The gold price didn't do a lot through all of Far East trading on Thursday...and that continued into the London open. The London low, such as it was, came shortly after 9:00 a.m. BST...and from there it rallied until shortly after 9:00 a.m. in New York, which proved to be its high of the day at $1,579.10 spot.
From there, all Thursday's gains disappeared plus more, as gold got sold off until it hit its Thursday low...$1,550.60 spot...which came at 2:00 p.m. in New York. Then it recovered a few dollars going into the 5:15 p.m. Eastern close.
The gold price closed the Thursday trading session at $1,557.80 spot, which was down $4.50 from Wednesday. Net volume was pretty high at around 147,000 contracts...but down significantly from Wednesday's net volume of 200,000 contracts.
The silver price pretty much followed the same price path as gold, with the turning points coming at the same times as gold.
Silver's low price for the day [around $27.60 spot] came minutes after 9:00 a.m. in London. The high of the day [$28.67 spot] was a few minutes before the 9:30 a.m. open of the New York equity markets...and it was all down hill from there into the 2:00 p.m. Eastern time New York low. From there it recovered about two bits going into the close of electronic trading.
The silver price closed in the plus column for a change at $28.32 spot...up 48 cents from Wednesday. Net volume was pretty chunky at 42,000 contracts.
The dollar index didn't do much yesterday. It did dip slightly below the 82.00 mark in morning trading in New York, but then rallied up to the 82.30 mark by early afternoon...and the traded sideways for the rest of the day.
Not surprisingly, the gold stocks gapped up at the open...and the high tick was round 9:45 a.m. Eastern. From there the stocks drifted lower with the gold price...with the low of the day coming at 2:00 p.m. in New York right on the button. Despite the fact that gold didn't finish in the plus column for the second day running, the gold stocks finished up on the day once again, with the HUI in the black to the tune of 0.73%.
Despite the fact that silver finished in the green, the shares were mixed. Nick Laird's Silver Sentiment Index closed up a tiny 0.32%...which is better than the alternative.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 4 gold and 11 silver contracts were posted for delivery on Monday.
The GLD ETF showed that an authorized participant added 67,950 ounces of gold...and the SLV ETF added 485,182 ounces of silver.
Well, the short interest numbers for SLV and GLD were updated on the shortsqueeze.com website last night. The SLV short position increased again. This time by 1.42 million shares/ounces...an increase of 11.15%. There wasn't much change in GLD, but the short position did decline 3.16%...565,000 shares, or 56,500 ounces.
The U.S. Mint had a small sales report yesterday. They sold 4,000 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 160,000 silver eagles. Month-to-date the mint has sold 48,000 ounces of gold buffaloes...8,000 one-ounce 24K gold buffaloes...and 2,277,500 silver eagles.
The Comex-approved depositories reported receiving 300,621 ounces of silver on Wednesday...and they shipped a smallish 57,131 troy ounces out the door. The link to that action is here.
The volume of searches for the phrase 'Bank Run' has just hit an all-time high...higher now than even during the peak of the Lehman Brothers 'moment'. Washington state reader S.A. was the first one through the door with the chart, followed twenty minutes later by the zerohedge.com story that it came from...courtesy of reader 'David in California'...and the link to that is here.
Reader Scott Pluschau has another commentary on gold posted over at his website...and the link to that is here.
I have the usual number of stories for you today...and a couple of them are very important, so I hope you find the time to read those two in particular.
Little noticed is that on Tuesday, Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading -- not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net.
Specifically, the law authorizes the Federal Reserve to provide "discount and borrowing privileges" to clearinghouses in emergencies. Traditionally the ability to borrow from the Fed's discount window was reserved for banks, but the new law made clear that a clearinghouse receiving assistance was not required to "be or become a bank or bank holding company." To get help, they only needed to be deemed "systemically important" by the new Financial Stability Oversight Council chaired by the Treasury Secretary.
We're told that the clearinghouses of Chicago's CME Group and Atlanta-based Intercontinental Exchange were voted systemic this week, and rumor has it that the council may even designate London-based LCH.Clearnet as critical to the U.S. financial system.
This absolute must read story from yesterday's edition of The Wall Street Journal is posted in the clear in this GATA release...and I thank Washington state reader S.A. for digging it up on our behalf. The link is here.
The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.
The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.
The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government's books.
It's amazing that this fact isn't well known by the general public. But of course the government is careful never to point out this fact...but most times when they do slip up and do mention it, the press is careful not to print it. That's not the case in this usatoday.com piece from last week...and I thank Scott Pluschau for sending it along. The link is here.
