The gold price did nothing until the start of London trading. During the next hour or so the smallish rally added five bucks to the price before the high-frequency traders showed up...and within ten minutes of the Comex open, gold's low price tick of the day [$1,572.50 spot] was in.
From that low, the gold price developed a positive bias, with the high tick of the day [$1,588.40 spot] coming at 2:10 p.m. Eastern standard time. From that point the gold price got sold down a few dollars before trading quietly into the close.
Gold finished the day at $1,584.00 spot...up $2.30 from Thursday's close. Net volume was very light at around 101,000 contracts.
Silver's chart pattern was pretty much the same as gold's. Silver's low tick [$26.71 spot] came at 8:45 a.m. in New York...and the high water mark [$27.56 spot] came around lunchtime...and from that high, silver more or less traded sideways into the close of electronic trading.
Silver had an intraday price move of 85 cents...and when all was said and done, the price finished up a nickel from Thursday's close. Net volume was pretty decent...around 36,000 contracts.
The dollar index did little of anything until shortly after 9:00 a.m. in London trading...and then away it went to the upside...hitting its zenith about 9:50 a.m. in New York...and from there it more or less traded sideways in the close. That rally tacked about 60 basis points on the U.S. dollar index.
Most of gold's price decline in London trading can be pinned on this dollar index rally...but that answer runs out of gas at the open of Comex trading, because the relationship fell apart after that.
I certainly wouldn't read much into the share price action yesterday, although the index traded above unchanged for most of the day...and the HUI finished up 0.29%.
The same can be said for the silver equities, which finished mixed as well. Nick Laird's Silver Sentiment Index closed down 0.27%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that there were no gold or silver contracts posted for delivery on Tuesday...and that's the first time in my memory that this report has come up blank in both precious metals at once.
There was another withdrawal from GLD yesterday...the third this week. This time it was 77,609 troy ounces. During the past week 485,063 ounces of gold were withdrawn from GLD. Considering the price action, it was probably withdrawn for other reasons. There were no reported changes in SLV.
The U.S. Mint had another small sales report. They sold 125,000 silver eagles. Month-to-date gold eagle sales total 17,500 ounces...along with 1,500 one-ounce 24K gold buffaloes...and 1,228,000 silver eagles.
There was a fair amount of activity over at the Comex-approved warehouses on Thursday. A total of 304,097 ounces of silver were received...and a pretty chunky 1,079,473 ounces of the stuff were shipped out the door. The link to that action is here.
The Commitment of Traders Report wasn't very exciting yesterday. For the reporting week there were slight gains in both silver and gold prices...and the Commercial net short position in silver rose by 1,028 contracts...and gold's Commercial net short position rose by 6,053 contracts.
I didn't have the chance to talk to Ted Butler yesterday, so I have no idea whether the increases were caused by the 'usual suspects' going short...or the small commercial traders [Ted Butler's raptors] selling long positions at a profit...or a combination of both. I'll find out for sure when I read his Weekly Review later today.
Regardless, it was pretty much a nothing report...and the set-up in both metals is still incredibly bullish.
The Central Bank of the Russian Federation updated their website with June's numbers yesterday...and it showed that they added 200,000 troy ounces to their official gold reserves during that month. Their gold reserves currently sit at 29.5 million ounces. Here's Nick Laird's wonderful graph updated with that number.
(Click on image to enlarge)
Along with the updated chart above, Nick sent along the updated "Transparent PM Holdings" graph. It shows minor declines in all the precious metals. But please note that the long-term trend is firmly up regardless of what's happening with the price.
(Click on image to enlarge)
Lastly is this chart titled "Buyers of [Very] Last Resort" that I borrowed out of a Daily Reckoning piece headlined "Market Rigging and Price Fixing" by Eric Fry that Roy Stephens sent me...and it's pretty self-explanatory.
I have the usual number of stories for a Saturday...quite a few. And since it's the weekend, I hope you can find the time to at least skim the 'cut and paste' portion that I've included with each news item.
Lenders like Bank of America Corp and Wells Fargo & Co say they are facing mounting pressure to buy back bad mortgages they sold to investors, signaling that banks' home-loan headaches could continue for years.
