NOTE: I will be at the Vancouver Investment Conference for the next five days. Because of that, my Friday, Saturday...and Tuesday columns are going to be as short as I can possibly make them. I have other fish to fry while I'm there...and sacrifices have to be made...and this is one of them.
The gold price rallied in fits and starts all through Far East and most of London trading on Wednesday, but got sold down a bit beginning shortly after 9:00 a.m. in New York.
But once the London p.m. gold fix was in, the gold price blasted higher...reaching its high tick of the day of $1,416.00 spot at 10:15 a.m...fifteen minutes later. It took JPMorgan et al almost to the close of London trading at 11:00 a.m. EDT to kill that rally and drive the gold price back below its Tuesday close...safely back under $1,400 spot...and an intraday trading range of seventy bucks.
The low price tick at 2:45 p.m. in electronic trading...and Kitco recorded that as $1,346.00 spot.
Gold close on Wednesday at $1,369.70 spot...down $6.30 from Tuesday's close. Volume was immense, as the short sellers of last resort used a lot of paper gold to put the London p.m. gold fix fire out. Net volume was 259,000 contracts.
It was pretty much the same price pattern in silver. Silver's high tick at 10:15 a.m. in New York was reported as $23.46 spot...and the 2:45 p.m. EDT low was recorded as $22.12 spot. That was an intraday move of $1.34.
Silver closed at $22.27 spot...down 16 cents from Tuesday. Volume in silver was very chunky as well...79,500 contracts.
The price patterns for platinum and palladium were similar as well...and here are their respective charts...
The dollar index closed at 83.76 in late afternoon trading in New York on Tuesday...and then didn't do much until 10:00 a.m. in New York. After a two-minute 27 basis point dip, the dollar index blasted higher...reaching it's zenith at 12:30 p.m. EDT. From there it slid a hair into the close...finishing the Wednesday session at 84.28...up 48 basis points from Tuesday's close.
If you'd like to believe that the Fed minutes...or Bernanke's commentary...had much to do with precious metal prices yesterday, you're certainly entitled to hold that opinion. The dollar index and all four precious metals were blasting higher together, until the not-for-profit sellers showed up at 10:15 a.m. EDT and put an end to it. That's why volumes in both gold and silver were over the moon...because, as I said, it took enormous fire power to kill the precious metal rallies stone-cold dead.
The gold stocks were up over 5 percent before JPMorgan et al put in an appearance...and by the London close, most precious metal stocks were back to almost unchanged on the day. For the most part, the gold stocks followed the price of the metal itself very closely...although there was a bit of a rally in the last thirty minutes of trading that lifted the HUI from no gain, to finish up 1.16%.
Of course it was pretty much the same sort of price action in the silver equities as well...but Nick Laird's Intraday Silver Sentiment Index closed down 0.16%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that zero gold and 40 silver contracts were posted for delivery on Friday...and the link to yesterday's Issuers and Stoppers Report is here.
There were more withdrawals from both GLD and SLV yesterday. In GLD, it was 96,682 troy ounces...and in SLV, it was an eye-watering 5,648,281 troy ounces. This huge amount of silver was obviously not plain-vanilla investor liquidation...and as Ted Butler mentioned in yesterday's column, he feels that it's JPMorgan and a few other bullion banks helping themselves by redeeming shares they already own...probably ones they bought in the April 12/15 engineered price decline...or in Monday's bear raid...or both.
There was a smallish sale by the U.S. Mint yesterday. They reported selling another 37,500 silver eagles.
Over at the Comex-approved depositories on Tuesday, they didn't report receiving any silver...but shipped 669,991 troy ounces out the door. The link to that activity is here.
In gold on Tuesday, these same depositories reported receiving 57,855 troy ounces of the stuff...and didn't ship any out. The link to that activity is here.
I have no charts or graphs for you today, so here's your "cute quota" before all the stories posted below.
I don't have all that many stories for you today...and I'll leave the final edit up to you.
Federal Reserve Chairman Ben S. Bernanke defended the central bank’s record stimulus program under questioning from lawmakers, telling them that ending it prematurely would endanger a recovery hampered by high unemployment and government spending cuts.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said today in testimony to the Joint Economic Committee of Congress in Washington.
Bernanke lamented the human and economic costs of an unemployment rate at 7.5 percent nearly four years into the recovery from the deepest recession since the Great Depression, and said the Fed’s easing is providing “significant benefits.” His comments echoed remarks by William C. Dudley, president of the Federal Reserve Bank of New York, who said in an interview that it would take three to four months before policy makers will know whether a sustainable recovery is in place.
