Gold bull market has a long way to go: Jim Rogers. The Battle for $21 Silver Begins. Russia’s Central Bank Buys 300,000 Ounces of Gold in August. The IMF itself has become the problem: Ambrose Evans-Pritchard… and much, much more.
YESTERDAY IN GOLD AND SILVER
Gold gained about six bucks from the time the markets opened in the Far East on Monday morning… until shortly after London opened at 9:30 a.m. local time. From that point, the gold price rolled over a bit, declining into the London p.m. gold fix at 10:00 a.m. in New York, before rising to a new record high of $1,284.80 spot… and then getting sold off and trading sideways for the rest of the New York session.
Silver’s price followed a similar path, except its high of the day [around $21.00 spot] was in London… shortly after 9:00 a.m. local time. From there it got sold off a bit, rose after the London p.m. gold fix… and then got sold off for a small loss on the day. Silver did not break through to a new record high price on Monday… and this is the second day in a row that silver has closed with a small loss.
The world’s reserve currency traded in a 50 basis point price range on Monday… and closed basically unchanged from Friday’s close.
The precious metals stocks pretty much traded in tune with the gold price action, with the top coming shortly before lunch in New York, which was gold’s [record] high price of the day. From that intraday high, the HUI gave up about a percent of its gains, but still managed to finish up 1.37% on the day… and back above the 500 level once again.
All in all, not much happened during Monday’s trading… and it’s impossible to read anything into one day’s worth of trading, especially considering the fact that volume in both gold and silver was on the light side. I’d love to see gold [and especially silver] blast off to the moon from these big overbought positions… but that sort of thing has never happened before… and if it does this time, it will be [as Ted Butler says] the very first time. It will mean that the bullion banks have been over run with a full short position on… and I see no sign of that from yesterday’s price action in either metal. But I rub my hands together with glee in anticipation of such an event!
Monday’s CME Delivery Report showed that 7 gold and 24 Comex silver contracts were posted for delivery on Wednesday. JPMorgan is still trading in its proprietary account. The link to what little action there was, is here.
The GLD ETF showed an increase on Monday of 117,260 ounces of gold… and there was no reported change over at SLV.
The U.S. Mint had a sales report yesterday. They sold 5,500 ounces worth of gold eagles… 2,000 one-ounce 24-K gold buffaloes… and 655,000 silver eagles. Month-to-date, the U.S. Mint has sold 43,000 ounces of gold eagles… 7,000 one-ounce 24-K gold buffaloes… and 1,045,000 silver eagles. Over at the ZÃ¼rcher Kantonalbank in Switzerland, they reported adding 23,860 ounces of gold and 809,074 ounces of silver to their respective gold and silver ETFs last week.
Over at the Comex-approved depositories, they reported receiving a net 165,440 troy ounces of silver on Friday. The link to that report is here.
The big gold news yesterday came from the monthly update over at The Central Bank of the Russian Federation. They reported purchasing 300,000 ounces of gold bullion for their reserves in August. Year-to-date they’ve purchased 3.1 million ounces… a hair over 96 tonnes. I’m sure China is socking away gold as well, except they aren’t advertising the fact. Russia is broadcasting it to the world. Here’s the graph courtesy of Richard Nachbar and his most excellent assistant, Susan McCarthy.
I have a lot of stories… too many, in fact… but I’m going to post them all anyway. You can decide what’s worth your time. I’ve already hacked and slashed down to what I thought was the bare minimum, so you can complete the editing job for me. I also apologize for the fact that a lot of them fall into the must read category as well.
I mentioned late last week that Sprott Asset Management in Toronto had just purchased another six tonnes of gold for their bullion fund. Well, there was a story about that in the Saturday edition of Canada’s Financial Post… and it covered more than the Sprott purchase. The headline reads “Gold Glitters For Sprott”… and it’s worth the three minutes it will take to run through it. The link is here.
The next item is a 16-minute long video from the Friday edition of CNBC’s Squawk Box. It’s a story about small business in America… and gives insight into the struggles of making it as an American small business owner, with Home Depot co-founder, Bernie Marcus. Bernie started off life as a [very] small businessman… and he’s still tuned into what’s going on with the small business owner. I was very impressed by his honesty and integrity. People like him are what America is really all about. Even if you don’t own a small business, this is a must listen. I thank my good friend Rick Friesen for sending it along… and the link is here.
