The Wednesday trading session started off like every other during the last few months, under selling pressure right from the open in Far East trading, and the gold price put in a new low for this move down shortly before 11 a.m. GMT in London, which was probably the a.m. gold fix.
Then shortly before 1 p.m. GMT, the gold price began a $15 rally that ran out of gas about 9:15 a.m. in New York. From there it traded more or less flat until 12:15 p.m. before taking off to the upside in earnest. The rally, which appeared to be be short covering, got capped about 35 minutes later as it broke about the $1,250 spot mark, and then got sold off about eight bucks during the rest of the Comex session and the electronic session that followed.
The CME recorded the low and high ticks as $1,210.80 and $1,251.50 in the February contract.
Gold closed at $1,243.30 spot, up $19.00 from Tuesday. Because the rally was vigorously opposed, net volume was heavy at 188,000 contracts.
Here's the New York Spot Gold [Bid] chart on its own, and once you look at the internal structure of that 35-minute short covering rally, the not-for-profit selling resistance at two different points should be obvious.
The silver chart for Wednesday is similar in most ways to the gold chart, including the new low price tick for this move down that came shortly after the 8 a.m. GMT London open. But looking at the New York Spot Silver [Bid] chart on its own, you can see that the short covering rally was far from smooth, before running into the heaviest selling resistance shortly after 12:45 p.m. EST. Unlike gold, the silver price wasn't totally back under control until shortly after 3 p.m. in electronic trading.
The CME recorded the low and high ticks as $18.89 and $19.89 respectively in the March contract.
Silver closed at $19.715 spot, up 54 cents from its Tuesday close, but well off its high. Not surprisingly, net volume was a very chunky 60,500 contracts, as the short covering rally ran into huge resistance as well.
Here's the New York Spot Silver [Bid] chart on its own so you can see the internal structure of its short covering rally, and the resistance it ran into going into the 1:30 p.m. Comex close.
Platinum and palladium did not set new lows for this move down on Wednesday, and both metals rallied sharply once Zurich closed at 6 p.m. Europe time, which was noon in New York. But these rallies got vigorously capped an hour later. Here are the charts.
The dollar index closed late on Tuesday afternoon in New York at 80.61. After rallying about 15 basis point going into 8 a.m. GMT London open, the dollar fell down to 80.58 by 8 a.m. EST, before blasting to its high of the day a hair above the 80.90 mark minutes before the open of the equity markets in New York. Then by 1 p.m. the dollar was down to its low of the day of 80.57 before rallying a handful of basis points into the close. The index finished the Wednesday session at 80.64, up only 3 basis points on the day, but it had a bit of a wild ride between the closes.
The gold stocks opened in positive territory, but quickly sank back into the red shortly after 10 a.m. EST. That lasted until the big short covering rally began around 12:15 p.m., and the shares quickly rallied to their highs just under the 200 mark on the HUI, but then gave back about a percent as the trading day wound down. The HUI finished up 2.20%.
The silver shares did better, and Nick Laird's Intraday Silver Sentiment Index closed up 3.79%, with the index closing almost on its high tick of the day.
The CME Daily Delivery Report was a big one yesterday, as 2,472 gold and 53 silver contracts were posted for delivery on Friday within the Comex-approved depositories.
In gold, the biggest short/issuer by far was HSBC USA with 2,216 contracts, with Canada's Scotiabank a very distant second with 178 contracts. It should come as no surprise to anyone that JPMorgan was the long/stopper on 2,389 of the total contracts, all of it in its in-house [proprietary] trading account.
In silver, it was Jefferies and Deutsche Bank issuing 51 contracts. JPMorgan stopped 43 contracts. All the details are in the Issuers and Stoppers Report, which is worth a look, and the link is here.
Not surprisingly, there was another withdrawal from GLD yesterday, as an authorized participant took out 86,822 troy ounces. And as of 11:44 p.m. EST last night, there were no reported changes in SLV.
The U.S. Mint had another small sales report. They sold 3,000 ounces of gold eagles; 500 one-ounce 24K gold buffaloes; and 25,000 silver eagles.
Over at the Comex-approved depositories on Tuesday, they reported receiving precisely 64,300 troy ounces of gold, which works out to exactly 2 metric tonnes of the stuff, so it's a good bet that the receipt was entirely composed of 2,000 one-kilo bars. All of it was received in the Scotia Mocatta warehouse, and nothing was reported shipped out. The link to that activity is here.
It was another busy day in silver, as 599,944 troy ounces were reported received, and 154,553 troy ounces were shipped out. The link to that action is here.
I have the usual number of stories for a weekday, so I hope you can find the time to spend on the ones that interest you the most.