You have to ask yourself this question. What recovery is he talking about? I thank U.A.E. reader Laurent-Patrick Gally for sending me this Bloomberg story yesterday.
Federal Reserve Bank of New York President William C. Dudley said policy makers will know in three to four months whether the economy is healthy enough to overcome federal budget cuts and allow the central bank to begin reducing record stimulus.
“I don’t really understand very well how the tug-of-war between the fiscal drag and the improving economy are going to sort of work their way out,” Dudley said in an interview with Michael McKee airing on Bloomberg Television. “Three or four months from now I think you’re going to have a much better sense of, is the economy healthy enough to overcome the fiscal drag or not.”
Dudley’s remarks underscore that Fed officials have yet to reach consensus on when or how to dial back their $85 billion monthly bond-purchase program designed to spur growth and lower unemployment. Philadelphia Fed President Charles Plosser has called for reducing stimulus at the Fed’s next meeting in June, while St. Louis’s James Bullard said Tuesday the purchases should continue.
Why does anyone pays attention to these guys? It's print...or die...and a couple of more months ain't going to make any difference, as they're still going to print. This moneynews.com article from yesterday was sent to me by West Virginia reader Elliot Simon.
This 7:28 minute video with Jim Grant and Maria Bartiromo was posted on the CNBC website yesterday afternoon just after the markets closed. It's a must watch for sure...as James rips the Fed a new one...and I thank I thank reader Joseph Kahan for sharing it with us.
Applications for U.S. home mortgages dropped for a second week in a row last week as a spike in interest rates stymied demand for refinancing, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, tumbled 9.8 percent in the week ended May 17.
The index of refinancing applications slumped 11.7 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 3 percent.
This very short Thomson/Reuters story appeared on the moneynews.com Internet site very early yesterday morning EDT...and is worth skimming. I thank Elliot Simon for his second offering in today's column.
A top IRS official in the division that reviews nonprofit groups will invoke the 5th Amendment and refuse to answer questions before a House committee investigating the agency’s improper screening of conservative nonprofit groups.
Lois Lerner, the head of the exempt organizations division of the IRS, won’t answer questions about what she knew about the improper screening — or why she didn’t disclose it to Congress, according to a letter from her defense lawyer, William W. Taylor III. Lerner was scheduled to appear before the House Oversight Committee on Wednesday.
“She has not committed any crime or made any misrepresentation but under the circumstances she has no choice but to take this course,” said a letter by Taylor to committee Chairman Darrell Issa (R-Vista). The letter, sent Monday, was obtained Tuesday by the Los Angeles Times.
This story appeared on the L.A. Times website early on Tuesday afternoon PDT...and I found it in yesterday's edition of the King Report.
The latest poll of Morgan Stanley's top clients from across the world says it all.
Chief economist Joachim Fels tells us that not a single investor at the bank's Florence forum thought the world economy would rebound with any strength later this year.
Just a quarter expect a return to trend growth. Some 57pc think there will be no escape from the "twilight" conditions afflicting the western world, and 20pc expect an full-blown global recession. That is a remarkably bearish set of views. Yet the same investors are overwhelmingly bullish on stocks and property.
This schizophrenic exuberance seems entirely based on the assumption that QE and central bank largesse will keep the game going, flooding asset markets with liquidity. Indeed, 80pc think the ECB will cut rates again, and half think it will have to swallow its pride and join the QE club in the end.
Great shades of 1929! Party on, dude! This must read commentary by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site on Tuesday...and I thank Roy Stephens for bringing it to our attention.
Europe edged closer to lifting banking secrecy on Wednesday after Austria said it was ready to share data on foreign depositors but Vienna's support could fade should efforts to strike a similar deal with Switzerland fail.
Austria's dropping of objections allowed EU leaders to commit to an exchange of bank information between countries by the end of the year, as cash-strapped states seek to stop tax evasion and close loopholes highlighted by Apple Inc's use of a base in Ireland.
"It's a bad day for tax cheats," Austrian Chancellor Werner Faymann told reporters at a meeting of EU leaders to discuss fighting tax fraud by lifting bank secrecy.
"I believe we will manage the exchange of data by the end of the year," he said, adding later that although he was watching negotiations on a similar deal with Switzerland, Austria was in "full agreement".