Two years ago, when he signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, President Barack Obama bragged that he'd dealt a crushing blow to the extravagant financial corruption that had caused the global economic crash in 2008. "These reforms represent the strongest consumer financial protections in history," the president told an adoring crowd in downtown D.C. on July 21st, 2010. "In history."
This was supposed to be the big one. At 2,300 pages, the new law ostensibly rewrote the rules for Wall Street. It was going to put an end to predatory lending in the mortgage markets, crack down on hidden fees and penalties in credit contracts, and create a powerful new Consumer Financial Protection Bureau to safeguard ordinary consumers. Big banks would be banned from gambling with taxpayer money, and a new set of rules would limit speculators from making the kind of crazy-ass bets that cause wild spikes in the price of food and energy. There would be no more AIGs, and the world would never again face a financial apocalypse when a bank like Lehman Brothers went bankrupt.
Most importantly, even if any of that fiendish crap ever did happen again, Dodd-Frank guaranteed we wouldn't be expected to pay for it. "The American people will never again be asked to foot the bill for Wall Street's mistakes," Obama promised. "There will be no more taxpayer-funded bailouts. Period."
Two years later, Dodd-Frank is groaning on its deathbed. It's bad enough that the banks strangled it. But even worse is the way they did it - with a big assist from Congress and the White House.
Normally I would save a 5-page essay such as this offering from Matt Taibbi over at Rolling Stone magazine, until the weekend...but I thought I'd post it now. It's a must read...and I thank Australian reader Wesley Legrand for sharing it with us. The link is here.
French President François Hollande managed to set the tone at his first EU summit with his proposal for euro bonds. It was the first such meeting in years that was not dominated by Chancellor Merkel. Hollande wanted to send the message that France will be more assertive in the future.
The air was stuffy in the French press room of the European Council building, which was crowded with journalists. Everyone wanted to see the new French president during his first press conference after a European Union summit. Shortly after 1 o'clock on Thursday morning, François Hollande held court just as his predecessor, Nicolas Sarkozy, once had, explaining his "vision for growth" for nearly an hour.
In the room next door was German Chancellor Angela Merkel. In front of her were just a few rows of chairs and some cameras, and the room was half empty. She had decided not to hold a full press conference. Instead, she gave a brief statement, answered two questions and left after five minutes. She apparently knew that she didn't have much of a chance against the appeal of her new French counterpart. It almost seemed as if she was happy to concede the stage to Hollande without a fight.
This story was posted over at the German website spiegel.de yesterday...and is Roy Stephens first offering of the day. The link is here.
Greece scarcely made it on to the agenda. The hard decisions have been delayed until the next summit in late June. There was no agreement on use of the European bail-out fund (ESM) to shore up Club Med banking systems and take the strain off the sovereign states.
Mario Draghi, president of the European Central Bank, said the EU is at a "crucial moment" in its history. "We have reached a point in which the process of European integration needs a courageous leap of political imagination in order to survive," he said. Yet no such leap was in evidence. The eurozone is no closer to equipping itself with federal debt machinery and a genuine lender of last resort.
French president Francois Hollande achieved his coup de theatre. The French media gently accused him of staging a choreographed spat with chancellor Angela Merkel over eurobonds, knowing that Germany will not share its credit card with the debtor states until there is a fully-fledged United States of Europe – anathema to France. "While Germany sees eurobonds as the end point, we see them as the starting point," said Mr Hollande.
Ambrose Evans-Pritchard has his own take on the European summit...and he is far from charitable in his comments. This story was posted in The Telegraph yesterday evening...and is certainly worth reading. I thank Roy Stephens once again for sending it along...and the link is here.
The European Central Bank is trying to limit the flow of information about so-called Emergency Liquidity Assistance, which is increasingly being tapped by distressed euro-region financial institutions as the debt crisis worsens. Focus on the program intensified last week after it emerged that the ECB moved some Greek banks out of its regular refinancing operations and onto ELA until they are sufficiently capitalized.
European stocks fell and the euro weakened to a four-month low as investors sought clarity on how the Greek financial system would be kept alive. The episode highlights the ECB’s dilemma as it tries to save banks without taking too much risk onto its own balance sheet. While policy makers argue that secrecy is needed around ELA to prevent panic, the risk is that markets jump to the worst conclusion anyway.
“The lack of transparency is a double-edged sword,” said David Owen, chief European economist at Jefferies Securities International in London. “On the one hand, it increases uncertainty, but at the same time we do not necessarily want to know how bad things are as it can add fuel to the fire.”
How bad are things really getting? They're terminal, dear reader...and this can they keep kicking down the road is getting bigger and uglier with each passing day. This story was posted on the Bloomberg website late yesterday afternoon...and I thank West Virginia reader Elliot Simon for bringing it to our attention. It's worth skimming...and the link is here.
