All was calm in the gold market in the Far East on their Tuesday...and that state of affairs lasted until 2:00 p.m. Hong Kong time...an hour before the 8:00 a.m. BST London open.
From that point, the gold price moved slowly higher in fits and starts. I thought for sure that the London p.m. gold fix, which came at 10:00 a.m. Eastern time, would have been the high of the day...but surprisingly enough, the gold price moved higher in the electronic market after the Comex close. According to Kitco, the high tick was $1,749.30 spot.
Gold closed virtually on its high of the day at $1,748.30 spot...a phenomena that you rarely see...up $10.90. Volume was very light...around 102,000 contracts...which was down 40% from Monday's volume.
The silver price followed the same price path...more or less...but all attempts to break above the $34 spot price mark got turned back.
Silver finished the Tuesday session at $32.96 spot...up 26 cents on the day. Volume was pretty light...just under 28,000 contracts.
The dollar index opened at 79.76 on Monday night in New York...and it was pretty much all down hill from there. The index closed at 79.22 at the end of the Tuesday trading day...down 54 basis points, which was a pretty decent decline.
Gold and silver prices would have reacted far more positively than they did, if a one-hour 20-basis point rally in the dollar index hadn't materialized out of the blue at the London p.m. gold fix at 10:00 a.m. in New York.
The gold stocks gapped up...and stayed up...before trading basically sideways for the rest of the New York trading day. And, like Monday, there was a sudden buying spurt into the close...and the HUI finished up 1.80%.
The silver stocks did very well for themselves yesterday...and the ones that really mattered turned in a solid performance as well. Nick Laird's Silver Sentiment Index closed up 2.55%.
(Click on image to enlarge)
The CME's Daily Delivery Report was another yawner again yesterday, as only 5 gold and zero silver contracts were posted for delivery from within the Comex-approved depositories on Thursday. Unless there are some big surprises, the rest of the October delivery month should be uneventful, as there aren't many contracts left to deliver in either precious metal.
There were no reported changes in GLD yesterday...but over at SLV, another chunk of silver was withdrawn by an authorized participant. This time it was 774,789 troy ounces. Since the beginning of the month, there has been a net withdrawal of 2.1 million ounces out of SLV. GLD has had a net increase of about 420,000 ounces over the same period.
Over at Switzerland's Zürcher Kantonalbank, they updated their gold and silver ETFs as of the end of trading on Monday, October 15th. Both ETFs showed declines. Their gold ETF dropped by 33,234 ounces...and their silver ETF declined by 541,547 ounces.
The U.S. Mint had a pretty decent sales report yesterday. They sold 14,000 ounces of gold eagles...2,000 one-ounce 24K gold buffaloes...and 410,000 silver eagles.
Over at the Comex-approved depositories on Monday, they reported receiving 575,979 troy ounces of silver...and shipped out a smallish 14,035 ounces. The link to that activity is here.
I have the usual number of stories for you today...and I hope you have the time to at least skim the parts that I've cut and paste from each.
In a stunning move Citigroup announced this morning that CEO Vikram Pandit and COO John Havens were resigning effective immediately. The departures come just one day after the big bank reported what was generally regarded as a strong quarter, sending the stock higher by 5% in Monday trading. Pandit also stepped down from Citi's Board of Directors.
This departure marks the end of a controversial and often troubled tenure. Pandit first came on the scene at Citigroup in July of 2007 when his hedge fund, Old Lane Partners LP, was bought for $800 million. Pandit reportedly pocketed $165 million for his portion of the company. Named CEO in December of 2007, Pandit steered Citi through the worst financial crisis since the Great Depression. The company's stock has fallen some 90% since he took the corner office, underperforming most of the industry.
The circumstances surrounding the abrupt exit are murky, at best. Pandit was far from beloved in the industry or by investors, but he was hardly seen as someone who's job was on the line.
