And Then There’s This…Thursday, May 8, 2008
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On Wednesday, neither gold nor silver showed any sort of direction…but they generally drifted lower before the Comex open. Of course the dollar rally didn’t help…but then again, oil was up to almost $124/barrel, so that should have made a difference but it didn’t.
When the tech funds show up to buy in the Non-Commercial category, then we’ll have a sustainable rally. But without them, it was another light volume day on the Comex yesterday
Open interest on Tuesday was as follows…gold o.i up 1,438 contracts and silver o.i increased by 434 contracts. As you can see here…and as I’ve said before… when volumes are this wafer thin, it doesn’t take much activity to alter the price in either direction. That’s why I’m not prepared to read too much into the price action of either metal right now.
Further to the news about Anglogold reducing their hedge book, the article over at resourceinvestor.com contained this interesting set of figures concerning most of the major outstanding hedge positions and the companies that own them. It’s certainly worth a look. As I’ve said before, the most egregious offenders have always been Barrick and Anglogold. This set of numbers certainly proves that.
In other gold news, I see in a Wall Street Journal story posted at lemetropolecafe.com that Congress is unlikely to take action on IMF gold sales this year. The article also noted “that Congressional reaction to the IMF’s plan to sell gold is ultimately likely to be far less confrontational that in the past.”
In the King Report last night was the following Dow Jones story…” Merrill Lynch reported on Tuesday that its Level 3 assets (mark to myth - Ed) soared almost 70%, to $82.4B from $48.6B at year end…to end Q1. Get this self-incriminating statement from Merrill: “During the first quarter of 2008, there was a decrease in the liquidity for these products, resulting in the increased use of unobservable inputs to derive their fair value.” An ‘unobservable input’…isn’t that nice! I don’t remember ever learning about those sorts of things in my Advanced Managment Accounting class at the University of Alberta way back when.
As per usual, I have a couple of stories today. The first concerns the upcoming IMF gold sales. The Yahoo News story is preceded by an editorial on this issue by the senior editor of the Journal Enquirer out of Manchester, Connecticut…Mr. Chris Powell…who also just happens to be the secretary treasurer of GATA. The dispatch is entitled “Is the IMF trying to recover its gold by pretending to sell it?” and is linked here.
The second story is from Bloomberg and is an update on the “3 Stooges” comedy/tragedy/farce between GMAC, ResCap and Cerberus Capital Mangement. You might need a program to keep up, but I get the impression that unless they’re bloody careful, they could all go down together. The story is entitled “GMAC Buys Time for ResCap Unit as Bankruptcy Looms” and is linked here.
I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts. - Abraham Lincoln
Well, after six months or more of twisting in the wind, the city of Vallejo, California threw in the towel yesterday and voted itself into bankruptcy. It’s the first city to do so in this credit crunch, and it’s a given that it won’t be the last. Then it will be of interest to see which state goes belly up first…and how far after that…the late, great USA herself follows suit. It makes me sad.
See you tomorrow.
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