Not much happened price-wise in gold in Far East and early London trading on Thursday. There was the usual smallish rally going into the London open, but it got sold off in the same old way, as it does just about every day at about that time. [Including this morning! - Ed]
From there, the price slowly declined until about 12:45 p.m. in London, which was the London low. Then a smallish rally developed that gained some real traction at 9:15 a.m. in New York, but the moment that the gold price stuck its nose above the $1,750 mark, one of the usual not-for-profit sellers was there to put things right...and every subsequent rally got sold off before it got a sniff of the $1,750 mark. Then at 12:45 Eastern, another not-for-profit seller showed up...and by 2:15 p.m., the gold price hit its low of the day, closing the electronic trading session barely off that low.
Gold finished the Thursday session in New York at $1,729.10 spot...down $2.90 on the day. Net volume was a very chunky 152,000 contracts, so it was obvious that 'da boyz' had to throw a lot of Comex paper at the price earlier in the day to keep it below the $1,750 spot mark.
Silver's price action was much the same...and despite the best efforts of JPMorgan et al...silver blasted through the $34/ounce price level with some authority, but that slip-up was taken care of before the New York trading session ended.
Silver closed the day at $33.90 spot...down four cents on the day. Net volume was rather hefty as well at 40,000 contracts...give or take a thousand or so.
For the second day running, the dollar index was virtually comatose, finishing unchanged on the day...so it's obvious that the price action in the precious metals was not influenced by what was going on in the currency markets on Thursday.
The gold stocks pretty much followed the gold price...and the HUI finished down 0.20%.
As you can imagine, the silver stocks didn't do particularly well, either...and Nick Laird's Silver Sentiment Index closed down 0.72% yesterday.
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The CME's Daily Delivery Report showed that 229 gold and zero silver contracts were posted for delivery on Monday. The short/issuer of all 229 contracts was Deutsche Bank...and the long/stoppers were the Bank of Nova Scotia, JPMorgan...in both client and in-house accounts...and Citigroup. The link to yesterday's Issuers and Stoppers Report is here.
Authorized participants made additions to both GLD and SLV yesterday. GLD took in 38,875 ounces...and SLV received 1,166,143 troy ounces of silver.
There was no sales report from the U.S. Mint.
It was also very quiet at the Comex-approved depositories on Wednesday, as they didn't receive any silver...and only shipped 1,955 ounces out the door.
Here are a couple of charts courtesy of Washington state reader S.A. The first shows the horrendous state of affairs of the shadow housing inventories. With this kind of overhang, the entire U.S. real estate market will be dead in the water for many, many years to come. Back in early 2007 I mentioned that I would talk about the bottom of the real estate market in 2013. Well, we're barely into the 2012 year...and I can say without fear of contradiction that this forecast I made five years ago is out by at least five years, so let's revisit this issue in 2018.
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The second chart from Washington state reader S.E. is titled S&P Tech Earnings Outlook with, and without, Apple. Not very impressive, is it?
This last chart is courtesy of reader "Tom in BR". There are a lot of estimates in this chart...but it's a good bet that the supply statistics [in red] are close to the mark, as production out to 2017 is pretty much baked in the cake already. We are at what is called "peak gold"...and unless there are some major [with a capital 'M'] discoveries brought on stream in the years to come, this is just about as high as gold/scrap production will ever get in our, or our descendents, lifetimes.
The question that's posed on the chart..."Where will investors get their gold?"...is well worth pondering...and I just hope you're getting your share, dear reader.
I have the usual number of stories today...and I hope you at least read the few paragraphs from each that I've cut and paste below each headline, so you at least get the flavour of the news item.
It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.
So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that. There will be little in the way of real compensation for struggling homeowners, and there are serious issues in the area of the deal's enforceability. In fact, about the only part of the deal we can be absolutely sure will be honored in full is the liability waiver for the robo-signing offenses.
Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.
I agree totally. It was a sell-out of biblical proportions. This Matt Taibbi piece was posted over at the rollingstone.com website early yesterday afternoon...and is Roy Stephens first offering of the day. If real estate matters to you, it's well worth the read...and the link is here.
