Gold was under slight downward price pressure right from the open in New York on Wednesday night...and by the time that the Comex began to trade at 8:20 a.m. Eastern time, gold was down about ten bucks from Wednesday's close.
And that was when the selling pressure increased in intensity, with the low price tick of the day [$1,630.00 spot] coming about fifteen minutes before the close of Comex trading at 1:30 p.m. in New York. From there, the price rallied a few dollars into the close of electronic trading at 5:15 p.m.
The gold price closed at $1,635.80 spot...down $17.90 on the day. Net volume was decent...around 128,000 contracts.
The silver price declined about twenty cents during mid-morning trading in the Far East...and then sat at that level until 8:45 a.m. in New York. It was all down hill from there, with the low of the day [$29.74 spot] coming at the same time as gold's low price tick...about fifteen minutes before the Comex close.
The silver price rallied sharply in the last fifteen minutes of Comex trading...and then a bit into the electronic trading session, before trading sideways for the rest of the day.
Silver closed at $30.07 spot...down another 58 cents from Wednesday. Net volume was pretty decent at 37,000 contracts. Thursday's low price tick took out the previous low of last Wednesday, April 25th.
The dollar index gained about 25 basis points between the Far East open on Thursday morning...and 8:30 a.m. in New York. Then all those gains vanished in the next thirty minutes. From there, the dollar index gained a handful of basis points, closing a hair higher than on Wednesday. Nothing to see here.
The gold shares gapped down...and then headed for the nether reaches of the earth. The low came at the low price tick in both metals....1:15 p.m. in New York. From there, they rallied a percent or so going into the close. It's just as well, because the HUI finished down 3.92% as it was...so at the low, it was down 5 percent. That's pretty amazing considering the fact that gold only had an intraday move of 1.5 percent.
The silver shares got it in the neck for the second day running, as Nick Laird's Silver Sentiment Index closed down 3.45%.
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The CME's Daily Delivery Report for 'Day 5' of the May delivery month showed that 7 gold and 252 silver contracts were posted for delivery on Monday. In silver, the surprise short/issuer was Merrill with 217 contracts. The biggest long/stoppers were Deutsche Bank ...JPMorgan ...and the Bank of Nova Scotia with 24 contracts to be received. The link to yesterday's Issuers and Stoppers Report is here.
There were no reported changes in GLD yesterday...but the SLV ETF reported its first withdrawal since April 20th...and it was 469,843 troy ounces.
Over at Switzerland's Zürcher Kantonalbank, they reported adding 20,969 troy ounces of gold...and 42,520 ounces of silver to their respective ETFs between April 20th and 30th.
The U.S. Mint had a sales report. They sold another 10,000 ounces of gold eagles...plus 100,000 silver eagles. We're only three business days into May, and the Mint has already sold as many ounces of gold eagles as they did in all of April. Someone with very deep pockets is obviously buying while "blood is running in the streets"...as should you, dear reader. I was a buyer yesterday as well. But I was buying silver, not gold.
Over at the Comex-approved depositories on Wednesday, they reported receiving 523,121 troy ounces of silver...and shipped 15,001 ounces out the door. The link to that action is here.
Washington state reader S.A. provided our first chart of the day. It's a plot of the gold price against the junior mining stocks on the Toronto Venture Exchange. It's not pretty, is it? And you also have to ask yourself why this is the case...but whatever the reason, I'd bet money that most of the junior producers are selling for well under their respective replacement costs if you had to rebuild their infrastructures from scratch starting today.
The second chart is courtesy of Nick Laird. It shows the GDX and the GLD indexes...and the ratio between the two...which is similar to the chart above. One is just confirming the other, but from slightly different perspectives. As Nick pointed out..."This chart clearly shows how gold stocks have underperformed the last four years." And you have to ask whether this is natural or not. I'm guessing that the share price is rigged just like the metals themselves, but don't have any proof except for these charts. But it just doesn't pass the smell test.
