Silver gained about a dime in Far East trading, but got sold off hard the second that Hong Kong closed…but began to rise (along with gold) around 7:00 a.m. NY time. From there, it oscillated either side of $16.50 until New York closed for the weekend. It’s obvious (at least to me) that someone didn’t want any excitement in the precious metals today…at least not in gold and silver…although platinum and palladium seemed to do OK.

Open interest on Thursday was once again of the strange variety. Gold o.i. only dropped 891 contracts on a price fall of about eleven bucks…not a lot. And even though silver was down a bit on Thursday, the o.i. was up again…for the third day in a row! This time by 1,157 contracts. Is this shorting…new spreads??? It will, of course, be in next week’s COT. It seems like we’re always waiting for the next report, as the current one never provides us with what we really want to know…like what’s happening right now.

However, we do have the latest Commitment of Traders report. There weren’t a lot of changes in silver, but the bullion banks did improve their position by about 1,500 contracts as the tech funds pitched their longs. The tech funds (in the Non-Commercial category) only added 161 longs to their position, but went short 1,193 contracts. The bullion banks in the Commercial category added 3,643 contracts to their long position, but also added another 2,087 contracts to their short position…which nets out to the 1,500 contracts mentioned above.

But the big story is in gold. I guess I was wrong this time, as everything that should have been reported, obviously was. The COT showed about a 19,000 contract improvement in the bullion banks’ short position, as the tech funds in the Non-Commercial category not only pitched a pile of longs, but went short by a bunch too. To be precise, the tech funds tossed 11,369 longs and put on a whopping 7,594 short contracts! That’s a lot…and they’ve added more since the Tuesday cut-off. The bullion banks hiding in the Commercial category not only added 1,731 contracts to their long position, but covered a more than impressive 17,359 contracts in their short position. There’s your 19,000 contract improvement right there.

I feel that the Thursday/Friday time period was the absolute bottom…but I’ll wait to see what the G8 has up their respective sleeves this weekend before I break out the bubbly.

I note the following headlines in John Williams’ latest commentary over at shadowstats.com…and they are as follows: 1) Inflationary recession and banking crisis continue to intensify, 2) Market fantasies of contained crisis begin to fade, 3) Severe inflation surge in offing, 4) Evidence mounts for manipulation of key headline economic numbers.

The first story today is from The Telegraph out of London and is another offering from Ambrose Evans-Pritchard. Does this guy ever sleep? If you think that the $US has its problems, the Euro doesn’t seem to be much better off these days. The story is entitled “Support for euro in doubt as Germans reject Latin bloc notes”. It’s well worth the read and is linked here.

The second story is also from The Telegraph and is entitled “Russia plans Arctic military build-up”. This story is certainly no surprise to me, as the rush to claim whatever oil and gas reserves may be left on this planet is now on in earnest. The link is here.

I didn’t attend the funeral, but I sent a nice letter saying I approved of it. – Mark Twain

Despite the enormous influence that the Beatles had on music in Britain and around the world, this rock tune is still #1 in Britain, and will probably remain so until long after I’ve left this world. The youtube.com video in question is linked here.

I see in a Bloomberg story that foreclosures were up 48% in May and repossessions have doubled. “One in every 483 U.S. households either lost their home to foreclosure, received a default notice or were warned of a pending action.” But, hey…the Dow was up…so everything is fine.

Enjoy what’s left of your weekend and I’ll see you early on Tuesday morning.

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…Saturday, June 14th, 2008

But that was the bottom. In fits and starts, it clawed its way back to close at around $868 according to the Kitco chart. The price is up about $4 in Sydney and Hong Kong trading as I write this. But don’t forget that New York has access to the Globex trading system for nearly 24 hours a day, and it could just as well be them trading in Hong Kong.

Silver action was slightly different. It declined virtually in a straight line until the Comex open, before it too was hit by the same not-for-profit sellers. The bottom tick was $16.22. Actually, some of the tech funds could have been shorting silver (and gold, too) at that point…at the same time as other tech funds were pitching their long positions. It’s hard to know without the COT report…and Wednesday’s and Thursday’s data won’t be in it until next Friday…June 20th.

On Wednesday, gold open interest fell 1,857 contracts, even though the gold price was up on the day. Silver o.i. went the other way…rising 2,174 contracts…which is a lot for a 30 cent move.

