The gold price spent all of Far East trading and most of the London morning, floating around between unchanged and down five bucks.
But at 12:35 p.m. in London, a somewhat more substantial selling pattern appeared...and by about 1:15 a.m. in New York, gold was down about ten bucks from Thursday's closing price.
Then, out of nowhere, the bid disappeared...and within forty-five minutes, gold was down another fifteen plus dollars. The low price tick of the day [$1,647.90 spot] came just minutes after 2:00 p.m. in electronic trading...and from there recovered about ten bucks going into the 5:15 p.m. Eastern time close.
The gold price finished the day at $1,658.50 spot...down $16.80...precisely one percent from Thursday. Net volume was exactly the same as Thursday...around 121,000 contracts.
Silver's price path was almost a carbon copy of gold's price action, except the price was more 'volatile'. The big difference was in the timing. Although silver's price decline began at the same 12:35 p.m. BST in London as gold did, it's decline was more precipitous...and the really serious price decline began just a few minutes after the close of trading in London...which was 11:02 a.m. Eastern time.
Silver's low price tick [$31.23 spot] was in about 1:20 p.m. Eastern...ten minutes before the close of Comex trading...and just a few minutes after the bid disappeared in gold. The silver price gained back 30 cents within minutes...and then proceeded to trade sideways until the 5:15 p.m. close of electronic trading in New York.
Silver finished the Friday trading session down 88 cents from Thursday and, strangely enough, net silver volume was the same as it was on Thursday...around 37,000 contracts.
Here's the New York Spot Silver [Bid] chart that shows the Comex trading day...and the electronic session that follows...in far more detail.
All of gold and silver's gains from Thursday...plus a bit more...disappeared on Friday, April 13th.
The dollar index was in a bit of a rally mode right from the 6:00 p.m. open in New York on Thursday night...but really took flight around 12:35 p.m. in London which, not coincidentally, was the precise moment that gold and silver price began their trips to the nether reaches of their respective price charts.
Almost 100 percent of the subsequent rally in the dollar index was in by just minutes after 11:00 a.m. in New York, which was the precise time that silver began its big sell-off on the Comex. From that point the dollar traded flat until 5:15 p.m. Eastern.
Virtually all of gold and silver's big dollar index-related losses were in by 11:02 a.m. Eastern time...and what happened to the precious metals after that time, was certainly had nothing to do with the dollar.
If you look at the Kitco gold chart above you will note a recovery in the gold price between 10:30 and 11:02 a.m...and even though the gold stocks gapped down at the open, the low of the day was in around 10:00 a.m. Eastern...and bounced off that price many times until the gold price recovered about five bucks...and away the gold stocks went to the upside.
That rally lasted until a few minutes after 11:00 a.m. Eastern time...and you know what happened to both gold and silver from there...especially silver. And need I remind you that the rally in the dollar index ended at precisely the same moment.
But, despite the drop in the gold price starting at 1:15 p.m. in New York, you'd be hard pressed to spot it on the chart below. The HUI only finished down 1.69% on the day...and in the face of what happened to the gold price going into the Comex close, I consider that a big win.
With silver down almost three percent on the day, the associated equities did not do well...and Nick Laird's Silver Sentiment Index closed down 2.82%.
(Click on image to enlarge)
After Thursday's big Daily Delivery Report from the CME, it was back to normal on Friday, as that report showed only 6 gold contracts posted for delivery on Tuesday. Unless someone shows up out of the blue to take delivery of a huge chunk of Comex silver...silver deliveries are pretty much done for, with only a handful left in the April delivery month. But there's still miles to go in gold.
There were no reported changes in GLD yesterday...but 873,837 troy ounces of silver were withdrawn from SLV.
The U.S. Mint reported selling 1,000 ounces of gold eagles. One has to wonder why they even bothered issuing a report yesterday.
It was another busy day over at the Comex-approved depositories on Thursday. This time they reported receiving 1,255,060 troy ounces of silver...and shipped 269,623 ounces of the stuff out the door. The link to that action is here.
