Gold blasted higher the moment that trading began in New York on Sunday night, but JPMorgan et al were lying in wait. Within four hours of the open, they had the gold price back under 'control'...but they had to throw a lot of paper at it to get the job done. Almost 20% of yesterday's net volume figure was expended during that time period, which is normally the quietest time of the trading day.
Not much happened in London trading...and both smallish rally attempts in the New York Comex session were turned back in the same old way.
Gold closed at $1,641.30 spot...up $10.20 on the day. The volume yesterday was exceedingly light...only about 69,000 contracts.
The silver price followed the same path as gold on Sunday night' New York open...straight up. It took about 10% of yesterday's net total volume in silver to put out that fire...which they did in four hours flat.
The price took off again shortly after 12 o'clock noon in London...which was twenty minutes before the Comex open in New York. By 8:40 a.m. Eastern, silver had gained about 70 cents...and hit its high of the day at $32.18 spot. It then took 'da boyz' about two and a half hours to take back all those gains, plus set the low price tick of the day, which was $31.51 spot.
The subsequent rally ran into a seller shortly before 3:00 p.m. in electronic trading, which once again took the silver price below Friday's closing price. But at 4:00 p.m. Eastern time, the seller vanished...and silver managed to struggle back into the plus column before the end of the Monday trading day.
Silver closed at $31.76 spot...up a nickel. Net volume was vanishingly small...about 22,000 contracts...and as I said a couple of paragraphs ago...10 percent of that came shortly after the New York open on Sunday night, which is a time of day [and week] where normally only a few hundred contracts trade...if that.
The dollar index made a couple of feeble attempts to break above the 80.00 level...but neither lasted for more than a few minutes...and the dollar index closed basically unchanged from Friday.
The gold stocks gapped up a bit...and then rallied a bit more...and then sold off a bit...and then traded sideways for the rest of the day. The HUI finished up 0.64%.
Most silver stocks got it in the neck again yesterday...and quite a few made new low prices for this move down. Nick Laird's Silver Sentiment Index closed down another 1.08%.
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The CME's Daily Delivery Report was very unexciting, as only 37 gold contracts were posted for delivery tomorrow.
There were no reported changes in either GLD or SLV.
The U.S. Mint had a small sales report. They sold 500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...along with 240,000 silver eagles.
There was a lot of activity over at the Comex-approved depositories on Thursday. They reported receiving 1,314,733 troy ounces of silver...and shipped 775,228 ounces out the door. For the second time in as many weeks, all five warehouses reported movement. The link to that action is here.
Silver analyst Ted Butler had an extensive commentary over the weekend...and a lot of it had to do with the JPMorgan interview on CNBC last week. Here are three free paragraphs...
"There is no doubt that this wasn’t a spontaneous event. The presentation wasn’t accidental. I’ve watched CNBC fairly religiously for as long as it has been in existence (but with the sound muted for much of the day) and the last firm recollection I have of any mention of a silver manipulation was more than three years ago, when Joe Kernan commented on The Wall Street Journal article on Sep 25, 2008 about a CFTC investigation into silver. I remember him joking about some new Hunt Bros. plot to drive prices higher. Never again have I heard the silver manipulation mentioned on that network. CNBC has never seriously broached the subject to my knowledge. So I was taken back when the reporter specifically asked about the allegations of manipulation in silver, as if they were widely recognized as common knowledge. I got a special kick out of the reference to all these allegations coming from the “blogosphere.” (As opposed to the mainstream media, I suppose).
"It would be safe to say that the interview tried to present JPMorgan as a contributor to worthy causes, who would never dream of manipulating silver and as a strong proponent of financial regulatory reform. All of JPMorgan’s positions in silver were claimed to be non-directional and only transacted to accommodate legitimate client hedging needs. To the typical CNBC viewer, who has little interest in silver to begin with, I would imagine that the segment appeared little more than a puff piece on an obscure topic. But I doubt that this was all that it was. There was an intent and purpose to this presentation, as many have already suggested. That’s what makes it so potentially significant.
