Although the Kitco gold chart looks like a lot happened yesterday… its the scale of the graph that makes it look that bad. Gold didn’t do much of anything during Far East trading… but the top [around $1,113 spot] was in around the usual 4:00 p.m. Hong Kong time [3:00 a.m. in New York] and the sell-off started as the dollar began to rally. Gold was only down about three bucks by the time that the Comex opened for trading in New York… but the New York bullion banks sold it down another ten bucks to its low of the day at $1,101.00 spot at the London close at 11:00 a.m. Eastern time. From there, the gold price traded sideways into the close of electronic trading at 5:15 p.m.
Silver’s path was similar, except the high [around $17.45 spot] came a little earlier than gold’s high… and silver’s low [$17.22 spot] came a little later than gold’s low. Nothing to see here either, folks!
The dollar was virtually the sole driver of gold and silver yesterday. The ‘rally’ began at 2:30 a.m. Eastern time… and ended minutes after the London close at 11:00 a.m. Eastern time… the high and low for gold to the minute. Any questions?
The HUI pretty much followed the precious metal prices yesterday. No surprises here, either.
Gold’s final volume figures for Monday were reported as 292,050 contracts… at least two thirds of that was roll-overs and spread trades. Open interest fell a chunky 18,548 contracts… but both Ted and I felt that most of that was a spread trade being lifted. Fortunately, this o.i. number will be in Friday’s Commitment of Traders Report. In silver, total volume was a pretty big 38,317 contracts but, once again, a big chunk of that was spreads… and roll-overs into the July contract and later months. Monday’s big gain in the silver price was accompanied by an unsurprising 2,861 contract increase in open interest, as the bullion banks went short against the technical funds who were going long… at least that’s what the numbers looked like to me. Ted said he would wait for Friday’s COT report before he’d agree entirely with my assessment.
Well, yesterday was first day notice for delivery into the April gold contract… and the numbers were impressive as there were 7,925 gold contracts put up for delivery on April 1st. The big issuers were Bank of Nova Scotia with 4,260 contracts and HSBC with 3,000 contracts. The biggest stoppers were Deutsche Bank with 2,687 contracts and JPMorgan with 1,780 contracts. I’d bet some serious coin, dear reader, that these four bullion banks mentioned here, are the ‘4 or less’ traders that hold the biggest gold short positions in the Commercial category of the Commitment of Traders report. Silver too!
In silver, there were 254 contracts delivered. The big [and virtually the only] issuer was JPMorgan. The biggest stopper was the Bank of Nova Scotia. The entire delivery report is well worth running through, as it gives you snapshot of all the ‘4 or less’ traders and who they’re delivering to… the ‘8 or less’ and the huge number of small traders. Please click here, as it’s an impressive list… in all metals.
There were no changes reported in either the GLD or SLV… and once again there was no report from the U.S. Mint. The Comex-approved depositories added 152,279 ounces to their silver inventories on Monday.
The European Central Bank, in its weekly statement of condition, reported that ‘gold and gold receivables’ fell by one million euros [1,304 ounces] because of the sale of gold coin by a subordinate bank. This precisely reverses last week’s gain. Net, there has been no material change in ECB gold holdings this year. I thank the usual New York gold commentator for that information.
I mentioned yesterday how I thought that both the Dow and U.S. dollar were looking shaky. To give you an idea of how narrow the trading is in stocks… the King Report made the following comment about market ‘action’ on Monday… ‘Citibank accounted for about 25% of NYSE volume for Monday. This is a crystal-clear indication of the nature of the stock market.’
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The first story today is courtesy of ‘Rocky’. It’s from yesterday’s edition of Canada’s Financial Post in Toronto. The headline reads ‘Golden Times at Royal Canadian Mint‘. ‘Gold and silver sales have exploded past the $1-billion mark at the federal mint, with spooked global investors snapping up the precious metals as a hedge in uncertain times.’ The mint includes its gold and silver usage as well. It’s a short story… and worth the read. The link is here.
GATA’s work at last week’s hearing of the U.S. Commodity Futures Trading Commission has been noted by mineweb.com‘s Lawrence Williams in commentary headlined ‘GATA’s Evidence of Silver and Gold Manipulation at CFTC Hearing‘. Williams prefaces the article with the comment that… ‘Testimony from GATA’s Bill Murphy to the CFTC hearing in Washington could be embarrassing for some major investment banks.’ That it could… and the link is here.
This next story was a GATA dispatch yesterday. Secretary Treasurer, Chris Powell, had this preface to the story… ‘Concurring in a thought expressed yesterday in his King World News interview by London metals trader and CFTC whistleblower Andrew Maguire, Chicago consulting firm president Janet Tavakoli suggests that the gold market is now awfully susceptible to a corner by those who want to take delivery of real metal. Tavakoli’s commentary is headlined ‘How to Corner the Gold Market‘ and you can find it at the Tavakoli Structured Finance Internet site. It’s a 5-page pdf file… and it’s a must read… and the link is here.
Here’s a commentary by Mark Fisher that appeared in Bloomberg yesterday. Fisher compares the U.S. decline to the fall of the Roman Empire… which is most apt, in my humble opinion. He goes on to say that… ‘Once the world realizes that the U.S. is the new Rome, the traditional tenets governing asset correlations will no longer hold, and we can expect a breakdown in traditional stock-bond portfolio theories. Since paper assets are ultimately shoved down to zero, expect hard assets to benefit — especially gold, energy and grains — along with commodity-related equities.’ The headline reads ‘U.S. Decline, Sloth Look a Lot Like End of Rome‘. It will take you less than five minutes to run through this… and the link is here.