(Click on image to enlarge)
I have a lot of stories for you today...and I hope you have time to at least skim them all.
The world in which we invest is a world of immense wall to wall manipulations by our friends in Washington. And people get off on Goldman Sachs because it has done this and this, it is pulling wires...The Federal Reserve is the giant squid of squids, it is the vampire squid of vampire squids."
He continues: "They - the vampire squids - have manipulated virtually every single price and valuation in the capital markets. People ought to recognize when they invest that one of the unspoken risks is the risk that this hall of mirrors, this Barnum and Bailey world that the Fed has created for us is going to vanish one day because they will not be able to hold it any more... It's not as if there is nothing to do in investing, but one must always keep in mind that the valuations that we see, that the prices that we watch flicker across the tape are prices that are fundamentally manipulated by these well-intended, dangerous people in Washington called the Federal Reserve".
This zerohedge.com piece contains a 9:34 minute Bloomberg interview with Mr. Grant which is an absolute must watch. I thank reader U.D. for bringing it to our attention. The link is here.
Americans like to imagine that the Founding Fathers were virtuous and civic-minded giants bestriding the continent. But many of them kept a sharp eye on the main chance, alert to opportunities for personal profit.
The birth of the mega-bank JPMorgan Chase & Co. (JPM) may be traced to two such figures: Aaron Burr, the dark star of America’s early years, and his longtime nemesis, Alexander Hamilton, the first secretary of the Treasury.
In the 1790s, New York was emerging as the nation’s commercial center, but it had only two banks: the Bank of New York and a branch of the Bank of the United States. Both were dominated by wealthy Federalist merchants. Republicans such as Burr often found the banks’ credit windows closed tightly against them.
This short and very interesting read, was posted on the Bloomberg website yesterday. I thank Washington state reader S.A. for sending it...and the link is here.
Steady declines in smoking, a big win for public health, are creating problems for municipal bond investors.
A handful of bonds backed by yearly payments from tobacco companies under a landmark settlement with 46 states are in the earliest stages of default, and more distress is expected.
So far, California, Ohio and Virginia, as well as Nassau County in New York, have resorted to tapping special tobacco-bond reserves to pay their bondholders, something analysts consider a technical default because it effectively means the bondholders are being paid with their own money.
One analysis of a sample of the roughly $55 billion in outstanding tobacco bonds foresees the potential for a handful of full-blown defaults more than a decade from now, but the continuing legal dispute could mean deeper problems sooner.
This story is from yesterday's edition of The New York Times...and I thank Phil Barlett for sending it along. The link is here.
The S.E.C. brought a civil case against a tiny, iconoclastic ratings agency called Egan-Jones, run by the outspoken Sean Egan, accusing it, essentially, of filling out forms wrong.
Before the S.E.C. charges, Egan-Jones was best known for two things: having made some bold calls about shaky credit prospects and having a business model that was different from that of the big boys — Moody’s Investors Service, Standard & Poor’s and Fitch. Mr. Egan’s outfit gets paid by the users of his ratings; the oligopoly gets paid by the issuers whose debt is going to be rated.
You don’t need to be a hedge fund quant to see the conflict of interest: the more ratings, the more profits to the ratings agencies, so the temptation is to be extra lenient. And, boy, were they.
This op-ed piece showed up in The New York Times on Tuesday...and it goes into much more detail than the piece I posted about this issue before. I thank Phil Barlett once again for bringing it to my attention. The link is here.
A major new rule that has drawn the ire of Wall Street is on track for completion sooner than some bankers had expected, dashing the hopes of financial industry lobbyists, who have pressed for a delay.
Regulators are making significant progress on a final draft of the regulation, the Volcker Rule, and some officials expected to complete it by September and possibly as early as this summer, people with direct knowledge of the matter said. The people, who spoke on the condition of anonymity, cautioned that regulators have not set a firm date for completing the rule.
The Volcker Rule aims to rein in risky trading on Wall Street. Named for Paul A. Volcker, the former chairman of the Federal Reserve, it would ban banks from placing bets with their own money, a practice known as proprietary trading.
