In early Tuesday trading in the Far East, gold didn’t do much of anything until shortly before 11:00 a.m. in the morning in Hong Kong. From that point, gold got sold off about $8 in an hour. Not a lot, but a pretty big move for the usually quiet Far East market. As it turned out, that was the low for world gold for the day. A quick retest of that price at 3:00 p.m. in Hong Kong…and gold was on its way higher…and the US$ much lower. This lasted through London trading, but ran into the usual brick wall at the Comex open in New York. Once the London p.m. gold fix was in at 3:00 p.m. [10:00 a.m. in New York]…down went the price.

This didn’t last long, and minutes before London closed for the day, a rally began that lasted almost until the end of Comex trading…and gold finished virtually on its high of the day at 5:15 p.m. I wonder how high gold would have finished in New York if the usual N.Y. bullion banks hadn’t showed up in the first couple of hours of Comex trading…or beat the gold price down in Hong Kong earlier in the day?

However, if you look carefully at the US$ chart for Monday, you will note that the gold price ‘lost’ about $11 while the US$ ‘rallied’ about 43 basis points. But on Tuesday, gold ‘gained’ back about $3 while the US$ got hammered for 1.07 cents. Funny how that works, isn’t it?

Silver’s performance on Tuesday was almost a carbon copy of gold’s.

Open interest changes for Monday’s big down day in both metals is as follows…gold o.i. actually rose 1,329 contracts to 374,970…on volume of 102,936. Either someone was shorting the hell out of the gold market…or all the shorts that were covered, disappeared under an avalanche of increased spread trades…either of these actions will result in an increase in open interest on a price decline. Silver’s 49 cent loss peeled off an impressive 4,536 contracts from open interest. Total silver o.i now stands at 106,844. Volume on Tuesday was a monstrous 51,216 contracts!

In the Comex Delivery Report yesterday, there 118 gold contracts and 16 silver contracts delivered. We’re getting close to the end of the June delivery month…only three or four days left…and we’re down to several hundred contracts to deliver in gold and a handful of silver contracts. There were no changes in either GLD or SLV yesterday…but surprise, surprise…the U.S. Mint has updated their eagle production for the second day in a row. They’ve reported minting another 10,000 one ounce gold eagles along with another 175,000 silver eagles…bringing the June totals of each up to 103,000 and 1,945,000 respectively. Not too shabby! And lastly, I note that over at the Comex-approved warehouses, another substantial chunk of silver was removed from their inventories. This time it was 999,555 ounces.

In other gold news, the usual N.Y. commentator had the following to report…”This morning the European Central Bank reported a fall in ‘gold and gold receivables’ of €20 million…’reflecting the sale of gold by one Eurosystem central bank.’ This is 0.9 tonnes, and compares with 0.945 tonnes reported last week. [This is] far below the 9.6 tonnes weekly pace notionally needed to sell the Second Washington Agreement on Gold quota evenly, let alone the pace which would be needed to sell the annual 500 tonne amount by the end of September, when the second WAG year ends.

“After a decade of public official sales in the 400-500 tonne range from European Banks, it appears that the [circa] 400 tonne IMF sale Congress recently approved, is desperately needed if this pace of sales [or documentation of sales] is to be sustained.

“The Gartman Letter, which adroitly abandoned gold early on Monday, suggests that only a house rule against reversing positions too quickly stops a short being put on, envisaging $875-$885 as a target. [Gold's 200-day moving average - Ed] ‘Never’ is not a word wisely employed near gold, but this would require [Indian] rupee weakness of astonishing magnitude.”

Three stories today…with the first two about real estate. The first story is about the upcoming debacle in commercial real estate in the United States. It’s a story from the Financial Times in London…and bears the headline “Worries over systemic risk in CMBS sector”. “A big question mark hangs over one large part of the market that is still dysfunctional: the market for securities backed by commercial mortgages.” I thank Craig McCarty for the story…and the link is here.

The second real estate story involves the U.S. residential real estate market and the upcoming resets/foreclosures in the option ARMs arena. I have mentioned this issue many times over the last couple of years…and ran a story on it about ten days ago. Here’s another. Karl Denninger, over at market-ticker.denninger.net, may have been born at night…but it wasn’t last night, and I’m not about to argue with what he has to say in this piece entitled “More OptionARM Falsehoods”. I consider it a ‘must read’…and the link is here.

And lastly is the latest commentary from silver analyst Ted Butler. His piece this week is entitled “Straight Talk on Manipulation”. I consider Ted’s knowledge of the silver market to be definitive. Everything he writes is a ‘must read’ as far as I’m concerned…and so is this. The link is here.

The first anniversary of the CFTC’s latest investigation into the bullion banks’ price management of the silver [and gold] market is fast approaching. I note that someone may have had a special one-ounce silver coin minted in honour of that occurrence. It’s not in particularly good taste, but speaks the truth nevertheless…and if I could get my hands on some, I’d buy them in a heartbeat…and send one to each of the ‘usual suspects’ at the CFTC. I thank Casey Research’s John Grandits for the photo below.

The past seventy-five years have seen the growth of government from a relatively small entity charged with defending the borders, adjudicating disputes and delivering the mail; to a bloated nightmare creature whose tentacles reach into every corner of our existence. – Doug Hornig, Casey Research

In the next 72 hours we have another bond auction, a Fed meeting and options expiry for the July contract in gold and silver. If there ever was a reason to sit on the precious metals prices…these reasons would be a start. And I note that even Bill King over at the King Report says “the DJIA, S&P500, gold, CRB and oil are a strong sell on a daily basis”…and that “bonds and the dollar, both weekly sells, are close to signaling a daily buy.” There isn’t a precious metals bull in sight…and the bullion banks are still sitting there with grotesque short positions in both metals.

I think I’ll open another bottle of wine.

See you on Thursday.

Source: And Then There’s This…Wednesday, June 24th, 2009