Then both metals began a gentle rise…and then a gentle decline into the London p.m. fix. From there, both metals were away to the races. Prices continue to rise quietly in Thursday morning trading in the Far East as I write this…which is late Wednesday evening here in North America.

Open interest for Tuesday was quite interesting. Gold o.i. only rose 1,384 contracts, which is not a lot considering gold rose almost $15. There must have been short covering in there as well. Silver o.i. rose a more than substantial 2,466 contracts…no short covering there at all. These would be technically motivated funds putting on long positions, as silver is now well above it’s 50-day m.a. I wonder what entities took the short side of that trade? Whoever they were will remain unknown until the COT comes out on May 30th…next Friday.

Well, what I predicted in my commentary on Tuesday did not come to pass on Wednesday…but there’s still time for it to happen…but not a lot. Only a couple of trading days to be exact. I must admit that seeing the counter-intuitive price action in the HUI…actually going negative on the day…did nothing to allay my fears about what might happen in the very near future. This is one of the events that we at GATA have sometimes seen just before a major sell-off attempt by the boys. I don’t believe for a second that it had anything to do with the drop in the Dow, as we had a big drop on Tuesday and the HUI had a terrific day. But as I’ve said before, maybe I’m looking for a black bear in a dark room that isn’t there. Let’s see what today brings.

In other gold news on Wednesday, I see that Mr. Gartman laid on another long position in gold and will add another once gold trades above $930 in New York. Will that be today? I’ll be ecstatic if it is.

Yesterday it was the Zimbabwe dollar…such as it is. Here’s a graphic illustration of what the US$ might look like a few years down the road. Andrew Jackson would not be amused…

click to enlarge

I’m totally overwhelmed by the number of stories that are worth mentioning, but I only have room for a couple. The first story is a GATA dispatch of a speech given by Benn Steil, senior fellow and director of International Economics for the Council on Foreign Relations. The headline reads “CFR official: Gold is the world currency of the future.” The link is here.The second story is from Reuters and is entitled “Goldman, UBS and Morgan Stanley agree on dark pools.” According to the article, about 10% of all equities trading is now done in these “dark pools”. If this doesn’t sound very transparent…it isn’t…and that’s the whole idea. The article is linked here.

I see that the derivatives market expanded 44% last year (according to the BIS) and now sits at $596 Trillion dollars…that’s spelled with a ‘T’. If this pace keeps up, by this time next year, total derivatives will exceed one Quadrillion dollars…that’s spelled with a ‘Q’!!! And Moody’s says that a ‘computer error’ accidentally gave triple-A ratings to billions of dollars worth of now worthless debt products. You believe them…right?

I don’t think we’re in Kansas anymore, Toto….

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, May 22nd, 2008

I notice that the price ratios between the time spans of differing gold lease rates have been remarkably well behaved lately, almost as if they were locked together in precise bands. I think that this is interesting as hell, although I have no idea what it means, if indeed it means anything, which it probably doesn’t, although I will say that those guys setting up spreads (to take advantage of volatility) in gold have gotten financially killed, which I figure in turn benefited the guys who are short all that gold, as that is who I figure is on the other side of the trade when you and I are trying to make a quick buck with some fancy day-trading of options and futures and, of course, the spreads, and they manage to clean us out pretty regularly, the lying, cheating, thieving bastards.

But being naturally suspicious and cynical, I obviously regard that this is just part of the plan on the part of 1.) The guys who are short gold, whose total short position is in the range of billions and trillions and quadrillions and zillions and gajillions of dollars for all I know, and the 2.) Central banks who foolishly lent out the nation’s gold, at diddly interest rates, as their part of the scheme, and now the Fed has essentially sold (although they call it “leased”) half of all our nation’s gold, which I seem to recall is the estimate of the Gold Anti-Trust Action committee, who are probably best qualified to know (other than the government or Fed, who know for sure, but both of which refuse to even talk about it!).

In fact, Bill Murphy of GATA says, “The Gold Cartel is running out of available central bank gold to meet surging demand for physical gold. It is the opinion of the GATA camp that the central banks only have half the gold they say they have in their vaults – not the commonly bandied about 30,000 tonne number, but less than 15,000 tonnes.”

He notes that there were many powerful people with many powerful friends who had many powerful reasons to keep the price of gold down, such as how “the gold price suppression scheme was the cornerstone of Secretary Treasury Robert Rubin’s ’strong dollar’ policy”, and “Treasury Secretary Paulson, a key member of the President’s Working Group on Financial Markets (popularly known as the Plunge Protection Team)” who chillingly said, “The United States will do what it takes to calm markets”, which they think will be demonstrated by the price of gold not rising, because ordinarily it would be shooting to the freaking moon in response to economic conditions like today, and people would be alarmed, and perhaps singing the latest hit song by the Rocking Mogambo Quintet (RMQ) that has the famous line, “Look at gold shoot to the moon! The Mogambo was right! We’re freaking doomed!”

Now, if you are like me, then you already suspect that all of these people are crooks and back-stabbing, traitorous thieves anyway, and all I want is just to make a lot of money so that I can move into a nice house in a gated community that has armed guards, a nice golf course and completely surrounded by sleazy strip clubs and pizza parlors where you can get any kind of pizza you ever heard of at discount prices.

Fortunately, everything except the cheaper prices is entirely possible as a result of all of this government meddling in the gold market (as they are advised to do so by former Fed chairman Paul Volcker, who had to eliminate the 15% inflation of the ’70s and who thinks that gold soaring to $850 an ounce “looked bad” and undermined his efforts to stop runaway inflation), and Mr. Murphy thinks that this means that “Fortunes have been made and there are more fortunes to come”, and that may people think that gold prices “will go up 3 to 5 times again from present levels.”

And as to the notion that the Fed has sold half of our nation’s gold, I think that is being generous as hell, as I see no reason why the Fed would stop at only half, sort of like when I am starving and I sit down with a whole delicious pizza in front of me, and my wife thinks I am just going to eat half and leave the other half for her, and then she acts all surprised when I see no reason to stop at half, either!

So, assuming they still have some gold to sell into the market to keep the price down, you may have an opportunity to buy more gold cheaply for a while longer yet! Whee!

And don’t get me started on how you can still buy silver so cheaply, as it will elicit another, yet bigger, squeal of glee from me along the lines of “Wheeeee!”, wherein you notice that I used a few extra letters to indicate much higher amounts of glee, which only proves how deadly serious I am!

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Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.