It's also called 'in-house' trading...and you see it all the time in the CME's Daily Delivery Report where they are bidding alongside their own clients...and sometimes even against them. This story was posted in The New York Times on Wednesday...and I thank Phil Barlett again. The link is here.
The U.S. Commodity Futures Trading Commission will delay a final vote on a rule governing derivatives exchanges amid internal dissent that it may restrict CME Group Inc. (CME), owner of the world’s largest futures exchange, according to four people briefed on the matter.
The rule, proposed in 2010, sought to require at least 85 percent of a contract’s trading to occur on a central market. The agency will meet on May 10 to approve a series of other exchange requirements, the CFTC said. The commissioners will delay the provision setting percentage levels, said the people, who spoke on condition of anonymity because the rulemaking process is not public. Under the proposal, an exchange would be forced to de-list a contract if it didn’t meet the 85 percent level.
The proposed rule would restrict CME’s ClearPort service, which acts as a clearinghouse for swaps traded outside of the company’s central market, Chicago-based CME said last year. ClearPort, which generates the highest fees per contract at CME, allows energy swaps, for example, to be converted into cleared futures contracts. Clearinghouses reduce risk in trades by guaranteeing trades between buyers and sellers.
You can pretty much bet that if the CME is bitching about it, it's probably in the public's best interest for the rule to be passed as written. This Bloomberg story was posted on their website yesterday...and I thank West Virginia reader Elliot Simon for sharing it with us...and the link is here.
CME Group Inc. (CME), the world’s largest futures exchange, is raising futures margins for non-hedged positions to comply with new regulations.
Members will be treated as speculators for outright positions, paying a higher margin, said the exchange, which trades everything from energy, agriculture and metals to interest rates and equity indexes. Members are now treated as hedgers rather than speculators even if they have a speculative position. The change is effective May 7, it said in a statement.
President Barack Obama last month urged Congress to bolster federal supervision of oil markets, including bigger penalties for market manipulation and greater power for regulators to increase the money traders must put up to back their bets. Regulators are seeking to limit speculation in commodities and ban so-called proprietary trading at banks.
I asked Ted Butler if it meant anything in the grand scheme of things...meaning gold and silver. He said it was no big deal, as it applies to the longs and shorts in all Comex futures contract types...and since it has to be done by the end of trading today, whatever effect it will have will be known soon enough. This Bloomberg story was posted on their website on Wednesday...and I thank Edmonton reader "Ray" for sending it along. The link is here.
Canada's biggest banks accepted tens of billions in government funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.
Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada's major lenders were in a far worse position during the downturn than previously believed.
It says support for Canadian banks from various agencies reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada's gross domestic product in 2009.
"Without government supports to fall back on, Canadian banks would have been in serious trouble."
No surprises here. All this happy news about Canadian banks being so wonderful is all b.s. Eric Sprott said so years ago...and he has turned out to be 100 percent right. I thank reader "h c" for sending me this cbc.ca story...and the link is here.
Spain’s rating downgrade at Standard & Poor’s doesn’t alter Germany’s stance that banks can’t have direct access to Europe’s financial backstops, a senior lawmaker from Chancellor Angela Merkel’s party said.
“The German position is absolutely strict,” Michael Meister, the deputy caucus chairman of Merkel’s Christian Democrats, said in a phone interview in Berlin. “And since such aid programs require unanimity, there’s not going to be any change. All sorts of people can try to set things in motion, but Germany won’t vote for it.”
It’s “obvious” that there can’t be unconditional help from the European Stability Mechanism to Spanish banks, Meister said today. The responsibility and liability for the ESM lies with its members, which are nation states, not banks, he said.
Well, that's their opinion at the moment...subject to change of course. In the end, Germany has always caved in...and they will here as well. This Bloomberg story is from a week ago, but worth a look if it interests you. I thank reader Graeme Guthrie for sharing it with us...and the link is here.
