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.
Yesterday in Gold and Silver
The gold price hit its Far East low around 2:30 p.m. Hong Kong time Tuesday afternoon…with the high of the day coming at 12:00 noon in London…right on the button.
The gold price slid a few bucks going into the Comex open…with the New York high coming at precisely 9:00 a.m. Eastern. It then appears that one or more bullion banks pulled their bids going into the London p.m. gold fix at 10:00 a.m. Eastern…and that was gold’s absolute low of the day.
The price recovered a bit…and then traded sideways into the end of electronic trading at 5:15 p.m.. in New York. The gold price finished down about three bucks from Monday’s close.
Silver’s low price on Tuesday was set early in the Hong Kong afternoon trading session, before blasting higher the moment that London opened for business at 8:00 a.m. GMT. By the time the London silver fix was in at 12:00 noon in London, silver had jumped ninety cents from that low.
The London silver fix proved to be silver’s high price tick of the day [as it was for gold]…and it was all downhill from there…with the New York low coming moments before the end of the Comex trading session at 1:30 p.m. Eastern. The silver price recovered about forty-five cents from there…before trading sideways into the close of electronic trading in New York.
Here’s the New York Spot Silver chart on its own. The London p.m. gold fix at 10:00 a.m. Eastern…followed by the absolute low of the day at 1:25 p.m…are the highlights.
The U.S. dollar hit its low around 1:00 p.m. in Hong Kong…before launching on a rally very similar to the ones that silver and gold enjoyed up until the London a.m. silver fix at 7:00 a.m. Eastern time…which was noon in London. So, for a time, the dollar and the precious metals were rallying together.
The absolute zenith in the dollar came at the London p.m. gold fix…just minutes before 10:00 a.m. in New York. It’s obvious, at least to me, that if there hadn’t been interference in both the gold and silver price at the London silver fix, which occurred three hours earlier at 7:00 a.m. Eastern, gold and silver would have continued to rally right alongside the dollar.
The London p.m. gold fix was the standout feature of all the graphs today…including the HUI below. From that low, the gold stocks recovered somewhat…and the HUI finished down 0.95%. Despite the fact that the silver price finished in the black, most silver stocks did not do well yesterday.
The CME’s Delivery Report was a little more interesting yesterday, with 50 gold and 79 silver contracts posted for delivery on Thursday. Month-to-date…407 silver contracts have been posted for delivery…about 20% of the total amount. Under normal conditions…95% of the deliveries in the March delivery month would have been made by now. Here’s the link to yesterday’s action.
There was no report from GLD…but there was another addition reported over at SLV. This time it was a smallish 488,160 troy ounces.
The U.S. Mint finally had a sales report for us. They sold another 7,000 ounces of gold eagles along with 668,500 silver eagles. This was their first sales report of the month that included silver eagles. Month-to-date…13,000 ounces of gold eagles have been sold…along with the silver eagles just reported.
It was a busy day over at the Comex-approved depositories on Monday. They reported receiving 2,003 ounces of silver…but shipped out 890,622 ounces. The link to that action is here.
Before I start with my stories, here are a couple of graphs that were sent to me yesterday. The first is a 10-year chart of the dollar courtesy of Washington state reader S.A. Using this kind of time frame, it’s not a very robust looking chart is it? When we finally break below the 2008 lows, it will certainly get ugly from there.
Lastly is this wonderful graph that shows the Comex silver short contracts held by the New York bullion banks. This is basically a graph of JPMorgan’s short position in silver…as 90-95% of this position [the red trace] is held by this one U.S. bullion bank. What’s left over is virtually all held by HSBC…as there are no other NY bullion banks involved. The green line is the closing silver price on the date of each Bank Participation Report going back to the beginning of 2009.
Here’s a nifty graph that Nick Laird over at sharelynx.com just slid into my in-box. It shows the premiums paid over the spot price of gold and silver eagles as the prices rises. You can see that as the price of the coins increase, the premiums shrink dramatically.
| The Wrap |
| The silver and gold price action was very positive yesterday in the early going…as both were rallying in lock step with a rising dollar…until the not-for-profit sellers showed up at the London p.m. silver fix at noon GMT.
Gold volume was around 115,000 contracts net of all roll-overs…which is pretty light…and preliminary open interest numbers are encouraging. Gold’s final open interest numbers for Monday, which were initially pretty high in the preliminary report, actually showed a decline of 3,301 contracts when the final numbers were posted on the CME’s website yesterday morning. Silver’s trading volume on Tuesday was a bit under 65,000 contracts net…and the preliminary open interest numbers is even more positive than gold’s…so I’m hoping for another o.i. decline when the final numbers are posted on the CME’s website later this a.m. In yesterday’s column I said that we would probably see a big decline in silver o.i. for Monday’s trading day when the final numbers were posted on Tuesday morning. That turned out to be the case…as silver open interest fell a chunky 3,551 contracts. Whatever final changes in open interest that are reported for Tuesday’s trading later this morning, they will be in Friday’s Commitment of Traders report…as yesterday was the cut-off for it. There are still 1,743 silver contracts open in March. I would guess that most of these contract holders will stand for delivery now that we’re this far into the delivery month…but it remains to be seen how long the shorts will take to deliver to them. That is the $64,000 question that remains unresolved. Nothing much has changed in the silver backwardation situation. But it certainly can turn on a dime without notice…so I’ll write a short paragraph on this issue every day until this situation resolves itself…one way or another. Yesterday Ted Butler mentioned that silver had outperformed gold by a factor of five since the end of January. Well, Washington state reader S.A. sent me the following chart which proves Ted’s point in spades. I’ll leave you to do the exact math…but it’s more than five times according to this graph.
Not much happened with gold and silver prices during Far East trading earlier today…but now that London is open, both metals are having a bit of a rally…and both are above yesterday’s closing prices at the moment. We’ll just have to wait and see what JPMorgan et al do…either during the remainder of London trading, or Comex trading in New York. |
