You'll Buy Gold Now and Like It!
The gold market offered little in the way of price excitement on Thursday. The price flat-lined in Far East trading until 1:00 p.m. Hong Kong time… and then rose to its high of the day [such as it was] around $1,245 spot, just before lunch in London. From there it took until the close of Comex trading to hit its low price of the day, which was $1,233.40 spot.
The silver price was just as unexciting, with what price 'excitement' there was starting at the Hong Kong close/London a.m. gold fix at 10:30 local time in the U.K. From there, silver took around six and a half hours to gain about twenty cents… with the high of the day [$19.19 spot] coming shortly before lunch in New York. From that point, it took silver only ninety minutes to hit its low of the day [$18.90 spot] minutes after the Comex closed. The price traded sideways for the rest of electronic trading in New York.
The world's reserve currency fell about 30 basis points in the early going in Far East trading yesterday morning… but 'stabilized' around 82.9 about 1:00 p.m. Hong Kong time, which was midnight in New York. From there, the dollar oscillated around that 82.9 price… and is still at that price twenty-four hours later as I write this paragraph.
Despite what the gold price and the general equity markets did yesterday, the precious metal shares posted a very respectable gain… with the HUI up 1.57% by the close of trading… finishing almost on its high of the day. I'm pleased, of course, but somewhat puzzled by it. I'd like to think that it's a harbinger of things to come… but, after many years of watching this sort of counter-intuitive price action, I'm always on the lookout for 'in your ear'. We'll see.
I asked Nick Laird over at sharelnyx.com to send me the World Precious Metals Funds Index that he so meticulously keeps up to date. Here it is as of yesterday's close. We still haven't penetrated that red line to the upside… and I'll be glad when we have punched through it with some authority.
As the month of August comes to a close, there hasn't been much delivery action lately… and yesterday's CME Delivery Report was no exception. It showed that 72 gold and 1 silver contract were posted for delivery on Monday. The link to that 'action' is here.
There was no update from the GLD ETF yesterday… but the SLV ETF had another report. This time they added 685,124 troy ounces of silver to their stash. But, based on the price action of the last few days, I'm sure they're owed millions more. One has to wonder where they're going to get it from.
The U.S. Mint had another small sales report yesterday. They sold another 1,500 ounces worth of gold eagles… 500 24-K gold buffaloes… and another 100,000 silver eagles.
The Comex-approved depositories showed that 496,796 ounces of silver were withdrawn from their collective inventories on Wednesday. The link to that report is here.
Today's first story was provided by reader Ken Metcalfe. It's a Reuters piece dated Thursday that bears the headline "Fed in emergency bid to put bailout ruling on hold" The Federal Reserve asked a U.S. appeals court to delay implementing a ruling that would force the central bank to disclose details of its emergency lending programs to banks during the financial crisis. Obviously, dear reader, the Fed doesn't want the general public to know to whom, or how much, they lent each bank… either foreign or domestic. The link to this rather short story [which is very much worth the read] is here.
The next story is an Ambrose Evans-Pritchard offering from Thursday's edition of The Telegraph. The Swiss franc has surged to an all-time high against the euro on capital flight from the eurozone after Irish, Greek, and Portuguese bonds came under renewed fire. The Swiss National Bank appears to have abandoned efforts to halt the appreciation of the `Swissie’ after losing 14 billion francs (£9 billion) over the first half of the year in a failed effort to stop money flooding into the country. The headline reads "Fresh flight to Swiss franc as Europe's bond strains return"… and I thank Roy Stephens for sending me this story… and the link is here.
While I'm at it, here's another Ambrose Evans-Pritchard offering [courtesy of Roy Stephens] that was filed in London earlier this morning. The headline reads "It pays to riot in Europe". You have to give your head a shake as you read this… as it could be a skit right out of Monty Python's Flying Circus. I can just see John Cleese and Michael Palin going at it right now! You can't make this stuff up. It's a must read… and the link is here.
Here's a piece from yesterday's edition of the businessinsider.com. It was sent to me by 'David in California'… and the headline reads "Chinese Inflation Could Be 80% Higher Than Reported In July". China's official consumer inflation statistic hit a 21-month high in July — at just 3.3%. While the figure is nearly hitting a two-year high, some are questioning the accuracy of the official inflation data, because prices seem to be rising much faster based on anecdotal information. Do you suppose that the Chinese government would tell little white lies about its true inflation rate, dear reader? In a New York minute! We've all heard the stories about the end of the era of cheap Chinese products… and this could be the reason. It's a very short piece… and you should take the time to read it… as it sounds very similar to what's happening all over the world. The link is here.
