The gold price was under light selling pressure during most of the Far East trading day on Wednesday...and this pressure intensified shortly before 10:00 a.m. in London...and the low of the day...$1,603.40 spot...came about 1:15 p.m. BST...or about five minutes before the 8:20 a.m. Eastern time Comex open.
From that low, the gold price tacked on a quick fifteen bucks by 9:40 a.m. Eastern time, which may or may not have been an early London p.m. gold fix. But from that high tick...which was $1,617.90 spot...either the price got capped, or the buyer disappeared...and the gold price chopped lower into the 5:15 p.m. close of electronic trading in New York.
Net gold volume was ultra-light once again...around 91,000 contracts...and gold closed up 30 cents from Tuesday...and an even dollar from Monday's close. You have to wonder if a trader for JPMorgan et al is winning some sort of prize for getting those three days of closes so close together.
Silver's price pattern was virtually the same as gold's, but with more 'volatility'. The only major difference being the timing of the high tick of the day...which was $28.37 spot. That came around 11:35 a.m. Eastern...almost two hours after gold's high. From that high, silver got sold off more than a percent going into the close. The low tick in New York came right at the New York open...and that was $27.67 spot, so silver had quite a trading range...2.5% to be exact.
Net volume was very light once again...around 23,000 contracts...and silver closed at $28.04 spot, down a nickel from Tuesday.
The dollar index chopped higher in a fairly narrow range...with the high tick of the day [82.77], such as it was, coming at 9:00 a.m. Eastern time right on the button. From that high, the index rolled over...and hit its New York low [82.52] shortly after 11:00 a.m...which was silver's low tick of the day.
From there it rallied a bit until precisely 2:00 p.m. Eastern...and then slid lower in the close, finishing Wednesday just about where it closed on Tuesday...and Monday as well....around the 82.30 mark.
The stocks rose about a percent...and then traded sideways in a narrow range right up until 2:00 p.m. in New York. Then a sell-off began...and the stocks got sold down and the HUI closed the trading day almost on its low...down 0.68%.
With the odd exception, the silver stocks finished down across the board, but not by a whole lot. Bu the stocks that mattered finished higher on the day...and Nick Laird's Silver Sentiment Index close up 0.55%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 283 gold and zero silver contracts were posted for delivery in the Comex-approved warehouses on Friday. The biggest short/issuer by far was the Bank of Nova Scotia with 207 contracts...and the two biggest stoppers were HSBC USA and Deutsche Bank with 162 and 92 contracts respectively. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in either GLD or SLV...and no sales report from the U.S. Mint.
The Comex-approved warehouses had more activity to report on Tuesday. They received 209,675 troy ounces of silver...and shipped 654,826 ounces of the stuff out the door.
Happily, I don't have that many stories today...and a lot of the ones I do have are precious metal related, so I hope you at least have time for those.
It was inevitable. No sooner had word gotten out that Knight Capital had managed to find a way to survive, and the focus of debate has changed to something more sinister. As stupid or careless as Knight's admitted software glitch or mistake was, it would never have happened had it not been for the legion of computer-assisted, high-speed traders who prowl the markets in search of opportunities exactly like this - then pounce. Knight's blunder was their bounty.
Whether you call them high frequency traders, H-F-T's or algos (shorthand for algorithmic or computerized trading programs), by any name they are "parasites" says Kenny Polcari, Managing Director at ICAP.
"When you sit down and look at really what is the role that high frequency traders play, it's frustrating," Polcari says in the attached video. "What are they really here for? They're buying and selling 100 share lots, up and down for pennies all day long."
This 4:53 video, along with the story itself, was posted on the finance.yahoo.com Internet site early on Tuesday morning...and it's well worth watching. I thank West Virginia reader Elliot Simon for sending it...and the link is here.
Back in 2009 when the world wasn't filled with HFT 'experts', we deconstructed the topic of High Frequency Trading on a daily basis, and predicted not only the flash crash, not only debacles such as the Knight trading fiasco, not only the death of capital markets as a fund raising vehicle for companies who wish to go public (i.e. the FaceBook IPO fiasco), but much more.
