JPMorgan et al Show Up at the London P.M. Gold Fix Again

Gold's high of the day [around $1,213 spot] was moments after Far East trading began on Monday morning… which was shortly after 6:00 p.m. in New York on Sunday night. 

The price was down about $10 by the time the Comex opened for trading yesterday morning… and the smallish rally that developed at that moment only lasted until the London p.m. gold fix… before the bullion banks showed up and that was it for the day.  Every attempt to break back over $1,200 the ounce got rebuffed… and gold closed at its low of the day… which, according to Kitco, was $1,195.40 spot.

Volume was not overly heavy… which made 'da boyz' job of pushing the gold [and silver] price around real easy.

Silver's high of the day [$18.15 spot] was at the open in Far East trading on Monday morning.  Then the price declined until the London a.m. gold fix was in at 10:30 a.m. local time.  From there. it rallied until the London p.m. gold fix… which was 10:00 a.m. in New York.  The bullion banks began to sell to start the ball rolling down the hill… then pulled their bids… and, in no time flat, silver was down to its low of the day at $17.75 spot.  All attempts to rise over $18.00 spot from that point on where stopped dead in their tracks.  Volume was just OK.

The graph of the world's reserve currency for Monday's trading was another yawner.

The shares certainly wanted to go higher on Monday, but you can see that the zenith for the p.m. shares was at precisely 10:00 a.m… the London p.m. gold fix… and the high of the day in both metals before JPMorgan et al showed up.  But the HUI bottomed in the early afternoon… and the HUI rallied to only finish down 0.62%… which wasn't a lot considering the price action.

The CME Daily Delivery report for Monday was a shocker.  There were noreported deliveries for Wednesday in either gold or silver… and, as of this writing, there are still 734 silver contracts that are open for delivery in July… and the month is nearly half over.  This is getting real interesting.  As I said on Saturday… maybe the Comex just doesn't have the silver available?  There's lots in their inventory, but it's obviously not for sale at the current price.  One wonders what the spot price might have to be to free some of that up.  A lothigher than it is now, would be my guess.

The GLD showed a minor increase in their alleged inventories on Monday… up 9,779 troy ounces to be exact.  The SLV ETF had no report.  But over at Switzerland's Zürcher Kantonalbank, it was onwards and ever upwards, as they reported receiving approximately 27,500 ounces of gold and another 284,000 ounces of silver in their respective ETFs last week.  [I thank both Carl Loeb and Ted Butler for these numbers.]  With the exception of maybe one or two weeks in all of 2010… the ZKB silver ETF has risen substantially.  One wonders why this is not the case for SLV.  In fact, it's the exact opposite.

The Comex-approved depositories reported that a big chunk of silver was withdrawn on Friday.  This time it was 1,318,894 troy ounces.  The largest amount came out of HSBC, USA… and the link to all the action [which involved all four depositories] is here.

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I have a lot of stories today… most of which showed up on Monday… as the weekend itself was rather quiet news wise.

The first one is courtesy of reader Scott Pluschau.  It's an AP story filed over atfinance.yahoo.com.  The headline reads "More Americans' credit scores sink to new lows".  One in four American consumers are deemed risky as more credit scores sink to lows of 599 or less.  This is an excellent story… and the graph is worth the trip all on its own… and the link is here.

The next item is a Bloomberg piece courtesy of reader Ken Metcalfe.  The headline pretty much sums it up… "States Can’t Count on Bailout, Obama Appointees Say".  States expecting Congress to authorize more assistance are “going to be left with a very large hole to fill,” said Erskine Bowles, co-chairman of the National Commission on Fiscal Responsibility and Reform.  The link to the story is here.

Hard on the heels of that story, comes this excellent graph courtesy of Australian reader Wesley Legrand.  At a glance, it gives you an idea of the desperate straits that most states of the union find themselves in.

I see that a Chinese credit rating agency has basically downgraded U.S. debt, as they put the United States 13th on a list of 'creditworthy' nations.  This rating isn't even remotely close to where the U.S. credit rating agencies puts U.S. debt.  A debt rating war is obviously off to the races here.  The first through the door with this AP story was Wesley Legrand… but I'm using the version sent to me by reader U.D… as it has a preamble to it that, along with the article itself, is definitely worth reading.  The headline to the story states… "Chinese credit firm says US worse risk than China"… and the link to the article, posted over at Jesse's Café Américain, is here.