Over more than three decades, Bill Gross, co-founder of asset-management giant PIMCO, has made so much money for clients that he has become the barometer by which other bond traders are judged. His West Coast perch, prescient calls on the U.S. economy and devotion to yoga only added to the mystique.
But the very recipe that enabled Gross to dominate his industry may now be conspiring against him.
He's coming off his worst year in the business after making a huge bet against U.S. Treasuries that backfired. Last year, for the first time in nearly two decades, investors pulled more money out of PIMCO's flagship fund than they put in.
Reader Phil Barlett sent me this very short Reuters piece yesterday...and it's a must read in my opinion...and the link is here.
After days of difficult negotiations, the leaders of the parties that comprise the Greek coalition government agreed to implement new austerity measures required in order for the country to receive additional aid from the European Union and the International Monetary Fund (IMF), the office of Prime Minister Lucas Papademos announced on Thursday.
The highly indebted euro-zone country is close to insolvency, and the government in Athens appears to be willing to meet most of the demands made by the troika, comprised of the EU, IMF and European Central Bank (ECB), responsible for determining if Greece has fulfilled its aid requirements.
German Finance Minister Wolfgang Schäuble said on Thursday evening, however, that he did not anticipate that a final decision would emerge from the meeting. He also expressed skepticism that the agreement reached in Athens would be enough to secure funding. "The agreement, as far as I understand, is not at a stage where it can be signed off," Schäuble said according to the Associated Press. He said that any deal had to be sufficient to bring down Greek debt to 120 percent of gross domestic product by 2020 and limit the need for bailout money to the previously agreed €130 billion. "Those general requirements are not fulfilled yet," he said.
This story was posted on the German website spiegel.de yesterday evening...and is another offering from reader Roy Stephens. The link is here.
Nazi flags are hardly a rarity at Greek demonstrations these days. Anti-German tirades on primetime television have likewise become a staple. In Greece, a consensus has developed as to who is to blame for the country's economic misery. Age old stereotypes are flourishing.
Georgios Trangas had launched into a tirade -- yet again. He seemed to have completely forgotten his four studio guests. Trangas stared into the camera and turned to his favourite subject: the Germans, and how they are cold-bloodedly shoving Greece into the abyss. "Germany doesn't care that 3 million pensioners are dying here," he raged.
The sentence is one of his more harmless utterances on this evening. But such verbal artillery is hardly out of the ordinary on the Athens television broadcaster Extra 33, a channel full of angry broadsides against the "German occupiers."
"Choris Anästhetiko" is the name of the program, and it lives up to its name: "Without Anaesthesia." Politesse is an alien concept on the show as it offers ruthless analysis of the economic and debt crisis gripping Greece. On this evening, the show is set to examine the problems facing taxi drivers in Athens and the suffering shipping industry. But the experts invited to appear on the show serve little more of a purpose than providing the moderator with additional excuses to launch into a diatribe.
This very interesting read showed up at the spiegel.de website yesterday as well...and is another Roy Stephens offering. The link is here.
Another normal day at the Hellenic Statistical Authority.
We learn that: Greece's manufacturing output contracted by 15.5pc in December from a year earlier...Industrial output fell 11.3pc, compared to minus 7.8pc in November...Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.
I have little further to add. This is what a death spiral looks like.
It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.
Ambrose is up on his soap box once again...telling it like it really is. This short blog was posted at the blogs.telegraph.co.uk website yesterday...and is a must read as well. I thank Roy for bringing this to our attention...and the link is here.
Ireland would see any European Central Bank contribution to the restructuring of Greek debt as a precedent that would boost Dublin's efforts to ease the burden of its own sovereign debt, the country's finance minister said on Wednesday.
Ireland, widely seen as the poster child among bailed-out euro zone countries, has been lobbying the ECB to help it reduce the burden of its sovereign debt by cutting the cost to the government of bailing out its banks.
"If the ECB are prepared to make this kind of concession to Greece it would encourage me to think that they might be ready to make concessions on the promissory note to Ireland," Finance Minister Michael Noonan told state broadcaster RTE.
This short Reuters story was filed on Wednesday afternoon...and I borrowed from yesterday's King Report...and the link is here.
The ECB has said it will not extend any concessions it may make on its Greek bonds to Ireland or other bailout countries.
