The gold price did very little in Far East trading on their Monday...and by the time London open rolled around at 8:00 a.m. BST, the price was pretty much unchanged from Friday's close.
But right from the London open, the gold price developed a negative bias, with the low of the day [$1,576.90 spot] coming just minutes after the Comex open in New York. Then away the price went to the upside...with most of Tuesday's gains in by 9:10 a.m. Eastern time. From there it traded sideways, with the high tick [$1,596.10 spot] coming shortly before 11:30 a.m. Eastern.
Almost from that point, the gold price began a slow decline that lasted all through the electronic trading session...and gold finished the Monday trading day at $1,588.60 spot...down the magnificent sum of 80 cents. Net volume was basically vapour at around 84,000 contracts.
It was pretty much the same story in silver, but as you can from the Kitco chart below, the price activity was more 'volatile'.
The absolute low [a few cents below $26.90 spot] came just minutes after 12 o'clock noon in London...and about fifteen minutes before the Comex open.
Then about ten minutes after the Comex open, the silver price blasted off to the upside...and was up about 45 cents by 9:10 a.m. in New York. From there, it didn't do a lot for the remainder of Monday, although the absolute high tick came about 2:35 p.m. Eastern time during the electronic trading session.
Silver closed at $27.21 spot...down a whole 3 cents from Friday. Net volume was pretty small at 23,000 contracts.
The dollar index didn't do much on Monday, either until shortly after the open in London...with the high of the day [83.63] coming around 1:20 p.m. in London...8:20 a.m. in New York.
From that high, the dollar index headed lower, with its nadir coming about 2:10 p.m. Eastern...and from its high to low tick, the index declined 60 basis points...a bit more than double its gain during London trading. The dollar index closed around 83.16...down less than 30 basis points from Friday's close.
As I mentioned in the previous paragraph, I noted that the dollar index loses during the Comex trading session were a bit more than double their London gains. But even though that was the case, that certainly wasn't reflected in the gold and silver price action, as they barely rallied back through Friday's closing price before getting sold off into the close and finishing down on the day.
With volume so light, it was easy for any interested party to prevent prices from getting out of hand to the upside in either metal...and I'd bet that that was the case on Monday. If left to their own devices, gold and silver would have moved significantly higher...and the gold price would certainly have broken through the $1,600 price mark...and above it's 50-day moving average.
The gold shares opened in positive territory...and that lasted all of five minutes. The gold stocks were in the red for the rest of the New York trading session...although they did come close to breaking into positive territory just minutes after 2:00 p.m. Eastern, when gold was enjoying a bit of a rally in the electronic trading session after the Comex close.
After that failed attempt to break into positive territory, the gold stocks got sold off a bit into the close of the New York equity markets...and the HUI finished down 0.37%.
The silver stocks finished mixed as well...and Nick Laird's Silver Sentiment Index closed up 0.26%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed some decent activity for a change...and it should come as no surprise to anyone that it was all in silver. There were 8 gold and 441 silver contracts posted for delivery on Wednesday. The biggest short/issuers were Jefferies with 340...and Merrill with 100 contracts. And it should also come as no surprise that JPMorgan and the Bank of Nova Scotia were the biggest long/stoppers, standing for delivery on all but 25 of the 441 contracts issued. The link to yesterday's Issuers and Stoppers Report is here...and it's worth a peek.
The GLD ETF showed that an authorized participant withdrew 116,419 troy ounces of gold yesterday...and their were no reported changes in SLV.
For the week ending July 13th, Switzerland's Zürcher Kantonalbank reported a withdrawal of 37,063 ounces from their gold ETF...but their silver ETF took in 416,867 troy ounces.
There was a small sales report from the U.S. Mint. They sold 1,000 ounces of gold eagles...along with 97,000 silver eagles. July silver eagles sales are now over the one million mark...and now stand at 1,003,000.
There wasn't a lot of activity at the Comex-approved warehouses on Friday. No silver was reported received...and only 43,109 troy ounces of the stuff was shipped out. The link to that action, such as it was, is here.
Fears of Curbing Indian Gold Imports
I had a very interesting e-mail from Indian reader Avinash Raheja...and this is what he had to say...and it was lightly edited by your humble scribe.