Of course Ambrose Evans-Pritchard couldn't resist the temptation to write about this issue as well.  Reader Roy Stephens sent me the following story from The Telegraph just before I hit the 'send' button on this column in the wee hours of this morning… so I've inserted it here.  The headline reads "Chinese rating agency strips Western nations of AAA status"… China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.NO!!! REALLY??? Do you think that the "American Empire" would stoop that low?  In a New York minute, dear reader… and the link to the story is here.

Here's a story from reader U.D. that was posted in last Friday's edition of theFinancial Times out of London.  It's a gold-related piece bearing the headline "Hedge funds look for a golden edge".  It's a fairly long piece, but it's worth your time… and the link is here.

The next offering is from Washington state reader S.A.  It's a 2-paragraph story from last Thursday's edition of businessinsider.com… with a headline that reads "John Paulson Socked With $2 Billion in Redemptions at the End of June".  One must wonder, dear reader, exactly how much of that was related to their substantial gold holdings.  I would suspect that it wasn't a lot… but there's no way of telling.  The scuttlebutt is that it was Paulson's selling that triggered the big sell-off in gold on July 1st.  That is, of course, pure B.S… but there are those willing to believe the most idiotic reasons, rather than the real ones.  It will take you well under a minute to read this story… and I suggest you do just that… and the link is here.

The next two stories are related to the European debt crisis in one form or another.  The first is another offering from Washington state reader S.A.  It's from a blog over at The Wall Street Journal that was posted on Saturday.  The headline reads "Number of the Week: Euro Zone Debt Is Coming Due".  In 2010/11 about $1.65 Trillion has to be rolled over… and it will be interesting to see if it can be done… and if it can, at what interest rate?  The graph that's imbedded in the story is worth the look… as is the story itself, which is linkedhere.

Here's a piece from yesterday that's written by UPI Editor Emeritus, Martin Walker… and posted from Frankfurt.  Reader Roy Stephens was kind enough to send it along… and the headline reads "Walker's World: Europe's Stress Test".  It's not overly long… and definitely worth your time… and the link ishere.

The next item is a gold-related GATA release from yesterday.  It bears the headline "Tinfoil hats are earned just by questioning central banks".  The dispatch has an imbedded story about the BIS gold swaps from the Sunday edition of The Telegraph out of London… but all of Chris Powell's commentary is worth your while as well… and the link is here.

Mike Kosares, the proprietor over at usagold.com has also waded into the BIS gold swap story with this offering entitled "BIS gold swap signifies a threat to Europe, not to gold".  What I really like about this story is how Mike simplifies the definition of what a gold swap really is and how it works.  I consider this story a must read for that, and other reasons… and the link to the GATA release is here.

Here's another must read item… and fortunately it's very short and, once again, the graph that accompanies the article is well worth the trip.  I stole the following preamble from Chris… GoldMoney founder, Freemarket Gold & Money Report editor, and GATA consultant James Turk reports that his "fear index" is at a 16-year high as a result of debasement of the U.S. dollar. Turk's commentary is headlined "Fear Index Rises to 16-Year High" and you can find posted at the FGMR Internet site here.

Lastly today is another must read piece.  This one's from the grand old man of the Canadian mining industry… Murray Pollitt.  In his latest market commentary for the Toronto brokerage house that bears his name, Murray reflects on the modern investment system and concludes that investors and investment fund managers are simply too distant from where they put their money, cumulatively risking a cataclysmic event. "All the vuvuzelas in South Africa" Pollitt writes, "cannot send a louder message regarding the future course of markets than the gold market is sending." That's the title of Pollitt's commentary — "Vuvuzela" — and, thanks to Pollitt's indulgence, you can find it posted over at gata.org… and the link is here.

The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. – Thomas Jefferson

With the low volume yesterday, JPMorgan et al had no trouble keeping the precious metals in check.  Although it was obvious to any open-minded observer that they pulled their bids at the London p.m. fix… I wouldn't read a lot into it… as it could have been worse.

Earlier today, all was quiet in Far East trading… with volumes low once again… even lower than Monday.  But there was a bit of a spike up in both metals at the Hong Kong close/London a.m. gold fix at 10:30 a.m. local time in London.  Volume in gold almost doubled on the spike… so it's obvious that the rally ran into immediate resistance from the bullion banks… however silver's volume was only up about 15% from what it had been before the spike, so it didn't take too many contracts to keep the silver price under control.

But it's always what happens in New York that counts… and I expect that today's activity will prove to be no different.  So we wait.

See you on Wednesday.