I see that Dennis Gartman is talking about gold again. Here are a few words from his early Thursday morning commentary….”If the governments of the world are now as concerned about inflation as we think they may be, and if they are even more concerned about the prospects for a generic, rising inflationary psychology amongst the public at large, then perhaps a collusive sale of gold to push it down through $865 would be possible…that is, if the (Gold) ‘Bugs’ great fear of collusion amongst the central banks is indeed a reality, and we truly have our doubts.”

Well, Dennis…gold did fall some more on Thursday, but that’s not the end of the world…nor has it been a surprise to the readers of my daily rant. As I’ve always said, the ultimate goal (if the bullion banks could achieve it) would be to take out the 200-day moving averages. They came within an eyelash in both gold and silver on Thursday. The 200-day m.a. has withstood every challenge going back for the last ten years. And when it has been broken, it’s wasn’t for long…and not by a lot. Dennis…if you want some investment advice…I’d seriously think about putting on a long position or two in the next month or so, and letting it ride…as we’re awfully close to the bottom. You can thank me later.

I see in an article dated 09 June/08 out of the bankingtimes.co.uk in Britain that “The Bank for International Settlements (BIS)…has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.” Really??? Thanks for pointing out the obvious.

Remember Northern Rock…the British bank with the huge line-ups as depositors withdrew their money? Here’s a new bank over there to keep an eye on…as the industry regulators certainly are. The bank is the UK’s biggest mortgage lender…HBOS…Halifax Bank of Scotland.

Today, it’s a double header from Ambrose Evans-Pritchard at The Telegraph out of London. The first story is entitled “Iran’s switch good news for gold bulls?” The story is worth the read in and of itself, but the graph embedded in it is worth printing off and taping to your bathroom mirror so you can see it every day. The article is linked here.

The second AE-P article is entitled “Emerging markets face inflation meltdown”. This story is a must read. The link is here.

I see the Dow rolled over again yesterday and the Catch-a-Falling-Knife Corporation was there to save it just as it was about to turn negative. The beat goes on.

Since today is Friday…it will be an interesting one in the markets. And all of us at Casey’s Daily Resource Plus will be here on Saturday to talk about it.

Have a great weekend.

From there, both metals rose in fits and starts all through London, but then began to tack on some gains once the Comex opened for business. However, the rise in prices did not go unopposed. You can see from looking at the Kitco gold chart; that once in London trading…and three times in New York trading…gold got sold off slightly when it showed any signs of “irrational exuberance” to the upside. Silver was the same.

Although I’m delighted with Friday’s action, I’m actually a bit underwhelmed by it. Firstly, in forty-eight hours, oil tacked on about $16…and the dollar was down 1.4 cents. These are monster moves…both of them…and very gold friendly. Despite that, gold did nothing on Thursday. All the gains came on Friday…such as they were. Remember that oil was about $110 and the US$ was a hair under 70 cents when gold was at its peak of $1,040 or so. We barely cracked $900 in gold on Friday…and silver is still down about 25% from its high in mid-March. So you can see why I’m not jumping up and down. But regardless of the monster sell-off in the equity markets, the HUI put in a pretty good performance.

Despite the run-up in price yesterday, there was just decent Comex volume on Friday, not huge volume. As far as Thursday’s open interest numbers go, gold o.i. rose 1,543 contracts, and silver added another 882 contracts. Volume was obviously thin on Thursday as well.

We are, once again, well through both the 20- and 50-day moving averages for silver. Gold closed on its 50-day m.a. yesterday and is about $5 above its 20-day m.a. As I mentioned, volume has not been extremely heavy in either metal for the last couple of days. That could change quickly once the tech funds show up on the long side.

As far as the Commitment of Traders goes, the “8 or less” traders (bullion banks) covered some of their shorts in both metals while the tech funds pitched their respective long positions. There wasn’t as much of a clean-out as either Ted Butler or myself were expecting. We were expecting at least double what was actually reported…but maybe this is the best the bullion banks could do! Despite the clean-out, the concentrated short position in gold hit another new high record amount. The boyz are now short 84% of the entire Comex gold market. In silver it’s 79%. Yet the CFTC and your mining companies do nothing.

And lastly, I see that Dennis Gartman got totally blown out of his gold short positions. Al Korelin, from the Korelin Economics Report, interviewed me about this…and ‘all of the above’…in our Friday commentary which is linked here.