According to the following Bloomberg story [courtesy of reader Scott Pluschau], another six U.S. banks were closed by the FDIC on Friday… costing them about $350 million. The FDIC’s list of â€œproblemâ€ banks climbed to 829 lenders with $403 billion in assets at the end of the second quarter, a 7% increase from the 775 on the list in the first quarter, the FDIC said last month. It’s not an overly long story… and the headline reads “Six Banks Fail, Community & Southern Acquires Three”… and the link is here.
Late last week I ran story that the IMF might be coming to bail out Ireland. Well, Ireland’s finance minister Brian Lenihan moved to calm markets with a rebuttal of this story that Ireland is ‘perilously close’ to a debt crisis. The headline from the Saturday edition of The Telegraph reads “Ireland’s finance minister quashes IMF bail-out story”. Where there’s smoke… there’s fire, dear reader… and I thank reader Roy Stephens for sending this story along. The link is here.
Following that article in Saturday’s edition of The Telegraph, comes this Ambrose Evans-Pritchard offering from the Sunday edition of The Telegraph that’s headlined “The IMF itself has become the problem as Europe’s woes return”. Ambrose gets up on his high horse and cuts a swath through the IMF with this piece. It’s very much worth the read… and I thank Washington state reader S.A. for sending it along… and the link is here.
Also on Sunday came this piece on Ireland that was posted over at the Business Insider website. The headline reads “Ireland To Face Crucial â‚¬1 Billion Bond Test This Tuesday”. That’s today! The story is only three paragraphs long and will take less than a minute of your time… and is definitely worth the trip. I thank reader ‘David from California’ for sending it along… and the link is here.
As you know, Europe isn’t the only area of the world that has big economic, financial and monetary problems. In many ways the United States is in even worse condition. Here’s the latest GlobalEurope Anticipation Bulletin with the longish headline that reads “The Global systemic crisis Spring 2011: Welcome to the United States of Austerity / Towards a very serious breakdown of the world economic and financial system”. This essay came out last week and lays out in stark terms what’s coming down the pipe for the U.S.A. It’s a long and very ugly read, with excellent graphs. It’s also a must read… and I thank reader Ken Metcalfe [along with others] for sending me this story… and the link is here.
Before I begin all my gold-related stories for today, here’s a graph that Nick Laird over at Gold .:. ShareLynx Gold .:. Gold Charts .:. Gold Markets .:. Gold Articles .:. Precious Metals .:. Alternative Self-Sufficiency .:. Eclectic Scategories slipped into my in-box in the wee hours of this morning. It’s his “PM Funds Index” graph… and it shows that we’re almost back to our 2008 highs in the world’s precious metals equity markets. I’m sure that ‘da boyz’ are looking at this graph as well.
Click here to enlarge.
The first story is the latest offering from GoldMoney founder James Turk over at his FGMR – Free Gold Money Report website. The headline reads “They are printing too much money”. The article [long, by Turk’s standards] is a must read from start to finish… and the graph is excellent… and the link is here.
The next gold-related story is one that I ‘borrowed’ from Kitco. It’s an interview with Jim Rogers that was posted over at their website last Friday. The headline reads “Gold bull market has a long way to go”… and the link to the text and video interview… is here.
Next is Monday gold market commentary from Peter Brimelow over at MarketWatch – Stock Market Quotes, Business News, Financial News. The headline reads “Some gold bugs worried by Friday’s flop”. The gold bug he refers to is your humble scribe… as I was underwhelmed by the price action on Friday… and I get quoted in his column. Just ignore what I had to say… and read the rest. The link is here. I’ll have more to say about this in my closing comments.
Also in Peter Brimelow’s column, he quotes from James Turk’s essay over the weekend that is headlined “The Battle for $21 Silver Begins”. This is a must read commentary as well… and it’s accompanied by the usual excellent graph… and the link is here.
Lastly today, comes this lengthy item that was posted over at zero hedge | on a long enough timeline, the survival rate for everyone drops to zero on Sunday afternoon. The longish headline reads “Bill Buckler Discusses The Last Price Standing Of “True Money”, Answers The Only Question Relevant To Gold Bugs”. “Bill Buckler, publisher of The Privateer, has released one of the most scathing critiques of paper money we have read to date…” Zerohedge has published a huge portion of Bill Buckler’s latest edition of The Privateer… and it’s a privilege for me to present it in this column. I cannot overemphasize how important it is for you to read this. I thank reader ‘David in California’ for bringing it to my attention… and now to yours. The link is here.