"Eventually, the whole world is going to collapse," Jim Rogers chides a disquieted CBC anchor as he explains the reality that, "we in the West have staggering debts. The United States is the largest debtor nation in the history of the world," adding that "this is going to end badly."
However, the co-founder of Soros' Quantum fund is convinced that the commodity super-cycle is far from over, but driven by supply constraints (and cost increases) as opposed to demand from higher growth. The following interview provides more color on his commodity view as he re-iterates his bullish stance on Ag (with sugar a focus) and Natural Gas (some harsh natural realities coming), warning "don't get too excited about fracking," when he talks energy products.
Rogers, in his inimitable way, sums up the state of euphoria that many markets find themselves in thus, "we are all floating around on a sea of artificial liquidity right now. This is not going to last."
The 7:23 minute CBC News video clip is embedded at the end of this Zero Hedge article...and my thanks go out to Manitoba reader Ulrike Marx for today's first story.
Anyone in a public-sector job looking forward to retiring in comfort should look carefully at what is going on in Detroit and Springfield, Ill. Sherlock Holmes would call it the case of the missing pension money.
News leaking out this week from the Motor City tells how the enormous gap between the pensions workers earned and the money set aside to pay for them will be closed. By stealing from the workers.
Courts, legislatures, and corporations are all working in concert not to pay the full benefits owed. For decades, political and business leaders failed to set aside the right amount of money each payday to cover the pensions workers earned and, in some cases, covered up the mismanagement of pension fund investments.
This short Newsweek essay was posted on their website sometime yesterday...and I thank Washington state reader S.A. for sending it our way.
Protecting investors and ensuring proper corporate governance are the essence of the mission of the Securities and Exchange Commission. But you wouldn’t know that from the recent actions of the agency and its chairwoman, Mary Jo White.
Last week, the S.E.C. unwisely removed from its regulatory agenda a plan to consider a rule to require public companies to disclose their political spending — even though the case for disclosure is undeniable. Basic investor protection requires that shareholders know how corporate executives are spending shareholder money. Good corporate governance requires that companies are transparent about their use of corporate resources. Shareholders know this and have demanded disclosure.
Even before 2010, when the Supreme Court’s ruling in Citizens United opened the floodgates for corporate political spending, shareholder proposals requesting information on such spending were growing. Since the ruling, those requests have increased along with the political spending. Trade associations and politically active tax-exempt groups are not required to disclose their donors, but there is mounting evidence that much of the money they spend is from companies that want to influence elections in secret, without fear of alienating shareholders, customers or legislators they target for defeat.
This short editorial was posted on The New York Times website on Tuesday...and thanks go out to Phil Barlett for sharing it with us.
At least 130 people were injured and one killed following mass looting and vandalism by gangs of youths, who took over several parts of Cordoba City in Argentina. The lawlessness was a result of the police going on strike over low pay.
A young man around 20 years old has died from a gunshot wound to his chest, imneuquen.com.ar reports. More than 50 people who took part in the looting have been detained. Twelve of the 130 who were wounded sustained their injuries from firearms.
After the news of the strike broke Tuesday, looters quickly appeared in the streets, going primarily for the supermarkets and small stores, which rapidly shut their doors. Targets included clothing stores, sporting goods, toy stores, bike shops, and branches of cell phone companies. Local media termed the city 'virtually paralyzed'.
This news item was posted on the Russia Today website early yesterday afternoon Moscow time, which was 6 a.m. in New York. It's the first contribution of the day from Roy Stephens.
Demonstrating a new resolve to punish bank misconduct, the European Union fined a group of global financial institutions a combined €1.7 billion (US$2.3 billion) on Wednesday to settle charges that they colluded to fix benchmark interest rates.
The settlement was the largest combined penalty ever levied by the European competition authorities and is the first time that American banks have been fined in a set of interest rate scandals that have also drawn scrutiny from regulators in Britain and United States. Those regulators still have their own investigations underway.
“By European standards, it’s a large fine,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. “It signals that the time when only the U.S. can impose big fines is probably over.”
This New York Times news item was posted on their Internet site early yesterday morning EST...and I found it embedded in a GATA release.
Subprime mortgages, currency tricks, interest rate fixing: Wherever supervisory authorities have probed crooked deals of the past, Deutsche Bank comes up. Now Germany's biggest bank has had to pay its first big fine. It won't be the last.
The statement had already been prepared: "We are attaching the highest institutional importance to ensuring that this type of misconduct does not happen again," the chief executives of Deutsche Bank, Anshu Jain and Jürgen Fitschen, said in a statement shortly before midday on Wednesday. Minutes earlier, the European Commission in Brussels had slapped record fines totaling €1.7 billion ($2.3 billion) on six international banks. Deutsche Bank's share was the biggest by far at €725 million.
