The James Joyce Table
Midas du Metropole
Topic du Jour
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July 15 - Gold $403.60 down $1.40 – Silver $6.63 up 6 cents
Silver Continues To Lead The Way Higher
Worry a little bit every day and in a lifetime you will lose a couple of years. If something is wrong, fix it if you can. But train yourself not to worry. Worry never fixes anything...Mary Hemingway
GO GATA!!!
Yesterday’s mysterious HUI sell-off near the bell was the tip off The Gold Cartel was preparing to attack bullion this morning. They did just that. Gold came in flat and was then trounced on US economic numbers which were anything but stellar. The euro dropped around .20 and the cabal used that as their cue to stomp on gold, taking it $4 lower. The Gold Cartel folks and allies took out stops and then began to cover.
Depending on how you look at it, they did not get much bang for their buck. The fly in the ointment was silver which refused to follow gold’s lead down. Silver quickly popped higher, rising 10 cents and dragged gold off its early suppressed lows as it climbed all the way back to unchanged+.
A better than expected Philly Fed manufacturing report was released at noon EDT, which put a further bid into the dollar and the shorts pressed their gold case for the second time during the session. Gold sank again, yet found solid support on the break.
The gold open interest surged once more yesterday. This time it rose 6047 contracts to 254,213. We know the funds have been buyers, as is cited by market commentators. What these commentators don’t ever tell us who is selling and why. It’s not the producers, who on balance are covering. So who is it that is nullifying all the recent fund buying? The Gold Cartel of course. Clearly, they are doing all they can to keep gold from taking out the $410 area.
Houston’s Dan Norcini notes:
Hi Bill:
Someone took a big position in the February '05 gold contract yesterday. Have you heard anything from your source Bill on who that was? Better than a 2,000 contract increase in here. A bit odd since total open interest in Feb 05 is a bit over 6,000 total.
The way open interest is increasing we will be at 270,000 by next week's end easily. I know I said it yesterday but I am stunned by the amount of determined selling taking place this time around.
If I can get some time I will look into this rate of increase and compare it with last October's rally into the high at $430 by year's end.
Best,
Dan
The two short-term keys to gold’s price are the physical market (can it absorb the cabal selling?) and silver. Silver continues to trade like a race horse which wants to gallop, only to be restrained by its bit, which is in this case a capped gold price.
The silver open interest rose 1648 contracts to 88,810. The funds are entering the fray on the long side. It is interesting to compare the silver open interest with its price action in contrast to what is happening to gold. Like night and day. Silver has rallied substantially with only a slight increase in open interest; while lately, gold has been going sideways with a substantial open interest increase. When silver launched to $8.40+, its open interest was about 122,000.
The silver stocks in the Comex warehouses dropped again, another 505,969 ounces to 115,963,456. This is just what we want to see. Over two weeks ago one of our Café sources said that over 20 million ounces of silver were going to disappear from the warehouse stocks. So far, so good!
Silver has its sights on $7 for a first stop objective. This price rebound is another sign the silver move earlier this year was no fluke. That move was a warning sign of what is to come; that is, the price of silver is going to blow through $10 per ounce later this year.
September silver
http://futures.tradingcharts.com/chart/SV/94
The John Brimelow Report
Indiscreet Standard: Powerful Bianco
Thursday, July 15 2004
Indian ex-duty premiums: AM $4.77, PM $5.17, with world gold at $404 and $403.60. Slightly below, and more or less at, legal import point. The Indian rupee slipped to a 3-week low today, on gloom over oil prices, the Congress Government’s attitude to business, and a growing feeling the Monsoon will fall short of last year’s perfection. This did not help world gold.
Shanghai prices, on the other hand, have returned to modest premiums after a week of discounts. Kilo bar premiums in the Gulf were mildly favourable today also: averaging appreciably more than $1. Overall, the physical market appears to be adjusting to $400+ world gold.
TOCOM appeared indifferent: volume edged up 16% to the equivalent of 18,099 Comex lots but the active contract was unchanged; world gold fell $2.50 from the NY close. Mitsui-London claims TOCOM was a "good seller", but open interest only fell the equivalent of 640 Comex lots, so any liquidation was on a much smaller scale than seen a few days ago. The "General Public" is far more interested in Platinum at present. (NY traded 47,344 lots yesterday; open interest rose a tell-tale 6,478 contracts.)
Yesterday in NY, as Refco Research says,
"Fund buying and short covering offered lift although trade and bank selling kept matters in check."
