As I mentioned in The Wrap last night, the gold market was comatose until shortly before the London open...and the rest, as they say, is history.
There was another spike up shortly after London opened...and from 9:00 a.m. in London, until the Comex open at 8:20 a.m. Eastern time, the gold price tacked on an additional ten bucks.
As soon as Comex trading began...and the jobs numbers were made public at 8:30 a.m...the gold price added another twenty bucks...and by 9:00 a.m. Eastern time, gold was up about $55 from Thursday's close. The price slid a hair from that point until just a few minutes before the Comex trading session closed at 1:30 p.m...but tacked on over ten dollars in the electronic trading session that followed, closing the day virtually on its high...up $58.80 spot. Volume was surprisingly light.
The silver price action was very similar, however it was obvious that the price wanted to move much higher after the Comex open, but someone was there to make sure that the price didn't get too frisky to the upside. Silver closed up $1.75 spot on the day, but would undoubtedly finished higher if had been allowed free rein. Volume wasn't overly heavy.
Here's the dollar chart for the week that was...and it's price action certainly had no influence on the precious metals over the last five business days.
Here's the HUI for the week that was. The ino.com feed is missing all of Thursday and part of Friday's data...but the HUI finished up about 4.6% on the week. Although the HUI finished up 2.39% on Friday, it would have done better if the general equity markets hadn't tanked.
The silver stocks did very well for themselves...and that's certainly reflected in Nick Laird's Silver Sentiment Index, which was up a robust 3.11%
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 213 gold, along with 18 silver contracts, were posted for delivery on Tuesday. In gold, the big short/issuer was the Bank of Nova Scotia with 197 contracts...and the big long/stopper was JPMorgan [205 contracts] in its client account. The action is silver isn't worth a comment. The link to the action is here.
The GLD ETF reported no changes yesterday...but the SLV ETF added 1,136,365 troy ounces of silver.
The U.S. Mint had a small sales report yesterday. They sold 3,000 ounce of gold eagles and 52,000 silver eagles.
While on the subject of silver sales from the U.S. Mint...the silver eagles sales are only part of what the mint produces in silver products every year.
Reader Ron Copley from Carmel, Indiana sent me the following sales records for other silver products the mint produces. Here are some of the incredible statistics he sent my way last night...and I thank him for this.
Sales of the 5-ounce 'America the Beautiful' coin series used up 175,065 ounces of silver in August...and 1,902,000 ounces year-to-date. And the proof U.S. Silver Eagle had sales of 133,460 in August...and they have sold 726,921 year-to-date.
So you can toss that 2,628,921 ounces of silver usage on top of the 29,045,000 silver eagles that the U.S. Mint has produced as of yesterday.
It was another huge day over at the Comex-approved depositories on Thursday. They didn't receive an ounce of silver, but shipped 1,446,799 troy ounces out the door. Most of the action was at Brink's, Inc. and HSBC USA. The link is here.
The Commitment of Traders report showed improvement in the Commercial net short position in both silver and gold...but Ted Butler was expecting better numbers than were reported..and I must admit that I was expecting better as well.
In silver, the bullion banks reduced their net short position by 1,951 contracts, or 9.75 million ounces. The Commercial net short position now sits at 225.7 million ounces. The '4 or less' bullion banks are short 198.3 million ounces...and the '5 through 8' bullion banks are short 38.8 million ounces. The eight bullion banks are short 237.1 million ounces...about 12 million ounces more than the entire Commercial net short position.
In gold, the Commercial net short position declined by 13,081 contracts...about 1.31 million ounces. The Commercial net short position is now down to 21.7 million ounces. The '4 or less' bullion banks are short 14.4 million ounces of gold...and the '5 through 8' bullion banks are short 5.2 million ounces. These eight bullion banks are short 19.6 million ounces of gold...which is 2.1 million ounces less than the Commercial net short position.
It's been a while since gold's Commercial net short position has been this low...and I'd guess that there's not much room left to the downside in gold. There's a bit of room to the downside in silver, as I've seen much lower Commercial net short positions that this, but JPMorgan et al would have to engineer a new low silver price for this move down [which would be well below $37 spot] to get more serious long liquidation. I wish them luck.
But the big take-away from these COT numbers is the fact that the open interest is falling as gold and silver prices are rising. As Ted Butler has pointed out many times, short covering by the Commercial traders has been the prime driver of this big rally in both metals...and it's entirely possible that Friday's big rally was largely short covering as well. We'll find that out in next Friday's COT report.
Since this is my weekend column, I can empty my in-box today...and, fortunately, I don't have that many stories in total...and you should be able to fit them all in this weekend.
August brought no increase in the number of jobs in the United States, a signal that the economy has stalled and that inaction by policy makers carries substantial risk.
The government report on hiring, released on Friday, prompted another round in a relentless diminution of economic expectations. The unemployment rate, at 9.1 percent, did not change last month, and the White House said it was expected to stay that high through at least 2012.
This story came from yesterday's edition of The New York Times...and is courtesy of Roy Stephens. The link is here.