It's the first major fine Deutsche Bank has has to pay for its past sins, and it's unlikely to be the last. The bank is embroiled in many lawsuits around the world, most of them related to the time before the 2008 financial crisis.
Several US authorities are targeting the perpetrators of the financial crisis -- banks that bundled and sold the controversial mortgage-backed securities from home loans. JP Morgan Chase alone has to pay $13 billion. Deutsche Bank faces possible claims running into billions of dollars.
It certainly sounds like Deutsche Bank is the German equivalent of JPMorgan Chase. This story was posted on the German website spiegel.de early yesterday evening Europe time...and it's worth reading. It's the second offering of the day from Roy Stephens.
The top editor of the British newspaper The Guardian told Parliament on Tuesday that since it obtained documents on government surveillance from a former National Security Agency contractor, Edward J. Snowden, it has met with government agencies in Britain and the United States more than 100 times and has been subjected to measures “designed to intimidate.”
The testimony by the editor, Alan Rusbridger, gave a public airing to the debate over how to balance press freedom against national security concerns, an issue that became more acute once The Guardian began publishing material leaked by Mr. Snowden in June.
The American and British governments have said the disclosures, which detail how the National Security Agency and its equivalent in Britain, Government Communication Headquarters, gather vast amounts of data, damage national security and help hostile governments. Journalists and transparency advocates have countered that the leak spurred a vital debate on privacy and the role of spy agencies in the Internet age.
This news item from The New York Times on Tuesday is definitely worth reading...and is another contribution from Roy Stephens.
One day after he spoke with leaders in embattled neighbor Japan, Vice President Joe Biden met with officials in China on Wednesday amid an escalating argument between Asian nations that has attracted the attention of the United States.
A meeting between Biden and China’s President Xi Jinping scheduled for only 45 minutes this week turned into a two hour ordeal and ended with the US senator-turned-second-in-command offering brief remarks but answering no questions before a press scrum in Beijing.
When Biden finally emerged from his marathon meeting with President Xi on Wednesday, he appeared “solemn” and “weary-sounding,” according to the New York Times’ Mark Lander, and the Associated Press equated the meeting between men as an “awkward kickoff” for the vice president’s tour of China.
Instead of directly acknowledging the disagreement between China and Japan during the press conference that followed his meeting, Biden said both nations need to make use of "crisis management mechanisms and effective channels of communication” and spoke of a "new model of major country cooperation” that rests on trust.
This article appeared on the Russia Today website late yesterday afternoon Moscow time...and I thank Roy Stephens once again for sending it our way.
Japan’s salaries extended the longest tumble since 2010, increasing pressure on household finances as inflation begins to take root.
Regular wages excluding overtime and bonuses fell 0.4 percent in October from a year earlier, a 17th straight monthly decline, according to labor ministry data released today. Total cash earnings rose 0.1 percent.
The slide in wages threatens living standards as consumers face the prospect of sustained inflation on top of a sales-tax increase in April next year. As a weaker yen helps boost company profits, the focus is turning to salary talks early next year that may determine the success of Prime Minister Shinzo Abe’s bid to reflate the world’s third-largest economy.
This Bloomberg story, filed from Tokyo, was posted on their website just before midnight on Monday evening Denver time. I found it embedded in yesterday's edition of the King Report.
Australia will dive further ‘Down Under’ into debt, as lawmakers reached a deal to do away with a limit. The government can now borrow as much as it wants, and will avoid a shutdown when it reaches the AU$300 billion debt limit on December 12.
In the first nine months of 2013, Australia’s economy expanded slower than forecast, growing only 0.6 percent from the first six months. Growth in 2012 was 2.3 percent, below the anticipated 2.5 percent benchmark set out by economists.
The forecast is gloomy, as unemployment isn’t expected to drop until 2015, a budget deficit over $30 billion is expected for the 2013 fiscal year, and free trade talks with neighbors are breaking down over spy revelations.
This is a Russia Today story that was posted on their Internet site early yesterday afternoon Moscow time, which was very early in the morning in New York. It's the last contribution of the day from Roy Stephens.
1. Investors Intelligence Report: "Stock Market Bears Plunge to Lowest Level in Over 25 Years". 2. Ronald-Peter Stoferle: "This is Why the Price of Gold is Going Ballistic Today". 3. Pierre Lassonde: "This Can Radically Change the Gold Price Overnight". 4. Ron Rosen: "History is About to Repeat...and it Will Shock the World". 5. The audio interview is with Grant Williams.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
Nick Giambruno: Jim, can you give us a summary of the health of the petrodollar in the past, what it looks like now, and what you think it will look like going forward? What is the significance of all this for the dollar's role as the world's premier reserve currency, the international monetary system in general, and the nominal price of gold?