Ted Butler told me that he expected that the Commercial net short position in silver was going to show a decline of about 5,000 contracts in yesterday's Commitment of Traders Report. The actual number was 4,950 contracts. Not a bad guess. The Commercial net short position is now down to 131.9 million ounces, which is a really small number.
As of the Tuesday cut-off, the '1-4' largest short holders in the Comex silver futures market are short 171.1 million ounces. The '5-8' largest traders are short an additional 41.8 million ounces on top of that. Once you remove the market-neutral spread trades from the Non-Commercial category, these '1-4' traders are short 37.8% of the entire Comex futures market...and it's a pretty good bet that JPMorgan is short about half of that on its own. The '5-8' traders are short another 9.2 percentage points as well, so the '1-8' large traders holding short positions in silver are short 47.0% of the entire Comex futures market in that commodity.
To put this into some sort of perspective...and to give you an idea of how concentrated this silver short position really is...there are 75 traders holding short positions in the Non-Commercial category...and that includes the 42 holding spread trades. There are 45 traders holding short positions in the Commercial category...and in the Nonreportables, there are literally thousands. Eight traders are short 47 percent of the entire Comex futures market in silver...thousands holding the other 53% short.
If this is not a concentrated short position, I don't know what is. The CFTC know this all too well. They should, as it's their data from their own report as of yesterday.
The situation is actually worse than this. I use the legacy COT report for both silver and gold. Ted [and others] use what is called the Disaggregated COT Report. When you take out the additional spread trades reported in that, then the concentrated short position of the '1-8' traders is even higher than the numbers I'm reporting above.
In gold, the Commercial net short position only improved by 6,415 contracts. Ted was expecting around a 15,000 contract improvement. He said it didn't happen because the rally on Tuesday punctured the 20-day moving average in gold with some authority...and a lot of technical funds bought when that average was broken to the upside.
As of the Tuesday cut-off, the Commercial net short position in gold was down to 17.1 million ounces. The '1-4' largest short holders are short 11.0 million ounces...and the '5-8' largest short holders are short an additional 5.4 million ounces. Between all of the 'big 8' short holders, they are short 95.9% of the Commercial net short position in gold. But in silver, the 'big 8' are short 161.4% of the Commercial net short position.
Here's Nick Laird's wonderful chart..."Days of World Silver Production" of the '1-4' and '5-8' largest traders in all Comex-traded commodities. The bars for silver and gold are visual representations of what I just spoke of above.
(Click on image to enlarge)
Here's another chart from Nick Laird which he slid into my in-box just after midnight. It's his "Total PMs Pool" graph, which is now at a new record high in ounces. Here was his accompanying commentary..."Hi Ed, Here we are at new highs in number of ounces held. Of note, the UBS Gold ETF put on 261,766 oz. of gold this week. Cheers. Nick"
(Click on image to enlarge)
So even though 'da boyz' are mucking about with the price, the smart money is still quietly socking it away...and that's what you should be doing as well, dear reader.
I have the usual number of stories for a weekend...and some I've been saving for today because of length or content, or both. I hope you have the time to sift through them all.
The iconoclastic rating agency, and fully recognized NRSRO to the dismay of some tabloids, which just refuses to play by the status quo rules, and which downgraded the US for the second time last Friday, to be followed soon by other rating agencies as soon as US debt crosses the $16.4 trillion threshold in a few short months, has just done the even more unthinkable and downgraded Fed boss JPMorgan from AA- to A+.
West Virginia reader Elliot Simon sent me this zerohedge.com piece late last night...and the link is here.
An Obama administration task force established to investigate misconduct that fueled the financial crisis is turning to a little-used statute that may make such cases easier to bring, according to people familiar with the matter.
The federal statute, FIRREA, was passed in the wake of the savings-and-loan scandals in the 1980s. It requires a lower burden of proof than criminal charges, has a longer statute of limitations than other financial laws and potentially could bring big fines.
