Well, Wednesday wasn't a particularly exciting day in the gold market, either. Both the low and the high of the day occurred within forty-five minutes of each other. The low [$1,561.80 spot] came around 8:50 a.m. Eastern..and the subsequent rally got hammered flat at 9:30 a.m...right at the open of the equity markets in New York. That was the high of the day at $1,585.10 spot.
Then, just like the price action on Monday and Tuesday, gold rallied a bit after London closed at 4:00 p.m. BST...11:00 a.m. Eastern.
Gold closed at $1,574.20 spot...up $1.60 on the day. Net volume was very light at 106,000 contracts.
And just in case you've forgotten, here's Nick Laird's "Intraday Average Gold Price Movements" graph. Note that the New York high of the day occurs, on average, at 9:30 a.m. Eastern time. This chart is derived from four years of LBMA price data...and is based on the work of German gold analyst, Dimitri Speck.
If you're a regular reader of this column, you'll know that the 9:30 a.m. New York high of the day is a common feature on the Kitco gold charts. During the last thirty days or so, it's occurred at least a half a dozen times, with the latest being yesterday.
(Click on image to enlarge)
The silver chart was very similar, except the low and high were precisely thirty minutes apart. The low at precisely 9:00 a.m. Eastern...and the high at precisely 9:30 a.m. Eastern. From there, silver 'declined' until the London close...and then like gold, rallied a hair into the 1:30 p.m. Comex close...and then sold off into the electronic close.
Silver finished the Wednesday trading session at $26.94 spot...down 17 cents on the day. Yesterday was pretty much the last day for traders to roll out of the July silver contract...and they were doing so in droves. Net volume was only a few thousand contracts, but gross volume was over 100,000 contracts.
Here's the New York Spot Silver [Bid] chart...and you can see the precision of the timing of the low and the high. The couldn't make their market interventions more conspicuous if they tried...unless they took out a full page ad in The Wall Street Journal the day before.
The New York Spot Gold [Bid] chart looks virtually identical.
The dollar index traded pretty flat until about 11:15 a.m. in London. From that point, it rallied to its high of the day...82.70...which came about 11:20 a.m. in New York. It gave up a bit of those gains by 1:00 p.m...and then trade flat into the close, around 82.55. The dollar index finished up about 10 basis points from Tuesday. There wasn't much co-relation between the dollar index and the precious metals price action yesterday.
The gold stocks opened in positive territory, but that obviously didn't last considering the fact that the gold price got smacked at that precise moment. The stocks hit their nadir about thirty minutes before the gold price hit its low of the day...and then they climbed back into positive territory briefly, but then got sold off a bit as gold got sold off in the electronic market after the 1:30 p.m. Comex close. The HUI finished down 0.30%.
The silver stocks finished mixed as well...but almost all of the seven stocks that make up Nick's Silver Sentiment Index finished in the black...and it closed up 1.53%.
(Click on image to enlarge)
The CME's Daily Delivery Report made a liar out of me, as 34 gold and 1 silver contract were posted for delivery on Friday...which is the last delivery day for the June contract. There may still be a few last minute deliveries for June in both metals...and whatever numbers there are, will be posted on the CME's website tonight.
For the second day in a row there were no reported changes in either GLD or SLV.
And, for the second day in a row, there was a small sales report from the U.S. Mint. They sold 6,000 ounces of gold eagles...and 1,500 one-ounce 24K gold buffaloes.
The Comex-approved depositories had no additions or withdrawals worth mentioning on Tuesday.
Here's a chart that Washington state reader S.A. sent me yesterday. It shows the "Inventory of German direct investments in southern European euro-zone countries and Ireland, in billions of euros." I've already done the math for you...and it adds up to €87.3 billion.
I don't have too many stories today, so I hope you can find the time to skim them all.
Reason magazine reports that U.S. Rep. Ron Paul's unadulterated legislation to audit the Federal Reserve in full, including its dealings with foreign banks, was approved yesterday in a unanimous vote by the House Oversight and Government Reform Committee.
The full report from Reason magazine, plus The New York Sun's editorial on it, is contained in this GATA release...and both are definitely worth reading. The link is here.
Barclays has agreed to pay a total of $450 million to US and UK regulators to settle a probe into allegations that its employees sought to manipulate the London interbank lending rate that is the basis of more than $350 trillion of contracts worldwide.
