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Message: Ed Steer this morning
U.S. Mint Sells 6,442,000 Silver Eagles in January
Barrick Gold's chairman very bullish on gold's prospects. U.S. Mint sells 133,500 ounces of gold eagles in January. 1.6 million ounces of silver withdrawn from the Comex on Monday. SLV down 683,700 ounces...and much more.
¤ Yesterday in Gold and Silver
Gold spent most of Far East and London trading on Tuesday gaining about eight bucks...which wasn't a lot, considering how bad the dollar was doing. Then, to add insult to injury, the New York bullion banks smacked the gold price moments after Comex trading began at 8:20 a.m...and by 10:15 a.m. Eastern, they had gold down about $15 from the open.
At that point, gold began a recovery which, if you examine the chart below...did not go unopposed...and, by the time gold was through trading on the electronic market at 5:15 p.m. in New York, gold had managed to tack on less than ten dollars from its Monday close. Gold's high tick of the day [$1,344.30 spot] came shortly before the close of floor trading...around 13:05 p.m. Eastern.
The silver chart looks suspiciously similar to the gold chart...with the highs and lows coming at precisely the same times. Silver's low at 10:15 a.m. was $27.87 spot...and it's high [shortly before the Comex close] was reported at $28.68 spot.
Just for information purposes only...here's the platinum chart from yesterday. The New York low and high for platinum occurred at the same times as gold and silver's lows and highs...but without the big sell-off at the Comex open. So platinum didn't have a bullion bank-excavated hole to dig itself out of like silver and gold did on Tuesday. The red trace [and part of the blue trace] is yesterday's price action.
However, one thing I would like to point out, is the fact that despite the less-than-terrific price action yesterday, both gold and silver printed a 'key reversal to the upside' chart pattern of sorts. I've seen the bullion banks paint key reversals to the downside...but never to the upside. If they have, I must have missed it. We'll have to wait and see whether it develops into anything as the day wears on.
The world's reserve currency is not doing well. Since its open on Monday in Far East trading...the dollar has fallen about 140 basis points...with 70 basis points of that coming during the Tuesday trading day. And, as of this writing, the dollar is now below the 77.00 cent level. Considering how badly the dollar is doing, I'm underwhelmed at the current performance of the precious metals.
Here's the dollar chart from Monday's open until midnight last night in New York.
The gold stocks pretty much followed the gold price action yesterday...and, despite the fact that the gold price didn't do all that well, the HUI finished up 2.73%. Most, but not all, silver stocks did much better than that.
Tuesday's CME Delivery Report showed that 255 gold and 67 silver contracts were posted for delivery on Thursday. The list of issuers and stoppers in both is worth skimming...and the link to that action is here.
The GLD ETF had no report. But, over at SLV, they reported another withdrawal...this time it was 683,712 troy ounces of the stuff.
The U.S. Mint proved me a liar yesterday, as they revised their final January sales figures on February 1st...a trick they haven't pulled in a while. Anyway, the final January updates are staggering. They increased their gold eagle sales by another 50,500 ounces...and increased their silver eagle sales by an eye-watering 1,698,000. Total January sales check in at 133,500 ounces of gold eagles...and 6,422,000 silver eagles. Almost 20% of U.S. silver production for 2011 disappeared into silver eagles in just one month. Words fail me.
However, as I said several times during the prior month...1,696,000 of these sales were reported on January 3rd...and rightfully belong in December 2010 sales. But, the big headline number will be the one that goes into the history books.
For the month of January, silver eagle ounces outsold gold eagle ounces by a factor of 48 to 1.
Along with these record sales in January, the mint also reported some sales for the month of February as well...6,000 ounces of gold eagles, along with 50,000 silver eagles.
Not to be outdone by all the action elsewhere, the Comex-approved depositories showed a big number of their own. Their report yesterday showed that 1,164,019 troy ounces of silver were withdrawn in total from their four warehouses on the last day of January. This activity is definitely worth the look...and the link is here.
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¤ Critical Reads
SubscribeWal-markdown: Inventory glut cuts giant retailer down to size
I have a lot fewer stories today than I did yesterday...but it's still up to you to do the final edit. The theme of the first four stories makes it hard to believe that the Dow punched through 12,000 yesterday...as the consumer is a dead duck.
