Well, I must admit that I wasn't totally expecting the gold price action we got in New York yesterday. Up until 8:35 a.m. in New York, gold had held in pretty well, considering the big uptick in the dollar index that had occurred much earlier in the trading day.
But then the high-frequency traders went to work...and about ten minutes before the 1:30 p.m. Comex close, gold hit its low of the day, which was $1,546.50 spot. From that low, gold recovered about ten bucks by 4:00 p.m. Eastern, but then gave half that gain back by the 5:15 p.m. close of electronic trading.
Gold closed at $1,552.00 spot...down $22.20 from Wednesday's close. Not surprisingly, net volume picked up a bit as well...around 127,000 contracts.
Silver tried valiantly on several occasions to break above...and then stay above...the $27 spot price mark during Far East and London trading...but then it had the audacity to break through that price mark at 8:35 a.m. in New York.
Then, like gold, the high-frequency traders did their thing...and low price tick of the day [$26.04 spot] came at 1:45 p.m. Eastern, fifteen minutes after the Comex close. After that, silver recovered about 40 cents by around 4:15 p.m...and then sold off a bit going into the close of electronic trading. Silver had an intraday price move of a bit over 4.0%.
Silver closed the trading day at $26.32 spot...down 62 cents from Wednesday. Net volume was very chunky...around 68,000 contracts.
It was a strange day indeed for the dollar index. It declined almost 30 basis points form its 82.55 open...and then jumped 50 basis points from that low to around 82.75 by 9:00 a.m. in London. It did trade as high as 82.85 for about an hour in the early afternoon in New York, but fell back to the 82.70 level and closed there...up a whole 15 basis points on the day.
It's obvious from a cursory glance at the chart below, that the goings-on in the currency markets were not a factor in yesterday's sell-off in the New York gold and silver markets.
The gold stocks gapped down at the open...and then headed lower from there. The absolute low came at 1:25 p.m. Eastern, gold's low price tick of the day. From that point, the gold stocks didn't do much until the New York stock markets had their big rally starting around 3:30 p.m. As a matter of fact, the Dow chart and HUI look identical. The only difference being that the Dow closed down only a small fraction of a percent, while the HUI finished down 2.13%.
The silver stocks were down pretty much across the board, but there were a few green arrows amongst the stocks I track. Nick Laird's Silver Sentiment Index closed down 2.85%.
(Click on image to enlarge)
The CME Daily Delivery Report managed to squeeze a few more contracts into the June delivery month, as 1 gold and 1 silver contract were posted for delivery today. Now that June is off the board, I can report that 6,073 gold and 133 silver contracts were delivered during the month. This is NOT physical delivery off the exchange, this is just gold and silver bars changing owners [members of the exchange] in the Comex-approved warehouses.
As expected, the CME also posted the July 2nd first day notice numbers as well. In gold, there were 652 contracts posted for delivery. The only short/issuer was JPMorgan with all 652 contracts...365 in its client account and 287 in its proprietary [in-house] trading account. The big long/stopper was the Bank of Nova Scotia with 643 contracts.
But it was silver that was the stunner. July is a big delivery month for silver...and the CME report showed that only eleven  silver contracts were posted for delivery on Monday. That's it. I expect this to change...and rather dramatically...as the days pass, but this is not even a rounding error of the number that I was expecting. The link to the Issuers and Stoppers Report, which is well worth a look, is here.
There were no reported changes in GLD, SLV or U.S. Mint sales.
The new short interest numbers for both SLV and GLD were posted over at the shortsqueeze.com website earlier this week. The short position in SLV declined by 3.80% to 13,476,900 shares/ounces. In GLD there was a smallish increase of 1.48%...and the short position there stands at 18,962,600 shares, or 1.90 million ounces. None of these shares have any physical metal backing them at all.
But there was a lot of in/out movement over at the Comex-approved depositories on Wednesday. They reported receiving 1,230,120 troy ounces of silver...and shipped an equally large 1,371,787 troy ounces out the door. Most of the action was at Brink's, Inc...and you can view all the details here.
There was lots of interesting news yesterday...and breaking stories late last night and early this morning as well...so I hope you have time for the ones that interest you.
This is a huge story:
On Wednesday, Barclays won the race to reach a deal with U.S. and British regulators, beating UBS, which was reportedly the first bank to begin cooperating with international antitrust authorities. Barclays agreed to pay at least $450 million to resolve government investigations of manipulation of Libor and the Euro interbank offered rate (or Euribor): $200 million to the U.S. Commodity Futures Trading Commission, $160 million to the criminal division of the U.S. Department of Justice and $92.8 million to Britain's Financial Services Authority.