This is incredibly tragic, but we need to remind everyone that an economic crisis is a human crisis
The ekathimerini.com story was picked up by the businessinsider.com website yesterday afternoon...and it's another Roy Stephens story. The link is here.
The new Greek parliamentary elections may still be three weeks away, but the country's euro-zone partners are already preparing for one possible outcome: that Greece will exit the European common currency zone soon after the vote.
Several newspapers, including the Wall Street Journal and the Financial Times Deutschland, are reporting that euro-zone finance ministries are making contingency plans in the event of a Grexit, as the media has dubbed the eventuality. And early on Thursday morning, Euro Group head Jean-Claude Juncker essentially confirmed the supposition.
"I did not ask the member states of the euro area to prepare national contingency plans, but of course we have to consider all kinds of events," he said following the informal European Union summit in Brussels on Thursday night. "But our working assumption is that Greece will stay as a member of the euro area."
This story was posted over at the spiegel.de website yesterday...and is Roy Stephens last offering in today's column. The link is here.
Greece may have only a 46-hour window of opportunity should it need to plot a route out of the euro.
That’s how much time the country’s leaders would probably have to enact any departure from the single currency while global markets are largely closed, from the end of trading in New York on a Friday to Monday’s market opening in Wellington, New Zealand, based on a synthesis of euro-exit scenarios from 21 economists, analysts and academics.
Over the two days, leaders would have to calm civil unrest while managing a potential sovereign default, planning a new currency, recapitalizing the banks, stemming the outflow of capital and seeking a way to pay bills once the bailout lifeline is cut. The risk is that the task would overwhelm any new government in a country that has had to be rescued twice since 2010 because it couldn’t manage its public finances.
This very interesting story was posted on the Bloomberg Internet site on very late on Tuesday night. I lifted if from yesterday's edition of the King Report...and the link is here.
The first is with Gabelli & Company veteran analyst Caesar Bryan. It's headlined "Global Investors are Frightened at This Point". The next blog is with MEP Nigel Farage...and he's never lost for words. This one is headlined "We Are on the Edge of a Total Social Breakdown". And lastly is this blog with Rick Rule. It's headlined "Three Things That Will End This Bear Market".
As he clambered out of bed and onto his feet one morning late last year, Miguel Angel Cardona, 62, felt his body betray him. His head grew so heavy it pulled him tumbling back down.
“You feel fuzzy, like you’re drunk,” recalls the grandfather of nine, who’s spent most of his life in Segovia, a gold-mining town in northwestern Colombia. In the days that followed he noticed numbness in his hands and fingertips. He lost 12 pounds, no longer able to stomach the meat, rice and fried plantains his wife sent with him to work each day at a single-shaft mine on the edge of town. He worked with drums filled with mercury, water and crushed stone to process gold. Cardona suspected his job was poisoning him, Bloomberg Businessweek reports in its May 28 issue.
In Segovia, almost 100 shops refine the gold that prospectors bring down from the foothills of the Andes Mountains. Juan Camilo Hoyos, 17, had no doubt his work at one of the shops was toxic. Hoyos operated a smelting oven, and after inhaling fumes each workday for about two months, he too lost the fine motor skills in his hands. “I couldn’t draw a straight line,” he says.
This story was posted on the Bloomberg Internet site late on Wednesday evening. I thank Washington state reader S.A. for sending it along. The link is here.
With the greenback merely "the best-looking horse on its way to the glue factory", the global economic imbroglio will lead to gold regaining its mojo and hitting new heights.
Gold's recent performance has certainly been a major disappointment to the many analysts and investors who have been anticipating another stellar year for the yellow metal. But the year is hardly over . . . nor is gold's long-term bull market.
I believe we will see a reversal of gold's fortunes and new all-time highs, if not this year then certainly in 2013. Moreover, the now decade-long advance in the metal's price could last another five-to-ten years given the global economic challenges that lie ahead.
This story by author Jeffrey Nichols was posted over at the Mineweb Internet site early this morning...and the link is here.
Historically gold is perhaps the only store of wealth that has stood the test of time. Politicians and bankers may manipulate the markets short term, but long term gold has always held it value.
Well, gold and silver didn't manage to cling on to their gains made at the end of last week which, presumably, brings us back to square one. The dollar is currently calling the tune as the Euro continues to sink on doubts about Greece and resultant contagion afflicting other Eurozone countries should Greece have to default, which currently looks inevitable (as indeed it has for the past couple of years). We are already seeing serious runs on Greek banks, and Spanish ones are also beginning to see the seeds of doubt creeping in. But are any European banks safe from such mass withdrawals of money?