Investors like Fannie Mae and Freddie Mac have been pressing banks to buy back bad mortgages for years, but in recent months those requests have intensified, the banks have said in recent second-quarter earnings reports.
These comments from banks provide a fresh reminder of the loose ends that remain from the housing bust that started five years ago. The threat of new expenses and litigation is dampening bank share prices, and the problem could linger for some time, analysts and experts said.
"This is not done yet," said Paul Miller, analyst with FBR Capital Markets. "There will be continued surprises in the industry."
This Reuters story was posted on their website shortly after the markets closed yesterday afternoon. I thank West Virginia reader Elliot Simon for sending it along...and the link is here.
Call it a case of man bites dog. Since the start of the housing crash, millions of Americans have lost their homes to foreclosure. Many of them lived in homeowner or condo associations.
These are organizations that collect monthly dues to pay for amenities, like added security, maintenance and recreational areas; one in five Americans currently lives in an association-governed community.
These associations have been hit hard by the housing crisis, as many delinquent borrowers stopped paying their monthly HOA dues. In some cases, HOA’s, which do have the authority in many states, managed to foreclose on properties even before the banks, by using the back dues as liens.
Now the homeowner associations are taking it one step further. They are going after the banks, claiming that several of the largest lenders are not paying monthly HOA/condo fees on homes they’ve repossessed and now hold as bank-owned properties (Real Estate Owned, or commonly called REO’s).
As a 27-year veteran in residential real estate here in Edmonton, this is a process that I'm intimately familiar with. Here in Alberta, arrears in condo fees are in first position on any condominium title...and take precedence over any other financial encumbrance. This CNBC story is Elliot Simons' second offering in a row...and the link is here.
Well, well, well...
Treasury Secretary Timothy Geithner has quite the mouth on him.
In Neil Barofsky's new book-- "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street"-- Geithner drops a few F-bombs in his interviews with the former Inspector General for TARP.
Like all sociopaths, little Timmy is lying through his f------ teeth. This short story appeared on the businessinsider.com Internet site mid-afternoon on Friday...and I thank reader 'David in California' for bringing it to our attention. It's a very short piece...and the link is here.
Imagine you ran a too-big-to-fail bank under criminal investigation by U.S. prosecutors. Now ask yourself this: How much of your company’s money would you pay to have the Justice Department inoculate you personally against the prospect of any government charges?
If you said “the sky’s the limit,” you’re not alone. Prosecutors often settle claims against corporations in exchange for fines, while letting the executives off scot-free. This brings us to the $160 million non-prosecution agreement that Barclays Plc (BARC) reached last month with the Justice Department, a week before Robert Diamond resigned as its chief executive officer.
In essence, although it didn’t mention him by name, the Justice Department publicly cleared Diamond of wrongdoing over the way he responded to a pivotal phone call from Paul Tucker, the Bank of England’s deputy governor, on Oct. 29, 2008, during one of the worst moments of the financial crisis. Here’s the crucial sentence from the “statement of facts” that the Justice Department and Barclays agreed were “true and accurate,” as part of their settlement:
“As the substance of the conversation was passed to other Barclays employees, certain Barclays managers formed the understanding that they had been instructed by the Bank of England to lower Barclays’s Libor submissions, and instructed the Barclays dollar and sterling Libor submitters to do so -- even though that was not the understanding of the senior Barclays individual who had the call with the Bank of England official,” the June 26 document said.
This op-ed piece by Bloomberg reporter Jonathan Weil was posted on their website on Thursday afternoon...and I thank Washington state reader S.A. for sending it. The link is here.
Regulators and central banks have been drawn into scandal over the manipulation of the key interbank lending rate which has led to a £290m fine for Barclays and the resignation of the bank's top executives.
The newly published emails showed that the Bank of England urged the BBA, the body responsible for Libor, for "greater energy" in overhauling the lending benchmark at the height of the financial crisis.
There were widespread concerns about the rate at the time. Barclays, which admitted rigging the rate between 2005 and 2009, is just one of 16 banks being investigated by US, UK and EU regulators.
Paul Tucker, now deputy governor at the BoE, said in 2008 that he did not expect the BBA to do a "root and branch review" of Libor, despite concerns raised by over "misreporting" of the rate by Tim Geithner, US Treasury Secretary who at the time was head of the New York Fed.
