Except for the inflection points, the gold chart on Wednesday looked an awful lot like the one on Tuesday. The only difference was that the New York low and high came at different times on each day...about two hours sooner for each on Wednesday vs. Tuesday. The New York low was $1,584.40 spot...and the high followed about two hours and change later at $1,584.40 spot.
Gold closed at $1,573.50 spot...down $5.80 on the day. Net volume was a reasonably light 111,000 contracts.
Silver's price action was rather subdued...less 'volatile'...but followed the gold price action like a shadow. The New York low [$26.81 spot] came at 9:45 a.m...and the high tick of the day [$27.44 spot] checked in about 11:05 a.m. Eastern time.
Silver's high tick brought the price back almost to its Tuesday close, but from that high, silver got quickly sold off into the Comex close...and more or less traded sideways from there.
The silver price closed on Wednesday at $27.18 spot...down 13 whole cents. Net volume was a very quiet 23,000 contracts.
The dollar index did nothing until a few minutes before 10:00 a.m. in London...and then quickly rose about 30 basis points...and hung in at that level until 9:00 a.m. on the button in New York.
It was all down hill from there...and the index closed mostly unchanged from Tuesday.
It's more than a stretch to say that the dollar index was the prime mover behind the precious metals again yesterday...as the index continued to decline long after what I suspect was a not-for-profit seller in both metals around 11:05 a.m. Eastern time.
The gold stocks gapped down...and then stayed down...with the high more or less coming at the high tick in the gold price, which came shortly after 11:00 a.m. Eastern time. From that high, the shares drifted a hair lower...and the HUI closed down 1.46%.
Except for the odd one, the silver equities all finished in the red as well...and Nick Laird's Silver Sentiment Index closed down 0.97%.
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After two days of rather interesting activity, the CME's Daily Delivery Report was a yawner yesterday, as only 10 gold and 1 lonely silver contract were posted for delivery on Friday.
There were no reported changes in either GLD or SLV...and no sales report from the U.S. Mint for the second day in a row.
The Comex-approved depositories reported receiving 62,871 troy ounces of silver on Tuesday...and shipped 679,051 ounces of the stuff out the door. The link to that action is here.
Here are two charts that West Virginia reader Elliot Simon sent me yesterday. They are the charts of the M1V and M2V...a ratio of nominal GDP to a measure of the money supply. That is, the number of times one dollar is used to purchase final goods and services included in GDP. M1 is cash...and M2 is cash, plus checkable funds and time deposits such as CDs.
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Elliot found "the M2V chart to be the most telling because its the lowest velocity ever recorded. The velocity measure means no one is spending, they're hanging on to their money for dear life. There is almost no lending or borrowing going on, either. In other words, for all intents and purposes, we're in recession and the National Bureau of Economic Research will probably recognize that whenever they get around to it, which is usually 6-12 months after the fact."
Here's another chart that Elliot sent my way yesterday...and it requires no further explanation from me.
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I have a lot of stories...and I hope you can find the time to read the ones that interest you.
The consequences of the city’s fiscal crisis took a trashy turn during a hearing Monday night when San Bernardino officials noted garbage pick-up was among the obligations they might not be able to afford after turning their government into a cash-only operation.
CBS2 reporter Jeff Nguyen reports the City of San Bernardino can no longer pay for anything on credit, such as gasoline for its fleet of garbage pick-up trucks. As a result, taxpayers may be left holding the bag for taking away their trash promptly as early as Wednesday.
“The trash and the streets are not going to be swept,” warned city sanitation worker Jerry Zuniga. “You leave the trash there for too long, it’s going to be health issue.”
This CBS/AP story was filed on the cbslocal.com Internet site on Tuesday...and I thank Scott Pluschau for sending it. The link is here.
The City of Compton, a city of 93,000 people located on the outskirts of Los Angeles, must decide by September 1 whether to seek bankruptcy, according to its two most senior financial officials.
Such a move would see it join a growing number of deficit-hobbled California cities that have used the filing to restructure onerous debt loads.
Compton, which has an accumulated $43 million deficit and has depleted what had been a $22 million reserve, will run out of cash to make its payroll on September 1 at its current cash consumption rate, city comptroller Steven Ajobiewe told the city council during a July 17 meeting.
