The high for gold during the Wednesday trading session [around $1,654 spot] came in mid afternoon trading Hong Kong time...and about an hour before London opened. Then it was all down hill from there, with the rally attempt during the Comex trading session getting sold off before it could get back to Tuesday's closing price. The low price tick of the day [$1,636.40] occurred a few minutes after 9:00 a.m. Eastern time.
The gold price closed in New York at $1,642.00 spot...down an even $8.00 on the day. Net volume was very light...in the 102,000 contract area.
Silver's price path was very similar to gold's, except for the fact that the high of the day came shortly before the lunch hour in Hong Kong...and the low came at 12:50 p.m. Eastern. The Far East high was somewhere north of $31.90 spot...and the New York low printed $31.28 spot. Net volume was about the same as Tuesday's...a smallish 27,000 contracts.
The dollar index opened around 79.56...and by shortly before 9:00 a.m. in New York, it was up 30 basis points. Then, during the next two hours, the dollar index fell about 35 basis points to its low of the day. The index gained a bit after that...and basically closed unchanged from Tuesday...and Monday.
Gold had it biggest New York gains during this 35 basis point decline in the dollar index...but why gold got sold off after the 11:00 a.m. low in the dollar index is a mystery to me...and even the 'rally' in the gold price between 9 and 11 a.m. looked like it ran into some headwinds, as it was far from smooth, while the dollar index had a virtual waterfall decline.
Here's the New York Spot Gold [Bid] graph so you can compare the dollar decline and gold's rally side by each.
The gold stocks spiked into positive territory about ten minutes after the equity markets opened, there was a willing seller in the wings...and even though the gold price worked its way higher right up until 11:00 a.m. Eastern time, the sell-off in the shares continued.
The low of the day came shortly after 1:30 p.m. in New York...and they rallied a bit into the close. The HUI finished down 0.93% yesterday.
The silver stocks finished mixed yesterday...but virtually all the stocks that make up Nick Laird's Silver Sentiment Index finished in the red...and it closed down 1.25%
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The CME's Daily Delivery Report showed that 142 gold and 1 lonely silver contract were posted for delivery on Friday. The only short/issuer was the Bank of Nova Scotia, with all 142 contracts...and the big long/stopper was JPMorgan, with 118 contracts for its client accounts...and 18 contracts for its in-house account. The link to the Issuers and Stoppers Report is here.
There were no reported changes in either GLD and SLV.
There was a smallish sale reported by the U.S. Mint. They sold 3,000 ounces of gold eagles...and that was it.
But over at the Comex-approved depositories it was anything but quiet. On Tuesday they reported receiving 1,022,932 troy ounces of silver...and shipped an incredible 3,107,201 ounces out the door! Once again the bulk of the activity was over at Brink's, Inc...and I also note that JPMorgan's silver inventory numbers are starting to sneak up there, as they just passed the 13 million ounce mark. The link to the action is here...and it's worth a peek.
Here are a couple of paragraphs about "excessive speculation" in the energy markets brought to you by silver analyst Ted Butler. He had something to say about that in his mid-week commentary to his paying subscribers yesterday...and they're worth reading.
"Primarily because of high gasoline prices at the pump, increased attention is being placed on what role commodity speculators may be playing in creating those high prices."
"But is that what has been occurring in energy markets? Perhaps to a certain level, but the clear telltale signs of excessive speculation and manipulation don’t appear to be present. The telltale signs, of course, would include a large concentrated position on the long side. This concentration information is compiled and published weekly by the CFTC in their Commitments of Traders Report (COT). For example, in crude oil futures, the big NYMEX contract doesn’t appear to be overly concentrated, with the four largest longs holding a 13.2% net position of total open interest."
"Undoubtedly, when important technical price signals are flashed, crude oil futures, like all commodities, can jump or fall suddenly as many technical traders enter or exit the markets simultaneously. In the past, I have suggested a separate speculative position limit be created if too many independent traders are utilizing the same price signals and disrupting price patterns. But overall, it does not appear as if an excessively concentrated long position is behind the rise in crude oil and gasoline prices. As an energy consumer, if I saw clear signs of manipulation in energy prices, I would say so."