Along with the fall of the American Empire… will come the fall of what’s left of the British Empire as well. Here’s a story from this morning’s dailymail.co.uk. The longish headline says it all… ‘Pet shop owner fined £1,000 and told to wear an electronic tag… for selling a GOLDFISH to a boy aged 14‘. You can’t make this stuff up… and I thank Florida reader P.S. for sending it along… and the link is here.
In the wee hours of Tuesday morning, Eric King of King World News sent me the interview headlined above… and linked below. Because the interview runs about 40 minutes in length… and I already had a pile of stories in my Tuesday report… I decided not to run it until today.
But I did listen to the whole thing as soon as I got it… and it was a shocker to say the least! I called Eric on the telephone as soon as I got up in the morning… and he told me that shortly after he posted the interview, his website had been hacked and about the last third of the interview had been deliberately erased from one of ISP’s servers. It was the part where Andrew Maguire and GATA’s Adrian Douglas started talking about things like ‘fraud’, ‘treason’ and ‘financial terrorism’. As you are aware, dear reader, Maguire and his wife were the victims of a hit-and-run on Friday… the day after his testimony was read to the CFTC hearing in Washington on Thursday. And as I said yesterday in my comments about his hit-and-run accident… it comes right out of a James Bond thriller… police chase, complete with helicopters. Britain’s finest got their man… but will he talk!
This reminds me of what happened to GATA chairman Bill Murphy a couple of years after the organization was founded… and I remember the incidents well. Within the space of six weeks, Bill got beaten up, his website hacked, and his car stolen. His car turned up the day after his insurance company paid up… no damage to the car, money in the console was still there, and his cashmere sweater was still in the back seat.
This has all the makings of a movie script somewhere down the road. Just as long as we get some royalties… and a big chunk of the merchandizing… we at GATA will be happy!
Anyway, with my preamble out of the way, here’s Chris Powell’s preamble to the GATA release on this explosive interview with Andrew Maguire and GATA board member Adrian Douglas… ‘London metals trader and CFTC whistleblower Andrew Maguire was interviewed with GATA board member Adrian Douglas for 40 minutes Tuesday by Eric King of King World News. Maguire explained how he came to complain to the CFTC about silver market manipulation by JPMorgan Chase traders in London… and then to Douglas when the CFTC failed to call him to testify at its hearing last week on futures trading in the metals market.’ This is a must listen interview… and the link is here.
How long can the US government protect the dollar’s value by leasing its gold to bullion dealers who sell it, thereby holding down the gold price? – Paul Craig Roberts, 24 February 2009, counterpunch.org
Well, my opinion on the U.S. equity markets and the U.S. dollar remain unchanged… as I think the top is in for both. I’m also looking at the big pennant formation that gold has been forming for the last four months… as it’s getting into a real tight trading range. Here’s the 1-year gold chart. Silver’s chart doesn’t show any kind of wedge shape at all.
Here’s another graph that I borrowed from Gene Arensberg’s latest Got Gold Report… for which I thank him. It needs no explanation from me… as the graph [and the commentary in it] says it all.
As you already know, dear reader, I’m still ‘all in’… and that hasn’t changed since the beginning of this bull market. If you’re considering investing some capital in the precious metals market, this may be the time. I ask you to check out both Casey’s Gold & Resource Report… and Casey Research‘s flagship publication, the International Speculator. It costs nothing to click on the links and read about them. And don’t forget that we have our 90-day money-back guarantee with both publications. How can you lose… as you’re making a solid investment in your financial future. Think about it.
I see that the dollar put in a top at 12:00 midnight last night… right on the button. With the precision timing of some of these moves in the dollar, the precious metals, and the equity markets… you’re not going to convince me anytime soon that these are ‘natural’ market forces at work. As I write this, the buck is down about 45 basis points from that high… and the metals are showing signs of life… but started trading sideways moments after London opened for the day. It’s obvious that this attempted rally on the back of the dollar’s decline is running into some resistance. And you’ve probably already figured out that when the dollar is rising, gold never runs into any of that sort of resistance as it’s falling. Funny how that works, isn’t it?
Volume is light in the Far East and early London trading… and with March now off the boards… there isn’t much in the way of switches or spreads in the 18,053 gold contracts currently traded as of 6:04 a.m. Eastern time. Approximate volume in silver is a very chunky 5,700 contracts even after the switches are removed.
The CME has posted preliminary volume figures for Tuesday. It shows that gold only traded 175,652 contracts, of which almost 120,000 were roll-overs from April into June. This means that the ‘real’ trading volume yesterday was next to nothing… well under 55,000 contracts. April open interest for gold has now dropped down to 16,238 contracts. The CME delivery report I spoke of earlier showed that 7,925 contracts were put up for delivery tomorrow… and I’m not sure whether that number [16,238] is net of that 7,925 contracts or not… as a delivery cancels a long and a short position… and thus, by straight subtraction, reduces open interest by that amount… in this case, it’s 7,925 contracts of open interest that have vanished automatically.
Silver’s preliminary volume was 36,274 contracts… and a bit over 10% of that volume was roll-overs into July and other months. I’m looking forward to the final open interest numbers in both metals later this a.m., because whatever is reported, will be in Friday’s COT report… as they are Tuesday’s numbers… and that’s the cut-off date for the report.
As I mentioned yesterday, with options expiry and first day notice out of the way, things could get interesting. Friday is a holiday… so there’s one less trading in the week than normal. Will it be exiting… or boring? We’ll find out soon enough.
See you tomorrow.
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