One has to wonder the real reason why he and Citi's COO left. Whatever that reason is, I'd say it's pretty ugly...and had little to do with what these talking heads were going on about. This finance.yahoo.com story was posted on their Internet site yesterday morning New York time...and I thank West Virginia reader Elliot Simon for our first story in today's column. The link is here.
Greg Smith - the former Goldman Sachs salesman who sent the world's most famous "take this job and shove it" letter when he wrote a blistering op-ed article in The New York Times about life inside Goldman - will release his book, “Why I Left Goldman Sachs: A Wall Street Story” next week.
But the Times reviews a leaked copy of the first chapter of the book. "During Greg Smith’s first week at Goldman Sachs, he was issued an identification badge and an e-mail address and each morning he had to scramble to make sure he got an 18-inch folding stool," the Times reports.
There's apparently a lot written about humiliation—at least in the first chapter titled, "I Don't Know but I'll Find Out." The chapter begins on Smith's first day at Goldman, where he joined more than 70 others in the sales and trading program.
This interesting CNBC item showed up on their website mid-morning Eastern time yesterday...and my thanks go out to Washington state reader S.A. for sending it along. The link is here.
Veteran natural-gas trader John Woods has a simple trading strategy around data on U.S. gas stockpiles: Stay away.
Mr. Woods and other floor traders on the New York Mercantile Exchange used to look forward to the weekly report of gas-inventory figures by the U.S. Energy Information Administration, widely considered the best reading of gas supply and demand in the U.S. Traders would be glued to their computers before the data's release at 10:30 a.m. on Thursdays, ready to dive into the busiest trading window of the week.
But in the past few months, unusual trading patterns have pushed many seasoned traders to the sidelines. One reason for the irregular activity is a strategy known as "banging the beehive," in which high-speed traders send a flood of orders in an effort to trigger huge price swings just before the data hit.
This story was posted on The Wall Street Journal website yesterday...and is the first of two in a row from Washington state reader S.A. It's worth the read...and the link is here.
The hottest new thing on Wall Street is cooling down.
High-frequency trading firms — the lightning-quick, computerized companies that have risen in the last decade to dominate the nation’s stock market — are now struggling to hold onto their gains.
Profits from high-speed trading in American stocks are on track to be, at most, $1.25 billion this year, down 35 percent from last year and 74 percent lower than the peak of about $4.9 billion in 2009, according to estimates from the brokerage firm Rosenblatt Securities. By comparison, Wells Fargo and JPMorgan Chase each earned more in the last quarter than the high-speed trading industry will earn this year.
This amazing story showed up in the Sunday edition of The New York Times...and I thank Washington state reader S.A. for his second offering in a row. It certainly falls into the must read category...and the link is here.
Several readers have sent me this 5:37 youtube.com video clip in the last six months and, for whatever reason, I don't believe that I've every posted it. I will make up for my oversight/poor judgment at this point. It's worth watching...and I thank reader Federico Schiavio for bringing it to our attention. The link is here.
German Finance Minister Wolfgang Schäuble is determined to end the euro crisis once and for all. On Sunday he effectively ruled out a Greek bankruptcy, and is now proposing far-reaching reforms to stabilize the currency union. Under his plan, Brussels would be granted far greater powers over national budgets.
Wolfgang Schäuble knows that the quiet on the markets over the past few weeks has been deceptive and that the euro crisis could erupt again soon. After all, doubts remain about whether Greece can remain in the currency union in the long term. If it triggers a chain reaction, the entire euro project could collapse. In addition, the willingness of many euro-zone member states to eliminate the design defects of the common currency appears to be diminishing.
The finance minister, a passionate advocate of deeper European integration, has said he wants to concentrate on a small number of far-reaching reforms.
This story, which is worth reading...especially when you read what Ambrose Evans-Pritchard has to say about it in The Telegraph story that follows...showed up on the German website spiegel.de yesterday...and I thank Roy Stephens for his first offering in today's column. The link is here.
Germany has stated its exorbitant price for keeping Greece in the euro and agreeing to mass bond purchases by the European Central Bank.