This story was posted on the telegraph.co.uk Internet site yesterday afternoon local time...and I thank Roy Stephens for finding it for us. The link is here.
You have to love the chutzpah at HSBC Holdings Plc. At the very moment it’s asking the courts to remove a ragged band of Occupy Wall Street protesters encamped under its Hong Kong headquarters, the largest European bank is also reminding the world why many people are so angry at bankers.
The subject of the anti-Wall Street crusade isn’t much to behold: A few dozen 20-somethings living in tents, lounging on shabby sofas, strumming guitars and handing out pamphlets. Their notoriety is all about location, location, location -- the plaza beneath one of Asia’s most iconic buildings in the heart of Hong Kong (HSI)’s financial district.
Turns out, HSBC is a more deserving target for the 99 percent than we knew. While it obsesses over a few demonstrators, HSBC has been cited for helping terrorists, drug cartels and other criminals launder money, according to a U.S. Senate investigation. That includes, among others, transactions involving North Korea, Myanmar and Sudan, an axis of evil customers.
All the worlds biggest banks are involved in this sort of activity, as there's big money to be made in these activities. Either HSBC Holdings Plc became too big for its britches, or too obvious...and it became the sacrificial lamb. Maybe more banks will receive the same treatment. That's one of the reasons why JPMorgan will no longer deal with the Vatican's bank...just too much shady stuff going on and, as you know, JPMorgan itself wouldn't bear close scrutiny either. This Bloomberg story was posted on their website on Thursday afternoon...and I thank Washington state reader S.A. for his second offering in today's column. The link is here.
Spain may soon be getting aid for its troubled banking sector, but that appears to be of no comfort to the Spaniards. After Madrid passed another round of tough austerity measures on Thursday, tens of thousands took to the streets in some 80 cities around the country.
The protests, which reportedly saw some 100,000 demonstrators in Madrid alone, were called by the CCOO and UGT trade unions, which reject the government's planned belt-tightening efforts. The two unions have threatened to call a general strike in September. Dozens of injuries and a handful of arrests were reported following scuffles with police.
Prime Minister Mariano Rajoy's conservative People's Party (PP), which has an absolute majority in parliament, pushed the controversial plan to cut spending by some €65 billion ($80 billion) through parliament on Thursday, despite staunch resistance from the opposition.
The austerity measures include a significant boost in the value-added tax, the abolition of Christmas bonuses for state employees and cuts to unemployment payments. The deep reductions in state spending have been met with widespread resistance, with police officers, firefighters, soldiers, judges and public defenders all taking part in Thursday's protests.
This story was posted on the German website spiegel.de yesterday...and has been re-titled since it was first posted. It's now headlined The World from Berlin: 'Merkel is Driving Europe into the Abyss'. I thank reader Donald Sinclair for sharing it with us...and the link is here.
Spain's broad equity index suffered its second largest single-day drop in almost 4 years and Italy also tumbled almost 5% as everything European was sold hard.
EuroStoxx (the broad Dow equivalent) is down almost 3% as EUR/USD dropped to two year lows, EUR/JPY to 12 year lows. AAA safe havens were massively bid with Germany, Denmark, and Switzerland all to new low (negative) rate closes.
Core equity markets did suffer though with Germany down 2% but it was the periphery that saw the damage in credit-land with Spain 10Y closing at 7.27%, 610bps over Bunds (and 5Y CDS over 605bps). Spanish spreads are +130bps from post-Summit (and pre-Summit) and Italy +78bps, but it is the front-end of the curve that is most worrisome - Spain's 2Y is 132bps wider in the last week. Europe's VIX exploded by over 4 vols to 24% today and once again looks decidedly high relative to US VIX.
Spain and Italy surging to as bad a performance as Portugal...post Summit...
This short Zero Hedge piece was posted on their website late yesterday morning Eastern time...and contains some very excellent charts. I thank reader 'David in California' for his second story of the day...and the link is here.
Spain dragged the eurozone closer to the edge of collapse despite winning the backing of finance ministers from the single currency's major economies for a €100bn (£77.8bn) bank rescue fund.
