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Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
Message: Ed Steer this morning
Silver to outperform gold in 2011 - Eric Sprott
Silver class-action suits against Morgan, HSBC consolidated in New York. UAE sees dramatic rise in gold sales. China Moves to Strengthen Grip Over Supply of Rare-Earth Metals, and much more.
¤ Yesterday in Gold and Silver
It was a pretty quiet day in Far East trading in the gold market on Tuesday. There was a bit of a pop shortly before London opened, but that got sold off the moment that the London a.m. gold fix was in at 10:30 a.m. GMT in London...5:30 a.m. Eastern time.
From there, the gold price slid right into the New York open at 8:20 a.m...when a buyer of some size showed up and popped the price up about ten bucks in very short order. From that point, the gold price ground slowly higher to its 1:00 pm. Eastern time on-the-button high of $1,369.30 spot.
Then gold price then got sold off a few dollars going into the close of electronic trading at 5:15 p.m. Eastern time.
Reader Scott Pluschau was kind enough to send the 10-minute gold chart once again...and you can see the big pop between 8:20 a.m. and 8:35 a.m. Eastern time, where 16,351 contracts got traded in one 10-minute slice between 8:20 and 8:30 a.m.
Silver was the star performer of the day yesterday. The jump in price that occurred shortly before the London open was for naught, as the price got smacked along with gold at the a.m. gold fix in London...and silver was back to the unchanged mark by the time that New York opened. The big jump in silver at 8:20 a.m. was followed by a slow-but-sure rise in the price for the rest of the New York trading session. After hitting its high [$30.40 spot] around 2:45 p.m. Eastern...the silver price basically traded sideways into the close.
The dollar declined slowly right from the open in the Far East yesterday...and its absolute low of the Tuesday session around 11:30 a.m. Eastern. Then it rallied into the close of New York trading...basically finishing unchanged on the day.
The gold stocks gapped up at the open...and then stayed there for the rest of the New York trading day. The HUI finished up 2.40%. Despite the very robust gains in the silver price, not all silver stocks had a big day yesterday...but the ones that did, beat the HUI by quite large margins.
Tuesday's CME Delivery Report showed that 201 gold and zero silver contracts were posted for delivery tomorrow. The link to what action there was...is here.
The GLD ETF showed a very small decline...only 9,757 ounces...which could have been a fee payment of some kind. There were no changes reported in SLV.
The U.S. Mint had a sales report on Tuesday. The sold another 6,500 troy ounces of gold eagles, along with another 59,000 silver eagles. Month-to-date, the mint has sold 20,000 ounces of gold eagles...and 897,000 silver eagles.
Over at the Comex-approved depositories on Monday...252,945 ounces of silver were reported withdrawn. The link to that action is here.
Yesterday I ran the BDI/CRB chart...wondering out loud what the graph would look like if the old CRB graph [Continuous Commodity Index - CCI] was used instead of the CRB, since it's now at record highs...and the CRB is a long way from new highs. As reader Bryan Bishop said in his e-mail to me yesterday..."ask, and ye shall receive."
Not only does this 5-year chart have the BDI index...it's got both the CRB and the CCI on it as well. The BDI is in green, the CRB is in dark blue...and the CCI is black and red. The chart is as I imagined it to be. Thanks, Bryan!
Before I start with my stories today, I wish to issue a correction to one that I posted yesterday...and that's the one where JPMorgan was going to accept gold as collateral against any kind of "crappy paper"...as GATA's Chris Powell so eloquently put it. I mentioned that JPMorgan was only going to accept physical bullion that was on deposit with them. Well, it turns out that just about any ETF will suffice as collateral and, one would presume, the GLD ETF would be included in that. I thank reader Randall Reinwasser for setting me straight...and the link to the one-page JPMorgan pdf file on this, is here.
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¤ Critical Reads
SubscribeAMAGERBANKEN - $2.8 Billion Bank Failure In Denmark: Senior Bondholders Whacked 41%
Now to my regular postings. The first is from reader 'David in California' and is a story from Copenhagen, Denmark that's posted over at dailybail.com. The headline reads "AMAGERBANKEN - $2.8 Billion Bank Failure In Denmark: Senior Bondholders Whacked 41%". This is the way bank failures are supposed to be handled. It's a short story...and the link is here.
China raises interest rates for third time in four months
Today's next offering is from reader Roy Stephens that was posted in yesterday's edition of The Telegraph. The headline reads "China raises interest rates for third time in four months". China raised interest rates on the last day of the Chinese New Year holiday to try to temper inflation as the country returns to work. The link is here.
U.N. Food Agency Issues Warning on China Drought
Reader Phil Barlett sent me the following item which was in yesterday's edition of The New York Times. The headline reads "U.N. Food Agency Issues Warning on China Drought". They were warning that a severe drought was threatening the wheat crop in China, the world’s largest wheat producer...which was also resulting in shortages of drinking water for people and livestock. It's my opinion that this article is worth your time...and the link is here.
China Moves to Strengthen Grip Over Supply of Rare-Earth Metals
Next is a story from Monday's edition of The Wall Street Journal that was sent to me by Australian reader Wesley Legrand. The headline, which pretty much says it all, reads..."China Moves to Strengthen Grip Over Supply of Rare-Earth Metals". Because the story is subscriber protected...only a few paragraphs can be read...but that's enough...and the link is here.
