HSBC's Head of Gold Trading Bows Out of CFTC Hearing
Wednesday's gold price action started off just like it did on Monday and Tuesday… trading sideways [despite an ever-rising dollar] until 2:00 p.m. in Hong Kong before the selling began. From that point, gold fell about $14 until a temporary bottom came at 8:40 a.m. in New York. Then gold gained a couple of dollars as the dollar flat-lined for about six hours. Then at precisely 1:00 p.m. Eastern time, a not-for-profit seller sold gold down another $7 to it's low price of the day… which was $1,084.50 spot. The 5:15 p.m. New York close came at the dollar's high of the day, which was 82.00 cents.
Silver's price path was similar, except it was under pressure almost right from the Sydney open on Wednesday morning… as the high price of the day [around $17.04 spot] was during Globex trading moments before that. From that point on, the silver chart looked pretty much like the gold chart, except silver's low came moments before the close of electronic trading in New York… and was reported as $16.54.
This big correction wasn't confined just to gold and silver… as platinum was down $30… which was a drop of 1.87%… and palladium was down $22… a whopping 4.73%.
The dollar gained almost a full cent during Wednesday's trading day… with the top coming [as I mentioned earlier] at the close of electronic precious metals trading at 5:15 p.m. yesterday. But to say that gold and silver mirrored the dollar price action would be a bit of a stretch once again.
Precious metals shareholders hit the sell button the moment that the equity markets opened at 9:30 a.m. yesterday morning… the HUI gapped down about 1.5%… and from there, it slowly declined to close virtually on its low of the day. The HUI finished down a whopping 4.19%. Ouch!
As I mentioned in my commentary yesterday, it was my opinion that because of Tuesday's price action, we would see an increase in open interest when the numbers came out Wednesday morning. Well, I was half right. Gold o.i. rose a healthy 4,497 contracts. Volume was a chunky 193,518… but a lot of that was roll-overs into future months. Silver's volume yesterday was 33,482 contracts… but I was pleasantly surprised to see that o.i. actually fell 797 contracts. All this will be in tomorrow's Commitment of Traders report.
The CME Delivery Report showed that 6 gold and 21 silver contracts are up for delivery on Friday. There were no reported changes in GLD, SLV… or the U.S. Mint's sales numbers. Because the Comex-approved warehouses didn't have a report on Tuesday, I have a couple of numbers to report today. Tuesday's report showed that silver stocks declined 642,005 ounces on Monday… and yesterday's report showed they added 141,532 troy ounces on Tuesday.
A lot of stories today… most of them about precious metals. The first is a piece that I borrowed from Kitco yesterday. It's a Reuters story filed from Moscow headlined "Russian gold lobby sees Q1/10 output down 10%". The story is only a handful of lines… and the link is here.
The next two stories are the only two non-gold related stories that I have today… and they are definitely worth noting. Both were provided by reader Scott Pluschau. As state and county budgets get squeezed, the axe is starting to fall. The first story is posted over at cbs2chicago.com and bears the headline "4-Day School Weeks Might Be Coming In Illinois" The link is here.
Scott Pluschau's second offering is from wcbstv.com… and is filed from New York City. The headline says it all… "Massive Job Cuts Projected For NYC". NYC Mayor Michael Bloomberg says that if Albany slices city aid, the ensuing layoffs will be the worst in decades… as 19,000 jobs will vanish. The link to that story is here.
Today's first real gold story is from The Telegraph in London. The headline is an eye-opener… "Explain why you sold Britain's gold, Gordon Brown told"… "Gordon Brown has been ordered to release information before the general election about his controversial decision to sell Britain's gold reserves." This is a hugely important story… and is a must read from one end to the other. It's embedded in a GATA release titled "British PM ordered to disclose info on gold sales"… and the link is here.
The next story is directly related to the one above… and it's posted over at Jesse's Café Américain website. The story from The Telegraph is posted there as well… but it's the preamble to the story that is a must read… as the information in it is crucial for understanding the international scope of the gold market management scheme. The headline to this piece reads "Brown's Bottom is an Enormous Issue in the UK: Was This a Bailout of the Multinational Bullion Banks Involving the N.Y. Fed?"… and the link is here.
Here's a really interesting article that's posted over at the mineweb.com. It appears that Mineweb reporter, Dorothy Kosich, was asked to leave what was billed as a public meeting of the Nevada Mining Association on Tuesday in which lobbyists, elected officials, executives from other mining and trade associations, and their spouses were present… so they could discuss a serious breach that has developed between independent and junior mining company geologists and major mining companies who are members of the NvMA. The headline reads "Mineweb not permitted to report on luncheon debating $27.5 million in new Nevada claims fees". It's an interesting read… and I thank Casey Research's Jeff Clark for bringing it to my attention… and the link is here.