This Reuters story was posted on the news.yahoo.com website early yesterday morning...and I thank Scott Pluschau once again for finding this story. The link is here.
A former JPMorgan Chase & Co banker pleaded guilty on Wednesday to fraudulently rigging a municipal finance contract 10 years ago.
Alexander Wright, 45, pleaded guilty in Manhattan federal court to one count of conspiracy to commit wire fraud for manipulating the bidding process for a June 2002 contract. The contract was tied to a $31 million bond offering for a New Jersey state healthcare facility.
The plea is the latest in a broad government investigation of the $3.7 trillion U.S. municipal bond market that has focused on rooting out schemes to fix prices and rig bids on bond transactions.
This Reuters story from yesterday was posted on The New York Times website yesterday afternoon...and I thank Elliot Simon for sending it along. The link is here.
Capital One Financial agreed to pay $210 million to resolve charges by banking regulators that its call-center representatives misled consumers into paying for extra credit card products.
The enforcement action, announced on Wednesday, is the first by the Consumer Financial Protection Bureau, which said it unearthed the activities through an examination of the bank.
The government said $150 million of the sanctions will go to reimburse affected customers, while the remaining penalty will be split between the Office of the Comptroller of the Currency, which fined the bank $35 million, and the CFPB, which will collect $25 million.
This Reuters story was picked up by the finance.yahoo.com website early yesterday evening...and is Scott's third and final offering in today's column. The link is here.
A large number of Americans are borrowing against their 401(k)s and having a hard time paying the loans back.
Defaults on 401(k) loans are draining retirement savings by as much as $37 billion a year, according to a study conducted by Robert Litan, a researcher at the Brookings Institution and Hal Singer, managing director of financial analysis firm Navigant Economics.
Based on historical default data and unemployment trends, the researchers project that the 401(k) default rate between July 2011 and May 2012 was 17.4% -- down from a projected peak of 19.8% two years earlier, but significantly higher than the documented 9.7% rate recorded in the 12-month period ending June 2008, right before the recession hit.
Many 401(k) participants are taking out loans against their retirement savings to cover emergency expenses, pay off debt or cover day-to-day costs -- often because they are unable to qualify for traditional forms of credit.
This CNN story was posted on their website late Tuesday afternoon...and I borrowed it from yesterday's edition of the King Report. The link is here.
Translated into an annual number, and adjusted for inflation; the 0.5% drop in retail sales reported for June is transformed into a collapse in U.S. retail sales at an annual rate of 16%. The 0.2% decline reported in May becomes a plunge of well in excess of 12% (annually). Which of these numbers "misleads" people, and which informs them?
With consumption directly or indirectly accounting for well over 80% of the U.S. economy; by the time that the "multiplier effect" is factored in (in reverse) this collapse in retail sales transforms almost point-for-point into a collapse in (real) U.S. GDP. Thus the consequences of this double-digit freefall in U.S. retail sales are plain for all to see.
The worsening economic collapse engineered by several successive U.S. regimes (at the guidance of their Bankster Overlords) is about to produce an economic cataclysm for Americans which will make the Great Depression seem like a day at Disneyland. Indeed, in the don’t-worry-be-happy world of the U.S. propaganda machine and its beloved "recovery" every day is like a day in Disneyland.
This essay was posted over at the lewrockwell.com website in the wee hours of this morning...and it's worth reading. I thank reader U.D. for sending it...and the link is here.
Here's another Jim Rickards video interview with The Daily Ticker. This one is from Monday morning...and it's posted on the finance.yahoo.com. This 4:08 minute interview is an absolute must watch in my opinion...and I thank Miami reader Harold Jacobsen for digging it up on our behalf. The link is here.
Italian premier Mario Monti is mulling emergency action to take direct control of Sicily’s regional government before the island spirals into a full-blown financial crisis, fearing contagion to the rest of Italy.
Mr Monti held an “urgent” meeting with the country’s president Giorgio Napolitano on Wednesday to grapple with the constitutional issue after it emerged that the region faces a deficit of up to €7bn (£5.49bn) this year and is in danger of default without sweeping cuts.
