And Then There’s This… Thursday July 17, 2008
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Both gold and silver were under pressure right from the Sydney open early yesterday morning in Far East trading. The prices bottomed just after midnight last night New York time. The gains from a feeble rally in gold and silver during London trading disappeared in the last two hours leading up to the NY open.
Minutes after 8:00 a.m., a spirited rally in both metals began which was over at the stroke of 9:00 a.m. Then at 10:30 a.m. we got another waterfall decline in both metals like we had on Tuesday. A short rally in both metals that occurred after the London close met the same fate as a similar rally on Tuesday. Both metals are again under some pressure in after hours Globex trading as I write this.
Open interest numbers in both gold and silver exploded on Tuesday (late reporting of previous day’s o.i.?). Despite the fact that gold and silver prices were hit on Tuesday, gold o.i. was up a stunning 13,332 contracts…and silver o.i. rose 3,254 contracts. It’s a given that virtually all of this action (in both gold and silver) was the tech funds going long in the Non-Commercial category and the bullion banks (’8 or less’ traders) going short against them in the Commercial category.
And judging from the price action starting at the Comex open on Tuesday morning, the top might be in for this rally. After coming within $12 of touching the magic $1,000…I guess the boyz want to remind us that this is supposed to be the ’summer doldrums’…despite the fact that the financial system is coming apart at the seams.
The fight between the longs and the shorts is raging…and it’s too soon to tell what’s going to happen. But with these monstrous increases in open interest in both metals, the bullion banks are sitting on eye-watering losses, since they are the ones taking on all comers on the short side. Are the ‘8 or less’ traders going to get overrun….or can they rig another sell-off and ring the cash register one more time before summer is out…because they sure do need the money. If I had a dollar to bet, I wouldn’t know which way to bet it this time. However, if past history is any sort of guide…!
And don’t forget that options expiry is coming up once again.
Needless to say, the Commitment of Traders report, which will be issued at 3:30 NY time tomorrow, will show how ugly the numbers really are in this big rally we’ve just had…as the cut-off was at the close of business on Tuesday. One can only imagine where the price of gold and silver would be if these bullion banks weren’t blocking every rally. But, hey!!!…that’s why they’re doing it! Don’t forget, there are no markets anymore…only interventions.
A prominent NY gold commentator had this to say about Wednesday’s activity….”Today’s $18 loss saw immense volume: Reuters reports estimated trade of 196,829 (contracts)…Clearly an extremely aggressive and violent seller has been active - with no interest in maximizing proceeds, judging by the suddenness of the declines…
On Tuesday, the ECB statement of condition indicated one captive CB (central bank) sold a total of 1.42 tonnes last week. The previous week’s implied sale was 3.42 tonnes. The ECB banks seem not to want to appear involved in gold’s current gyrations.”
In other gold news, this Yahoo story was posted at Kitco yesterday and is entitled “South Africa’s gold mines hit by strikes”. It’s not a long story…and it’s worth running through. The link is here.
As expected, the CPI numbers yesterday were horrific…biggest rise in 26 years. And I see that Bernanke said that there may be conditions where foreign exchange intervention is warranted. I guess that explains the dollar rally…such as it is/was. Lastly, I see that southern California house prices are down 29.3% in June, compared to June ‘07…and the median price fell a whopping 4.1% in one month…from May to June. The market is crashing. No wonder IndyMac (IMB) went belly up.
Talking about IndyMac…here’s a couple of photos provided by Peter R. and posted in Bill Murphy’s MIDAS commentary at lemetropolecafe.com yesterday. Before this is all over, there will be a lot more line-ups at a lot more US banks before this is all over.
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A couple of stories as usual. The first story today is silver analyst Ted Butler’s latest commentary entitled “Shelter From the Storm”. The link is here.
The second story is from The Telegraph in London. It’s another Ambrose Evans-Pritchard piece entitled “US faces global funding crisis, warns Merrill Lynch”. Evans-Pritchard says “The US treasury is running out of time before foreign patience snaps”. There’s probably a lot of truth in that statement. The link is here.
Well, the boyz finally got the market turned…and a short covering rally started. As the King Report said early this a.m….”The rig finally worked!!! The SEC crafted the mother of all short-covering rallies (financials)!” Oil and the precious metals are temporarily under control, so maybe they can sleep in tomorrow, because I’m sure they haven’t been getting much shut-eye lately. Both Bernanke and Paulson looked haggard on TV on Tuesday. I suppose makeup can only help so much. Then they have to rely on style, because there was no substance to be found in anything they had to say.
I hope your Thursday goes well, and I’ll see you Friday.
Source: And Then There’s This… Thursday July 17, 2008
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