There must be an EU “currency commissioner” with sweeping powers to strike down national budgets; a “large step towards fiscal union”; and yet another EU treaty.
Finance minister Wolfgang Schäuble dropped his bombshell in talks with German journalists on a flight from Asia, and apparently had the blessing of Angela Merkel, the chancellor. “When I put forward such proposals, you can take it as a given that the chancellor agrees,” he said.
Officials in Brussels reacted with horror. “If that is the demand, they are not going to get it. Nobody in the Council wants a new treaty right now,” said one EU diplomat.
It's hard to believe that the spiegel.de story above...and this story from The Telegraph...are about the same comments from Schäuble, but they are. Ambrose almost throws a hissy fit here...and it's a must read. I thank Manitoba reader Ulrike Marx for sharing it with us. The link is here.
They were just municipal elections, but a Flemish separatist party emerged as the clear winner. In addition to posing renewed problems for the future of Belgium, the vote is symbolic in a European Union where solidarity among member states is rapidly disappearing, German editorialists said on Tuesday.
Are some European countries in danger of splintering? It is a question many on the Continent and in the United Kingdom are asking this week in the wake of renewed indications that some separatist movements might be gaining ground.
The most recent step forward for one such movement came on Monday, when British Prime Minister David Cameron signed an agreement with First Minister Alex Salmond of Scotland, paving the way for a Scottish independence referendum in 2014. Although a recent survey suggested that just 32 percent of Scottish voters will support independence, the agreement is being hailed as historic.
Potentially more momentous, however, are the municipal election results in Belgium, which saw the party of Flemish separatist Bart De Wever make significant gains across the northern part of the country. Furthermore, De Wever will now become the mayor of Antwerp, Belgium's second-largest city.
This is another item from Roy Stephens...and it was posted on the spiegel.de website yesterday. The link is here.
The Trussell Trust said its food bank network had fed almost 110,000 people since April, compared with a total of 128,697 in the whole of 2011-12. The trust runs a network of 270 food banks across the UK, staffed by volunteers with food products donated by local people. The charity is launching a new food bank in the UK every three days and expects this growth to continue until 2015.
Its food banks provide at least three days' worth of nutritionally-balanced food for local people in crisis.
The charity expects to feed more than 200,000 people in 2012-13 as food and fuel bills are set to rise this winter.
This bbc.co.uk item was posted on their website early yesterday morning Eastern time...and I thank London, U.K. reader Tariq Khan for sending it. The link is here.
How can someone who has declared an annual income of €25,000 ($32,400) transfer €52 million abroad? What kind of supplementary income must an individual have who, according to his tax returns, earned €5,588 in 2010, yet still managed to move €19.8 million abroad? And how can it be that a Greek citizen sequesters €9.7 million abroad although he supposedly earned exactly zero euros?
These are the questions that tax fraud investigators will have to ask of a number of individuals whose identity has so far only been made public in the form of initials. For instance, a "G. D." stands at the top of a list with the names of 54,000 Greek citizens who relocated major assets abroad between 2009 and 2011. The list stems from the Greek central bank and is now in the hands of the Finance Ministry.
It is the longest of four lists that are currently circulating in Athens. Each contains the names of people whose financial circumstances -- bank balances and real estate holdings -- do not correspond at all with what they claimed on their tax returns. But hardly anything is being done about it. The Greek reality is sometimes paradoxical: While the governing coalition was busy squabbling with international creditors over how many hundreds of euros can still be trimmed from teachers' and nurses' paychecks, and Athens continued slashing employee pensions, wealthy Greeks moved billions abroad with relative impunity.
I knew the corruption was bad...but I had no idea how bad it really was. This story showed up on the spiegel.de Internet site yesterday...and it courtesy of Roy Stephens. The link is here.
George Soros has put the matter nicely at the National Association for Business Economics in New York.
If the world could somehow persuade Germany to pull out of EMU, Europe’s never-ending crisis "would disappear in thin air".
