Gold had a nothing day yesterday, but most of the action it did have occurred on the Comex in New York, where an attempt to break through $740 was once again thwarted. Silver was where all the action was. After a 20 cent sell off on the Comex open, silver jumped up sixty cents from the bottom by lunchtime, but someone was there to put an end to this “irrational exuberance.”

Monday’s open interest numbers showed another substantial decrease in gold open interest…this time 4,551 contracts. But in silver, o.i. rose 1,191 contracts to 93,757. Was it short selling? I’ll let you know on Saturday morning.

Talking about silver, here’s a graph (courtesy of Gene Arensberg) showing Comex silver stocks from October 17th to November 17th. Since that graph was published early yesterday, Comex silver stocks have fallen again…this time by 314,095 troy ozs. to 128,720,340 troy ozs. Options expiry and first day notice for the December contract are Thursday the 20th and Friday the 28th respectively. It will be interesting to see if there are any delivery fireworks forthcoming.

And from the usual NY gold commentator…”The weekly European Central Bank statement of condition reported that ‘gold and gold receivables’ fell €10Mm last week (0.496 tonnes). This was said to be caused by sales by two captive CBs, partially offset by a gold coin purchase by a third. Of course this is far below the notional 9.6 tonnes which could be sold if the WAG2 quota was disposed of evenly; although last week’s total was a €1Mm gain. The ECB group still chooses not to appear active in gold at present…. Tuesday saw another attempt on $750 during Comex hours which was of course blocked. Gold traded across a $15.30 range, with the floor close down $9.30. Estimated volume was 113,428 with a switch effect of 38,734, so net volume was not heavy.” (Not heavy? That’s an understatement! It’s almost no volume at all. No wonder JPMorgan can keep the gold price under $750. But why are they doing that? What surprise have they got up their sleeve that they’re not telling us? – Ed)

There have been several stories over the past week that coin melt bars (0.900 fine) are showing up in the Middle East. The only bars that match this description are the US coin melt bars. In a story filed from Beijing over at djnewswires.com/eu early this morning, came this comment…”China’s central banks is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country’s huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong. The newspaper didn’t elaborate on the plan.” And in a story at foxbusiness.com, they comment on the two tiered gold price with a story headlined “Why Gold is Down, But You Can’t Get Your Hands on Any”. Congressman Ron Paul and Comrade Ben Bernanke had an interesting exchange on gold yesterday. The youtube.com video is linked here. And lastly, I see that the Plunge Protection Team got some unwelcome air time on CNBC yesterday. The talking heads were not happy to be discussing this, and did everything they could to pour cold water on the idea. The you tube.com link is here.

I’ve never seen as many negative stories as I saw yesterday. But here’s a graph from a Reuters story yesterday concerning current sentiment over at the National Association of Home Builders which should put it all into perspective.

click to enlarge

Mercifully, I only have two stories today. The first is a Reuters article filed from Washington that quotes Kansas City Federal Reserve President, Thomas Hoenig, who said on Monday that the central bank has “done what it can” to buffer the economy through a downturn. The story is definitely worth the read and is linked here.

The second offering today is silver analyst Ted Butler’s latest piece on silver. Ted’s commentaries are always worth the read…as is this one. It’s entitled “Sure Thing?” and is linked here.

Democracy must be something more than two wolves and a sheep voting on what to have for dinner. – James Bovard, Civil Libertarian (1994)

How about that Dow…eh! A 300+ point rally in about an hour and fifteen minutes. How many times in the last six months have we seen a major rally in the closing hour of trading at some crucial point? Could it be the PPT…or the President’s Working Group? According to CNBS…it doesn’t exists. If President Ronald Reagan were alive, he would put an end to that discussion, because his executive order that made it so, is linked right here.

And as they would say in New Orleans…see y’all tomorrow!

Source: And Then There’s This…Wednesday, November 19th, 2008