"To my knowledge, this is the very first time that JPMorgan has openly acknowledged the allegations against it for manipulating the price of silver. Please think about that. It’s been more than three years, dozens of class-action lawsuits and a ton of reputational abuse (remember “sink JPM, buy a Silver Eagle”?) and this is JPMorgan’s first rebuttal? Years ago, I used to wait for process servers and Fed Ex-delivered cease and desist demands; but I had just about given up on JPMorgan ever responding since so much time had passed. Don’t get me wrong, I’m very glad not be sued; but I am a little underwhelmed with how JPM finally did respond. I can’t help but ask myself – why now and in this tepid a manner?"
You just know that JPMorgan et al's price fixing operation in silver has become blindingly obvious when the following question showed up in a crossword puzzle in a major daily newspaper in the Netherlands this past weekend....18 Across: "The price of this precious metal is kept artificially low by the business bank JP Morgan Chase." In Dutch that reads as follows..."De prijs van dit edelmetaal wordt kunstamtig laag gehouden do"or de zakenbank JP Morgan Chase."
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You can't make this stuff up! The 'click to enlarge' feature works wonders here...and I thank reader John Gillies for digging up this absolute gem on our behalf!
Too bad it's not as equally obvious to all the silver companies out there who keep throwing away our silver at $32 the ounce, when it should be priced at least five times that amount.
Being Tuesday, I have the usual plethora of stories for you today.
Negative surprises for the U.S. economy are mounting. The latest was the nonfarm payrolls report on Friday, but many worse-than-expected reports have been percolating to the surface in recent weeks in matters ranging from manufacturing output to home prices.
The Federal Reserve, to its credit, has been warning that employment in recent months was improving at a faster pace than the fundamentals merited. So what is its next move?
My expectation is that it will hit the gas, and hard, to lower real interest rates and improve liquidity despite recent protests from regional presidents."
It's many market observer's opinions [including mine] that sometime before summer is out, some form of QE3 will be on its way. This rather short marketwatch.com story is from yesterday...and I thank Florida reader Donna Badach for sending it. The link is here.
During the first few months of 2010 and 2011, America showed encouraging signs of robust economic growth. In both years, though, by the spring or early summer, hopes of the world’s biggest economy mounting a meaningful and sustainable recovery were snuffed out.
That’s why figures showing only a 120,000 rise in US employment in March, released on Friday, have sparked a wave of investor angst. This is the lowest payroll gain since the autumn and just half the previous month’s total. Are we to see a repeat of the “false start” pattern of 2010 and 2011? Surely, this number raises significant questions, again, about the strength of this US recovery.
This story was posted on the telegraph.co.uk website on Saturday...and is Roy Stephens first offering of the day. The link is here.
It's obvious that Mr. Williams is rather underwhelmed by Friday's employment numbers...and doesn't mince words in the King World News blog from yesterday. It's not overly long...and there are some great graphs. It's worth the read...and the link is here.
In the December 2011 testimony to Congress, when Jon Corzine was asked exactly who assured him that transfers were not from any customer funds, he answered: John Corzine: “explicit statements that we were using proper funds, both orally and in writing, to the best of my knowledge…The woman that I spoke to was a Ms. Edith O’Brien.”
With that...and within seconds, an obscure back office employee with the title of Assistant Treasurer, came to the center of what is emerging to be not only one of the largest bankruptcies in U.S. History, but one of the most momentous, as it reaches beyond the financial district of New York into the heartland and creep into the corners of regulatory offices and our judicial system. The growing web around the bankruptcy now brings uncertainty to the very foundations of regulation and judicial oversight in the United States.
And with those words, fiduciary culpability for taking client funds was squarely placed onto 46 year-old Edith O’Brien.
This zerohedge.com story was posted on their website last Friday...and I thank reader Phil Barlett for bringing it to my attention. The link is here.
JPMorgan Chase & Co. trader Bruno Iksil’s outsized bets in credit derivatives are drawing attention to a little-known division that invests the company’s reserves and fueling a debate over whether banks are taking excessive risks with federally insured and subsidized money.
Iksil’s influence in the market has spurred some counterparts to dub him Voldemort, after the Harry Potter villain. He works in London in the bank’s chief investment office, which has assembled traders from across Wall Street to its staff of 400 who help oversee $350 billion in investments. While the firm describes the unit’s main task as hedging risks and investing excess cash, four hedge-fund managers and dealers say the trades are big enough to move indexes and resemble proprietary bets, or wagers made with the bank’s own money.