Given the interlinking of the global banking system it makes one wonder where on earth one can put one's money safely. U.S. treasuries appear to be the main beneficiary at the moment - hence in part the apparent strength of the dollar - but it can't be too long before the traditional safe haven of gold also starts to benefit - and where gold goes silver tends to follow - in a much more exaggerated manner.
This is another story that I found over at the Mineweb earlier this morning. This piece by Lawrence Williams is on the long side, but certainly worth reading. The link is here.
Tosca Mining Corporation's goal is to acquire advanced stage projects that can be placed into production quickly. The company's primary asset is the Red Hills Molybdenum/Copper project located in Presidio County, Texas. A program to confirm, and expand the considerable size and potential of the project and evaluate various economic scenarios was completed in 2011.
Tosca recently received results from the 13 remaining holes from its phase two, 16,000 M (4,873 m) diamond drill program. Per Tosca’s Chairman, Dr. Sadek El-Alfy, “the drill program has successfully verified historic drill results of the shallow Copper-Molybdenum cap and confirmed the presence of a deeper, well mineralized Molybdenum Porphyry deposit.” The results of 21 holes drilled through the copper/moly cap in Tosca's 2011 drill program give a weighted average grade of 0.39 % Cu over a core length of 113 feet (34.5 m). Since the copper cap is subhorizontal, the average core length can be interpreted as being approximately equivalent to true width. The copper/moly cap is crescent shaped, approximately 4,000 feet (1220 metres) long and 400 feet (122 m) to 1000 feet (305 m) wide.
The 2011 program encountered numerous thick Molybdenum mineralized intervals including Hole TMC-25 wich intersected 1,189 feet (362.4 m) averaging 0.089 per cent Mo including 830 feet (253 m) of 0.1 per cent Mo from 359 feet (109.8 m) to the bottom of the hole. Hole TMC-29 cut 989 feet (301.4 m) averaging 0.09 per cent Mo including 139 feet (42.4 m) of 0.16 per cent Mo. The molybdenum grades are similar and in some cases higher than those of projects currently considered of potential economic interest."
Aggressive plans are in place for 2012 to conduct metallurgical tests, produce an updated resource estimate and Pre Economic Assesment. Tosca is operated by an experienced mine development team, operates in Texas, a mine-friendly jurisdiction and its property iseasily accessible with infrastructure in place to advance operations. Please visit our website to learn more about the company ad request information.
The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubt. - Bertrand Russell
Once again it was obvious that both gold and silver wanted to move higher during the London and New York trading sessions...but there was always a willing seller in New York to make sure that most or all of the gains had disappeared by the close of trading at 5:15 p.m. Eastern time.
But wonder of wonders, the gold stocks finished in the plus column again. I'd love to be a fly on the wall of the firm[s] where 'strong hands' that are buying all these precious metals equities. They obviously know something that we can only guess at for the moment.
The big story yesterday was that Wall Street Journal article about the Comex and CME [plus others] falling into the 'too big to fail' category. This obviously means that when the defaults come in the gold and silver markets, the CME...which will be the one holding the bag...will survive. And what's even more obvious is the fact that if this story is true, it means that a default at one of the exchanges mentioned in this WSJ story is pretty much baked in the cake already...and it's just a matter of which exchange will be first...and how soon. As you can imagine, my money is on the Comex futures market in silver.
Today we get the latest Commitment of Traders Report for positions held at the close of Comex trading on Tuesday. Based on the price action in both gold and silver during the reporting week, I would guess that there has been some deterioration...but I reserve the right to be wrong about that. We'll find out at 3:30 p.m. sharp Eastern time...and if you're a COT wonk, the link to the legacy report is here.
Well, Friday action in the precious metal markets in the Far East started off in the usual fashion...moving sideways to down in all four metals. But starting shortly before 3:00 p.m. Hong Kong time [a bit over an hour before the 8:00 a.m. London open] rallies developed in all of these metals...and that continued until shortly before 9:00 a.m. local time.
This tiny rally in the precious metals was certainly helped along by the fact that the dollar index headed south at precisely 2:00 a.m. Eastern time...which was 3:00 p.m. in Hong Kong. But the precious metal rallies were already underway before the dollar rolled over. The decline in the dollar index has stalled a bit...and all the precious metals are chopping sideways as of 5:10 p.m. Eastern time. Net volume in gold is average...but silver's volume is getting up there. And as I hit the 'send' button at 5:20 a.m. Eastern time, gold is up about five bucks...and silver has recovered most of its earlier losses and is only trading down a nickel.
I haven't a clue what will happen during the New York trading session today. I'm hoping that we won't see the usual sell-off by the 'usual suspects'...but all the really serious price action mostly occurs in New York, so we'll just have to wait and see.
With the lows apparently in place for this move down in the gold and silver markets, 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 great weekend...and I'll see you here sometime tomorrow.