The gold price didn't do much of anything up until 1:00 p.m. Hong Kong time...12 midnight Eastern...and then developed a slightly positive bias from there. It then traded flat from shortly after the London open, right up until half-past lunchtime BST...7:30 a.m. in New York...and at that point, a rally of some substance developed.
This rally continued at the 8:40 a.m. Comex open...and ten minutes later the price went vertical...and it was obvious, at least to me, that a not-for-profit seller stepped and managed the price higher from there. The high tick of the day [$1,642.60 spot] came at 10:00 a.m. Eastern...which was the 3:00 p.m. BST London gold fix.
It got sold down a few dollars from that high...and then more or less traded sideways into the 5:15 p.m. close of electronic trading.
The gold price closed the Tuesday session at $1,638.60 spot...up $17.40 on the day. Volume was very decent at around 140,000 contracts, virtually double Monday's volume. It's obvious from that volume, coupled with the price action, that this rally was not going unopposed by JPMorgan et al.
Here's the New York Spot Gold [Bid] chart on its own, which is pretty much the only chart that matters.
The silver chart looks almost the same as the gold chart. The only real difference between the two was the fact that the high of the day for silver [$29.63 spot] did not come at the London gold fix, but within the first thirty minutes of electronic trading after the 1:30 p.m. Eastern Comex close.
From that high, silver got sold down a bit more than 30 cents by 3:15 p.m...and then more or less traded sideways into the close.
Silver finished the Tuesday session at $29.33 spot...up 52 cents from Monday's close. Net volume was around 33,500 contracts...about 40% higher than Monday's.
And, for information purposes only, here's the New York Spot Silver [Bid] chart that shows the minute-by-minute action during the Comex session...and the electronic market that followed.
The dollar index developed a negative bias right from the 6:00 p.m. Monday night open...and then really headed south very shortly after London open for trading at 8:00 a.m. BST...3:00 a.m. in New York.
From there, the index continued lower...and the low price tick [81.82] came just a few minutes after 11:00 a.m. Eastern. The subsequent rally into the close cut the daily loss by less than 10 basis points.
The dollar index close down a bit over 50 basis points...and you can see from the gold and silver charts that the decline had virtually no impact on their prices until around 11:30 a.m. in London, or 7:30 a.m. in New York. Only then did the rallies in the precious metals develop some legs...and by that time, half the decline in the dollar index was already in.
In my opinion, it's a stretch to say that there was any co-relation between currency movements and the precious metal prices yesterday.
The gold stocks gapped up...and then stayed up. They hit their zenith around 11:00 a.m. Eastern time, about an hour after gold hit its high. From there, and up until half an hour before trading ended, the shares gave up over two percentage points of their gains, even though the gold price was trading sideways. Then, with thirty minute left, the HUI rallied into the close...and finished up 1.69%. But at its high, the HUI was up about 3.50%.
The silver stocks had another good day, as did the juniors. Nick Laird's Silver Sentiment Index closed up another 2.66%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 75 gold...along with 1 silver contract...were posted for delivery on Thursday. Like Monday, the biggest short/issuer was JPMorgan with 74 contracts...and it was the same group of 'usual suspects' as long/stoppers...the Bank of Nova Scotia, HSBC USA...and Deutsche Bank. The link to the action is here.
An authorized participant added 135,679 troy ounces of gold to GLD yesterday...and there were no reported changes in SLV. Since the beginning of August...authorized participants have added 869,264 ounce of gold to GLD, but have only added about 1,470,000 ounces of silver to SLV. I'm sure that the authorized participants would have added more...and the obvious reason that they haven't, is because it's just not available. So in lieu of adding physical silver, they short the shares instead. The next report on GLD and SLV's short position from shortsqueeze.com should, hopefully, tell us a lot.
There was no sales report from the U.S. Mint.
Over at the Comex-approved depositories on Monday, they didn't receive any silver...but they shipped 1,063,729 troy ounces of the stuff out the door. The link to that activity is here.
Here are a couple of charts that Washington state reader S.A. sent me yesterday...and I seem to remember posting the first one, once before. But it fits like a hand in a glove with the second chart, so here it is again. Nothing has obviously changed over the millennia...governments debasing the currency to worthlessness.
Here's another chart for you today...this one courtesy of Nick Laird. Nick said that based on a 40% backing, the gold price would have to just about double to US$3,400 just to play 'catch up' from where it's priced at right now.
(Click on image to enlarge)
I have the usual number of stories for you today, which is quite a few...but not nearly as many as yesterday.
Traders have been talking about the S&P's Triple Top recently, as the index hit highs not seen since before the financial crisis began in 2008.
The Triple Top is a take on the Head and Shoulders trading pattern, that garnered attention at the end of 2011.