Concerns that Madrid is running out of options to bring down the debts of its ailing banks and bankrupt regions sent the country's borrowing costs soaring above 7.2% – a rate seen as unsustainable for a country that cannot devalue its own currency and is suffering a lengthy double-dip recession.
The bank bailout had been supposed to push down the country's borrowing rates, but the country's problems continue to mount. On Friday the region of Valencia was forced to turn to the Spanish central government for cash help.
In some respects, this story is similar to the last two, but looks at the same issues from a slightly different angle. It was posted in The Guardian late yesterday evening BST...and I thank Roy Stephens for bringing it to our attention. The link is here.
The rats everywhere are now jumping furiously off the Titanic, but few had taken the time to write a letter explaining in detail just how cracked and broken the hull really was.
This has now changed, with the departure of Peter Doyle, formerly a division chief in the IMF’s European Department responsible for non-crisis countries and currently an adviser to the Fund.
Not content with quietly slinking off the scandal ridden organization which has become the butt of all jokes in the international community, where humor about Lagarde's Louis Vuitton panhandling bag is as pervasive as punch lines about just how incompetent the organization is at actually doing its duty, Doyle has penned the following scathing letter which tears down every myth about the IMF: from its impartiality, to the selection process of its head, to its effectiveness.
Doyle's letter showed up as a pdf file in this Zero Hedge story from yesterday. It's Washington state reader S.A. third and final contribution to today's column...and your first absolute must read of the day. The link is here.
“Global macro” has of late been relegated more of a backseat role, with earnings and market “technicals” driving a largely upbeat marketplace. Things might have changed today, with spiking Spanish bond yields proving increasingly difficult to disregard. Spain’s 10-year yields surged 26 bps Friday to 7.19%, increasing the rise for the week to 61 bps. Perhaps more alarming, Spanish two-year sovereign yields jumped 61 bps Friday and were up 134 bps for the week. At 5.62%, two-year yields are almost back to panic spike highs from last November – and are essentially at the highest level since 1997. Despite the EU’s recently negotiated 100bn euro bailout, Spain’s borrowing costs have moved only further into unsustainable territory. The Spanish stock market was hit for 5.8% today. Things have reached the boiling point, as mass public discontent with the latest round of austerity measures recalls Greece’s unraveling.
And while the EU’s plan to finance a Spanish banking bailout has come together, the market takes no comfort. There is today little foreign interest in owning Spanish debt. Meanwhile, recent poor auction results indicate that domestic demand, chiefly from Spain’s troubled banks, has also meaningfully waned. Problematically, Spain has huge deficits and large debt maturities to finance going forward, as the scope of the holes in banking system and local government finances seemingly expands by the week. Between the sovereign, the banks and regional governments, the markets fear an unending and, in the end, unmanageable quantity of debt to refinance. Friday saw the cash-strapped Valencia region prepare to tap Spain’s newly created 18bn euro facility for bailing out the regions. The highly-leveraged and badly maladjusted Spanish economy has begun to buckle.
Spain sovereign Credit default swap (CDS) prices rose 25 bps Friday and were up 50 bps for the week, jumping back above 600 bps. I still grapple with prominent, advanced and perceived wealthy sovereign nations such as Spain and Italy with CDS trading above 500 and even 600 bps. Spain CDS surpassed 100 bps for the first time during 2008. Credit deterioration has been even more devastating throughout Spain’s banking system. For example, troubled Bankia and Banco Popular saw their (subordinated) CDS trade to about 2,000 bps this week, as the markets increasingly price in a run of costly Spanish bank failures.
Doug Noland tears the cover of the ball in this scathing assessment of the world's current credit risk environment. This story, too, falls into the must read category...and I thank reader U.D. for sending it along. The link is here.
China has emerged as Africa's main trading partner and a major source of investment for infrastructure. But its presence has also sparked concerns about labour abuses and corruption.
Hu made the lending pledge on Thursday during the opening ceremony of the Forum on China-Africa Cooperation in Beijing.
Hu also said China and African countries, as developing nations, should better coordinate their response to international affairs to counter the practices of "the big bullying the small, the strong domineering over the weak and the rich oppressing the poor".
The pledge is likely to boost China's good relations with many African nations, suppliers of oil and raw materials to the world's most populous nation.