Spain is sounding out investment banks including Credit Suisse, Goldman Sachs and UBS as it seeks a credible fix for its banks roiled by a collapse in real estate prices and now threatening the creditworthiness of Spain itself, sources familiar with the matter said.
Spain has repeatedly said it will not ask for European Union or IMF money to solve the problem of its banks, hit by billions of euros in losses after the bursting of a decade-long property bubble in 2008. Instead, the central bank is consulting about setting up a holding company to value and sell off the real estate assets.
This Reuters story was filed from London on Wednesday...and I borrowed it from yesterday's edition of the King Report...and the link is here.
The president of the European Central Bank (ECB) said it was of "utmost importance" for leaders to impose fiscal discipline but also to generate growth by "facilitating entrepreneurial activities, the start-up of new firms and job creation".
He echoed demands for a "growth pact" from leaders including the French presidential hopeful, Francois Hollande. But rather than protectionist policies advocated by some, Mr Draghi said his ideal growth pact would be based on free labour markets and structural reforms that would be "agreed collectively, not unlike the fiscal [pact]".
But for the moment, the "economic outlook continues to be subject to downside risks", he warned.
Talk is cheap...and that's all this is...talk. I thank Roy Stephens for sending me this story that was posted on The Telegraph's website early yesterday evening...and the link is here.
Greek voters enraged by economic hardship will punish traditional parties in a highly uncertain election on Sunday that could plunge the country into new political chaos and shake the entire euro zone.
At stake is whether Greece sticks with the harsh terms of a hugely unpopular 130 billion euro ($170.83 billion) EU/IMF bailout, or heads down a path that could see it ejected from the single currency, with dire risks for other EU peripheral states like Spain and Italy.
The last polls published before the election showed the conservative New Democracy and socialist PASOK parties - which between them dominated Greece for decades and now rule jointly - would scrape just enough votes to renew their uneasy coalition. They are the only parties to support the bailout.
No new surveys have been allowed to be published for two weeks and pollsters warn the result may be a surprise.
This Reuters story, filed from Athens yesterday morning, is another offering from Roy Stephens...and the link is here.
Greek far-right parties could end up with as much as 20 percent of the vote in Sunday's elections. The neo-Nazi Golden Dawn party has intensified the xenophobic atmosphere in the country. Those who confront them are threatened with violence, journalist Xenia Kounalaki recounts.
There are now three outwardly xenophobic parties in Greece. According to recent surveys, together they could garner up to 20 percent of the vote in elections on Sunday: the anti-Semitic party LAOS stands to win 4 percent; the nationalist party Independent Greeks -- a splinter group of the conservative Nea Dimokratia party -- is forecast to win 11 percent; and the right extremists of Golden Dawn could end up with between 5 and 7 percent.
Shaved heads, military uniforms, Nazi chants, Hitler greetings: How should a Greek journalist deal with such people? Should one just ignore them and leave them unmentioned? Should one denounce them and demand that they be banned? One shouldn't forget that they are violent and have perpetrated several attacks against foreigners and leftists. I thought long and hard about how to write about Golden Dawn so that my article was in no way beneficial to the party.
This short, but very chilling story, showed up in yesterday's edition of spiegel.de...and is another contribution from Roy Stephens. It's worth skimming if you have the time...and the link is here.
The first is headlined "China steel mills...too big to fail - or succeed". The second bears the headline "China's shipyards founder as building boom ends". Overcapacity is a huge problem in both industries...and both appear set to implode. I thank reader Andrew Holland for sending me these stories.
“We would love to be able to put LME delivery points, LME warehouses into China, which we think would be a big benefit to the Chinese industry and LME,” Chief Executive Officer Martin Abbott said in a Bloomberg Television interview today. The LME is anticipating a number of approaches next week, Abbott said.
The exchange licenses a network of more than 600 storage sites around the world where users can deposit metals, with Asian locations in Japan, South Korea, Malaysia and Singapore. Metals demand in Asia will continue to expand, Abbott said.