Sicily’s regional councillor Andrea Vecchio warned that the island has run out of money. “I’m afraid we will soon no longer be able to pay civil servants’ salaries,” he said.
“The developments in Sicily are very serious,” said Prof Giuseppe Ragusa from Luiss University in Rome. “It is just the sort of negative shock we don’t want right now. Everything has to go perfectly for Italy to pull through.”
This Ambrose Evans commentary was posted on The Telegraph's website late yesterday evening British Summer Time...and it's definitely worth the read. It's Roy Stephens first offering of the day...and the link is here.
Thilo Sarrazin is not everybody's cup of tea. The ex-Bundesbanker and shock-jock critic of Islam in Europe loves to make mischief.
But his latest broadside against monetary union in the Frankfurter Allgemeine is spot on. The Maastricht Treaty 20 years ago was a wild lurch into strategic incoherence.
Europe’s leaders fell into the trap of Goethe’s Zauberlehrling or Sorcerer’s Apprentice, launching a currency experiment that they could not control. Now the magic word eludes them. They cover up their impotence by deflecting blame onto markets.
Mr Sarrazin said EMU has demonstrably failed. Germany must draw the proper conclusion: either abandon the euro or accept the revolutionary step towards a European superstate. Morton’s Fork has arrived, with all its fateful consequences.
This is another Ambrose Evans-Pritchard offering...and it, too, is worth skimming. It's Roy Stephens second offering in a row...and it was posted on the telegraph.co.uk Internet site yesterday. The link is here.
When José Manuel Barroso launches into one of his notorious PowerPoint presentations in the conference hall of the European Council building in Brussels, the mood among European Union leaders present quickly begins to resemble that of an endless vacation slide show in someone's living room. While grandpa waxes lyrical over his photos of Alpine wildflowers, the rest of the family reaches for snacks and hopes the show will soon end.
With each new slide that the Commission president pulls up on table monitors, his enthusiasm for the achievements and initiatives of his own organization grows, while the 27 heads of state and government resign themselves to their fate. The most recent Brussels summit was no different. EU leaders leaned back into their chairs, confident that Barroso's presentation would not prove particularly demanding.
This time, though, they were wrong. When some European leaders raised objections to the fiscal policy recommendations from Brussels, the Commission president fired back. He reminded those assembled that they were the ones who had given the Commission the right to set parameters for national governments. It didn't make any difference to him if they continued to play their little tactical games, he said, noting that he would prefer to stick to facts. And then Barroso said heatedly: "If the European Council doesn't sign off on these recommendations, we'll have a serious problem."
The leaders were shocked. Was this Barroso speaking? It certainly wasn't the Barroso they'd grown accustomed to.
This very long article was posted on the German website spiegel.de yesterday...and I thank reader Donald Sinclair for bringing it to our attention. The link is here.
The eurozone is in “critical” danger and the European Central Bank must do more to drag it from the depths of the crisis, the International Monetary Fund has warned.
The Fund said that attempts to stabilise the region’s economy and banks had so far failed and a determined move towards a more complete banking and fiscal union was necessary to protect the future of the single currency.
“The immediate priority for the eurozone is to establish a banking union and move toward more fiscal integration,” said Mahmood Pradhan, mission chief for the eurozone.
“These moves would help stem the decline in confidence engulfing the region, lower borrowing costs for countries facing severe market pressure, break the downward spiral between sovereigns and banks, and reduce the risk of contagion across the euro area.”
This story was posted on The Telegraph's website early yesterday evening local time...and I thank Roy Stephens for sending it. The link is here.
The first is with Peter Schiff...and it's entitled "This is My Single Greatest Fear". The second blog is with Richard Russell. It's headlined "Get Rid Of Debt & Prepare For Tough Times". And lastly is this blog with Jean-Marie Eveillard...and Eric King has given it the title "We Are Near The End Of This Correction In Gold".
Congressman Paul talks about the FED, Libor, and Gold...and all the manipulation. He would be surprised if they weren't manipulating all of them. It runs for 12:33 minutes...and I thank reader Dennis Meredith for sending it along. It's worth listening to...and the link is here.
Federal Reserve Chairman Ben Bernanke on Wednesday rebutted Republican lawmakers pushing a bill that would give Congress the ability to review monetary policy decisions, saying it could compromise central bank independence.