I have three stories today, so I’m glad it’s the weekend, as I hope you can find the time to read them…if they suit your fancy. The first one is from The Wall Street Journal of all places. This is the second gold story that has come from a senior ‘fellow’ of the Council on Foreign Relations in the last sixty days. Does it mean anything? Who knows. You can decide. The article is entitled “Contracts as Good as Gold” and is linked here.

Then a day after the above story showed up, this next story appeared in the Asia Times out of Hong Kong. The co-authors of this piece look and sound like they’re reasonably well connected too. Any relation to these two articles? Don’t know that either…however, gold is front and centre in both. It’s worth reading, and is entitled “Time overdue for a world currency” and is linked here.

And lastly comes the following Reuters story filed from Jerusalem. I would suspect that the contents of this story had something to do with what happened in the gold, oil, currency and stock markets on Friday. The article is entitled “Israel to attack Iran unless enrichment stops–minister”. The link is here.

You can fool some of the people all of the time, and those are the ones you want to concentrate on. – George W. Bush, Washington, D.C. – March 31, 2001

Today’s video will take you back about 40 years. My God…where has the time gone??? Turn up the volume on your speakers and enjoy! The link is here.

I noted in a Bloomberg story that US household wealth fell the most in five years….$1.7 trillion worth in Q1/08. Real estate-related assets dropped by $329 billion, the most since 1952. And even though the Dow was down 411 points (and falling) just before the close, the ‘Catch a Falling Knife” brigade made sure that it didn’t close on its low. Is everything still fine? Monday’s trading should be educational.

Enjoy the rest of your weekend, and I’ll see you bright and early Tuesday morning.

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…Saturday, June 7th, 2008

From there, it was off to the races until a not-for-profit seller showed up at 10:00 a.m. New York time to put an end to the festivities in both metals. Another attempt at a rally in gold a couple of hours later was also repelled, and gold finished flat on the day.

However, silver came roaring back and closed on its highs of the day. If that not-for-profit seller hadn’t shown up, there’s no telling how high the price would have gone. It’s my guess that this was a short covering rally, as any intelligent not-for-profit buyer would never buy like this. The shares did well yesterday. Let’s see if we get any follow-through today.

For Wednesday, gold open interest rose another 2,274 contracts, and silver went up another 219 contracts. That’s not a lot of volume, but it’s my guess that the bullion banks were (once again) going short against all the longs that were being put on.

I note that Dennis Gartman has decided to short the gold market. He set a stop at $883 and a target of $850. He also said that he would double his short position if gold went below $870…which it subsequently did on the Comex open yesterday. The 200-day m.a. for gold is within an eyelash of $850, but as of this writing, he’s less than $6 away from being stopped out. I await developments with great interest.

The first story today is actually a Bloomberg interview with Jimmy Rogers. Rogers, never one to suffer fools gladly, doesn’t pull his punches here. Amongst other things, he says that the bull market in oil “has years to go”. The link is here.

The second story was in US Banker a couple of days ago, but I didn’t have room for it. Now the story has shown up in the Financial Times in London. You’ll see the words “$5,000 billion” getting thrown around quite a bit. On this side of the Atlantic Ocean we call it $5 Trillion. Now we’re talking serious money. The story is entitled “US banks fear being forced to take $5,000bn back on balance sheets”…and it’s linked here.

His mother should have thrown him away and kept the stork. – Mae West

I see that mortgage delinquencies and foreclosures are at a 29-year high. The ECB is considering raising interest rates next month. Then there’s oil….up $5+ dollars yesterday. And the Dow finished up 213 points. Everything is fine…really!

Have a great weekend, and all of us at CDR+ will see you right here on Saturday.

Source: And Then There is This Friday, June 6, 2008

A small rally ensued that continued into early New York trading on the Comex, but got capped…for the third day running…at 9:00 a.m. New York Time. From there, it got sold off gently for the rest of the day and into early trading in the Far East today.

Silver suffered the same fate, but managed to rally back into positive territory for the second day in a row…but was capped before it could get anywhere near its 20-day moving average, which is $17.14.

It’s still an open question whether the boys will try to take out the 200-day moving averages on this cycle, or have they already collected all the tech longs they can? I wouldn’t like to see it happen, because of the psychological damage it would do, but if the bullion banks want to do it…they can. Time will tell. Everyone talks about the ’summer doldrums’ in the precious metals. As you can see, there are forces out there that contribute to it.