Mr. Draghi left open the door to losses being absorbed by the ECB's national central bank members, before insisting any such Greek deal would be a one-off.
"Greece is unique for everything. We don't want to repeat any experience. I haven't said what the ECB is going to do," said Mr. Draghi, adding that the Irish Government "ought to be praised for constant progress making in reforms" in light of "enormous challenges".
This story was posted on the irishtimes.com website just after midnight local time...and is also courtesy of Roy Stephens. The link is here.
Argentina limited the use of cash in the country’s financial markets as President Cristina Fernandez tightens oversight of currency transactions to help contain capital flight and prepare for what is anticipated a ‘difficult’ year for the Treasury and the Argentine economy.
The government will restrict daily cash transactions to 1.000 Pesos (231 US dollars) per person, down from 10.000 Pesos, according to a statement in the Official Gazette. The measure affects activity in the stock and bond markets, investment funds and in the futures markets. Operations above the limit will have to be done through Argentine bank accounts that are authorized by the central bank.
Since winning a second, four-year term in October, Cristina Fernandez has ordered the tax agency to review all foreign currency transactions, required pre-approval for the importation of goods and raised capital requirement on banks in a bid to limit dividends and slow capital flight.
Outflows totalled 18 billion collars in the first nine months of 2011, double the same period in the previous year, and accelerated to the fastest pace in at least a decade in the third quarter. The Argentine government measures have slowed outflows, allowing the central bank to rebuild its international reserves.
This story was posted over at the mercopress.com website yesterday...and I thank Casey Research's own Louis James for sending it along. The link is here.
Here's a video interview with Jim Rickards that was posted over at the Russia Times website on Wednesday. It starts at the 4:30 mark...and runs for about 18 minutes. I listened to it from beginning to end...and I think it's worth your time.
I thank reader Randall Reinwasser for sending it along...and the link to the youtube.com video is here.
Iran is seeking to close grain purchases using gold and oil as payment and has paid in yen for a large volume of wheat in its first deal since Western sanctions against Tehran started choking imports of food staples, European wheat exporters said.
Iran bought at least 200,000 tonnes of soft wheat on the world market last week for prompt delivery from private sellers -- mostly of Australian origin -- but some traders said the United States could possibly account for part of the volume.
New financial sanctions imposed since the beginning of this year to punish Tehran over its nuclear programme have ended up playing havoc with Iran's ability to buy imports and receive payment for key food items.
I found this Reuters story posted in a GATA release yesterday...and the link is here.
Much has been made of yesterday's Reuters story how "Iran turns to barter for food as sanctions cripple imports" in which we learn that "Iran is turning to barter - offering gold bullion in overseas vaults or tanker loads of oil - in return for food", and whose purpose no doubt is to demonstrate just how crippled the Iranian economy is as a result of the ongoing US embargo.
Incidentally this story is 100% the opposite of the Debka-spun groundless disinformation from a few weeks ago that India was preparing to pay for Iran's oil in gold (they got the asset right, but the flow of funds direction hopelessly wrong). While there is certainly truth to the fact that the US is actively seeking to destabilize the local government, we wonder why? After all as the opportunity cost for the existing regime to do something drastic gets ever lower as the popular resentment rises, leaving the local administration with few options but to engage either the US or Israel. Unless of course, this is the ultimate goal.
Yet going back to the Reuters story, it would be quite dramatic, if only it was not the case that Iran has been laying the groundwork for a barter economy for many months now, something which various other analysts perceive as the basis for the destruction of the petrodollar system.
This long read was posted over at the zerohedge.com website yesterday...and is courtesy of Washington state reader S.A. Unfortunately, or fortunately, depending on your point of view...this is a must read...and the link is here.
...with developing recommendations regarding the definition of high frequency trading (“HFT”) in the context of the larger universe of automated trading. This definition of HFT is anticipated to serve as an initial step towards assessing the presence and impact of HFT in CFTC regulated markets for consideration of appropriate regulatory and policy responses.
Since its inaugural meeting, the TAC has focused on one of the most important technological evolutions in trading behavior: automated trading. This shift in terms of speed and volume has challenged the exchanges’ and the Commission’s ability to ensure market integrity and safeguard against market misfires such as flash crashes.
