New normal for gold..... June Gold chart today , dig the moves at 8:30....
http://www.caseyresearch.com/gsd/edition/john-rubino-the-golden-bulls-eye
¤ YESTERDAY IN GOLD & SILVER
The gold price chopped sideways through most of Far East trading on their Thursday, but began to develop a negative bias just before London opened...and by 9:30 a.m. BST, the low tick was in for the day.
The subsequent rally ran out of gas shortly after 11:00 a.m. in New York...and then drifted a hair lower into the 5:15 p.m EDT close of electronic trading.
Gold closed at $1,385.90 spot...down only $6.60 from Wednesday's close. Net volume was a very impressive 197,000 contracts, down only slightly from the 204,000 contracts traded on Wednesday.
It was almost the same price pattern in silver, except the high tick of the day [$22.92 spot] in New York came at 11:00 a.m. EDT right on the button, which just happened to coincide with the close of the London bullion market. From there it traded sideways for the remainder of the day.
Silver closed at $22.69 spot...up a dime from Wednesday. Gross volume was 48,000 contracts, down substantially from the 65,000 contracts traded on Wednesday.
The platinum chart sort of looked similar to the gold chart. But in palladium, the price rallied strongly after its pre-London open low...and the high tick of the day [$746.00 spot] came at the Comex close.
For Thursday, gold closed down 0.47%...silver closed up 0.44%...platinum finished down 0.87%...and palladium closed up 1.66%.
The dollar index closed on Wednesday at 83.785...and then climbed to it's 83.98 high at 9:00 a.m. in London. From there, it was all down hill to its low of the day...83.48....which came a few minutes after 11:00 a.m. EDT in New York. From there it chopped higher into the close, finishing the Thursday session at 83.745...down a whole 4 basis points from Wednesday's close.
For the most part, the precious metal prices tracked the dollar index very closely...but the price moves in the precious metals [both down and up] were out of all proportion to the corresponding moves in the currencies.
The CME Daily Delivery Report showed that 9 gold and 127 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. In silver, the two biggest short/issuers were ABN Amro with 70 contracts...and Credit Suisse with 51 contracts. The two biggest stoppers were the ringleaders of the silver price management team...Canada's Bank of Nova Scotia...and JPMorgan Chase, with 90 and 24 contracts respectively. The link to yesterday's Issuers and Stoppers Report is here.
Both GLD and SLV had rather substantial withdrawals again yesterday. In GLD...183,707 troy ounces were withdrawn. In SLV it was a chunky 2,269,165 troy ounces. This looked like plain-vanilla investor liquidation to me...but you just never know any more.
Joshua Gibbons, the Guru of the SLV Silver Bar List, updated his website with the goings-on within SLV for the week ending on May 15th...and this is the first sentence of his very brief commentary..."Analysis of the 15 May bar list, and comparison to the previous week's list...289,605.1 oz. were added (all to Brinks London), no bars were removed or had a serial number change." The link to his website, about.ag/SLV/, is here.
The U.S. Mint reported selling another 5,500 ounces of gold eagles yesterday...along with 1,500 one-ounce 24K gold buffaloes.
Over at the Comex-approved depositories on Wednesday, they didn't report receiving any silver, but shipped 638,463 troy ounces of the stuff out the door. The link to that activity is here.
In gold on Wednesday, these same warehouses reported receiving 2,424 troy ounces of gold...and shipped out 10,720 troy ounces of same. The link to that activity, such as it was, is here.
Here are a couple of charts courtesy of West Virginia reader Elliot Simon...and neither require any further explanation from me.
selected news and views....
Big Banks Get Break in Rules to Limit Risks
Under pressure from Wall Street lobbyists, federal regulators have agreed to soften a rule intended to rein in the banking industry’s domination of a risky market.
The changes to the rule, which will be announced on Thursday, could effectively empower a few big banks to continue controlling the derivatives market, a main culprit in the financial crisis.
But critics worry that the banks gained enough flexibility under the plan that it hews too closely to the “pre-crisis status.”
“The rule is really on the edge of returning to the old, opaque way of doing business,” said Marcus Stanley, the policy director of Americans for Financial Reform, a group that supports new rules for Wall Street.
The Dodd-Frank Act now exists in name only, as it's basic tenets have been gutted. This is just another, if not the last, brick in the wall for what the bill stood for originally. This article was posted on The New York Times website late on Wednesday afternoon...and I thank reader Clive Sutherland for today's first story.
Alex Pollock: Forget Too Big to Fail Banks — It's Time to Break Up the Fed
By the Federal Reserve's own logic about breaking up banks that are too big to fail, it's time to break the Fed apart for the same reasons, according to a blistering analysis by Alex Pollock of the American Enterprise Institute.