Not surprisingly, gold open interest on Tuesday fell 5,490 contracts on the $17 swan dive in the gold price…and with silver squeezing out a few pennies of gain, o.i. rose 120 contracts. It would be wonderful if this gold o.i drop was in the COT tomorrow, as there has been huge liquidation since the Memorial Day long weekend…none of which was in last week’s report.

In the Bill King Report last night, there was the following comment…”At the end of 2007 the eight largest banks/brokers had over $500B of Level 3 assets, which represented over 90% of their capital. The amount of Level 3 (Mark to Myth) assets has increased in 2008.” This “Level 3″ debt isn’t worth much. Check out the ABX chart. For the first time, some of these “assets”…if you wish to dignify them with that name…are now worth less than a nickel on the dollar. The chart is here.

I have three stories today. The first is a short one about oil…and some comments that T. Boone Pickens had about the CFTC investigation into crude oil “manipulation” by “speculators”. The Bloomberg link is here.

The second story is about the Fed’s Treasury Auction Facility. As of May 1st, they are providing $150 billion/month in short-term loans to banks and brokerage firms to prevent a total melt-down. Their latest auction for a $75B tranch received 71 bids for $96.62B! From this, it’s easy to see how solid the US financial system really is…LOL! The link is here.

In another sure sign that all is not well, here is a story from The Telegraph in London entitled “Banks’ credit crisis solutions have echoes of 1929 Depression.” The link is here.

“I am enclosing two tickets to the first night of my new play; bring a friend…if you have one.” – George Bernard Shaw to Winston Churchill…followed by Churchill’s response: “Cannot possibly attend first night, will attend second…if there is one.”

Let’s see…Lehman was raising capital on Monday, and was rumored to be buying its own shares on Tuesday trying to support its stock price. Bernanke says that inflation is “significantly higher” than the Fed wants. And lastly, Moody’s has put Ambac’s Aaa credit rating up for review…after their stock has fallen from $95 to $2.50. Everything is fine.

See you on Friday.

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…Thursday, June 5th, 2008

Gold got hit for about $17…and silver for 27 cents. No profit-maximizing seller ever sells like this…ever! As one experienced gold commentator over at Bill Murphy’s LeMetropoleCafe.com put it yesterday…”(It’s) not the action of a price-motivated long…or profit-motivated short.”

I give the cartel a 9.6/10 for this. The Kitco graph is a beauty, don’t you think? They did the dirty in 15 minutes and that’s about as vertical a line as you’re going to see..and not a stop along the way! I would have awarded a few extra marks if they had dropped the price more than $25. Maybe some other time. Too bad we don’t see many days like that when prices are rising. It appears that it only happens when they’re ‘falling’.

Gold didn’t recover a lot of ground as the day wore on, but silver almost made it back to unchanged.

Monday’s open interest numbers are interesting. Even though both metals had up days that day, open interest in gold fell another 4,929 contracts and silver was down 1,575 contracts. There are probably some June deliveries in that gold number, but nevertheless, o.i. normally increases on days that the price rises, so these are probably numbers that were from last week’s hammering that weren’t reported in a timely manner. As I’ve said many times, the bullion banks love to manage the Commitment of Traders report.

In gold news…and for the second day in a row…a major gold producing country announced that first quarter production was down. On Monday, it was Australia. Tuesday, it was South Africa announcing Q1/08 production down 15.6% from Q4/07…and down 16.8% from Q1/07. This news was not unexpected, as the power issues in South Africa have got years to run. Of course, this sort of news no longer impacts the price, since the bullion banks have a short-side corner on the gold market. Hell…production could have fallen 100% and yesterday’s price would have probably been driven down even further!

I’ve got a couple of stories today that are worth spending some time on. The first is the usual monthly epistle that comes from Eric Sprott and Sasha Solunac over at Sprott Asset Management in Toronto. The timing couldn’t be better for this piece. It’s entitled “They’re Getting Worse”…and the pdf file is linked here.

The second story is from silver analyst Ted Butler. His weekly commentary is entitled “Bubble Mania” and it’s linked here.

Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all. – Dale Carnegie

Well…the Dow got saved again yesterday. The falling knife experts swung into action around 2:30 p.m. Eastern time…just as the market looked like it was doomed for the umpteenth time this year. Their efforts were only partially successful. I wonder how they’ll make out today?

We’ll know soon enough…and I’ll be here tomorrow to talk about it. I hope your Wednesday goes well.

Source: And Then There’s This…Wednesday, June 4th, 2008

From there, away it (and silver) went to the upside. But about half an hour before the Comex open, both metals traded sideways until Globex trading closed at 5:15 p.m. in New York.

