Detroit to Bulldoze Thousands of Homes in Fight for Survival
Like Thursday's price action… I wouldn't read much into Friday's trading action either. There was extremely thin volume in all metals. Gold sold off about 1% once the Comex opened… but gained it all back in what I think was a short covering rally that started shortly after 11:00 a.m. in New York. Gold actually finished up a couple of bucks on the day. Both gold's high and low price came in New York trading. The lows was $1,201.40 spot… and the high was $1,216.10 spot.
Silver's high price of the day occurred about an hour after trading began in London yesterday… with the high around $12.65 spot. It was mostly down hill from there… with a mini sell-off at the Comex open. The low price of the day [$18.22 spot] was in New York trading… and the price spent a couple of hours bouncing off that low before recovering a bit [in sympathy with gold] into the close.
Gold and the dollar were pretty much un-correlated again yesterday. If this trend continues, I will probably drop the U.S. dollar as a talking point in this column. What interests me at the moment is what will happen to gold and silver once we have a serious decline in the dollar… as the current dollar rally has been living off the recent [and deliberate] downgrades of European sovereign debt. With the Euro in the toilet… it remains to be seen what might cause it to rally… and the dollar to crater. Here's the 3-year dollar chart to emphasize my point.
I wouldn't read a lot into the precious metals share price action, either. The Dow was in negative territory all day, which sort of surprised me… but the downgrade of Spanish sovereign debt just added to the litany of woes that most world equity markets face. The sell-off, and subsequent recovery, of the gold price in New York barely showed up in the share price action at all. The HUI finished down an even 1.00%.
Friday was first notice day for delivery into the June gold contract. The CME Delivery Report showed that 3,389 gold contracts and zero silver contracts were posted for delivery on Wednesday, June 2nd. The list of issuers and stoppers was huge. The issuers were names that you probably wouldn't recognize… but the big stoppers were all bullion banks… with the '4 or less' traders taking the lion's share of the contracts delivered. The action is worth looking at… and is linked here.
The GLD ETF showed no changes on Friday… but the SLV reported receiving another chunk of silver. This time it was 1,273,911 troy ounces.
The U.S. Mint had another report yesterday. They indicated that another 6,000 one-ounce gold eagles had been sold… along with a very tiny 25,000 silver eagles. Month-to-date, one-ounce gold eagles sales were 190,000… and year-to-date they're at 521,500. Silver eagle sales for May totaled 3,636,500… a monstrous number… but not over the 4 million mark. Year-to-day, silver eagles sales total a gargantuan 15,167,500. The U.S. Mint is cranking out over 3 million silver eagles a month. If that rate continues for the rest of the year, the U.S. Mint will have basically consumed every ounce of silver that will be produced in the U.S. for 2010… and that, dear reader, is a lot!
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As a side show to all this, the 24k-gold buffalo sales numbers for May were 70,500 bullion coins. The U.S. Mint has only been producing this coin for two months so far this year… and total sales are already at 127,000. One has to wonder how long their stock of blanks will last… and whether the program will be terminated for the year once they've used them all. Time will tell.
The Comex-approved warehouses showed that 540,090 ounces of silver were taken into their collective inventories on Thursday. The link to the action is here.
The Commitment of Traders report for positions held as of the close of trading on Tuesday, May 25th showed improvement in the Commercial categories of both silver and gold. In silver, the bullion banks decreased their net short position by 7,769 contracts… a pretty impressive number. In gold, the bullion banks improved their net short position by 11,365 contracts.
In silver, the '4 or less' bullion banks in the Commercial category of the COT are still short 244.4 million ounces of the stuff… and the '8 or less' bullion banks are short 319.5 million ounces. In percentage of world silver production… the '4 or less' bullion banks are short 36% of world silver production… and the '8 or less' traders [which includes the '4 or less' traders] are short 47% of world silver production. How concentrated does the short position have to get before the CFTC will act? Just asking.
In gold, the '8 or less' traders are still short virtually 100% of the entire Commercial net short position… which now sits at 26.8 million ounces. The link to the COT report is here.
Silver analyst Ted Butler had his usual Friday interview with Eric King over atKing World News… and the link to that is here. As per usual, I urge you to stop at this point and listen to what Ted has to say.
The first story for today I found when I was poking around at The Telegraph's website late last night. Just in case the American press didn't run with it, I thought I'd include it here. Tired of Detroit's status as the symbol of everything wrong with urban America, its new mayor has come up with a radical solution: to bulldoze the city. I'd heard rumours that this sort of solution for 'Motor City' was in the works… but to see it printed in a major world newspaper is something else again. It's depressing, shocking… and sad. But you have to read it anyway. The headline states "Detroit to bulldoze thousands of homes in fight for survival"… and the link is here.
While on the subject of U.S. cities in trouble… here's a Reuters story of interest. Two years after Vallejo, California filed for bankruptcy protection, officials in nearby Antioch are also tossing around the 'B' word. The headline reads "Bankruptcy talk spreads among California muni officials". I thank reader Scott Pluschau for sending it along… and the link is here.
The next story posted at bloomberg.com is courtesy of Washington state reader S.A. It's a story I touched on earlier in my column… the loss of Spain's AAA rating. Now it has been lowered by Fitch to AA+. In actual fact, dear reader, Spanish debt is really junk… as is the sovereign debt of most nations on earth. The headline reads "Spain Loses AAA Rating at Fitch as Europe Battles Debt Crisis"… and the link is here.
Here's a story from today's edition of The Wall Street Journal which features GATA consultant Edwin Vieira. The headline reads 'Pieces of Eight': The Constitution and the Dollar. I've met Edwin… and have heard him speak. He's a great speaker and there are no flies on him at all. The article would normally require a subscription to view, but GATA has posted it in the clear… and the link is here… and it's worth the read.
Earlier this week I ran a King World News interview with Pierre Lassonde… one of the living legends of the mining and resource world with over 35 years of experience. Here's part two of that interview. If you missed part one… it's linked on the second interview page as well. Both are well worth your time… and I urge you to listen to both. The link to part two is here.
Lastly today is the latest Markets at a Glance commentary from Eric Sprott and David Franklin over at Sprott Asset Management in Toronto. This month's commentary is headlined "A Busted Formula". It's definitely worth the read… which I've already done myself… and the link is here.
Today's 'blast from the past' needs absolutely no introduction… everyone knows the song… and the artist. May his soul rest in peace. So turn up your speakers and click here.
On a lighter note… here's a comedy classic. It was sent to me by reader Gerold Becker, and involves Dean Martin and Foster Brooks. It's a hoot… so click here. The second one is an interview between Tonight Show host Johnny Carson and Dolly Parton. And, as Carson says in the intro, he couldn't restrain himself this time… and just had to say what he thought. The moment is now part of TV comedy history… and the link to that is here. Enjoy!
Next week is the beginning of a new month. May was a disaster for world equity markets… and makes one seriously wonder how June will fare. The world is still circling the economic, financial and monetary drain… and all the money [created out of thin air] that's being thrown at it, won't change the final outcome one bit… except to make matters worse and delay the inevitable.
For my American readers who are enjoying a long weekend… I hope it's a good one.
See you on Tuesday.