U.S. dollarfalls 125 basis points… gold rises one whole dollar. Goldman Sachs gets ready to hand out $13 billion in bonuses. Rare earth prices soar. Iran’s gold reserves hit record highs… and much more.
After Tuesday’s bushwhacking, gold didn’t do much in Far East trading on Wednesday. It took the gold price about seven hours after the beginning of trading on Wednesday to rise three dollars to the $1,341 spot level by 2:00 p.m. Hong Kong time. Then the price sat there for almost eight hours before getting sold off at 8:45 a.m. Eastern time in New York… this was despite the fact that the dollar lost almost 60 basis points during that period of time! Gold’s low price of the day came shortly before 9:30 a.m. at $1,332.00 spot.
Then, during the next 90 minutes, the dollar crashed by another 70 basis points… with the bottom coming at precisely 11:00 a.m. Eastern time. During that time period, gold managed to rise a whole twelve dollars. From that point, both the dollar and gold basically flat-lined until the close of Wednesday trading at 5:15 p.m. Eastern time yesterday afternoon.
From the dollar’s absolute high early on Wednesday morning in the Far East… right up until 11:00 a.m. in New York about fourteen hours later… the dollar got clocked for 125 basis points. Gold’s net gain… about a dollar.
In case you’ve forgotten, on Tuesday the dollar gained just under 100 basis points… and gold got hammered for a $35 loss.
Silver fared a lot better during Wednesday’s trading… tacking on about 50 cents while gold was gaining that dollar.
What can I add to the dollar’s performance on Wednesday that I haven’t already mentioned. The 3-day graph is here. The high tick occurred around 10:00 a.m. Hong Kong time… with the low coming at precisely 11:00 a.m. Eastern time about fourteen hours later. After that, the dollar did not budge off its low for the rest of the New York session.
The shares hit their high around 11:00 a.m… just as the gold rally in New York came to an end. Then they basically traded sideways from there, with the HUI closing up 1.94%.
The GLD ETF had another small withdrawal on Wednesday. This time it was 29,305 ounces. There was no change reported in SLV.
The U.S. Mint reported selling another 5,000 ounces of gold in their gold eagle program… but didn’t report selling any silver eagles.
The Comex-approved depositories reported that they received 900,971 ounces of silver… all of it going into Brink’s Inc. The link to the action is here.
But, as I’ve mentioned in my last two columns, yesterday was the day that The Central Bank of the Russian Federation updated their website with their gold purchases for September. As you’ve already seen from the headline, that amount was a real chunky 700,000 troy ounces. Year-to-date they’ve purchased 3.8 million ounces of gold for their reserves… over 118 tonnes… and now hold 24.3 million ounces. That’s an 18.5% increase from the beginning of this year. That’s a lot, dear reader.
As I said in this column yesterday, the big declines in both gold and silver on Tuesday was a bear raid by the bullion banks hiding behind the petticoats of a dollar rally. With the dollar up about 95 basis points on Tuesday… and then down 125 basis points on Wednesday, that should be obvious to even a casual observer.
But, despite the huge decline in the world’s reserve currency, there were still a lot of sellers in the gold market yesterday… and was one of the reasons that gold didn’t do better. There was also another Permanent Open Market Operation [POMO] by the Fed as well… free money given to the primary dealers to put to work in the stock market. That’s what drove the Dow up yesterday.
There were decent declines in open interest in both gold and silver on Tuesday when the bullion banks did the dirty. That was confirmed by the final figures from the CME when they were published yesterday morning. There might be a further decline based on Wednesday’s action as well.
Ted Butler mentioned that there won’t be really large declines in open interest until some of the key moving averages are taken out to the downside. One of the most important is the 50-day m.a… and it’s a long way down from current price. Ted doesn’t think we’ll get that low. Let’s pray that he’s right. Here’s the 1-year silver chart to put the current situation in some sort of perspective.
Volume on Wednesday was pretty heavy… but not as big as Tuesday’s volume. Volume for today in Far East and early London trading is pretty decent already… especially in silver. Now that London is open for business, a bit of a rally has commenced… and both metals are back in the plus column after languishing in Far East trading earlier in the day.
I guess it might have something to do with the fact that the world’s reserve currency has dropped about 55 basis points in the last hour or so… and is now back under 77.0 cents once again.
I won’t hazard a guess as to what New York trading action will bring this morning, as that will pretty much be determined by what JPMorgan et al have planned… and we’ll find that out soon enough.
See you on Friday.
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