The gold price made a few rally attempts...one at the New York open on Sunday evening...and then again a few hours later in early Far East trading on their Monday morning. Neither rally was allowed to get far.
Gold hit its low of the day around 9:30 a.m. Hong Kong time...and then chopped sideways until the 8:00 a.m. BST London open. At that point a rally of some substance developed...and that rally ran into serious resistance the moment that Comex trading began at 8:20 a.m. EDT in New York. Gold got sold off from there, but rallied again into the London p.m. gold fix...and that was it's high of the day, which Kitco recorded as $1,239.60 spot. From there, the price didn't do much into the 5:15 p.m. electronic close.
The gold price closed the Monday session at $1,237.30 spot...up $13.50 from Friday's close in New York. Net volume was pretty light...around 103,000 contracts.
It was more or less the same chart pattern in silver, as well...although the price was more 'volatile'. The rally at the London open got hit by a not-for-profit seller around 8:40 a.m. EDT...about twenty minutes after the Comex open. After that, the silver price traded sideways for the rest of the day. The high at 8:40 a.m. in New York was posted as $19.41 spot.
Silver closed at $19.08 spot...up 18 cents from Friday. Volume, net of July and August volume, was 31,500 contracts.
Platinum and palladium rallied as well, but their respective chart patterns were quite different. Once the palladium price broke through $700 the ounce, there was someone there to make sure it got no higher.
For Monday, gold close up 1.10%...silver was up 0.93%...platinum gained 2.57...and palladium was up 2.20%.
The dollar index closed on Friday afternoon in New York at 84.44...and then got as high as 84.58 in early Far East trading on their Monday, before beginning to head south at 1:00 p.m. Hong Kong time. The low tick of the day...84.17...came shortly after 3:00 p.m. in New York...and after that the index gained a few basis points into the close. The index closed at 84.20...down 24 basis points from Friday's close. There's a wonderful story about the gold vs. the dollar index in today's 'Critical Reads' section...and it's definitely a must read. It puts a 'paid' sticker on the belief that the dollar index and the gold price are related in any way, shape, or form.
The gold stocks made every attempt to stay in positive territory in the early going...but the selling pressure was relentless. The HUI close down 1.83%...and virtually on its low of the day. I would guess that the selling was fund related.
With the odd exception, the silver stocks got clubbed as well...and Nick Laird's Intraday Silver Sentiment Index closed down 1.54%.
(Click to enlarge)
The CME's Daily Delivery Report showed that 2 gold and 211 silver contracts were posted for delivery tomorrow. The only two short/issuers of note were JPMorgan Chase out of its client account with 109...and Canada's Bank of Nova Scotia with 100 contracts. Of course the only long/stopper worth mentioning was JPMorgan in its in-house [proprietary] trading account...with 189 contracts in total...along with 10 contracts in its client account. This is just another example of JPMorgan trading against its own customers...and it shows how desperate they are to get long silver...not that screwing their customers for profit in anything would bother them anyway. The link to yesterday's Issuers and Stoppers Report is here.
Once again there was a big withdrawal from GLD. This time it was 483,140 troy ounces. Since its peak of 43.37 million ounces on 30 November 2012...GLD has had 12.99 million ounces withdrawn. And as of 9:47 p.m. EDT yesterday evening, there were no reported changes in SLV. However, when I was editing this column at 4:18 a.m. EDT, I checked back on the SLV website and discovered that they were now reporting a withdrawal of 530,686 troy ounces. On 30 November 2012...there were 314.45 million ounces of silver in SLV. As of yesterday, there were 322.63 million ounces of silver in SLV. Over the same period that 13 million ounces of gold has been withdrawn from GLD...there has been 8.2 million ounces of silver added to SLV.
I've been negligent in reporting the internal goings-on over at SLV depositories...but Joshua Gibbons, the Guru of the SLV Bar List, has been anything but. This is his report for the period ending Wednesday, June 26...and it makes for very interesting reading..."Analysis of the 26 June bar list...and comparison to the previous week's list...2,895,421.4 oz. were added (all to Brinks London), 6,659,078.2 oz. were removed (all from Brinks London), no bars had a serial number change.