This Reuters article was filed from Brussels...and posted on their website mid-afternoon on Wednesday...and it's another offering from Laurent-Patrick Gally.
Asian stocks took a beating Thursday as data showing that Chinese manufacturing activity unexpectedly contracted in May exacerbated early losses recorded on worries the Federal Reserve could downscale its bond purchases.
Japanese shares suffered the most, with the Nikkei Stock Average swinging spectacularly to plunge more than 4% in the afternoon session from a 2% rise posted earlier in the day.
The benchmark, which had ended at multiyear highs in each of the previous four sessions, was down 4.1% in highly volatile late-afternoon trade.
The Nikkei Average’s more-than-6-point intraday reversal coincided with a surge in Japanese government bond yields that forced the Bank of Japan to offer 2 trillion yen ($19 billion) in funds to calm investor nerves. The central bank announced the fund-supplying operation after 10-year JGB yields soared to their highest level in more than a year, citing “the unreasonable increase” in volatility.
This marketwatch.com story, filed from Hong Kong, was posted on their website in the wee hours of this morning EDT. It's worth your time...and I thank reader 'David in California' for finding it for us.
The first interview is with Michael Pento...and it's headlined "Fed Lies and Propaganda Won't Stop Gold and Silver Rise". Next is this commentary by Citi analyst Tom Fitzpatrick "Gold to Advance a Stunning $2,000+ From Current Levels". Here's a blog with Robert Fitzwilson. It's entitled "The Fed Destruction and a Cascading Panic Among Investors". And lastly is this interview with Dan Norcini...and it bears the headline "Incredibly Important Developments in Many Key Markets".
Four silver sets from the United States Mint are slated to be reduced in price according to a memo from the bureau.
According to the U.S. Mint, the 2012 and 2013 US Mint America the Beautiful Quarters Silver Proof Set, the 2013 US Mint Silver Proof Set, and the 2013 US Mint Congratulations Set will all be re-priced. Effective date for the change is not yet known, though it could happen on Wednesday.
This short article was posted on the silvercoinstoday.com Internet site on Tuesday...and I thank Marshall Angeles for sending it.
London-listed gold producer Petropavlovsk has said it will pre-sell 55pc of its future output planned for the second quarter of 2014, at an average price of $1,408 an ounce. This is the first time that a big producer has hedged more than half its future sales.
“We have a huge investment programme and thought a little price protection in the short-term will let us sleep better at night,” said chairman Peter Hambro.
“It was hedging that killed gold prices the 1990s,” said Ross Norman from Sharps Pixley. “Every time there was rally, the producers seized on the chance to sell forward. It was most unhelpful.”
Mr. Norman said it was the unwinding of hedge books a decade ago that unleashed the bull market. This process could now go into reverse if hedging spreads. "We don't think it will. The forces that led to the bull market will prevail," he said.
The forward sale is for only three months...and Ross Norman has it exactly right. Except for project financing, no miner is going to put their head back in that particular lion's mouth ever again. This Ambrose-Evans Pritchard offering was posted on The Telegraph's website early yesterday evening BST...and it's Roy Stephens second and final offering in today's column.
During the third week of May each year, representatives of the platinum industry gather in London, for an event that has become known as ‘Platinum Week’. Platinum Week centers on an industry dinner sponsored by the London Platinum and Palladium Market (LPPM) which marks the anniversary of the inauguration of the London Platinum Quotation (the forerunner of the present London Fixings) in 1973.
This event is attended by platinum group metals (PGM) producers, refiners, fabricators and traders. The first major event of the week is the publication of Johnson Matthey’s annual review of supply and demand for the PGM markets.
According to Johnson Matthey, the platinum market was in deficit by 375,000 ounces in 2012, close to their forecast made last November. The palladium market was also undersupplied but by a much larger margin of more than 1 million ounces.
This commentary by David Franklin over at Sprott Asset Management is a must read.
Sprott Silver Equities Class Co-Manager Maria Smirnova understands the power of leverage. She has seen the big impact even a slight increase in the silver price can have on silver producers. Every cent is multiplied and goes right to the investor's bottom line, giving the equities more upside than possible in a coin. That is why Eric Sprott increased holdings of silver equities in certain Sprott funds. Smirnova discusses five of these companies in this interview with The Gold Report.
This interview was posted on theaureport.com Internet site yesterday...and is well worth reading.
Premiums for gold bars hit a record high in Asia on Wednesday as lower spot prices lured more buyers, mainly in China, the world's second biggest consumer of the precious metal, amid tight physical supplies.