“I think the Technology Advisory Committee through advice and guidance this new Subcommittee on Automated and High Frequency Trading will provide a much needed holistic approach to identifying the criteria the Commission needs to incorporate into any further decision making regarding automated trading and HFT,” said Commissioner O’Malia.
We don't need a commission to figure this out. HFT is at least 70% of the trading on any given day in the New York equity markets. The average retail investor withdrew from the market many years ago once they realized that "there are no markets anymore...only interventions".
I note that this new committee is seeking nominations for members. I nominate Ted Butler. I thank Florida reader Donna Badach for sending me this cftc.gov press release...and the link is here.
It has been so long since the CME cut gold and silver margins that frankly we are a little bit stunned... In an extended announcement, which saw outright margins for virtually every commodity get cut, the CME just lowered Initial and Maintenance margins of gold (by 12%) and silver (13%), to $7500 maintenance for GC and $16000 maintenance for SI. Did the paper bull trap season just open? And how long before these are re-hiked by 15%, 20% or more? For now, however, this is certainly near-term bullish.
This zerohedge.com story was sent to me by reader 'David in California'...and the link is here.
For all you newbies out there, this 15:50 video posted over at the brotherjohnf.com website early this morning is an absolute must watch. And even if you've been around the block a few times like I have, I learned something brand new from watching it...and you might, too.
So drop everything...top up your coffee...quietly thank reader 'David in California' for digging this up on your behalf...and then click here.
Shapiro’s idea may not have taken hold in Mexico, but he hopes it does in Andover, where he will ask Town Meeting voters in April to authorize the town to give its employees and contractors the option of receiving part of their pay in $1 American Eagle Silver coins.
Ideas like Shapiro’s are gaining steam in several states due in part to US Representative Ron Paul, a Republican presidential candidate who is a longtime advocate for ending the Federal Reserve System and returning to a gold-or silver-based standard of currency, said Frank Talty, political science professor at University of Massachusetts Lowell.
Paul’s argument is that the hyperinflation of the dollar with no gold or silver standard “is all smoke and mirrors, like the king has no clothes, and eventually we’ll discover that the currency has no backing and it will lead to the destruction of world markets,’’ Talty said.
This story was posted over at The Boston Globe yesterday...and I thank West Virginia reader Elliot Simon for sharing it with us. The link is here.
Yesterday the godfather of newsletter writers, Richard Russell, was discussing this very subject: “I just went through the latest Rapaport jewelry and diamond magazine, and I was frankly amazed at the record prices paid at auction. Obviously, big money is investing in valuable tangibles. The prices that some of these jewels have gone for are at simply mind-blowing heights.”
This very interesting R.R. blog was posted over at the King World News website yesterday...and the link is here.
Hinde Capital CEO Ben Davies told King World News yesterday that gold is starting to attract some retail investment interest and that its fair value as a ratio with the monetary base is over $4,000. [Somebody please call GATA when life is fair so we can go back to our vegetable garden or neighborhood tavern.]
It's my opinion that a price more than double that amount would be more reasonable. - Ed. An excerpt from Davies' interview is posted at the KWN website. The link is here.
In his commentary this week, "Gold Cars and Gas Stations," posted at GoldSeek, 24hGold, and 321Gold -- financial letter writer Stewart Thompson remarks that "banks likely are manipulating gold, and manipulating it higher, with central bank buy programs" and that gold investors should take a break along with the gold price rather than keep "screaming that you're being manipulated to death."
That Western central banks may be working the gold price higher is not a new idea to readers of these dispatches and followers of market analysts like GATA Chairman Bill Murphy and GATA consultant James Turk, founder of GoldMoney.
Our camp has often asserted that the Western central banks long have been undertaking a "controlled retreat" with gold, using derivatives and leases (not so much sales anymore) to keep the price from exploding after years of essentially short selling the metal or backstopping such short selling by bullion banks. Federal Reserve Chairman Alan Greenspan confirmed as much in his testimony to Congress in July 1998 when he said that "central banks stand ready to lease gold in increasing quantities should the price rise."
Chris Powell is on a rampage with his extensive commentary in this GATA release. It's a must read, of course...and the link is here.
Silver market analyst Ted Butler notes in commentary yesterday that the U.S. Commodity Futures Trading Commission's latest investigation of silver market manipulation has now been going on for 3 1/2 years and he asks for one final appeal from the public to the commissioners and members of Congress.
