Now That GATA Can Be Quoted, Can Central Banks Be Asked?
Monday was an extremely quiet trading day in both precious metals, despite the fact that it was also the last trading day in the August contract. Gold was in a four dollar trading range throughout Monday… and silver wasn't much more exciting, with a twenty cent trading range. Volume in both metals was vanishingly small… the lowest numbers that I can ever remember seeing, once all the roll-overs and spreads were removed.
What little action there was started after the Hong Kong close, with a smallish rally in both metals that ran into a resolute seller moments after trading began on the Comex in New York… and that, as they say, was that. Those two features are plainly visible on both graphs.
The silver graph looks identical…
The world's reserve currency did nothing until 11:00 a.m. in Europe on Monday morning… which is 5:00 a.m. Eastern time. I understand that yesterday was a holiday in England… and I'm not sure whether the currency or precious metals markets were open in London or not. Be that as it may… nine hours and a 40 basis point rise later, the dollar flat-lined from 2:00 p.m. New York time onward. Of course this price action did not appear to be a factor in the precious metals market yesterday. Here's the dollar chart for all of Monday's trading day… and part of Tuesday's… up until 5:06 a.m. Eastern time this morning.
The precious metal shares pretty much followed the gold price for the first hour of trading on Monday… but, as the day wore on, the down day in the general equity markets acted as a brake on the HUI… and by the time the markets closed, the HUI had fallen 0.86%. But, it could have been worse, dear reader.
Well, the new CME Delivery Report was posted on their website shortly before 11:00 p.m. Eastern time last night. It showed that 72 gold contracts were posted for delivery today. Also shown were the numbers for first day notice for delivery into the September contract. The report indicated that 180 gold, 316 palladium… and a rather smallish 292 silver contracts were posted for delivery tomorrow, September 1st. This report is well worth the look… and is linkedhere.
There were no reported changes in either GLD or SLV… and there was no sales report from the U.S. Mint, either. But over at the Comex-approved depositories, they reported that another 386,235 troy ounces of silver were withdrawn from their respective inventories on Friday. The link to that action is here.
Over at Switzerland's Zürcher Kantonalbank last week, they reported adding another 85,568 ounces of gold… but they also reported no change in their SLV ETF. I thank Carl Loeb for these numbers.
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Today's first story is courtesy of Swiss reader B.G. It's from yesterday's edition of The Guardian out of England… and it's about Florida real estate of all things. More than 20,000 American mortgagees are to hit Palm Beach as NACA's five-day mortgage modification marathon gets under way. The headline reads "US homeowners flock to Florida event in desperate bid to save properties". If you're at all interested in the U.S. real estate market, this is worth your time… and the link is here.
As you aware, not everything is going swimmingly in China these days. The next two stories [on two entirely different subjects] show that clearly. They're both Ambrose Evans-Pritchard offerings… and the first [thanks to Roy Stephens] is a Sunday evening posting headlined "Vodafone joins queue of firms to leave China". This is definitely worth your time, dear reader… and the link is here.
The second story from Ambrose at The Telegraph is also courtesy of reader Roy Stephens. This is a story about China and rare earth minerals that has surfaced before. This time things seem to be somewhat more serious. China's draconian export curbs on rare earth minerals needed by the rest of the world for frontier technologies is escalating into a serious diplomatic and trade clash with the United States and other leading powers. The headline reads "Backlash over China curb on metal exports". This is a must read… and the link is here.
Here's the third story in a row from Ambrose Evans-Pritchard. This one is courtesy of reader G.G. All three were published in The Telegraph on Sunday evening. This one was a surprise… as what Ambrose was talking about was news to me… and I've been around! This is what Ambrose had to say… "If Barack Obama were to marshal America's vast scientific and strategic resources behind a new Manhattan Project, he might reasonably hope to reinvent the global energy landscape and sketch an end to our dependence on fossil fuels within three to five years." The headline reads "Obama could kill fossil fuels overnight with a nuclear dash for thorium". If you want to find out more about thorium, dear reader… the link is here. Both that… and the story from The Telegraph are must reads… and the link to the story itself is here.
Next is a graph courtesy of Nick Laird of sharelynx.com that I've run several times before. It's a compilation of 17 global indices with a 41% weighting to the USA. Even without that weighting, things look pretty ominous. You can easily see that an unseen hand is preventing the world indices from crashing. That unseen hand is in New York… and goes by the name of The President's Working Group on Financial Markets. Because once the Dow goes… the world's stock markets are done for… and everyone knows it. As I've said before… the entire world's economic, financial and monetary system is hanging by a thread.