Pollock, in a note to American Banker, said St. Louis Fed President Jim Bullard recently laid out four simple ways to determine when a bank is too big and needs to be split up — namely, if its assets are too voluminous, if it's too leveraged, if it has too much short-term funding of longer term assets and if it creates too much systemic risk.
Pollock, in a note to American Banker, said St. Louis Fed President Jim Bullard recently laid out four simple ways to determine when a bank is too big and needs to be split up — namely, if its assets are too voluminous, if it's too leveraged, if it has too much short-term funding of longer term assets and if it creates too much systemic risk.
Pollock said the Fed's current operating status could be accurately characterized by the following: It's too big, with over $3.3 trillion in assets, it's too leveraged at 60 to 1, it's extremely short-funded and it's "a frequent contributor through its interest rate and money-printing action of gigantic systemic risk."
"Therefore, it follows pretty clearly from the same logic that we should break up the Fed," said Pollock, former CEO of the Federal Home Loan Bank of Chicago.
"Therefore, it follows pretty clearly from the same logic that we should break up the Fed," said Pollock, former CEO of the Federal Home Loan Bank of Chicago.
All in favour say aye! This story was posted on the moneynews.com Internet site during the East Coast lunch hour yesterday...and it's courtesy of Elliot Simon.
Exiting Q.E. could 'undermine the recovery', IMF warns
Central banks, including the Bank of England, strayed into “unchartered waters” by cutting interest rates to near-zero and launching billions of pounds of quantitative easing, and they will find the exit “difficult to control”, the IMF said. “The market response [to a rise in interest rates] will be less predictable ... possibly for several months or even years.”
Long-term interest rates could spike as investors dump over-priced bonds and banks could face a fresh round of losses on both their gilt portfolios and loan books as borrowers struggle to meet higher monthly payments, it added.
For the economy more broadly, though, the IMF said the risks were considerable. “The risk is interest rate volatility and overshooting in the adjustment of long-term rates. The potential sharp rise in long-term interest rates could prove difficult to control, and might undermine the recovery (including through effects on financial stability and investment),” it wrote in a policy paper.
It also argued that there was clear evidence of “diminishing returns” in continuing with existing policies like QE. The most effective policy now, it suggested, was “conditional guidance” of the sort used by the US Federal Reserve and under review by the Bank. It has also been championed by incoming Governor Mark Carney.
This news item appeared on the telegraph.co.uk Internet site at 4:00 p.m. BST yesterday...and it's Roy Stephens' first offering in today's column.
World from Berlin: 'Austerity Is Making European Economy Sicker'
The European common currency zone has now been in recession for six straight quarters, with three of the bloc's four largest economies now suffering persistent negative growth. Could the Continent's pursuit of austerity be backfiring? German commentators believe the answer is yes.
The European Union statistics office on Wednesday noted that nine of 17 euro-zone member states are now in recession, with France being the newest significant member of that club. Furthermore, the common currency zone, with bloc-wide declines in economic output for six straight quarters, is now struggling through its longest recession ever, worse even than the downturn in the immediate wake of the 2008 financial crisis.
The contraction was not huge; the euro-zone economy shrank by just 0.2 percent in the first three months of this year. And the German economy narrowly avoided recession, posting growth of 0.1 percent. But the situation in large economies such as Italy and Spain, both of which saw contractions of 0.5 percent in the first quarter of this year, is worrisome.
The currency area's persistent stagnation has raised concerns that Europe could be facing a "lost decade" like the one Japan recently lived through. Klaas Knot, head of the Dutch central bank and member of the European Central Bank board, is just one of many significant voices sounding the warning.
This article appeared on the German website spiegel.de early yesterday afternoon Europe time...and once again I thank Roy Stephens for bringing it to our attention.
China premier says little room for policy stimulus: media
China has limited room to use government spending and policy stimulus to boost its economy, China Premier Li Keqiang was quoted as saying on Wednesday, dashing hopes among some investors that Beijing may take steps to foster growth.
Li was quoted in the state-owned China Securities Journal as saying that though the economy faces considerable headwinds and uncertainty, China should allow market forces to do their work.
"If there in an over-reliance on government-led and policy driven measures to stimulate growth, not only is this unsustainable, it would even create new problems and risks," Li was quoted by the paper as saying indirectly.
His remarks were made at a meeting of the state council, or China's cabinet, on Monday after a series of data showed a recovery in the world's No. 2 economy faltered in April.
This Reuters story, filed from Beijing, was posted on their website in the wee hours of Wednesday morning EDT...and it's a little something I found in yesterday's edition of the King Report. It's definitely worth reading.
Japan storms back on weak yen, but Asia trembles
Japan’s economy has roared back to life as the radical reflation policies of premier Shinzo Abe drive a surge of consumer spending, but fears are growing that the tumbling yen could set off a broader Asian crisis.
