It was deathly quiet in the gold market right up until I went to bed on Monday morning, which was shortly after the 8:00 a.m. BST London open...which was 3:00 a.m. Eastern. The gold price developed a slightly negative price bias about two hours after the London open...and drifted quietly lower until 8:31 a.m. in New York. At that point gold was down about four bucks from Friday's close.
Then the 'fat finger' hit the sell button...and a 7,500 contract gold order showed up...and that, as they say, was that. A sell order that size in an illiquid market had the desired effect. Less than a minute later, the low of the day [$1,643.90 spot] was in...and the gold price began to recover from there.
By 12:20 p.m. Eastern time, the gold price had recouped all its loses...and more or less traded sideways from there into the close of electronic trading at 5:15 p.m. in New York. I was very encouraged by that, because in the 'old days'...ten year ago...it would have taken weeks or months for the gold price to recover from such a hammering. This time it only took a few hours.
Here's the New York Spot Gold [Bid] chart on its own...as what happened in the New York gold pit about ten minutes after the Comex open...and its subsequent recovery...were the most pertinent features during the Monday trading day.
The gold price closed at $1,664.30 spot...up $1.50 from Friday's close...and heaven only knows what the gold price would have done if left to its own devices. Net volume was only 101,000 contracts, so you can see that an order of 7,500 contracts hitting the market all in one shot, blasted out a pretty big price crater on the Kitco gold chart. Needless to say, I'll have more on this in 'The Wrap' further down.
As much as all eyes were on the gold price, the real action was going on in the silver market. The high tick, around $31.40 spot, came in late afternoon trading in the Far East in their Monday afternoon...and less than half and hour before the London open. Net volume was less than a 1,000 contracts up to that point.
From that high, the silver price rolled over...and had declined about 45 cents just before the Comex opened. Silver then got sold down along with gold at 8:31 a.m. Eastern. But the silver price stayed down, with the low tick of the day [$30.50 spot] coming a couple of minutes after 10:00 a.m. Eastern time.
The silver price recovered a bit from there, but didn't really do much until 12:15 p.m. Then, in less than twenty minutes, the silver price was back over the $31 spot price...but only by a few cents. From there it traded sideways into the close. Silver had an intraday price move of 2.46%.
Silver closed at $31.01 spot...down 26 cents from Friday's close. Net volume was around 28,000 contracts.
The dollar index spent Monday wandering around in a 25-point range...and closed virtually unchanged from Friday. It was obviously not a factor in yesterday's price shenanigans in New York.
The gold stocks gapped down...and showed no signs of a permanent recovery until about 11:45 a.m. Eastern time. Then the stocks recovered half their gains by the close of trading at 4:00 p.m....and the HUI finished down only 1.38%. And this despite the fact that gold closed in positive territory.
But it was an entirely different story with the silver stocks. Virtually all of them finished in the black...and some had some eye-popping gains. Don't ask me who was catching a falling knife...but someone was buying silver shares with both hands yesterday. Nick Laird's Silver Sentiment Index closed up 0.67%...and this despite the fact that silver finished down almost a percent on the day.
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The CME's Daily Delivery Report [for the second delivery day in May] showed that 8 gold and 411 silver contracts were posted for delivery tomorrow. In silver, the two biggest short/issuers were JPMorgan and Jefferies...with 195 and 120 contracts respectively. The largest long/stoppers were Deutsche Bank, Goldman Sachs and JPMorgan with 152, 111 and 102 contracts respectively. There were lots of other issuers and stoppers in yesterday's report...and it's worth a look. The link is here.
The GLD ETF showed a rather large withdrawal yesterday, as an authorized participant took out 194,199 troy ounces. There were no changes reported in SLV.
To end the month of April, the U.S. Mint reported selling another 200,000 silver eagles yesterday. For the entire month, the mint sold 20,000 ounces of gold eagles...9,000 one-ounce 24K gold buffaloes...and 1,520,000 silver eagles. Silver eagles outsold gold eagles and buffaloes 52:1 during the month just past...and year-to-date that ratio is a hair under 41:1.
It was pretty quiet over at the Comex-approved warehouses on Friday. They reported receiving 92,099 troy ounces of silver...and shipped 398,296 ounces of the stuff out the door. The link to that action is here.
