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.
Well, for the first hour of trading in Sydney on Tuesday morning, it sure didn’t look like much was going to happen… but that didn’t last long. Shortly before the Hong Kong open, a buyer showed up… and by the time that London opened for trading about eight and a half hours later, gold was up about $16 to $1,116 spot. From there it got sold off until exactly 8:00 a.m. in New York before another rally of sorts got underway. But this rally was different. Every time the price showed signs of ‘irrational exuberance’ to the upside, there was some not-for-profit seller there to sell it off. But, it’s always possible that these were little short covering rallies with gaps in between them. This we won’t know until the open interest numbers are published later this morning. Gold’s high of the days was $1,120.90 spot, about an hour before the New York close… and it’s low was around $1,098 spot, which occurred in Sydney almost 21 hours prior to that.
Silver’s Tuesday trading pattern was different from gold’s for a change. It gained about 32 cents from its Sydney low to the London open… and then basically sat at $15.80 until the London p.m. gold fix at 10:00 a.m. New York time… about six and a half hours later. Then, it too, was off to the races once more… gaining another 30 cents before the Comex close… but falling back a bit into the close of electronic trading at 5:15 p.m. Eastern time. Silver’s low [around $15.47] was at the same time as gold’s… during early morning trading in Sydney. It’s high [$16.23 spot] was around the Comex close at 1:30 p.m. in New York.
For the most part, the dollar was under pressure starting first thing Tuesday morning in the Far East. As I mentioned in yesterday’s report, the metals certainly followed suit. But the waterfall decline in the greenback that started at 10:00 a.m. in New York yesterday, is nowhere to be found on the gold chart… and only silver’s rally [starting at that time and ending at 12:30 p.m. when the dollar hit bottom] gives any indication that the dollar fell out of bed at all. Normally a fall of that size would have lit a big fire under gold, but it didn’t this time. Very strange.
The precious metals stocks were up about 3% the moment that the equity markets opened in New York yesterday… and tacked on less than 1% after that. And, for whatever reason, the good folks over at finance.yahoo.com were having chart problems with the HUI… and I have no graph for you today.
Now for Friday’s changes in open interest. I mentioned on Saturday that I thought that the rally we saw in gold might have a short covering component… and it did. Gold o.i. fell 3,826 contracts on smallish volume of 163,772 contracts. Silver’s open interest rose only 349 contracts, but that, too, could have been the dealers going long to hide their tracks. Volume was a very light 38,383 contracts. Hopefully the Commitment of Traders report on Friday will shed some more light on this, as all of this data will be in it. I’m also looking forward to the open interest numbers that are reported today at the CME’s website… as it should [fingers crossed] show the o.i. changes for both Monday and Tuesday’s trading… and I highly suspect that some of the price rises we saw in both metals on those days, involved short covering as well… especially the price rises that occurred during Far East trading. Time will tell.
Well, the CME did had a delivery report on Monday. Apparently 60 gold and zero silver contracts are to be delivered today. The new report for Tuesday showed that 244 gold contracts… along with 31 silver contracts… are to be delivered tomorrow. Both the SLV and GLD had additions yesterday. In GLD… 96,717 ounces were added. In the SLV, a very chunky 1,570,073 ounces were added. Over in Switzerland at the Zürcher Kantonalbank, they reported the changes in their gold and silver ETFs for the week that was. Their gold ETF was up 22,942 troy ounces… and their silver ETF took another huge jump, this time by 1,078,529 ounces. As usual, I thank Carl Loeb for those numbers.
There was no report from the U.S. Mint yesterday… but over at the Comex-approved depositories, they indicated that another 434,520 ounces of silver were withdrawn from their collective inventories on Friday. The closing stocks on Friday showed that the four depositories had 108,719,192 troy ounces between them. This, dear reader, is not a lot… as a large chunk of this is not for sale… at least not for sale at today’s prices. A lot of this is held by private owners that hold registered warehouse receipts for it… and the boys at the Comex just add it in as window dressing to make the actual total seem larger than it really is.
