The gold price didn't do much of anything in Far East or early London trading on their Wednesday---and the smallish rally that developed once the noon London silver 'fix' was in, got in the neck at precisely 8:30 a.m. EDT---ten minutes after the Comex open. From there it chopped sideways until the 1:30 p.m. Comex close. Then further selling pressure entered the market---and gold got closed almost on its low tick.
The high and low were recorded by the CME Group as $1,250.20 and $1,240.70 in the December contract.
Gold finished the trading day in New York yesterday at $1,241.00 spot, down $8.40 from Tuesday's close. Net volume was 103,000 contracts.
As usual, silver got hit the moment that trading began in New York on Tuesday evening---and never recovered. The tiny rally that developed right at the Comex open ran into 'da boyz' and their algorithms---and silver, like gold, was closed almost on its low tick.
The high and low were recorded as $17.535 and $17.115 in the December contract, which was an intraday move of more than 2 percent.
Silver closed in New York yesterday at $17.17 spot, down 34.5 cents. Net volume was pretty decent at 36,000 contracts.
Platinum hit its high at 9 a.m. Tokyo time---and then got sold down to unchanged. The real selling pressure began the moment that Zurich opened---and platinum was closed on its absolute low of the day, down twenty bucks from Tuesday.
Palladium did very little on Wednesday, at least up until its brief spike shortly after 11:30 a.m. in New York yesterday morning. From that spike high it got sold down with a vengeance as the powers-that-be closed it down an even 10 bucks from Tuesday's close.
The dollar index closed late on Tuesday afternoon in New York at 85.40---and after a brief dip to its 85.24 low around 2:10 p.m. Hong Kong time on their Thursday afternoon, it chopped higher until around 2:40 p.m. EDT---and from there it traded pretty flat into the close. The index finished the Wednesday session at 85.75---up another 35 basis points.
Here's the 6-month U.S. dollar index so you can see what's happened since its low in early May.
The gold stocks gapped down at the open---and the rally that developed shortly after the London p.m. fix didn't last. It was down hill all the way from there, as the HUI closed on its absolute low tick, down 3.17%. [NOTE: My new HUI chart is courtesy of Nick Laird, for which I thank him]
The performance of the golds stocks looked terrific compared to the silver equities, as they got crushed to the tune of 6.37%.
Once again the sell-off in the precious metal shares was out of all proportion to the loses in the underlying metal.
The CME Daily Delivery Report showed that 1 gold and 10 silver contracts were posted for delivery within the Comex-approved depositories on Friday. The link to yesterday's Issuers and Stoppers Report is here.
The CME Preliminary Report for the Wednesday trading session showed that gold open interest in October dropped to 235 contracts---and October o.i. in silver was cut from 102 contracts down to 14 contracts, from which must be subtracted the deliveries posted in the previous paragraph. The October delivery month, which concludes one week from today, will go off the board without incident.
There was anther withdrawal from GLD yesterday. This time an authorized participant took out 67,293 troy ounces. And as of 9:27 p.m. EDT yesterday evening, there were no reported changes in SLV.
There was no sales report from the U.S. Mint.
There were no in/out movements in gold at the Comex-approved depositories on Tuesday but, as usual, it was a totally different story in silver, as 585,333 troy ounces were received---and 446,684 troy ounces were shipped out. Almost all the action was at Brink's, Inc. and the CNT Depository. The link to that action is here.
I don't have all that many stories today, so I hope you have the time to read the ones you like.
Central banks meeting next week will expose a huge divergence in monetary policy between several major economies, putting the macro environment in focus and weighing on foreign exchange, hedge fund manager Kyle Bass said Wednesday.
The founder of the $1.7 billion hedge fund Hayman Capital thinks the Fed likely will taper its bond-buying stimulus to zero next week. The Bank of Japan, however, likely will announce it will do whatever it takes to prevent the world's third-largest economy from heading into a major crisis.
"They still run 10 percent fiscal deficits. We think they're going to run a current account deficit of 2 to 4 percent next year and Japan is going to have to buy more bonds and the U.S. is going to buy no more," Bass said on "Squawk on the Street." "And so when the training wheels come off the market in central bank land, macro becomes functionally much more relevant."
