All was quiet in Far East trading during their Thursday trading session...and volume was almost nonexistent in both gold and silver. But once London opened, a rally of sorts got under way in both metals...and JPMorgan et al had to throw a lot of paper at it to get it under control.
Once they did, gold got sold down to it's low of the day [around $1,630 spot] which was shortly before 1:00 p.m. local time in London...and half an hour before the Comex opened in New York.
From that low, the gold price struggled higher, but at 9:00 a.m. in New York a more serious rally got under way...which got stopped in its tracks at the London p.m. gold fix a few minutes before 10:00 a.m. Eastern. That proved to be the high tick of the day...which Kitco recorded as $1,655.20 spot.
By the end of Comex trading at 1:30 p.m. in New York, the gold price had been sold off about fifteen bucks...but it rallied a hair going into the 5:15 p.m. close of electronic trading.
Gold closed the Thursday trading day at $1,642.60 spot...up the magnificent sum of sixty cents. Net volume was immense, up 45% from Wednesday at 147,000 contracts.
Silver followed almost the same price path, although it appeared that the low price tick of the day [$31.26 spot] came about 8:40 a.m. in New York.
The 9:00 a.m. rally in New York ended at the London p.m. gold fix...and at the precise moment that the silver price blasted through the $32 spot mark. Kitco reported that high tick as $32.16 spot. At that point an eager not-for-profit seller showed up and smacked the silver price down almost 50 cents in about half an hour. Every subsequent rally attempt over the $32 spot mark met with the same fate...and from 12:30 p.m. Eastern time onwards, the silver price traded pretty flat.
Silver closed at $31.80 spot...up 17 whole cents from Wednesday's close. One can only image how high it would have gone if 'da boyz' hadn't shown up to do what they do best. Net volume was up an astonishing 40% from the previous day at 37,000 contracts...and as I said earlier, it's obvious that they had to throw a lot of paper at these metals to keep them under control.
The dollar index didn't do a lot until about 6:40 a.m. in London when it began to roll over...and by 9:40 a.m. BST the index was down about 25 basis points. That was its low of the day...and from there it rallied until 7:30 a.m. in New York...and that proved to be the high of the day.
It more or less held that high before heading south shortly after the Comex trading session began...and by 10:20 a.m. in New York it had bottomed out after dropping about 30 basis points.
From there it recovered a bit going into the close...and closing at the same number it closed at every day this week...about 79.57.
The dollar index was almost the inverse of what happened in gold and silver...which is what one would normally expect, with all other external factors being the same. But it doesn't explain why 'da boyz' had to throw so much paper at it in London and New York when the dollar index was heading south. It's obvious, at least to me, that the precious metals prices were going to 'overreact' to the upside to these down-side moves in the dollar...and that was obviously a no-no.
The gold stocks pretty much followed the gold price action, but could not hold their early gains...and they declined until 12:30 p.m...which was the end of the New York sell-off in the gold price after the high at the London p.m. gold fix. The HUI traded sideways from there...finishing down a smallish 0.13%.
The silver stocks finished mixed to down...but Nick Laird's Silver Sentiment Index managed to eke out a miniscule gain of 0.17%.
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The CME's Daily Delivery Report showed that 48 gold and 35 silver contracts were posted for delivery on Monday...and the Bank of Nova Scotia and JPMorgan were the long/stoppers of note on both metals. The link to that action is here.
There were no reported changes in GLD yesterday...but over at SLV, an authorized participant withdrew 1,456,278 troy ounces of silver...which came within a 105 ounces of the exact amount that an authorized participant deposited on Monday. Go figure! Since the silver price has traded virtually sideways all week, I would assume that this silver was moved because it was needed more urgently elsewhere.
There was no sales report from the U.S. Mint.
The Comex-approved depositories reported receiving 328,996 troy ounces of silver on Wednesday...and also shipped 351,095 ounces of the stuff out the door as well. The link to that action is here.
Before getting into the stories for today, here are three graphs that were sent my way by Washington state reader S.A. yesterday.
The first one is headlined "Federal Surplus or Deficit"...and it goes back a hundred years or so. You can see where the wheels started falling off when Nixon yanked the U.S. off the gold standard in 1971.
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The next two charts show the ratio of the gold price vs. the euro and the yen over the last three years.
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Later yesterday evening, Nick Laird added to the list of graphs with this one...along with the following comments...
"Just noticed these numbers and thought I'd plot them up.