The bars added were from: Met-Mex (0.7M oz.), Russian State Refineries (0.5Moz), Kazahkhmys (0.5M oz.), KGHM (0.3M oz.), and 9 others. The bars removed were from: Britannia Refined Metals (2.5M oz.), Degussa (1.2M oz.), Handy Harman (0.4M oz.), Hoboken (0.4M oz.), and 24 others.
As of the time that the bar list was produced, it was over-allocated 328.3oz.
Almost all of the bars removed (6.1M oz.) had been there several years. Of the bars added, 1.0M oz. were not seen before, and 1.3M oz. are bars that had been added on 29 May 2013 and removed since then. Interestingly, the 2.8M oz. added were listed on Sunday, when you would expect iShares to be closed.
There was a decent sales report from the U.S. Mint yesterday. They sold 6,500 troy ounces of gold eagles...3,500 one-ounce 24K gold buffaloes...and another 822,000 silver eagles. I'm still very much of the opinion that the U.S. Mint sales reported on July 1 were actually sold in June, but reported in July...and the sales reported yesterday are the first real sales for the new month.
Over at the Comex-approved depositories on Friday, they didn't report receiving any silver...but they did ship out 150,953 troy ounces of the stuff...and in gold, they didn't receive any either, but shipped 120,285 troy ounces out the door for parts unknown. I thank Nick Laird for these numbers.
The Commitment of Traders Report in silver showed that the Commercial net short position actually increased by 18.4 million ounces during the reporting week. That had nothing to do with JPMorgan Chase piling in on the short side, but it was Ted Butler's raptors selling some longs and taking profits...but the selling of long positions has the mechanical effect of increasing the Commercial net short position. The Commercial net short position in silver now sits at 38.8 million ounces, still at record lows.
Silver analyst Ted Butler had this comment to make..."JPMorgan’s concentrated short position still looks to be 12,000 contracts or maybe a bit more and this also tells me silver is wrung out since JPM hasn’t been able to buy back more."
In gold, there was another big improvement in the Commercial net short position...1.24 million ounces to be exact. The Commercial net short position in gold is now down to 2.28 million ounces...and reader E.W.F. advised me that "they hold their smallest net short position since 28 December 2001."
Ted Butler had this to say about it to his paying subscribers yesterday afternoon..."Since the recent high point of November 27th, the commercials have reduced their total net short position by an astounding 236,000 contracts or the equivalent of 23.6 million gold ounces. That’s almost double the 12.5 million ounces that have been sold and redeemed in the big gold ETF...GLD. I may have been conservative in estimating the commercials were able to buy the equivalent 50 million gold ounces in the orchestrated gold price take down over the past six months."
The July Bank Participation Report wasn't much to look at it in silver, as there were was virtually no change from the June report. '3 or less' U.S. bullion banks increased their Comex short positions by 6.92 million ounces...which isn't a lot...and the total Comex short position of these '3 or less' U.S. bullion banks now sits at 101.5 million troy ounces of silver. The 11 non-U.S. banks in this report are short 62.6 million ounces of silver on the Comex...an increase of 1.78 million ounces since the June report. In my opinion, Canada's Bank of Nova Scotia holds the lion's share of that 62.6 million ounces held short...and the balance of these short positions held by the other 10 non-U.S. banks are not material. Here's the BPR chart for silver...with the July data included...and it's charts 4 and 5 that mean the most.
(Click to enlarge)
The biggest changes were in gold. 4 U.S. Banks increased their Comex net long position from 2.96 million ounces in the June report to 4.47 million ounces in the July Report. And 20 non-U.S. banks that hold Comex short positions in gold, decreased their Comex net short position from 2.50 million ounces down to 2.38 million ounces in the July report, which is almost no change at all. Once again I'm prepared to bet a fair amount of money that Canada's Bank of Nova Scotia is the proud owner of a substantial portion of that 2.38 million ounce short position in gold...and the remainder, divided up more or less equally between the remaining 19 non-U.S. banks, are basically immaterial in the grand scheme of things. Here's the BPR for gold...updated with the latest data courtesy of Nick Laird.
(Click to enlarge)
And despite the monstrous price declines in both platinum and palladium during the June trading month, the short positions held by all the banks...both U.S. and non-U.S...actually increased during the reporting period. I have no idea why that's the case...and here are their respective charts.