My first gold-related story of the day comes from a posting over at thestreet.comwebsite. The headline reads "Top 5 Reasons Gold Prices Move". Author Alix Steel picks price manipulation by central banks as one of the reasons… and GATA gets a prominent mention. Kitco's Tokyo Rose believes that claims of price suppression are completely unfounded… "There's no vested interest on anybody's part to suppress prices here," Jon Nadler states. Well, dear reader, you can make up your own mind as you read this rather lengthy piece. It's amust read… and the link is here.
I wasn't the only person on Nadler's case yesterday. Here's GATA's Chris Powell having a go at him as well. The headline of the GATA release states "On same day Nadler denies, admits central bank interest in suppressing gold". I'll leave the rest of the heavy lifting up to Chris… and the link to this must readpiece is here.
Nick Laird over at sharelynx.com sent me a couple of more graphs in the wee hours of this morning. The first one shows gold and silver vs. other commodity bubbles over the last 30 years. As can be seen, gold and silver outshone all the other commodity bubbles when they exploded back in 1980… but look where they are at the moment. We've got a long way to go, dear reader.
Here's a Bloomberg piece that was filed early this morning from somewhere in Southeast Asia. The headline reads "Gold Demand to Surge in Vietnam as Dong, Stocks Slump". The dong has been devalued three times this year already… and at least one more is expected. “The Vietnamese public will continue to conserve and protect their assets by hoarding gold tael bars,” Albert Cheng, managing director for the Far East at the World Gold Council, wrote in an e-mail. Needless to say, this is a must read from one end to the other… and the link is here.
Lastly today, comes this timely offering from Casey Research's own Jeff Clark… editor of Casey's Gold & Resource Report. The headline is very apropos as well… and reads "You'll Buy Gold Now and Like It!" This report caps off my commentary today very nicely. It's not overly long… and the link ishere.
It was a 'watch paint dry' kind of day in the precious metal markets yesterday. Volumes in both gold and silver were very low, which is typical for summer trading. But I must admit that I was expecting much bigger volume [and price action] considering how close to the end of the month we're getting. Last day of trading for the August contract is on Monday… so that just leaves today and Monday for all roll-overs and spreads into future months to get done… as Tuesday is first notice day for delivery into the September silver contract. September is not a big delivery month for gold.
The gold price action in the Far East… and at the London open… was non-existent. Volume in both metals was vanishingly small. I'd have to go back quite a few years to see overnight volumes as low as these numbers. Maybe things will have changed once the London a.m. gold 'fix' is in at 10:30 local time… 5:30 a.m. Eastern.
Since it's Friday… the latest Commitment of Traders report [for positions held at the end of Tuesday's trading] will be issued at 3:30 p.m. sharp New York time. The thing that I'll be looking for is whether or not Tuesday's big up day is in those numbers. I suspect not, but I'll find out soon enough. The link to the latest COT data, when it's released, is here.
Here's the last chart that Nick Laird from sharelynx.com sent me this morning. It's a 4-year graph of his Silver Stock Index. I'm not a big fan of technical analysis in a rigged market… but if I was, this graph indicates that it should to break to the upside very shortly. I would expect that we won't have too long to wait to find out.
So the Vietnamese are going to be buying more gold to protect themselves from even more downward revaluations of the dong. The World Gold Council said the same thing about Europe and China in their report yesterday. Not that I want to beat this particular horse to death, dear reader… but if they're all doing it, you should be too. I've already put my money where my mouth is… and I'm very happy that I've done so. I remember buying silver at $7 Canadian the ounce for several years before it did anything to the upside. Was I nervous about it? You betcha! I also remember a Vancouver bullion dealer trying to sell me a 1,000 ounce J&M bar for about 50 cents below spot… around $6,200 at the time. I said no. I'll never forget that mistake.
We've got three summer trading days left in gold and silver before the northern hemisphere goes back to work after the Labour Day weekend. If you're still sitting on the fence regarding investing in the precious metals, there's still time to put your investment dollars to work. The first place I'd start would be with a subscription to either Casey's Gold and Resource Report… or Casey Research's flagship publication… the International Speculator. Please click on the links, as it doesn't cost a dime to check them out… and the subscriptions come complete with CR's usual money-back guarantee.
Today is Friday… and options expiry on the Comex. Ted Butler pointed out that there wasn't much in the way of open interest left in either metal, so it shouldn't be a big deal. If you're looking for a clue as to what might happen in New York when the U.S. bullion banks start trading this morning… I don't have any idea at all. But whatever happens, I look forward to it with great interest.
I hope you have a great weekend… and I'll see you here on Saturday.