July 12 - Gold $1564.90 down $10.30 - Silver $27.14 up 19 cents
Silver Closes HIGHER Two Days In Row … The Sprott Effect ... Gold/HUI Scream Off Lows
"Live as if you were to die tomorrow. Learn as if you were to live forever." … Mahatma Gandhi
Both gold and silver started going lower when Asian trading commenced and kept on going. Gold eventually fell to $1554, while silver dropped to $26.37. European stock markets are all lower this morning, the DOW is called lower, and the dollar is on the move to the upside.
The market movement is attributed to disappointment over the lack of further market stimulation by the US via some sort of QE. But, to me, it seems misplaced. The Dow, gold and silver had plenty of time to react to the news if it were going to be a permanent negative. In the end, as noted, there was little lasting reaction by the end of the day. However, traders overseas did not have the opportunity to sell yesterday and they did so today, as all European stock markets closed lower, while gold and silver were punished severely in the early going.
Today I waited until gold and silver closed to make any further comments because of all that is going on. Time to get to the observations…
*First, from MIDAS commentary yesterday…"As there was no direct reference to QE coming, the prices of gold and silver were predictably slammed. Gold fell to $1566 and silver to $26.76 due to market disappointment. Both of which were new lows for the day. SO interestingly enough, silver turned right around again to go positive. Yesterday, the terrible price action in silver foretold what was coming in gold. The way silver (up 10 cents over that Comex close) is trading now with gold down $11 lower than yesterday’s Comex close tells me we are seeing the worst of it today and that tomorrow gold and silver should move back up."
WRONG! … or was it? That expectation of gold and silver going higher today looked about as bleak as could be this morning. Yet, by the close it was only half wrong.
Silver stood out all morning long, as the price quickly bounced off that early low and came back to the $26.65 level for a while. With gold still in the weeds, and not far from its lows, silver began to quietly make new high after new high. It was so noticeable I even put out a "tweet" with the price still down 10 cents from the Comex close and some 24 from its Access Market close yesterday. By the time I could get a MIDAS Bulletin out because of a prior email in the loop, the price of silver had gone positive, and then shot up to make a $27.38 high for the day. The price really took off when the DOW went from down 65 to DOW down 30.
Gold rallied to $1570, but then ran into a brick wall of selling. While the euro did rally off its lows of the day, it never gained any traction after some upticks.
So what happened today? Is the silver move a precursor of The Gold Cartel covering, or not? Only time will tell, but silver came back from the price area it has recovered from SO many times the past many months. To add credence to this notion, the silver open interest fell 982 contracts yesterday to 123,126, WHILE the gold open interest went UP 4203 contracts to 434,057. This tells me JP Morgan was covering shorts, while others were shorting gold. After reporting on silver trading for nearly 14 years now in this column, this is the sort of time when JPM says, "thank you very much," and buys … with spec longs puking due to the negative gold influence and getting fleeced for the umpteenth time.
Now, this could be a normal JPM shortcovering maneuver, or due to a special factor which forced them to do so…
Sprott Physical Silver Trust Prices Follow-on Offering of Trust Units In an Aggregate Amount of US$200,005,000
TORONTO, ONTARIO, Jul 12, 2012 (MARKETWIRE via COMTEX) -- Sprott Physical Silver Trust (the "Trust") /quotes/zigman/626031/quotes/nls/pslv PSLV -4.27% , a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, announced today that it has priced its follow-on offering of 18,100,000 transferable, redeemable units of the Trust ("Units") at a price of US$11.05 per Unit (the "Offering"). As part of the Offering, the Trust has granted the underwriters an over-allotment option to purchase up to 2,715,000 additional Units. The gross proceeds from the Offering will be US$200,005,000 (US$230,005,750 if the underwriters exercise in full the over-allotment option).
The Trust will use the net proceeds of the Offering to acquire physical silver bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to the Offering. Under the trust agreement governing the Trust, the net proceeds of the Offering per Unit must be not less than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering.
The Units are listed on NYSE Arca and the Toronto Stock Exchange under the symbols "PSLV" and "PHS.U", respectively. The Offering will be made simultaneously in the United States and Canada by underwriters led by Morgan Stanley and RBC Capital Markets in the United States and RBC Capital Markets and Morgan Stanley in Canada.
Copies of the U.S. prospectus related to the Offering may be obtained by contacting Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, New York 10014 Attention: Prospectus Department (telephone 866-718-1649 (toll free) or 917-606-8474) or by e-mailing[email protected], or RBC Capital Markets, LLC, Attention: Prospectus Department, Three World Financial Center, 200 Vesey Street, 8th floor, New York, New York 10281-8098 (telephone:212-428-6670)(fax:212-428-6260). Copies of the Canadian prospectus related to this Offering may be obtained by contacting RBC Capital Markets, Attention: Distribution Centre, 277 Front St. W., 5th Floor, Toronto, Ontario M5V 2X4 (fax:416-313-6066) or Morgan Stanley & Co. LLC 180 Varick Street, 2nd Floor, New York, New York 10014 Attention: Prospectus Department (telephone 866-718-1649 (toll free) or 917-606-8474) or by e-mailing [email protected]. The Offering in Canada is only being made by the Canadian prospectus, which includes important detailed information about the Units being offered.
This news release does not constitute an offer to sell or a solicitation of an offer to buy the Units, nor shall there be any sale of the Units in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdic
That is a fair amount of silver which is going to be taken off the market. Could Eric’s timing be any better in terms of pricing? His move to accumulate more silver for his firm’s ETF is surely going to gain a lot of attention.
Now, back to silver as a signal. Is it still valid? I really believe so. The Gold Cartel has been bombing the gold price to negate and defuse this key inflation barometer. How many times have you heard this? The Fed wants it off the radar screen before it does its eventual stimulus. It wants that cover. The move up in silver suggest The Gold Cartel is done with its pressing.
So here we are with gold back to the same price levels it has recovered from so often too. The reasons for gold to be accumulated here are as powerful as ever and I suspect the major league buyers who have been accumulating will show up again, if they have not already started. I see the DOW has now gone positive after its early shellacking.
While this morning was brutal, we should have seen the worst of The Gold Cartel induced raid, and gold should follow silver back up. Through all of this silver has closed higher two days in a row now.
The AM Fix was $1565.50, while the PM Fix fell to $1556.25.
Note from Martin B…
Well Bill certainly not the Kiss of Death. Funny how it was kept below $27.24 (yesterdays high) so as not to get upside reversal.