The trades, first reported by Bloomberg News April 5, stirred debate among U.S. policy makers over the Easter-holiday weekend as they wrangle over this year’s implementation of the so-called Volcker rule, the portion of the Dodd-Frank Act that sets limits on risk-taking by banks with government backing. The law passed after the collapse of the subprime mortgage market triggered the worst financial crisis since the Great Depression.
This story was all over the Internet on the weekend. Who knows, maybe Bruno Iksil's name will show up in a crossword puzzle as well some day. I thank West Virginia reader Elliot Simon for bringing this rather longish Bloomberg story to our attention...and the link is here.
The shortfall in US labor union pension funds is huge and growing rapidly. The latest data, from 2009, from the PBGC showed that these multi-employer plans were 48% underfunded with $331bn of assets to support $686bn of liabilities - and it has hardly been a good ride for those asset values since then.
Critically, as the Financial Times noted yesterday, recent changes by FASB has enabled Credit Suisse to estimate shortfalls more accurately and it paints an ugly picture.
Yes, it certainly does. I thank reader Bob Fitzwilson for sharing this zerohedge.com piece from yesterday with us...and the link is here.
The Obama administration and its European allies plan to open new negotiations with Iran by demanding the immediate closing and ultimate dismantling of a recently completed nuclear facility deep under a mountain, according to American and European diplomats.
They are also calling for a halt in the production of uranium fuel that is considered just a few steps from bomb grade, and the shipment of existing stockpiles of that fuel out of the country, the diplomats said.
That negotiating position will be the opening move in what President Obama has called Iran’s “last chance” to resolve its nuclear confrontation with the United Nations and the West diplomatically. The hard-line approach would require the country’s military leadership to give up the Fordo enrichment plant outside the holy city of Qum, and with it a huge investment in the one facility that is most hardened against airstrikes.
This sounds very much like the "Hull Note" delivered to Japan on November 26, 1941...less than two weeks before the outbreak of hostilities on December 7, 1941 at Pearl Harbor. The Americans knew perfectly well that Japan could not live with this ultimatum...and that war would result. That was the plan...and it worked like a charm.
The above New York Times story from Saturday was something I dug out of yesterday's King Report...and the link is here.
Iran has slammed world powers for imposing preconditions ahead of Saturday’s nuclear talks. The foreign minister, Ali Akbar Salehi, stressed on Monday that “setting conditions before the meeting means drawing conclusions before negotiations.”
"None of the parties will accept conditions set before the talks," Iran’s PressTV quoted Ali Akbar Salehi as saying, adding that Salehi branded the demands as “completely meaningless.”
The US insists that Tehran should suspend uranium enrichment, which they consider just a few steps from weapons grade, according to leaked reports. Washington also wants Iran to close its underground nuclear facility at Fordo near the holy city of Qom.
This story was posted over at the Russia Times website late last night...and I thank Roy Stephens for sending it along. The link is here.
The first is headlined "Armenia calls for importing Iranian oil products". The second bears the title "India considering return to Iranian gas". And lastly is this story..."Maritime insurer warns over sanctions against Iran". All stories are courtesy of Roy Stephens.
Just as Washington took the unusual step recently of inviting members of the Egyptian Muslim Brotherhood for White House talks to try regain influence in Cairo, Egyptians followed recent gains by the Muslim Brotherhood in parliament to pursue Tehran as strategic partner instead of Washington.
Given the increasingly close cooperation between what could become an Egyptian government run by the Muslim Brotherhood, Washington also may be looking to the Brotherhood as a potential conduit of communications to Iran, a development that could be unsettling to Israel. Publicly, the U.S. is cautioning Egypt against growing ties with Iran, while recognizing the reality of the Brotherhood's possible ascension to leadership in Egypt.
This businessinsider.com story was posted on their website yesterday afternoon...and is another Roy Stephens offering. The link is here.
The Russian military anticipates that an attack will occur on Iran by the summer and has developed an action plan to move Russian troops through neighboring Georgia to stage in Armenia, which borders on the Islamic republic, according to informed Russian sources.
Dmitry Rogozin, who recently was the Russian ambassador to the North Atlantic Treaty Organization, or NATO, warned against an attack on Iran.