With options expiry and first day notice out of the way, I must admit that I’m expecting the bullion banks to back off. Not that there are a lot of contracts left to be liquidated by the longs anyway. There are (as Ted Butler says) only a finite number of longs that can be liquidated. The rest just aren’t going to budge, and the bullion banks know that. It appears that we’ve had a full clean-out to the downside in both gold and silver. It’s not possible to know how successful ‘da boyz’ were, because all of the pertinent data won’t be out until the COT next Friday.

Changes in open interest in both gold and silver for Thursday are as follows. Gold open interest fell 7,095 contracts and silver open interest dropped 492 contracts.

In the Commitment of Traders report issued yesterday for positions held at the end of trading on Tuesday, May 27th…virtually none of this past week’s hammering of the gold and silver price shows up in this report. As I’ve mentioned in the past, the cartel can manage this report to a certain extent by holding back information that should normally be included. This past week was a case in point, as it doesn’t appear that any data from Tuesday is in this report. As I’ve said before, we will have to wait until next Friday’s COT before we have any indication.

As far as concentration goes…the ‘8 or less’ traders in gold currently hold 81.6% of the entire short position on the Comex. In silver it’s 78.2%. Both numbers are up slightly from last week. In terms of ounces of gold, the ‘8 or less’ bullion banks are short a whopping 24.5 million ounces…and the ‘4 or less’ are short 20.1 million ounces. These are all-time record numbers. But without a doubt, all of these numbers will be down significantly now that the blood bath is over. Al Korelin of the Korelin Economics Report interviewed me about the goings-on in the gold and silver markets last week…and if you’d like to listen to it, the link is here.

Without question, I think the most important story out of Wall Street yesterday was this Bloomberg piece about Wall Street firms receiving permanent access to money from the Federal Reserve. Just last week, Wall Street and the banking system were saying that ‘everything was fine.’ Obviously everything isn’t fine. The most disturbing part of this article is a comment that Vice Chairman Donald Kohn made when he said, in response to an audience question, that the Fed’s shortage of Treasury securities for them to lend out is “not one of the things I’m worried about.” If he’s not worried about that…then what is he worried about? I think we already know…the collapse of the entire economic, financial and monetary system. The story is linked here.

You may remember that the Bank for International Settlements (BIS) released their semi-annual derivatives report last week…for the period ending December 31, 2007. GATA consultant, Reg Howe, wades into this fray with his most excellent commentary…which in turn is accompanied by some equally excellent graphs. The report is entitled “Gold Derivatives: Moving Up Again” and is linked here.

I’ve had a perfectly wonderful evening. But this wasn’t it. – Groucho Marx

Today’s fun video is another trip down memory lane to the mid-1970s. The album was a multi-million seller…and I still have my copy, but bought the CD version as soon as it was available. The youtube.com video is linked here.

I see in a yahoo.com story, that CNN correspondent Jessica Yellin made mention of the fact that “the press corps was under enormous pressure from corporate executives to make sure the (Iraq) war was presented in a way that was consistent with patriotic fever in the nation and the president’s high approval ratings.” You mean…spin and lie…be a paid shill? The American press wouldn’t do that and mislead the American people, would they? It was ever thus.

Enjoy the rest of your weekend, and I’ll see you on Tuesday.

Source: And Then There’s This…Saturday, May 31, 2008 

Then both metals (and a lot of other commodities) got smacked simultaneously. But the boys weren’t through yet! The moment that the London traders closed their doors for the day, another wave of heavy selling showed up on the Comex…triggering more tech fund sell stops in both gold and silver. It was a bloodbath everywhere.

Open interest changes in gold and silver trading for Wednesday are as follows. Gold o.i. fell another 7,783 contracts and silver o.i. was down 74 whole contracts. Today’s COT will show none of this.

In three trading days since the Memorial Day long weekend, gold has been taken to the cleaners for about $55…and silver for about $1.75. In his Tuesday commentary, Ted Butler summarized what happened during the last three days…”While I did not expect this sharp sell-off, its explanation should be clear in hindsight. The dealers (bullion banks – Ed) wanted to reduce their short exposure and rigged prices lower during a thin trading time to get the tech funds selling below the key 50-day moving averages in gold and silver. The commercials (bullion banks – Ed), early this morning, sold a few contracts to get the ball rolling downhill and then pulled their bids until the tech funds starting selling in earnest as the moving averages were broken. Then the commercials bought back all the contracts the tech funds were coughing up. This should be obvious to everyone (save the regulators, who are averting their eyes.).”

