Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The pop in the gold price just before the London open yesterday morning was pretty much all the excitement there was on Tuesday. Gold made a brief rally attempt at the Comex open at 8:20 a.m. Eastern…but that was pretty much it for the day. Gold’s high price tick was $1,377.90 spot which occurred 8:30 a.m. in New York.
The silver spiked up a bit the same time as gold…and from there, silver worked itself slowly higher. The high tick was shortly before lunch in London…which was close to the London silver fix. But, from that high, the silver price came under selling pressure after every rally attempt…and silver finished up less than 20 cents from its Monday close.
The dollar swung within a 25 basis point range, both up and down, from its open on Tuesday morning in the Far East…and finished down 10 basis points on the day. For the second day running, there was no co-relation between the precious metals and the world’s reserve currency that I could see.
The gold stocks gapped higher once again…and stayed up for the rest of the New York trading session…with the HUI finishing up 1.86% on the day. Most silver stocks had a good showing as well.
The CME’s Daily Delivery Report showed that 62 gold along with only 1 silver contract were posted for delivery tomorrow. It was all ‘da boyz’ in gold…and the link to the action is here.
The GLD ETF showed another decline. This time it was 48,780 ounces. There were no reported changes in SLV.
Over at Switzerland’s Zürcher Kantonalbank for the week that was, they reported a 32,339 troy ounce decline in their gold ETF, but over at their silver ETF, they increased their holdings by 296,173 ounces. As always, I thank reader Carl Loeb for those numbers.
The U.S. Mint reported that they sold another 13,500 ounces of gold eagles yesterday…but nothing in silver eagles. Month-to-date…55,500 ounces of gold eagles have been sold…along with 1,705,500 silver eagles.
There was almost no activity over at the Comex-approved depositories on Monday. They received a smallish 74,519 ounces of silver.
If you are interested in Gold, and in particular in its role as money, you will be aware that the primary POLITICAL reason why Gold should be used as money is that it cannot be printed or borrowed into existence. The point is that it is only the political control over what the world uses as money which prevents gold from resuming its function of money on an OFFICIAL basis. On an “unofficial” basis, Gold has never stopped being money.– Bill Buckler, The Privateer, February 12, 2011
Both silver and gold didn’t do much yesterday, but looking at the charts of each, I would guess that there was a seller about that made sure that that was the case. The volume’s in both metals were slightly higher than they were on Monday, but not by much.
I was not impressed with the preliminary open interest number in gold…and I’m expecting to see an increase in gold’s open interest when the final figures are posted on the CME’s website later this morning. Silver’s open interest numbers look more encouraging…and they even might show a reasonable decline. We’ll see. But, whatever they are, they will be in Friday’s Commitment of Traders Report…as yesterday [at the close of trading] was the cut-off for that report.
Monday’s open interest changes were, unfortunately, just about as I expected. Gold open interest rose 4,379 contracts…and silver’s o.i. was up a very chunky 4,945 contracts. There were decent rallies in both metals on Monday…especially in silver…and it’s obvious to me that both rallies ran into sellers that were more than willing to go short the metal against all long contract buyers. The bullion banks come to mind, but that won’t be known for sure until Friday’s COT report.
Here’s the 1-year silver chart. As you can see, the RSI is heading back into overbought territory once again…and on increasing open interest…which I’m never happy to see.
I also note that we’re within a dollar of the old high that was set back on January 1st. It will be of interest to see what happens for the rest of the trading week…and month…as we’re coming up hard on March delivery for silver…and open interest in the March contract is pretty high at the moment.
So, I wouldn’t be the slightest bit surprised if JPMorgan et al weren’t tempted to go after the silver price going into First Day Notice, which is the last trading of February. I’m sure they’d like to ring the cash register and harvest all these new longs that have piled in since late January. But can they…or will they?
Gold just broke through its 50-day moving average to the upside yesterday…but probably didn’t penetrate it enough to bring in serious technical fund buying…but the preliminary open interest numbers didn’t make for happy reading, so who knows. As silver analyst Ted Butler has pointed out, a break through this moving average may set off a rally in both metals once the tech funds step up to the plate in gold.
So, whatever happens in gold and silver for the rest of February, we should all be psychologically ready for it. The gold stocks have been outperforming the metal during the first two days of the week…and we should find out soon enough if these buyers know something that we don’t. Here’s the 1-year gold graph…and the RSI is a long way from overbought territory here.
Both gold and silver didn’t do much in the early going in the Far East earlier today…but began to rally a bit going into the London open…and are still trending higher as of 4:19 a.m. Eastern time.
Today’s trading action in New York might prove interesting.