"Iran is our neighbor," Rogozin said. "If Iran is involved in any military action, it's a direct threat to our security." Rogozin now is the deputy Russian prime minister and is regarded as anti-Western. He oversees Russia's defense sector.
This is another businessinsider.com story from yesterday afternoon...and another Roy Stephens offering as well. The link is here.
The territorial dispute in the South China Sea between Vietnam, the Philippines, and China is far from over.
The three countries have been going back-and-forth over rights to supposed oil and gas reserves throughout the region, with Malaysia, Taiwan and Brunei also attempting to lay claim on the deposits.
There were hopes the issue would be brought closer to resolution during the recent Association of Southeast Asian Nations summit in Cambodia, but that get-together seems to have had exactly the opposite effect.
This is the third businessinsider.com story in a row. I thank Roy once again...and the link is here.
There are two very big issues that Japan is confronting; energy and taxes. Both of these issues will come to a head over the next sixty days. I don’t see a soft landing.
Fourteen months ago Japan had 54 operating nukes. Today it has one. By the end of May, it will have none. The Japanese press is discussing options such restarting the nukes, but many people want to shut them all down.
There are two significant consequences of the shutdowns: (A) soaring imports of expensive hydrocarbons (LNG, oil and coal), and (B) this summer, there will be as much as a 12% shortfall in electricity to cool homes and run factories.
This rather short zerohedge.com story was posted on their website on Sunday...and I consider it a must read. I thank Phil Barlett for sending it along. The link is here...and the graphs are great.
Warning lights are blinking again in Spain and Italy — the two countries considered most susceptible to a second round of problems — amid signs that banks there are once more loading up on the sovereign debt of their governments.
New data shows that Spanish and Italian banks have been buying such debt in record amounts after the European Central Bank lent financial institutions billions in cheap money over the winter in the hopes that banks would buy more bonds from their own government to tamp down national borrowing costs, which had earlier shot toward the high levels that forced Greece to take a bailout..
From November to February, during which the central bank lent more than 1 trillion euros to 800 European banks, Spanish banks increased their holdings of government securities by 68 billion euros and Italian banks by 54 billion euros, both buying especially debt from their own countries.
This story was posted on The New York Times website on Sunday...and I thank Phil Barlett for sharing it with us. The link is here.
The reliance of eurozone banks on the European Central Bank was demonstrated on Monday when Portugal revealed that its domestic banks were tapping the central bank for record amounts of funding.
The Bank of Portugal said the use by domestic banks for the various facilities available from the ECB rose to €56.3bn in March – up from €47.5bn in February and greater than the previous record level of €49.1bn in August 2010.
Bailed out by the EU and International Monetary Fund in April 2011 for €78bn, Portugal has €12bn earmarked for bolstering its banks' capital positions if necessary in the months ahead.
Just another instance of PIIGS at the trough. Sooner or later they will end up in the same position as Greece is now...default. This story was posted in The Guardian yesterday...and is another Roy Stephens offering. The link is here.
Until the rising reserve powers of Asia, Russia and the Gulf regain trust in the shattered credibility of the world’s two great fiat currencies - if they ever do - gold is unlikely to crash far or remain in the doldrums for long. `Peak gold’ cements the price floor in any case.
The “marginal cost” for mining gold is around $1450. That is when miners leave low-grade ore in the ground and weaker producers shut down. It creates a natural floor of sorts. Besides, `peak gold’ is a more immediate reality than `peak oil’, he said. There has been no equivalent to the shale revolution seen in oil and gas. World output has been stuck for a decade at around 2700 tonnes a year despite a fourfold increase in investment. There are no great finds, no Witwatersrand this time.
There will come a day then the bullion super-cycle finally sputters out. My guess is that it will come once Europe’s monetary system has returned to a viable footing - either by real fiscal union, or by break-up - and once China’s RMB becomes fully convertible and takes it place as the third pillar of the world’s currency system. We are not there yet.
This rather longish [for him] Ambrose Evans-Pritchard offering was posted over at The Telegraph website late on Sunday night...and I plucked it from a GATA release. The link is here.
It was just the tip of the iceberg. We're talking about last week's move by Zijin Mining Group to launch a $299 million bid for Norton Gold Fields, which operates the Paddington goldmine near Kalgoorlie.
