It was a pretty quiet trading day just about everywhere on Planet Earth on Monday. The gold price got sold down about ten dollars by shortly after 10:00 a.m. Hong Kong time...and traded mostly above the $1,590 spot price mark right up until it's low price tick of around $1,587 spot that came about five minutes before the 8:20 a.m. Eastern time Comex open. Gold rallied from there, breaking through the $1,600 price mark around 10:50 a.m. in New York. That proved to be its high tick of the day...$1604.40 spot...and every other rally attempt over the $1,600 spot market got quietly, but firmly turned aside.
Gold closed at $1,596.90 spot...down $2.20 from Friday's close. Net volume was only 88,000 contracts...and about 10,000 contracts of that amount was a spread trade placed early in the Far East trading day.
Here's the New York Spot Gold [Bid] chart on its own, so you can see the micro-action around the $1,600 mark in New York trading. Note the pre-Comex opening low...and the multiple attempts to break above $1,600 spot. It was another day when gold's closing price would have been much higher if left to its own devices.
In Far East and early London trading, silver traded in a 30 cent price band...from around $29.50 to $29.20 spot...with its low of the day coming shortly before 1:00 p.m. London time, which was a few minutes before 8:00 a.m. in New York. Then it looked like silver retested that low minutes before the Comex open.
Ten minutes after New York began to trade, silver was back above its Friday close...and traded around that price until its spike high of $27.74 that came the same minute as gold's high tick...about 10:40 a.m. Eastern.
After that, the silver price never got above the $27.65 spot mark...and finished the electronic trading session at $27.52 spot...up a whole 3 cents from Friday. Net volume was around 27,000 contracts.
The dollar index opened where it closed on Friday...around the 81.60 mark. It reached its Far East high [around 81.83] late in the morning Hong Kong time...and then rolled over to its low of the day [81.55] which came around 10:40 a.m. in London. Then away it went to the upside. The high was around 81.96 at 10:25 in New York...but 90% of the dollar index rally was in by 8:15 a.m...which was five minutes before the Comex opened for trading. From there, the index slid a hair...and then traded sideways for the last six hours of the New York trading day, finishing around 81.87.
The gold stocks sold off a bit at the beginning of the New York trading day...and their high came, naturally enough, at the 10:40 a.m. spike high in the gold price. From there, the gold stocks got sold off to their low of the day, which was minutes before noon Eastern time. After that they clawed their way back to almost unchanged by the close. The good folks over at finance.yahoo.com that provide the daily HUI chart, obviously had some issues early in the day, but got them fixed in the few hours of trading. The HUI finished down a tiny 0.11%.
Most of the stocks in Nick Laird's Silver Sentiment Index closed in positive territory, but the 3.85% decline in Pan American Silver dragged the SSI down as well...and it closed down 0.47%.
(Click on image to enlarge)
The CME's Daily Delivery Report for the second delivery day in July showed that 6 gold and only 99 silver contracts were posted for delivery on Wednesday. In silver, the biggest short/issuer was Merrill with 95 contracts...and biggest long/stoppers were JPMorgan and the Bank of Nova Scotia. They stood for delivery on all 99 contracts issued. The link to the Issuers and Stoppers Report is here.
As of the preliminary report from the CME in the wee hours of this morning, there are about 2,400 silver contracts still open in July.
There were no reported changes in GLD yesterday, but an authorized participant[s] withdrew an eye-watering 4,364,343 troy ounces of silver from SLV. It's hard to say whether that withdrawal was price action-related...or whether the silver was more desperately needed elsewhere.
The U.S. Mint had a small sales report to start out the month of July. They sold 2,000 ounces of gold eagles...and 269,500 silver eagles.
The Comex-approved depositories reported receiving 599,997 troy ounces of silver on Friday...all of it into Brink's, Inc. The link to that action is here.
Here's a chart that Washington reader S.A. stole from somewhere yesterday...and it needs no further embellishment from me. My first story of the day is on this subject.
As per most Tuesdays, I have a lot of stories...and the final edit is, as always, up to you.
America’s manufacturing sector has contracted for the first time in almost three years, raising the spectre of the world’s major economic centres suffering a simultaneous slowdown.
An index of manufacturing activity unexpectedly fell to 49.7 in June from 53.5 in May, the Institute for Supply Management said yesterday. A reading below 50 signals contraction and last month’s figure was lower than the most pessimistic forecast. The Dow Jones and the S&P 500 both fell as investors took the report as further confirmation that the world’s largest economy is losing the momentum it enjoyed at the start of the year.
“It’s a really terrible number,” said David Semmens, an economist at Standard Chartered.
