Chinese Citizens Buying Gold With Both Hands
Well, by the time I hit the 'send' button on Tuesday's column in the wee hours of yesterday morning, it was obvious that Wednesday was going to be a bad day for both gold and silver… and it was. Platinum and palladium got creamed as well… especially palladium.
But none of the precious metals prices went down of their own free will… they had some help. It's obvious looking at the gold graph that there were four different bouts of selling… with the first one starting at exactly 8:00 p.m. Eastern time during early Wednesday trading in the Far East. This point was also gold's high price of the day of around $1,127 spot. The next sell-off began around 9:30 a.m. in London, the third time was shortly after 9:30 a.m. in New York… and the last time was shortly before lunch. The last little sell-off just before noon took gold to its low of the day at $1,185.90 spot.
Silver's high for Wednesday was its opening price in Far East trading yesterday… $18.99 spot. But from there, the silver graph pretty much looked like the gold graph… with the only major difference being that silver got its final clubbing to its low of the day [$17.92 spot] shortly after lunch in New York… whereas gold got sold down to its low just before lunch. Normally the bullion banks arrange for both metals to bottom at the same time. Not yesterday.
The U.S. dollar, at least recently, has become completely disassociated from the what's happening in the precious metals. On Tuesday, the dollar had a huge rally, which had no effect on gold. Yesterday, the dollar fell out of bed starting at 6:30 a.m. Eastern time… and about nine hours later at 5:15 p.m. in New York, the dollar bottomed… down about 130 basis points. When the bullion banks are lurking about, it obviously doesn't matter what the dollar is doing.
The shares got smoked… and, as per my comments above, the bullion banks added to the panic decline in the shares by selling both gold and silver off hard moments after the New York market open at 9:30 a.m. But at least the HUI didn't finish on its low of the day… but the damage was bad enough… down 4.37%. The HUI's low of the day came at gold's low… about 11:50 a.m. yesterday morning.
The CME Delivery Report showed that 65 gold and 2 silver contracts were posted for delivery on Friday. The GLD ETF reported adding a small amount yesterday… this time it was 97,849 troy ounces. There was no changes in SLV… but there's no doubt in my mind that this big decline in silver prices [conveniently orchestrated by their custodian… JPMorgan] allowed them to cover a large number of the shares that they were forced to short because they couldn't deliver physical silver into the SLV. Funny how that all works, isn't it… and this isn't the first time that's happened, either.
Over at the U.S. Mint they reported selling another 18,000 one-ounce gold eagles… bringing the monthly total up to 110,500. The Comex-approved depositories reported a rather large 903,574 ounces of silver were withdrawn from their warehouses on Tuesday. There was activity in all four warehouses… so Tuesday's depository report is worth a look… and the link is here.
My first gold-related offering is this video dated May 17th that was sent to me by reader U.D. It's an excellent clip about the soaring gold demand in China. Even I was amazed by this… as the sheer numbers of people going through this gold store was a sight to behold. A situation like this in the United States is currently impossible to imagine, as stores like this do not, and never will, exist there. It's a skynews.com video posted over at youtube.com… and it runs for two and a half minutes. It's the sort of clip you have to watch more than once… because you're too busy watching everything to listen to everything the reporter is saying. The link to the video, which is headlined "Chinese Dumping Worthless Currency for Gold", is here… and enjoy!
The reporter in the above story quoted George Soros as saying that gold is the ultimate bubble. That's not correct. What Soros said was that gold will be the ultimate [as in final] bubble.
Here's a palladium story that was posted over at Bloomberg, which was sent to me by Australian reader, Wesley Legrand. It's hard to understand why palladium was hit for over 9% at one point yesterday, when bullish stories like this surface. The headline reads "Russia Palladium Stockpiles May Be Over"… "Russia, the world’s biggest palladium producer, may have exhausted state inventories of the metal, removing a key source of global supply." The rest of the story is even more bullish than that. But I suppose palladium was like the U.S. dollar yesterday… when the bullion banks are laying waste to the precious metals… there are no safe harbours, no matter how positive the news. The link to this must read story is here.
My last gold-related story is an essay by Adrian Ash from bullionvault.com. It's posted over at safehaven.com and bears the headline "Gold Gets All Political". Adrian floats the disturbing possibility that governments, looking around for easy sources of revenue, may decide to tax the private ownership of gold. Whether it's possible or not is another question entirely… but it is food for thought… and I suggest you take the time to run through this article… kindly provided by reader U.D… and the link is here.
Toronto-based Inter-Citic Minerals Inc. (TSX: ICI) is a gold exploration and development company, developing what could be one of China’s largest open-pit gold deposits. Inter-Citic’s 279 sq km Dachang Gold Project in Qinghai Province, China, with 50,000 meters of drilling underway in 2008.