Simply, the Triple Top is three peaks perforated by recessions or sell-offs in between rallies. Volume tends to decline from the first peak to the second, and from the second to the third, something we've noted has been endemic to the recent trading data.
This must read story was posted on the businessinsider.com website yesterday afternoon...and it's courtesy of Roy Stephens. The link is here.
Earnings season is drawing to a close and the results raise a number of worrying questions about the economy's direction.
For the second quarter, the percentage of companies beating revenue forecasts was the lowest since 2009. For every company that gave a positive outlook, nearly five companies gave negative outlooks, Thomson Reuters data showed.
Third-quarter earnings estimates are down sharply, and now show a year-over-year decline of 1.8 percent, which would be the first quarter of negative growth in three years.
This Reuters story from last Friday is one that I borrowed from yesterday's King Report...and the link is here.
One of the most frequently-overlooked problems of the financialization age is that a lot of our brilliant financial engineers are actually pretty damned average, when it comes to playing the market.
There's a great little piece at Zero Hedge about how hedge funds are having a terrible year (for the second straight year), with only 11% of all funds outperforming the Standard and Poor's 500, the basic stock index.
Here's Tyler's take on the panic in the hedge fund industry:
This is the worst yearly aggregate S&P 500 underperformance by the hedge fund industry in history, and also explains why the smooth sailing in the S&P500 belies the fact that nearly every single hedge fund manager (and at least 89% of all) is currently panicking like never before knowing very well there are only 4 more months left to beat the S&P or face terminal redemption requests. And with $1.2 trillion in gross equity positions, the day of redemption reckoning at the end of the year (and just after September 30 for that matter as well) could be the most painful yet.
Matt Taibbi is at it again in this short and rather pithy blog over at the Rolling Stone website...and it's definitely worth the read. It's also courtesy of Roy Stephens...and the link is here.
The price of oil resumed climbing Tuesday, reaching its highest point since early May.
Speculation that the U.S. Federal Reserve might take action to spark the sluggish recovery and hopes for good news from upcoming debt-crisis meetings in Europe were the catalysts.
Benchmark crude finished up 71 cents at $96.68 in New York. Earlier, it crossed $97 for the first time since May 11. It lost 4 cents Monday after rising for four straight days.
Brent crude, which is used to price international varieties of oil, rose 94 cents to $114.64 per barrel in London.
This AP story was posted on their website later in the afternoon on Tuesday...and it's another item that I lifted from yesterday's edition of the King Report. Since I posted this, the headline has now been changed to read "Oil Prices up as Traders Foresee Tighter Supplies"...and the link is here.
We need to address a MAJOR situation that is developing: the drought in the US and its impact on US crops.
The US is experiencing its worst drought since 1956. Altogether 63% of the lower US 48 states are experiencing a drought. As a result of this, the USDA has said that 50% of the US’s corn crop will be in poor to very poor condition.
What does this mean? That the US will have a very VERY low corn crop. This in of itself is bad. But when you consider that corn supplies are at their lowest levels in 17 years, you’ve got a recipe for a serious corn shortage.
Few people understand how large a part of the US industrial food chain is tied to corn.
This is the first of two stories in a row about the devastating U.S. drought. This short essay appeared on the zerohedge.com Internet site yesterday...and I thank reader Marshall Angeles for sharing this story with us. It's definitely worth the read...and the link is here.
The severe drought in the US has been blamed the rising prices of agricultural commodities. But that is only part of the story: Biofuels, financial speculation and changing dietary habits are also playing a role. The global food supply faces pressure from all sides.
The American Midwest is experiencing its worst drought since the 1930s. One-sixth of the corn crop has been lost and the soybean plants and wheat stalks don't look much better. Shortages and rising prices for essential commodities are the result.
Some prices have soared by almost 50 percent within just 10 weeks, and grain warehouses are beginning to empty out. Other important supplier countries also anticipate poor harvests. Because of a prolonged dry period in Russia, wheat exports are expected to be only half of what they were last year. Brazil, on the other hand, has had too much rain, which is bad news for sugar-cane farmers. "The latest crop predictions suggest that we should fear the worst," the United Nations World Food Programme warned last week. It is the third such warning in recent years, following similar crises in 2008 and 2011. Catastrophe, it would seem, is becoming the norm.
Sudden spikes in the prices of wheat, soybeans and corn threaten the wellbeing of every individual. Economists warn of "agflation," or inflation triggered by a rise in the price of agricultural products. Poor nations, however, are disproportionately affected because people there spend a larger share of their income on food. But consumers in the industrialized world will also feel the effects.
This short essay was posted on the German website spiegel.de yesterday...and I thank Roy Stephens for his third offering in today's column. The link is here.
Every two months, representatives from the world’s largest banks meet at an undisclosed location to review the London interbank offered rate.