I see in an American Press story yesterday that “the CFTC has disclosed that it is six months into a wide-ranging investigation of U.S. oil markets, with a focus on possible price manipulation.” Really??? I’m sure they’ll let us know if ‘8 or less’ traders are long 81.4% of the oil futures market…just like the ‘8 or less’ traders are short in gold at the moment. The CFTC is all over any suspected long manipulation but ignores short-side corners on the market.

My first story today is from Ambrose Evans-Pritchard, the International Business Editor of The Telegraph in London. Just when Wall Street and the Fed are telling us “the worst is over”, Mr. Evans-Pritchard files this story entitled “U.S. and European debt markets flash new warning signals.” The story is linked here.

The second…and very short…story is from over at miningmx.com and is entitled “Gold de-hedging could reach 10 million ounces in 2008″. The link is here.

The only thing really feared by the rest of the world is that the economic collapse of the US, now sliding into deepening recession, will have drastic effects on their own economies. This is the driving power behind these recent world summits (none of which included the U.S. – Ed). Only closer economic relations between these other nations can lessen the effects of the world-wide effects of the coming US economic depression and financial collapse. – Bill Buckler, the-privateer.com, 24 May 2008

Today is first notice day in gold for the June contract. Once that’s behind us, it’s my opinion that this cartel-orchestrated sell-off in the precious metals will be behind us. Don’t forget that the cartel did exactly the same thing to us in April…and in March too! Do you see a pattern??? If you doubt me, check the chart here. The silver chart is identical.

Today is also Friday, so expect anything…and we at Casey’s Daily Resource Plus will see you here on Saturday to discuss it with you. Have a great weekend.

Source: And then there’s this… Friday, May 30, 2008

This sell-off lasted until noon, then lo and behold, the price took off again, but it was capped just before the NYMEX close. But all in all, it wasn’t a very exciting day, as everyone just wanted to get the heck away from work and enjoy the long weekend. I’m sure there weren’t a lot of people around after lunch.

Thursday’s open interest showed that gold o.i. rose 497 contracts (probably more shorting) and silver dropped 1,390 contracts.

The Commitment of Traders report for positions held as of May 20th are as follows. The bullion banks in the Commercial category went net short by an additional 3,187 contracts and the Non-Commercial/Tech funds went net long by an additional 3,028 contracts…so the bullion banks matched the tech funds almost contract for contract. The bullion banks went short against every long that the tech funds placed. The ‘8 or less’ traders (bullion banks) in the Commercial category are now net short 77.2% of the entire Comex silver market…a small increase from the previous week’s report.

In gold, there were some really big changes. The Commercial/bullion banks increased their net short position by a monstrous 37,584 contracts while the Non-Commercial/tech funds went net long 29,181 contracts. Not only have the bullion banks matched every change by the tech funds, they’ve also added a bunch of new shorts on top of that. And since Tuesday’s cut-off, Ted Butler feels that the bullion banks have added another 10-15,000 contracts to their net short position during the last three trading days of the week. The ‘8 or less’ traders (bullion banks) in the Commercial category are now net short a new record amount…an absolutely grotesque 81.4% of the entire gold short position on the Comex.

None of this warms the cockles of my heart one iota. Nothing has changed on this week-old rally, as the bullion banks continue to go short against all longs in both gold and silver…although the deterioration in silver wasn’t anywhere near as bad as it was in gold.

Since it’s a long weekend, I’ll really stretch the outside of the envelope with three stories. The first one is a front page story from Friday’s Wall Street Journal…the last place that one would expect to find a story such as this. It’s about the shortage of silver eagles…and without doubt, this story will help fan the flames of desire even hotter than they already are. It’s entitled “Losing a Mint: Curb on Coin Sales Anger Collectors” and it’s linked here.

The second story is one that I promised yesterday about JPMorgan and the woes in Jefferson County, Alabama. I wonder if it will be the first county to declare bankruptcy…as Vallejo, CA was the first city to do so. The item is from Bloomberg and is entitled “JPMorgan Swap Deals Spur Probe as Default Stalks Alabama County”…and the whole ugly mess is linked here.