I wrote about the Libor investigation in the current issue of Rolling Stone, in "The Scam Wall Street Learned From the Mafia," about muni bond bid-rigging. Throughout this spring, while the Carollo bid-rigging case played out in a Manhattan courtroom, negotiations between banks and regulators were going on in this far larger cartel-corruption case. It’s been clear for some time now that a number of players had begun cooperating, and the only question was which bank was going to settle first.
Despite widespread expectation that it would be UBS, it turned out to be Barclays. You know how in Law and Order Jack McCoy always puts the two murder accomplices in separate rooms and tells them both that whoever talks first wins?
This short blog was posted on the Rolling Stone website yesterday morning...and is definitely a must read. I thank Roy Stephens for sending it. The link is here.
Royal Bank of Scotland and Lloyds have been accused of systematically rigging financial markets in a growing international scandal that wiped billions off the value of shares in Britain's biggest banks.
Bob Diamond, the chief executive of Barclays, is under pressure to resign after the bank admitted it had conspired to fix global interest rates, with David Cameron, the prime minister, saying he should take responsibility.
The scandal now threatens to engulf taxpayer-funded Lloyds and RBS, which according to court documents obtained by The Daily Telegraph have also been accused of routinely distorting basic financial data used to set interest rates.
As Matt Taibbi said in the previous article..."This is a huge story." He's got that exactly right. This piece was posted on The Telegraph's website at 10:00 p.m. local time. I found it in a GATA release...and it's well worth reading. The link is here.
Banking competitors are trying to lure away top talent at JP Morgan by highlighting the recent prop trading losses are likely to affect bonuses and Jamie Dimon isn’t being honest about how bad the loss will be. On July 13th the banking giant will announce 2nd quarter earnings and a real-time number is expected on how many billions net income gets wacked with because the London whale trade has been wound down or they’re willing to admit how bad the wind down will be. Last week Mark DeCambre at the New York Post wrote his JPM sources expect the loss to be between $4-6 billion – JPM’s estimate in May was only $2bn. But I heard this week JPM managing directors are being told it’s more. To the tune of $9 billion – Ouch!
That could be two quarters worth of net income and since JPM staffers are paid in part on how the whole company earns that rumor about a yearend lack luster bonus is looking more like a reality. Not good if you are killing your quota this year and working in a group that has nothing to do with the wrong way derivative trade. So a few seasoned wealth managers I spoke with are weighing competitor offers and seriously thinking of jumping ship – even if that means they give up their not yet vest $JPM stock.
Losing $9 billion on a single trade strategy gone so very wrong will put a lot of pressure on the White House’s favorite banker and make the Senate look even more foolish for their fluffy congressional hearings on the failed trade. If a $9bn gross trading loss becomes reality then the 3 notch downgrade by Moody’s could slid even further which increases their cost of borrowing and well – that sucks for anyone contingent on a JPM paycheck.
This story was all over the Internet yesterday...but in fact it was first reported by Terry Buhl on Tuesday...and just about every other U.S. newspaper 'borrowed' the story without accreditation. Here's the original story posted over at the teribuhl.com website...and it's a must read. I thank Casey Research's own Bud Conrad for bringing it to our attention. The link is here.
Late in May, facing a wrongheaded internal credit-derivatives trade that had already generated $2 billion in losses, senior managers at JPMorgan found themselves staring at a worst-case scenario that pegged the ultimate losses related to unwinding the trade put on by a U.K. trader - now nicknamed "the London Whale" - at as much as $9 billion, says someone familiar with the matter.
But since then, the picture has grown somewhat rosier, and the managers are now confident that they can contain the trading losses at considerably less, says this person and another person familiar with the matter - at somewhere between about $4 billion and $6 billion.
JP Morgan (JPM) executives have refused to benchmark the exact size of the losses, with chief executive Jamie Dimon saying only that the bank's second quarter, which ends Saturday, will be "solidly profitable." Given that the bank has generated between about $3.5 billion and $5 billion in recent quarters, he likely meant that results would be in line with those, said someone familiar with his thinking.
We may, or may not, find out what the real loses are in the fullness of time...but don't expect the truth to come out of Dimon's mouth. This CNBC story was picked up by the finance.yahoo.com website yesterday...and I thank reader Scott Pluschau for sending it. The link is here.
The House of Representatives voted Thursday to make Eric H. Holder Jr. the first sitting attorney general held in contempt of Congress in U.S. history after he withheld documents that Republican lawmakers demanded as part of an investigation into a flawed gunrunning operation.