Today's first item [which I stole from yesterday's King Report] comes from the Monday edition of the New York Post...where the headline reads "Wal-markdown: Inventory glut cuts giant retailer down to size". Wal-Mart is coping with a bad case of post-holiday indigestion. After bingeing on Christmas inventory, the world's biggest retailer has been forced to take drastic steps in recent weeks to clear stores and warehouses of excess goods, according to sources close to the company. The culprit: disappointing December sales. The link is here.
Nearly 11 Percent of U.S. Houses Empty
While I'm looting the King Report...here's a CNBC story that's headlined "Nearly 11 Percent of U.S. Houses Empty". Home ownership is falling at an alarming pace, despite the fact that home prices have fallen, affordability is much improved and inventories of new and existing homes are still running quite high. Bargains abound, but few are interested or eligible to take advantage. If you have the time, this is worth the read...and the link to this rather short story is here.
GM Parks 510,000 Cars With Dealers, 31% Higher Than Year Earlier
Reader Phil Barlett provides out next story today. It's a posting over at zerohedge.com that's headlined "GM Parks 510,000 Cars With Dealers, 31% Higher Than Year Earlier". This is a very short must read...and the graph is great. The link is here.
Bernanke's Poverty Effect: Food stamp Recipients Jump by 400K In November, Hit New Record Of 43.6 Million
This next story continues to show the abysmal condition of the U.S. economy. It's another zerohedge.com article...and this one's courtesy of Australian reader Wesley Legrand. The headline reads "Bernanke's Poverty Effect: Food stamp Recipients Jump by 400K In November, Hit New Record Of 43.6 Million". It's a one-paragraph read...and the graph alone is worth the trip. The link is here.
Here Comes QE3: Hoenig Says "More Quantitative Easing May Be Discussed"
Young Wesley, having nothing better to do, obviously spent a fair amount of time at the zerohedge.com website yesterday. Here's his second offering from there. It's headlined Here Comes QE3: Hoenig Says "More Quantitative Easing May Be Discussed". One of the places that the Fed has asked the primary dealers to invest in, is the equity markets...especially the Dow. The Fed has been in-your-face blatant about higher equity prices, so they are getting their wish...regardless of how the economy is going. It's only one paragraph long, so please check it out. The link is here.
Asia risks overheating and world risks imbalances warns IMF chief
The next story is courtesy of reader Scott Pluschau...and is posted over at channelnewsasia.com...and was filed from Singapore yesterday. The headline reads "Asia risks overheating and world risks imbalances warns IMF chief". [The man has a keep grasp of the obvious. - Ed] Asia faces the risk of overheating and "devastating" food inflation, IMF chief Dominique Strauss-Kahn warned Tuesday. Widening imbalances across and within countries are also sparking tensions which threaten to derail the fragile global economic recovery warned the IMF chief. [I wonder what "fragile global economic recovery" he's referring to? - Ed]. The link is here.
IMF raises spectre of civil wars as global inequalities worsen
The IMF report that spawned the above story, also drew a response from Ambrose Evans-Pritchard over at The Telegraph late yesterday evening...and I thank reader Roy Stephens for bringing it to our attention. The headline reads "IMF raises spectre of civil wars as global inequalities worsen". The International Monetary Fund (IMF) has warned that "dangerous" imbalances have emerged that threaten to derail global recovery and stoke tensions that may ultimately set off civil wars in deeply unequal countries. At times it's difficult to tell that this story from The Telegraph is talking about the same thing that channelnewsasia.com is describing. It's obvious that it depends on who's doing the reporting. The link to Ambrose Evans-Pritchard story is here.
A Million-Strong Festival for Freedom: Masses Celebrate Mubarak's Waning Power
Roy Stephens provides the next story, which is about the ongoing crisis in Egypt. This piece was posted over at the German website spiegel.de yesterday...and was filed from Cairo. It bears the headline "A Million-Strong Festival for Freedom: Masses Celebrate Mubarak's Waning Power". Mubarak has already announced that he will not seek re-election in September...but that's not good enough, as the people want him gone now. It's a bit of a read...plus there's an extensive photo gallery if you chose to run through it...and the link is here.