The first person to weigh in on the dire condition that we find ourselves in isRichard Russell. In Richard Russell's latest commentary, the Godfather of newsletter writers discusses bear markets, gold, silver and fiat money. This short commentary entitled "Fiat Currency To Meet Its End" is posted overkingworldnews.com… and the link is here.
The next story [courtesy once again of Roy Stephens] on this issue is from Martin Walker… UPI Editor Emeritus. The headline reads "Walker's World: Back to bad old ways"… and is filed from Edinburgh in Scotland. Walker says that the world's governments have shot their wad saving us from the last crash… "and when the next crash comes, our governments and central banks will be out of ammunition." It's not a long read… but definitely worth your time… and the link is here.
I now have three stories in a row from over at the zerohedge.com website… and they are all must reads. The first is courtesy of reader U.D… and was posted early Sunday morning. This story shows just how quickly the average investor is abandoning the equity markets. The headline reads "Confirming "Dumb Money's" Resilience To The Wall Street Siren Song"… and the link is here.
These last two zerohedge.com stories were posted while I was writing this commentary, so both are very current… and involve what happened in the overseas markets during the last twelve hours. The first story is about the Euro/Swiss franc ratio when the markets opened in Japan at 8:00 p.m. Eastern time last night. You can even see the small spike up in the US$ in my graph further up the page. It remains to be seen whether the Swiss National Bank will intervene in the currency markets by selling the Swiss franc… as previous interventions have proved expensive… and futile. As T.D. says in this article… we'll find out at 5:00 a.m. Eastern time. The headline reads "Swiss Franc Explodes As Asia Opens, SNB Intervention Bells Ringing Loud"… and the link to this must read story is here.
The last zerohedge.com offering was posted at 10:28 p.m. Eastern time last night… and is courtesy of reader 'David in California'. The very long headline reads "IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen". This story refers briefly to the previous story posted above. It's a bit longer than the other two… and has a video interview with some IMF cretin at the end. As I've already said a couple of times… this piece is a must read as well… and the link is here.
Today's last offering is the only gold-related story that I could find yesterday. It's a GATA release that's headlined "Now that GATA can be quoted, can central banks be asked?" As GATA's secretary treasurer Chris Powell points out… "If GATA now can be at least mentioned even in the Financial Times, real journalism can't be far away — along with the end of the gold price suppression scheme." This commentary is a must read as well… and the link is here.
Maybe one of the lessons of history is that periodically paper currency loses credibility so much that we have to revert to commodity standards, and I think that may well be happening. When you look at what's happening in the gold market, it's not so much fundamentals that are driving gold up from a $1,000 towards $2,000. It's a fact that more and more people feel that they should hold gold as perhaps 10 percent of their portfolios. If everybody thinks that, if that becomes a standard investment strategy, then gold is going to go a lot further than its present price. So I've really re-thought my attitude towards gold almost on that momentum basis. – Niall Ferguson, 14 May 2010
If you read all the stories posted above, dear reader… you may be getting the idea that things might get really ugly this fall… and I would agree with you. I see nothing out there that convinces me [and a lot of other analysts] otherwise. Tomorrow is the beginning of a new month… and anything could happen from that point… although I suspect that the real action won't begin until after the Labour Day long weekend.
I noticed that both gold and silver spiked down a bit in Far East during their Tuesday afternoon trading session. Both metals have recovered most of their loses since… but it's too soon to say whether this is a harbinger of things to come during the London and New York trading sessions. There wasn't much volume associated with these moves… so I'm not reading a lot into it as I write these words in the wee hours of this morning. Of course my opinion might change as the trading day begins in New York.
As I mentioned in this column on Saturday [and a couple of other times earlier last week], I would not be the slightest bit surprised if the bullion banks decided to harvest some more leveraged tech longs in gold, as both gold and silver are advancing into overbought territory. However, there's still lots of room to the upside… but what happens [and when] is almost entirely up to the U.S.-based bullion banks.
The U.S. dollar showed some signs of life once trading in the Far East started earlier today. As I mentioned earlier, this began at 8:00 p.m. Eastern time last night as the Swiss franc blasted to the upside. Here's the 1-year dollar chart… but it's too soon to tell whether it will break down at its 50-day moving average, or power higher.
Nothing will surprise me when the New York bullion banks start trading this morning… and you, dear reader, shouldn't be surprised either.
See you on Wednesday.