In recent months, I have been extremely cautious with my positions in precious metals, as the surge in India's current account deficit has brought Gold a very bad name in the domestic MSM and some political and regulatory circles. However, recent write-ups in our MSM seem to be dampening those concerns. Yesterday, on news channel CNBC-TV18 which is the prime business channel in India, former Governor of [the] Reserve Bank of India, Dr. Y.V. Reddy gave a short 3:32 minute interview in which he had some things to say about Indians' demand for Gold. After this, I think we can put all our fears about any possible (significant) curb on Gold imports, to rest. This interview is a must watch...and while the Gold remarks start just after the 2 minute mark, I strongly recommend watching the entire interview as it is very rare to come by a career central banker to speak out with such prudence and sound economics. It's linked here.
Because of his accent, his English is very hard to follow...and Avinash was kind enough to provide the following 'translation' on our behalf..."when asked for his views on the surge in Gold imports, he conceded that the realization seems to be coming through with us that we cannot control the import of the metal. He said it's natural for savers to find alternative investments 'OUTSIDE' the country when they fetch NEGATIVE returns on their bank deposits, when real estate is having its own problems and so also stock markets. So he said it was natural and went on to almost justify the import demand from investors (which I'm sure you also agree). He was honest enough to call a spade a spade when he stated our bank deposits return a negative return because that obviously means he is not referring to [the] WPI [wholesale price index] as the measure for actual inflation, which is certainly far higher. He went [on] to say that blaming Gold imports and saying it is responsible for the deficits is nothing more than a prejudiced value judgment. He said, how come we don't say imports of consumption goods such as luxury cars or shaving lotions is not wasteful, but Gold is? He thinks that is a prejudice."
Since it's my Tuesday column, I have a lot of stories for you today...and I'll leave the final edit up to you.
Retail sales in the U.S. unexpectedly fell for a third month in June as limited employment gains took a toll on consumers.
The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales. Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May.
The retail figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70 percent of the economy, curbing sales at retailers such as Target Corp. and Macy’s Inc.
Bad news always seems to be "unsuspected". It's amazing to watch the main-stream media spin bad news. This Bloomberg story was posted on their website early in the afternoon yesterday...and I thank reader Edward Costik for sending it. The link is here.
HSBC Holdings Plc did business with firms linked to terrorism, failed to guard against money- laundering violations in Mexico and bypassed U.S. sanctions against Iran, according to U.S. Senate investigators.
HSBC affiliates worldwide gave terrorists, drug cartels and criminals a portal into the U.S. financial system, the Permanent Subcommittee on Investigations said in a 335-page report yesterday detailing a decade of lax controls. Lawmakers plan to question senior executives from the London-based bank, Europe’s largest, at a hearing in Washington today.
“HSBC sets up a U.S. bank affiliate as its gateway into the U.S. financial system and lets its global network of affiliates abuse that gateway,” Senator Carl Levin, the Michigan Democrat who heads the subcommittee, told reporters. “The failure of accountability here is dramatic.”
Well, somebody might get fired over this. There might be a big fine, but it's a given that nobody will go to jail over this. This is another story from the Bloomberg Internet site yesterday...and the link is here.
The business deal from hell began to crumble even before the Champagne corks were popped.
The deal, the $580 million sale of a highflying technology company, Dragon Systems, had just been approved by its board and congratulations were being exchanged. But even then, at that moment of celebration, there was a sense that something was amiss.
The chief executive of Dragon had received a congratulatory bottle from the investment bankers representing the acquiring company, a Belgian competitor called Lernout & Hauspie. But he hadn’t heard from Dragon’s own bankers at Goldman Sachs.
“I still have not received anything from Goldman,” the executive wrote in an e-mail to the other bank. “Do they know something I should know?”
More than a decade later, that question is still reverberating in a brutal legal battle between Goldman and the founders of Dragon Systems — along with a host of other questions that go to the heart of how financial giants like Goldman operate and what exactly they owe their clients.
Why am I not surprised...and I'm sure you're not either, dear reader. The criminal activity in the world's financial system seem to know no bounds. This story was posted in The New York Times on Saturday...and I thank Washington state reader S.A. for sharing it with us. The link is here.
Regulators on both sides of the Atlantic failed to act on clear warnings that the Libor interest rate was being falsely reported by banks during the financial crisis, it emerged last night.
A cache of documents released yesterday by the New York Federal Reserve showed that US officials had evidence from April 2008 that Barclays was knowingly posting false reports about the rate at which it could borrow in order to assuage market concerns about its solvency.