This is the first of four articles that I've been saving for Saturday's column. This one appeared on The Telegraph's website early Thursday morning...and I thank Roy Stephens for bringing it to my attention...and now to yours. The link is here.
China is shelling out massive amounts of money and manpower to improve Pakistan's Karakoram Highway, the highest motorway in the world. The supposed gift to its neighbor is a perfect example of China's economic strategy of taking on short-term expenses for the sake of long-term benefits.
The almost 1,300-kilometer (800-mile) long path, which runs from Kashgar in western China's Uighur Autonomous Region almost to the Pakistani capital Islamabad, is set to be transformed from a dusty, bumpy road into a modern mountain highway. The section on the Chinese side is already finished. "For Beijing, it's about being able to export more goods to Pakistan, through the ports of Karachi and around the world," says China expert Fazal ur-Rehman of the Institute of Strategic Studies in Islamabad. Plans also include a future pipeline that runs along the Karakoram Highway, allowing China to bring in Iranian gas.
But government circles in India, China's rival in Asia, are concerned that after the expansion China will also be able to transport tanks and other heavy military equipment to the Indian Ocean. After all, China already showed its aggressive potential when it marched into Tibet in 1950, and a few years later when it occupied other parts of the region.
This interesting read showed up on the spiegel.de website on Tuesday...and is certainly worth your time if you have it. It's also Roy Stephens final offering in today's column...and the link is here.
Swiss bank revealed India has more money than rest of the world The second best Russia has 4 times lesser deposit. U.S. is not even there in the counting in top five! India has more money in Swiss banks than all the other countries combined!
Due to international pressure, the Swiss government agreed to disclose the names of the account holders only if the respective governments formally asked for it. Indian government is not asking for the details. We need to start a movement to pressurize the government to do so! This is perhaps the only way, and a golden opportunity, to expose the high and mighty and weed out corruption!
With personal account deposit bank of $1,500 billion in foreign reserve which have been misappropriated, an amount 13 times larger than the country’s foreign debt, one needs to rethink if India is a poor country? With this amount 45 crore poor people can get Rs 1,00,000 each.
After paying the entire foreign debt, we will have surplus amount, almost 12 times larger than the foreign debt. If this surplus amount is invested in earning interest, the amount of interest will be more than the annual budget of the Central government. So even if all the taxes are abolished, then also the Central government will be able to maintain the country very comfortably.
This story appeared on the ibtl.in Internet site on Tuesday...and I thank Nitin Agrawal for sending it along. The link is here.
London and the Olympic Games are clearly not made for each other. Visitors will need determination and, most of all, patience to reach the venues at all. And, for the locals, it all can't end soon enough.
It's never easy to be a Londoner, not even on a perfectly normal workday in an English summer.
Everyone, whether rich or poor, experiences the same hardships of big-city life in London. For Londoners, the day begins with aircraft noise -- which some never get used to -- partly because double- or triple-paned windows are in short supply, even in Europe's most expensive city.
In London, cars, cabs and buses are inefficient forms of transportation for medium and long-distant trips. As a result, day after day, millions squeeze into the clattering London Underground, the oldest, probably hottest and often fullest subway system in the world. Then, after prolonged inhalation of the melded odors of perspiration and perfume, the crowds pour into downtown London's too-narrow sidewalks before disappearing into their offices. There, they can finally do what some still do very well in this massive, sometimes magnificent but often excessively wound-up city: make money.
The same drama unfolds every evening, only in reverse. About half of London's workforce commutes more than 45 minutes each way -- if all goes well, that is. Is it any surprise that so many people there have a few drinks at a pub before heading home, resorting to alcohol to cast the place where they live - and their lives -- in a somewhat rosier light?
The Economist claims that London "had the best infrastructure in the world" 100 years ago. But, today, the city is already being pushed to its limits on a daily basis. And now this major city is about to host the world's most challenging major spectacle, the Olympics, for the third time, after hosting it in 1908 and 1948.
Speaking from personal experience while I was attending GATA's London conference just about a year ago, I couldn't agree more with the above assessment of London. It's going to be a bigger zoo than it already is...and that's being kind. I found this story on the spiegel.de website on Tuesday...and it's worth reading. The link is here.