The residual euro would fall to a level that better reflected economic fundamentals in Southern Europe. Competitiveness would largely be restored at a stroke, without the need for debt-deflation. There would be no further risk of large sovereign defaults.
Mr Soros said — as he has many times before — that the current course is pushing euroland into a "lasting depression, and it is entirely self-created".
This AE-P blog showed up on the telegraph.co.uk Internet site sometime yesterday...and it's another contribution from Roy Stephens. The link is here.
The first two blogs are from the mysterious "London Trader". The first is headlined "Competition to Buy Physical Gold is Extremely Fierce"...and the second is entitled "Bullion Banks Had to Halt Gold's Advance". The last blog is with The Portola Group's founder, Robert Fitzwilson. "it bears the headline "Expect Severe Inflation, Time is Running Short to Take Action". The audio interview is with Jean-Marie Eveillard.
The U.S. dollar index fails to measure the currency's purchasing power but only its relative strength against other depreciating currencies, Jonathan Kosares of Centennial Precious Metals notes in commentary published today, "Dollar Index Disguises Global Inflation Threat." The dollar index, Kosares shows, is essentially unchanged over the last seven years even as basic goods have become 45 percent more expensive in that time...and gold is up four fold.
This very excellent commentary was posted on the usagold.com Internet site yesterday...and I consider it a must read. I pulled it from a GATA release yesterday...and the link is here. The dollar index graph is worth the trip all by itself.
The head of industrial and precious metals trading at Barclays, Cengiz Belentepe, has told Bloomberg that investors are selling their investments in gold ETFs and opting for the safety of allocated physical gold.
According to Barclays, gold holdings in ETF products are growing at a slower pace than in 2004-2009 because some investors may be moving to physical bullion after initial purchases of an ETF.
Gold ETFs has a very significant degree of counter party risk to the many counter parties such as the trustees and the many custodians and sub custodians. The ETF is a second rate form of paper gold in which one becomes an unsecured creditor of a trust rather than the outright, beneficial owner of allocated and segregated coins and bars.
As I've said for years now...and for precisely the reasons given in this article posted over at goldseek.com...I wouldn't touch either GLD or SLV with a 10-foot cattle prod. There are lots of other physical precious metal funds that don't have the fingerprints of the Nazgûl all over them. I thank Elliot Simon for his last offering in today's column...and the link is here.
Starting from today, 16 October 2012 until 31 December 2012, customers can purchase 99.9% pure, Swiss-manufactured 24 carat gold coins in denominations of half a gram, one gram, five grams, eight grams, 10 grams, 20 grams and 50 grams from 1,120 identified India Post outlets across the country.
The offer has been timed to coincide with the most important festivals in the Hindu calendar - Dussehra, Dhanteras and Diwali. This year Dussehra falls on 24 October, Dhanteras on 11 November, followed by Diwali on 13 November 2012. Both Dussehra and Dhanteras are considered auspicious days to buy gold and this ritual is believed to bring good fortune and divine blessings to households.
This story was posted on the economictimes.com Internet site around noon India Standard Time yesterday...and I thank Mumbai reader Avinash Raheja for bringing it to our attention. The link is here.
The Mexican journalist Guillermo Barba, who last year revealed via GATA that the Bank of Mexico was refusing to disclose the location and form of the 93 tonnes of gold it supposedly had purchased recently...announced this week that he has pried the answer out of the bank, using Mexico's freedom-of-information law just as GATA has been using U.S. FOI law.
Ninety-four percent of Mexico's gold, Barba reports, is said to be vaulted at the Bank of England in London...that is, at the center of the fractional-reserve gold banking system.
So much for Mexico's sovereignty...and so much for Mexico's gold.
I borrowed the headlined, plus the rest of the above preamble, from a GATA release yesterday. I thank reader 'David in California' for being the first to bring this story to my attention...and it's certainly worth your time, if you have any left. The link is here.