An unnamed Barclays employee told a New York Fed analyst, Fabiola Ravazzolo, on 11 April 2008: "So we know that we're not posting, um, an honest Libor." He said Barclays started under-reporting Libor because graphs showing the relatively high rates at which the bank had to borrow attracted "unwanted attention" and the "share price went down".
This story was posted on the independent.co.uk website on Saturday...and I thank U.K. reader Tariq Khan for bringing it to our attention. The link is here.
Escalation. The inevitable collapse of the Prisoner's Dilemma that kept the LIBOR contributors together is occurring rapidly. After Barclays' forced admission and initial fine, the 'he-who-defects-first-wins' strategy has been trumped by Deutsche Bank as they turn all 'Donnie Brasco' on their oligopolistic peers.
Under the leniency programs of the EU, companies may get total immunity from fines or a reduction of fines which the anti-trust authorities would have otherwise imposed on them if they hand over evidence on anti-competitive agreements or those involved in a concerted practice. How quickly the worm turns when trust leaves the system - the warning the rest of the Liebor contributors - be afraid, be very afraid.
This short Zero Hedge piece from Sunday is a must read...as is the imbedded Reuters link/story...so make sure you read them both. I thank reader 'David in California' for sending it along...and the link is here.
Former Assistant U.S. Treasury Secretary Paul Craig Roberts and financial analyst Nomi Prins argue that the manipulation of the LIBOR interest rate by big banks was meant to support government bond prices that in a free market would fall amid so much bond monetization.
The Roberts-Prins analysis fits the historic relationship between real interest rates and gold, a connection long cited by GATA as the crux of the gold price suppression scheme.
The Robert-Prins analysis is headlined "The Real LIBOR Scandal" and was posted over at the paulcraigroberts.com Internet site on Saturday. I thank Chris Powell for writing the introduction...and the link is here.
As regulators ramp up their global investigation into the manipulation of interest rates, the Justice Department has identified potential criminal wrongdoing by big banks and individuals at the center of the scandal.
The department’s criminal division is building cases against several financial institutions and their employees, including traders at Barclays, the British bank, according to government officials close to the case who spoke on the condition of anonymity because the investigation is continuing. The authorities expect to file charges against at least one bank later this year, one of the officials said.
The prospect of criminal cases is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities. The Justice Department investigation comes on top of private investor lawsuits and a sweeping regulatory inquiry led by the Commodity Futures Trading Commission. Collectively, the civil and criminal actions could cost the banking industry tens of billions of dollars.
This story was posted on The New York Times Internet site late on Saturday evening...and I thank Phil Barlett for sending it. The link is here.
Concerns are growing about the reliability of oil prices, after a report for the G20 found the market is wide open to “manipulation or distortion”.
Traders from banks, oil companies or hedge funds have an “incentive” to distort the market and are likely to try to report false prices, it said.
Politicians and fuel campaigners last night urged the Government to expand its inquiry into the Libor scandal to see whether oil prices have also been falsely pushed up.
This story was posted on the telegraph.co.uk website late on Sunday evening in London...and I thank reader Peter Wynn Williams for digging it up for us. The link is here.
JPMorgan Chase disclosed on Friday that losses on its botched credit bet could climb to more than $7 billion and that the bank’s traders may have intentionally tried to obscure the full extent of the red ink on the disastrous trades.
Mounting concerns about valuing the trades led the company to announce that its earnings for the first quarter were no longer reliable and would be restated. Federal regulators, who were already examining the trades, are now looking at whether employees of the nation’s biggest bank by assets intended to defraud investors, according to people with knowledge of the matter.
The revelations left Jamie Dimon, the bank’s chief executive, scrambling for the second time within two months to contain the fallout from the trading debacle. It has already claimed one of his most trusted lieutenants, compelled Mr. Dimon to appear before Congress to account for the blunder and prompted the bank to claw back millions in compensation from three traders in London at the heart of the losses. A top bank official said that the board could also seize pay from Mr. Dimon, but did not indicate that it would do so.
This story was posted on The New York Times website late on Friday evening. I borrowed it from yesterday's edition of the King Report...and the link is here.
JPMorgan Chase & Co.'s assertion that traders at its London chief investment office may have intentionally mismarked trades, masking losses that total at least $5.8 billion, makes little sense, according to former executives with direct knowledge of the unit’s operation.