HFT is so embedded in markets that un-rooting it would result in a complete reboot of "fair" stock valuation: imagine what would happen to stock prices if Knight and its "buy everything" algos were no longer present. Mass hysteria as the realization that vacuum tubes are now TBTF.
This story was posted on Zero Hedge yesterday...and I thank reader U.D. for sharing it with us. The link is here.
As they look to their national convention starting in Tampa on Aug. 27, Republicans are considering including a plank in their party platform calling for a full audit of the central bank.
Prodded by the failed primary bid of longtime Fed critic Ron Paul -- and the grassroots enthusiasm the Texas congressman’s cause inspired among bail-out weary Tea Party activists and small government advocates -- Republicans are entertaining a prospect that has long made them and some of their financial supporters cringe.
Paul, in an interview, warned that if Romney’s backers resist the effort, it could result in a politically distracting and messy fight in front of the national media. “It’s good economics and it’s good legislation, but it’s also good politics, because 80 percent of the American people agree with it,” Paul said. If Republican leaders “exclude it, I would think some of my supporters would be annoyed and feel strongly enough to take it to the floor under the rules.”
This Bloomberg story was posted on their website early on Tuesday morning...and I thank Washington state reader S.A. for bringing it to our attention. The link is here.
Cowboy local regulator or the exposer of lax federal bureaucrats?
That's the key question being asked about New York banking regulator Benjamin Lawsky after his explosive charge that London's Standard Chartered bank abetted $250 billion of money-laundering transactions with Iran.
Standard Chartered won help Wednesday from Britain's central bank governor, who portrayed Lawsky as marching to his own tune, and marching out of step with federal regulators in Washington. "One regulator, but not the others, has gone public while the investigation is still going on," the Bank of England's Mervyn King said at a news conference in London.
Meanwhile, the U.S. Treasury Department, in a letter responding to a request for clarification from British authorities, said it takes sanctions violations seriously.
Damage control is in full swing. I'll bet that the powers that be make this story disappear very quickly. This Reuters piece was posted on the finance.yahoo.com Internet site early yesterday evening...and I thank Phil Barlett for digging it up on our behalf. It's certainly worth skimming...and the link is here.
One of the founding fathers of the euro admits that some states may be forced to abandon the single currency, but insists Germany would be better off staying in.
Otmar Issing, a former European Central Bank chief economist, warned that the eurozone could be heading towards fracture in a book called How we save the euro and strengthen Europe published this week .
"Everything speaks in favour of saving the euro area. How many countries will be able to be part of it in the long term remains to be seen," said Mr Issing in the book, which is written as a conversation between an economist and a journalist.
At no point did he explicitly refer to Greece, but the debt-stricken country has been hovering perilously close to default and an exit from the eurozone as it makes harsh spending cuts and tax hikes to appease the EU and ECB after receiving billions in bail-out payments.
This story was posted on the telegraph.co.uk Internet site late Wednesday afternoon BST...and I thank Roy Stephens for his first offering of the day. The link is here.
The European Central Bank is now taking risky measures to help save Athens from its acute financial emergency. Increasingly, euro-zone leaders are pushing the dirty work on the ECB. In the end, though, they will likely have no choice but to pay Greece the next tranche of its bailout package.
"There is no time to lose," Jean-Claude Juncker warned just a few days ago. Leaders must use "all means at their disposal" to save the currency union, the head of the Euro Group said. But one thing is becoming clear: Politicians are increasingly pushing the dirty work on to the European Central Bank (ECB).
Take Greece, for example, where liquidity is becoming scarce. The government in Athens needs to repay a maturing bond worth €3 billion ($3.7 billion) to the ECB by Aug. 20. The solution to that problem seems paradoxical: The ECB itself is pumping money into Greece, so that the country can in turn repay the ECB.