Silver analyst Ted Butler posted his weekend commentary for his paying subscribers on Saturday...and here are a couple of free paragraphs.
"There was a significant although a not unexpected improvement in this week’s Commitment of Traders Reports (COT) for gold, given the sell-off during the reporting week. The total commercial net short position declined by almost 9,000 contracts to 167,200 contracts. All three categories of commercials bought back short positions (big 4, 5 thru 8 and the raptors) fairly evenly on the price weakness undoubtedly induced and rigged by the commercials themselves. As always, I am at a loss to explain the uniform behavior in other than collusive terms."
"One standout feature to this week’s gold COT report was that the big 4, once again, reduced their net short position to a new low level not seen in years. This category of commercials is, therefore, well situated for a significant gold price rally. The big question is how aggressive they will be in selling short when that rally develops. While I would continue to label the gold COT structure as very bullish, the only thing that bothers me a bit is that the gold raptors are still net short 10,200 contracts. Most often, at past price bottoms, these raptors would be holding a net long position by now. This opens up the possibility that these gold raptors will still be gunning for lower prices to create more speculative selling. It also opens up the possibility that the gold raptors will have their heads handed to them, as happened last August. I’ll leave it to you to guess which I am rooting for."
Before I get into my stories...here are a couple of charts that Nick sent me late last night. You'll need to use the 'click to enlarge' feature to bring up all the glorious details, but it's worth it.
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Reader Scott Pluschau has a blog posted over at his website headlined "Gold is on Verge of Change in Trend"...and the link is here.
I have, what I believe to be, a reasonable number of stories for a Tuesday column...and the most important ones involve the precious metals. So if you read nothing else, those are the stories you should start with.
The headline number was the worst since November 2009, the miss was the biggest since September 2009, Production of 57.1 was the lowest since September 2009, New Orders slide to 57.4 from 63.3, Supplier deliveries lowest since September 2011, and so on. The only good print was employment which mysteriously rose from 56.3 to 58.7, just in time for the NFP print [on Friday] to come really, really ugly.
This zerohedge.com piece is courtesy of reader Scott Pluschau...and the link is here.
This month Veterans Affairs Secretary Eric K. Shinseki announced the addition of some 1,900 mental health nurses, psychiatrists, psychologists, and social workers to its existing workforce of 20,590 mental health staff in attempt to get a handle on the epidemic of suicides among combat veterans. Unfortunately, when presidents misuse our military on an unprecedented scale - and Congress lets them get away with it - the resulting stress causes military suicides to increase dramatically, both among active duty and retired service members. In fact, military deaths from suicide far outnumber combat deaths. According to an article in the Air Force Times this month, suicides among airmen are up 40 percent over last year.
This short commentary from Congressman Ron Paul yesterday is a must read in my opinion. It's posted over at the safehaven.com website...and I thank Roy Stephens for sending it our way. The link is here.
Spain's newly announced recession won't be ending any time soon and it could force the U.S. stock market to fall anywhere between 10 percent and 20 percent, economist Harry Dent told CNBC Monday.
"Spain is going to default. The markets are in total denial on this," Dent, author of "The Great Crash Ahead," told CNBC's "Squawk on the Street." "It’s a question of whether it’s going to happen sooner or later."
Dent spoke after Standard & Poor's downgraded 16 Spanish banks and the nation announced first-quarter gross domestic product figures that showed the country to be in recession.
Spain's problems are far worse than what happened in Greece, he added.
This cnbc.com story from yesterday was sent to me by West Virginia reader Elliot Simon...and the link is here.
Irish economist David McWilliams, whose work also showed up in Saturday's column, presents an artful 6-minute lecture on Europe's banking woes. It's very well done...and if you wish to partake of the first two "Lessons"...they are in the right side bar.
I thank reader Steven Kelly for bringing it to my attention...and the link is here.
For two years Germany has had its way in Europe, treating historic nations much as Bismarck treated Bavaria – sovereign only in name. Mrs. Merkel will have to relearn the forgotten art of compromise.
The French-led counter-attack and rumblings of revolt through every branch of the EU institutions last week have brought this aberrant phase of the eurozone crisis to an abrupt end.