The bank restated first-quarter results, paring profit by $459 million, in part because an internal review revealed that U.K. traders had priced their books “aggressively,” Mike Cavanagh, head of Treasury & Securities Services, said in a July 13 meeting with analysts. The mispricing made losses on a portfolio of credit derivatives look smaller than they were, and executives concluded that traders may have sought to hide the “full amount of losses,” JPMorgan said in a presentation.
JPMorgan requires traders to mark their positions daily so the firm can track their profits, losses and risk. An internal control group double-checks the marks against market prices monthly and at the end of each quarter, said three former executives from the CIO and a senior executive in market risk. The firm uses the control group’s prices, not what individual traders submit, to calculate earnings, making it difficult for one trader or trading desk to rig prices, the people said.
This story was posted mid-afternoon on the Bloomberg Internet site on Monday...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
Later this month Congress will have an unprecedented opportunity to force the Federal Reserve to provide meaningful transparency to lawmakers and taxpayers. HR 459, my bill known as "Audit the Fed,"
is scheduled for a vote before the full Congress in July. More than 270 of my colleagues cosponsored the bill, and it has the support of congressional leadership. But its passage in the House of Representatives is only the beginning of the battle, as many senators and the president still don't see the critical need to have a national discussion about monetary policy.
The American public now senses that the Fed's actions, especially since 2008, are enormously inflationary and will cause great harm to the American economy in the long run. They are beginning to understand what so many economists still don't understand, which is that inflation is a monetary phenomenon, and rising prices are merely a symptom of that phenomenon. Prices eventually rise when the supply of US dollars (paper or electronic) grows faster than the available goods and services being chased by those dollars.
Dr. Paul's commentary was posted over at his website paul.house.gov yesterday...and I found embedded in a GATA release. It's headlined "Inflation is a Monetary Phenomenon"..and the link is here.
To those on the hill and elsewhere who suggest this growing 'fiscal cliff' and 'debt ceiling' crisis will all get solved, former Office of Management and Budget (OMB) Director David Stockman tells Bloomberg TV that "they will punt, punt, punt and kick the can with partial solutions driven by eleventh hour crisis-based extensions that will go on for the whole of the next term!"
His warning is that unlike in past periods, today "we are completely paralyzed, there is an ideological divide on taxes and entitlement like we've never had before" and while he realizes that "the debt problem doesn't become a debt problem until the market suddenly have a wake up call and realize that if the Fed doesn't keep printing, it's game over."
This story was posted over at the Zero Hedge website early yesterday afternoon. The 6-minute Bloomberg interview with Stockman is a must watch...and I thank Elliot Simon for sending it along. The link is here.
Monday's weak retail sales data provides more evidence of the economy's sluggish state, raising the stakes for Fed chairman Ben Bernanke's Congressional testimony this week.
The slowing economy -- and what Bernanke plans to do about it -- will top the agenda during the chairman's appearance before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. (Bernanke is also likely to face questions about the fiscal cliff and the brewing LIBOR scandal, among other topics.)
At issue is whether Bernanke will tip his hand about prospects for another round of quantitative easing (a.k.a. QE3) or some other form of policy easing. While Bernanke is unlikely to provide any specifics on the plan of action, he's almost certain to reiterate the Fed's prior pledge to "take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."
This 6:20 minute video interview is posted over at the finance.yahoo.com Internet site...and I thank reader "Harold" for sending it. It's well worth watching...and the link is here.
German Chancellor Angela Merkel on Sunday dismissed accusations that she had caved in to her European Union partners at the last summit and insisted that the question of liability in future bank bailouts had not yet been decided.
Merkel, who faces a parliamentary vote on Thursday on whether ailing Spanish banks should receive up to €100 billion in aid, told ZDF television in an interview: "According to the rules, the Spanish government is naturally liable for the Spanish program." She added that concerning future bailouts, "We have not adopted any final positions on this yet."
Critics in Germany, including in Merkel's own center-right coalition, say national governments should be liable for emergency loans provided to banks in their countries. Otherwise, they argue, German taxpayers will face higher risks.
Merkel denied she had been pushed into making concessions at the June 28-29 summit, saying: "That is not my view of events."
This story was posted over at the German website spiegel.de yesterday...and was originally headlined "Merkel to secure votes for bailout of Spanish banks". I thank reader Donald Sinclair for bringing this story to my attention...and the link is here.