There was little encouragement to be found in the majority of the smaller indices that made up the worrying headline figure. A measure of new orders dropped to 47.8 from 60, while prices paid slumped to 37 from 47.5. Overseas demand for US manufactured goods was also down, the ISM survey said.
This story from The Telegraph was filed from London yesterday afternoon BST...and I thank Roy Stephens for sending it. The link is here. There is also this Reuters piece on U.S. consumer spending that I stole from yesterday's King Report.
As of Monday, major financial institutions — those once deemed "too big to fail" — were required to submit to regulators their so-called living wills. The plans would diagram how the banks would be broken apart should they find themselves unable to exist in their current form.
But the plan, part of the Dodd-Frank banking regulations instituted in the wake of the 2008 financial crisis, may be for little more than appearance's sake should a similar-size catastrophe hit the banking system.
The reform sought, among other things, to make sure banks have enough capital to brace themselves against huge losses and not devastate the global financial system should they fail.
"Capital is like oxygen for banks. However, when your body is filled (with) cancer, as the case with European debt or stupid derivatives trades, it doesn't matter," Matt McCormick, portfolio manager at Bahl & Gaynor, told CNBC's "Squawk on the Street." "If these banks go out or (get) to the point where it's going to happen, in my opinion it's going to be from unforeseen circumstances."
This story was posted over at the CNBC Internet site yesterday...and I thank Ontario reader Richard O'Mara for sending it along. The link is here.
The following story from Bloomberg, which will likely pick up much more steam over the next weeks and months, detailing how the bank which just barely avoided a triple notch downgrade (wink, wink) has had previous dealings with the very same rating agencies seeking to, picture this, artificially inflate ratings!
So to summarize: Fed manipulates capital markets, HFT manipulates bid ask spreads, "self-policing" CDS pricing market groups fudge the prices on trillions in Credit Default Swaps, bank cabals collude and manipulate short-term interest rates, and now banks are confirmed to have manipulated the ratings on tens of billions of bonds using monetary incentives and threats.
Is there anything in this "market" that was fair over the past several decades, and was actual price discovery ever actually possible?
This Zero Hedge story was sent to me by reader Phil Barlett, for which I thank him. The link is here.
In a statement to the House of Commons [yesterday afternoon in London], the prime minister said a parliamentary inquiry could act 'immediately, be accountable and get to the truth quickly so this never happens again."
Mr Cameron said the inquiry would have widespread access to special advisers, ministers and papers from the coalition and the previous Labour government, "The British people want to see two things. They want to see bankers who acted improperly punished and they want to know we have learned the broader lessons ," he said.
This is another story that was posted on The Telegraph's website yesterday afternoon...and I thank Roy Stephens for bringing it to our attention. The link is here.
Barclays stepped up its efforts to rig interest rates after its chief executive, Bob Diamond, spoke to the deputy governor of the Bank of England, Paul Tucker.
Diamond had a conversation with Tucker about how much Barclays was claiming it had to pay to borrow money during the financial crisis in 2008.
After Mr Diamond spoke to Mr Tucker, Barclays staff came to believe the Bank of England wanted them to falsify this data -- which was used to calculate Libor, the interest rate that banks pay to each other.
The bank's traders then escalated their secret attempts to manipulate the markets and make it appear that the bank was paying less to borrow money than was actually the case, documents show.
You can't make this stuff up. This story was posted on the telegraph.co.uk website on Sunday...and I found it hiding in a GATA release. The link is here.
Bob Diamond is threatening to reveal potentially embarrassing details about Barclays' dealings with regulators if he comes under fire at a parliamentary hearing on Wednesday over the Libor rate-setting scandal, according to people close to the bank's chief executive.
"If he is attacked, he will fight back," said one person familiar with preparations for the Treasury select committee hearing.
Such a confrontational tactic could aggravate the fraught relations between the bank and the authorities after Barclays paid L290 million to settle an investigation by UK and US regulators over the bank's involvement in manipulating key interbank lending rates.
As Chris Powell says in his introduction..."The rats are starting to turn on each other. Eventually gold and silver market rigging may be mentioned as well". This subscriber-protected story appeared in the Financial Times of London yesterday...and it's posted in the clear in this GATA release...and the link is here.
Virtually all financial scandals follow the same pattern. First there is the initial exposure of wrong doing, then comes the mitigating claim that it was common practice and everyone was up to it, and finally it emerges that the regulators knew all along but failed to act.
The only bit of the generally repeated sequence of events missing in the Barclays case is the one I haven't mentioned – the cover-up. As the crisis develops, someone, often the chief executive, is nearly always caught attempting to destroy the evidence.