Jeff Clark is the editor of Casey's Gold & Resource Report… a monthly newsletter that costs a ridiculously small $39/year for a subscription. I urge you to click on the link and check it out.
Here's a piece out of GATA chairman Bill Murphy's MIDAS commentary over at lemetropolecafe.com yesterday that will be of interest.
"This morning Adrian [Douglas] and I met with Gordon Liddy of Watergate fame … very nice man. This afternoon it was an interview with BNN’s Pat Bolen. "What a coincidence to be meeting with Mr. Liddy today. Late yesterday, GATA’s own 'Deep Throat' surfaced. It's a bombshell of sorts, a whistleblower who is confirming what GATA has to say about market manipulation and the bullying nature of The Gold Cartel traders. Evidence of a certain nature will be presented tomorrow by Adrian or me in the Q&A period. I mentioned it in my BNN interview and suggested viewers stay tuned.
"Adrian just informed me [that] the head of precious metals trading at HSBC has bowed out from presenting, instead handing the ball off to a trader who won't have the full deck of information about what HSBC is really up to. Meanwhile, JP Morgan won't be represented at all." END
This 'Deep Throat' character was a surprise to me, as much as it is for you. I first heard about it when I read Bill's commentary yesterday. And HSBC USA is sending a second stringer to the hearings today. I knew that JPMorgan wasn't going to be there… but now the head of precious metals trading for HSBC bows out. Maybe he didn't want to sit their and have to lie his ass off. I don't know about you, dear reader, but this stinks to high heaven.
And lastly comes this important information. The U.S. Commodity Futures Trading Commission [CFTC] has finally posted an Internet link planned for video broadcast of the commission's hearings on futures and options trading in the precious metals markets. The hearing is scheduled to start at 9 a.m. Eastern time this morning. Click here for that link.
I noted the following headline over at thestreet.com yesterday… "Portugal Sinks Gold Prices". "Portugal is now in the spotlight after Fitch downgraded its rating to "AA-" from "AA" with a negative outlook. The news pressured the euro, lifted the U.S. dollar and weighed on gold prices." I can safely say that the gold price "sank" because the Fed and Treasury wanted them to sink. But this little game their playing can only go on so long before everyone wises up to the fact that all fiat currencies are suspect.
Yesterday was not a happy day for us precious metals advocates. The dollar rally, plus the price suppression, hasn't helped things lately. Both metals are now well below their respective 50-day moving averages… and I can't help but wonder if 'da boyz' aren't still gunning for the 200-day moving average in gold. Since the top in early December, gold's 200-day m.a. has never been violated to the downside… and, as you know, this has always concerned me… and I've said so many times. Gold's 200-day moving average is about $40 below yesterday's closing price… so it's an easy target for the bullion banks if they wish to pursue it. Here's the 1-year gold chart to put all this in perspective.
Silver's 200-day moving average is only about two bits below Wednesday's closing price. But silver has already spent a fair amount of time well below its 200-day moving average, but any attempt to smack gold would certainly be an opportunity for JPMorgan et al to hammer silver one more time, as the spec longs have built up their positions a bit since that bottom. However, the big difference here is that the '4 or less' traders [including JPMorgan and HSBC] have only increased their short position a tiny amount on this last rally… so they will be looking to cover more of their shorts if they can engineer another sell-off. Here's the 1-year silver chart.
And lastly, here's the 3-year US$ chart to put it all into perspective. When this dollar rally is over, the bottom will be in for both gold and silver. Looking at this chart, one has to wonder just how much steam this dollar rally has left in it.
I note in Far East trading that both gold and silver have recovered a bit… but not before setting new low prices for this move. London has been open for two hours… and the rally [such as it is] is still there… but barely. As of 5:33 a.m. Eastern time, gold volume [minus the spreads] is sitting around 17,000 contracts… and silver's volume is about 3,200 contracts. The dollar is at 81.70… about 30 basis points below its high at 5:15 p.m. Eastern time yesterday.
The CME has posted preliminary trading volume for Thursday. It shows that volume in gold was a pretty hefty 229,094 contracts… of which about 40,000 were roll-overs into the June contract. In silver, volume was 29,840 contracts… of which 90% was in the May contract, the next delivery month for silver. And, after yesterday's price 'action'… I'm expecting to see some decent declines in open interest [especially in silver] when the final numbers are posted later this morning.
That's more than enough for one day… I'm off to bed.
See you on Friday morning.