War is Coming
I wouldn't read a lot into Thursday's gold price action. However, having said that, shortly after New York trading began, gold broke through the $1,200 ceiling for the second day in a row and, for the second day in a row, it immediately got sold off to its low of the day [$1,189.20 spot]… as the usual not-for-profit sellers showed up to make sure that gold behaved itself.
The low occurred minutes after London closed for the day… and from there, gold began recovering a bit. However, every tiny rally attempt during the New York session got sold off… and once Comex trading ended and electronic trading began, the 'volatility' disappeared as well.
Here's the New York Spot Gold chart on its own. You can see that every little rally attempt got hit… as gold really wanted to go higher, but wasn't allowed to. It's obvious that some bullion bank is micro-managing the price and doesn't want it to break above $1,200 spot on a closing basis… at least not yesterday or Wednesday.
Silver's price pattern followed gold's almost to the minute… with the high of the day [$18.49 spot] occurring shortly before 9:00 a.m. in New York… and the low [$18.20 spot] right at the London close at 11:00 a.m. Eastern… two hours later. Like gold, silver recovered a bit, but traded sideways after Comex trading was done for the day.
The world's reserve currency had an interesting day on Thursday. Between 3:30 a.m. and 8:40 a.m. Eastern time… the dollar dropped about 55 basis points. Gold's reaction… up about six dollars… with the high in both gold and silver coming at the dollar's low tick. Then between 8:40 a.m. and 11:00 a.m. Eastern…the London close… the dollar rose about 40 basis points. Gold's response was down twelve bucks to its low the day. So the dollar and the gold price were linked [sort of] yesterday… but why yesterday and not other days?
The HUI didn't do much… but the low was at the dollar's high… a few moments after 11:00 a.m. Eastern time. The HUI was basically unchanged on the day… up a tiny 0.04% when all was said and done.
Thursday's CME Delivery Report was pretty skinny… with only 14 gold contracts posted for delivery on Monday. The GLD ETF reported receiving 29,329 ounces of gold… and the SLV ETF dropped a chunky 979,024 ounces of silver. That drop was a bit of a surprise, as there's been no negative price action in the last week that would account for it. I didn't talk to Ted after the ETFs updated their numbers, but I would guess that someone needed to take delivery of silver they owned… so they redeemed their shares. The SLV is down at least 10 million ounces of silver from its high of 304.7 million ounces on February 26/10.
The U.S. Mint had another report yesterday. They reported selling another 10,500 ounces into their gold eagle program… and another 3,000 24-K gold buffaloes as well. There was no silver eagle update. Month-to-date… 14,000 ounces of gold has disappeared into the gold eagle program, plus another 4,500 in the buffaloes… along with 275,500 silver eagles.
The Comex-approved depositories showed that 301,920 ounces of silver were added to their collective inventories on Wednesday… and the 449,718 ounces that got 'adjusted' out of existence on Tuesday, showed up in this report… so the lost has been found. The link to the action is here.
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My first gold-related story today was in yesterday's edition of marketwatch.com. It's a Peter Brimelow piece headlined "Gold crawls back — radical bugs vindicated?"… Gold seems to have stemmed its recent summer slide — perhaps vindicating the gold bugs who watch physical demand, primarily from India. It's worth the read… and the link is here.
The next gold-related item was posted over at mineweb.com… and I'm just going to steal Chris Powell's intro… as it was a GATA release late yesterday morning. This week MineWeb's Geoff Candy interviewed Sprott Asset Management's chief investment strategist, John Embry, who predicts that the only possible economic recovery in the West will come from enormous money creation that will send gold flying. The interview is headlined "If Gold's Not at $1,500-$2,000 in the Next 18 Months, I'm Dead Wrong — Embry". The interview is not overly long and well worth reading. The link is here.
Here's a story filed late yesterday evening from The Telegraph out of London. It is, of course, by Ambrose Evans-Pritchard. Russian premier Vladimir Putin has ordered a halt to all exports of wheat and other grains from August 15th onwards, raising the stakes dramatically in the crisis over wheat supplies. Putin is also pressuring Kazakhstan and Belarus to follows suit as the worst drought in a century threatens to drag on into late August. The Black Sea belt and Eurasia's Steppes produce a quarter of global wheat exports. The headline reads "Agflation fears as Russia halts all grain exports". It's not a long read, but it's a must read… and the link is here.
My last three stories today are all pretty big reads… and if you can find the time, dear reader, they are certainly worth your while. The first one is courtesy of reader U.D… and is posted over at theenergyreport.com. It's a long interview with ShadowStats.com's John Williams. What John envisions—and he's by no means looking to the far horizon—is a systemic collapse, a hyperinflationary great depression… and the cessation of normal commerce. This is a 10-15 minute read headlined "John Williams: Times That Try Our Souls"… and the link is here.
The next big read is an essay that was posted over at the German websitespiegel.de yesterday. It's a 3-page work that reader Roy Stephens sent my way. It cuts right to the core of what's happening in Afghanistan and Pakistan at the moment. Some of it I already knew, some of it I suspected as being true… and the rest was a real education. It's a given that you won't find in-depth behind-the-scenes material like this posted anywhere in the U.S. main-stream media. The headline reads "The Taliban's New Target: Losing Faith in Pakistan's Future". This is another 10-15 minute read… but it's definitely worth it… and the link is here.
My last item today is Wednesday's issue of "Conversations With Casey" posted over at caseyresearch.com… which some of you may have already read if you're on the free distribution list… as I am. If you haven't read it… this is one you shouldn't miss. It's headlined "Doug Casey: War is Coming". Louis James, the editor of the International Speculator, conducts the interview… and the link ishere.
Anyone that doesn’t understand [that] the Comex is a manipulated illusion isn’t paying attention. More and more investors around the world are coming to understand this, which is why there is a movement into the physical. Real gold versus paper gold. Which do you own? – Michael Krieger, zerohedge.com
At 8:30 a.m. Eastern time this morning, the jobs report will be released. Normally, gold is crushed the moment the report is posted… but that hasn't happened for the last few months… and it will be interesting to see what the U.S. bullion banks do with gold and silver prices, as they're always lurking about. If the numbers are bad, will they be able to keep gold below $1,200 spot? Good question.
The CME's preliminary volume report for Thursday's trading showed that volume was very light in both gold and silver. Volume for Friday [as of 4:50 a.m. Eastern time] in the Far East and early London trading was microscopic in both metals. No doubt that will change quite a bit as the trading day progresses and the U.S. bullion banks start to throw their weight around.
Both metals are up a hair… and trending higher as I write this… but that will probably mean nothing when New York opens for business.
Since today is Friday, it's also the day for the new Commitment of Traders report. It will be posted at 3:30 p.m. Eastern time… sharp. If you follow it, you can click here at the appointed time. Both Ted and I are expecting an improvement in the bullion banks' short position in both gold and silver… but how much it will be, remains to be seen.
Today is also the release of the monthly Bank Participation Report. It should give a clear indication of how many short positions JPMorgan was able to cover in the silver market during July. I'll report on that on Saturday.
Have a great weekend… and I'll see you here tomorrow.