"They show the new depository for JPM and their silver holdings. And amongst all the depositories it stands out loud - 10 million ounces [added] in a month.
"One can only presume that they are stocking this silver on behalf of their clients. But then that might be wrong...."
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Nick's timing on this graph is perfect, because I mentioned in my Thursday column that JPMorgan's silver stash in its Comex-approved depository had just passed the 13 million troy ounce mark...and more was added on Thursday as well. What I wasn't aware of, was how fast it was being added during the last thirty days. I'm impressed.
I have the usual number of stories today...and I hope you find something of interest in the ones I've selected.
At Citigroup's annual meeting, owners of the stock voted 55 to 45 against a $50 million executive pay package, including $15 million for CEO Vikram Pandit.
Shareholders have every right to be upset with Vikram.
Over the last decade, Citigroup has had the worst stock price performance of the big banks, but consistently had some of the highest executive compensation.
Now, the vote is non-binding, but the chairman of Citigroup Dick Parsons said he took it seriously, and promised the board would consider it carefully.
This story was posted over at the foxbusiness.com website on Wednesday...and I thank reader George Findlay for sending it along. The link is here.
Sean Egan told CNBC Thursday the Securities and Exchange Commission had no reason to charge his credit-rating firm with intentional misstatements when it applied to be a "nationally recognized'' rating agency.
Egan spoke before Egan-Jones counsel Alan Futerfas told Reuters later Thursday the SEC had voted to file civil charges against the agency.
Futerfas said the SEC did not indicate what relief it is seeking as part of the enforcement action, which has yet to be formally filed.
West Virginia reader Elliot Simon, who sent me this story, was wondering out loud if this "could be retaliation for their having lowered again the credit rating of dear old Uncle Sam?" Nothing would surprise me. This story was posted over at the cnbc.com website late yesterday afternoon...and the link is here.
So you think you know what a trillion dollars looks like? Then try to imagine $228 trillion. That's the amount of derivatives held by the nine largest U.S. banks.
A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else.Here's a pictorial of the derivatives held by the nation's largest banks...and the pile of money they have bet in the derivatives market. This is a must read for sure...and I thank Nick Laird for bringing it to my attention...and now to yours. The link is here.
The derivatives industry is squeezing Washington like a python. Desperate to control the tone and thrust of derivatives regulation, industry lobbyists have been swarming over the Commodity Futures Trading Commission and the Securities and Exchange Commission, each of which is writing derivatives rules as mandated by the Dodd-Frank reform law.
In case their lobbying falls short, the industry -- largely dealer banks and commodities firms -- has been pushing legislation that would preempt the rulemaking process and tie the agencies’ hands. So far, no fewer than 10 such derivatives bills have been introduced in the House; two have passed and several more have cleared committee.
Not satisfied with that, influential lawmakers have been not so subtly warning regulators to go easy on derivatives. This is incredibly intimidating: Congress controls the agencies’ budgets, and the increase in workload mandated by Dodd-Frank leaves them woefully short on funds.
This Roger Lowenstein piece was posted over at the bloomberg.com website on Tuesday. And in light of the previous story, is another absolute must read as well. I pulled this story out of yesterday's King Report...and the link is here.
German Chancellor Merkel has made it clear that she would like to see French President Nicolas Sarkozy win a second term. Indeed, if his challenger François Hollande emerges victorious in the country's upcoming election, she could face isolation in Europe. But a Sarkozy re-election might be problematic, too.
As Europe continues to integrate both economically and politically, the outcomes of national elections have grown in importance to reach beyond their own borders. German Chancellor Angela Merkel knows that, and it's why she will travel on Sunday to Paris, where voters will be heading to the polls in the first round of the French presidential elections.
For Merkel, this is an election like no other, and one that is even more important to her than many German state elections. Whoever wins in France will help drive European policy by her side. If the victor proves to be Hollande, who differs with Merkel's closely allied partner Sarkozy on many issues, not the least of which involve rescuing of the euro, things could become uncomfortable for her, both in Brussels and at home in Berlin.
This story was posted on the German website spiegel.de yesterday...and is Roy Stephens' first offering of the day. The link is here.
Controversy is raging in Germany over soaring "payments" by the Bundesbank to shore up Europe's monetary system and cope with a tidal wave of capital flight from southern Europe.
Professor Hans-Werner Sinn, head of Germany's IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. "The euro-system is near explosion," he told Austria's Economics Academy on Thursday.
Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors - often by the back-door - that will saddle Germans with ruinous losses one day.
"It is a horror scenario," he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.
This offering from Ambrose Evans-Pritchard was posted on The Telegraph's website early in their evening. The story is courtesy of Roy Stephens, of course...and the link is here.
A few months before submarines became the talk of Athens, Yiannis Panagopoulos, who heads the Greek trade union confederation (GSEE), found himself sitting opposite Angela Merkel at a private meeting the German chancellor had called of European trade unionists in Berlin.
When it came to his turn to address the leader, he instinctively popped the question that many in Greece have wanted to ask. "After running through all the reasons why austerity wasn't working in my country I brought up the issue of defence expenditure. Was it right, I asked, that our government makes so many weapons purchases from Germany when it obviously couldn't afford such deals and was slashing wages and pensions?"
Merkel's reaction was instant. "She immediately said: 'But we never asked you to spend so much of your GDP on defence,'" Panagopoulos recalled. "And then she mentioned the issue of outstanding payments on submarines she said Germany had been owed for over a decade."
Greek profligacy may be blamed for triggering the debt crisis that now threatens to tear the eurozone apart, but if there is one area where Berlin is less excoriating of state largesse it is in Athens's extravagant taste for arms.
This is a very interesting read, with the emphasis on the word 'very'. This story was posted in yesterday's edition of The Guardian...and I thank Roy Stephens once again. The link is here.
Italian Prime Minister Mario Monti followed in the footsteps of his Spanish counterpart on Wednesday (18 April) by announcing that Italy would need extra time to reaching its deficit target amid a deepening recession.
The Italian government had pledged to balance its budget in 2013, but it now expects the economy to shrink by 1.2 percent of GDP this year, the cabinet said in a statement. It added that the deficit of 0.1 percent previously estimated for 2013 would not be reached until 2014, while a balanced budget would be reached only in 2015.
The International Monetary Fund (IMF) put out an even more pessimistic forecast about Italy's recession earlier on Tuesday, when it said the Italian economy would contract by 1.9 percent.
This story was posted over at the euobserver.com website yesterday...and I thank Roy once again for sending it to me. The link is here.
The first one is headlined "Iran will cut oil exports to 'entire Europe' if sanction not lifted: minister". The second is entitled "Iran stops oil sale to Royal Dutch Shell". Both stories are courtesy of Roy Stephens once again.
The government showed no signs of backing down Thursday from expropriating a Spanish company's controlling stake in Argentina's formerly state-owned energy company, shrugging off international condemnation while finding overwhelming support for the plan in congress.
Top officials also suggested that Argentina won't pay anywhere near the $10.5 billion sought by Repsol-YPF SA for its stake, and that the company might not see any money at all before years of battles in international courts, if then. Repsol shares have tumbled 17 percent this week, and Standard and Poor's downgraded the company's stock Thursday to one step above junk.
This story was posted on the businessinsider.com website early yesterday evening...and is another Roy Stephens offering. The link is here.
Whenever gold is in a longer term sideways pattern as it is now for nearly seven months, a lot of smaller investors lose their patience and doubt their investment. Therefore we enjoy offering to you today a very powerful talk with Egon von Greyerz, founder and managing partner of Matterhorn Asset Management and GoldSwitzerland. Egon strongly reminds us the real important things, investors shall always focus on…
Egon von Greyerz talks to us about unlimited money printing done by the central banks, why governments and political leaders are in an official denial and what a deflationary implosion would really mean. Von Greyerz, born in Sweden and living in Zurich, Switzerland, has his view from in- and outside his own country. He therefore is a real professional source to discuss the current situation in Switzerland and if it is still safe to store one’s physical gold in this country.
The interview runs 21:30...and it's posted over at the metallwoche.de website...and the link is here.
For the second day in a row I have an interview with Eric Sprott for you. This one is conducted by Charles Biderman...and was posted over at the trimtabs.com website yesterday...and it runs for 8:21 minutes. I thank Roy for sharing this with us...and the link is here.
The first is with Stephen Leeb. It bears the headline "QE3 is now 80%-90% guaranteed...and I'm Going All-In Gold if it Dips". The second is with legendary value investor Jean Marie Eveillard. The headline reads "We are Looking at Catastrophe Going Forward". And lastly is this James Turk blog that's headlined "The Most Important and Extraordinary Chart for 2012". Of all three blogs, the one by James Turk is the most important...and a must read.