There are three CNBC video clip with Kyle that run concurrently. In total, all three run for 7 minutes. They showed up on their website around 9 a.m. EDT on Wednesday morning. They're worth watching. I thank reader David Ball for today's first story.
McDonald's franchisees are furious that the company's aggressive promotions and costly restaurant upgrades are squeezing their profits, according to a new survey.
"Growth for McDonald's is over," one franchisee wrote in response to the survey by the financial services firm Janney Capital Markets.
"I am just hoping to be flat," another franchisee said. "[The] customer has lost faith in the brand."
"We are leaderless," said a third. A fourth franchisee complained, "They are being successful in bankrupting us."
This very interesting news item appeared on the businessinsider.com Internet site at 4:48 p.m EDT on Monday---and it's courtesy of reader Brad Robertson.
Large manufacturers are increasingly moving production back to the United States from China, according to a new report by The Boston Consulting Group released Thursday.
In the third annual survey of US-based senior executives at manufacturing companies with annual sales of at least $1 billion, the number of respondents who said their companies were currently reshoring to the U.S. from China increased 20 percent from a year ago.
Given the fact that China's wage costs are expected to grow, do you expect your company will move manufacturing to the United States?" the August survey asked executives at an unspecified number of companies that currently manufacture in China.
The executives who said "Yes, we are already actively doing this" rose to roughly 16 percent in the "Made in America, Again" survey in August from 13 percent a year earlier and seven percent in the first survey in the series, in February 2012.
This AFP news item appeared on the france24.com Internet site at 9:05 a.m. Europe time this morning---and I thank South African reader B.V. for sliding it into my in-box shortly before I filed today's column.
The Federal Reserve's New York branch knew about risks JPMorgan Chase & Co was taking with its massive "London Whale" derivatives bets four years before they imploded, but it failed to act properly to head them off, the U.S. central bank's inspector general said.
The Fed's Office of Inspector General said on Tuesday one of the key flaws it uncovered in its probe of the 2008 transaction at the Wall Street bank was the New York Fed's over-reliance on certain personnel who left the supervisory team in 2011. That created a "significant loss of institutional knowledge" within the team assigned to inspect JPMorgan, the report said.
In what amounts to another recent black eye for the New York Fed's bank supervision unit, the report also noted that competing supervisory priorities and limited resources contributed to a failure to conduct key follow-up examinations.
This Reuters article, co-filed from New York and Washington, put in an appearance on their Internet site at 1:59 p.m. EDT on Tuesday afternoon---and it's a story I found in yesterday's edition of the King Report.
The central-bank put lives on.
Policy makers deny its existence, yet investors still reckon that whenever stocks and other risk assets take a tumble, the authorities will be there with calming words or economic stimulus to ensure the losses are limited.
A put option gives investors the right to sell their asset at a set price so the theory goes that central banks will ultimately provide a floor for falling asset markets to ensure they don’t take economies down with them.
Last week as markets swooned again, it was St. Louis Federal Reserve President James Bullard and Bank of England Chief Economist Andrew Haldane who did the trick. Bullard said the Fed should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, while Haldane said he’s less likely to vote for a U.K. rate increase than three months ago.
Just a softer way of saying the President's Working Group on Financial Markets, now shortened to the Plunge Protection Team. This Bloomberg offering, filed from London, showed up on their Internet site at 5:18 a.m. Mountain Daylight Time on Tuesday morning---and it's the second item in a row that I plucked from yesterday's edition of the King Report.
Brazil Finance Minister Guido Mantega popularized the term “currency war” in 2010 to describe policies employed at the time by major central banks to boost the competitiveness of their economies through weaker currencies. Now, many see lower exchange rates as a way to avoid crippling deflation.
Weak price growth is stifling economies from the euro region to Israel and Japan. Eight of the 10 currencies with the biggest forecasted declines through 2015 are from nations that are either in deflation or pursuing policies that weaken their exchange rates, data compiled by Bloomberg show.