There was some surprise expressed at this. While Chinese companies have been snapping up bulk and base metals projects around the world, it was generally thought they had little interest in picking up gold projects.
Think again. A very reliable source close to several gold companies tells us Chinese interests are not only taking stakes in explorers and miners, they are also buying gold directly from producers and shipping it home.
This story was posted over at theaustralian.com.au website yesterday...and is posted in the clear in this GATA release. This story is well worth your time...and the link is here.
The hundreds of gold traders and pawn shops that have sprung up across Greece over the past three or four years are rapidly making it into the police’s crime bulletins on an almost daily basis.
Behind many of the garish store signs advertising “I buy gold,” found on almost every main street in every neighborhood in the country, what is abundantly clear is that laws and regulations stay at the door, as authorities in Greece find themselves stymied by the massive trade in gold and unable to get a grip on the number of such stores that are cropping up or the manner in which they go into business.
The Bank of Greece, which is responsible only for gold traded for investment purposes (in the form of coins, slabs and ingots), has been taken by surprise by the surge in the domestic gold market, but there is little it can do as the street trade in gold is beyond its jurisdiction. What is under its jurisdiction is the “protection of credit,” and according to the interpretation of this task in Law 3601 from 2007, this also includes pawn shops, as it is the duty of the Bank of Greece to issue licenses only to certified professionals.
The people actually practising the trade, however, and even those doing so legally, evoke a regulation issued by the police in 1996 that allows the Greek police to issue licences for shops that buy or trade in gold or act as pawnbrokers, differentiating between those who hold valuables for one month and those who can hold them for up to six months.
This short story was posted over on the Greek website ekathimrini.com...and it's worth running through. I thank reader "David in California" for sending it my way on Sunday night...and the link is here.
Eric Sprott has gained a reputation as an implacable bear. In fact, that has not always been the case. Back in the 1980s, he was bullish on the stock market. But that's ancient history. Since 1999, he has been Canada's highest-profile doomsayer. The markets are in long-term decline and everything is going to hell.
He was in his usual end-of-the-financial world-as-we-know-it form when he spoke to an audience of financial professionals in Toronto last week at the kick-off of his company's annual national road show. In a presentation titled "Mania. Manipulation. Meltdown." Mr. Sprott predicted the collapse of almost everything.
What's the answer for the investor who, after listening to all this, is in a state of near-panic? Surprisingly, not gold. "It was the investment of the last decade," he says dismissively.
The answer is silver. Eric Sprott has become Canada's Silver Bull. And he says his conviction has nothing to do with a new fund his company is launching, the Sprott Silver Equities Class. He's a true believer. "It's the investment of the decade," he proclaims.
The author of this piece, Gordon Pape, like every other main stream pundit, dismisses this without checking the facts of the case. Mr. Pape is the best-selling author/co-author of many acclaimed investment books...but I'll place my bets on Eric's opinion anytime. It's posted over at the gurufocus.com website...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
As per a decree issued by the Prime Minister's office on April 3, gold has been banned as a medium for exchange, along with seven bullion-related activities that will take effect from May 25.
The decree prohibits use of gold as a medium of exchange; manufacturing gold jewellery without a licence from the central bank; trading gold without a licence; and conducting any other gold-related businesses without the approval of the prime minister and the central bank.
In addition, licensed gold enterprises must satisfy requirements such as having registered capital of 100 billion Vietnamese dong; having operated in gold trading for two years; paying tax above VND500 million; and having at least a branch in three central provinces and cities.
This story showed up on the saigon-gpdaily.com.vn website last week...and is definitely worth the read. I plucked this story from a GATA release...and the link is here.
Sprott Asset Management's John Embry told King World News yesterday that Western governments and central banks would love the gold price to collapse but he adds that gold and gold mining investors shouldn't be overly concerned about ugly price charts because market manipulation is designed to make the charts look ugly and prompt selling.
I thank Chris Powell for providing the headline and the introductory paragraph. The link to the KWN blog is here.
Given last week's selloff in gold and silver, it's time to refresh our "corrections" chart and put the pullback in perspective. The drop in precious metals hasn't been fun for those who already own all the gold they want, but unless one thinks the bull market is over, it's important to end-game profitability to look at corrections as good buying points.
