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
After spending most of Far East and early London trading within a five dollar price range on Wednesday, the gold price finally caught a bid at 11:00 a.m. in London that lasted until about ten minutes after the Comex open in New York.
At that point, the moon-shot rise in the gold price ran into a not-for-profit seller…and by the time the selling and bid-pulling was over…’da boyz’ had the gold price down about five bucks below it’s Tuesday closing price.
Once that seller disappeared, the gold price rebounded…and closed up about five bucks on the day.
Silver’s low of the day came about 11:00 a.m. in the Hong Kong trading day…and then worked its way up to it’s New York high around $37.75 before it, too, ran into the same not-for-profit seller at exactly the same time…and from that point on, silver pretty much followed a similar price pattern to gold.
The dollar didn’t do much at all yesterday…and the scale of the chart makes yesterday’s price action look more dramatic than it really was. I guess the standout feature was the thirty-five basis point drop between the two hour period of 10:30 a.m. to 12:30 p.m. That’s the exact time when the bids got pulled on both metals…and the dollar fell in tandem with the two precious metals.
As you’ve probably already figured out, there was nothing free-market about what happened during this two hour time period yesterday in New York…along with the not-for-profit selling that happened after the Comex open.
Gold’s low price is easy to spot on the HUI chart…and the gold stocks closed virtually on their highs of the day, with the HUI up 1.95%. The silver stocks did very well for themselves, too.
The CME had no delivery report yesterday…which was not a surprise as the last of the March silver contract deliveries had been posted on Tuesday night. Then late last night the CME posted the deliveries for First Notice Day in the April gold contract…which is today.
They reported that 1,942 gold, along with 58 silver contracts, were posted for delivery tomorrow, April 1st. The big issuers in gold were Deutsche Bank and HSBC…and the big stoppers were JPMorgan [in both their client and proprietary trading account] and the Bank of Nova Scotia. It’s not often that you see four of the ‘8 or less’ Comex traders all in one spot…but here they are. The link to this activity…and it’s well worth looking at…is here.
There was no activity in either GLD or SLV for the second day running…and the U.S. Mint only reported selling 2,500 ounces of gold eagles yesterday. With today being the last day of the month, one can only hope that they will have one more sales update for March. We’ll see.
There wasn’t much activity in the Comex-approved depositories on Tuesday. They reported receiving 5,056 ounces of silver…and shipped out 82,084…for a net decline of 77,028 troy ounces.
Just as a note of interest here. Nick Laird, the guy from Australia that provides a lot of excellent charts for this column from over at sharelynx.com, is giving a free 10-day access period to his website, so you can see what his chart service is all about. I urge you to spend some time poking around…and the link is here.
Before I get into my stories for today, I want to share this e-mail regarding the Perth Mint that I received from a reader yesterday. Here it is…word for word.
Hi Ed – read today’s news letter with interest regarding Perth Mint’s termination of UNallocated pool account SILVER. Check out this link to Perth’s blog page for their statement…they are going to have an ALLOCATED silver pool account.
HOWEVER, I wanted to bring something else to your attention…which is a “life lesson” I learned, of course, the HARD WAY. See attached Perth Mint certificate for ALLOCATED GOLD account…SEE ITEM #13 on the printed terms. It says: “The owner acknowledges and agrees that the Perth Mint’s maximum liability to the owner if it fails to make available for delivery the commodity described on this certificate pursuant to proper instructions from the owner shall the be London a.m. [gold] fix price of the commodity on the delivery date as specified by the owner’s instructions, subject to clause 7.”
Now Ed, I ask you…what the hell good is a certificate from the Perth Mint for allocated gold IF they can pay you off with PAPER? If and when the s**t really hits the fan…at least here in the USA…if you don’t have the metal in hand, bend over and kiss it goodbye.
The Allocated Gold contract with the Perth Mint is posted below. Click to enlarge…then study it carefully. Note the yearly storage fee of USD$13.99 for the ‘Allocated Gold’ that the contract clearly states that you might never get…and probably won’t.
| The Wrap |
| Well, the U.S. bullion banks showed up yesterday early in the Comex trading session and put an end to the rallies in both gold and silver that were on their way to going vertical in price. It’s hard to tell or not whether the rallies were caused by them buying and covering shorts…and/or covering shorts when they pulled their bids shortly after 10:00 a.m. Eastern.
But one thing that should be obvious to all, is that if the bullion banks hadn’t shown up to halt both rallies right in their respective tracks around 8:45 a.m. Eastern, the prices of both would have been in outer space long before the trading day was over, as there were no free-market traders willing to take the short side of these long positions at these prices. JPMorgan et al are the shorts of last resort. They are the only ones that are standing in the way of monstrously higher prices. And they don’t even have to make any attempt to cover their short positions. As Ted Butler says, all they have to do is put their hands in their pockets and do nothing…and the nuclear price explosion in both silver and gold would be on. Gold volume yesterday was not overly heavy once all the roll-overs and spread trades were removed…and because of these switches, it’s really difficult to get a handle on how much ‘real’ trading was done. However, I was happy with the preliminary open interest number, which was only 765 contracts, so I’m expecting the final o.i. number in gold to show a decline later this morning…and I would expect most of that to be spread trade related. Gold’s final open interest number for Tuesday’s trading day showed a decline of 3,843 contracts, which I was more than happy to see…as the preliminary o.i. numbers I reported in yesterday’s column showed an increase of 3,891 contracts. Silver’s net trading volume on Wednesday was a decent 60,000 net contracts…and the preliminary open interest number was an unimpressive plus 1,933 contracts. I hoping that will be reduced substantially when the final number is posted. Tuesday’s final open interest number in silver showed a very tiny increase of only 26 contracts…which isn’t even a rounding error. Considering that the preliminary o.i. number was 1,727 contracts…this was a relief. I’m hoping that Wednesday’s preliminary open interest of 1,933 contracts mentioned in the prior paragraph will also suffer the same fate later this morning. Tuesday’s final open interest numbers in gold and silver will be in tomorrow’s Commitment of Traders report as Tuesday was the cut-off. The settlement numbers for the silver futures market yesterday shows that the backwardation situation was basically unchanged from what it was on Tuesday. Both silver and gold were up a bit during Far East trading during their Thursday…and I note that silver popped at the London open…so it could be another interesting day in New York…and it remains to be seen if JPMorgan will be forced to put in an appearance if precious metal prices start getting away from them again. |