(Click to enlarge)
(Click to enlarge)
Well, China's latest net gold imports through Hong Kong were posted yesterday morning Far East time...and they indicate that China imported 108.8 metric tonnes of gold in May via that route. Here are a couple of nifty charts showing this...both courtesy of Nick Laird. The first is the monthly chart...and the second, the yearly chart. Neither requires further embellishment from me.
(Click to enlarge)
(Click to enlarge)
Being a Tuesday, I have more than the usual number of stories for you as well.
Jon Corzine will not be cuffed over MF Global’s improper handling of customers’ funds leading up to the commodity brokerage firm’s spectacular collapse in late 2011, The Post has learned.
Federal investigators have found no evidence that the disgraced Wall Street titan broke the law.
“After 18 months of investigation, the criminal probe into Jon Corzine is now being dropped,” a person with knowledge of the probe told The Post. “There is no evidence of criminal wrongdoing,” this person said.
I hope you're not surprised, dear reader, as I'm not. Nobody will go to jail over anything on Wall Street anymore. This story appeared in the New York Post late Sunday night...and I thank Marshall Angeles for today's first story.
Over the last several years, an exclusive group of investors has paid a steep premium to receive the results of a closely watched economic survey a full two seconds before its broader release. Those two seconds can mean millions of dollars in profits for the investors, who practice a computer-driven strategy called high-frequency trading.
On Monday, the company providing these investors with that lucrative edge, Thomson Reuters, is expected to announce that it will suspend the practice, yielding to pressure from the New York attorney general, according to a person with direct knowledge of the matter.
Eric T. Schneiderman, the attorney general, and his staff have been investigating the unusual arrangement that Thomson Reuters has with the University of Michigan. On two Fridays a month at 10 a.m. Eastern time, the widely cited and often market-moving economic survey known as the consumer confidence index is posted by the university on a Web site.
This article appeared on The New York Times website late Sunday evening...and I thank U.A.E. reader Laurent-Patrick Gally for sending it along.
A new report from the Congressional Budget Office [CBO] shows that the federal government's student-loan program is a "scam," a Wall Street Journal editorial states.
"If you think the federal student-loan program looks like a bad deal for taxpayers, imagine how it would look with honest accounting," Journal editors write.
"And now you don't need to imagine thanks to a new [CBO] report that's receiving far too little attention. Turns out that the official 'savings' for taxpayers of $184 billion over the next decade really add up to $95 billion in losses."
This story was posted on the moneynews.com Internet site last Thursday...and it's courtesy of West Virginia reader Elliot Simon.
Despite signs of a slowdown in the Chinese economy, General Motors posted record first-half sales in China, where GM sales now have surpassed the total number of vehicles the company sells in its home market of the United States.
GM and its Chinese joint venture partners saw sales surge by 10.6 percent during the first half of 2013, to nearly 1.6 million vehicles, an all-time record that positions it as the booming Asian nation's No. 2 automotive manufacturer. It sold just over 1.4 million vehicles in the U.S. during the same period.
GM isn't the only American maker outpacing the growth of the overall Chinese market. Rival Ford set its own record for the first half, with sales surging 47 percent there and demand up 44 percent in June.
This news item was posted on the CNBC website yesterday afternoon...and is the second contribution in a row from Elliot Simon.
In the first part of efforts to renegotiate Britain’s relationship with the European Union, ministers will announce plans to claw back the powers.
Theresa May, the Home Secretary, will give MPs details of proposals to opt out of 133 EU measures covering justice, home affairs and the police — including the controversial European Arrest Warrant — by next spring.
Some of the measures that are seen to be in the national interest will then be opted back into, in a complex process, but “more than two thirds” will disappear permanently from British law, The Sunday Telegraph has learned.
The move follows last week’s unanimous Commons vote in favour of moves to hold an “in-out” referendum on Britain’s membership of the EU by 2017.
This story appeared on the telegraph.co.uk Internet site late on Saturday evening...and is the first offering of the day from Roy Stephens.
Angela Merkel's government said on Monday that its cooperation with American intelligence was fully regulated by strict legal guidelines after a magazine reported that the U.S. National Security Agency was in close cahoots with German spies.