“This beggar-thy-neighbor policy is not about rebalancing, not about growth,” David Bloom, the global head of currency strategy at London-based HSBC Holdings Plc, which does business in 74 countries and territories, said in an Oct. 17 interview. “This is about deflation, exporting your deflationary problems to someone else.”
This Bloomberg news item, filed from London, appeared on their Internet site at 8:24 a.m. Denver time yesterday morning. It---and the headline---were something I found at the gata.org Internet site.
The eurozone is yet again in a nasty state.
As it suffers from low growth and low inflation, the two combine to make a nasty cocktail. Without much of either, unemployment remains stuck at an eye-watering high 11.5pc, and government debt burdens are likely to feel increasingly heavy.
The European Central Bank (ECB) has announced a variety of acronyms - CBPP3, TLTROs, and an ABS purchase scheme - all stimulus measures designed to combat the euro area’s low inflation crisis.
Yet so far, they’ve been insufficient to raise expectations of future inflation, implying that the firepower just isn’t strong enough. Economists are hoping that the ECB will deploy outright quantitative easing, and start buying up the sovereign bonds of eurozone governments.
This article appeared on the telegraph.co.uk Internet site at 2:14 p.m. BST on their Wednesday afternoon---and it's courtesy of South African reader B.V.
The French parliament voted Tuesday in favour of a draft law that could, for the first time, make it possible to remove the country’s president from office through a US-style impeachment.
The bill, already passed by France’s lower house, was approved by the Senate by 324 votes to 18.
It will now go to France’s Constitutional Council, which must decide if the bill complies with the French constitution, before becoming law.
If approved, the law would represent a radical change to the legal status of the French head of state – who has so far enjoyed greater legal protection than almost any other Western leader.
This news item was posted on the france24.com Internet site yesterday---and it's the second offering in a row from reader B.V.
Asked in 2010 if oil companies were right to make deals with the world’s despots and dictators, Christophe de Margerie, the boss of Total who died in a plane crash in Russia Monday night, gave a typically unequivocal answer: “bloody right.”
It was a reply that summed up a man unapologetic about doing whatever was necessary to keep the oil and profits flowing, no matter the opinion of the public, politicians or regulators.
De Margerie’s bushy, walrus-like facial hair earned him the nickname “Big Moustache”, but in his younger years he went by a different sobriquet – “Mr Middle East” – heading Total’s operations in that area from 1995.
It was a job that saw him scour for oil in some of the world’s most politically volatile places and made him a natural choice to head the French oil giant’s exploration and production department when the role became vacant in 2002.
This very interesting but longish commentary/obituary appeared on the france24.com Internet site on Tuesday Europe time---and it's the fourth article of the day from reader B.V.
Ukraine plans to buy $770 million worth of gas (2 billion cubic meters) from Russia this winter to keep the heat on. The question is: who is going to pay the bill?
All three parties, Russia, the E.U., and Ukraine met in Brussels on Tuesday and confirmed Kiev will pay $385 per 1,000 cubic meters of Russian supplied gas through the end of March. Before Ukraine can start purchasing gas, they need to pay off $1.45 billion in debt.
“There’s one obstacle: Ukraine failed to pay for Russian-supplied gas for seven months,” Oettinger said Tuesday. It will be difficult for Ukraine to find a benefactor, since, as Oettinger pointed out, its credit history is less than stellar. The economy is in ruin and may already need extra IMF money to stay afloat.
This Russia Today article showed up on their website at 2:53 p.m. Moscow time on their Internet site yesterday---and I thank Roy Stephens for sending it our way. Reader Jim Skinner sent a story from the fortune.com Internet site on this issue. It's headlined "Russia calls Europe's bluff on Ukraine gas deal."
Ukraine should be able to find ways of paying for Russian gas supplies within a week, Russian Energy Minister Alexander Novak said on Wednesday, suggesting a standoff would end once Moscow received financial guarantees from Kiev.