It is unclear how successful the growing use of FIRREA will be. Lurie, the former Justice official, said it's "largely uncharted territory," and defense lawyers have already started pushing back on the government's use of the law.
This Reuters story from yesterday was sent to me by reader Andrew Holland...and the link is here.
"By this point in the ongoing global Credit crisis, it should be clear that the real villain is the anchorless global Credit “system” devoid of anything, any mechanism, or any “sound money and Credit” ideology that might help to restrain excess. Self-adjustment and automatic self-correcting mechanisms would be invaluable. Instead, our central bank, steward of the world’s so-called “reserve currency,” indicates its willingness to become even more “activist” - and global finance spirals only further out of control.
For decades now, global Credit has been allowed to expand unchecked – with no limit to either the quantity or quality of debt instruments. Perhaps the timing and sequencing of various crises was unknowable, though the end results were, for the most part, predictable."
Doug Noland is at the top of his game in his weekly Credit Bubble Bulletin posted over at the prudentbear.com website. It's a must read for sure...and I thank reader U.D. for bringing it to our attention. The link is here.
This is the speech that Richard gave at the Casey Research/Sprott Summit in Phoenix, Arizona on October 1, 2011. I thank reader 'David in California' for sending it to me in the wee hours of this morning. The link is here.
The IMF is raising its forecasts for global growth from levels it expected in January, but there is still a "high degree of instability" in the world economy, Managing Director Christine Lagarde says in an interview with the WSJ's David Wessel.
This 11:44 minute video was posted over at the marketwatch.com website on Thursday. I had to click on the "Pop Up Player" feature in order to get it to play...and you may have to resort to that as well. I thank Florida reader Donna Badach for sending it...and the link is here.
Iceland's main exports are aluminum and fish. Now the isolated nation is hoping to offer the world a new commodity: a cheap, guiltless way to store its data.
In February, a startup called Verne Global opened a large server farm on an old NATO base near Iceland's main airport and began offering "100% renewable" computing services to the rest of the world. It's one of three data centers in Iceland and part of what Iceland's government hopes will be a new local industry.
Iceland produces more electricity per capita than any other country in the world. Nearly all its power is renewable, coming from either glacier-fed rivers or steaming geothermal vents. And it's cheap, too. At 4.3 cents per kilowatt-hour, electrons on the island cost around half the average retail rate in the United States.
This very interesting story was posted on the technologyreview.com website on Wednesday...and I thank Roy Stephens for his first offering of the day. The link is here.
The volcanoes of Iceland could soon be pumping low-carbon electricity into the UK under government-backed plans for thousands of miles of high-voltage cables across the ocean floor.
The energy minister, Charles Hendry, is to visit Iceland in May to discuss connecting the UK to its abundant geothermal energy. "We are in active discussions with the Icelandic government and they are very keen," Hendry told the Guardian. To reach Iceland, which sits over a mid-ocean split in the earth's crust, the cable would have to be 1,000 to 1,500km long and by far the longest in the world.
Hendry has already met the head of Iceland's national grid about the plan. The web of sea-floor cables – called interconnectors – planned for the next decade would link the UK to a Europe-wide supergrid, which is backed by the prime minister. The supergrid would combine the wind and wave power of northern Europe with solar projects such as Desertec in southern Europe and north Africa to deliver reliable, clean energy to meet climate change targets and reduce dependence on fossil fuel imports.
This is also an interesting read...and was posted in the Wednesday edition of The Guardian. I thank Roy Stephens once again...and the link is here.
Sinkholes are common hazards in mining regions, plaguing areas where miners have burrowed into layers of soluble minerals and accidental floods have followed. But in Berezniki, as often happens in Russia, the problem has been magnified by past practices in which safety was not always the foremost concern.