Germany's opposition, with an eye on September's election, when the chancellor will seek a third term, demanded that her government explain how much it knew about U.S. surveillance tactics ahead of talks with Washington about the NSA.
"In the light of the latest media reports, it is even more urgent to ask what Germany's secret services and above all what the Chancellery knew about eavesdropping activities," said the Social Democrats' (SPD) chancellor candidate, Peer Steinbrueck.
Der Spiegel's report that the NSA works with Germany and other Western states on a 'no questions asked'-basis undermines the chancellor's indignant talk of "Cold War" tactics revealed by former NSA contractor Edward Snowden.
This Reuters story, filed from Berlin, was posted on their website yesterday afternoon EDT...and I thank Laurent-Patrick Gally for finding it for us.
It is increasingly clear that this is once again a case of new day, same old story in the eurozone.
Take the crisis in Portugal last week. It is simply another example of the austerity and bail-out policies in Europe clashing with national democracies, mostly due to the former’s failure to deliver results.
We have seen this before in both Greece and Italy, while we’ve caught the flip side in Germany (the ongoing debate about paying for bail-outs). This presents a dangerous combination of a series of short-term political crises allied to long-term economic decline – as well as the risks it poses to social stability.
This particular political crisis flared up after the now former Portuguese finance minister, Vitor Gaspar, resigned at the start of the week. In his own terms, his departure was motivated by a combination of falling public support for the austerity policy, of which he was the key proponent, and the many times Portugal had managed to miss its reform targets under the current bail-out programme.
This is another news item from The Telegraph on Saturday evening BST...and it's another offering from Roy Stephens.
Greece secured a 6.8 billion euro ($8.7 billion) lifeline from the euro zone but was told it must keep its promises on cutting public sector jobs and other reforms in order to get all the cash, officials said Monday.
The deal, which spares Greece defaulting on debt that falls due in August, will see Athens drip-fed support under close watch from its international creditors to drive through unpopular reforms.
Under the deal, euro zone finance ministers agreed to make staggered payments of aid to Greece starting with a 2.5 billion euro installment in July, said officials close to the talks.
Was there ever any doubt? As Mario Draghi said earlier this year...they'll do "whatever it takes"...and that's what they did. This CNBC story was posted on their Internet site yesterday afternoon EDT...and it's courtesy of Laurent-Patrick Gally.
Standard & Poor’s Rating Services cut the long-term counterparty credit ratings on Barclays Bank Plc, Credit Suisse AG, and Deutsche Bank AG to A from A+, S&P said in a statement Tuesday.
The rating company also affirmed its ratings on UBS AG and said the ratings on the banks are now stable.
“Barclays, Credit Suisse, Deutsche Bank, and UBS are among the most exposed in Europe to a combination of regulatory initiatives being undertaken globally on capital market-related businesses,” the statement said.
That's all there is to this 3-paragraph Bloomberg News item that was posted on the moneynews.com Internet site on Tuesday of last week...and my thanks go out to Elliot Simon.
At least 51 people were killed on Monday when the Egyptian army opened fire on supporters of ousted president Mohamed Mursi, in the deadliest incident since the elected Islamist leader was toppled by the military five days ago.
Protesters said shooting started as they performed morning prayers outside the Cairo barracks where Mursi is believed to be held.
But military spokesman Ahmed Ali said that at 4 a.m. (0200 GMT) armed men attacked troops in the area around the Republican Guard compound in the northeast of the city.
This Reuters story, filed from Cairo, was posted on their Internet site late yesterday afternoon EDT...and once again I thank Laurent-Patrick Gally.
Japan faces increasingly serious threats to its security from an assertive China and an unpredictable North Korea, a defense ministry report said on Tuesday, as ruling politicians call for the military to beef up its ability to respond to such threats.
The report, the first since hawkish Prime Minister Shinzo Abe took office vowing to boost Japan's defenses, was likely to prompt a sharp response from Beijing, whose ties with Tokyo are strained by a territorial row.
China is also upset by remarks from Abe suggesting he wants to cast Tokyo's wartime history in a less apologetic tone.
Well, this will definitely not sit well with China...and one wonders just how bad the fall-out will be. This Reuters story, filed from Tokyo, was posted on their website just before midnight last night EDT...and I thank Roy Stephens for digging it up for us...and it's definitely worth skimming.