A reader sent me this little tidbit about China's gold imports that he stole from the S&A Digest the other day...
"China's gold imports continue soaring...Mainland China's imports from Hong Kong rose 20% in February to 39.7 tonnes, according to the Hong Kong Census and Statistics Department. That's below the record 102.5 tonnes imported last November. But combined imports for the first two months of this year increased more than six-fold from last year to 72.6 tonnes."
"China is poised to overtake India as the world's largest gold market this year... Consumer demand in the country rose 20% in 2011, compared to 7% for the rest of the world. Hong Kong shipped 427.9 tonnes of gold to China last year, up more than three times from a year earlier."
One last thing before the 'Critical Read' section...and that's this Scott Pluschau blog about open interest on the Comex Futures Market. Just about everything you need to know about o.i. is included. The link is here.
I have the usual number of stories for your reading 'pleasure' today and, once again the final edit is up to you.
A former director of the Federal Bureau of Investigation who has come under fire as the bankruptcy trustee for MF Global will appear next week before a Congressional panel examining the collapse of the brokerage firm.
Louis Freeh, who has the responsibility of returning assets to creditors of the commodities brokerage firm, is expected to testify alongside regulators as well as another trustee responsible for the return of missing customer money. The two trustees, whose missions in some ways are at odds, have been facing off over the privacy of documents and the distribution of assets.
The hearing, slated for April 24 before the Senate Banking Committee, will be the sixth Congressional inquiry stemming from MF Global’s bankruptcy and the disappearance of customer money. Nearly six months later, farmers, hedge funds and other customers of MF Global are still owed an estimated $1.6 billion.
This story appeared in The New York Times on Monday evening...and Phil Barlett didn't get it to me in time to make Tuesday's column, so here it now. The link is here.
America's swelling ranks of fallen municipal borrowers have been blamed in the past year on 'what-were-they-thinking' causes, be it a Taj Mahal sewer system in Alabama or an overpriced trash incinerator in Pennsylvania's capital city of Harrisburg.
But the next series of major cities and counties in danger of defaulting on their debt can hardly point to one single decision for their malaise. Whether it be Detroit, Miami or Providence, Rhode Island, their problems have a lot more to do with financial policies that put them on course to live well beyond their means.
Municipal defaults have shot up since 2007 and are on pace for another high year in 2012, according to Richard Lehmann, publisher of the Distressed Securities Newsletter.
This Reuters story was posted on their website on Tuesday...and I thank West Virginia reader Elliot Simon for sending it my way. The link is here.
The European Union would like to see the International Monetary Fund provide billions in additional funds to help relieve the debt crisis. However, a number of emerging economies are resisting the plans, accusing the West of abusing its power within the organization and creating a "North Atlantic Monetary Fund".
The prospect of additional financial aid is anything but a given. Many of the IMF's 187 member states are becoming increasingly resentful of the still-affluent old continent's sense of entitlement. And many politicians in poorer parts of the world resent the well-off Europeans for being so adept at helping themselves.
For the group of emerging economies known as the BRICS countries -- Brazil, Russia, India, China and South Africa -- the IMF's largesse is further proof that the old industrial powers of Europe and North America see the Washington-based organization as a self-service shop. A tough wrestling match with these countries is to be expected over any additional aid for Europe.
For all readers not familiar with the IMF, this is a must read in my opinion. It's a Roy Stephens offering that he dug up over at the German website spiegel.de yesterday...and the link is here.
European banks could be forced to sell as much as $3.8 trillion in assets through 2013 and curb lending if governments fall short of their pledges to stem the sovereign debt crisis or face a shock their firewall can’t contain, the International Monetary Fund said.
