Will Iran Be Attacked Before the Weekend?
Gold was in positive territory through most of Far East trading on Monday morning… and took a bit of a pop to the upside during early London trading… and then another jump at the Comex open in New York. That was its high of the day.
From that point it got sold off about five bucks and then traded sideways for the rest of the trading session. Yesterday's high… $1,228.60 spot… occurred shortly before 9:00 a.m. Eastern time. Volume was very light.
Silver also spent most of Far East trading in the plus column… but the real action occurred moments after New York began trading at 8:15 a.m. Eastern time. For about twenty-five minutes, the silver graph looked like a NASA rocket launch… as silver tacked on a thirty-one cent gain. Then, either the buyer disappeared, or the price got capped, and silver [like gold] traded sideways for the rest of the day. Ted and I discussed the pros and cons of whether this was a new buyer… or one of the bullion banks [read JPMorgan] doing some short covering. The open interest numbers might tell us something this morning… but we'll probably have to wait until this Friday's Commitment of Traders report before we know for sure. Volume in silver, like gold, was light.
The world's reserve currency hit its high [83.02 cents] early in Far East trading on Monday morning… and by 9:05 a.m. Eastern time, had declined 70 basis points. The dollar recovered a bit during the rest of the New York session, but basically didn't do much after that.
Here's the 6-month dollar chart. The three cent rally we had last week looks a little iffy after Monday's performance… but it's too early to write this rally off yet… although it sure is tempting… isn't it, dear reader?
The precious metals shares opened up… and stayed up… closing in the plus column to the tune of 1.69% on the day.
To go along with a quiet day in the bullion markets yesterday, the CME's Daily Delivery report showed that only 3 gold and 5 silver contracts were posted for delivery on Wednesday. There were no reports from either ETF… nor from the U.S. Mint. The Comex-approved depositories showed a smallish decline in their silver inventories on Friday. This time it was 65,883 troy ounces.
But over at the Zürcher Kantonalbank in Switzerland… I have two weeks worth of reports for you… as their numbers weren't available last week. From August 2-6/10… their gold ETF increased 15,985 ounces… and there were no reported changes in their SLV ETF. For the week that just past, they reported adding 43,403 ounces of gold… and 1,497,164 troy ounces of silver. I thank both Carl Loeb and Nick Laird for these numbers.
Since it's Tuesday, I have three days worth of stories to share with you. I've whittled them down mercilessly… and feel free to do the same with what's left, dear reader.
First off I'm going to post this graph that came from John Williams over atshadowstats.com. It's the gold and silver chart going back to 1997.
The graph is pretty neat… but here's what John has to say about both the gold and silver price…
Gold and Silver Highs Adjusted for CPI-U/SGS Inflation. Despite the June 28th historic high gold price of $1,261.00 per troy ounce, gold and silver prices have yet to approach their historic high levels, adjusted for inflation. The London afternoon fix, per Kitco.com of January 21, 1980 would be $2,382 per troy ounce based on July 2010 CPI-U-adjusted dollars… and would be $7,727 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [all series not seasonally adjusted].
In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce [London afternoon fix, per silverinstitute.org] has not been hit since, including in terms of inflation-adjusted dollars. Based on July 2010 CPI-U inflation, the 1980 silver price peak would be $139 per troy ounce and would be $450 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars [again, all series not seasonally adjusted].
Food for thought, isn't it?
Here's another story from pages of The New York Times. This one's from Monday's edition.and it's courtesy of Washington state reader S.A… and bears the headline "China Passes Japan as Second-Largest Economy". It's a fairly long story… and the link is here.Today's first story is courtesy of reader Roy Stephens. It's from the Friday edition of The New York Times. The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association. During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. We're going to see a lot more of this before this depression is over, dear reader. The headline states "Debts Rise, and Go Unpaid, as Bust Erodes Home Equity". It's a longish story, but it's certainly worth the read… and the link is here.
The next offering is from Australian reader Wesley Legrand. It's a piece from last Thursday's Financial Times out of London. It's a piece by Jim Rickards… a name you should know quite well by now, dear reader. The headline reads "Fannie and Freddie's bond market upheaval"… and the link to this rather short story [which is a must read, I might add] is here.
The next item is a King World News interview with GoldMoney.com founder James Turk. The interview runs about ten minutes. It is, of course, all about silver and gold… and it's definitely worth your time… and the link is here.
Here's a story that was posted on Sunday over at emirates247.com. It appears that some gold imported into the UAE by traders and investors turned out to be fake on closer inspection. The headline reads "Tons of gold imports turn to dust on arrival". This falls into the "how stupid can you get" category. I bet someone in Ghana or Nigeria was selling gold at a 'discount'. There are obviously suckers with big money in the UAE as well. This very short story is a must read… and the link is here.
A couple of GATA releases follow. The first one is headlined "Banging the close is illegal in commodities, unless you bang it down". Back in April the U.S. Commodity Futures Trading Commission took action in a commodity market manipulation case that may illustrate what commodity market law enforcement is all about. The CFTC found that a former portfolio manager for Moore Capital engaged "in a practice known as 'banging the close.' Specifically, the former portfolio manager's orders were entered in a manner designed to exert upward pressure on the settlement prices of the platinum and palladium futures contracts." Chris Powell's extensive preamble, along with the story itself, are linked here.
The second GATA release is headlined "Hinde Capital's attack on gold ETF makes Financial Times in London". Nobody was more surprised than myself that this report was picked up the FT. Five years ago, a report like this one would not have been touched by the main stream media at all. The FT article isn't very long… and Chris Powell's preamble to it are both worth reading… and the link is here.
Here's a story that was filed from New Delhi on Friday of last week. The headline is rather startling… it reads "61 trucks loaded with 300 tons of explosives go missing in central India". How is that possible, one would ask. One shudders to think, as the story goes, what might happen if this falls into the wrong hands… if it hasn't already. The link is here.
I've left what I consider to be the most newsworthy of story until the end. This one was sent to me on Saturday morning by reader 'David'. News that Russia will load nuclear fuel rods into an Iranian reactor has touched off a countdown to a point of no return, a deadline by which Israel would have to launch an attack on Iran's Bushehr reactor before it becomes effectively "immune" to any assault, says former Bush administration U.N. Ambassador John R. Bolton. The headline reads "Russia's Loading of Nuke Fuel Into Iran Plant Means Aug. 21 Deadline for Israeli Attack". Well, if Israel and the U.S.A. are going to do anything… they've got to get it done before the end of this week. The story is posted over at newsmax.com… and the link to this must read article is here.
Well, as I put this report to bed, I note that the dollar is continuing to decline… and both gold and silver are up a bit now that London has opened for trading.
With everything that's floating off the rails at the moment, I wouldn't want to be sitting on the sidelines of this precious metals bull market for all the tea in China. And I must admit that the situation in Iran really makes me very nervous. Will Israel and the U.S.A. bomb the nuclear facility… and even more importantly… will they use nuclear weapons? If they do, I wouldn't give you ten cents on the dollar for any paper product out there. Allocated gold and silver either in hand, or with companies you know really have the goods, is the only way to fly here.
I'm expecting another interesting day in the gold and silver pits when Comex trading begins today.
See you tomorrow.