1. John Embry: "This Will Destroy the Financial System as We Know It". 2. James Turk: "Something Shocking Has Occurred in the Gold Market". 3. Dr. Marc Faber: "Brace For Financial Destruction and Sovereign Defaults". 4. Robert Fitzwilson: "Global Markets Now on the Verge of Total Panic and Meltdown". 5. John Williams: "Monetary Base Skyrocketing as Unemployment Hits 23.4%". 6. The first audio interview is with Dr. Stephen Leeb...and the second audio interview is with Dr. Marc Faber.
Figures for net Chinese gold imports through Hong Kong in May have now been released, and, while they did not quite come up to the record level seen in March at 136 tonnes, at 108.8 tonnes they were still the second highest total on record, and comfortably in advance of April’s 80 tonnes.
In April, it is thought that the level of net imports could have been far higher but traders were taken by surprise following the exceedingly high March import figures which had used up their quotas and a subsequent rundown of stocks that month which had not been fully replaced by the time of the big April 12 gold price fall which had appeared to stimulate huge physical demand.
If the demand continues at this kind of level, with stocks of physical gold continually moving from vulnerable western hands to more stable eastern ones then at some stage there will be a very apparent shortage of physical metal in the West. Increasingly gold trading will move from exchanges like COMEX to Shanghai and Hong Kong. COMEX may become an effective irrelevance in the gold market dealing only in ‘paper’ gold (which it effectively is already) and the physical gold price momentum will move to the east. Currently it is COMEX which is setting the global gold price. In the future it will be Shanghai if the current trend continues – and then it will be a wholly different ballgame!
This commentary by Lawrence Williams over at the mineweb.com Internet site yesterday is definitely worth reading...and it's courtesy of Marshall Angeles.
After updating their precious metals' company cost curve, Citi's ominous warning that, "a combination of rising unit costs (15% yoy), sustained high capital budgets and a falling gold price have resulted in a fast contraction in margins - so much that no gold company under our coverage will generate Free Cash Flow at spot gold."
Companies are trying to adjust by cutting capex, exploration and corporate costs. But we also notice that most of the global gold cost curve is burning cash at spot levels. Further cuts are needed in the coming 12 months to make ends meet.
We view this as a return to normal for global gold equities. Given the ‘price taker’ nature of the industry, the next decade will see high-cost asset disposals, reduced capital budgets, lower exploration expenditure and balance sheet recapitalisation as companies try to survive in a lower gold price environment...
This Zero Hedge story from Sunday evening was sent to us by Marshall Angeles.
The confirmation of strikes at two Anglo American Platinum mines in South Africa has put the metal back in the spotlight, as concerns mount over unrest during the mining industry's wage negotiation period.
The price of platinum rose on Monday after the world's largest platinum producer said operations at its Thembelani and Khuseleka mines were affected by a strike.
Robin Bhar, head of metals research at Société Générale S.A., said the unrest had the potential to affect the price of the precious metal.
"If this strike results in a significant loss of production, it's going to help support the price," he told CNBC. "The ongoing industrial unrest across South Africa is already having an impact on platinum prices – and the situation is not going to get better soon."
This short piece was posted on the CNBC website early yesterday morning EDT...and my thanks go out to Laurent-Patrick Gally once again.
Deutsche Bank says much of the downward price correction in gold may have already occurred. “Lessons from history suggest that although gold price losses have been extreme, the extent of the price correction…is still some way short of the percentage declines that occurred in 1980-1,” the bank says in a weekly commodities report. “However, we would classify events over 30 years as significantly different since at that time U.S. short-term interest rates rose to 20% with real interest rates also rising rapidly. As a result, while we still view Fed policy as a strong headwind to gold returns, it is possible that the major part of the gold price correction has now already occurred.” Deutsche Bank looks for $1,350 gold in the third quarter, $1,300 in the fourth and then $1,350 again in the first quarter of 2014.
That's all there is to this Kitco Market Nugget. This is what passes for serious analysis by the bullion banks these days. Yes, I agree that the vast majority of the losses are in...but these forecast prices...just like the other forecasts out there, are subject to revision without notice. And that's what's going to happen again this time. I wouldn't take these forecast prices too seriously.