Eric King's 'London trader' source tells KWN that the "LBMA's gold price fixing scheme is about to collapse". We'll see. The second blog is with Egon von Greyerz...and it's headlined "$1.5 Quadrillion Bubble...and Gold Going Into the Stratosphere". Lastly is this Nigel Farage audio interview. I posted the Farage blog a couple of days ago.
While this has not been widely reported in the Western media, news broke this week of a massive illegal gold-futures trading scam in China. Not only does it underscore the growing hunger for gold among the newly minted Chinese middle class, but also hits home the rationale for owning physical gold, according to one U.S. based asset manager.
Over 5,000 investors were bilked out of 380 billion yuan, or $59.62 billion in a scheme involving Loco London gold since 2008, according to a report in the China Daily.
While details are unclear how the scam worked, the implications could be bullish for gold in a number of ways. Perhaps gold prices could be at even higher levels than they are right now, if this money had been properly invested.
“That is obviously a very significant amount, this is an enormous scam,” said Adrian Day, president of Adrian Day Asset Management. Looking ahead, Day noted that “It might make Chinese investors turn towards the physical rather than esoteric contracts.”
This Kitco story was posted at the forbes.com website during the New York lunch hour on Friday...and I thank reader 'David in California' for sharing it with us. It's a must read...and the link is here.
Jim Sinclair's call this week to gold and silver investors to fight back against market manipulation is noted in Friday commentary by MineWeb's Lawrence Williams, who mentions GATA's role in the fight. Williams' commentary is headlined "Jim Sinclair's Call to Arms against the Organised Criminals Who Manipulate Global Markets".
It's certainly a must read...and I found this story imbedded in a GATA release...and I thank Chris Powell for the headline and the introductory paragraph. The link is here.
Pelangio Exploration Inc. (PX:TSX-V; PGXPF:OTC) announced the results of seven diamond drill holes totaling 1,574 metres from its ongoing drilling program at the Pokukrom East zone on the Manfo Property in Ghana. Highlights of the results included:
· 1.19 g/t gold over 113 metres, including 9.05 g/t gold over 7 metres;
The results continued to confirm a higher grade, shallow north plunging core of Pokukrom East zone with an open plunge of 600 metres from near surface in previously reported hole SPDD-088 (7.01 g/t gold over 19 metres) to 210 metres depth in the holes reported this week. Warren Bates, Senior Vice President Exploration, commented: “These are our best holes on the Manfo Property to date. These holes represent the north-plunging core of higher grade mineralization at Pokukrom East, now demonstrating an open plunge length of 600 metres.” Please visit our website to learn more about the project and request additional information.
Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by a deluge of bank paper, as we were formerly by the old Continental paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who instead of employing their capital, if any they have, in manufactures commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs. Prudent men must be on their guard in this game of Robin's alive, and take care that the spark does not extinguish in their hands. I am an enemy to all banks discounting bills or notes for anything but coin. But our whole country is so fascinated by this Jack o' lantern wealth, that they will not stop short of its total and fatal explosion. - Thomas Jefferson
Today's 'blast from the past' was a big hard rock number that I'd forgotten all about until Edmonton reader B.E.O. sent me the youtube.com video of it last Saturday. This number was one of their biggest hits...and was first released on their "Demons and Wizards" album back in May 1972. I hope you enjoy it...and the link is here.
Well, the world's current economic, financial and monetary systems are on their last legs. In actual fact, they are 'dead men walking' at this very moment...it's just the timing that's uncertain.
Of course you'd never know any of that by looking at the precious metal prices these days...but I've beaten that price management horse to death enough already this week, so I'm not going to dwell on it any further here.
The last ace in the hole left to the world's powers that be is the gold card...and it remains to be seen if, or when, they play it...as there is no hint whatsoever that they are about to.
That rather interesting tell-all resignation letter from that IMF official certainly shows that inside the 'hallowed halls' at the very top of the fiat currency food chain, things are not at all as they appear...and it certainly isn't business as usual. Did I get a whiff of desperation coming from that resignation letter...or is it just me?
Things will "keep buggering on" as Winston Churchill once said...until they either stop, implode, or explode. Nothing would surprise me in the weeks and months ahead and, hopefully, you won't be surprised either.
Enjoy what's left of your weekend...and I'll see you here on Tuesday.