inthisissue
Gold's high price of the day came in early Far East trading...and began to sell off a bit. This lasted until London opened and the subsequent rally took it back to unchanged by 12 o'clock noon BST.
Then it was basically all down hill from there...with every rally attempt, no matter how tiny, getting sold off. The low of the day came in the thinly-traded New York Access Market at 3:30 p.m. Eastern time. From there it recovered about fifteen bucks into the close...but still finished down about $13 on the day. Net volume was pretty light at around 160,000 contracts.
Silver's price path was virtually the same as gold's...with the high of the day coming at the silver fix in London...which was noon local time. Silver's low came at the close of Comex trading at 1:30 p.m. in New York. Net volume wasn't overly heavy at 35,000 contracts...and silver closed down 38 cents on the day.
The HUI spent all of the day in the red, but was recovering quite nicely as the trading day wore on. But starting around 3:00 p.m. Eastern, the shares began to sell off...and received an additional hit when the general equity markets sold off half an hour after that. The HUI finished down 1.82%.
I'm sorry, but ino.com is having problems with their HUI chart again...and I couldn't find another one that I could cut and paste to stick in here. Hopefully they'll be back up later today.
With the odd exception, most silver stocks finished in the red as well...and Nick Laird's Silver Sentiment Index finished down 1.61%
(Click on image to enlarge)
For the second day in a row, there wasn't much activity in the CME's Daily Delivery Report, as only 6 gold and 17 silver contracts were posted for delivery on Friday.
There were no changes reported in GLD on Wednesday...but an authorized participant deposited 973,832 troy ounces of silver in SLV.
The U.S. Mint had a sales report yesterday. They sold 5,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and a smallish 25,000 silver eagles. Month-to-date the mint has sold 24,500 ounces of gold eagles...5,000 one-ounce 24K gold buffaloes...and 926,000 silver eagles.
The Comex-approved depositories reported receiving 595,613 ounces of silver on Tuesday...and shipped 349,675 ounces out the door.
I didn't have any quote from silver analyst Ted Butler's weekend commentary in my Tuesday column, so I'll even things out by stealing two paragraphs from his mid-week column which came out yesterday.
"Don’t look for, or expect, legitimate supply/demand explanations for any silver sell-off. I can’t say that there will never be a legitimate supply/demand explanation in the future, but I can tell you I have never found one yet in 30 years of close observation. The price has gone up in the broad sweep because of the force of supply and demand, but has only declined on crooked games in the paper markets. I realize that’s an extreme view, but it is one on which I am convinced to my core. I further believe that if you come to accept this as a core belief as well, you will be doing yourself a favor. What it means is that you should come to expect, simultaneously, that silver has done and will do as well as it has in the past because of the real fundamentals, but that the crooks running the paper game will engineer sell-offs at will to shake (leveraged) paper silver holders out of their positions. If you think you can out smart them by short-term trading, you have my best wishes for success, but little in the way of my expectations. Faced with the reality of the opposing forces, my solution is holding on a fully paid for basis (with an occasional options fling). If anyone has a better approach, I’m all ears."
"The most salient feature to the silver paper trading mechanism is that the short side of the derivatives equation is extremely concentrated, while the long side exhibits very little indication of concentration. In other words, the silver longs are diverse and unrelated to one another. This is the hallmark of a free market.. The short position is dominated by large financial institutions, led by JPMorgan, that are few in number but hold very large positions; the very definition of concentration. This is as far from a free market as it gets. Further, the shorts appear to act collusively, generally buying and selling in unison. Even the exchange mechanism, run by the CME Group, is closely related in mutual interests to the large shorts who dominate. Criminal enterprise is a measured description of this arrangement."
Here's a chart that I 'borrowed' from yesterday's edition of Casey's Daily Dispatch. It's the U.S. Dollar Index Component Weights...and it requires no further explanation from me.
(Click on image to enlarge)
I have a lot of high quality stories and interviews for you today...and I hope you can find to give them the attention they deserve, as my usual 'pit bull' editing procedure was of no help in this column.