Barclays did at least manage to avoid that one; emails are not so easily shredded as the paper work of old. But the other two elements are now fast snowballing; as is now apparent, manipulation of interbank interest rates appears to have been endemic at a number of banks and what's more, regulators repeatedly ignored warnings of it.
Regulatory failure is as much a part of this story as the mischief itself. To state this reality is not to absolve Barclays or anyone else from blame, but merely to point out that such scandals tend invariably to occur against a backdrop of poor standards, lack of vigilance and a general climate of regulatory tolerance.
This must read story was sent to me by Roy Stephens as I was doing the final edit on this column in the wee hours of this morning. This regulatory failure spoken of in this story is exactly the same as the CFTC and CME's regulatory failure in the silver price fixing scandal. I'd dearly love to see Gensler and Chilton et al hung for this. As I said, this story from The Telegraph's website last evening is a must read...and the link is here.
The Bank’s Monetary Policy Committee (MPC) is expected to vote for more bond purchases through quantitative easing (QE) when it makes its monthly decision on Thursday.
It would take the total spent under the programme to £375bn.
Additional stimulus would come against a backdrop of a recession in Britain that is deeper than initially thought, a eurozone debt crisis which continues and falling inflation.
Michael Saunders, economist at Citigroup, said: “We expect the MPC will restart QE at the upcoming meeting, in reaction to the persistent weakness of the UK economy, easing inflation worries and ongoing European Monetary Union crisis.”
Obviously the spectre of deflation is stalking the land...and that will never do, will it? This story was posted in The Telegraph late on Friday evening...and it's another story that I found posted in a GATA release. The link is here.
The German parliament had barely approved the permanent euro rescue fund and the fiscal pact on Friday when opponents of the measures filed requests for a temporary injunction with the German constitutional court. On Monday, the court announced it will hear the complaints on July 10.
The plaintiffs, who oppose Germany transferring more power to European institutions, are trying to obtain a temporary injunction against the two laws to stop them entering into force until the court has addressed the main complaints against the measures at a later date and ruled whether the laws in question are constitutional. It is highly unusual for the court to hold a hearing on requests for a temporary injunction. The fact that it is doing so is regarded as a sign of the importance of the issue.
This very short story was posted on the German website spiegel.de yesterday...and I thank reader Donald Sinclair for sharing it with us. The link is here.
Finland, one of the eurozone’s few remaining AAA-rated economies, has pledged to block Brussels’ celebrated plans to allow its new bail-out fund to buy sovereign bonds in the market.
“Finland finds it an inefficient way to stabilise markets,” said a senior Finnish government official told reporters.
A spokesman for the Dutch finance ministry said: “The Prime Minister said on June 29 he is not in favour of buying up bonds. Using the existing instruments to buy up bonds will be expensive and can only be done if there is unanimity (between member states). That means the Netherlands would need to vote in favour.”
This story was posted on The Telegraph's website early yesterday evening...and I thank Roy Stephens once again. The link is here.
French President Francois Hollande, elected in May on a promise to avoid growth-sapping austerity measures, should make tough savings and public sector job cuts to meet a European deficit target, the national audit office said on Monday.
Economists have warned for months that faltering economic growth was gnawing a hole in state revenues, but Hollande kept the issue largely under wraps until he won the presidency and his Socialist party topped parliamentary elections in June.
He now risks angering the public, along with leftist allies and trade unions, to achieve what the audit office estimated would be more than 33 billion euros ($42 billion) in savings next year to reach an EU deficit goal of 3 percent of GDP.
This Reuters story was filed from Paris yesterday...and I thank reader Scott Pluschau for sending it our way...and the link is here.
Nigel was interview by the folks over at Russia Today...and the 6:19 minute video was posted on their website last Thursday. Nigel is not quite as over-the-top as he can be at times...but he still carves a lot of the EU technocrats a new one. Roy sent me this video on Sunday...and it's worth your time if you have it. It's posted over at youtube.com...and the link is here.
Bedeviled by government mismanagement of the economy and international sanctions over its nuclear program, Iran is in the grip of spiraling inflation. Just ask Ali, a fruit vendor in the capital whose business has been slow for months.
People hurried by his lavish displays of red grapes, dark blue figs and ginger last week, with few stopping to make a purchase. “Who in Iran can afford to buy a pineapple costing $15?” he asked. “Nobody.”
But Ali is not complaining, because he is making a killing in his other line of work: currency speculation. “At least the dollars I bought are making a profit for me,” he said.
