And Then There’s This… Tuesday July 15, 2008
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Both gold and silver started off quietly in early Monday morning trading in the Far East. It wasn’t until 3:00 a.m. New York time that both metals got sold off right up until the Comex opened. Gold was down $10 and silver about 25 cents. However, once the Comex got going, rallies commenced in both metals.
The prices in both did not rise unopposed…and shortly after twelve noon in NY, gold and silver prices traded sideways…a familiar pattern for readers who follow my daily commentary. There was pretty heavy volume during Comex trading.
Open interest on Friday’s big price gains were of the large variety as well. In gold, open interest rose a steep 9,638 contracts…and silver was up big too…4,293 contracts. The tech funds in the Non-Commercial category would be the ones going long, and the bullion banks in the Commercial category would be the ones going short against them. As I’ve mentioned many times in the past, this is the usual…and very familiar…pattern. However, this time it’s accompanied by the biggest financial crisis since the depression. Will the bullion banks be able to engineer another sell-off…or will they get overrun? If they do get overrun, it will be the first time.
A well known gold commentator in New York had similar thoughts…”Friday’s action indicated a very strong gold appetite…Friday’s $18.60 Comex gain saw 9,638 lots added to open interest – 29.98 tonnes. Considering there must have been at least some commercially-motivated short covering, it is clear that the opposition to gold’s advance is serious…Comex gold’s further $13.10 gain today (Monday), on massive volume (c.167, 000), merely underlines this…However, a potentially lethal problem is emerging for gold bears. In an environment where very little else works on the long side, being long gold instruments, does….Could the general population be coming?”
In other gold news, I see in a Reuters story posted at Kitco, that AngloGold Ashanti expects its Q2 production to be up 3% over forecast. They also announced that they had reduced their hedge book by 39%….4.4 million ounces…in the first six months of 2008. That’s quite a chunk. I also note that on Friday, Barclays announced a 10-for-1 split in the iShares Silver Trust (SLV). And lastly, the World Gold Council-sponsored ETF…GLD…added 46 tonnes of gold to its holdings on Friday. This is a new record level (705 tonnes), and the biggest outright gain since the ETF was launched. The silver ETF (SLV) added zero ounces once again. Here is a most excellent graph of the GLD ETF that shows all. I thank Gene Arensberg over at Got Gold Report for his kind permission to reproduce it here. I will post his chart of the silver ETF…SLV…tomorrow.
Last Friday I was interviewed by Al Korelin of the Korelin Economics Report. For those of you who may be interested in listening to what I have to say, the link is here.
The first bad news story of the day is an American Press story that came out on the weekend. It appears that the U.S. government has signaled that it will save Fannie (FNM)and Freddie (FRE), but every other financial company out there is on its own. I guess that’s why the banking index got slaughtered yesterday. There’s much worse to come, too. The title is “Government not expected to help more companies”. The link is here.
The problems in Afghanistan, Iraq and Iran are still there…and it appears that oil is the link between them all. I see in a story out of The Telegraph in London on Friday that “Israel will not hesitate to act, if threatened…Israeli defense minister says.” In keeping with these themes, I’m including this article written by Eric Margolis…Foreign Correspondent/Defense Analyst & Columnist…according to his web site. It’s entitled “At Last, Some Truth About Iraq and Afghanistan”. This rather short article is well worth the read and is linked here.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. - Ludwig von Mises
Well, the President’s Working Group did everything possible over the weekend, with happy news stories about FRE and FNM. Then on Sunday night came a rally in the US$, gold and silver were down, futures were spun positive…but in the end it didn’t help, as all that was supposed to go up, went down…and all that was supposed to go down, went up. As Jim Rogers said…the GSE rescue is an “unmitigated disaster”. Let’s see how the boyz make out today.
All of us at Casey’s Daily Resource Plus will see you right here on Wednesday.Source: And Then There’s This… Tuesday July 15, 2008
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