“What’s going on in China, what’s going on in the whole of Asia, it’s a whole multi-generational, structural change,” said Abbott. “It’s not cyclical. So we’re not going to be fazed by short-term adjustments to forecasts.”
This Bloomberg story was posted on their website late last night...and reader Elliot Simon dug it up for us. The link is here.
The China Daily newspaper on April 26th reported that China had received approval to start trading silver futures on the Shanghai Futures Exchange. "There has been an absence of a means of trading in silver in China," Wang Ruilei, an analyst with precious metal trader CGS Co Ltd, told China Daily. "The market will be bigger and more liquid with the advent of these futures contracts." Allowing Chinese investors access to the silver market will provide an influx of investment dollars into the commodity, and make it more difficult for American speculators to manipulate the markets in their favor.
Also Phillip Klapwijk of GMFS expects fabrication demand for silver, which makes up 80 percent of total demand for the metal, to rise as much as 5% this year.
This is just a rehash of a story on this issue from last week. There's still no date for when it's about to go live...and I must admit that I agree with Ted on this, that it matters no what happens on this exchange, as the world silver price is still set on the Comex in New York. But it is nice that they acknowledge the fact that the silver price is "manipulated" by "American Speculators".
But, having said all that, I certainly wish them well when it finally does begin to trade. This marketwire.com story was picked up by finance.yahoo.com yesterday...and I thank reader Thorsten Winkler for pointing it out. The link is here.
The first blog is with Egon von Greyerz...and it's headlined "Swiss Refiners Say "Demand for Gold is Massive". The second is with Peter Schiff. It's headlined "Possible Rally Tomorrow & Investors to be Blindsided". Of course he's talking about today, now...so we'll know soon enough. The last blog is with James Dines...and it's entitled "Paper Money Addicts, Major Uptrends & Anarchy".
"I will keep a substantial long exposure to gold -- which serves as a Jelly Donut antidote for my portfolio. While I'd love for our leaders to adopt sensible policies that would reduce the tail risks so that I could sell our gold, one nice thing about gold is that it doesn't even have quarterly conference calls."
Or, as Kyle Bass said last year, "Buying Gold Is Just Buying A Put Against The Idiocy Of The Political Cycle. It's That Simple!" Not surprisingly, it is only the idiots out there who still don't get what these two investing luminaries are warning about.
This rather long zerohedge.com piece was sent to me by Phil Barlett...and the link is here.
The end of America's current monetary system is certain, and it is approaching fast. The only question is what will replace it?
The restoration of the American dream demands sound money, so to avoid being victimized by yet another monetary flim-flam when the dollar reserve standard collapses, it is very important that the people understand our monetary history.
Our monetary history – and perhaps its future – can be told in the tale of the three little pigs. Except that this version of the story is in reverse and it comes with a warning…
Once upon a time – and for a very long time – Americans lived in a solid gold monetary system. They owned gold and used it for money. The dollar was literally as good as gold. It was a monetary system so solid that it was like a house of bricks. And then, in 1933, the state decided it wanted all that gold for itself, and it demanded all the gold bricks from the monetary house. It even threatened the people with 10 years in jail if they didn't turn over all the gold, brick by brick.
This short story by Charles Goyette was posted over at the lewrockwell.com website yesterday...and I thank reader Steve Pierce for sending it our way. The link is here.
With his latest essay, multi-billionaire Hugo Salinas Price, president of the Mexican Association for Silver, joins those who are documenting the recent market-manipulating smashdowns in gold.
I borrowed the headline and the introductory paragraph from a GATA dispatch last evening. The story is posted over at the plata.com.mx website...and the link is here.
Silver appears to be the hottest precious metal on India's export block at the moment.
Traders said jewellery exports to the US, one of the country's major export destinations, have hit a new high. "More and more people are turning to silver jewellery these days. The high price of gold coupled with the economic slowdown across the region appear to be the major culprits," said silver exporter Rajeev Thadani.