Open interest has now risen a steep 18,000 contracts or 1.8Mm ozs of paper gold in three days, with gold stuck slightly over $400. Standard London is apparently sufficiently far down the food chain amongst Bullion dealers to break ranks and stipulate the obvious suspicion:
"It is interesting to note that the fixings in London have tended to be on the weaker side relative to the prevailing pre-fixing markets, which suggests that there is official selling around"
Others have clearly grasped this and it has emboldened opportunistic shorts.
ScotiaMocatta quite reasonably observes of Tuesday’s Comex data:
"The Comex open interest was up 2,261 contracts to a new total of 247,735. The fact that the open interest rose in a falling market tells us that new short positions had been established."
While Reuters reported this afternoon:
""We came off on some decent selling. The floor is offering it lower. They're bearish. The weak longs are liquidating. We're seeing some profit-taking. But I think we're going to hold here and rally. Silver's looking firm. I think this is a buy on the dip," said one COMEX floor broker"
Shorting is naturally easier with a back stop present. Volume was estimated at a heavy 58,000 lots today.
Nevertheless, the physical market as evidenced by the premiums is in a constructive posture and, unless the official sector is willing to do something heroic, will probably continue to edge gold higher in the immediate future.
While waiting for this, those friendly to gold will find yesterday’s Bianco Research Commentary refreshing. Entitled
"Why CPI Might Now Be The "Number Of The Month"
this essay offers a chart and observes:
"The chart below measures how inflation has been performing versus consensus expectations (as measured by MMS International)… In recent months…the expectations index has taken a sharp turn higher …In fact, inflation has been exceeding expectations to a degree never before seen in this data in that the rise in the chart below is the biggest ever seen…the actual inflation rate is currently at 14-year highs…Currently the six-month annualized rate of inflation is at its highest level since 1990."
"Conclusion
Inflation has surged ahead of expectations to levels not seen in well over a decade."
JB
CARTEL CAPITULATION WATCH
The DOW (10,163 - down 45 in quiet trading) closed on its lows for a change. The DOG continued its losing streak, closing at 1913, down 2.
The dollar gained .44 to 88.20 and the euro lost .55 to 123.27.
When the PPI was raging, our government couldn’t get the number out on time, using one bogus excuse after another. Today’s PPI was reported lower, thus all reporting problems disappeared. How ludicrous can it get? So few in the mainstream, save a John Crudele of the NY Post, bother to say anything on the subject!
There were numerous US economic reports released this morning:
08:30 July Empire Manufacturing reported 36.54 vs. consensus 27.8
Prior reading revised to 29.93 from 30.17.
* * * * *
08:30 May Business Inventories reported 0.4% vs. consensus 0.5%
Prior reading revised to 0.7% from 0.5%.
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08:30 June PPI reported (0.3%) vs. consensus 0.2%; ex-Energy reported 0.2% vs. consensus 0.2%
May reading unrevised at 0.8%; ex-Energy unrevised at 0.3%.
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08:30 Weekly jobless claims reported 349K vs. consensus 345K
Prior week revised to309 K from 310K.
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09:18 Industrial production disappointing in June
The (0.3%) decline in June was disappointing, though manufacturing was down just (0.1%). Much of the weakness was due to a (2.3%) decline in utility production, which is often influenced by weather. Capacity utilization was 77.2% vs the 77.7% consensus. The strong July Empire State index will serve as an offset to this report, and the Philly index at 12 ET today will also be watched for an indication that June weakness was an aberration. There was little bond market reaction to the numbers: 10-year note (2/32) to yield 4.49%.
July 15 (Bloomberg) -- Manufacturing in the Philadelphia region unexpectedly expanded at a faster pace this month than in June and more companies reported rising orders and higher employment, a Federal Reserve report showed.
The Fed Bank of Philadelphia's July general economic index rose to 36.1 from 28.9 the previous month. A number greater than zero signals more manufacturers see business improving than deteriorating. The index reached a 10-year high of 38.8 in January and has been in positive territory since June 2003. –END-
Chinese inflation numbers come out tomorrow, which could have some impact on our markets. Some recent headlines
China's economy growth continue to speed up ( 07-15 )
China to be world's 2nd biggest aviation market by 2022 ( 07-15 )
Construction Bank sees profits soar in Jan.-June period ( 07-15 )
Airbus: China's air transport to grow 5 times by 2022 ( 07-15
Beijing economy keeps rapid growth [ 07-14 15:57]
Housing price up 10.4% [ 07-14 15:16]
Foreign trade soars in Shanxi [ 07-13