"It’s not for Germany to decide for the rest of Europe," said François Hollande, soon to be French leader, unless he trips horribly next week. Strong words even for the hustings.
"If I am elected president, there will be a change in Europe's construction. We’re not just any country: we can change the situation," he said.
European allies are flocking to his cause from left and right, he claims. Not even Austria supports Germany’s austerity drive any longer.
This Ambrose Evans-Pritchard offering was filed at The Telegraph on Sunday evening...and is, of course, courtesy of Roy Stephens. The link is here.
Governments in many countries, particularly in Europe, have implemented radical reforms and austerity measures in an effort to combat the economic crisis. But this approach has "devastating consequences" on the job market, the International Labor Organization (ILO) warned on Monday.
Furthermore, these measures have not achieved the desired result of reduced deficits, the United Nations agency said. The "World of Work Report 2012" called the global employment situation "alarming," and urged governments to recognize that job-centered policies have a positive effect on the economy.
"The austerity and regulation strategy was expected to lead to more growth, which is not happening," director of the ILO's Institute for International Labor Studies, Raymond Torres, told the press in Geneva. "The strategy of austerity actually has been counterproductive from the point of view of its very objective of supporting confidence and supporting the reduction of budget deficits."
This is another Roy Stephens offering. This one was posted on the spiegel.de website yesterday...and the link is here.
Egypt's national tragedy took a turn towards farce April 27, when Saudi Arabia closed its embassy and several consulates after demonstrations that "threaten the security and safety of Saudi and Egyptian employees, raising hostile slogans and violating the inviolability and sovereignty", according to a Saudi statement. Saudi Arabia and other Gulf States were supposed to anchor an international aid package that will forestall a disorderly financial crisis.
With a critical fuel shortage cutting into food supplies and essential services, Egyptians already have a foretaste of chaos. The two-for-a-penny pita, the subsidized flat bread that provides much of the caloric intake for the half of Egypt's population living on less than $2 a day, is at risk.
A battle over the Muslim Brotherhood's international ambitions may push Egypt over the edge into a Somali level of horror. I warned in this space on April 11  that the Muslim Brotherhood thinks that it can thrive on chaos. The anti-Saudi demonstrations support this interpretation of the Brotherhood's actions.
This story was posted over at the Asia Times website early on their Tuesday morning. It's a bit of a read, but worth it if you have the time. I thank Roy Stephens for this news item...and the link is here.
The first is headlined "Iran's electricity exports could hit 10 Billion KWH". The second is entitled "South African crude imports from Iran almost double in March". And lastly is this short item headlined "China mulls guarantees for ships carrying Iran oil". All three stories are courtesy of Roy Stephens, for which I thank him.
In this small Icelandic village, sailors are making double their pre-crisis pay, haddock sales to places like Boston and Brussels are booming and unemployment is almost zero - signs of this island's surprisingly rapid rise from the ashes of banking ruin.
While much of Europe wallows in recession, the economy of this volcanic island in the mid Atlantic is growing at a clip that has surprised many people, thanks to a currency fall - in which the crown lost almost half its value to the euro - an export and tourism boom as well as growing consumer confidence.
If you can handle it...here's a 'good news' story that was posted over on the Reuters website yesterday. I thank Roy Stephens once again...and the link is here.
In its struggle against the gold price suppression scheme and surreptitious market rigging by governments generally, GATA long has failed to win support from major gold and silver mining companies, despite our frequent solicitation, perhaps because mining companies are so vulnerable to the scheme's instigators -- governments, which control mining licenses, royalty requirements, and environmental regulations -- and to the scheme's agents and profiteers -- big investment houses, which control mine finance, mining being the most capital-intensive industry.
But this lack of support doesn't mean that GATA isn't being watched closely by some major miners, as was suggested Friday when Bloomberg Television's Trish Regan interviewed McEwen Mining CEO and Goldcorp founder Rob McEwen on her program "Street Smart." Also interviewed was Philadelphia Trust Co. CEO Michael Crofton.
The program's issue was whether the United States should return to a gold standard, and while the discussion was a bit disjointed, it made plain that the gold issue is a conflict between, on one hand, the international political power amassed by the United States and imposed through its issuance of the only world reserve currency, and, on the other hand, the desire for more limited government and free markets.
