China Drops Their Oars into the Gold Market

Well, I wouldn't read a heck of a lot into Tuesday's gold price action. The upward move that gold made yesterday, began at the Hong Kong close... which also happens to be the London a.m. gold fix... at 10:30 a.m. local time. From the fix, gold rose to around $1,187 spot... and basically stayed around that price for the rest of the day... with the spike high of the day [$1,191.90 spot] occurring shortly before 11:30 a.m. in New York trading. All three attempts that gold made to break above $1,190 spot yesterday were quietly, but firmly, turned back. Volume was very light.

Here's the New York Spot Gold [Bid] chart so you can see the New York action in more detail.

Silver's price path was very similar to gold's... with the high of the day [$18.64 spot] coming about fifteen minutes after gold's high... which was shortly before lunchtime in New York. And, like Monday, silver got sold down starting right after the high price was in.

The world's reserve currency lost another 50 basis points [intraday] yesterday... most of it in the wee hours of Tuesday morning. Since the Far East open on Monday morning... and the close of trading at 5:15 p.m. yesterday afternoon in New York... two complete trading days... the U.S. dollar has fallen a full cent... and gold is up a whole four dollars! I'm underwhelmed. Here's Tuesday's dollar action.

The precious metal stocks did OK... although they sold off a bit going into the close... and the HUI finished up 0.76% on the day.

Tuesday's CME Delivery report showed that 49 gold and 1 silver contract were posted for delivery on Thursday. There were no reported changes in either GLD or SLV... and nothing from the U.S. Mint, either. Once again there was a fair amount of activity at the Comex-approved depositories. Tuesday's report showed that their silver stocks declined 117,566 ounces on Monday. Here's the link to that activity.

The Zürcher Kantonalbank in Switzerland had a report for both their gold and silver ETFs for last week. There was a minor increase of 15,986 ounces of gold... and no reported change in their silver ETF. Considering how hard both gold and silver got hit last Tuesday... these numbers are very reassuring... especially when you consider the declines in GLD over the same period. As usual, I thank Carl Loeb for those numbers.

My first story [courtesy of reader 'David'] arrived in my in-box yesterday morning at 3:56 a.m. Eastern time. Since my Tuesday commentary was already full to the brim... it had to wait until today. It's a piece posted over at zerohedge.com... with the very long headline "China Officially Enters The Gold Market: Full Release Of PBoC's Plan To Expand And Develop China's Gold Infrastructure". It's worth the three minutes of your time that it will take to read it... and the link is here.

The next news service out of the gate on this story was Bloomberg. In an article filed from Beijing at 06:44 Eastern time... came this story headlined "China Plans to Help Gold Producers Invest, PBOC Says". This short story is a must read... and the link is here.

The next newspaper to run with this was The Wall Street Journal. The headline there reads "PBOC to Allow More Gold Trading by Banks". This story requires a subscription... so here's the GATA release of the entire article. It, too, is not very long... but well worth your time. The link is here.

Six hours later, Bloomberg issued an update on their previous story. This one was longer and more in depth. It, too, was filed from Beijing... and bears the headline "China to Further Open Gold Market to Trading, Imports". This piece is a must read as well... and the link is here. I thank reader G.G. for sharing this story with us.

Well, it appears that China has publicly come out of the closet regarding its gold market... at least the part of it that they want us to know about. I expect that all this news will be gold positive going forward.

The next story is courtesy of reader Roy Stephens. It's an Ambrose Evans-Pritchard offering that was filed late last night from The Telegraph in London... and the headline reads "US Treasury yields fall to record low on Fed's 'QE lite' plan". Yields on short-term US Treasury debt have fallen to the lowest in history on mounting expectations of extra stimulus from the Federal Reserve. As I've said many times... it's print, or die. Empires have to fed... or they implode. The link is here.

The next gold-related item is from Eric King over at King World News. It ended up as a GATA release... and I'm just going to steal part of Chris Powell's preamble and directly link the article... "Eric writes that the "Pac Man" phase has descended on the gold mining industry, with the major miners having to acquire juniors to maintain their reserves and being able to do it by using their stock as currency. King's commentary is headlined "Gold Takeovers: Pac Man Phase Upon Us" and the link is here.

Eric King also has an interview with gold industry giant, Pierre Lassonde. No flies on him, dear reader... and this is an absolute must listen... and the link is here.

Lastly today, is this rather longish Bloomberg piece that was sent to me early yesterday morning by Washington state reader, S.A. It's about JPMorgan's recent commodity trading losses. I read it twice... and couldn't figure out for the life of me why the story went into as much detail as it did. Ted Butler didn't know exactly what to make of it either... and GATA chairman Bill Murphy over at lemetropolecafe.com passed around an e-mail he received on this story suggesting that there may be more to it than meets the eye. I agree with that. It might be a mea culpa in advance of what is about to happen to JPMorgan when decide to continue covering their grotesque short positions in silver... and gold. We'll see. The Bloomberg headline reads "Blythe Masters Says ‘Don’t Panic’ as Commodities Slip"... and the link to this rather interesting story is here.

For a change there was a bit of excitement in both gold and silver's price action during Far East trading earlier today. It wasn't much, but it's been a while since there was any upside action worthy of the name in that part of the world. And now that the London a.m. gold fix is in... both metals have spiked a bit higher.

Volume in both metals is a bit more substantial than it was on Monday at this time of day... but that only stands to reason considering the price activity. However, as you already know, dear reader... what happens in the Far East and London is trumped by the U.S. bullion banks once trading begins in New York. So we'll find out soon enough if today's earlier action meant anything.

That's all for today. I'll see you here tomorrow.