Are we having fun yet?
Gold didn't do much until London opened for trading on Wednesday morning. From that point, gold rose to its high of the day [around $1,247 spot] during the London lunch hour… shortly before New York opened for business.
But once that high was in, it was all virtually straight down from there… with the low of the day [$1,223.60 spot] coming at the London p.m. gold fix… which was minutes before 10 a.m. in New York. From that low, the selling pressure disappeared… and gold rose back to within a couple of bucks of Tuesday's close. Volume, once again, was not overly heavy.
The silver price followed exactly the same path as gold… with the high of the day just under $19 during the London lunch hour. But [like gold] once the Comex opened, the bullion banks pulled their bids and the price cratered… with the low of the day [$18.32 spot] coming about a half hour after the London p.m. gold fix. Unlike gold, silver was not allowed to recover much, as every tiny rally attempt got sold. Silver finished the day down 29 cents from Wednesday's close.
The dollar had an interesting day yesterday… doing nothing until 9:00 a.m. Eastern time when it gained over 45 basis points in an hour… hitting its zenith at precisely 10:00 a.m. Then, during the next four and a half hours, it lost about 70 basis points. This is sure a wonderful reserve currency the world has here.
Considering the pounding that gold and silver took before the equity markets opened for business yesterday, the precious metals shares did surprisingly well… with most of the silver stocks putting in a reasonably strong performance. Despite the rather modest gain of only 0.47% in the HUI… a lot of the non-HUI stocks did much better than that.
The CME's Daily Delivery report showed that 79 gold and zero silver contracts were posted for delivery tomorrow. It was all the usual suspects once again… and the link is here. Neither GLD nor SLV had a report yesterday… and U.S. Mint didn't either. But the Comex-approved depositories showed a decline of 340,500 troy ounces of silver on Tuesday. And, once again, all the frantic activity was at Brink's and HSBC USA. The link to the action is here.
As I mentioned in this column yesterday, options expiry for the June contract is today… at the close of trading on the Comex. Market analyst Peter Grandich reminded his readers of that fact… and that the day's futures price plunge is just the "regular thievery" that takes place every month… but has no lasting effect. Grandich's commentary is headlined "The Farce and the Fact". It's a short piece… but very much worth the read… and the link is here.
The next gold-related story is a GATA release from early Wednesday morning. Jim Richter, editor of The Richter Report, provides a comprehensive explanation, supported in the historical record, as to why central bankers care very much about gold… and even perceive it as their deadly enemy. Richter's commentary is headlined "A Look at Gibson's Paradox and Gold". This is a bit of a read, but I think it's worth your while… and the link is here.
As I said on Tuesday, we hadn't heard the last of Saudi Arabia's mysterious doubling of their gold reserves. Writing for Resource Investor, Jeffrey Nichols of Rosland Capital in Santa Monica, California, notes the sudden more than doubling of the gold reserves reported by Saudi Arabia… and speculates that Saudi Arabia and other oil-exporting nations are likely buying gold "on the sly through their sovereign wealth funds that do not necessarily report their investment holdings." If so, the gold suppression scheme of the paper pushers in London and New York may be very near its end. Nichols' commentary is headlined "Looking Behind the Saudi Gold Holdings Increase". This is a must read… and the link is here.
Here's an interesting story that reader Steve Colton sent to me in the early hour of Thursday morning. It's a finance.yahoo.com article bearing the headline "Coeur Enters into Agreement with China National Gold for Processing of Kensington Gold Concentrates". The Kensington mine in Alaska, which is scheduled to begin production shortly, is expected to produce 50,000 ounces of gold this year and average approximately 125,000 ounces of annual gold production over an initial 12.5 year life based on current reserves of 1.5 million ounces. The contract with China National Gold relates to approximately half of the concentrates to be produced at Kensington. It's a very short read… and the link is here.
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I have a couple of non-gold related stories that are worthy of your attention.
Here's a couple of real estate related stories. The first is one that I actually found on my own! It's a Bloomberg piece bearing the headline "Sales of U.S. New Homes Plunged in May to Record Low". Purchases of U.S. new homes fell in May to the lowest level on record after a tax credit expired, showing the market remains dependent on government support. This sort of news should be no surprise to you, dear reader, as the entire U.S. economy [if not most of the western world] is currently being held aloft by massive government spending of borrowed money. One can only wonder what would happen if the U.S. government [through the Fed, the Treasury and Wall Street] stopped propping up the stock market, bond market… and U.S. dollar. As I've said over the years, when that day comes, the world's economic, financial and monetary system will lie in smouldering ruins within five business days. The link to the story is here.
Here's a story from the 'you can't make this stuff up' department. It's from the June 12th edition of The Washington Post. The headline reads "Economists consider tearing down homes to protect housing market". As reader Ken Metcalfe [who sent me the article] said… "Somebody pinch me so I can wake up!" The link to the story is here.
My last story of the day is also gold related. It's a monster read, so you may want to save it for when you have more time. I'm posting it now, because I have another huge read that I'll be linking in my Saturday commentary… and I don't wish to drop both on you on the same day.
This story was also posted as a GATA release yesterday… and I'm just going to 'borrow' Chris Powell's preamble once again.
Erste Group Bank in Vienna, long a vigorous advocate of gold ownership and monetization, has just published a magnificent report on gold's prospects, which the bank finds extremely bullish. The report includes a long section on manipulation of the gold market that cites many things GATA has publicized, including the complaint by London metals trader Andrew Maguire that GATA carried to the March 25 hearing of the U.S. Commodity Futures Trading Commission, and CPM Group executive Jeffrey Christian's testimony at that hearing about the extraordinary leverage used by traders on the supposedly physical gold market in London. The 71-page report is entitled "Special Gold Report: In GOLD we trust"… and is posted over at the gata.org website… and the link is here.
We have tried spending money. We are spending more than we have ever spent before and it does not work. We have never made good on our promises. I say, after 8 years of the Administration, we have just as much unemployment as when we started… and an enormous debt to boot! -Henry Morgenthau, Secretary of the Treasury during the New Deal,May 1939
It's obvious that 'da boyz' have more work to do to keep gold and silver in the summer doldrums. How long this will continue is anyone's guess. Will it end with options expiry today? Don't know. It's also possible they may keep this up until the end of the month, as silver is their main target… and they're using gold to beat the crap out of silver at the same time.
Both metals came under selling pressure at, or shortly before, the London open this morning. But, as you already know, the real show starts at the Comex open… just like it did yesterday. We'll find out soon enough what the bullion banks' intentions are. Most of the action should occur before the London p.m. gold fix at 3:00 p.m. local time… 10 a.m. Eastern time. But that price pattern may be different today because of options expiry.
Volume is not overly heavy at the moment… 5:10 a.m. Eastern time… but that will change once the bullion banks start trading in New York.
If we do have another big down day today, I'm going to be really interested in seeing how the precious metals shares react to all of this… because they did surprisingly well in the face of such a huge sell-off yesterday.
As you know, I'm still 'all in'… and that hasn't [and won't] change until this gold and silver market hatches into something. Whenever this 'correction' in the gold and silver prices come to an end, I feel that you should be seriously considering investing in the precious metals markets, as this fall could be really ugly in every other sector. Casey Research's flagship publication… the International Speculator… and Casey's Gold and Resource Report are both excellent monthly publications that will show you where your investment dollar should go. And don't forget about the money-back guarantee if you're not 100% satisfied.
See you on Friday.