Bernanke said it would be a "nightmare scenario" if politicians decided to second-guess monetary policy.
"That is very concerning because there's a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term," Bernanke told the U.S. House of Representatives' Financial Services Committee.
This Reuters piece was posted on their website early yesterday afternoon...and I thank Washington state reader S.A. for bringing it to our attention. The link is here.
There are two stories contained in this GATA release...and both of them are must reads in my opinion.
Elaborating on his recent interview with King World News, gold fund manager Egon von Greyerz of Matterhorn Asset Management explains why he believes gold will defeat "intervention, manipulation, and suppression." And former GATA researcher Andrew Hepburn has surfaced in the Canadian magazine MacLean's with an essay about market manipulation.
I borrowed the headline...and the introduction...from a GATA release yesterday...and the link to both stories is here.
The SEC Tuesday charged a father, son and daughter with running a nationwide investment scam, claiming their company. 3 Eagles Research & Development LLC, would extract more than $11 billion in gold from two gravel pits in central Ohio.
The agency claims that Harry Dean Proudfoot III of Mt. Vernon, Ohio, and his children Matthew Dale Proudfoot of Colbert, Washington, and Laurie Anne Vrvilo of Tigard, Ore., raised at least $2.7 million from 140 investors in 23 states through 3 Eagles, which operated out of Vrvilo's house.
"However, 3 Eagles did not even have the rights to much of the property it claimed to be mining for gold, and the Proudfoots instead diverted investor money for personal use rather than the mining activities outlined in presentations to investors," said a SEC news release.
This is a very interesting read...and falls under the category of "there's a sucker born every minute". It's posted over at the mineweb.com Internet site...and I thank reader Donald Sinclair for his second contribution in today's column. The link is here.
In June 2006, the FSA created its Retail Distribution Review (RDR) programme which they are enacting in order to enhance consumer confidence in the retail investment market. The RDR has a target for full-implementation of 31 December 2012.
The RDR is expected to have a significant impact on the way in which financial services are delivered to retail investors in the UK. The primary delivery mechanism of financial services to retail customers is via approximately 30,000 Independent Financial Advisers (IFAs) who are authorised and regulated by the FSA. They are expected to bear the brunt of the force of the RDR.
Gold bullion is set to benefit from the axing of commission for IFAs and the implementation of the RDR “should be regarded as a game changer” for gold as an investment in the UK, according to the World Gold Council.
In its latest report ‘Gold as a strategic asset for UK investors’, the World Gold Council rightly points out that the current commission structure in the UK narrowed the range of products recommended “which has been suboptimal for clients’ risk preferences and diversification prospects”.
The World Gold Council backs the new regulation, arguing that it will lead to a broader range of assets including gold being recommended by advisers.
This must read story was posted in yesterday's gold market analysis over at goldcore.com...and you have to scroll down a bit to find it. It's embedded in a zerohedge.com offering...and I thank Phil Barlett for sending it. The link is here.
Odyssey Marine Exploration Inc., a deep-ocean exploration company, said it recovered about 48 tons of silver from a World War II shipwreck three miles (4.8 kilometers) beneath the Atlantic Ocean.
The company retrieved 1,203 silver bars, or about 1.4 million ounces of the metal, from the SS Gairsoppa, a 412-foot (126-meter) British cargo ship that sank after being torpedoed by German U-boat in February 1941, Tampa, Florida-based Odyssey said today in a statement. The metal, worth $38 million at today’s prices, is being held at a secure facility in the U.K.
Odyssey said the recovered silver represents about 20 percent of the bullion that may be on board the Gairsoppa, which lies about 300 miles off the coast of Ireland. The operation, the largest and deepest recovery of precious metals from a shipwreck, should be completed in the third quarter.
This very interesting Bloomberg story from yesterday is well worth the read...and I thank Elliot Simon for his last offering in today's column. Elliot wondered out loud if JPMorgan was financing the recovery efforts. Is so, it's a tough way to cover their mega-short position in the Comex futures market. The link is here.
China has proposed to expand trading of precious metals from designated exchanges to the country's vast interbank market soon, a move that is set to increase liquidity and help Beijing gain stronger global pricing power for key commodities like gold, a person familiar with the situation told Dow Jones Newswires Wednesday.
