Gold Demand Up 36% in the Second Quarter: WGC

The gold price was pretty flat during Far East trading, but tacked on about five bucks shortly after London opened yesterday morning.  Then it didn't do much until New York opened… and from that point, gold rose to around $1,241 spot… and bounced off that price ceiling for the rest of the day… before closing at $1,240.00 spot right on the button.  Not exciting action, but still up about ten bucks on the day.  Gold's high tick was $1,242.60 spot.

Silver's price action was somewhat similar… almost ruler flat until about an hour after London opened.  From that point it spiked up about twenty cents… and remained even more ruler flat until Comex trading began.  Then, silver rose slowly but steadily all through floor trading… breaking through the $19 mark right at the Comex close… but traded flat after that.

Silver was the star of the day… and its high price tick checked in at $19.07 spot at the Comex close.  Without a doubt it would have powered higher… however it looked like someone made sure the party ended at the close of floor trading.

The dollar bounced around quite a bit yesterday and basically finished unchanged from Tuesday.  Its price movements were totally irrelevant to the gold price action yesterday.

Despite the fact that gold basically traded sideways from 9:30 a.m. Eastern time onwards on Wednesday… the shares were on a tear all day long… with the HUI closing at its high of the day… up an even 3.00%.  And this was in the face of a Dow that spent most of yesterday clawing its way back above the 10,000 mark.  It was a very impressive performance… and, not surprisingly, the shares in most silver companies did particularly well.

Wednesday's delivery report showed that 185 gold contracts were posted for delivery on Friday.  The big issuer was the Bank of Nova Scotia… and the big stopper was HSBC.  The link to the action is here.  Neither the GLD nor the SLV had anything to say for themselves yesterday… and the U.S. Mint had a tiny sales report indicating that they had sold an additional 150,000 silver eagles, bringing the monthly total up to 1,806,000.  As I've said many times, dear reader… I sure hope you're buying your share.

Over at the Comex-approved depositories there was a fair amount of 'in and out' movement… and by the end of Tuesday's activity, total warehouse silver stocks declined 198,457 troy ounces.  The link to that action is here.

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Today's first story shows you how desperate some governments are getting… trying to suck every penny out of the consumer.  It was sent to me by Washington state reader S.A.  The headline of this Wall Street Journal story reads "Sliced Bagels, Taxes on Top".  In New York, the sale of whole bagels isn't subject to sales tax. But the tax does apply to "sliced or prepared bagels [with cream cheese or other toppings]," according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it's never been touched by a knife, it's also taxed.  The rest of the story is linked here… and I found it a little slow to load.

Washington state reader S.A. has one more story for us today.  This was posted at Bloomberg yesterday and bears the headline "Morgan Stanley Analyst Says Governments to Default".  Investors face defaults on government bonds given the burden of aging populations and the difficulty of increasing tax revenue, according to a Morgan Stanley executive director.  The sovereign-debt crisis is global "and it is not over," he wrote.  Suddenly sovereign debt default has gone mainstream in the U.S.A.  The link to this very worthwhile story is here.

Here's a story that I ripped out of a GATA release yesterday.  Chris Powell's headline for it read "There are no markets, just manipulations".  The Reutersstory itself is headlined "Firm Faces Civil Charges for Oil-Trading Mayhem".  A big high-frequency trading firm faces possible civil charges by regulators after its computer ran amok and sparked a frenzied $1 surge in oil prices in February, according to documents obtained by Reuters and sources familiar with the continuing investigation.  It's a longish story that leads you into the HTF arena… and shows you what can happen when computers run wild.  The link to what I consider a must read story, is here.

Yesterday I ran a big piece by Egon von Greyerz from Matterhorn Asset Management in Switzerland entitled "There Will Be No Double Dip".  Here he is again… this time he's interviewed by CNBC Squawk Box in Europe.  The interview is from last Thursday.  I thank Australian reader Wesley Legrand for sending this along.  It's 9:24 in length… and it's well worth listening to… and the link is here.

Here's a piece on gold consumption in China by Adrian Ash that's posted over atsafehaven.com.  It was sent to me by reader U.D… and the headline reads "China's Gold Demand: Saving, Not Spending".  It's a short piece, with a great graph… and the link is here.

Here's a Bloomberg story that was filed from Seoul this morning.  It's courtesy of Russian reader Alex Lvov… and the headline says it all… "Bank of Korea 'Under Pressure' to Buy Gold, Oh Says" "Given that central banks in India, Russia and China have bought gold for defense, the Bank of Korea can't help but feel under pressure to consider purchases for diversification," said Oh Kyu Chan, Seoul-based head of the overseas fund of funds team at Shinhan BNP, which operates Korea's biggest gold fund.  Kang Sung Kyung, a senior official at the bank's reserve-management department, had no comment today on plans for gold purchases.  The link to this rather short story is here.

The most important gold story of the day came from a report put out by the World Gold Council yesterday.  Reader Scott Pluschau was the first person through the door with this article in the wee hours of yesterday morning… but I'm using the link provided by Russian reader Alex Lvov, because I consider the commentary that goes with it to be far more useful.  It's a posting over atzerohedge.com that bears the headline "Gold Spikes As World Gold Council Says Gold Demand Surged 36% In Q2, Sees Ongoing Demand Out Of China And Europe".  One can only imagine, dear reader, what physical gold [or silver] demand will be like when this bull market in precious metals really gets off the ground with the general public.  The delivery shortages that we experienced last year will prove to be insignificant compared to what they might be like in the months and years ahead.  The link to this must read article is here.

Well, it was another interesting day yesterday.  Ted Butler mentioned that, without doubt, there was deterioration in the short positions of both gold and silver… as the tech funds were certainly buyers… and the bullion banks went short against all comers.  It just remains to be seen how bad it was… and who was doing the shorting.  Volume in both metals was pretty heavy.  Since all this happened on a Wednesday, we won't see any of this until next Friday's Commitment of Traders report.

Today is options expiry in the OTC market… and options expiry in the futures [Comex] market is on Friday… and, after the action we've seen on both Tuesday and Wednesday, I'm not sure what to expect during the next two days of trading New York.

Dave Morgan over at silver-investor.com has a video commentary giving his thoughts on what happened yesterday… and what it might portend.  It's less than two minutes long… and well worth your time.  The link is here.

Very little happened during the Thursday trading day in the Far East… and precious little is going on now that London is open.  Volume in both metals is virtually non-existent as of 5:42 a.m. Eastern time.  That will change when the New York bullion banks step up to the plate this morning… and we should be prepared for anything, as we are now sailing in uncharted waters.

See you on Friday