The settlement covers the US Commodity Futures Trading Commission and Department of Justice, as well as the UK Financial Services Authority. The CFTC imposed a $200 million penalty, the Justice Department $160 million, and the FSA a record L59.5 million fine.
Unlike many US-only deals, the settlement will include a detailed final notice from the FSA in which Barclays will admit failings.
This Financial Times story from yesterday is posted in the clear in this GATA release...and the link is here.
European Central Bank President Mario Draghi is contemplating taking interest rates into a twilight zone shunned by the Federal Reserve.
While cutting ECB rates may boost confidence, stimulate lending, and foster growth, it could also involve reducing the bank's deposit rate to zero or even lower. Once an obstacle for policy makers because it risks hurting the money markets they're trying to revive, cutting the deposit rate from 0.25 percent is no longer a taboo, two euro-area central bank officials said on June 15.
"The European recession is worsening. The ECB has to do more," said Julian Callow, chief European economist at Barclays Capital in London, who forecasts rates will be cut at the ECB's next policy meeting on July 5. "A negative deposit rate is something they need to consider, but taking it to zero as a first step is more likely."
This story was posted on the Bloomberg website in the wee hours of yesterday morning...and I plucked it from a GATA release. The Bloomberg headline reads "Draghi May Enter Twilight Zone Where Fed Fears to Tread"...and the link is here.
Chancellor Angela Merkel reinforced her Nein to euro bonds on Wednesday and sharply criticized euro zone reform proposals presented by top EU officials this week. Her remarks set the stage for what promises to be a difficult, fractious EU summit on Thursday.
In a statement to Germany's lower house of parliament, the Bundestag, Merkel made clear that she will not bow to intense international pressure on Germany to agree to joint bond issues that would calm the euro crisis by stabilizing ailing euro-zone member states like Italy and Spain.
She said the blueprint for closer financial integration drafted by European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, Euro Group President Jean-Claude Juncker and European Central Bank President Mario Draghi contained major shortcomings, and that she would seek support for her own ideas in Brussels.
This story appeared on the German website spiegel.de yesterday...and I thank reader Donald Sinclair for sending it. The link is here.
French President François Hollande promised his voters a growth pact to counteract Germany's obsession with austerity. Now, he has gotten what he asked for, nominally at least. But the pact, which will be agreed to at this week's EU summit, is full of hot air.
Summit participants know themselves that the resolution is little more than a bit of window dressing for voters and financial markets. The pact contains nothing new, according to an internal analysis undertaken by one member state. It is only being agreed to, the analysis continues, so that the new French president can save face. During his presidential campaign, Hollande demanded efforts to stimulate the economy.
"It is all just old wine in new bottles," agrees Daniel Gros, director of the Centre for European Policy Studies, a Brussels-based think tank. "Politicians just want to show that they are taking the desires of the electorate seriously." But, he adds, the effect on the economy will be virtually nil.
The summit is already underway as you read this and, like the FOMC meetings on this side of the Atlantic, it's not going to amount to much, as this is all just another attempt to rearrange the deck chairs on the Titanic. This Roy Stephens offering was also from the spiegel.de Internet site...and the link is here.
Many places in Spain are suffering as a result of the euro crisis, but few have been hit as hard as La Línea, a Spanish town which neighbors the prosperous British overseas territory of Gibraltar. With the city on the verge of bankruptcy, many residents have turned to smuggling to earn money.
The residents of La Línea de la Concepción are leaving, like rats deserting a sinking ship.
They've been crossing the border by the thousands since early morning, first the cleaning women, nannies and construction workers, and then the smugglers. They all want to get out of Spain, if only for a few hours. There is work across the border, in the British overseas territory of Gibraltar, and work spells hope for a better life.
This rather innocuous story is well worth reading, even though it's a couple of pages long. It's another story from the spiegel.de website...and another offering from Roy Stephens. The link to this rather depressing read, is here.
€60 million has been stolen from bank accounts in a massive cyber bank raid after fraudsters raided dozens of financial institutions around the world.
According to a joint report by software security firm McAfee and Guardian Analytics, more than 60 firms have suffered from what it has called an "insider level of understanding".
"The fraudsters' objective in these attacks is to siphon large amounts from high balance accounts, hence the name chosen for this research - Operation High Roller," the report said.
"If all of the attempted fraud campaigns were as successful as the Netherlands example we describe in this report, the total attempted fraud could be as high as €2 billion euro (£1.6bn)."