It's a controversial plan, because the central bank is prohibited from financing governments directly. As a result, no one is talking openly about the absurd flows of money. The ECB has only hinted that it will extend a helping hand to Greece.
Nigel Farage was right. You couldn't make this stuff up! This story was posted on the German Internet site spiegel.de yesterday...and is Roy Stephens second offering in a row. It's definitely worth reading...and the link is here.
France is headed back into recession for the second time in three years, its central bank warned Wednesday in a setback for the recovery prospects of the stricken eurozone.
In a downbeat survey of the outlook for Europe's second biggest economy, the Bank of France predicted a 0.1 percent contraction in gross domestic product (GDP) for the third quarter of this year.
If that outcome is confirmed it would follow a similar fall in output for the three months to June and zero growth in the first quarter of 2012.
France is also grappling with a trade deficit running at close to record highs, despite shrinking in the first half of the year.
This AFP story showed up on the france24.com website yesterday...and it's also courtesy of Roy Stephens. The link is here.
It's a sure sign of economic trouble when even the perma-bulls acknowledge pain is coming down the pike. That is exactly what John Mauldin of Mauldin Economics sees, as he told David Galland in an interview at our Spring Summit, Recovery Reality Check. Watch the video - or read the transcript if that's your preference - to learn why John thinks the period through 2013 is vitally important for the US economy and what he thinks the number-one priority for investors is during that time frame.
This 20-minute video interview was imbedded in yesterday's edition of Casey's Daily Dispatch...and is well worth watching. The link is here.
The first is with market veteran Richard Russell...and it's headlined "Has a Massive and Historic Bubble Popped?". The second blog is with Citi's Tom Fitzpatrick. It's entitled "Have You Seen These Absolutely Shocking Charts Of Inflation?" And lastly is this one with Peter Schiff. It's headlined "Gold & The Perfect Storm That Will Lead To Collapse".
Shouting matches and even physical fights break out each time a mini-bus pulls up to drop off passengers at a crowded bus stop in downtown Harare. It's all about not getting short-changed.
Hyperinflation forced Zimbabwe to trash its worthless local currency three years ago in a move that brought much needed relief to the crippled economy but created a surprising new headache: a lack of coins.
"Change is a big problem, and at the same time passengers are impatient with us. I have been slapped a few times for not having change for them," said a bus conductor Walter Chakawata.
The US dollar and the rand from neighbouring South Africa are Zimbabwe's main adopted currencies. The dollar, however, is preferred and all prices are pegged to it.
But there is not enough US small change in circulation. The result is that prices are either rounded off -- making goods and services more expensive -- or customers brace themselves for a fight to get their change.
I ran a story about this quite a long time ago, so it seems that nothing has changed in the interim. This AFP story was filed from Harare yesterday...and was posted on the mysinchew.com website. I thank Elliot Simon for finding this story...and the link is here.
Gold has climbed above the psychological $542.94 (Rs 30,000) mark in India, but with the festive season starting and the marriage season set to kick off later this month, Indian consumers continue to buy gold despite the high price.
Retailers say some consumers are buying smaller items of jewellery and smaller gold rings, as an investment option with the fear that prices will go up further. ``People do make their annual jewellery purchases at this time. There is an innate tendency among many investors to secure investment in times of uncertainty, especially with the stock markets tanking and unattractive interest rates,'' said Madhukar Jha, precious metal and diamond retailer.
"Most buyers fear that prices will go up in the short term and are making small purchases as a hedge at this point. Marriage season will soon be here and the high gold price will not stop purchases,'' said Jha, whose retail outlet has floated a new scheme for equated installments.
Reader Donald Sinclair sent me this mineweb.com story in the wee hours of yesterday morning, but I'd already filed, so it had to wait until today. It was filed from Mumbai early yesterday morning local time...and the link is here.
This rather large GATA release contains lots of links regarding gold...and the quiet plans that the world's central banks may have for it. There are links to commentaries from the likes of Izabella Kaminska, the brilliant financial writer and researcher at FT Alphaville, Peter Millar, Jim Rickards...and others.