In a study of 58 banks including BNP Paribas SA (BNP) and Deutsche Bank AG (DBK), the IMF forecast that under such circumstances, gross domestic product in the 17-country euro region would be 1.4 percent lower than now expected after two years. Even under its baseline scenario, the IMF sees banks’ combined balance sheets possibly shrinking by as much as $2.6 trillion.
“So far, deleveraging has occurred predominantly through buttressing capital positions and reducing non-core activities, leaving the impact on the rest of the world manageable,” the IMF said in its Global Financial Stability Report released today. “It is essential to continue to avoid a synchronized, large-scale, and aggressive trimming of balance sheets that could do serious damage to asset prices, credit supply, and economic activity in Europe and beyond.”
This Bloomberg story was sent to me by Casey Research's own David Galland...and the link is here.
With an eye on the growing banking crisis in southern Europe, particularly in Spain, an increasing number of governments as well as senior representatives of the European Central Bank are pleading for the European Union's temporary euro backstop fund to be used to provide financial institutions with direct assistance.
Sources familiar with the discussions told the Süddeutsche Zeitung that the parties would like to see the criteria used by the European Financial Stability Facility (EFSF) to allocate aid be relaxed to include financial institutions in the event they represent a greater problem than a country's government finances. So far, this aid has been paid to governments, which in turn provided some forms of assistance to beleaguered banks.
Such a move would enable the temporary euro-zone rescue fund, the European Financial Stability Facility (EFSF), to directly transfer money to these banks, bypassing national governments.
This very short story was posted over at the spiegel.de website yesterday...and is another Roy Stephens offering. The link is here.
The Bank of Spain plans to auction between €1.5 and €2.5 million ($1.9 and $3.3 million) in bonds of 2.5 and 10 year securities today.
But financial media and investors are going nuts over this auction—as opposed to a sale of short-term bond auction on Tuesday—because of the maturity of debt Spain is selling.
Thus, Spain's ability to sell 2.5-year securities that mature before the LTRO expires will be vital to how well Spain can weather the storm around its banks. Poor results on the 2.5-year auction would signal that investors are already ignoring the positive impact of the LTRO, and that Spain's sovereign debt situation is about to get a whole lot worse.
This very short story was posted over at the businessinsider.com website...and I thank Roy Stephens once again for sending it. The link is here.
Even by the standards of the Monetary Policy Committee, Adam Posen is the gentlest of doves. The Harvard-educated academic has voted consistently for low interest rates and for Quantitative Easing on grounds that prices were about to start dropping dangerously. In an interview with The Guardian in March 2011, he predicted that inflation would stand at 1.5 per cent by the middle of this year. 'If I have made the wrong call, not only will I switch my vote, I would not pursue a second term,' he declared. 'They should have somebody who gets it right and not me. I am accountable for my performance.'
Last month, despite the Bank of England's mulish insistence that price rises would slow, inflation rose from 3.4 to 3.5 per cent. Barring a miracle, it looks like so long, Dr Posen.
Not that I want to pick on the one MPC member who has had the courage of his convictions. Most of his colleagues have been every bit as wrong as he has. The core function of the Bank of England, as it happily states on its website, is to maintain price stability, defined as inflation at two per cent. That figure is now becoming a kind of symbolic, notional target, like Portugal's territorial claim to Olivenza. It's hard to remember when the price rises were last within the permitted range. Four years ago? Five?
This story was posted in The Telegraph yesterday...and is another offering from Roy Stephens. The link is here.
The World Trade Organization dealt a blow to the hopes of anyone hoping that the global economy might be showing signs of improvement in the coming months by announcing last week that it expects the rate of growth in global trade to fall again to only 3.7% from 5% — significantly below the 20-year average growth rate of 5.4%. That might not be the end of the story: “severe” downside risks could put a further dent in growth rates.
As this week’s Chart of the Week indicates, traffic through the Suez Canal in Egypt – a key cargo transportation route – has nosedived in recent weeks and months. Currently, Suez traffic is only slightly better than flat compared to year earlier levels.