The latest round of gas talks between Moscow and Kiev ended late on Tuesday in Brussels with no agreement in a dispute that prompted Russia to cut off gas supplies to its neighbor in mid-June, potentially hurting flows west to the European Union.
But while Novak said he was optimistic for new talks on Oct. 29, Ukrainian Prime Minister Arseny Yatseniuk said he was skeptical about building ties with Russia, underlining how efforts to reach a deal are hampered by a wider political conflict between the two countries.
Another conflicting story on Ukraine's gas issue. This Reuters article, filed from Moscow, was posted on the their website at 7:14 a.m. EDT on Wednesday---and it's the second offering of the day from reader Jim Skinner.
Christophe de Margerie’s last act as chief executive officer of Total SA left no room for doubt about his feelings toward Vladimir Putin’s Russia.
In a Moscow speech hours before the plane crash that took his life two days ago, de Margerie said U.S. and European Union sanctions on the country were “unfair and unproductive,” and that he opposed efforts to render it “isolated from the major global economic and political process.”
Appearing before a receptive audience that included Prime Minister Dmitry Medvedev and a host of Russian executives, he cited his work as co-chair of a Franco-Russian business body alongside Gennady Timchenko -- a commodities billionaire who was one of the first targets of U.S. sanctions.
De Margerie’s death removes from the scene a businessman who rarely shied away from geopolitical debates and became one of Russia’s most outspoken allies in its efforts to avoid economic quarantine, willing to say what others only dared think. Although European corporate giants from Siemens AG to Renault SA have built close relationships with Russia, most business leaders have preferred to keep their lobbying private to avoid offending governments committed to punishing Putin.
This very interesting Bloomberg article appeared on their website at 6:24 a.m. MDT yesterday---and I thank reader M.A. for sending it.
Russia’s currency has taken a significant 20 percent plunge this year against the dollar and euro, but analysts are confident that Russia’s sturdy stash of foreign reserves and miniscule external debt make the ruble one of the ‘most stable’ currencies.
Russia’s vast gold and foreign currency reserves will help weather the ruble’s rough patch. At more than $450 billion, they are the third largest reserves in the world.
"We believe that the fundamental factors that determine the value of our currency were unchanged. Fundamentally the balance of our budget, the absence of significant external debt of our state. Precisely because of this ruble is one of the most stable currencies," Deputy Chairman of the Bank of Russia, Mikhail Sukhov, told TASS Wednesday.
The Central Bank has already spent more than $10 billion in October to stymie the ruble’s fall, and $50 billion since the beginning of the year. However, the bank has signaled it won’t continue to prop up the ruble with billions more.
This must read article appeared on the Russia Today website at 4:16 p.m. Moscow time on their Tuesday afternoon---and it's the final offering of the day from Roy Stephens.
The U.S. Embassy in Iraq located in central Baghdad has been shelled with rockets, Al-Mustakillah news agency reported Wednesday citing a security source.
"On Tuesday night the US Embassy was hit with three rockets. They were fired from a park area in the Dora district [in southern Baghdad]," the agency's source said.
Earlier on Tuesday, Al-Sumaria TV channel reported a mortar shelling of the so-called "green zone" in the center of the capital, housing government buildings and foreign missions. Security forces surrounded the area to repel a potential attack.
The above three paragraphs are all there is to this brief story that appeared on the RIA Novosti website yesterday at 2:02 p.m. Moscow time. It's the second offering of the day from reader M.A.
China will officially launch a new $50 billion Asia Infrastructure Investment Bank on Friday as it steps up its challenge to global financial institutions like the World Bank that it feels are dominated by America and its allies.
But only 20 mostly small economies, many of them effectively client states of China, will become founding members of the bank at Friday's ceremony in Beijing after Washington lobbied furiously to stop other countries from signing up.
When it first unveiled its plan to establish the bank last year, Beijing extended a broad invitation and several European states, as well as Australia, Indonesia, and South Korea initially showed interest.
But thanks to pressure from the US -- conveyed by US diplomats in Beijing, Washington, and other capitals -- none of these countries will join the bank at this stage, although some are hoping to be involved later.