I thank Chris Powell for providing the above 3-paragraph preamble...and the pertinent link to the Bloomberg TV interview is contained in this GATA release.
The first item is an audio interview with Eric Sprott. It's from Eric's blog that was in this column on Saturday. The first blog is with Michael Pento...and it's entitled "Love Affair With Inflationary Policies to End in Disaster". Next is a blog featuring Keith Barron...and it's headlined "The World Will See More QE, Inflation and Revolution". The fourth blog is with Citibank analyst Tom Fitzpatrick...and it's entitled "Citibank Analyst Extraordinarily Bullish on Gold, Oil and U.S. Dollar". And lastly is this blog from the godfather of newsletter writers, Richard Russell. It's entitled "A Chapter of the World Has Come to an End".
California is proposing to lift a ban on a once-common method of dredging gold from riverbeds, raising objections from some state regulators and prompting lawsuits against the state by anti-mining and pro-mining groups.
At issue is "suction-dredge mining," which uses equipment to vacuum up gravel and sift out gold. State lawmakers imposed a temporary ban on the method in 2009 to protect fish and water quality. In March, the California Department of Fish and Game proposed lifting the ban while imposing new regulations.
This story was posted in The Wall Street Journal on Sunday...and I thank Washington state reader S.A. for sending it along. The link is here.
GATA Chairman Bill Murphy was interviewed for about 20 minutes by Lauren Lyster on the cable television network Russia Today's "Capital Account" program on Monday.
There's a reason why the subject -- gold market manipulation -- can be discussed only in non-Western news media, and the continuing interest shown in it by Russia Today, a creation of the Russia government, suggests that governments not part of the market rigging have long figured it out.
While Lyster's skirt is, certainly by design, shorter than JPMorgan's position in silver, she is once again well-versed in the subject and unafraid to press it to its uncomfortable conclusion, unlike the "money honeys" of U.S. cable TV networks.
I thank Chris Powell for his rather humourous introduction...and the link to this must watch youtube.com video is here. The comments on gold...and the Murphy interview...begin about the 2:05 minute mark.
With his new study, "Dr. Zijlstra's Final Settlement: Gold as the Monetary Cosmos' Sun," appended here, our good friend the Netherlands economist Jaco Schipper of MarketUpdate.nl today adds substantially to the growing documentation of the Western central bank gold price suppression scheme.
Zijlstra is the late Dutch treasurer, prime minister, and central banker Jelle Zijlstra, in whose memoirs Schipper has found confirmations of that scheme, including a confirmation involving former Federal Reserve Chairman Paul Volcker, whose involvement in gold price suppression often has been noted by GATA.
Zijlstra knew what he was writing about, as he served not only as president of its central bank but also, simultaneously until his retirement in 1981, as president of the Bank for International Settlements, where gold price suppression long has been a primary function.
This extraordinarily long GATA release is a must read from beginning to end...and there are enough imbedded links to keep you in front of your computer screen for the rest of the day. The link is here.
BIG GOLD's Jeff Clark recently caught up with Charles Oliver, the senior portfolio manager of the Sprott Gold and Precious Minerals Fund. He made a splash with a gold-price prediction four years ago that didn't quite come true, with consequences that have created a new legend for the man, as you can see below.
That amusing episode now behind us, we have to say that we like and respect Charles, so Jeff interviewed him to learn what he sees coming next. Charles also discussed the lag in gold stocks and what may turn them around, the possibility of companies hedging their production, why he's bullish on silver, and more.
This interview was the entire contents of Monday's edition of Casey's Daily Dispatch. It's a must read as well...and the link is here.
Bernanke's public attack on gold comes down to two propositions, both demonstrably false:
Gold cannot be used as a monetary standard because there's not enough gold. This is one of the most frequent charges used by gold standard opponents. In fact, the quantity of gold is never an issue; the issue is one of price.
Central bankers do not want to face up to the fact that they have printed so much paper money that a return to sound money would involve a one-time hyperinflationary spike in all hard asset values and a concomitant destruction of paper wealth. This adjustment will take place eventually—it always does. The issue is whether we will face up to the reality sooner than later in a studied and orderly way or wait for a disorderly and catastrophic day of financial reckoning.