South Korea to form food crisis task force
The following story was sent to me by reader David Crofton. It's a posting over at commodityonline.com that bears the headline "South Korea to form food crisis task force". Reflecting higher prices of agricultural and meat products, as well as surging global prices of oil and other commodities, South Korea's consumer prices rose 4.1% year-to-year in January, breaching 4% for the first time since October and topping the Bank of Korea's target band of between 2% and 4%. I suggest you read this...and the link is here.
Central banks must act against rising commodity prices, Luxembourg central banker says
The next food/commodity-related story is this piece out of Monday's Wall Street Journal. It's contained in a GATA release that Chris Powell has headlined "Central banks must act against rising commodity prices, Luxembourg central banker says". The WSJ headline reads "ECB's Mersch: Euro Zone Bailout Fund Needs Government Bond-Buying Powers"...and the comments regarding controlling commodity prices comes towards the end of the article...and the link is here.
UAE sees dramatic rise in gold sales
I've got five precious metals-related stories...and the first one is courtesy of reader 'David in California'. It's a one-paragraph article about gold that's headlined "UAE sees dramatic rise in gold sales". The story is posted over at the Middle East website ameinfo.com...and the link is here.
Alasdair Macleod: Why technical analysis fails with gold
The next two stories are both GATA releases...and, since Chris Powell has already wordsmithed the preambles, it saves me a bunch of typing. The first is headlined "Alasdair Macleod: Why technical analysis fails with gold". The reason it fails, Alasdair writes, is because analysts don't distinguish between investment in gold via paper markets and the hoarding of gold, the taking possession of the real stuff. The link to the entire GATA release is here.
Murray Pollitt: World would benefit from a higher gold price
In his latest commentary, Murray Pollitt of Pollitt & Co. in Toronto, enumerates the many benefits to the world that would follow from a higher gold price. Pollitt headlines his commentary "Ramblings" and is contained in a GATA release linked here.
Silver to outperform gold in 2011 - Eric Sprott
Reader Richard Di Nucci was kind enough to share this next item with us. It's a piece that was posted over at the mineweb.com yesterday...and the headline reads "Silver to outperform gold in 2011 - Eric Sprott". Not that we haven't heard this before elsewhere, but it's always worth a second visit...and the link is here.
Silver class-action suits against Morgan, HSBC consolidated in New York
Lastly today is this GATA release that's headlined "Silver class-action suits against Morgan, HSBC consolidated in New York". A judicial panel on Tuesday consolidated class-action litigation alleging that JPMorgan Chase & Co. and HSBC Holdings PLC violated antitrust laws by manipulating the silver market and potentially reaped billions of dollars while keeping the price of silver artificially low. It's a posting over at the law360.com website. It's very much worth the read...and the link is here.
¤ The Wrap
The taxpayer: That's someone who works for the federal government but doesn't have to take the civil service examination.- Ronald Reagan
Of course I was happy to see both gold and silver do well during the New York trading session yesterday. But the question that both Ted Butler and I were asking each other was...who is taking the short side of all these long positions that are moving the prices higher? Are JPMorgan et al going short against all comers once again? That is unknowable at the moment...and won't become apparent until Friday's Commitment of Traders report.
The CME's preliminary volume data for Tuesday's trading day shows that around 140,000 contracts in gold were traded...net of all roll-overs. Silver's volume yesterday was around 70,000 net. Judging by the preliminary open interest numbers, I'm expecting open interest increases in both metals when the final figures are posted on the CME's website later this morning.
Whatever o.i. numbers are finally posted this morning, these will be in Friday's COT report, because yesterday was the cut-off for that report.
Monday's final open interest numbers showed a slight decline of 408 contracts in gold...along with a smallish increase of 172 contracts in silver. Not a lot in the grand scheme of things...but, like I said in the previous paragraph...I expect Tuesday's final o.i. numbers to show deterioration in both metals. Just how much, and by whom, remains to be seen.
Since JPMorgan and the other bullion banks are [according to the last two Bank Participation Reports] covering as many short positions in both gold and silver that they can, Ted and I both wonder why they would either individually or collectively stick their heads back in the lion's mouth at this point. So we'll just have to wait and see how this all unfolds as the days and weeks pass.
Here's the 6-month silver chart. We are well through the 50-day moving average to the upside...and it may have been the technical funds going long yesterday...but we won't know that until Friday. I doubt very much that yesterday's rally was short covering.
Here's the 6-month gold chart. As you can see, we're still about ten bucks under the 50-day moving average there...and it will be interesting to see what kind of price action we get once that average is broken to the upside. Normally the technical funds don't come back in on the long side until that moving average is firmly broken, so that's why I'm scratching my head a bit, wondering who the buyer was yesterday.
Not much happened in Far East trading earlier today...and I was somewhat disappointed to see that there was no follow-through to the upside once Wednesday trading began. Volume in gold is very light...around 12,500 contracts as of 4:13 a.m. Eastern...and silver has traded around 7,200 contracts net.
It will be interesting to see if anything happens during trading in London today. But, like just about every other day [yesterday being a prime example of that], the real action doesn't occur until trading on the Comex begins at 8:20 a.m. in New York. I would suspect that this pattern will repeat itself again today.
See you on Thursday.
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