Jim Rickards: The term "petrodollar" is shorthand for an understanding between Saudi Arabia and the United States that the US will guarantee the security of the House of Saud in return for the Saudis agreeing to price oil in dollars, to manage the dollar price of oil, and to redeposit those dollars in the banking system where they can be used to support international lending by major banks.
This lending, in turn, supports purchases of US and Western manufactured goods and agricultural exports by developing economies. From this deal, the US got cheap energy, exports, banking profits, and the ability to operate a fiat currency system. The Saudis got rich and survived. This system has existed implicitly since 1945 and explicitly since 1974 when it was negotiated by Henry Kissinger on behalf of the Nixon administration.
Now the petrodollar system is collapsing for two reasons. The US has abused its privileged reserve currency position by printing trillions of dollars in an effort to create inflation. More recently, President Obama has taken steps to anoint Iran as the regional hegemon of the Middle East, and to ease the way, in stages, toward Iran's possession of nuclear weapons capability. This is viewed as a stab-in-the-back by the Saudis and the Israelis and will lead quickly to Saudi Arabia obtaining nuclear weapons from Pakistan.
This first rate interview with Jim was posted on the internationalman.com Internet site yesterday...and it's your first absolute must read commentary of the day...especially if you're a serious student of the New Great Game.
Fat chance, you might say. And you would probably be right. For 11 consecutive years the yellow one was worth more (a lot more in some years) on December 31 than it had been the previous January. On January 1 this year trading closed at $US1,678/oz. To get back to that over four weeks would require a market miracle.
While you can still find analysts who believe the gold price will stage a meaningful recovery, there might be quite a different story to tell. Perhaps we should stop being too fixated on price (a suggestion that will fall on deaf ears with every punter reading this) and look instead at demand for physical metal (and leave aside the $US250 billion -- $274.4 billion -- in daily trading of various gold instruments).
This commentary was posted in the clear over at the gata.org Internet site yesterday...and it's worth reading.
Media reports claim the U.S. Mint is sharply limiting American Silver Eagle coin orders for the remainder of this year in order to conserve coin blanks for next year’s 2014 Silver Eagle bullion coin program.
Meanwhile, year-to-date sales of American Eagle gold bullion coins at the end of November totaled 800,500 gold ounces, surpassing last year’s total sales of 753,000 ounces.
Despite sales this year, which have already shattered all-time records, November American Silver Eagle bullion coins sales actually declined by 787,000 coins from October sales. U.S. Mint figures show 2.3 million Silver Eagle bullion coins were sold in November, down from 3,087,000 coins in October and 3,159,500 coins sold in November 2012.
This short story was posted on the mineweb.com Internet site on Tuesday...and I thank reader M.A. for sending it along.
The Royal Canadian Mint's Silver Maple Leaf will be getting a new look in 2014. A new finish formed of complex radial lines and a micro-engraved laser mark will become permanent additions to the Mint's flagship silver bullion coin.
The traditional bullion finish on previous Silver Maple Leaf coins will be replaced with radial lines which emanate from the center of the coin. These lines have been precisely machined within microns on the master tooling to ensure consistent die production and coin striking. The specific width and pitch of the lines create a light diffracting pattern which is unique the "next generation" Silver Maple Leaf and unmatched by other bullion products.
A micro-engraved security mark has also been added to the reverse of the coin. A textured maple leaf incorporates the numeral "14" to denote the coin's year of issue and represents the cutting edge in bullion coin security. This technology was also added to the Mint's Gold Maple Leaf bullion coins starting in 2013, as well as its $1 and $2 circulation coins starting in 2012.
It's about time the silver maple leaf got a face lift, as it was starting to look tired. This very short story contains some neat photos, and is a quick read. It was posted on the coinupdate.com Internet site yesterday...and my thanks go out to West Virginia reader Elliot Simon for finding it for us. By the way, the 25-year anniversary silver maple leafs arrived in our store on Monday...and they are quite smashing! I suggest you pick up some before they disappear.
Reporting from the Mines and Money conference in London, Mineweb's Lawrence Williams quotes the Tocqueville Gold Fund's John Hathaway as attributing gold's recent price decline to the liquidation of paper gold that has been caused by the scramble for real metal.