This story, along with an excellent graph, was posted on the thomsonreuters.com website on Monday...and I thank Nitin Agrawal for bringing it to our attention. The link is here.
British Foreign Secretary, William Hague, has hit out at Argentina after the country's government said it was seizing YPF, the South American nation's biggest oil company which is controlled by Spanish energy group Repsol.
The Foreign Secretary warned that the move by controversial president Cristina Fernandez was part of a wider protectionist agenda.
Ms Fernandez has said she will nationalise a large part of YPF, reducing Repsol's stake from 57pc to 6pc.
Spain has threatened swift economic retaliation against Argentina over the plans, which are part of Argentina's efforts to curb fuel price increases.
This story showed up over at The Telegraph yesterday morning...and I thank Roy Stephens for sending it along. The link is here.
The first is headlined "U.S. aircraft carriers not allowed to stop in areas designated by Iran: general". The second is titled "Iran discovers large light crude oilfield". And lastly is this story entitled "Iran gives green light to foreign investment in oil sector". All are courtesy of Roy Stephens and represent his final offerings in today's column.
Gold miners should pay more in dividends if they are to compete with exchange-traded funds as two years of record buyouts eroded shareholder value, Kirkland Lake Gold Inc. (KGI) Chief Executive Officer Brian Hinchcliffe said.
Precious metal producers spent a record $53 billion on deals in 2010 and a further $43 billion last year as all-time high gold prices spurred deals. That led to write-downs that are an admission of overpaying when cash could have been returned in dividends to lure investors from increasingly popular ETFs, Hinchcliffe said.
"The generalist investor is not going to be attracted to an industry that is not judiciously allocating capital, whether it's in the context of making acquisitions or in the context of dedicating capex," Hinchcliffe said. "ETFs are a major competing alternative for investment. I-m talking about a 5 percent to an 8 percent dividend policy -- that is the best defense against the ETF."
This Bloomberg story showed up in a GATA release yesterday...and the link is here.
Syria is trying to sell gold reserves to raise revenue as Western and Arab sanctions targeting its central bank and oil exports begin to bite, diplomats and traders said.
Western sanctions have halved Syria's foreign exchange reserves from about $17 billion, French Foreign Minister Alain Juppe said on Tuesday after a meeting with about 60 nations aimed at coordinating measures against President Bashar al-Assad's government.
"Syria is selling its gold at rock-bottom prices," said a Western diplomatic source, declining to say where it was being sold.
A second diplomatic source confirmed the information, adding that Damascus was looking to offload everything it could to raise cash, including currency reserves.
This Reuters piece from yesterday is another one I plucked from a GATA release...and the link to that is here.
The first is with Egon von Greyerz...and is headlined "Bank Failures, Disorder, Massive Panic & Gold". The second is with former LBMA commodities broker, trader and current MEP, Nigel Farage. It's entitled "There are Going to be Serious Banking Collapses". The last blog is with the founder of The Portola Group...Robert Fitzwilson. The headlined reads "We are witnessing the Largest Financial Bubble in History".
Sprott Asset Management CEO Eric Sprott gave a comprehensive interview to GoldSeek Radio's Chris Waltzek this week. It covered not just the monetary metals, but the ongoing crackup of the world financial system.
I borrowed the headline and the above introductory paragraph from Chris Powell. The interview is 16 minutes long...and it's posted over at the silverseek.com website. It's a must listen for sure...and the link is here.
Writing at Coin Week, Patrick Heller of Liberty Coin Service in Michigan comments on how gold and silver price suppression in the futures markets has gone beyond obvious. Heller's commentary is headlined "Major Gold and Silver Price Suppression Now a Weekly Occurrence -- So What?"
This is another item I lifted from a GATA release yesterday. It's posted over at the coinweek.com website...and it's definitely worth the read. The link is here.