For the month of March, when the gold jewellers in India were on strike for 21 days, silver exporters in India reportedly shipped jewellery worth $105 million (Rs 5.6 billion) as compared with $69 million (Rs 3.6 billion) in March 2011.
This story was filed from Mumbai on Wednesday...and it's posted over at the mineweb.com. I thank Elliot Simon once again for finding it for us...and the link is here.
GoldCore's Mark O'Byrne today relays a report that the Swiss National Bank, while refusing to specify the location of its gold reserves, acknowledges that they are held both domestically and internationally, the latter locations providing "access to a gold market where stocks could be liquidated if necessary." Presumably "necessary" includes the sort of surreptitious currency market intervention seen against gold simultaneously with the Swiss franc's devaluation last September.
I borrowed the above paragraph from a GATA release last night...and the story itself is posted over at the goldcore.com website. The link is here.
Pelangio Exploration Inc. (PX:TSX-V; PGXPF:OTC) announced the results of seven diamond drill holes totaling 1,574 metres from its ongoing drilling program at the Pokukrom East zone on the Manfo Property in Ghana. Highlights of the results included:
· 1.19 g/t gold over 113 metres, including 9.05 g/t gold over 7 metres;
The results continued to confirm a higher grade, shallow north plunging core of Pokukrom East zone with an open plunge of 600 metres from near surface in previously reported hole SPDD-088 (7.01 g/t gold over 19 metres) to 210 metres depth in the holes reported this week. Warren Bates, Senior Vice President Exploration, commented: “These are our best holes on the Manfo Property to date. These holes represent the north-plunging core of higher grade mineralization at Pokukrom East, now demonstrating an open plunge length of 600 metres.” Please visit our website to learn more about the project and request additional information.
It is inaccurate to say I hate everything. I am strongly in favor of common sense, common honesty...and common decency. This makes me forever ineligible for public office. - H.L. Meneken
It was just another day out of JPMorgan et al's playbook yesterday. As I pointed out in my silver commentary at the top of this column, silver hit a new low for this move down after the February 29th drive-by shooting, so there's no doubt that there was more spec long liquidation yesterday.
Here's the 6-month silver chart...
(Click on image to enlarge)
Gold still has a ways to go to get to new lows...and Ted figures that this is what will be needed to flush out more technical fund longs in silver as well. But the question remains...can they, or will they? Are we done...or is there more pain left? Don't know. Only 'da boyz' know for sure.
Since we get the jobs report this morning at 8:30 a.m. Eastern time, I'm particularly interested in how the gold price will react to that news...or be allowed to react to it...and we don't have long to wait now.
Also due out today is the monthly Bank Participation Report and the latest Commitment of Traders Report...and both should tell us a lot. It's unfortunate that neither Wednesday nor Thursday's precious metals price action will be included, as that would tell us more...especially in silver. I checked the CFTC's website at 3:21 a.m. Eastern time to see if the BPR had been posted early, but it hadn't.
Not much happened in either gold nor silver during Far East trading during their Friday, but now that London has been open for about a half an hour, gold is down about three bucks...and silver is down around 15 cents. Volumes are vanishingly small...and the dollar index is comatose.
As I hit the 'send' button at 5:17 p.m. Eastern time, London has now been open a bit more than two hours. Gold is down about seven bucks...and silver is down 25 cents or so. Volumes in both metals have risen substantially, but are still low, relatively speaking. The dollar index didn't move at all during Far East trading...but is now up a bit over 10 basis points.
With the jobs report looming, it's impossible to tell what might happen in New York trading today, but judging from the early price action in London, it's not looking too promising at the moment. It's also Friday on top of that, so I'm ready for anything.
As I said yesterday, we are far closer to a bottom than a top in this engineered price decline...and as difficult as it is, this is the time you should be laying your money down...when blood is running in the streets. I did yesterday...and if silver prices go lower, I'll be buying more.
With that in mind, 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.
Have a good weekend...and I'll see you here tomorrow.