I posted three paragraphs out of his mid-week essay to clients in my Thursday column...and knew that the rest of it would be up in the public domain very shortly. Well, here it is.
Butler's commentary is headlined "Enough Is Enough" and it's posted at GoldSeek's companion site, SilverSeek.com...and the link is here. The e-mail addresses to all the guilty parties is at the bottom of Ted's commentary, so please let these members of the criminal class at the CFTC know how you feel...but be polite about it, even though they don't deserve it.
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North American Nickel’s latest news from our 100% owned Post Creek property in the Sudbury mining camp is what geologists always hope for….a large, clearly defined, un-tested target close to surface in a known camp with excellent infrastructure advantages for mining. Drilling is scheduled to begin in September. In this case it’s an EM anomaly 200 m long, that has been interpreted as the electromagnetic signature of ‘near-massive to massive sulphide.’ It’s located approximately 55 m below surface and the trend of the anomaly corresponds, in part, to both the CJ#1 dyke and the Whistle Offset Structure to the south. Please visit our website to read the full news release and learn more about North American Nickel.
Sometimes I wonder whether the world is run by smart people who are putting us on, or by idiots who really mean it. - generally attributed to Mark Twain
It was another day where the gold and silver prices were held in check...and break-out attempts got squashed once again. Gold wasn't allowed to break above $1,750 for any length of time...and silver is safely back under $34 spot. Although there were tiny down moves in both platinum and palladium, they were barely noticeable on their respective charts.
My comments on the $1,750 mark in gold over the last two days, brought this response from reader and T.A. analyst, Scott Pluschau..."The bears should be sweating next time we approach $1,750. Sooner or later the supply at this level will get depleted...and the squeeze or "full court press" will be on. By the fourth time a level gets tested over a matter of days, it starts to crack and crumble. But you never know, we could be back at $1,700 before then...$1,749 is the "High Volume Node" over the past 10 trading days."
We'll see...but we did make it down below the $1,715 mark about ten minutes after London opened this morning.
Nick Laird took a break from other things during his Friday morning in Australia to build the following two charts for us. The first is the London AM/PM Bias chart for palladium. As Nick says in the dialogue box on the graph..."Since April 1990 there has been a cumulative upward bias on the price of the Ex-London trading hours of +543%...with a cumulative downward bias on the price of the London trading hours of -268%." This chart...and the one below...deserve some careful study. The 'click to enlarge' feature comes is real handy here.
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Here's the identical chart for platinum...and the London AM/PM Bias is far more obvious. The dialogue box states that..."Since April 1990 there has been a cumulative upward bias on the price of the Ex-London trading hours of +470%...with a cumulative downward bias on the price of the London trading hours of -311%.
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I have the chart for silver somewhere as well...and I'll get around to that sometime next week.
Today is the day we get both the Commitment of Traders Report and the Bank Participation Report. Ted was checking for the BPR yesterday, as sometimes it comes out early...but as of 4:18 a.m. Eastern time this morning, it still wasn't up at the CFTC website.
It was pretty quiet in Far East trading during their Friday. The high, such as it was, came shortly before 10:00 a.m. Hong Kong time...and then the price slid about five bucks up until about ten minutes before London opened. Then in less than fifteen minutes, gold got clocked for about fifteen bucks. It was pretty much the same price action in the other three precious metals as well....and there wasn't a thing going on in the dollar index at the time. Here's the Kitco gold chart as of 5:06 a.m. Eastern time.
As I hit the send button at 5:09 a.m. Eastern, both gold and silver have recovered a bit, but are starting to roll over once again...and their price patterns look very similar to what happened on Thursday morning during this time period. With today being Friday, it will be interesting to see what 'da boyz' have in store for us during the rest of the trading day.
The high-frequency trading volume in gold is already very heavy...and silver's volume is pretty decent as well, but with surprisingly few roll-overs. I would guess that there was a serious amount of technical fund/small trader long liquidation going on...but how much won't be known until next Friday's COT report.
There's still time to either re-adjust 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. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.
That's it for this Friday. I hope you have a great weekend...and I'll see you here tomorrow sometime.