The first blog is with James Turk...and Eric King has headlined it "Summer Doldrums Over, Gold & Silver To Explode". The second blog is with Stephen Leeb...and it's entitled "The Naked Shorts Will Be Destroyed In The Gold Market". Next is this John Embry commentary. Eric has headlined this blog "Economic Deterioration, Gold & Market Manipulation". Lastly is this audio interview with Egon von Greyerz. I posted the blog of this in Saturday's column.
Some day, gold will wake up from its dreary, listless state and take off.
And, if contrarian analysis is right, that day will come sooner rather than later.
Of course, you have every right to be skeptical of this argument, since contrarian analysis has been bullish on gold for several months now and the yellow metal — so far at least — has failed to respond.
But contrarian analysis has been far more right than wrong about gold’s short-term gyrations over the last three decades, which in effect means that the intelligent bet over the years has been to bet against the consensus of gold timers.
This marketwatch.com story from last Friday is an absolute must read...and the link is here.
History suggests that to sell gold ahead of an extended period of deflation would be counter to the likely price outlook, as well raising investment risk profile rather than reducing it.
Gold has a history as a hedge against inflation, or more precisely, inflationary expectations, but what is not often considered is its role in a deflationary environment.
Since the United States Treasury closed the gold window in August 1971, the world's major economies have been almost continuously in an inflationary environment.
Recent figures from the U.S. and China, plus persistent problems in Europe and commercial banks' reluctance to lend, have rekindled fears of an imminent period of deflation.
This mineweb.com story was filed from London on Saturday...and I thank reader Donald Sinclair for his second contribution to today's column. The link is here.
Police say thieves are breaking into homes in a high-end part of Davidson County, but they're not grabbing electronics or jewelry.
The crooks are, instead, digging through cabinets and making off with pieces of silver.
Crime in Belle Meade isn't common, but lately police have had their plates full trying to find whoever is stealing valuable silverware and dishes.
"It's very unusual, because they're targeting silver, and silver only," said Belle Meade Police Detective Tom Sexton.
This unusual story was posted over at the wsmv.com Internet site in Nashville last Thursday...and I thank reader "G. Roberts" for bringing it to our attention. The link is here.
Peter had an interesting column posted at the marketwatch.com website yesterday. As you can tell, it's all about gold...and if you have the time, it's well worth reading. I dug it out of a GATA dispatch yesterday..and the link is here.
From Jim Rogers... to Marc Faber... to Congressman Ron Paul, this book is sitting on the desks of some of the world's smartest thinkers...
And for good reason, too.
Inside you'll find 47 ways to protect your wealth from the declining value of the U.S. Dollar
The case for Gold (and silver) is even more obvious. Gold and silver are money that is nobody's liability and which cannot be created by a keystroke on a computer. They are the alternative to modern fiat and backed by government debt money. Any rise in their purchasing power as compared to what is used as money casts what is used as money into increasing disrepute. Obviously, those in charge of that money don't want to see Gold and silver rising in "price". Therefore, the price of Gold and silver is manipulated. It has ALWAYS been manipulated and will be until the day comes when it regains its function as money. - Bill Buckler, Gold This Week...14 July 2012
With virtually non-existent volume on Monday, I'm not prepared to read much into yesterday's price action, no matter how suspicious it looked. It's very easy to control price activity when volume is this light. This is certainly the 'summer doldrums'...but as I've said several times before, it's just made to look that way, as left to their own devices, all four precious metals would have price stickers that would take your breath away. And as Bill Buckler said above..."the price of Gold and silver is manipulated, it has ALWAYS been manipulated...and will be until the day comes when it regains its function as money."
Both gold and silver rallied a bit in early Far East trading on their Tuesday...and those rallies didn't get anywhere...or weren't allowed to get anywhere...and both metals opened the London trading day basically unchanged from Monday's close in New York. Gold and silver rallied a hair during the early going in London...and then shortly before 10:00 a.m. BST, both metals spiked, but got hammered flat instantly...and gold was held below the $1,600 mark once again. Volumes in both metals, which had been on the light side earlier, have now jumped a bit on those price spikes...so it's apparent that JPMorgan et al are handling these rallies in the same old way. The dollar index chart over at ino.com is M.I.A. as I hit the 'send' button at 5:25 a.m. Eastern time. At the moment, gold is up about eight bucks...silver's price is up around two bits.
I haven't the foggiest idea how the precious metals will trade today in New York, but we should be prepared for anything...especially considering that the cut-off for this Friday's Commitment of Traders Report comes at the close of Comex trading at 1:30 p.m. Eastern time.
See you on Wednesday.