Another 2.6 million people slipped into poverty in the United States last year, the Census Bureau reported Tuesday, and the number of Americans living below the official poverty line, 46.2 million people, was the highest number in the 52 years the bureau has been publishing figures on it.
And in new signs of distress among the middle class, median household incomes fell last year to levels last seen in 1996.
I thank Russian reader 'Dmitry' for this story out of Tuesday's edition of The New York Times...and the link is here.
The number of default notices mailed to homeowners who were late on their mortgages soared in August to a nine-month high — the largest month-to-month increase in four years — and that helped push the rate of overall foreclosure filings higher last month, according to data released by RealtyTrac Inc. on Thursday.
Foreclosure filings, which include those late-payment notices plus auction announcements and bank repossessions, rose 7% in August compared with July, hitting a total of 228,098 U.S. properties. But the filing rate fell 33% from a year earlier.
This marketwatch.com story, filed shortly after midnight, was sent to me by Florida reader Donna Badach...and the link is here.
Moody’s Investors Service on Wednesday downgraded French banks Credit Agricole SA and Société Générale SA as the credit-rating company also said it has become increasingly concerned about the funding and liquidity needs of the lenders.
Moody’s had said in June that it was considering downgrading France’s top three listed banks because of their exposure to Greek debt and said Wednesday that it is still reviewing BNP Paribas SA.
This is another marketwatch.com story from Florida reader Donna Badach...and the link is here.
European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.
Retail and institutional deposits at Greek banks fell 19 percent in the past year and almost 40 percent at Irish lenders in 18 months. Meanwhile, European Union financial firms are lending less to one another and U.S. money-market funds have reduced their investments in German, French and Spanish banks.
“All of this is symptomatic of a lot of fear in the European financial sector,” said Kash Mansori, senior economist at Experis Finance in Charlotte, North Carolina. “It shows that even European banks don’t trust each other anymore, so they’re taking their money out of the EU system.
This Bloomberg story from yesterday is well worth your time...and the link is here.
China has called for major strategic concessions from Europe before agreeing to rescue the eurozone, chilling hopes for immediate purchases of Italian bonds.
Premier Wen Jiabao said his country and will play its part to "prevent the further spread of the sovereign debt crisis," but warned that China will not sign a blank cheque for states that have failed to carry out full reform.
"Countries must first put their own houses in order," he told the World Economic Forum in Dalian.
Mr. Wen said he had spoken to José Manuel Barroso, the president of the European Commission, laying the conditions for Chinese intervention.
This Ambrose Evans-Pritchard offering from yesterday's edition of The Telegraph is linked here. This story...and the Bloomberg story above...came from a GATA release yesterday.
German Chancellor Angela Merkel has tried to bring her coalition partners back in line following rogue comments on a possible Greek bankruptcy and exit from the euro zone. She is desperate to restore calm in her ranks to avoid exacerbating the crisis and to gain time to prepare for worst-case scenarios.
These days, when Angela Merkel and Nicolas Sarkozy issue a joint statement, it usually means that the debt crisis has fallen into a state of greatest possible uncertainty. It's when the German chancellor and the French president feel compelled to call for quiet and discipline. The message to be expected at these times is that the euro is safe, the Greeks have understood what must be done and that everything is under control -- even if nothing really is.
This extremely well written story from the German website derspiegel.de yesterday, is very much worth the read. It's Roy Stephens first offering of the day...and the link is here.
European Commission chief Jose Manuel Barroso has said he will propose options for the introduction of joint bonds for the 17-nation eurozone, saying that tighter fiscal integration is the only way to overcome the current debt crisis.
European shares and the euro rose on Wednesday after the head of the European Commission said it would soon present options for the introduction of euro area bonds, a development investors saw as a positive despite German opposition to the idea.
This Reuters story was posted over at the france24.com website yesterday...and is another Roy Stephens offering as well. The link is here.
European banks are rushing to use their gold to access much-needed dollar funding, in the latest sign of the growing liquidity crunch for the continent's financial institutions.
