Gold and silver both sold off slightly in early Far East trading. But shortly after London opened, away they both went to the upside. However, once Hong Kong closed, a not-for-profit seller sold the rallies down.

Three rally attempts, including the one at the Comex open, were squashed. It’s obvious that both metals would have finished much higher if they had been left to their own devices.

Monday’s volume was on the “lowish side” according to Ted Butler. Open interest in gold on Friday showed a decline of 7,223 contracts. However, about 4,600 of that was delivery into the June contracts, so the ‘real’ decline in o.i. was the difference between those two numbers…about 2,600 contracts. Silver o.i. declined 1,362 contracts, of which, only about 80 odd contracts were delivery related.

With silver and gold prices now safely back below their respective 50-day and 20-day moving averages, it doesn’t take a lot of volume to influence prices in either direction.

In gold news yesterday, I see that Australian gold production dropped to 53 tonnes (a 19-year low) in the first quarter of 2008…down 16% compared to the last quarter of 2007…and down 12% compared to the first quarter of 2007. And I also note that Barrick filed a $2 billion debt shelf offering…long after the markets closed on Friday. Barrick says it will be used “for debt repayment, subsidiaries, capital spending and investment and other general corporate purposes.” That’s “Barrick Speak” for paying down their hedge book.

Lots of news over the weekend. The first story has to do with oil. I sent the link to everyone here at Casey Reserach with the comment that “You can’t make this stuff up”…and David Galland’s comment was “Keep this stuff up, and one day we’ll wake up with oil priced in euros…” The story is from The Telegraph in London and is entitled “US Senators seek curbs on London trading in oil futures”, and the link is here.

We now move from unbelievable stupidity in the last story, to incredible Wall Street-style ‘new math’ in this story. Losses are now profits!!! Yep…black is white, and white is black! Right out of “The Matrix”. It’s a Bloomberg story entitled “Wall Street Says -2 + -2 = 4 as Liabilities Get New Bond Math.” Like I said about the preceding story…you can’t make this stuff up. The link is here.

In “normal” times, when money is being inflated with impunity, the pressure to debunk the alternative is not great. But we do not live in “normal” times today. Monetary inflation has come home to roost, so the pressure to control the precious metals is extreme. - Bill Buckler, the-privateer.com, 30 May 2008

Where wasn’t there bad news yesterday? Wachovia, Lehman, Merrill, Morgan Stanley, Washington Mutual. Words fail me. With the Dow down about 210 points, it would appear that the President’s Working Group was there to make sure the losses didn’t get out of hand. Another pig…more lipstick!

Source: And Then There’s This… Tuesday, June 3, 2008