This is an amazing read...and I wouldn't have believe it if it hadn't shown up on a mainstream media website. It's worth your time...and I thank New Jersey reader Robert "Lippie" for sharing it with us. The link is here.
Fiat money is a wonderful thing is it not? Truly one of the more useful developments in society since humans first learned to think / speak, that one can put in a day’s work and be rewarded with a piece of paper, which can itself be exchanged for something as marvelous as a punnet of strawberries or a Fender Jazz Bass.
So easy, right? And not a large wheel-barrowful of paper as citizens would have needed in the Weimar Republic, but a small scrap that is literally like Monopoly paper. (The 500 euro ($632) note, at approximately 404 pounds, is coincidentally exactly one week’s average gross salary for workers in the UK in 2011. Just think, all that purchasing power contained in a piece of paper measuring 160 x 82 mm! And in Bangladesh that note would be 60 percent of average annual salary…).
The public could be forgiven for wondering where the money comes from. Originally, that is. What is backing up the value implicit in a bank note?
The orthodox answer can be found in any textbook on economics of course. Ultimately the central bank backs up the value of paper money, with its "promise to pay the bearer on demand the sum of…" but of course since currencies came off the gold standard this promise to pay isn’t in the form of equivalent assets of intrinsic value, like gold, but just more of the same paper money.
What's incredible about this must read story that was posted over at the cnbc.com website yesterday, is the author. He's Moorad Choudhry...Treasurer, Corporate Banking Division, Royal Bank of Scotland. I thank West Virginia reader Elliot Simon for sharing it with us...and the link is here.
"The point at the moment is that just because the Greeks voted - basically to stay in the EU in hopes of economic benefits outweighing the pain of whatever the austerity requirements are - that doesn't mean they'll actually be able to deliver. Once the new half-measures begin to bite, I expect to see more angry mobs back out on the streets. These people have become so corrupt that they think the government is some kind of a magic cornucopia, when first and foremost it's really just a vehicle for institutionalized theft."
This week's Conversations With Casey is another must read, if you haven't read it already. Louis James baits Doug with "sic 'em" kinds of questions...and Doug goes for the jugular every time. No shades of grey in his comments...and the link is here.
The first blog is with Jean Marie Eveillard. It's entitled "This Is All A Delusion, I Am Keeping My Gold". The second is with Rick Rule...and it's headlined "The Big Money I'm Speaking With Is Frightened". The third blog is with Stephen Leeb...and it bears the title "The Fate of the Global Financial System Hangs in the Balance". And lastly is this audio interview with the BMO's chief investment strategist, Don Coxe. I posted his KWN blog in this space yesterday.
At the Idaho GOP convention in Twin Falls, the state GOP decided to preserve the platform of abolishing the Federal Reserve Bank and instituting dollars backed by gold and silver.
“We recognize the failure of the Federal Reserve System to maintain a sound U.S. dollar and the danger of mercantile banks controlling the issuance of our currency. We believe the Federal Reserve Bank should be abolished and the issuing power restored to the people with the stipulation that the U.S. dollar be backed by gold and silver,” reads the recently adopted 2012 platform.
The platform goes even further and encourages Idahoans to acquire precious metals.
“We believe Idahoans need to protect their savings from the ravages of inflation, which is hidden taxation, and encourage citizens to participate in a systematic acquisition of precious metals which represent real value as opposed to paper currencies,” the platform continues.
This story was posted over a the dailycaller.com website on Tuesday...and I thank reader Clayton McBride for sending it along. The link is here.
Maybe you've heard the old story about the hand-written message on the slip of paper in the Chinese dessert: "Help! I'm a prisoner in a Chinese fortune cookie factory!"
It's not quite that bad at GATA's roving headquarters right now but your secretary/treasurer's long expedition to the western shores of the Pacific Ocean has been a bigger expense than we're used to undertaking, even as we hope that it has been unusually productive -- appearances on Asia's two widest-reaching television networks, Channel NewsAsia in Singapore and CNBC Asia in Hong Kong, and presentations at financial conferences in both cities, including Standard Chartered's "Earth's Resources" conference, a venue a bit more respectable than those to which contrarians and troublemakers commonly are invited.
You can help -- especially if you haven't already -- by making a financial contribution to GATA despite the especially hard times being endured right now by the monetary metals sector. Whether this expedition was worthwhile or not, it has run our modest finances way down and we don't do much fundraising even as we're ready to continue our work if the support is still there.