Already the world's largest gold consumer and producer, China has long been hoping to become the next major gold trading center after London and New York, but Beijing's tight grip on commodities trading and rigid capital controls are among the obstacles in the way.
The move is also part of the broader financial reforms that Beijing has launched in recent weeks, including interest rate liberalization and securities investment deregulation, that seek to grant market forces a bigger role in both the economy and the capital market.
If you're wondering if this story is gold positive or not...I'm the wrong person to ask. Maybe James Turk will step up to the plate and enlighten us at some point. This story was posted on the foxbusiness.com Internet site yesterday...and I thank Nick Laird for providing it. The link is here.
Worldwide economic uncertainty has created a growing interest in precious metals as a way to preserve wealth. Today, global risks for investors include currency devaluation, sovereign debt defaults, bond market collapses and stock market losses, all underpinned by ever-increasing government debt.
For protection from impending economic Armageddon, investors are turning in increasing numbers to the traditional safe haven of precious metals. Unfortunately, many today don’t know how to purchase or store bullion, and consequently may find themselves as vulnerable to financial collapse as those who didn’t purchase any bullion at all.
This increased interest in precious metals as portfolio insurance has spawned a new generation of precious metals-based financial products, many of which are paper proxies or derivatives of bullion. There are even unregulated markets for the exchange of “digital gold.”
This essay was written by Nick Barisheff...President and CEO of Bullion Management Group Inc...and is well worth the read. It's posted on the bmgbullion.com Internet site...and the link is here. I thank Paul Brent for bringing it to our attention.
This very excellent 4:27 minute video interview with Rob was posted on the youtube.com website on Tuesday. He spends the entire time talking about the current valuation of the gold mining equities...and it's a must watch. I thank Texas reader Rod Hanson for bringing it to my attention...and now to yours. The link is here.
Great Panther Silver Limited, (TSX: GPR NYSE.A: GPL)headquartered in Vancouver, Canada, is a profitable primary silver producer operating two 100% owned mines in Mexico. Over 94% of revenues are derived from unhedged precious metals production with approximately 74% generated from silver sales and 20% from gold. Since entering production in the first quarter of 2006, the Company has seen five consecutive annual increases in revenues and provides strong leverage to future rises in precious metals prices.
The Company has also been growing its resource and reserve base at both 100% owned operations. A new resource/reserve estimate is expected for the Guanajuato Mine Complex and the San Ignacio Project in the second quarter of 2012 and a new resource/reserve estimate for the Topia Mines during the third quarter of 2012. Great Panther continues to replace mined ounces, grow resources and reserves at both operations, and is targeting a 10 year mine live at each.
The few who understand the system, will either be so interested in The few who understand the system, will either be so interested in its profits, or so dependent on its favours that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests. - John Sherman...a protégée of the Rothschild family
There's nothing much to add to what I've already said about yesterday's gold and silver price action. It's just the same old, same old, as the 'summer doldrums' drag on.
As each day and week passes, the rot that permeates the entire economic, financial and monetary system on Planet Earth is being becoming more visible. Chris Powell's classic quote "There are no markets anymore, only interventions" is now closer to the mark than even he knew at the time.
The gold and silver prices rallied a bit during the Far East trading session, but as I hit the 'send' button at 5:20 a.m. Eastern time, the high for the day may have already been set in early London trading, just like it was for the previous two trading days. It remains to be seen whether it will be three days in a row. Volume is pretty light in both metals...and the dollar index, which had been down about 25 basis points shortly after the London open, is now back to unchanged on the day.
Before I head out the door, I want to point out a new service that Casey Research is involved in...and if you get my column on a daily basis, you've already heard about the "Hard Assets Alliance" that Olivier wrote about and sent out to all CR subscribers a day or two ago.
Since John Hathaway is on the advisory board, I thought I'd give him a call and get his opinion "right from the horse's mouth" so to be speak. He spoke enthusiastically and very positively about it so, based on what John had to say to me on the phone yesterday, I have no trouble recommending it to anyone who may be interested. You can read all about it here.
I hope your Thursday goes well...and I'll see you here tomorrow.