First, for those who've been rattled by this recent selloff, it's times like these when you have to examine the fundamental reasons why you own gold and silver in the first place. If you bought gold primarily as a speculation that would "only go up," I have some bad news: Your reason is weak, and you might get flushed out by one of these corrections before it's really time to exit.
Conversely, if you bought because you genuinely fear what is happening to the value of your currency, or the very real possibility of high inflation, or that global events will affect your personal standard of living, or because "real" interest rates provide a negative return, or you're tired of government meddling and mismanagement, then you understand what gold is really for and will see a temporary pullback for precisely what it is.
This excellent essay appeared in yesterday's edition of Casey's Daily Dispatch...and is preceded by an equally excellent introduction by Casey Research senior metals investment strategist, Louis James. It's a must read...and the link is here.
“Loophole” Lets You Tap Big Oil's Cash Stash...
Big Oil make out like bandits when gas prices hit $4.
How about using this little-known “loophole” to get some of that cash back?
And not just a tiny stock dividend either -- this can pay you up to three times the income most stocks or bonds pay. Even though this move has nothing to do with the stock market.
It is NOT the goal of the Fed or the politicians to pump up the prices of real economic goods of any description. Since "inflation" is conventionally held to be rising prices of the essential goods which make or break REAL economies, the prices of these essential goods must be held down by any and all means. And foremost amongst these goods is anything that can or has been used as a medium of exchange in the past. Gold (and to a lesser but still considerable extent, Silver) are the curse of all interventionists. They are the alternative to the command economy and the eternal brake on the accumulation of the political POWER which those who command the economy lust after. - Bill Buckler, Gold This Week, 07 April 2012
After the breakout attempts when New York opened on Sunday night, gold and silver prices weren't allowed to do much of anything after that...especially during the New York trading session. Volume, except for the Sunday night open, was extremely light for the rest of Monday...and it was real easy for anyone to shove prices around if they so desired, which is precisely what happened. Every rally attempt was very firmly sold off.
Today is the cut-off for this Friday's Commitment of Traders Report...and last week's smash-down in the price of all four of the precious metals, including copper, will be included in this report. Both Ted and myself are expecting an improvement in market structure, but I strongly suspect that there was some deterioration after what happened at the Sunday night open...including what may be happening at the moment.
Well, we're over a week into the April delivery month in gold...and according to the figures I'm looking at, there are about 3,300 gold contracts still open. As of yesterday, there were 2,539 contracts delivered in April already, so there's still a fair chunk to go if all these remaining contract holders stand for delivery. Of that 2,539 contracts already delivered, JPMorgan has been the long/stopper on over 2,143 of them. One has to wonder what the rest of these short/issuers are waiting for...and who they will turn out to be...as will the long/stoppers.
In early Tuesday trading, gold managed to tack on about ten bucks...and is now trading flat going into the London open, which is about forty-five minutes from the time I'm writing this paragraph.
Silver gapped down about two bits right at the open of Far East trading. I was watching the volume figures for silver very closely...and if the CME was reporting them correctly, only 28 contracts traded during the first forty minutes after the 6:00 p.m. Eastern time open. I find that hard to believe, but that's what their website was reporting.
As I await the London open, silver's gross volume is now pretty chunky...and once you net out all the roll-overs, volume is actually a bit higher than it was this time on Monday...and prices are all over the map within a fairly tight range. I'm not sure what's causing such a schizophrenic price pattern, as I've never seen those types of wild swings on the Kitco silver chart before. Maybe its high-frequency traders, but I'm just guessing. And maybe it has to do with the bid/ask...as it's ten cents at the moment. We'll see how this trading pattern shakes out as the Tuesday trading day progresses.
As I write this paragraph around 2:25 a.m. Eastern, silver is down about a dime...and I'm curious to know what's really going on, as it's surprising to see silver down at all when gold is up this much. Platinum is up $15...and palladium is up $11...so silver is a bit of a mystery at the moment.
And as I hit the 'send' button at 5:45 a.m. Eastern time, gold is now only up a buck or so...and silver is down 30 cents. It could be an interesting Comex trading session.
That's more than enough for today...and I'll see you here tomorrow.