As always, until the World Gold Council with its multi-million-dollar annual budget decides to get serious and confront the elephant in the room, surreptitious market rigging by central banks, we have to depend on you.
You can read the rest of Powell's quiet plea for financial assistance in this GATA release...and the link is here.
Demand for gold coins fell in key markets in the early part of this year as the strong demand for small investment products that helped send bullion prices to record highs in 2011 tailed off, sales data from three major Mints showed.
The United States, Canadian and Austrian Mints, which between them produce three of the world's top five bullion investment coins, all reported lower sales in the first quarter of 2012 versus a year ago.
Combined sales of U.S. American Eagle, Canadian Maple Leaf and Vienna Philharmonic gold coins fell by more than a third to 451,113 ounces in the three months to March.
I found this story posted over at the mineweb.co.za Internet site early this morning...and it's certainly worth the read. The link is here.
The Reserve Bank of India is likely to clamp down on gold coin sales by banks, amid rising bullion imports adding pressure to the current account deficit and weakening the rupee.
The Banking Regulation Act does not allow banks to trade in commodities and they play the role of a financial intermediary. This norm was relaxed in the pre-2008 era when the country saw a dollar influx that resulted in a sharp appreciation of the rupee. To sterilise dollar inflows, banks were allowed to sell gold, as they imported the yellow metal. The measure was temporary.
"Banks were allowed to sell gold by importing it to fight the excess dollar flows. By the same logic, the measure should be reversed now as we are at the opposite end of the spectrum. It was a temporary measure, which unfortunately was made permanent by banks," a top RBI official said.
This story was posted on the Business Standard of India Internet site early yesterday morning. I discovered it in a GATA release...and the link is here.
Bayfield Ventures Corp. (TSX.V: BYV) is exploring for gold and silver in the Rainy River District of NW Ontario. The Company’s 100% owned “Burns” Block property adjoins the immediate east of Rainy River Resources’ (TSX.V: RR) world-class gold deposit which includes an indicated resource of 5.72 million ounces of gold, averaging 1.18 g/t, in addition to an inferred resource of 2.25 million ounces of gold, averaging 0.79 g/t. Drilling to date on Bayfield’s Burns Block demonstrates that the ODM17gold zone extends from Rainy River Resources' ground onto the Burns Block. Bayfield is currently carrying out 100,000 metres of diamond drilling on its Rainy River properties. Drill results thus far have been very encouraging. Notable drill results include 60.05 grams per tonne gold and 362.96 grams per tonne silver over 11.2 metres within 26.70 grams per tonne gold and 170.69 grams per tonne silver over 25.5 metres, as well as 35.93 grams per tonne gold and 359.65 grams per tonne silver over 10.0 metres. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. Please visit our website to learn more about the company and request information.
Politics is the gentle art of getting votes from the poor and campaign funds from the rich by promising to protect each from the other. - Oscar Ameringer
It was another quiet day in the precious metals again yesterday. Net volumes were very light...and will probably stay that way until we get past First Day Notice in silver tomorrow. Then we start a brand new month...and we'll see how things proceed from there.
The First Day Notice for silver deliveries for July 2nd will be posted on the CME's website late this evening...and I'll have them for you in tomorrow's column.
We've only got two trading days left in the month...and in the second quarter. I expect there to be some attempts to manipulate stocks and commodities higher/lower during this period, so I won't be at all surprised by what happens between now and the close of New York trading on Friday.
Both gold and silver traded in a tight range either side of unchanged right up until 3:00 p.m. Hong Kong time...and then both metals got slowly sold off going into the London open. As I hit the 'send' button at 3:20 a.m. Eastern time, gold is only down about four bucks...and silver is down less than a dime. Net volumes are very light once again for this time of day...and I expect that to continue until trading on the Comex commences at 8:20 a.m. Eastern time in New York.
The dollar index, which had been down about 35 basis points up until 1:00 p.m. Hong Kong time, turned on a dime...and is now blasting higher and has regained all that loss, and then some, as of 10:05 a.m. in London.
Of course neither gold nor silver rallied when the dollar index was falling, but that's certainly not the case now that the dollar is up about 55 basis points off its low of the day. But, having said that, the precious metals certainly didn't sell off that much...at least compared to other days when we had dollar index moves of that size to the upside.
With the latest "Must Save Europe" Summit underway, I'm sure that the 'powers that be' don't want to see the precious metals move sharply higher while that event is in progress.
I await the New York price action with great interest.
See you on Friday