This Financial Times article, which is worth reading, appeared on their website yesterday---and it was posted in the clear in this GATA release.
Nelson Bunker Hunt, the down-home Texas oil tycoon who owned a thousand race horses, drove an old Cadillac and once tried to corner the world’s silver market only to lose most of his fortune when the price collapsed, died on Tuesday in Dallas. He was 88.
His death, at an assisted living center, followed a long period of treatment for cancer and dementia, The Dallas Morning News reported.
“A billion dollars ain’t what it used to be,” he said in 1980 after silver stakes he had amassed with two brothers, Herbert and Lamar, fell to $10.80 from $50.35 an ounce. In barely two months, their holdings and contracts for purchases — corralling a third to half the world’s deliverable silver — had plunged from a $7 billion value in January to a $1.7 billion loss in March.
With the Hunts unable to cover enormous margin calls, the debacle endangered financial markets and brokerage houses, forcing federal regulators and the nation’s banks to step in with a $1 billion line of credit, a bailout that saved the system from a stampede and the Hunts from a meltdown.
This very interesting fairy tale, at least considering what's mentioned in the above four paragraphs, showed up on The New York Times website yesterday---and I thank Casey Research's BIG GOLD editor, Jeff Clark, for bringing it to my attention---and now to yours. It's worth reading---but I hope its written with less bias than their reporting on the Ukraine/Russia situation. For that reason you should read it with your b.s. meter on its most sensitive setting.
Ned Goodman, president and chief executive officer of Dundee Corp., believes gold is undervalued while equities are poised for a crash.
Speaking at a keynote luncheon at the Quebec Mining Exploration Xplor 2014 Convention in Montreal, Quebec, Goodman was blunt regarding gold prices and where they’re heading.
“We think gold is very undervalued at current gold prices,” Goodman said. “I think gold will hit $1,200, and when it does, be a buyer because I think that will be a good place to be.”
Touching on stock markets, Goodman didn’t pull any punches, calling it a Botox market where all deficiencies are simply covered and propped up to look healthy.
This story appeared on the kitco.com Internet site yesterday at 2:38 p.m. EDT yesterday---and it's the second contribution in a row from BIG GOLD editor Jeff Clark.
On behalf of Matterhorn Asset Management, financial journalist Lars Schall talked with exploration geologist and mining entrepreneur Dr. Keith Barron.
Keith is a scientist and he explains in no uncertain terms what is going on in the mining industry, the false accounting relative to the cost of exploration, what happened when gold went up to 1,900, why gold versus USD simply must go to at least 5,000, why ‘gold above ground’, if anything, is overstated and why the Swiss Gold Initiative is indeed very important and not just for the Swiss People, as well as Keith Barron’s view on Silver.
Barron is a day late and a dollar short on this topic, as several other gold commentators/mining executives have already been down this road already this year. This 47:17 minute interview was posted on the goldswitzerland.com Internet site yesterday---and I found it in a GATA release.
The volume of gold sold forward by mining companies jumped 61 percent in the second quarter after Russia's Polyus Gold added a major new hedge position, an industry report showed on Wednesday.
In their quarterly Global Hedge Book Analysis, released on Wednesday, Societe Generale and GFMS analysts at Thomson Reuters said they are predicting net hedging for the year of 40 tonnes, the most since 1999.
They forecast in July that gold producers would return to net hedging this year for the first time since 2011.
Volumes of hedging predicted for this year are still well below the levels seen in the late 1990s. Net producer hedging in 1999 reached 506 tonnes, according to GFMS data.
I'm sure you've heard the expression "much ado about nothing." Well, despite the headline, that's what this Reuters story is. However, it's worth your while as a trip down memory lane---and I thank Manitoba reader U.M. for sending it.
Demand from China and other parts of Asia will support the price of gold, the chief executive of one of its largest miners said, as the precious metal traded near its strongest level in six weeks.
Chuck Jeannes of Goldcorp said he saw "as much clarity in the market as there has ever been," with a "floor" created by strong demand whenever gold reached or fell below about $1,200 per ounce.