Growth jumped to a 3.5pc rate in the first quarter, vindicating the government’s efforts to break Japan’s deflation psychology and lift the country out of its 20-year ice age. “Abe’s kick start appears to have succeeded,” said Flemming Nielsen from Danske Bank.
Retail sales are soaring as a “wealth shock” electrifies the economy. The Nikkei index has risen has 70pc since November, with foreign hedge funds among the first to jump on the bandwagon.
The weaker yen is already delivering a powerful punch, accounting for almost half the growth. The currency has dropped 30pc against the dollar and China’s yuan since August, and 37pc against the euro.
This Ambrose Evans-Pritchard commentary was posted on thetelegraph.co.uk Internet site early yesterday evening BST...and I thank Manitoba reader Ulrike Marx for sharing it with us.
Three King World News Interviews
The first interview is with Rick Rule...and it's headlined "This Is What I am Doing With My Own Money Right Now". Next is this commentary by Keith Barron. It's entitled "Premiums Soaring as Massive Run on Gold and Silver Continues". And last is this interview with Citi analyst Tom Fitzpatrick...and it bears the title "Five Incredibly Important Gold and U.S. Dollar Charts".
The World's Central Banks Added To Their Gold Stockpiles Even As Prices Tumbled
A new report from the World Gold Council shows that central banks bout 109 tonnes of gold in the first quarter.
This was the seventh straight quarter in which they purchased over 100 tonnes of gold.
Central banks held 31,735.4 tonnes of gold as of May 2013. This was up from 31,694.8 tonnes as of April 2013.
According to the WGC, Russia and South Korea were among the biggest buyers of gold.
This businessinsider.com story from yesterday was posted on their Internet site late yesterday morning...and I thank Roy Stephens for sharing it with us.
From Petrodollar to Petrogold: The US is Now Trying to Cut Off Iran's Access to Gold
The US is moving to broaden its 'blockade' efforts of Iran to the movement of pure gold into the Islamic Republic. The US-led embargo of Iranian crude succeeded in slowing the flow of petrodollars into the nation but as Foreign Affairs committee chairman Edward Cohen remarked, there is "no question that there is gold going from Turkey to Iran."
While the official line from US elite such as Bernanke remains that 'gold is not money' it appears that increasingly other nations would disagree, as Cohen admitted, "in large measure what we're seeing is private Iranian citizens buying gold as a protection against the falling value of Iran's currency."
It would seem somewhat self-evident that the US is admitting, by attempting to embargo this gold flow, that outside the US, the Dollar is becoming increasingly irrelevant (see China's gold demand); and that for many countries the petrodollar no longer exists, having been replaced by 'Petrogold'.
This Zero Hedge posting from yesterday was sent to me by Marshall Angeles...and it's worth reading.
Gold Demand in One Chart: Physical vs. ETF
China's demand for gold jumped 20% to 294 tonnes in the first quarter of 2013, while global gold demand overall slid 13% thanks to the dramatic rotation of demand from paper to physical. Chinese demand in gold bars and coins grew to 109.5 tonnes - more than double the five-year quarterly average of 43.8 tonnes.
Central banks added 109.2 tonnes of gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. But it was the Q1 ETF outflows of 176.9 tonnes, equating to a 7% decline in total gold ETF holdings that obscured the strong rise in investment for gold bars and coins at the retail level. In the face of the huge 'paper' gold ETF outflows, 'physical' gold demand surged to its highest in 18 months...
The charts are incredible...and this Zero Hedge story is a must read...and it's the second story in a row from Marshall Angeles.
Growth in demand for gold in India higher than China
Gold consumption reflected a strong revival over last year as Indian households flocked retail outlets to purchase gold jewellery owing to a fall in price of the yellow metal. As against a decline of 13% in global demand for gold, India reported a 27% increase in Q1 2013, surpassing China's demand growth of 20%.
While demand for jewellery increased by 15% to 159.5 tonnes as compared to Q1 2012, investment demand witnessed a significant rise of 52% at 97 tonnes in the January to March period this year, said a recent report released by the World Gold Council (WGC). The government on Thursday also slashed the import tariff value of gold to $466 per 10 grams from $472 per 10 grams.
"Demand growth was largely driven by rural households whose incomes benefited from a good late harvest," the report said. A 4% decline in local gold prices over the quarter further prompted jewellery purchase during the wedding season. Gold prices fell by Rs 500 to a one-month low of Rs 26,800 per 10 grams in the capital on Thursday. While domestic prices fell by over 3% during Q1, in April alone, gold prices fell by nearly 18% due to global factors.
While demand for jewellery increased by 15% to 159.5 tonnes as compared to Q1 2012, investment demand witnessed a significant rise of 52% at 97 tonnes in the January to March period this year, said a recent report released by the World Gold Council (WGC). The government on Thursday also slashed the import tariff value of gold to $466 per 10 grams from $472 per 10 grams.