At over 4,000 metres above sea level, Potosí in Bolivia is the world’s highest city. But it is overshadowed by the rainbow-coloured Cerro Rico, or Rich Hill, which looms above the citizens – an imposing reminder of the cause of the city’s splendour and horror. The city was founded in 1545 following the discovery of silver in the Cerro Rico, the veins of which proved to be the world’s most lucrative, bankrolling the Spanish Empire for more than two centuries.
Many roads lead to hell, and I follow a miner to the Candelaria Bajo mine, one of the oldest of the 700 mines in Cerro Rico, which dates back at least 350 years. Like the millions who have gone before me, I take a last look at the sun and then enter the underworld through a low, dark entrance, stained black with llama blood, the remnants of a sacrifice to the devil. Miners are extremely superstitious.
This 2-page story was posted over at the bbc.com website yesterday...and I thank reader Richard Craggs for bringing it to my attention in the wee hours of this morning. The link is here.
Khorloo, 65, and her sons spent the day scrutinizing half a dozen CCTV screens as workers at the Bornuur gold processing plant whittled 1.2 metric tonnes of ore down to 123 grams of pure gold that could earn the family as much as $6,000.
Khorloo is a member of a new horde of at least 60,000 herders, farmers and urban unemployed trying to extract the riches buried in the vast steppe with metal detectors, shovels and home-made smelters.
In the last five years, dwindling legal gold supplies and a spike in black market demand from China have made work much more lucrative for Mongolia's "ninja miners" - so named because of the large green pans carried on their backs that look like turtle shells. For thousands of dirt-poor herders, the soaring prices alone are enough to justify years of harassment, abuse and hard labor.
This Reuters story was filed from Bornuur, Mongolia earlier today...and I thank Russian reader Alex Lvov for sharing it with us. It's a very interesting must read...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.
We shall grind the bourgeoisie between the millstones of inflation and taxation. - Vladimir I. Lenin
With yesterday's volume in both gold and silver at very low levels, I'm not prepared to read much of anything into yesterday's price action in either metal...although as I mentioned further up, I thought there was some interference in the gold price as the dollar index cratered between 9 and 11 a.m. Eastern time.
I thought I'd toss in the 1-year silver and gold charts here, just so you can see where we are compared to where we were this time a year ago. All the drive-by shootings of the past twelve months are visible on this chart. At the moment, silver is trading quietly in a one dollar price range between $31 and $32 spot...and I haven't a clue as to which way this will break, as I'm not a fly on the wall over at JPMorgan.
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Here's the 1-year gold chart. As you can see, the 50-day moving average has now crossed over the 200-day moving average...the 'death cross' as the T.A. guys like to call it. But, as you know, 'da boyz' can paint any chart pattern the want...and that's what you're looking at here...and above.
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As I write this particular paragraph at 3:02 a.m. Eastern time, the markets have just opened in London. Nothing much happened during Far East trading in either gold or silver. At the London open, gold was down a couple of bucks...and silver was down less than a dime. Trading volume is astonishingly light in both metals...even lighter than yesterday at this time...and I thought I'd never see numbers that low again. How wrong I was...so it's obvious that there is no high-frequency trading going on at the moment...and this is probably legitimate volume. The dollar index is comatose.
It's been more than two hours since I wrote the above paragraph. Both silver and gold began to rally a bit the moment that London opened...and I can tell from looking at both the Kitco charts and the volume numbers, that these rallies are being very strongly opposed. The saw-tooth pattern tells all...and volumes are sharply higher in both metals. It's obvious that JPMorgan et al are aggressively selling into this rally attempt.
The dollar index took a 20 basis point header starting about twenty minutes before London opened...but has recovered most of that starting around 9:20 a.m. BST. It will be interesting to see how things develop once Comex trading begins in New York later this morning.
Tomorrow we get the latest Commitment of Traders Report...and The Central Bank of the Russian Federation updates their website with the March numbers. They were net sellers of gold during the first two months of this year...and I'm more than interested in what they have to say for themselves in March.
That's all I have for today...and I'll see you here tomorrow.