The vote — 255 to 67, with 108 Democrats abstaining — capped weeks of partisan sniping over Holder’s decision not to turn over a set of documents that lawmakers had sought as part of their 18-month-long probe into “Fast and Furious,” as the case was known.
Obamacare and now this...all in one day. What happened to the USA that I knew and loved in the 1950s and 1960s? This story was posted on the washingtonpost.com Internet site yesterday...and the link is here.
On Thursday night, Italy and Spain plunged an EU summit into disarray by threatening to block “everything” unless Germany and other eurozone countries backed their demands for help.
Mario Monti, the Italian Prime Minister, celebrated the agreement, reached in the early hours of Friday, as a “very important deal for the future of the EU and the eurozone”.
He could not resist reminding Angela Merkel, the German Chancellor, that Italy had also won on the football pitch, by defeating Germany two goals to one for a place in the finals of the European Championship.
“It is a double satisfaction for Italy,” he said.
This story was posted on the telegraph.co.uk Internet site early this morning British Summer time. I thank Roy Stephens for sharing it with us...and it's certainly worth reading. The link is here.
The Iranian government said it may halt all imports of South Korean goods in response to Seoul’s suspension of all Iranian crude oil imports as of July 1. Those imports are scheduled to be stopped as a result of a European Union ban on insurance of ships transporting Iranian crude oil.
If it happens, the move is expected to deal a devastating blow to small and medium enterprises that rely heavily on exports to Iran.
A diplomat from the Iranian embassy in Seoul told the Hankyoreh on June 26 that the South Korean government’s recent decision to halt Iranian crude imports “has posed a serious obstacle to Iranian exports by South Korean businesses.” He also added that “Iran may well decide to suspend imports for all items produced in South Korea."
Iranian ambassador to South Korea Ahmad Masumifar previously said Tehran would take “reciprocal” measures if Seoul suspended crude imports, but this is the first reference to what those measures might actually entail.
This story was posted on the hani.co.kr website yesterday afternoon local time in Korea...and I thank reader David Crofton for bringing it to our attention. The link is here.
The zone will be set up in Shenzhen where China introduced its key economic reforms 30 years ago.
Beijing has been seeking to open up its capital markets to try to trigger a fresh wave of economic growth.
It has also been pushing for a more global role for its currency.
Wang Zhongwei, deputy director of the Information Office of China's cabinet, said the government "will proactively conduct an experiment in exploring convertibility under the capital account in Shenzhen's Qianhai zone".
Details of the plan are expected to be announced at a press conference in Hong Kong later on Friday.
This story was posted on the bbc.co.uk website just after midnight BST...and I thank reader 'David in California' for sending it my way. The link is here.
The case of Ecuador against Chevron continues on; and whilst Ecuador has won their landmark court judgment, Chevron is still refusing to pay the $18 billion demanded as recompense for the disaster which ruined the precious environment and decimated indigenous groups, causing an outbreak of cancer and other oil-related diseases that have killed or threaten to kill thousands of men, women, and children.
The villagers have now taken their case to the Superior Tribunal of Justice in Brazil's capital of Brasilia, the highest civil court in Brazil, in an attempt to receive permission to seize Brazilian assets owned by Chevron in order to claim the $18 billion owed.
If successful Chevron could face some trouble, as, with one of the largest proven oil reserves in the world, Brazil is a major strategic play for Chevron’s long-term growth. The country is already Chevron’s second largest production market in Latin America and one of the top ten markets in the world for the oil giant's capital spending. The Ecuadorian villagers shouldn’t find it too difficult to harvest their $18 billion from the Chevron’s Brazilian assets, but the result could seriously damage the oil major’s growth in the region.
This story was posted over at the oilprice.com website yesterday...and is Roy Stephens final offering in today's column, for which I thank him. The link is here.
Is inflation a good or a bad thing? It might sound like an easy question. But actually it depends on who you are and what your portfolio looks like.
If you have lots of debt, and own equities, property and commodities, then inflation is pretty good. If you are a creditor, and own mostly bonds, then it is a bad thing.
Most of the time, there is a global argument going on between the people who want inflation and those who don’t. Whether prices rise or not depends on who wins...and until recently, the balance has been about even.
But right now, that power balance is shifting. Europe and Japan are about to switch to inflation. That will have huge implications for the markets. Such as? Property and blue chip equities will do well. Bonds will do badly. Most of all, gold will spiral up into the next phase of its bull run.