Since zero hedge | on a long enough timeline, the survival rate for everyone drops to zero stole a chunk from Bill Buckler’s latest… I might as well ‘borrow’ something from his latest report as well. Last week I mentioned the fact that Alan Greenspan had given a speech saying that “Fiat money has no place to go but gold”. That was the headline from my Thursday column. Well, Bill Buckler… one of the sharpest knives in the drawer in my humble opinion… had this must read commentary about Greenspan’s speech…
“By definition, a political and financial establishment are the rulers of the nation they inhabit. In a â€œdemocraticâ€ nation like the US, the people get to â€œvoteâ€. But who writes the party platforms and picks the candidates for the major political parties, the only parties which stand any chance of forming a government? And who sets up the campaigning and voting rules to make sure that they ARE the only parties which stand any chance of forming a government?”
“The more established an establishment becomes, the fewer the REAL differences between the parties vying for the vote. There was a time when there was a marked difference between the Democrats and the Republicans in the US (or the Coalition and Labor in Australia). That time has long since passed. For many decades now, the only choice available in elections has been which party to put in charge of the borrowing and spending. This policy is carved in granite and has been for almost a century.”
“The first pre-requisite to political power is the ability to control what is used as money. Without that, an establishment cannot be formed because the means for its sustenance cannot be taxed to the extent necessary and cannot be created out of thin air at all. Everybody in the US establishment and in every other establishment in the world knows this and has always known it.”
“Long before Alan Greenspan developed the urge to join the establishment, he understood this and warned against it. Once he DID decide to join the establishment, he turned his undoubted talents to sustaining the economic and financial ignorance of the governed. He was uniquely successful in this task, but he knew it couldn’t last. That is what he was telling the members of the CFR on September 15th. But he was preaching to the converted. They know it too. And that is their overriding problem. The jig is up. The â€œstingâ€ is no longer working.”
“All over the world, financial markets are clinging to the only things they â€œknowâ€ because they dread to discover that there is no real substance to their â€œknowledgeâ€. In the US, the establishment knows that their free ride is coming to an end. They have waxed fat on their ability to create the world’s reserve currency out of thin air for many decades. From the â€œexcessâ€, they have kept their nation in line by the usual means of â€œbread and circusesâ€. Now, the system they created has broken down and they know it.” – Bill Buckler, The Privateer… 19 September 2010
Please read those five paragraphs over and over again, until you ‘get it’. I consider those five paragraphs to be the most important ones I’ve read in almost ten years.
Buckler says the following at the beginning of every weekly “Gold This Week” commentary that he writes…”
“In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a political metal. In the true meaning of the word, its price is “governed”.
“This is so for the very simple reason that Gold, in its historical role as a currency, is fundamentally incompatible with the modern worldwide financial system.
“Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is no escape because no paper currency has any link to Gold.
“All of the economic, monetary, and financial upheaval of the past 30 years is a direct result of this fact.
“The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold.
And, dear reader, I suggest you read that over a few times as well.
As I said earlier in this column, based on the volume, I wouldn’t read a lot into yesterday’s price action. I note that there we are now down to 798 silver contracts that are still open for September. These have to be closed out, or delivered into, by September 29th.
I also note that there has been some interesting price action that started around 2:00 p.m. Hong Kong time… and it got even more interesting once London opened for trading. Volume [as of 4:55 a.m. Eastern time] is pretty light, which I’m glad to see considering the price action.
Today is Tuesday, the cut-off day for this Friday’s Commitment of Traders report. The last three weeks have seen very unusual price activity [all to the upside, fortunately] on this day… and I’m wondering if Tuesday’s action in New York will follow that same pattern. We’ll find out soon enough.
If we do get a correction of some kind, I do not expect it to be very deep or last very long. Once that low has past, I expect to see some real fireworks in both metals… especially silver. I sleep well at night knowing that when that happens, I won’t be found asleep at the switch.
I hope you are in a similar position, dear reader… but there’s still time to get on board. As I said in this column on Saturday, with the precious metals shares poised to blast off to new highs in the very near future, I would deem it prudent to be as fully invested as you wish to be… starting right now. I’m still urging you to put your investment dollars to work. The first place I’d start would be with a subscription to either Casey’s Gold and Resource Report… or Casey Research’s flagship publication… the International Speculator. Please click on the links, as it costs nothing to check them out… and the subscriptions come complete with CR’s usual money-back guarantee.
It could be an interesting day when trading begins in New York.
Thanks for putting up with this very long column today… and I expect that tomorrow’s commentary will be much shorter. Not only for your sake, but also for mine.
See you on Wednesday.