Factory activity worldwide stalled last month as new orders tumbled, heightening fears that the global economy may be heading for another recession and driving stock markets lower.
Surveys of company purchasing managers showed manufacturing contracted in the euro zone for the first time in almost two years in August, echoing earlier data from South Korea and Taiwan where new export orders fell sharply.
The rest of the details in this Reuters story don't get any better. I borrowed this from yesterday's King Report...and the link is here.
Here's a very short piece by Carl Swenlin of decisionpoint.com fame, that was posted over at financialsense.com yesterday.
On August 17 the S&P 500 Index 50-EMA crossed down through the 200-EMA, declaring by our definition that the long-term trend was down and that we were in a bear market. When this happens, we remind ourselves that "bear market rules apply," and that we should expect negative outcomes more often than positive ones.
This is a small handful of very short paragraphs...and the chart is worth the trip all by itself. I thank reader U.D. for sliding it into my in-box very late last night...and the link is here.
The latest financial market convulsions have been tough for almost everyone, including traders caught on the wrong side of another big swing and pained everyday investors watching their dwindling holdings go down and up — and down again.
But there is a silver lining to even this latest market horror show, at least for the exchanges where the financial instruments change hands.
Businesses like the New York Stock Exchange and the Chicago Mercantile Exchange skim cents off each stock or contract bought or sold over their trading floors or computers. With the daily volumes of financial market contracts sent surging through their systems by nervous traders and investors up by billions, the latest trading rush is directly polishing their bottom line.
This 2-page story appeared in the August 27th edition of The New York Times...and I thank reader Phil Barlett for sending it along. The link is here.
Some 250,000 diplomatic dispatches from the US State Department have accidentally been made completely public. The files include the names of informants who now must fear for their lives. It is the result of a series of blunders by WikiLeaks and its supporters.
Everyone who knows a bit about computers can now have a look into the 250,000 US diplomatic dispatches that WikiLeaks made available to select news outlets late last year. All of them. What's more, they are the unedited, unredacted versions complete with the names of US diplomats' informants -- sensitive names from Iran, China, Afghanistan, the Arab world and elsewhere.
SPIEGEL reported on the secrecy slip-up last weekend, but declined to go into detail. Now, however, the story has blown up...and is one that comes as a result of a series of mistakes made by several different people. Together, they add up to a catastrophe. And the series of events reads like the script for a B movie.
You can't make this stuff up...and I thank reader Scott Pluschau for sending it along. The story is posted over at the German website spiegel.de...and the link is here.
The debt crisis has been a tough test of endurance for Europe. To better face such challenges in the future, German Finance Minister Wolfgang Schäuble wants to forge a new European Union treaty, the mass-circulation daily Bild reported Friday.
According to the report, Schäuble clarified his plan during a closed-door meeting of leaders of his conservative Christian Democratic Union (CDU) and its Bavarian sister party the Christian Social Union (CSU) on Thursday evening. Shifting greater powers over economic and financial policy to Brussels is necessary, he said according to the paper, "even though we know how difficult a treaty change will be."
Schäuble also acknowledged that such reforms would create a significant divide between the 17 European Union countries that use the euro and the remaining 10 that do not.
This story, posted over at the speigel.de website yesterday, is another Roy Stephens offering...and the link is here.
An Italian radio program's story about Iceland’s on-going revolution is a stunning example of how little our media tells us about the rest of the world. We may remember that, at the start of the 2008 financial crisis, Iceland literally went bankrupt. The reasons were mentioned only in passing, and since then, this little-known member of the European Union fell back into oblivion.
As one European country after another fails or risks failing, imperiling the Euro, with repercussions for the entire world, the last thing the powers that be want is for Iceland to become an example.
Please put this on your absolute must read list for sometime this weekend. I thank reader Rob Bentley for sharing this story with us. It's posted over at the newsnetscotland.com website...and the link is here.
This is the partial headline from a piece posted over at zerohedge.com yesterday. It's based on a Reuters story yesterday that bore the headline "Gold Sales Would Not Solve Europe's Debt Troubles". Here are the first three paragraphs from the Reuters story...
Europe's most indebted nations are under heavy pressure from their richer neighbours to sort out their finances, but they are unlikely to mimic the impoverished gentlefolk of old by selling off the family silver -- or in their case, gold -- to do so.
More than 750 tonnes of gold are currently sitting in the state coffers of Portugal, Greece, and Spain alone, equal to about 17 percent of the 2010 annual supply of bullion from mining and sales of scrap.
Despite struggling with massive debt burdens and in some cases accepting multi-billion-euro bailout packages, the so-called PIIGS -- the countries above, plus Ireland and Italy -- have not dipped into their gold reserves to service that debt.
[Of course, at $1,900 the ounce, there is nowhere near the amount of gold necessary to repair every country's balance sheet. But, as I've said countless times over the years, all that has to be done is for the central banks of the world to re-price gold to say $20,000/ounce...and most European countries, along with the US, would be solvent overnight. Don't be surprised if it happens. - Ed]
The zerohedge.com piece has a bit of spin to it...and the link to that is here...and I thank reader Charley Orr for sending it. The link to the original Reuters piece, which I stole from a GATA release, is here.