This marketwatch.com story was filed from London on Wednesday...and I thank West Virginia reader Elliot Simon for sending it along. The link is here.
The first is with Egon von Greyerz...and it bears the headline "Greatest Financial Collapse The World Has Ever Seen". The second is with John Hathaway. It's entitled "Confidence Severely Damaged, Chaos to Accelerate". And lastly comes this blog with Peter Schiff. It bears the title "Europe, Gold, & The Health Care Bill".
Be sure that a huge volume of money printing will soon be on the way in Europe, and in the U.S. too, and the gold speculators' long awaited stimulus to drive prices up will at last become a reality.
Jeff Nichols - Managing Director of American Precious Metals Advisors said that "Despite yet another round of funding for Europe's sickest economies and banks - and regardless of whatever decisions are taken at the European summit this week - the Eurozone will continue to unravel. There's just no way that citizens of the peripheral economies will continue to accept austerity, collapsing economies, rising joblessness, and deteriorating living conditions for years to come."
"Sooner or later, I expect an impending if not actual default by one or another sovereign borrower or failure of one or another major European bank (what some are calling a "Lehman" moment recalling America's 2008 banking crisis) will trigger an unprecedented flood of new money from the Fed, the European Central Bank, and other central banks in Europe and Asia - assuring that gold and silver once again shine brightly."
This is perhaps an understatement. If this degree of monetary stimulation does come about the impact on gold and silver prices would be immense, and way beyond the power of governments, compliant central banks and their banking sector allies to maintain any degree of control of what is seen as the ultimate standard against which fiat currencies are measured.
Amen to that! This Lawrence Williams commentary was posted over a the mineweb.com Internet site yesterday...and is a must read for sure. I thank reader Donald Sinclair for sending it...and the link is here.
Great Panther Silver Limited, (TSX: GPR NYSE.A: GPL)headquartered in Vancouver, Canada, is a profitable primary silver producer operating two 100% owned mines in Mexico. Over 94% of revenues are derived from unhedged precious metals production with approximately 74% generated from silver sales and 20% from gold. Since entering production in the first quarter of 2006, the Company has seen five consecutive annual increases in revenues and provides strong leverage to future rises in precious metals prices.
The Company has also been growing its resource and reserve base at both 100% owned operations. A new resource/reserve estimate is expected for the Guanajuato Mine Complex and the San Ignacio Project in the second quarter of 2012 and a new resource/reserve estimate for the Topia Mines during the third quarter of 2012. Great Panther continues to replace mined ounces, grow resources and reserves at both operations, and is targeting a 10 year mine live at each.
Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is no escape because no paper currency has any link to Gold.
All of the economic, monetary, and financial upheaval of the past 40 plus years is a direct result of this fact.
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. - Bill Buckler...in his permanent preamble to his Gold This Week commentary
Well, what happened during the Comex trading session in New York yesterday has been superseded by the news out of Brussels earlier this morning. The dollar index headed south...and the precious metals headed north. Both of these events are evident on the Kitco charts and the dollar index graph at the top of this column.
As of 3:13 a.m. Eastern time, volume is pretty decent in gold...and pretty heavy in silver. After falling about 75 basis points in just a few minutes, the dollar index has stabilized around the 82.00 mark. And although I'm happy to see silver and gold rally, it's obvious to me that these rallies are not going unopposed, as I can tell by the volume numbers that JPMorgan et al are throwing everything in the book at them...and it will be interesting to see how the rest of the trading day unfolds.
Not only is this news out of Europe of great interest, it's also the last trading day of the month...and the second quarter. I'm not even going to hazard a guess as to what the closing numbers are going to be in anything at the end of the New York trading day.
I would think this might be a good time to visit your favourite precious metals dealer, as it's my opinion that the current sale on silver and gold will end soon.
It also might be a peachy idea to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best (and current) recommendations...as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
Today we get the Commitment of Traders Report for positions held at the close of Comex trading on Tuesday, June 26th. It should tell us a lot. If you're a COT wonk, you can click here at precisely 3:30 p.m. Eastern time...and all will be revealed to you. This is the link to the legacy report, not the disaggregated report.
And as I hit the 'send' button at 3:15 a.m. Eastern time, gold is up eighteen bucks...and silver is up 50 cents. The dollar index has gained back a bit of its loss...but is still down about 65 basis points at the moment...and volumes in both gold and silver are getting up there now that London has been open for a bit more than two hours.
It will be interesting to see what happens in New York trading today.
Enjoy your weekend...and I'll see you here on Saturday.