I thank Laurent-Patrick Gally for his final offering in today's column...and the above single paragraph is all there is to that story.
As of last Friday, gold has now fallen as much 35.4% (based on London PM fix prices) over 96 weeks. But if you're like us, you still recognize that the core reasons for investing in gold haven't changed. People who sold their gold recently made a short sighted decision. Before too long precious metals will rebound—and probably in a big way.
But when? Does history have any clues about how long we'll have to wait for that rebound?
Perhaps the most constructive way to forecast a turnaround in gold is to look at how its price behaved in prior big corrections.
This commentary by Casey Research's own Jeff Clark was contained in yesterday's edition of the Casey Daily Dispatch...and is certainly worth your time.
Reuters reported yesterday that 60 percent of the gold mining industry in South Africa is now estimated to be unprofitable.
But there is not a peep from that industry, the Chamber of Mines, the mineworkers unions, or the South African government about the gold price suppression by Western central banks that is amply documented by GATA.
No, all of South Africa seems content simply to die obediently at the request of imperialism, one more rich country insisting on being poor. Maybe its government officials and plutocrats figure that they always can flee to apartments in Mayfair. But as South Africa goes down, the rest of Africa will follow. Is there not one patriot in the country?
This commentary by GATA's secretary/treasurer Chris Powell yesterday is a must read.
The DOW is About to Plunge to 6,000!
The man who predicted nearly every major economic trend over the past 30 years…including the 1991 recession, Japan’s lost decade, the 2001 tech crash, the bull market and housing boom of the last decade and, most recently, the credit and housing bubble…
Now predicts the DOW is going to crash.
These HFT crooks (mainly JPMorgan in my opinion) have set us all up so perfectly that the market (if we can call it that) now waits for the crooks to set prices first and then transact business for the rest of the day at the prices the HFT crooks have dictated. I think we’ve all lost our minds to allow this. I don’t think the regulators at the CFTC or the CME have lost their minds, just any sense of what’s right and what they are responsible for. I also don’t think that JPMorgan has lost its mind, as the intent behind the sudden takedowns is the enable the bank to buy as much gold and silver as possible and the record clearly indicates that is exactly what these crooks have done. - Silver analyst Ted Butler...06 July 2013
Volumes were pretty light yesterday...and it was easy for anyone that wished to do so, to keep the precious metal prices in check. That was obvious with gold, silver and platinum yesterday.
Ted Butler feels that JPMorgan's short position in silver is about 12,000 contracts or so...and has remained that way for several weeks, as it's obvious that they haven't been able to improve on this position despite the price declines. It's possible that they've reached the end of the line in silver...and this is the best they can do. However, it's equally obvious that they're still accumulating gold in a big way...not only on the long side on the Comex, but also through the GLD ETF.
One of these days when they figure they have done the best they can do, then it's my guess...along with others...that there won't be any reason for JPMorgan Chase to stand in the way of a major price rally in all precious metals. As a matter of fact, they will stand to benefit greatly when that happens...we just don't know which day, week or month it's going to be.
So, as I keep saying...we wait.
The closest moving averages that mean anything to short holders in the Comex futures market are miles above the current prices for both gold and silver...and until they are breached to the upside, these short holders won't be in any panic to cover. So, based on technical considerations, it could be a while before a rally materializes that threatens these moving averages. And unless a black swan shows up out of left field somewhere, it's my opinion that the rallies that set off these short covering rallies will be instigated by JPMorgan, as they are in total control of the precious metal markets...and can do pretty much whatever they want, both to the upside and downside.
Here are the 1-year silver and gold charts with the 20 and 50-day moving averages shown...
All four precious metals had decent rallies in early Far East trading, with the highs coming during the early afternoon Hong Kong time...and not much is happening in London trading, although platinum and palladium have both been sold down to basically unchanged. Volumes are already very substantial...45,000 contracts in gold...and a hair over 9,500 in silver. I can tell by looking at the numbers that virtually all of it is of the HFT variety. The dollar index isn't doing much as I hit the 'send' button at 5:10 a.m. EDT.
I don't have any idea of how trading will go in New York today, but the HFT volumes at this point indicates that JPMorgan et al still have a pretty good grip on this market.
That's more than enough for today...and I'll see you here tomorrow.