Despite the overshadowing of the last forty years, what remains true is that gold is acceptable to all nations as collateral even between bitter enemies. It remains a common denominator of every nation. All accept that gold is an important reserve asset. The very fact that 'the worse get, the more relevant gold is in the money world' is inescapable. The euphoria of the 40-year experiment with paper, based on trust in governments alone, is failing. It's at the stage where it's being forced on an unwilling world, a world that is fully aware of its failings and manipulation.
If gold were retained as part of the monetary system and its value "floated" against a currency's value at a much higher price (five figures in the U.S. dollar or more) alongside other pieces of updated financial engineering, then an effective way of using gold in the monetary systems would return to the system. In a financial world that is failing, a measure of value to do that job is needed simply to give the system a semblance of credibility.
Developed world central bankers are fully aware of its future usefulness in times of need because gold has never left the vaults of the developed world central banks; they only just reduced slightly. Why? To quote the Washington and subsequent central bank gold agreements, "Gold remains an important reserve asset."
This is Part 4 of a 5-part series that Julian Phillips has written about gold. As I've been saying for years, the only way left to save the current financial and monetary system [if that is the plan of the 'powers that be'] is to revalue gold to some fantastic five digit price to square the books of the world's central banks. That day is coming, it's just a matter of when. This was posted over at the safehaven.com website yesterday...and is Roy Stephens final offering in today's column. It's a must read for sure...and the link is here.
Could This Tiny Stock Be The "Next Subway"?
Our friends over at Penny Stock Research just released a free report detailing 3 stocks that could rocket higher in 2012.
Of particular interest is one restaurant stock that's being called the "next Subway".
It's trading at only 59 cents a share right now but could be significantly higher in the very near future!
Click here to get the complimentary report...
All treaties between great states cease to be binding when they come in conflict with the struggle for existence. - Otto von Bismarck
Well, there's nothing that happened in yesterday's gold and silver price action that we haven't seen before...and with increasing frequency. As I've said many times since the drive-by shooting of May 1, 2011...they aren't even trying to hide their actions anymore. It's all 'in your face' virtually all the time, now.
I have a couple of more things from Nick Laird to lay on you in this column. The Office of the Comptroller of the Currency just issued their derivatives report for the second half of 2011. The table of numbers below shows the total derivatives...plus the precious metals derivatives contracts held by the five biggest U.S. commercial banks. The 'click to enlarge' feature is a must for this chart.
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The highlights [or should they be called lowlights?] shows that the top five commercial banks in the U.S. hold over 95% of all the derivatives in the U.S. banking system.
In the precious metals, JPMorgan and HSBC USA hold 99.9% of all the gold and silver derivative contracts held by U.S. banks. JPMorgan hold 71% of all gold derivatives...and 66% of all silver derivative contracts. HSBC USA holds the rest...and Citigroup's and Bank of America's positions are immaterial.
Here's Nick's pie chart that shows that visually.
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It's obvious that JPMorgan and HSBC USA run the precious metal show...and I'm curious to know who the 'et al' are when I talk about them in the same breath as JPMorgan. Whoever they are, they aren't commercial banks...and if they are, they aren't American commercial banks.
As I mentioned in this space yesterday, we get both the Commitment of Traders Report...and the March gold data from The Central Bank of the Russian Federation, today.
As has been the case lately, there wasn't much action in Far East trading...and now that London has been open for a bit over an hour, there isn't much action there, either. The volume numbers are shockingly low as of 4:03 a.m. Eastern time. Net gold volume is a hair under 10,000 contracts...and silver's net volume is under 1,800 contracts. The dollar index is down a hair.
Of course 'da boyz' didn't have to contend with another surprise rally similar to the one that greeted them at the London open on Thursday morning, but having said that, both precious metals are trading on vapours at the moment.
Well, just over an hour has passed since I wrote those two previous paragraphs...and a small rally did materialize in London during that period. It certainly wasn't much...maybe five dollars in gold...and about two bits in silver. But net volume jumped over 45 percent in less than an hour in both metals, so it's obvious that JPMorgan et al aren't letting anything get past them, no matter how small.
We'll see how things turn out in Comex trading today...which is Friday. But if yesterday's price action...and now this morning's price action in London...is any indication, it doesn't look promising...but you just never know.
That's it for another day. I hope you have a great weekend...and I'll see you here on Saturday sometime.