And lastly, another story involving JPMorgan. Their CEO, Jamie Dimon, definitely had some unhappy thoughts to share at a UBS financial conference in New York earlier this week. This is one of the first indications I’ve seen, from a large American financial firm, that this will be no garden variety recession…and things, as he said, could get “really bad”. (Note to J. Dimon: Jamie, why don’t you just tell the truth and say that this “really bad” recession you talk about is a ‘best case’ scenario…not the worst case. – Ed) The link is here.

I got a request from a reader in Britain for ’something classical’ rather than the ‘pop’ music I’ve been putting up. I didn’t know if youtube.com carried that sort of thing, but it didn’t take me long to discover that they did…and lots of it. The piece I’ve picked was determined more by the artist, than the music itself. I met 15 year old violin prodigy, Joshua Bell, when he came to play with the Edmonton Symphony Orchestra. I think he played the Sibelius violin concerto. He performed for the ESO twice…and after that, we couldn’t afford his fee.

He’s playing in a hall I don’t recognize, and with a first rate chamber orchestra that I don’t recognize either. I’m sure some reader will happily provide the details. Here is (a lot older) Joshua Bell playing the final movement of Beethoven’s Violin Concerto in D minor – Op. 61. I thank Percy L. for the suggestion…and I hope you like my choice…despite the fact that I’m not wild about the cadenza. The link is here.

Now get as far away from a computer as possible for the rest of the weekend, and I’ll see you here bright and early on Wednesday morning.
Source: And Then There’s This…Saturday, May 24, 2008

Whether it was frantic buying or frantic short covering is unknown. But once the 20-day moving averages for both metals were significantly challenged, someone decided that that was enough…and both metals started down the moment that London closed for the day. Volume was pretty decent in both metals.

Wednesday’s open interest numbers are as follows. Gold o.i. rose 1,594 contracts and…once again…silver did the opposite, with o.i. down 670 contracts. This won’t be in the COT until May 23rd.

I’ve talked a fair amount about the 20- and 50-day moving averages the last week or so. Sooner or later, they will be broken to the upside by a substantial amount, and the tech funds will come pouring back in…and away we will go again. But before you start cheering, you need to keep the following in mind. The price of both gold and silver have always been a dance between the tech funds in the Non-Commercial category and the bullion banks in the Commercial category…always. At this moment, near the lows in price (and the 200-day moving averages), these same bullion banks are still short (as of the last COT) a knee-wobbling 79% of the entire Comex gold and silver market…not just the Commercial category where they reside. As these previously mentioned tech funds go long…who is going to take the short side of their long transaction? If it isn’t going to be the bullion banks, it certainly isn’t going to be anyone else, as all but 21% of the rest of the traders are LONG gold and silver. What happens then will determine whether prices explode to the upside (because no one wants to take on any more short positions), or the bullion banks go even shorter…and more concentrated. That time is getting very close.

I see a couple of days ago that banking analyst Meredith Whitney blasted Citigroup’s turnaround plan saying the financial giant “is so deep in a black hole that even renowned physicist Stephen Hawking could not help the ailing company.” Not too many shades of grey in that comment.

And in the King Report last night, there was this Freddie Mac answer to an analyst’s question…”No it’s not, Paul. We made a determination in the first quarter that given how widely the pricing we were getting on the ABS (Asset Backed Security) portfolio, that it no longer made sense to leave that in Level 2, so we essentially moved the entire ABS portfolio into Level 3. We were still using the mean pricing that we were getting from the dealers. So we’re not using a model price.” Freddie Mac now has an eye-watering Level 3 (mark to myth) portfolio of $157 billion. Everything is fine.

Two stories today. The first is from chief investment strategist John Embry over at Sprott Asset Management in Toronto. It’s his latest commentary posted in Investor’s Digest of Canada and is entitled “Last Chance to Board Gold Train at under US$1,000″. The pdf file is linked here.

The second article is from Ambrose Evans-Pritchard from the The Telegraph in London. It is more than worth the read because there is clear evidence of serious conflict boiling up inside the EU, and there is quite a discussion about it. The article is entitled “OECD Warning as Stagflation Goes Global” and is linked here.

Between two evils, I always pick the one I never tried before. – Mae West

The President’s Working Group on Financial Markets must be in a frenzy about now. How they keep the markets levitated in the face of total economic disintegration is beyond me. Today’s activity will probably be another circus…Fridays always are…and we at Casey’s Daily Resource Plus will be here to report on it on Saturday. Have a great weekend.

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, May 16th, 2008