In the West, mines are usually located far from populous areas, to reduce the risks of sinkholes to homes and other buildings. But Berezniki, a city of 154,000 that began as a labor camp, was built directly over the mine — a legacy of the Soviet policy of placing camps within marching distance of work areas.
And so Berezniki is afflicted by sinkholes, yawning chasms hundreds of feet deep that can open at a moment’s notice. So grave is the danger that the entire city is under 24-hour video surveillance. On a screen in the command center late last year, one such hole appeared as a small dark spot in a snowy field in the predawn hours, immediately threatening to suck in a building, a road and a gas station.
Here's another fascinating story that was sent my way earlier this week. It's a piece from the Wednesday edition of The New York Times...and I thank Phil Barlett for sharing it with us. The link is here.
Egypt's Muslim Brotherhood signaled its intent last Sunday to push the country into economic chaos. With liquid foreign exchange reserves barely equal to two months' imports and panic spreading through the Egyptian economy, the Brotherhood's presidential candidate Khairat al-Shater warned that it would block a US$3 billion emergency loan from the International Monetary Fund (IMF) unless the military government ceded power.
"We told them [the government], you have two choices. Either postpone this issue of borrowing and come up with any other way of dealing with it without our approval, or speed up the formation of a government," Khairat al-Shater said in a Reuters interview.
Last week, Egypt's central bank reported that total reserves had fallen to $15 billion, but - more importantly - liquid foreign exchange reserves had fallen to only $9 billion, equivalent to just two months' imports. Foreign exchange futures markets expect the Egyptian pound to lose half its value during the next year, and Egyptians have responded by hoarding diesel fuel, propane gas and other necessities.
This very interesting background material on what's going on in Egypt right now is something that you would never find in the main stream media...and for that reason alone it's a must read. It was posted over at the Asia Times website on Wednesday...and is another story courtesy of Roy Stephens. The link is here.
Recep Tayyip Erdogan, the Turkish prime minister, repeated calls for United Nations action against Syria, and went on to refer to Article 5 of the Nato treaty. That calls an attack on one Nato member like Turkey an attack on all members.
Invoking the treaty would allow Nato members to take military action against Syria legally without a UN security council resolution. Article 5 has only been invoked on one previous occasion – in the action taken against Afghanistan after the September 11 attacks.
"Options are plentiful," he said, referring to shooting incidents on the Turkish-Syrian border which sent bullets spraying into refugee camps on three consecutive days earlier this week and killed four Syrians. A Turkish official and interpreter were also injured.
"Nato also has duties regarding Turkey's borders, according to the fifth article," he added.
I dug this story up over at The Telegraph late last night...and the link is here.
Last year NATO countries bombed Libya, demanding “democracy” in the country. But now it’s clear it was all about oil and it’s not like the Americans and Brits are going to be democratic about it, and share those spoils equally with France and Italy.
So…oil giants Total from France and ENI from Italy are just going to have to wait in the sidelines while the hungry American and British big boys take their juicy oil slices first… ExxonMobil, Chevron, Texaco, BP, Shell…
It’s no surprise then to read in The Wall Street Journal that the US Securities & Exchange Commission (SEC), together with the puppet Libyan “authorities” are launching “investigations” into both companies’ “financial irregularities” in their shady dealings during the forty-two years of Gaddafi’s power. Now who would have imagined this! An Italian oil company involved in kick-backs? Corruption at the highest echelons of the French oil industry?!? Tsk, tsk!!! Unheard of…! The US and UK would never do something like that!! Just ask Enron, ask Halliburton, ask BP…
This story comes as no surprise to me. Not only is the rest of Europe out...so is China, as it recently discovered. This is another very interesting read...and it was posted over on the Russia Today website earlier this week. Of course it's another Roy Stephens offering...and the link is here.
The shortfall in oil production relative to what would have been expected based on the 1983-2005 growth pattern amounted to 4.7 million barrels in 2011. This is far more than any country claims as spare capacity. This is no doubt one of the reasons why oil prices are as high they are now. These high oil prices tend to interfere with economic growth of oil importing nations.