"Demand growth was largely driven by rural households whose incomes benefited from a good late harvest," the report said. A 4% decline in local gold prices over the quarter further prompted jewellery purchase during the wedding season. Gold prices fell by Rs 500 to a one-month low of Rs 26,800 per 10 grams in the capital on Thursday. While domestic prices fell by over 3% during Q1, in April alone, gold prices fell by nearly 18% due to global factors.
This story showed up on The Times of India website early Friday morning IST...and it's definitely worth reading. I thank Ulrike Marx for digging this story up for us.
'Fundamentals always win eventually' -- but who will define 'eventually'?
Market analyst John Rubino remarks on the futility of technical analysis in a manipulated market like gold.
Rubino writes: "When big players with regulatory immunity can move an asset's price -- and can see resistance/support levels and moving averages just as clearly as anyone else -- smaller traders don't stand a chance."
"Fundamentals always win eventually," he adds, and maybe they do, but the question lately on the minds of gold investors may be whether fundamentals always win within the course of a normal human lifespan. As long as many gold investors -- including some very big ones -- buy paper gold, which can be created to infinity, instead of real metal; as long as the gold mining industry is so oblivious to the rigging of the price of its product and does nothing to defend itself; and as long as mainstream financial news organizations have no interest in committing actual journalism, central banks won't have to worry about any threat to their totalitarian power.
Those are the variables on which GATA continues to work.
Rubino's commentary is headlined "The Golden Bull's Eye" and it's posted at the 24hGold.com Internet site.
No surprises here, dear reader, as I've been saying this for years...and Chris Powell's opening preamble above is definitely worth reading more than once. As you have probably already figured out, I found this very short must read essay in a GATA release yesterday.
¤ THE WRAP
The government was set to protect man from criminals -- and the Constitution was written to protect man from the government. - Ayn Rand
It was another day where "da boyz" went to work in the thinly-traded Far East market before London opened for the day...so they were able to set the tone first thing in the morning in Europe. But the sell-off didn't last the long...and all the metals recovered most of their losses, or better, as the day went on.
But don't think for one minute that this had anything to do with what was going on in the dollar index, as it was nothing of the sort. It was just JPMorgan et al...and their high-frequency traders trying to force the last technical fund long holder to sell. As Ted Butler pointed out, we're already miles past the blood-out-of-a-stone moment. This is right to the bone...and now that they've reached that stage, prices cannot be forced lower, as that's just the way the pricing mechanism in the futures market works.
As I said in this space yesterday, if we do go lower, it won't be on a lot of real trading volume, as virtually all the price action we're watching right now is of the HFT variety...regardless of the time of day...and it's a very illiquid market.
Here are the 6-month gold and silver charts. As you can see, we've set a double bottom in the silver price, but we've still got a ways to go to get to the same position in gold. I'll be amazed if we get there, but I've learned never to say never.
(Click on image to enlarge)
(Click on image to enlarge)
And as I said further up, to get lower prices than this, someone has to sell a long position...or be prepared to go further short than they already are. As last week's Commitment of Traders Report showed, we're already in all-time record-breaking territory in some COT categories...both long and short...and I'm just trying to imagine what JPMorgan et al may have left in their bag of dirty tricks, but I'm not of a sociopathic bent, so I can't get into their head space.
While on the subject of the COT Report, we get the new one this afternoon at 3:30 p.m. EDT...and based on the price action for the reporting week that ended at the close of Comex trading on Tuesday, I'm expecting to see small declines in the Commercial net short positions in both silver and gold...but I reserve the right to be wrong... ;-) The only thing I'm sorry about, is that the price action from Wednesday and Thursday won't be in it.
But whatever numbers are, I'll have them for you tomorrow.
There wasn't a lot of price activity in gold and silver during Far East trading on their Friday, but the usual negative price biases developed about an hour or so before the London open ...and it remains to be seen what develops as the Friday session progresses from London into New York. Volumes, as of 3:42 a.m. Eastern time, are already very high...and obviously all of the high-frequency trading variety. The dollar index is up 21 basis points at the moment.
And as I hit the 'send' button on today's column at 5:15 a.m. EDT, the smallish sell-offs that came just before the London open haven't amounted to much...at least for the moment. Gold is down ten bucks...and silver is down two bits. Net volume in gold is already north of 40,000 contracts...and the gross volume in silver is a bit over 9,000 contracts. The dollar index is still up 20 basis points or so.
Considering the fact that it's Friday, I'll be ready for any price scenario when I switch my computer on later this a.m.
Enjoy your weekend...or what's left of it, depending where on Planet Earth you live...and I'll see you here tomorrow.
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