Gold dealers and analysts said that there had been a strong move to lend gold in the market in exchange for dollars in the past week, accelerating in recent days.
Although it may be true, it's a good bet that these are swaps...and that some day this trade will be unwound. The possibility that European banks are leasing or lending physical gold into the market is very remote. If that had been the case, the gold price would have tanked immediately...although there's still time for the central banks and bullion banks to use this story to their advantage, if they chose to do so. We'll see what happens
The story was posted in the Financial Times yesterday...and because it's subscriber protected, it's been printed in the clear in this GATA release...and the link is here.
Donald Trump's flirtation with a presidential run is over, but he's still making stunt-jabs at Obama.
The latest: he's accepting Apmex's deposit for Trump office space in the form of "three 32-ounce bars of gold."
These are, of course, kilo bars. The Business Insider story from yesterday was sent to me by reader 'David in California'...and the link is here.
HSBC has been dropped from a lawsuit accusing banks of suppressing silver prices after reaching a temporary standstill agreement with plaintiffs' attorneys.
The London-based bank's removal leaves JPMorgan Chase as the lone defendant named in the case brought by dozens of silver investors and money managers.
Here's another subscriber-protected story from yesterday's edition of the Financial Times. It's also posted as a GATA release, but I thank Washington state reader S.A. for being the first one through the door with it. The link is here.
Australia's first physical bullion exchange offering an over-the-counter spot market for gold, silver and platinum is set to launch early next month.
The Australian Bullion Exchange will make direct bullion ownership available to retail and institutional investors from Oct. 4, the new exchange said Wednesday in a statement. Bullion will be bought and sold on the ABX through listed brokers.
Australia is the world's second-largest producer of gold after China.
This story was filed from Melbourne yesterday...and was posted over at marketwatch.com. It's Florida reader Donna Badach's third offering of the day. The entire 3-paragraph story is posted above...but the link, if you wish to use it, is here.
GOLD stocks look like they might finally break through the gloom surrounding the broader market. It's not before time either, given gold has been the shining light across the various asset classes, rising some 50 per cent in the past year.
Share prices of gold stocks have done precious little in the same period, notwithstanding the dramatic impact on earnings and valuations that the gold price rise is having. But in the back end of last week there were signs that the much-discussed disconnect between gold's advance and the market's treatment of gold shares is finally being addressed.
This story appeared a couple of days ago in The Sydney Morning Herald. We don't get to hear too much about gold market sentiment in Australia...and I thank reader John Harris for sharing this rather longish piece with us. It's worth skimming...and the link is here.
Cazenove market analyst Robin Griffiths told King World News yesterday that gold isn't a bubble but well may become the biggest one of his life, as he expects pension funds to get into it soon and there just isn't enough.
I thank Chris Powell for the introduction...and the link to the KWN blog is here.
With gold trading near the $1,800 level, King World News was given exclusive distribution rights for this rare and extraordinary piece with fifteen graphs by superstar John Hathaway of Tocqueville Asset Management L.P. John is, without question, one of the most respected institutional minds in the world today regarding gold and his fund was recently awarded a coveted 5-star rating by Morningstar.
This is a very long absolute must read...and the link is here.
Here's another very long read for you...and it's a must read as well. It's an interview with Rick Rule that's posted over at smallcappower.com. When Rick has this much time to let it all hang out, you just know it has to be worth your while.
I thank reader Richard E. Vollertsen for sharing it with us...and the link is here.
In the September issue of their Markets at a Glance newsletter, Sprott Asset Management's Eric Sprott and David Baker try to explain why gold stocks have so badly underperformed gold itself -- and they note evidence that the situation is changing.
As I've mentioned many times over the last three weeks, there are some very deep pockets buying up cheap gold and silver shares by the railroad car full...and this fact has obviously not gone unnoticed over at Sprott. As a matter of fact, I pointed out this very thing to Eric in a phone conversation we had last week...not knowing, of course, that there was an article in the works about this very thing.
