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 gold price didn’t do a lot yesterday, pricewise. It gained five bucks by 11:00 a.m. Monday morning Hong Kong time…and stayed there until 3:00 p.m…before sliding into the New York open. A sharp rally commenced…that ran into equally sharp selling…with gold’s low [$1,364.60 spot] coming at the London p.m. gold fix…which was 10:00 a.m. in New York…right on the button! From there, gold climbed to its high of the day, which was $1,377.30 spot, which came at the close of trading at 5:15 p.m. Eastern time. Not much to see here, but it was gold’s first positive day of the new year.
What I said about gold, pretty much applies to the silver price yesterday as well…with the high of the day posted at $29.14 spot. The low was around $28.60 spot sometime during the lunch hour in London. Looking at the New York chart on its own, it’s impossible to tell when the high was…as every time that silver poked its nose over $29.10 spot, it got sold off. Silver finished up 40 cents on the day.
Here’s the New York Spot Silver chart on its own…
The world’s reserve currency didn’t do much during the Monday trading day, anywhere in the world…although there was a 45 basis point sell-off between 8:00 a.m. and 12:30 p.m. Eastern time yesterday. From that low, the dollar traded sideways into the New York close.
Not surprisingly, because gold hit its low of the day at precisely 10:00 a.m. Eastern time, which was the London p.m. gold fix…that was also the precise bottom for the gold stocks…as the HUI chart shows below. And, like the gold price, the stocks finished in slightly positive territory [up 0.26%] as well.
The CME’s Daily Delivery report is hardly worth mentioning, as only 9 gold and 3 silver contracts were posted for delivery tomorrow. Nothing to see here, folks.
For a change, the GLD ETF showed an increase yesterday. It was only 48,800 troy ounces…but an increase nonetheless. However, over at the SLV ETF it was an entirely different story, as 1,709,855 ounces of silver were reported withdrawn. That’s the second withdrawal of 1.7 million ounces in as many business days. I’m not sure if it’s a legitimate withdrawal because of the price action…or did someone have urgent need for the silver that they had temporarily stored there?
The U.S. Mint had a sales report as well. They sold another 5,000 ounces of gold eagles yesterday…along with a whopping 1,136,000 silver eagles! Month/year-to-date, the mint has sold 33,500 ounces of gold eagles, along with 3,357,000 silver eagles.
Over at the Comex-approved depositories on Friday, they reported that 300,296 troy ounces of silver were withdrawn…and the link to that action is here.
While I’m on the subject of silver, my bullion dealer here in Edmonton is off to his best start to a year, ever. As a matter of fact, he has all the business he can handle…and then some. Most people showing up now are all new customers that are buying silver because they’ve heard or read that this is the ‘sure thing’ for 2011. Isn’t the Internet just grand? Ordinarily, I’d say that that might be an indication that a top was close…but that is definitely not the case this time. If was I was a bullion bank, or any other entity short the silver market right now, I’d be shaking in my boots at news like this.
And it gets worse, or better, depending on who you are. Scottish reader Ian McGlone sent me the following tidbit yesterday morning… “Ed, this just appeared on the bullionvault.comwebsite. Price & liquidity warning – Silver – Our inbound silver deliveries have been delayed. We only sell bullion which is physically under our control, so we find ourselves currently unable to offer silver on our own market. Naturally, the market remains open for all our customers to quote their own prices; but as we ourselves currently have no silver to offer, there is a tendency to higher prices for both buyers and sellers. Buyers are advised to be appropriately cautious when confirming their order’s limit price. We are advised silver be delivered on Tuesday 11th Jan 2001.”
Not that anyone would want to throw gasoline on this fire…but here’s a press release from yesterday that Ted Butler sent my way. It’s from Sprott Asset Management. Eric has just made public what everyone and his dog knows about now…that it took them over ten weeks to get all the silver they ordered. “Frankly, we are concerned about the illiquidity in the physical silver market,” said Eric Sprott. “We believe the delays involved in the delivery of physical silver to the Trust highlight the disconnect that exists between the paper and physical markets for silver.”
Gee, I wonder where Eric got that idea from? Anyway, the GATA headline to the press release reads “Plenty of paper silver…but metal is scarce, Sprott warns“. Needless to say, it’s worth the read…and the link is here.
Ted Butler and I were discussing both CEF and Sprott’s physical silver funds yesterday…talking about how soon they would have offerings. I note that CEF’s silver fund has a premium of only 6.8% in both U.S. and CAN$ terms…but over at Sprott, they reported 13.5% as of the close yesterday. I would suspect [at this premium] that Sprott will have an offering pretty soon.
In his commentary to clients on last week’s trading activity, silver analyst Ted Butler had this to say on Saturday… “There were no obvious physical market factors to account for this [past] week’s price decline, particularly in silver. All signs pointed to an old-fashioned Comex-orchestrated affair, complete with late-night spoofing [phony offers] and actual selling at thin times to get prices rolling down hill to scare and induce others to sell. I guess the regulators at the CFTC…and the criminal enterprise also known as the CME Group…need a good night’s sleep and can’t be bothered with late night Comex shenanigans.”