The shortfall in growth especially occurred in crude oil. Between 2005 and 2011, crude oil production rose only 0.5%. It was mostly the oil substitutes that grew.
This very long must read is full of excellent charts and graphs...and is another less-than-subtle reminder that peak oil is upon us. I thank reader Bob Fitzwilson for bringing this essay to our attention. It's posted over at the ourfiniteworld.com website...and the link is here.
Broad hints have been coming out of China that the country might start small-scale military strikes over disputed waters that are believed to hold rich energy reserves. The consequences of such endeavors would be tolerable to Beijing, international experts say.
Bitter territorial disputes China has with neighbors in the East and South China Seas have long grabbed media headlines. Virtually all countries in the region are involved in spats with China, from South Korea and Japan to the Philippines and Vietnam. In March alone, Beijing had verbal clashes with Seoul over a submerged rock; with Manila over the Philippines' plan to build a ferry pier; and with Hanoi over China's biggest offshore oil explorer's moves to develop oil and gas fields.
When strategists speak of the "Malacca Dilemma", they mean that Beijing's sea lines of communications are highly vulnerable. In times of conflict between the US and China, the supply of crude and iron ore needed to keep the Chinese economy alive and kicking could be relatively easily cut off in the straits that connect the Indian Ocean with the Pacific.
The war for world's last remaining potential oil reserves is really gathering a head of steam...and China is being forced to fight for oil even in its own backyard, as the U.S. is attempting to shut them out everywhere else. This Asia Times story was posted on their website on April 6th...and is Roy's final offering in today's column. It's certainly worth reading if you have the time...and the link is here.
In the Australian Securities Exchange's Sydney data room, which is about the size of a big lounge room, there are six "cuckoos". These are the banks of servers installed by high-frequency traders.
They sit against the wall opposite the ASX servers and each is connected directly into the host by a fat fibre optic pipe. Each cable is precisely the same length by agreement with the ASX so that none gets an advantage; if one server is closer to the input, its cable is looped around to lengthen it.
Think about that: one less metre of optic fibre carrying data at 299.8 million metres per second - that is, the speed of light - would give one share trader an unfair advantage over the rest. It suggests that something pretty quick is going on.
The question is whether it's fair to the rest of us; whether those six parasites with their suckers fastened directly into the heart of the ASX should be allowed to get away with it.
This is "High-Frequency Trading for Dummies"...and this very well written piece was posted at the Australian Broadcasting Corporation...abc.net.au...website on Wednesday. I thank reader Wesley Legrand for sending it along...and the link is here.
THE gold medals that will be awarded in London this year will be the biggest and heaviest handed out at any summer Olympics. At 400 grams (14 ounces) they will be 17 times heavier than at the 1912 Olympics in Stockholm. On the other hand, the 1912 games were the last one where gold medals were made entirely of gold. Now they consist mainly of silver with a thin coat of gold—6 grams is the minimum requirement. The London medal will have a gold content of only about 1.5%, and at current prices will be worth $706.
This tiny article was posted over at the economist.com website on April 5th...and I thank reader Federico Schiavio for sending it. The link is here.
Gold bulls have plenty of room to graze in the stockyard these days as the investing herd migrated to other assets during the market’s steep climb in 2012. For the fourth time in the past year, gold bears outnumbered the bulls in Bloomberg’s weekly Gold Bull/Bear Sentiment Survey. In fact, the bears had the bulls outnumbered by almost 2-to-1.
Today’s growing sloth of gold bears is a “buy” signal for contrarian investors like us at U.S. Global. Research from the gold team at Canaccord Genuity found that gold rallied about 10 percent on average during the month following each of these sentiment “cross-overs.” This historical increase means that gold could potentially rally to the “high $1,700’s per ounce,” which Canaccord believes “would breathe some new life into the gold equities.”