The link has not yet been posted over at sprott.com...so here it is posted over at the advisoranalyst.com website. It, too, is a must read...and the link is here.
I can pretty much guarantee that you haven't heard the name John Brimelow too often, if at all. But don't let that fact influence your thinking for one minute. John has been a gold analyst long before most of us could spell the word. Here's Chris Powell's introduction...
"Gold market analyst John Brimelow, who spoke at GATA's Gold Rush 2011 conference in London last month, was interviewed there by fellow speaker and GoldMoney founder James Turk and discussed gold demand from India, China, and the Middle East. In regard to the Swiss franc, which was devalued the other day, Brimelow remarks incisively that one's currency might better be held down by purchasing gold with it than simply by selling it."
The interview is not quite 19 minutes long...and you can put this on your absolute must watch/listen list as well. As far as I can remember, this is the only interview of this type he has ever given...and it's a rare treat to listen to someone as plugged into the world-wide physical gold market as he is, so be prepared to get an education. The link is here.
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Columbus Gold Closes Transaction to Acquire Paul Isnard, 1.9 Million Inferred Oz. Gold Project; Plans Drilling On June 30, 2011, Vancouver, Canada based, Columbus Gold (CGT: TSX-V) announced that it had closed its previously-announced transaction with Auplata SA, gaining the exclusive right to obtain up to a 100% interest in the Paul Isnard gold project in French Guiana, which includes the 43-101 compliant 1.9 million Inferred gold resource in the Montagne d'Or gold deposit. Columbus Gold now has fully satisfied the share issuances required to earn into the project, and can earn its initial 51% interest in the project by incurring $7 million in exploration expenditures, which it expects to complete by early 2012. Upon Columbus Gold earning a 51% interest in the project, it will have an option to increase its interest to 100% (subject to an underlying royalty) by completing a bankable feasibility study. Drilling is planned to commence in August 2011. For additional information, please see Columbus Gold news release dated June 30, 2011, or contact the company at: Investor Relations |
Among the countless evils that bring about the demise of entire states, these four are probably the prior ones: internal discord, high mortality, infertility of the soil, and the deterioration of the money. The first three are so apparent that hardly anybody would contest them. The fourth evil, however, which stems from the money, is only noticed by a few, and only by those, who think deeply, for the states fall victim to demise not at the first attempt, but gradually, and almost invisibly. - Nikolaus Kopernikus
It was a pretty quiet trading day in both gold and silver yesterday. Both metals came under significant selling pressure once the London silver fix was in at noon local time...but it wasn't on very big volume.
I was certainly happy with the preliminary open interest numbers for Wednesday's trading day and, hopefully, that will carry through to the final numbers later this morning.
Tuesday's final open interest numbers were a very pleasant surprise, made even more pleasant by the fact that they will be included in tomorrow's Commitment of Traders Report.
Here's the 3-year HUI chart, which I also posted sometime last week. As I mentioned at the time, the Relative Strength Indicator never penetrates the 70 level on the RSI scale very often before it gets sold off...and last week's attempt to do that, when it reached a new record high, ran into the same outcome. How long this 'correction' lasts is in the hands of JPMorgan et al...but I get the impression that it won't be for too much longer...and the subsequent recovery will be very quick. We'll find out soon enough, I would think.
(Click on image to enlarge)
Gold and silver prices in the thinly-traded Far East market during their Thursday trading day, were pretty soft. That hasn't changed much now that London is open. Volume in gold, despite the lack of price direction, is already very heavy...and silver's volume is extremely light by comparison. As I hit the 'send' button at 4:51 a.m. Eastern time, gold is down about $8...and silver is down about 35 cents.
I haven't the foggiest idea of what might happen during the balance of London trading...or in the Comex trading that starts at 8:20 a.m. Eastern. But it's obvious to me that the bullion banks are in this market every time that things get too perky to the upside in either metal...and will smash the price every time that the opportunity presents itself. That's why I'm always on the lookout for 'in your ear'.
See you on Friday.
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