Who sits on the British Bankers’ Association’s Foreign Exchange and Money Markets Committee, the body that governs the benchmark for more than $300 trillion of securities worldwide, is a secret. No minutes are published. The BBA won’t identify any members, saying it wants to protect them from being lobbied, and declined to make the chairman available for interview.
The group’s lack of transparency is symptomatic of a self- regulated system that failed to stop traders around the world manipulating the world’s most widely used benchmark interest rate for profit. Martin Wheatley, the British regulator charged with reviewing Libor after the scandal, is now weighing whether to bring oversight under the control of regulators.
Well, this Bloomberg story from yesterday was a big eye-opener for me...and I expect for you as well, dear reader. For that reason alone, it's a must read...and I thank Richard Craggs for sending it our way. The link is here.
George Osborne’s attempts to slash Britain’s ballooning deficit have been dealt a blow by official figures revealing a shock rise in borrowing in July.
The damning numbers mean the Chancellor may have to tap the markets for at least £10bn more borrowing than last year, even after the planned £18bn of tax rises and spending cuts.
Economists put the looming shortfall down to the weakness of the economy, which has resulted in a fall in tax receipts and a sharp rise in benefit payments.
The Treasury had been expected to pay off £2.2bn of the national debt last month, which is traditionally good for corporation and self-assessment tax receipts. Instead, the Office for National Statistics (ONS) revealed that the Government borrowed £600m more.
This story was posted on the telegraph.co.uk Internet site late yesterday morning BST...and I thank Donald Sinclair for sending it along. The link is here.
Italian GDP contracted for the last 12 months and the country is now looking at a longer and deeper recession than was previously expected.
With Spain already expected to request a sovereign bailout, investors are worried that the giant Italian economy might be the next domino to fall. So the big question on everyone's mind: Is Italian debt sustainable? i.e. can Italy meet its debt without debt relief and avoid default.
Société Générale's James Nixon say that "What our models serve to illustrate, however, is that Italy has precious little room for maneuver. If there is significant slippage beyond what we are forecasting, then Italy’s debt position could easily slip to the other side of the saddle path equilibrium and Italy could find itself on an unsustainable debt trajectory. Despite Italy’s low absolute deficit, it is precisely this fear that is reflected in current Italian spreads.
Italy therefore looks perilously close to losing market access and finding itself on an unsustainable debt trajectory…Thus, there is a good chance that the EU will seize the opportunity to impose deep and meaningful reforms on Italy – something that at the moment all the political parties inside Italy appear keen to avoid."
This story was posted on the businessinsider.com Internet site just before midnight last night...and is another contribution from Roy Stephens. The link is here.
China risks a repeat of Japan’s boom-bust disaster 20 years ago as exorbitant property prices combine with a demographic tipping point, a top Japanese official has warned.
The surge in Chinese home prices and loan growth over the past five years has surpassed extremes seen in Japan before the Nikkei bubble popped in 1990. Construction reached 12pc of GDP in China last year; it peaked in Japan at 10pc.
Mr Nishimura said credit and housing booms can remain “benign” so long as the workforce is young and growing. They turn “malign” once the ratio of working age people to dependents rolls over as it did in Japan.
This Ambrose Evans-Pritchard offering was posted on The Telegraph's website yesterday evening at 9:06 p.m. BST...and I thank Roy Stephens for sharing it with us. It's worth skimming...and the link is here.
The first is with Richard Russell...and it's headlined "The Key to Stocks, Gold & Growing Old". The second blog is with Dr. Stephen Leeb. It bears the title "Supply Crunch To Send Silver Into The Stratosphere". And lastly is this blog with Dan Norcini. It's headlined "Large Entities Creating Major Breakouts In Crucial Markets".
South Africa's leading gold miners are facing a potential lawsuit on behalf of thousands of workers who claim they contracted silicosis, a lung disease, through the companies' negligence.
A South African lawyer filed the first papers on Tuesday against AngloGold Ashanti, Gold Fields and Harmony, in a preliminary step to determine whether the court recognizes the case as a class action.
"If the certification is granted we anticipate that this may be the largest damages suit in the history of this country, in the tens of billions of rand possibly," lawyer Charles Abrahams, who represents more than 3,000 mostly former miners, said.
This story was posted over at the mineweb.com Internet site yesterday...and I thank Donald Sinclair for sending it along. It's worth reading...and the link is here.
With Post 9/11 veteran unemployment hovering near nine percent and the services preparing to drastically cut forces, Australian mining companies have stepped up to grab some of that labor for their short staffed operations down under.
Seth Robson at Stars and Stripes reports the mines are looking for everything from plumbers and electricians, to heavy-equipment operators and project managers with pay ranging from $65K to 200K to start.
Australian headhunters are looking for new hires at job fairs throughout the US, but Robson mentions Detroit and Houston specifically and that 400 to 500 positions need to be filled immediately.