Hathaway is quoted as predicting an "implosion of credit structures" related to gold, and as asserting that any U.S. gold reserve remaining at Fort Knox is "encumbered by so many lending agreements to banks and their clients that having it there physically is meaningless."
Williams' report is headlined "Paper Implosion Bullish for Gold, Says Tocqueville's John Hathaway" and it was posted on the mineweb.com Internet site yesterday. It falls into the must read category...and I found it embedded in a GATA release, and I thank Chris Powell for wordsmithing "all of the above".
December's "Things That Make You Go Hmmm..." letter by Grant Williams of Vulpes Investment Management in Singapore compares the current mechanisms used by central banks and bullion banks to suppress the gold price with the mechanisms used by the London Gold Pool of the 1960s, which, Williams observed, worked fine every day for a long time until suddenly it didn't.
Williams draws heavily on the long Bloomberg News report from a week ago that raised suspicion about the daily gold price "fixing" undertaken by bullion banks in London, a report called to your attention by GATA.
Williams writes: "The last time an effort was made to manipulate the price of gold lower than the market wanted it to be, it ended in a quick 25 percent spike in the price, followed over the next decade by the manifestation of those market forces in no uncertain terms and ending in a blow-off top some 2,332 percent higher than the price at which gold had been held for two decades.
This is your second absolute must read commentary of the day...and top up your coffee before you start, as it's a bit of a read. It's embedded in a GATA release from yesterday...and it includes an excellent preamble by Chris Powell. There's also a Zero Hedge spin on this story. It's linked here...and is courtesy of Ulrike Marx.
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 great thing about the manipulation premise is that it is a one-way conversion process. Those unsure of the manipulation can be converted into seeing the manipulation if they look deep and objectively enough; those who grasp the manipulation can never be converted back again after they recognize the truth. At some point, enough will become aware of the scam being run on the Comex so as to render it unsustainable. If a physical silver shortage hits first, then it won’t matter if enough learn of it or not. - Silver analyst Ted Butler: 04 December 2013
As I mentioned at the top of this column, yesterday's big jump in both gold and silver had all the hallmarks of a short covering rally that got stopped in its tracks once again before their respective prices went supernova.
If it was a short covering rally, JPMorgan et al were selling long positions for a profit. But by doing so, they became once again what they always are; sellers of last resort. Of course it's not possible to deduce how this rally will unfold in the days and weeks ahead, so I'm not going to let myself read too much into yesterday's price action, except to tell you that I've seen this movie before, and the ending is always the same. But it's far too soon to judge this budding rally in the same manner.
The gold imports into China through Hong Kong [and probably elsewhere] are certainly getting the coverage they deserve on the Internet and in the main stream media, and I can't shake the feeling that these Chinese imports are about to become problematic for Western central banks, if it's not a problem already.
Like the fall of the London gold pool, it's entirely possible that the Chinese are attempting the same trick that the French did when they pulled out of that pool; buy as much gold as the can before the whole JPMorgan-led price management scheme blows up. But while the Chinese are draining the West's gold reserves, the world's central banks can't raise a word of complaint about it, because if they did, the jig would certainly be up almost overnight, as it would bring into immediate question the true state of the world's central banks gold reserves.
The other question that I frequently ask myself is; what is the true state of Russia's gold reserves? Officially, The Central Bank of the Russian Federation hasn't added any gold to their reserves in the last three months, but I'm wondering if they've learned from the Chinese and decided to withhold their data as well. Time will tell.
Grant Williams speculation of another bank holiday around a gold price reset is one of my pet theories, and that's a day that lot of us are waiting for, including this writer.
The fact that JPMorgan is now long the gold in the Comex futures market, plus making every attempt to get out of their silver short positions during the last year, gives credence to the idea that the Anglo/American stranglehold on the precious metals prices, and thus the price of all commodities, is on its last legs. But how soon it will all come crashing down is unknowable, but it's coming.
In overnight trading, the prices of both gold and silver have been in slow decline ever since their respective rallies got capped in New York yesterday afternoon, but that decline accelerated a bit going into the London open this morning. Volumes are pretty light [as of 3:53 a.m. EST] in both metals at the moment, but I was mildly surprised that there was zero follow-through either in Far East or early London trading. This short covering rally was a New York based event only, and I have no idea as to what it may portend for the Comex trading session today.
And as I hit the send button on today's column at 5:20 a.m. EST, both gold and silver are still edging lower, and volumes are about "normal" for this time of day. Platinum and palladium are more or less trading flat. The dollar index, after taking a 25 basis point header during the Hong Kong afternoon session, is now back around unchanged.
That's all I have for today, which is more than enough, and I await the 8:20 a.m. EST Comex open with some interest.
See you tomorrow.