In Far East trading on Monday, both gold and silver rose gently until later in their trading day. From there they began an equally gentle decline (dollar related?) that lasted all through London trading until the moment the Comex opened. Then it was lights out as the bullion banks pulled their bids and the floor price evaporated in a heartbeat.

By the time the smoke had cleared less than half an hour later, gold was down about $27 and silver got creamed for around 75 cents…both with monstrous volume. This is the most blatantly obvious bear raid I’ve seen since the one we had a week ago Monday…LOL!!! I’ve seen bigger price declines in both metals in a single day, but not in such a short time period. The gold cartel finally gets the magic 10/10 “Waterfall Award”…because it’s as straight a line as you’ll ever see. But silver spoiled the show, and I felt compelled to dock the boyz a bit because they didn’t get the price down more than a dollar (even thought the chart was just as pretty as gold’s)…so the boyz over at Scotia Mocatta and HSBC (USA) Ltd. (HBA.PD) only get a 9.9/10. Options expiry on the Comex is tomorrow at the close of business, so they’ve got a couple more days to get it right.

It’s a good bet that virtually every long that was placed last week by speculators and the tech funds got stopped out by the raid yesterday morning. Even Dennis Gartman, who had placed another bet on Friday (and maybe added to his position early on Monday morning if he was really unlucky), got blown out. This is the third time in the last couple of months that he’s been taken out within days (if not hours or minutes) of placing a long bet on the gold market. As one well-known NY gold commentator said yesterday; “Some of gold’s friends will find this amusing…but that is foolish. The question is, what is present in the market which causes this very well informed and alert technical/momentum player to go long immediately before unheralded and massive selling hits the market?” Right in front of options expiry is never a good time to go long either precious metal. The Cartel pulled this very same trick before options expiry in March, April, May…and now June. Dennis, try July 1st…right after first day notice for delivery into the July contract…and do not buy on margin!

With last week’s break-out in both metals now firmly and thoroughly crushed, I’m sure that the powers that be would love both gold and silver to go to sleep over the summer months. Both metals are now safely below their respective 20- and 50-day moving averages once again. We’ll have to see what happens, but I wouldn’t bet any money that these metals will cooperate, as the bullish triangles still look like they are about to bust out to the upside…like they tried last week. Let’s see what July brings once month end and quarter end are out of the way.

The 200-day moving averages still lurk below…although not too far below…and from here it would be a virtual non-event if they were taken out. The cartel can do it any time they want. If you don’t believe me, please review yesterday’s gold and silver charts…or the previous Monday’s. One more day like either of those would be all that it would take.

Open interest numbers for Friday trading in gold and silver showed that gold o.i. rose 2,572 contracts and silver o.i. fell 299 contracts. If all trades that occurred on Monday are reported in a timely manner, the gold open interest numbers for Monday should be quite something…and should make the COT this Friday.

I mentioned in my report on Saturday that Friday’s Commitment of Traders report “was a yawner.” However, I neglected to point out the concentration ratios of the ‘eight or less’ traders in the Commercial category that Ted Butler gave me. These traders are, of course, the market making bullion banks. As of last Tuesday’s cut-off, these banks were short 78.6% of the entire Comex silver market and 82.8% of the entire Comex gold market. Once again, here’s the LBMA members list. The first eleven names that are on that list are the ‘market makers’. I would be prepared to bet some serious coin that the ‘8 or less’ traders (for both gold and silver) will be found almost exclusively in this eleven name list…and that they are all the same firms. The link is here.

In gold news I see that Australia’s gold production is down 7% year/year…and Vietnam suspended gold imports to tame the trade deficit. Vietnam has already imported 60 tonnes of gold so far this year…a 100% increase over the same period last year. Lastly, Dubai reported an 18% rise in gold sales in May.

And also of extreme interest was the action of the HUI yesterday, which finished in positive territory despite the crucifixions of both monetary metals. Although I don’t wish to look a gift horse in the mouth…after eight years of involvement with GATA (Gold Anti-Trust Action Committee)…we (including this writer) have a tendency to be suspicious of such counterintuitive stock moves whether the precious metals prices are falling (or rising). It wouldn’t be the first time that the boyz loaded up on cheap shares while everyone else was unloading theirs, so they can use them to sell into (and blunt) any upcoming major precious metals stock rallies…especially at the very peaks…like what happened in March just before the gold price got creamed, where the shares sold off heavily (and counterintuitively) the day before the top. But hey…maybe they’re just trying to make a buck on the upcoming rally!

After all this commentary I only have one story today. It’s entitled “Asia Clearing Union to Introduce Euro Alongside U.S. Dollar to East Payment Settlement”. This basically gives the euro equality with the US dollar. The story is linked here.

It took everything that the President’s Working Group had in their little bag of tricks to keep the house of cards from falling over yesterday…dollar up, US futures markets spun positive, Japan’s huge opening loses blunted, gold and silver crushed. They tried the same with oil and got stuffed. But ominously, the Banking Index (KRX) got creamed again on the continuing woes of MBIA and Ambac (ABK). It hit a ten year low with yesterday’s close. The 3-year chart is linked here…and it’s ugly.

See you tomorrow.

Source:And Then There’s This… Tuesday, June 24, 2008