And Then There’s This…Friday, July 18th, 2008
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In Far East trading early Thursday morning, gold picked up five bucks and silver was virtually unchanged. This lasted until Hong Kong closed. Then both metals got sold off until shortly before New York opened…then a rally commenced.
This rally lasted until the moment NY opened and it got promptly sold off. Gold touched its lows of the day at 8:45 NY time…but then a spirited rally began in both metals which lasted until London closed. Then silver got sold off heavily, with gold following about two hours later. The waterfall declines were kind of pretty, but we’ve all seen better…right? The Kitco gold graph for the last three days is shown below.
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From its high of the day, to its low in Globex trading after hours yesterday, gold got smacked for about $25 and silver for about 80 cents. During the last two trading days, gold has had $30 bucks shaved off its price…and silver about a buck. Options expiry is a week from today…Friday, July 25th. First day notice for August delivery (a big delivery month for gold, but not for silver) is Thursday, July 31st. You can bet your last nickel that the ‘8 or less traders’ want as many of these lovely call options as possible that they’ve written in the last month, to expire out of the money so they can collect the premiums. I mentioned “ring the cash register” in yesterday’s commentary. This is the reason that the price is being hammered to the downside. The bullion banks sell until stops are tripped…then they pull their bids…and down goes the price. They did this in March, April, May, June…and now July. Any questions?
The usual well know NY gold commentator had these thoughts yesterday about gold activity on both Wednesday and Thursday…”Wednesday’s down $16 Comex day involved a sudden, massive sell-off coincident with the oil inventory data being released. This clearly was not long liquidation: open interest on the day rose 1,146 contracts (3.56 tonnes). It is inconceivable that at least some long capitulation did not take place, considering Comex (AMEX:IAU) gold was in the (high) $980s during Monday’s session. The implication must be that fresh short selling into Comex yesterday (Wednesday) was substantial…The same spirit emerged after the Floor close this afternoon (Thursday), with gold dropping over $11 in a notoriously thin time of the day. Estimated (Comex) volume of 240,866 must be close to a record. This is a major suppression effort.” (Yes it is. - Ed)
As mentioned in the previous paragraph, gold open interest on Wednesday was actually up 1,146 contracts…and silver o.i. went the other direction…again…down 1,045 contracts. Twilight zone stuff. Thursday’s open interest changes that I’ll be reporting on Saturday should be more interesting…as will the Commitment of Traders report that will be out later today.
A couple of stories out of the Financial Times in London for you today. The first is entitled “Sovereign funds cut exposure to weak dollar” and is linked here.
The second story is entitled “Short-sellers caught out by higher costs”…and the link is here.
It took everything that the Catch-a-Falling-Knife Corporation had, to keep the Dow positive yesterday. From the graph, it looks like the Dow rolled over three times, and was briefly in negative territory once. It’s sure taking a lot of huffing and puffing to keep this short covering rally going.
Today is Friday, so don’t be surprised by anything that happens. As I write this, I see that the futures are down on all the bad news that came out after the market closed yesterday. Let’s see if the boyz can make a silk purse out of this one.
See you on Saturday.
Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.
Source: And Then There’s This…Friday, July 18th, 2008
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