The imposition on Sunday of new international measures aimed at cutting Iran’s oil exports, its main source of income, threatens to make the distortion in the economy even worse. With the local currency, the rial, having lost 50 percent of its value in the last year against other currencies, consumer prices here are rising fast — officially by 25 percent annually, but even more than that, economists say.
This very interesting 2-page story showed up on The New York Times website on Sunday...and I thank reader Randall Reinwasser for bringing it to my attention...and now to yours. The link is here.
Iranian lawmakers have drafted a bill that would close the Strait of Hormuz for oil tankers heading to countries supporting current economic sanctions against the Islamic Republic.
"There is a bill prepared in the National Security and Foreign Policy committee of Parliament that stresses the blocking of oil tanker traffic carrying oil to countries that have sanctioned Iran," Iranian MP Ibrahim Agha-Mohammadi told reporters.
"This bill has been developed as an answer to the European Union's oil sanctions against the Islamic Republic of Iran."
Agha-Mohammadi said that 100 of Tehran's 290 members of parliament had signed the bill as of Sunday.
This story was posted over on the Russia Times website early yesterday evening...and is another Roy Stephens offering. The link is here.
The first is with James Turk...and it's headlined "Frightening Situation, the World is on a Knife's Edge". The second blog is with Bill Haynes, the President and owner of CMI Gold & Silver. It's entitled "This Will End in Inflation & Destruction of Paper Currencies". And lastly is this commentary by Richard Russell. It bears the headline "Is Anything Safe in Our New World?"
Writing at GoldMoney, economist Alasdair Macleod joins those noting official proposals to recognize gold holdings by banks as equivalent -- and, implicitly, superior -- to government-issued cash.
Macleod writes: "What is sauce for the commercial goose is also sauce for the central-bank gander: It makes no sense for the central banks to continue to marginalise gold on their own balance sheets. Instead, central banks should abandon the myth of valuing gold on their books at $42.22 and treat it as a proper monetary asset. ... What this proposal amounts to is no less than the official remonetisation of gold."
Alasdair's commentary is worth your time as well...and it's posted over at the goldmoney.com Internet site...and the link is here.
Gold traders in the eastern Congo district of Ituri have heard of the Dodd-Frank Act, or "Obama's Law" as it's known here, but don't see why it's got anything to do with them.
"I struggle to understand this Obama's law," says George Lobho, one of hundreds of traders operating out of tiny wooden shacks in the muddy streets of Mongbwalu. "What does it mean?"
Ituri is one of many areas of the country to have experienced bitter ethnic conflict between rival tribes in recent years. Massacres have left tens of thousands dead.
It is this fighting that led U.S. authorities to take the unprecedented step of naming Congo in section 1502 of the Dodd-Frank financial regulation act, which says U.S.-listed companies that source gold, tungsten, tantalum and tin from Congo or its neighbors must assure the U.S. stock exchange regulator that their business is not helping fund conflict.
This very interesting, but longish Reuters story, was filed from Mongbwalu in the Democratic Republic of Congo on Thursday. I found it in a GATA release yesterday, which Chris Powell had headlined "U.S. law against 'conflict gold' unenforceable and ineffective"...and the link is here.
Policymakers, economists, investors—everyone—should read and reread Gold: The Once and Future Money by Nathan Lewis (John Wiley & Sons, $27.95). It’s worth its weight in gold—and then some. If all grasped its basic conclusions, the world would be an infinitely richer and happier place. Economic disasters don’t come from inherent flaws in the free marketplace. They come from government policy mistakes, and, as we saw in the 1930s, those errors can have ghastly consequences.
Gold combines engrossing history with absorbing economic analyses and conclusions. Who would’ve imagined a book could give you what you need to know about economics without ever sounding like a textbook?
Not that everything Lewis writes is gospel—some of his interpretations of diplomatic history are way off base—but on the core subjects of money and prosperity he’s absolutely on target.
It should come as no surprise that this must read story showed up on the forbes.com Internet site. It's Roy Stephens final offering in today's column...and the link is here.
There’s a plausible path to $10,000 an ounce gold. And it doesn’t require a breakdown in civil society…
Speculators see central bankers as modern-day superheroes, able to push markets around with a single phrase. In the minds of most investors, Ben Bernanke, Mario Draghi and Masaaki Shirakawa might as well be wearing tights, masks and capes. These superhero central bankers continuously swoop down into the financial markets to defend them from downticks…and to insure that they always deliver capital gains.