This story was posted on the businessinsider.com website late last night...and I thank Roy Stephens for his final offering in today's column. The link is here.
GATA's secretary/treasurer was interviewed for about 30 minutes yesterday by financial letter writer Jay Taylor on his VoiceAmerica Internet radio program, "Turning Hard Times Into Good Times".
The interview begins at about 32 minutes and 50 seconds into the program...and it's archived at the voiceamerica.com Internet site. The link is here.
Whether it is because the CME just did it; or it's all their clients have left; or Gold volatility is lower than EUR/USD volatility (9.0% vs. 9.6% in last 3 weeks); or they see the painting on the wall of Draghi's grand-plans, the LCH-Clearnet just announced that as of August 28th, unallocated gold will be accepted as collateral for margin cover purposes. This now means all the major exchanges accept worthless barbarous relics as collateral - as well as worthless fiat paper 'money'.
Gold is edging ever closer to being officially recognized as a currency once again...and it's my guess that the moment it is, it will come with a shockingly high sticker price. This story was posted over at Zero Hedge early yesterday afternoon...and I thank West Virginia reader Elliot Simon for bringing it to our attention. The link is here.
The temporary closure of Hecla's Lucky Friday Mine, complicated by ground support rehabilitation work at the company's Greens Creek Mine, negatively impacted U.S. silver production earlier this year.
Domestic silver production for the period from January to May of this year totaled 411,000 kg (13,214,000 oz.), down 63% from total production of 1,120,000 kg (36,008,836 oz.) reported during the first five months of last year.
U.S. Geological Survey figures show the United States imported 2.4 million kg (77,161,800 oz.) of silver with a value of $2.58 billion from January to May of this year. The U.S. imported silver bullion, silver doré, silver ores and concentrates, and silver ash and residues from Argentina, Belgium, Canada, Chile, Columbia, the Dominican Republic, Ecuador, Italy, Jamaica, Mexico, Morocco, Nicaragua, Panama and Peru.
This story...filed from Reno, Nevada...was posted on the mineweb.co.za Internet site in the wee hours of this morning...and you may not believe it, but I found the story all by myself! It's a short must read...and the link is here.
Avrupa Minerals Ltd. is a growth-oriented prospect generator focused on aggressive exploration for valuable mineral deposits in politically stable and prospective regions of Europe with a growing pipeline of prospects in Portugal, Kosovo and Germany.
Share structure and cash on hand (12/31/2011):
Please visit our website for more information.
I was happy to see the price moves in all the precious metals on both Monday and Tuesday, but I'm concerned about the volume figures...and who was going short against all the new technical fund long contracts being placed.
As Ted Butler said on the phone yesterday, it all depends on what JPMorgan et al are doing...especially in silver. Yesterday, at the Comex close, was the cut-off for Friday's Commitment of Traders Report...and when that is posted on the CFTC's Internet site at 3:30 p.m. Eastern time, we'll have some idea of how good/bad it really is.
Here's the 6-month silver chart. As you can see, we're well above the 50-day moving average, but still have a ways to go to get to the 200-day. You should also note that the RSI has now broken through the 70 mark, at 70.37...always a sign that the market is approaching 'overbought'...and may be due for a 'correction'.
(Click on image to enlarge)
Of course, it can stay overbought for quite a while, but I'm always on the look out for 'in your ear'...and we'll have to see how this all turns out in the days and weeks ahead.
We still have one week left for traders holding Comex futures contracts in silver to roll out of the September delivery month, so it will be a busy time. As of the CME's preliminary report from yesterday, there are 35,000+ contracts still open for that month...and those that aren't standing for delivery have to be out within the next five trading days or so.
Here's the 6-month gold chart. As you can tell, we are rapidly approaching the 200-day moving average...and as I write this paragraph at 4:20 a.m. Eastern time, we're less than ten bucks away. The RSI still has not hit the overbought mark as of yet, but another up day like yesterday will certainly do the trick.
(Click on image to enlarge)
Gold and silver didn't do much in Far East trading on their Wednesday, which has certainly been the norm for a long while now...but an hour after London opened, both metals jumped up a bit, so it's my guess that we'll have another interesting trading day again today. Net volumes in both metals are nothing special but, like yesterday, the silver volume is a little higher than I'd like to see...but gold's volume is still reasonable. The dollar index has been basically comatose all night long. And is almost always the case, I expect the major price action to occur during the Comex trading session.
Since the May lows in both metals, the price trend has been slowly higher, but have been kept within a very narrow trading range since then. Based on these last three months' price action, I'm not about to wave the 'all clear' flag just yet, but it's certainly heading in the right direction.
I'm cautiously optimistic...and I'm still 'all in'.
See you tomorrow.