Bayfield Ventures Corp. (TSX.V: BYV) is exploring for gold and silver in the Rainy River District of NW Ontario. The Company’s 100% owned “Burns” Block property adjoins the immediate east of Rainy River Resources’ (TSX.V: RR) world-class gold deposit which includes an indicated resource of 5.72 million ounces of gold, averaging 1.18 g/t, in addition to an inferred resource of 2.25 million ounces of gold, averaging 0.79 g/t. Drilling to date on Bayfield’s Burns Block demonstrates that the ODM17gold zone extends from Rainy River Resources' ground onto the Burns Block. Bayfield is currently carrying out 100,000 metres of diamond drilling on its Rainy River properties. Drill results thus far have been very encouraging. Notable drill results include 60.05 grams per tonne gold and 362.96 grams per tonne silver over 11.2 metres within 26.70 grams per tonne gold and 170.69 grams per tonne silver over 25.5 metres, as well as 35.93 grams per tonne gold and 359.65 grams per tonne silver over 10.0 metres. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. Please visit our website to learn more about the company and request information.
The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself. -- Thomas Jefferson
I must admit that I was very pleased to see the rallies in both gold and silver yesterday...although most of it was probably dollar related. Just the fact that there was no sign of JPMorgan et al...except at the London p.m. gold fix...was encouraging.
But I must admit that I'm somewhat taken aback by the lack of follow-through by the big bullion banks, as they are in a position to do whatever they want to the downside, as they have this monstrous short position hanging over them like the sword of Damocles. But, as Ted Butler pointed out, the Commitment of Traders Report does not predict the timing of market events...only that the conditions are ripe for them to occur.
Do you remember reading the KWN blog above from the "mysterious" London trader where he said that they "had to halt gold's advance"? That may have come as a complete surprise to you, dear reader, but not to me. The reason for that is simple, as silver analyst Ted Butler has been talking about this for a month now in his bi-weekly commentaries to his paying subscribers. I'm sure that he won't mind too much if I steal what he had to say about this issue from his weekend review just past...and even if he does, it will be too late for him to do anything about it by the time he finds out about it.
"In gold, the total commercial net short position declined by 2,300 contracts to 267,000 contracts, still a very large number more associated with price tops than bottoms. The only standout feature under the hood was that the gold raptors accounted for all the reduction, as they bought back another 3,500 contracts of a still-large 37,400 contract net short position. This is the fourth week in a row that the gold raptors (the smaller commercials apart from the big 8) bought back short positions at losses. This is a rare occurrence, last seen on the climb to the all-time gold price highs of a year ago. As was the case back then, the big 4 and 8 largest commercial shorts sold enough additional contracts short to contain the price and, in effect, rescue the gold raptors from further losses (so far)."
"It's at times like this, when co-ordinated and concentrated selling can clearly be identified, that manipulation is most apparent. Without the surge in short selling by the big 4 over the past month or so, the gold raptors would have been in big trouble and would have bought back many more of their gold shorts than they did. But a short covering panic by the gold raptors was not something in the interest of the biggest gold shorts...and the big guys made sure the gold price rally didn’t get out of hand. That’s the story to date...and what these big gold shorts do next will determine the future gold price."
Yesterday, at the close of Comex trading, was the cut-off for this Friday's Commitment of Traders Report. Based on the price action during the reporting week, we should see a further decline in the short positions of JPMorgan et al...but, like last week's report, I doubt very much if the declines will be of a material nature.
Not much happened during the Far East trading session on their Wednesday, although both gold and silver were up a tiny bit going into the London open. The dollar index was down a bit over 10 basis points. Volumes were light...lighter than they were even on Tuesday at this time. And as I hit the 'send' button at 5:06 a.m. Eastern, the gains that both metals had earlier have disappeared, even though the dollar index is still down. But at these volume levels, I wouldn't read a whole heck of a lot into the price movements in either direction.
I have no idea what to expect during the New York trading session today, but as you already know, most of the price and volume action occurs there...and will again today.
Enjoy your day...and I'll see you here tomorrow.