I agree with every word that Jim Rickards writes in this short piece that was posted over at the usnews.com website yesterday. I thank Randall Reinwasser for bringing this incredible must read story to our attention...and the link is here.
For the first time in what may be ages, a phenomenon that has become near and dear to anyone who trades gold, and which at best elicits a casual smirk from those who observe it several times daily, we find that the WSJ has finally picked up on the topic of the endless daily gold slam down, where the seller in complete disregard for market disruption (because in a normal world one wants to sell any given lot without notifying the market that one is selling so as to get a good price on the next lot... but not in the gold market where the seller slams the bid with reckless abandon) ignores market depth and in a demonstration of nothing but brute price manipulation force, slams every bid down just to demoralize further buying.
This was the story-de-jour yesterday...and rightfully so. It was just a mini-version of the drive-by shootings that began exactly one year ago on this date, when silver got hit for six bucks in a 13-minute time period during the thinnest trading imaginable...the Far East open on a Monday morning, which was Sunday night in New York.
This zerohedge.com story was sent to me by reader Phil Barlett yesterday...and the link is here.
New Breakthrough Fuel Could Power Your Car
It took the earth 300 million years to make the oil we burn.
Imagine if we could squeeze that whole process into just a few months... a few weeks... or even a few days. Because that's exactly what could be happening.
At least a half-dozen labs and companies are working on this, right now.
If they get it right, we could literally "make" as much gas for your car as you need. We could make fuel for planes, trains, and diesel trucks this way too.
Sometimes people do not want to hear the truth because they do not want their illusions destroyed. - Friedrich Nietzsche
Well, you pretty much have to have been born yesterday to believe that it was a 'fat finger' that caused that 1-minute sell-off in gold. It was as deliberate an act as one can imagine. I can think of only two financial entities that might have the pockets for such a transaction...and that would be the BIS or JPMorgan. We'll never find out, because the criminals running the CME and the CFTC won't do anything to stop the criminals that are rigging the precious metal markets.
One thing that is hard to tell from this action is whether it was a long position being liquidated, or a short position being placed. Hopefully Friday's COT report will show more.
I was encouraged that Rob McEwen finally said something about the gold price manipulation scheme on Bloomberg the other day. About ten years ago, Rob was kind enough to donate $1,000 to GATA when I called him on the phone looking for some financial support when he was still CEO over at Goldcorp. I asked the same of Ross Beaty when he was grand poobah over at Pan American Silver. I asked him to his face in his office when I was out there visiting family many years back. I wish you should have been there, dear reader. He had a look on his face like I'd just handed him a bucket of warm spit. He couldn't get out of there fast enough.
I was also somewhat encouraged...and also somewhat baffled...by the dichotomy between the gold and silver share prices yesterday. The HUI was down on the day...and the SSI was up...and a lot of the juniors were way up! I certainly didn't know what to make of that.
Of course I wasn't overly happy with yesterday's price action...as I was hopping for up...way up...but that wasn't in JPMorgan et al's playbook. However, there is one consolation about yesterday's price action, is that it will all be in this Friday's Commitment of Traders Report.
And, in a rather perverse sort of way, I'm hoping that the precious metal prices do little or nothing...or maybe even get smacked one more time today...as today is the cut-off for the COT report...plus the monthly Bank Participation Report. If my 'hopes' turn out to be the case, then Friday's report should pretty much show us that we're back to where we were in late December from a COT perspective. We've got three days to wait it out before we see if that's the case or not.
The gold price didn't do much of anything in Far East trading...and still isn't doing much in early London trading, either. Silver got sold off about a percent during the afternoon in the Far East. As I write this paragraph at 4:04 a.m. Eastern time...an hour after the London open...gold volume is under 10,000 contracts and silver's net volume is under 2,000...which is vapour basically. So I wouldn't read a lot into the price action at this point. The dollar index is down about 10 basis points.
And as I hit the 'send' button at 5:20 a.m. Eastern time, gold is down about three bucks and silver is down a bit over 20 cents. Although volumes are up from what I wrote in the previous paragraph about an hour ago, they're still very light relatively speaking. The dollar index is still down a hair.
After yesterday's drive-by shooting, I'll be on the lookout for "in your ear" again during the Comex trading session today.
That's more than enough for one day. I'll see you here tomorrow.