I note in a Reuters story posted over at Kitco that, once again, the European Central Bank sold no gold last week. I’ll bet you a ten spot that they won’t sell again… and if they do… it will only be a token amount. The central banks of Europe [and the rest of the world for that matter] have probably already figured out that their gold reserves [what they have left of them] is the only asset on their books that’s actually worth more now than it was ten years ago.
In another Reuters story filed in London, I see that the Euro price of gold hit a record high of 816.33 euros/ounce yesterday. A lot of that gain is certainly currency-related…but that’s the whole idea behind owning the stuff in the first place.
As the headline to this column states, George Soros has bet even more money on the gold price. His holdings of the SPDR Gold Trust jumped from 2.5 million shares to 6.2 million shares by the end of 2009. The link to the story is . I seem to remember him talking about gold being the ‘ultimate bubble’. That’s probably why he bought more… as it’s still to come.
I had quite a few stories left over from Tuesday. Here’s a couple from James Turk of fame, that are posted over at his fgmr.com website. The first is entitled ““… and the second is headlined ““. Both are very short reads and definitely worth your time.
The next story today is about real estate. The headline reads “CMBS Delinquencies and Special Servicing Hit Record Highs”. As you are well aware, dear reader, the real estate market [both residential and commercial] is a complete disaster… with the residential real estate market about three years ahead of commercial real estate. A quote from the article reads… “the delinquency rate on commercial mortgage-backed securities (CMBS) conduit and fusion loans posted the largest single monthly increase on record. US CMBS loans are also transferring to special servicing status faster and greater than ever before.” This is a must read story… and I thank Russian reader Alex Lvov for sending it along… and the link is .
Here’s another story that’s been sitting in my in-box since Sunday. It’s a post from over at jessescrossroadscafe.blogspot.com. The “giant vampire squid” is getting a lot more bad press these days regarding its dealings with Greek debt… and hiding other countries debt as well. The article is entitled “Goldman Goes Rogue: Special European Audit to Follow“. It’s highly recommended reading… and the link is .
This next item is from a post over at seekingalpha.com. I’d heard the rumours… but this is the first hard copy that I’d seen. It appeared in yesterday’s edition of the King Report and I thought it was well worth the read. The headline states “The U.S.: Land of the Free and Home of a Nearly Failed Treasury Auction of Its Own”… and the link is .
That latest edition of the GlobalEurope Anticipation Bulletin has been posted at leap2020.eu and bears the title “Second half of 2010: Sudden intensification of the global systemic crisis — Strengthening of five fundamental negative trends”. This is the world financial crisis from a European perspective. It’s a longer read, but not excessively so… and the graphs are worth the trip. I thank reader Doug Beiers for bringing it to my attention… and the link is .
And lastly is this piece by silver analyst, Ted Butler. It’s his presentation at the Phoenix Resource Investment Conference and Silver Summit earlier this month… and in it, he explains why he’s optimistic that the new chairman of the U.S. Commodity Futures Trading Commission, Gary Gensler, and President Obama will put an end to the silver price suppression scheme. It’s well worth the read… and the link is .
When fascism comes to America, it will be wrapped in the flag, carrying a cross. – Sinclair Lewis, author of It Can’t Happen Here, 1935
There wasn’t a huge amount of activity in Far East trading earlier today… and the dollar wasn’t doing much either. There were a couple of brief run-ups… the first was during the lunch hour in Hong Kong… and the second shortly before London opened for the day. I’m only guessing, but these might be the New York bullion banks short covering on the Globex trading system. Volume was very light… with even less volume than was posted at this time on Tuesday morning. Gold volume [as of 4:23 a.m. Eastern time] is only 19,593 contracts for April… and silver’s volume for March is 4,985 contracts, which is pretty decent, actually.
The volume numbers for Monday and Tuesday are now posted at the CME’s website. They show that gold traded 195,019 contracts… and silver traded 60,160 contracts for both days combined. But it’s the open interest changes that I really want to see.
Gold has now breached its 50-day moving average to the upside… and silver is now above its 200-day moving average. The HUI chart is looking pretty happy as well. Let’s hope it continues.
See you here tomorrow.
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