The reality, of course, is that these superheroes are frauds. They have no superpowers…other than the power of mass delusion. The powers of Mario Draghi and the other central bankers in Europe are waning. Excess debt is like kryptonite: Each new wave of printing has less impact on markets. As the popular phrase goes: “This is a solvency problem, not a liquidity problem.”
There's nothing really new here, as Dan Amoss over at the dailyreckoning.com website spells out how the central banks of the world will re-price gold to put their books in order. He's a little late to this party, as many other gold commentators have already written at length on this subject, including your humble scribe. Dan's number is $10,000...and mine is $18,000...so place your bets!
I thank reader Bill Moomau for sending it...and the link is here.
Silver Doctors has posted an excerpt from a Friday program on CNBC where the host and panelists agree that improper market manipulation is pervasive and includes the silver market because that market is so small and vulnerable. Indeed, the corruption of the world financial system has become so vast and obvious that even gold and silver market manipulation soon may be taken for granted everywhere except in the financial press itself. You'll read about it last in The Wall Street Journal and the Financial Times, though they've been sitting on the story for years.
After 25+ years of pounding at the gates, it now appears that Ted Butler's tireless efforts of putting the silver price management scheme in front of the financial press has paid off. It seems like the main stream media knows everything about it, but won't say a word...as Chris Powell pointed out in the preceding paragraph...and his famous quote fits right in..."There are no markets anymore, only interventions."
I thought that the preamble to the story over at the silverdoctors.com website might have been a little sensationalist when I first read it...but after listening to the video clip, it was more than obvious that it was not. It was the real deal...and if I hadn't heard it myself, I would never have believed it. It's an absolute must watch...and I thank reader 'David in California' for being the first one through the door with this scoop. The link is here.
From Jim Rogers... to Marc Faber... to Congressman Ron Paul, this book is sitting on the desks of some of the world's smartest thinkers...
And for good reason, too.
Inside you'll find 47 ways to protect your wealth from the declining value of the U.S. Dollar
Discover FIVE of those 47 ways for free, right here.
Asia is accumulating Gold. Russia is accumulating Gold. "Backward" nations all over the world are accumulating Gold - on both an individual and a government level. While the "developed" world has developed an idea of monetary safety which turns all history on its head, the rest of the world is not going along with them. We'll leave it to you to decide which are the credulous and which are not. - Bill Buckler, Gold This Week, 30 June 2012
With such light trading volume in both metals, I wouldn't read a lot into yesterday's price action...although it was obvious that gold wasn't allowed to breach the $1,600 spot price mark for more than a few minutes at a time. Silver's price was well contained below the $28 spot mark as well.
But the story of the day yesterday was that CNBC panel discussion where all parties acknowledged that the silver market is rigged seven ways to heaven will, in my opinion, turn out to be a key moment in the history of the price management scheme in silver. There's no doubt it my mind that this video clip probably got a fair amount of playing time with the JPMorgan et al crowd, the CFTC, the CME Group...and beyond. I would bet that there are forces now in play that can't be stopped.
How big a hammer blow this is may not show up in the silver price immediately, but it indicates to me that the silver fuse is definitely lit...and the end is getting closer with each passing day.
As I mentioned in my Saturday column, the Friday COT report showed that the eight largest Commercial 'traders' in the silver futures market were short 3.27 times the net short position of 60 million ounces...a monstrous concentration held by a small handful of traders, dominated by JPMorgan. This is what silver analyst Ted Butler had to say about it in his Weekly Review on Saturday...
"It’s hard to express the true meaning in the proper words, but the 'big 4' now hold a short position that is 2.5 times greater than the total commercial [net] short position, an extreme level never witnessed in my memory. In many ways, even though the total amount of commercial shorts in COMEX silver has never been lower, it has also never been more concentrated than it is now. The true measure of manipulation is the level of concentration because concentration determines market control."
Well, it was an interesting trading session in the Far East on their Tuesday...and that positive trend is still in place now that London has been open for about two hours. Gold is above the $1,600 spot price mark at the moment, but silver's two attempts to move above $28 spot, ran into the usual not-for-profit sellers. Gold volume is not overly heavy for this time of day, but silver volume is getting up there. The dollar index has been pretty much ruler flat since the Far East open on their Tuesday morning. And as I hit the 'send' button at 5:18 a.m. Eastern time, gold is up exactly twelve bucks...and silver is up 40 cents.
Today, at the close of Comex trading, is the cut-off for Friday's Commitment of Traders Report...and I must admit that I'm looking forward to Tuesday's New York trading action with great interest.
I'll have a column tomorrow on the July 4th holiday...but it will be posted later in the morning, like it is on Saturday, so don't expect it in your in-box at its usual time.