"The anecdotal evidence is that gold goes down and physical demand goes up," Mr. Jeannes said in an interview with the Financial Times. "A huge number of physical buyers in the world see gold as a bargain below $1,200."
You wonder how people such as him make it to positions of responsibility when they don't know anything about how their product is priced in the market---and run screaming when you attempt to explain it. The above three paragraphs from a Financial Times article from yesterday, is all that's posted in the clear in this GATA release. The rest is subscriber protected.
The China Gold Association has confirmed that China's gold off-take in 2013 reached 2,200, Bullion Star market analyst and GATA consultant Koos Jansen reported yesterday. That would constitute most of world gold mine production and the figure apparently does not include purchases by the People's Bank of China, which remain the most sensitive state secret.
"Why the Western media don't report on these numbers is a mystery," Jansen writes. "This data is not a secret. Yet the Chinese have been trying to hide it as much as possible---and it looks like either they're being helped by Western institutions, or these institutions are ignorant."
Of course there is still another explanation: that Western financial news organizations and the World Gold Council very much intend not to deal with this issue honestly, since doing so would impugn the whole Western financial system, built as it is on currency and commodity market rigging.
This must read commentary was posted on the Singapore website bullionstar.com on Tuesday---and this is another gold-related news item I found posted on the gata.org Internet site.
Instead of the usual rush for jewellery, this Dhanteras sees a reversal of buyer's preferences, with more people opting for the traditional gold coin. We talk to some shopkeepers and buyers to understand this shift in choices
For many families in the city, a visit to their family jeweller today is as important as lighting lamps on Diwali. Jewellers too look forward to the festival of Dhanteras all year long, in the hope of making up for slow sales and the lean months. Unlike last year, this Dhanteras, the gold rate is lower compared to the last few months, which has given many store owners hope for a busy shopping day today.
But in an interesting twist, the low gold rate hasn't motivated people to increase their Dhanteras budget and buy jewellery instead of the traditional gold coins. Shoppers told DT why they would prefer to wait for the remaining festive days to pass before making any major ornamental purchases and why they will stick to the traditional coin purchases instead. Crowded shops, busy salespeople and `formality shoppers' make Dhanteras a bad day for investing in jewellery because like they say, buying an ornament is an experience that can be done once the hustle and bustle of Diwali is over.
This article showed up on the Times of India website at 11:41 a.m. IST on Tuesday---and I thank reader U.M. for finding it for us.
As 40-year-old Mohammed Iqbal sifts through sludge in the back alleys of Kolkata’s jewellery market for gold dust, his weathered face brightens slightly at the recent uptick in work.
For generations, the city’s group of “newaras” — gold dust scavengers — have been scratching a living by panning for fine particles swept from the 2,000-odd jewellery workshops operating in the alleys.
Iqbal estimates he normally earns just 150 to 200 rupees ($2.40 to $3.20) a day from selling flecks of the precious metal that he painstakingly finds on the ground and in the drains of the grimy alleys.
But the onset of India’s raucous festival season, especially the biggest Hindu celebration of Diwali on Thursday, brings a relative bonanza for Iqbal, with his income more than doubling.
This extremely interesting AFP story appeared on the aquila-style.com Internet site early yesterday morning EDT---and I thank reader U.M. for sliding it into my in-box late yesterday evening MDT. It's also her final contribution to today's column.
Here we go again — what is believed to be the biggest gold nugget found in modern times in California’s historic Gold Country is going on sale Thursday in San Francisco.
This 6.07-pound whopper is being sold by Tiburon coin dealer Don Kagin, the same dealer who is selling the $10 million worth of gold coins that made such a stir this year after they were found in a couple’s backyard in the Sierra.
The “Butte Nugget,” so named because it was found by a gold hunter in the Butte County mountains, will be unveiled at the prestigious San Francisco Fall Antiques Show. The show opens Thursday at Fort Mason.
This very interesting news item put in an appearance on the sfgate.com Internet site at 10:33 a.m. Pacific Daylight Time yesterday---and my thanks go out to reader Carl Lindfors for digging it up for us. And if you don't want to read the article, you should at least look at the picture.
