TSX.V: ABN) is a Canadian gold and silver exploration company with a focus on developing properties in the Yukon. The Company's flagship project is its 100% owned Justin Gold Project located 35 kilometres southeast of the Cantung Mine and has an all season road running through its claims. A phase one drill program was carried out in 2011 on the 18,314 acre Justin Project in which a significant new greenfields gold discovery was made at the property’s POW Zone. The Company intercepted 60 metres of 1.19 g/t gold in hole JN11009 at a vertical depth of 113 metres. Additionally, a new high grade silver-copper zone was discovered at the Kangas Zone with hole JN11003 returning 1.07 metres of 7320 g/t silver (234 oz/ton) and 3.52% copper near surface. As a result of these discoveries on the Justin Project, Aben acquired 14,274 additional acres of mineral tenure in the immediate vicinity of the project to facilitate a more aggressive work program this upcoming season. The Company has four other prospective Yukon and NWT projects in its portfolio along with a seasoned management and geological team. Aben’s chairman, Ron Netolitzky, is credited with exploration success on numerous properties including three Western Canadian gold and silver projects which became producing mines. Please visit our website to learn more about the company and request information.
The desire of gold is not for gold. It is for the means of freedom and benefit. ~ Ralph Waldo Emerson
Well, I was certainly happy with what I saw on my computer screen when I finally crawled out of bed late yesterday morning. But a twenty-four dollar rally in gold...and 38 cents in silver...does not make my heart beat a lot faster. However, it is better than the alternative...and I was delighted with the share price action as well.
Gold broke through, and closed above, both the $1,600 price mark...and it's 50-day moving average. With both those barriers swept away, we await further developments.
(Click on image to enlarge)
I'd certainly like to fall into the John Hathaway frame of mind in his blog posted above...and we're all praying that he'll be right...including your humble scribe.
But after twelve years of cheerleading every gold and silver rally that we've seen come through the door, I'm far more cautious these days...especially since May 1, 2011. Ted Butler has finally got to me on this, because as wonderful as it is to watch prices rise, I now always ask myself this question...who is taking the short side of the Comex futures contracts that are being purchased? I watch the CME volume numbers and the Commitment of Traders Report like a hawk hoping that the long-term pattern will finally change. So far it hasn't...and I saw few signs of it yesterday, either. There may have been some short covering, but it's hard to tell...and yesterday's volume data won't be in tomorrow' Commitment of Traders Report.
With JPMorgan et al having a short-side corner on the precious metal markets, it's always them that's taking the short side of most of these long contracts being purchased by the technical funds...as there are no legitimate short sellers left out there. Anyone with a brain wants to be long the PM market at this juncture...and even the remainder of the traders in the Commercial category of the Commitment of Traders Report in gold and silver would be shown to be net long if the 'big 8' weren't around.
I doubt very much that 'da boyz' will stand there with their hands in their pockets and let this market blow sky high, which is precisely what would happen if they stepped away from taking the short side and, heaven forbid, actually started to cover their outrageous short positions.
As GATA has pointed out over the years, what we are witnessing is a 'controlled' price retreat...and as Bill Buckler has pointed out every week for the last twenty-five years..."The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold."
Don't get me wrong, I'd love to see that very thing happen...and if it does, then you'll know the reason in advance.
After yesterday's excitement, mostly in New York, there's been absolutely no follow-through in either Far East or early London trading on Thursday...so we may have to wait until the 8:20 a.m. Comex open before we see any serious price action. Gold volume is all fumes and vapours at the moment...10:09 a.m. London time...and silver's volume number is nothing to write home about, either. On that basis, I wouldn't read too much into the current price activity as of 5:10 a.m. Eastern time. The dollar index is quiet as well.
The calm before the storm, perhaps?
That's all I have for today...and I'll see you here tomorrow.