How absurd and tragic that journalists, when compelled, usually resentfully, to report about gold, seek interviews with investment house analysts and newsletter writers but never, ever with the primary sources, central banks themselves. That the central banks wouldn't say anything -- that they have to be sued for such basic information -- is no excuse, for such unaccountability itself then becomes the story.
Of course it's not just journalism that is at fault; it is also entire political systems. Elected agencies of government may decide every trivial question but the valuation of all currency, capital, labor, goods, and services in the world is left to be determined in secret by a few dozen people, as if this is the natural order of things.
It is not. It is the destruction of democracy.
GATA's secretary/treasurer Chris Powell has lots more to say in the extensive preamble to this essay...and it's a must read. It's posted over at the gata.org Internet site...and the link is here.
Another well-charted forecast of a gold price breakout comes from Peter Grant, market analyst for Centennial Precious Metals in Denver, whose special report, "Gold Technicals Portend Impending Breakout," is posted at Centennial's Internet site, USAGold.com.
I found this item posted in a GATA release from early this morning...and I thank Chris Powell for the headline and the introductory paragraph. The essay has some most excellent charts...and the entire piece is worth the read...and the link is here.
In seven of the past 10 years, gold has seen double digit percentage growth between end July and December. Blanchard analysts see this happening again this year and are looking for new price records ahead.
The price pattern of late has also suggested the market is poised for an uplift with strong resistance from falls seen in the upper $1500s. Gold has fallen back several times now on disappointments - notably from Bernanke, the Fed and most recently Mario Draghi - none of whom have actually committed to the anticipated additional monetary easing. But on each successive occasion the fall back has been less and the most recent time gold only fell below the $1600 level for a couple of days - and that following the double whammy of immediately consecutive disappointments from the FOMC and Draghi.
With the potential for a $2,300 price tag - the equivalent of the 1980 record high for gold - $1,600 still represents a good value entry point with strong potential upside, Doyle says, particularly as the strong seasonal investment period just has begun.
Gold aficionados will hope he is correct.
This is another story that was posted over at the mineweb.co.za website on Tuesday...and I dug it up all by myself. The author of the piece is Mineweb's General Manager and Editorial Director, Lawrence [Lawrie] Williams...and the link is here.
While timing exactly when the rebound will happen is impossible, Marshall Auerback, director of Pinetree Capital, believes now is the time to pay the gold market renewed attention. In this exclusive Gold Report interview, he explains why the gold market is more interesting than in the recent past and shares what he would do if he were chairman of the Federal Reserve.
You don't get much gold-related information out of Marshall...and if there is, it never shows up on the Internet anywhere. I consider this interview a must read for sure. It was posted over at theaureport.com website site yesterday...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.
With volumes as low as they were yesterday, I'm not prepared to read a lot into what happened in gold and silver during the New York trading session, although it was rather mysterious to see the rallies in both gold and silver come to a screaming halt before they got much above their Tuesday close. These rallies only involved gold and silver. Both platinum and palladium were unaffected.
As I've mentioned on several occasions over the summer, we seem to be in a holding pattern of sorts...losing ground in the London market...and then gaining it all back in New York, or vice versa. Sort of two steps back and then two steps forward...and any semi-serious gains are conveniently sold off after the high tick of the day is in, in New York. I wouldn't have to use more than half the fingers on one hand [not including my thumb] to count the number of times that either gold or silver have closed on their high tick of the day in the New York Access Market this year, as it just ain't allowed to happen.
As per usual, there was no price activity in either silver or gold during the Far East trading session on their Thursday...and little is happening now that London has been open a couple of hours. Volumes, once again, are vanishingly small...and the dollar index is comatose.
The "dog days" of summer are such a pain when you're waiting for events to unfold. I think I'll pour myself a glass of wine...and then change the batteries in my belly button lint brush.
See you on Friday.