With gold surging $50 and silver trading up over $1 on Friday, King World News interviewed one of the greats in the gold world, Keith Barron. Keith consults with major gold companies around the world as well as major brokerage houses and Keith is responsible for one of the largest gold discoveries in history.
Eric sent me the interview in the wee hours of this morning...and it's a must listen. The link is here.
Here's a story about gold that appeared at the irishtimes.com website yesterday. Like virtually all gold commentators these days, he doesn't understand the fact that the gold price is rising mainly because of massive short covering by the Commercial traders in the Comex futures market...but his heart is in the right place.
Investors, institutions and many central banks are diversifying into the commodity to protect themselves from the real risks posed by a global recession, by the intractable EU and US debt crises, from currency debasement and from financial and systemic contagion.
Gold remains the preserve of the smart, diversified money, and some of the largest institutional buyers of gold in the world today are pension funds and central banks.Prudent financial planners will continue to advocate global diversification and the importance of having an allocation to gold.
I thank Roy Stephens for sending me this story last night...and the link is here.
Alasdair Macleod, economist, former banker, and speaker at GATA's Gold Rush 2011 conference in London last month, was interviewed there by fellow speaker James Turk, founder of GoldMoney. They discussed government's erosion of savings through monetary debasement and central banking's creation of a boom-and-bust cycle through interest rate manipulation.
I borrowed the story...and Chris Powell's preamble...from a GATA release yesterday. The interview is 14 minutes long...and is posted over at the goldmoney.com website...and the link to this extraordinary interview is here.
Geopolitical analyst Jim Rickards, who spoke at GATA's Gold Rush 2011 conference last month, today gold King World News yesterday that inflation targeting -- explicit devaluation of the dollar -- is likely to be the focus of the next meeting of the Federal Reserve's Open Market Committee and that investors are moving out of the exchange-traded gold fund GLD and taking delivery of real metal. The full audio interview has been posted at the KWN website...and the link is here.
Here's a short essay that was posted over at mises.org on September 1st. The most amazing part of this article is that fact that it originally appeared in the August 15th edition of Forbes...and what the author says below about the forces for monetary reform being very much in motion, is absolutely correct.
Monetary policy is the most recondite yet most pervasive and powerful of economic forces. Keynes, in The Economic Consequences of the Peace, wrote...
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
The converse also is true. Restoring real monetary integrity engages all the hidden forces of economic law on the side of prosperity. And forces for monetary reform are very much in motion.
I thank Australian reader Wesley Legrand for sending me this absolutely must read article...and the link is here.
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The big debate is going to be about whether they [the Fed] want to explicitly target inflation. Now that's what this is all about, Eric, trashing the dollar. The dollar price is collapsing and so the dollar price of gold is going up, it’s going way up. - Jim Rickards, September 2, 2011...King World News
This week's 'blast from the past' is instantly recognizable and was the band's contribution to the "Music for UNICEF" fund. It was released on November 21, 1978 in the US and Canada...and they performed it at the Music for UNICEF Concert on 9 January 1979. As I sit here in front of my computer in the wee hours of Saturday morning, I just wonder where the hell the last thirty-three years went. So turn up your speakers...and then click here. Enjoy!
Despite the huge price increases in both gold and silver, the volumes in both were not overly heavy. Gold's net volume was around 130,000 contracts...and silver's was 37,000 contracts.
I'm not going to spend any time trying to analyze what happened yesterday. But as I said earlier, it had all the earmarks of a short covering rally...but the preliminary open interest numbers, especially for gold, don't make for happy reading.
Other than the fact that the entire world's economic, financial and monetary systems are circling the drain at an ever-faster rate with each passing week...everything is just fine.
And, as I've said before, I don't think that the world as we know it will make it much past Christmas...and a friend of mine in Florida doesn't think we'll make it past Hallowe'en. The sure way of knowing how close we are to the end is by watching the gold price...the only money that can't be run off a high-speed printing press, or created out of thin air by the banking system.
Doug Casey's age-old comment about "all the water behind Hoover Dam through a garden hose" is about to be proven correct as the year advances.
That's it for today...and the week. But, before I close, I'd like to remind you one more time of this FREE on-line Casey Research sponsored event happening on September 14th at 2:00 p.m. Eastern time. It's entitled "The American Debt Crisis"...and it's posted over at the americandebtcrisis.com website. The introductory trailer runs 8:33...and if you want to register for this FREE webinar, you can just type in your e-mail address in the spot indicated in the right sidebar. The link to all of the above, is here.
Summer is officially over...and I expect that this fall will be one for the record books. I just hope that we're all prepared for what is to come.
Since this is a long weekend here in North America, I probably won't have a report until Wednesday, unless the gold market blows sky-high in the few places on Planet Earth that the precious metals will be traded on Monday.