The total NI 43-101 compliant Inferred Mineral Resource Estimate at Dachang now stands at 2.9 million oz Au contained (approximately 25 million tonnes with an average grade of 3.6 gpt Au), with more drilling underway on the DMZ to further define the existing 43-101 inferred mineral resource estimate in preparation for a scoping study, as well as additional drilling in highly prospective new areas focused on resource expansion. Gold mineralization in the Dachang Main Zone begins at surface and has not been significantly drilled below 150 meters, and numerous known areas of surface gold mineralization on adjacent and other parts of the property have the potential for further discoveries. The Dachang Main Zone itself remains open at depth and along strike.
Under a 30-year joint venture agreement with the Qinghai Geological Survey Institute (QGSI – the provincial geological survey body), Inter-Citic has a fully-vested 83% interest in the property, with 17% belonging to QGSI. Inter-Citic has a further option to increase its total interest to 90% at pre-feasibility. The Dachang property consists of several exploration license areas. They have all been renewed by the Company as they have come due in regular course. The business license for the Dachang Gold Project is currently valid to December 26, 2033.
The next story is one that I lifted from yesterday's edition of the King Report. It's an article posted in yesterday's edition of The Washington Post. The headline reads "SEC proposes rules to prevent another 'flash crash'". Bill King's comments regarding this situation, were as follows… "If the SEC had more integrity or common sense, it would ban flash trading. But the US is creating oligarchs, like Russia did when it was imploding. So a handful of privileged elites can front run all orders on all exchanges. This is infuriating, nauseating and symptomatic of a corrupt society in decline." I concur totally… and the link is here.
This next item is real estate-related and comes courtesy of reader Scott Pluschau. It's headlined "Mortgage delinquencies drag on economic recovery"… and is posted over at finance.yahoo.com. "More than 10 percent of homeowners with a mortgage had missed at least one payment in the January-March period, the Mortgage Bankers Association said Wednesday. That's a record high and up from 9.1 percent a year ago." The story is worth your time… and the link is here.
Here's another item courtesy of reader U.D. This time it's a story that's posted over at us.com. The headline reads "Toughest test comes after graduation: Getting a job". Among 2009 U.S. college graduates, 80% moved back home with their parents after graduation, according to a poll by entry-level job site CollegeGrad.com. That's up from 77% in 2008, 73% in 2007 and 67% in 2006. The link to the story is here.
Reader Scott Stephens just sent me the following story that was posted late yesterday evening at The Telegraph in London. It is, as usual, by Ambrose Evans-Pritchard… and the headline reads "Germany's 'desperate' short ban triggers capital flight to Switzerland". This is a longish piece, at least for Ambrose… and it's definitely worth reading, as all is not well in either Euroland in general, or Germany in particular… as it appears that the short ban set off instant capital flight to Switzerland. BNP Paribas said €9.5bn flowed into Swiss franc deposits in a matter of hours on Wednesday morning. The link is here.
Lastly today is another story that I lifted from yesterday morning's King Report… which was all over the Internet by the end of yesterday. This copy is posted over at businessinsider.com… and the headline tells all… "Dow Theorist Richard Russell: Sell Everything, You Won't Recognize America By The End Of The Year". The last paragraph of the article is particularly poignant… but if I were you, I'd read the whole thing… and the link is here.
I'm not going to disagree with the Richard for one second. It's been my opinion for years now, that the Dow is only worth ten cents on the dollar… if that. Of course the President's Working Group on Financial Markets may have other ideas… and I'm sure that they were the ones that caught the falling knife on May 6th. Time will tell.
Civilization exists by geological consent… subject to change without notice. – Author Unknown
I see that the bullion banks are at it again. This time they started at 2:00 p.m. in Globex trading in Hong Kong. They hit all the precious metals… gold, silver, platinum and palladium all at the same instant… and set new lows for this move down. Without a doubt there's considerable liquidation of spec longs going on with each new low that is set… and I wouldn't be surprised if there were more new lows set not only today… but maybe for the rest of the month. The bullion banks are obviously very serious this time.
Volume is moderate in gold… and very heavy in silver… at least for this time of day, which is currently 5:31 a.m. Eastern time.
Here's the 3-year silver chart. Silver broke below its 50-day moving average by a whole four cents yesterday… and the boys may be gunning for the 200-day moving average as well. I'm sure that they'll use every dirty and illegal trick in the book to do what they want to do. There's no one to stop them, as it appears that both the CFTC and SEC aren't going to raise a finger against them.
One thing of note that I'm going to watching for today is the April update to the Central Bank of Russia's website. When they do update it, they show how much gold they purchased for that month. They've already purchased a record amount in Q1/10… and I'm really interested to see if they keep up this blistering pace. I'll be surprised if they don't… and I'll report on this [complete with graph] in my Friday commentary.
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I'm sure that precious metals trading in New York will prove to be interesting once again.
See you on Friday.