The first part of this 'Investor Alert' is all about gold equities...and is definitely worth the read. I thank West Virginia reader Elliot Simon for bringing it to my attention. It's posted over at Frank's website...usfunds.com...and the link is here.
Some analysts say the 11-year bull market in gold is over, gold is in a bubble that has or is about to bust.
If that be the case, clients of GoldMoney & BullionVault (two of the more established and popular physical gold dealer and custodians) have got it all wrong and hence are “of all men most to be pitied”. Look at how their collective gold holdings have been increasing relentlessly, even during periods of sharp price declines.
This short term chart covering the period since gold’s intermediate top in August 2011 shows steady increase of total holdings from quarter to quarter. The growth in BullionVault is particularly impressive.
What then can be said of the apparent dichotomy between the declining trend in gold & silver prices and the increasing demand seen in the metal purchases? Just two words: Paper & Physical.
The author of this excellent piece, C.K. Diong over at the politicalmetals.com website, sent it to me yesterday...and I am more than happy to post it here. It further confirms that 'Total PMs Pool' graph that Nick Laird sent me...and is posted further up in this column. It's definitely worth reading...and the charts are great. The link is here.
Gold fund manager Caesar Bryan told King World News yesterday that there was a mysterious dumping of gold contracts on the New York Commodities Exchange just minutes before today's close. "This is very odd trading on a Friday afternoon when there was no other discernible movement in other markets," Bryan says.
Of course GATA's adherents may not find such an event quite as odd as Bryan does, but we're glad of his calling attention to it, gladder still for his noting that "the backdrop for gold is still very solid" and that the European financial system continues to disintegrate.
I stole both the headline and the two introductory paragraphs from a GATA release yesterday...and the link to the KWN blog is here.
Foundation Resources is a mineral exploration company focusing its efforts within the Coldstream Gold Property, located 115 Km North West of Thunder Bay, Ontario. The Company has a NI 43-101 resource estimate with 860,000 ounces of gold (763,276 ounces gold inferred and 96,400 ounces gold indicated) on the Osmani deposit, which represents one of five highly prospective targets that expands over a 16 km long gold trend. In addition to its Canadian projects, the Company is also exploring the San Rafael gold-silver property in Mexico which is located approximately 150 km northwest of Durango.
These most recent drill results from Span Lake emphasizes the blue sky potential the Coldstream Property possesses and continues to demonstrate the impact that Foundations management team brings to the project. Over the remainder of the year Foundation plans to aggressively drill and expand the current resource on the Osmani Deposit and explore the numerous gold anomalies previously identified within the Coldstream Property. We look forward to providing our shareholders and the public with an updated NI43-101 in Q4 of 2012, which will include 15 holes and 4000 metres of drilling completed last year on the Osmani Deposit, that wasn't included in the resource calculation. Please visit our website to sign up for continued updates.
Crime once exposed has no refuge but audacity. - Tacitus
Here's a song by a well-known American rock group that really never got the respect that I though it warranted. Maybe because it's impossible to play in concert unless there's a full orchestral back-up. It certainly deserved a better fate than what it got, as you never hear it on the radio anymore. You'll know it instantly nonetheless...and I hope you enjoy it. So turn up your speakers and then click here.
Well, was it free-market forces at work in the thinly-traded Friday afternoon market in New York...or was it JPMorgan et al? You can decide on your own. But to me, it was an "up yours...and have a happy Friday the 13th"...and I even recognized their footprints.
Of course the breakouts above gold and silver's respective 20-day moving averages got crushed on yesterday's take-down...and I have no idea where that leaves us in the days and weeks ahead.
But the Commitment of Traders Report yesterday was about as bullish as you can get. Can we get more bullish from here...meaning can the prices be engineered lower? You bet...but we're far closer to a bottom than a top.
There's still the opportunity to either readjust your portfolio, or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best (and current) recommendations...as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
That's it for the day...and for the week. Enjoy what's left of your weekend...and I'll see you here on Tuesday.