It’s almost a waste of time discussing Friday’s gold and silver markets. Volume was extremely thin everywhere. But it was obvious that there was selling pressure once again. This started in London and extended right into the close of regular Comex trading in New York.

I will discuss the Commitment of Traders briefly, as there was some improvement in both gold and silver. In silver, the Commercial traders (where the bullion banks hide out) covered 10,290 short positions and sold 6,530 long positions for a net improvement of 3,760 contracts. The tech funds pitched 3,072 longs and went short an additional 908 contracts…’improving’ their position by 3,980 contracts.

In gold, the Commercial traders added 9,315 contracts to their long position and added an additional 1,080 contracts to their short position, improving their position by 9,235 contracts. The tech funds in the Non-Commercial category added 3,136 contracts to their long positions and increased their short position by 10,223 contracts, for an ‘improvement’ of 7,087 contracts.

But the concentration of the ‘4 or less’ traders in both categories has increased substantially. To give you an idea of how extreme it is in gold…’four or less’ traders in the Commercial category (Ted Butler thinks it’s now actually one or two traders) are short 15 million ounces of gold. As of yesterday’s COT, the net Commercial short position (shorts minus the longs in that category) was sitting at only 12.1 million ounces. That’s astounding. Putting it another way, ‘4 or less’ traders hold 50% of the short positions in the Comex gold market, once you take out the spreads…which are market neutral. Silver is similar. These ‘4 or less’ are the market makers.

With India still importing up a golden storm, the usual NY commentator had these words of wisdom yesterday…”UBS comments…’Demand for other coins, wafers and small investment bars remains strong, according to our Zurich desk, and jewellery demand, which we have written about a lot recently, was strong again on Thursday, buying early and late in the day at the lower end of the wide trading range. This combination of very strong jewellery and investment demand is very unusual and is keeping all refineries busy, we hear.’

“Thursday’s suppression of the early NY spike to $844 and closing up $3.20 saw a 3,375 (contract) gain in open interest: 10.5 tonnes. No liquidation.

“World gold had gained some $7 by the end of the Far East day on Friday morning, but efforts to sustain this in NY were obliterated and Comex closed down $2 on quiet pre-long weekend trading. Estimated volume of 89,498 (switch effect 9,500): 40 cents off the bottom of a $9.20 range; an elegant example of market grooming.

“Gold shorts, like Oil shorts, found protection.

“The consequent price will greatly delight the Indian public, now entering their seasonal enthusiasm for bullion.”

I see in a story out of The Independent in England that British “retailers delivered their worst performance for nearly a quarter of a century last month and there is little sign of relief for them any time soon. And in a similar story on this side of Atlantic, Bloomberg reports that “Spending by U.S. consumers slowed in July as the impact of the tax rebates faded and a pickup in inflation eroded Americans’ buying power. Purchases rose 0.2 percent, one-third the pace in June, the Commerce Department said today in Washington, while prices surged the most in 17 years.”

Only one story today…and it’s an intriguing little gem filed by American Press out of Cincinnati. The headline reads “Federal appeals court in Ohio OKs 1912 lease clause requiring payment in gold coin”. And yep…it’s certainly worth the read! The link is here.

Great spirits have always encountered violent opposition from mediocre minds – Albert Einstein

As autumn approaches, my ‘blast from the past’ is definitely a summer song. Turn up your speakers and then click here.

Starting on Tuesday, it’s going to be a whole new ball game out there as everyone returns to work after the summer break. Enjoy the rest of your long weekend and we’ll see what Tuesday brings.

Source: And Then There’s This… Saturday August 30, 2008