Afghan bank’s losses could reach $900 million
Reader 'David from California' provides our next reading material that's posted over at boston.com. It's a reprint of a story from Monday's edition of The New York Times...and is filed from Kabul. It bears the headline "Afghan bank’s losses could reach $900 million". Fraud and mismanagement at Afghanistan’s largest bank have resulted in potential losses of as much as $900 million — three times previous estimates — heightening concerns that the bank could collapse and trigger a broad financial panic in Afghanistan, according to US, European, and Afghan officials. [I'm sure that 'helicopter Ben' will bail them out with U.S. taxpayer money. - Ed] The link to the story is here.
Strange Currency: Return to the gold standard? It's just crazy enough for some state legislators to propose it
Reader "Dr. Strangelove" has our first gold-related story of the day. It's a piece from slate.com that bears the headline "Strange Currency: Return to the gold standard? It's just crazy enough for some state legislators to propose it" As you are aware, dear reader, I've run quite a few stories about different states of the Union studying the possibility of returning to some sort of local gold and/or silver backed currency. Here's a short expose on the subject...and the link is here.
Barrick Gold Chairman Holds Shiny Outlook on Turmoil
My only other gold story today is from reader Hadley Bagshaw...and it's from last Friday's edition of The Wall Street Journal. It's a very short read that's headlined "Barrick Gold Chairman Holds Shiny Outlook on Turmoil". In his covering e-mail to me, Hadley mentioned that he was "surprised to see Barrick Gold's chairman speak well of gold." I do not wish to get into a discourse on the history of Barrick Gold here...but if I did, this G-rated column would become an R-rated column real quick. The link to the story is here.
¤ The Wrap
It was not accidental. It was a carefully contrived occurrence...The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.- Rep. Louis T. McFadden [D-PA]
Silver came within a dime of breaking through its 50-day moving average to the upside yesterday...but gold's 50-day m.a. is still $35 away. Until these moving averages are broken, the technical funds have no reason to come back on the buy side. Virtually all of them sell when this critical moving average is broken to the downside...and then they all begin to pour back in when this moving average gets broken to the upside...and we're not there yet.
Still, with the dollar heading to the nether reaches of the earth, one would think that the price action in gold and silver would be better...but it appears that the bullion banks are preventing both of them from turning in a better performance then they normally would. This, too, will pass...but until it does, we just have to wait it out.
The CME's preliminary volume numbers for Tuesday showed about 150,000 gold contracts [net of all roll-overs] were traded yesterday...along with about 63,000 silver contracts. Based on the preliminary open interest numbers...plus yesterday's smallish rally in both metals in New York yesterday...I'd say that Tuesday's final o.i. numbers will show a slight increase in both metals. Whatever those numbers are, they will be in Friday's Commitment of Traders report...as yesterday was the cut-off for it.
Monday's final open interest numbers were another pleasant surprise. I mentioned in this column yesterday that it looked like gold's final o.i. numbers for Monday were going to be good...and they were more than good...as o.i. declined another 15,213 contracts. In silver, I mentioned that it was hard to tell, but in the end the o.i. fell 963 contracts.
Since January 10th, the world's reserve currency has fallen about 4.5 cents...about 5.5%. During that time, gold has 'declined' about twenty-five dollars...and silver is down about fifty cents. This is not the kind of precious metals price action that one would normally expect...but when the bullion banks are on the rampage, what the dollar does is not a factor.
The dollar is now deeply into oversold territory. I ran the 6-month dollar chart in this column yesterday...and here it is again today. The comment I made yesterday was that, from a technical point of view, the dollar was due for some sort of bounce. It just remains to be seen if that happens...or whether we fall further from here. That comment still stands.
What I am concerned about is...if we get that 'bounce'...how will the precious metals respond? I suppose the more appropriate question is...how will the New York bullion banks allow them to respond? I would think that we'll find out the answer to that question soon enough.
Neither gold nor silver did much of anything pricewise during Wednesday's Far East trading session...and are still not doing much now that trading in London has begun. Gold volume is a bit lighter than yesterday at this time...and silver's volume is about the same. At the moment [4:32 a.m. Eastern], the dollar is basically unchanged from its closing price in New York yesterday afternoon...and it's still an eyelash below 77.00 cents.
I don't wish to end today's epistle on a negative note, so here is a wonderful video that will sooth your soul...and I thank my good friend Rick Friesen for sharing it with us. So, if you like dogs, cats and 'wild' animals, this is for you...and the link is here. The background music is very soothing as well.
See you on Thursday.
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