This drake mallard duck was dabbling in the shallows a bit more than 10 meters away, which is point blank range for a 400mm lens. He is resplendent in his new breeding plumage, as the drakes all look so drab in in the summer/early fall when they're in the eclipse phase.
I don't normally crop creature photos this close, but wanted to show the iridescent green head from two different angles as the late-morning sun shone on it. Plus it also accentuates two common English phrases so well---'water off a duck's back' and 'duck tail'. Both of which show their lineage in these two shots. The red reflection in the water is, as usual, from the building in the distant background.
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Based strictly on price action---and as I indicated in Saturday's weekly review---most likely there has been further technical fund buying and commercial selling in COMEX gold futures in the reporting week [that] ended on Tuesday, October 21. I would guess at least 15,000 additional technical fund contracts were bought net in gold---and perhaps more than 20,000 contracts. I don’t sense much technical fund buying in silver, copper, palladium and platinum in the COT report to be issued this Friday, but if there was any technical fund buying in silver, it was flushed out in Wednesday’s rotten silver price performance.
Gold appears to be the only metal experiencing technical fund buying to date---and that still raises the possibility of the commercials rigging gold prices lower temporarily to lure the technical funds who bought, back to the sell side. In that case, silver may come under pressure, but it’s hard to see how many technical funds can be maneuvered to sell, seeing as managed money shorts are already at an all-time record high. - Silver analyst Ted Butler: 22 October 2014
I must admit that the price action in all four precious metals on Wednesday didn't surprise me in the slightest. But the shocker was the hammering that their associated equities took, especially the silver stocks. As you know, I've commented on the disconnect between the movements in the metals themselves and their underlying share prices on several occasions since the low of two weeks ago---and yesterday's action draws a similar response from me.
The gold stocks are now back to where they were when gold painted its $1,184 low tick in the wee hours of Thursday morning on Monday, October 6---and the silver shares are even lower than that.
If you're looking for answers, the only one I can think of is that some precious metal mutual fund[s] had to unload a pile of shares because of redemptions---and its only a matter of time before Rick Rule is out telling all and sundry that it's a perfect buying opportunity. I don't know how you feel about it dear reader, but after more than three years of this, I'm tired of somebody telling me to buy the dips. I, like you, just want to see the stocks that we already own, do what we know they're supposed to do.
Of course the mining executives don't care what happens to their public stockholders, because they'll just get their respective boards of directors to reprice their millions/billions in stock options---so it's no skin of their noses if their shareholders are getting wiped out in a rigged market.
Here are the 6-month charts for the 'Big 6' commodities. Note that we've had 'failure' in gold at its 50-day moving average, something I mentioned yesterday---and it only remains to be seen whether JPMorgan et al will continue this downward trend, or this is just a blip as we continue to move higher in price.
And as I write this paragraph, the London open is five minutes away. All four precious metals, which had been up a bit on the day, had their prices turned lower starting about 45 minutes before the London open---and only platinum remains in positive territory at the moment. Gold volume is a bit under 13,000 contracts---and silver's volume is around 2,900 contracts. The dollar index is up a handful of basis points.
As October winds down, we have options and futures expiry for the November contract/delivery month in both gold and silver coming up next week. But unless there's surprise, I expect November deliveries to be a mere shadow of what transpired during the October delivery month. The reason I say that is because the current gold open interest in November is only 352 contracts---and in silver, it's 122 contracts. Nothing to see here. The big delivery month of the year in both metals is December---and what transpires in that month could prove interesting.
And as I hit the send button on today's column at 4:55 a.m. EDT, I note that all four precious metals are under renewed selling pressure now that London has been open a couple of hours---and all four are down a bit more from their New York closes on Wednesday. Net volume in gold is around 23,000 contracts at this point---and silver's net volume is about 5,200 contracts, neither of which are particularly large numbers for this time of day. The dollar index is now down a couple of basis points.
That's all I have for today---and I await the New York open with great interest to see what JPMorgan et al have in store for us during the Comex trading session.
See you tomorrow.