Premiums for gold bars in Hong Kong touched a new all-time high of $6 an ounce over spot London prices, up from $5 last week. Singapore premiums rose to $5.
Banks in China were quoting up to $7 in premiums, two traders in Singapore said.
This Reuters story, filed from Singapore, was posted on the mineweb.com Internet site...and I thank Manitoba reader Ulrike Marx for sharing it with us. It's definitely worth reading.
Although the primary purpose of the futures markets is to provide an efficient and effective mechanism for the management of price risks, when it comes to precious metals, and as we have seen in recent weeks, it has become nothing more than a casino run by a group of bullion banks that are acting as agents for the US Federal Reserve which is intent in manipulating these markets as they do all other markets. And, while much of the recent volatility has been caused by the options and futures market, the regulatory authorities of the CFTC who came up with a series of hikes in margins to stop the price of both gold and silver from rising, claiming that the markets were extremely volatile, I see they have done nothing to prevent the recent price drops.
The action or lack thereof by the regulatory authorities is most disturbing and would suggest that they themselves are colluding with the parties involved in this illegal manipulation of the gold and silver market.
Another excellent commentary on the obvious price management scheme by JPMorgan Chase et al. Author David Levenstein. a South African gold trader and bullion dealer, lets it all hang out in this rather long, but on-the-money commentary filed from Johannesburg on Tuesday. I thank reader Rudi Staudinger for our last story of the day...and it's certainly worth your time.
Bayfield Ventures Corp. (TSX.V: BYV) is exploring for gold and silver in the Rainy River District of NW Ontario. The Company’s 100% owned “Burns” Block property adjoins the immediate east of Rainy River Resources’ (TSX.V: RR) world-class gold deposit which includes an indicated resource of 5.72 million ounces of gold, averaging 1.18 g/t, in addition to an inferred resource of 2.25 million ounces of gold, averaging 0.79 g/t. Drilling to date on Bayfield’s Burns Block demonstrates that the ODM17gold zone extends from Rainy River Resources' ground onto the Burns Block. Bayfield is currently carrying out 100,000 metres of diamond drilling on its Rainy River properties. Drill results thus far have been very encouraging. Notable drill results include 60.05 grams per tonne gold and 362.96 grams per tonne silver over 11.2 metres within 26.70 grams per tonne gold and 170.69 grams per tonne silver over 25.5 metres, as well as 35.93 grams per tonne gold and 359.65 grams per tonne silver over 10.0 metres. Bayfield also holds a 100% interest in two other properties in the Rainy River District. Claim blocks “B” and “C” are well located to the immediate east and west (respectively) of Rainy River Resources’ #433 and ODM17 gold zones. Please visit our website to learn more about the company and request information.
Among the many misdeeds of British rule in India, history will look upon the Act depriving a whole nation of arms as the blackest. -- Mohandas Gandhi, An Autobiography
Well, not too many shades of grey in yesterday's price action, as JPMorgan et al hauled the precious metals prices down with naked brute force...selling whatever Comex paper contracts necessary to keep prices where they're currently sitting.
Based on the structure of last Friday's Commitment of Traders Report, which will most likely show an even more wildly bullish set-up in tomorrow's report, you have to wonder what "da boyz" are waiting for. As I've mentioned a few times already, we'll probably have a triggering event of some kind, but it was obvious from yesterday's price action that the powers that be didn't want the Fed news to be the event that set it off...although it was as equally obvious that all four precious metal wanted to blow sky high.
Looking at the current economic, financial and monetary situation...you just have to wonder how much time we have left before the whole thing collapses in a heap. Maybe the Fed and JPMorgan et al are awaiting that day when everything melts down before they finally allow the precious metals market to melt up. We'll find out, as they say, in the fullness of time.
In Thursday trading in the Far East, the gold price got sold down to its low shortly after 10:00 a.m. in Tokyo...and has been rallying a bit ever since. Gold and silver volumes are very high as London opens at 8:00 a.m. BST...and the dollar index is flat.
And as I hit the 'send' button at 4:50 a.m. Eastern time, the gold price is up a respectable eighteen bucks...and silver is up about 20 cents. The dollar index has taken a real header in the last hour or so...and is down about 41 basis points. Gold's net volume is already 50,000 contracts...and silver's gross volume is at the 12,000 contract mark, so these rallies are not going unopposed.
The rest of the Thursday trading day could be educational...and I await the Comex open in New York with great interest.
See you tomorrow.