Platinum also traded flat for most of the day, ending at $2051/oz., up $10. For the week, platinum gained 1%.

Silver rose to $17.60 at the New York open, but then declined steadily through the day, closing at $17.32/oz., unchanged. For the week, silver shot up 5%.
(Click here for charts)

It was, perhaps, another mildly disappointing day for the precious metals, as they showed only a little life despite the support offered by a sinking dollar, rising oil, and weakness in the equities markets.

Peter Spina, an analyst at GoldSeek.com, concurs, writing that “the price is not reacting as strong as one would expect as some overhead resistance around $900 is keeping a bit of a lid on an extended rally.”

Julian Phillips of Goldforecaster.com summarized the market thusly: “It was New York and COMEX that took the gold price back over $900, so long and short-term investors are behind gold’s price rise today. With their eyes on the $ and oil they took it higher. Despite the oil producers conference this Sunday and despite the removal of subsidies on oil in China, the oil price has risen $3. On top of that the $ itself became anemic and fell back over $1.56 sending gold up as it fell.

“If good news for oil doesn’t push it down what will? It seems the market doesn’t want talk, it wants action! Until it gets it, the prospects are good for gold and silver.”

$900 is obviously a resistance point for many buyers, as gold has been toying with the mark for a while now, with no sign it’s going to be decisively taken out. But some think the time may be near, and are raising their buy-in levels.

“I bought some last week and would buy again under $880,” said Adrian Day, president of Adrian Day’s Asset Management.

However, a third-quarter rally in gold may be limited by a “relatively high level of net speculative length,” wrote analysts at Deutsche Bank. Speculative long positions in Comex gold have doubled in the past year, according to the Commodity Futures Trading Commission.

Source: Precious Metals Move Slightly Higher

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

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

Right now the gold-to-oil ratio is trading around 7. That means a single ounce of gold is roughly worth seven barrels of light sweet crude. With oil trading near $130 a barrel, this is an extreme low point for the ratio.

The previous drop in mid-2005, when an ounce of gold was briefly worth 6.5 barrels of oil, was the lowest the ratio has been in decades.

Oil Too Expensive, or Gold Too Cheap?

So what does it mean when the gold-to-oil ratio moves toward an extreme like this? In historical terms, it suggests that something is out of whack. Either oil has gotten too expensive, or gold has gotten too cheap.

The last time we saw an extreme in the other direction was late 1998, when the gold-to-oil ratio rose above 26. That was a case of oil being way too cheap… and of course, crude oil bottomed out for all time just a few months after that.

Given the way oil is trading now — the recent rocket ride to $130 a barrel, etc. — some think that oil has gotten too expensive, too fast. Their view would be that the price of oil has to come down, perhaps by a lot, and that the gold-to-oil ratio is reflecting this.

Your humble editor disagrees with this view for a number of reasons.

For starters, there’s a lot of hot air about how oil could be a bubble and speculators are driving oil prices… but there is little proof of this charge, and a lot more evidence pointing in the other direction.

Germany’s Folly

Angry German politicians have gone so far as to call for a worldwide ban on oil trading. They think that $130 oil is all the evil speculators’ fault, and that all the traders should have their hands tied.

This is about the dumbest thing I’ve ever heard, and a good example of how politicians can be dangerous. One of the key functions of markets is price discovery; through self-interested buying and selling, the markets act as a useful forecasting tool. (One of the best forecasting tools we have at any rate.)

Without a functioning market mechanism to determine the price of a valued good, the market breaks down. You either have lots of one-off transactions taking place in the dark, or else you have some government committee setting the price by fiat. I hear Soviet Russia tried that. It didn’t work out too well.

The activity of traders and speculators also provides much-needed liquidity to markets. When, say, an airline like Southwest buys heating oil futures contracts to lower its exposure to jet fuel costs, more often than not there are traders on the other side of the transaction. Without someone to take the other side of a trade, end-users of oil and gas products have no way to hedge their business risk.

In a very real sense, speculators are paid to take on risks that hedgers don’t want. Risk transference is a vital market mechanism. The German politicians don’t get this. Or maybe they do get it, but they just don’t care.

Trying to restrict trading would be a fool’s errand anyway. There is more than enough competition among global exchanges to keep the trading going, even if some goofball government tries to ban trading on a local basis. That’s a very good thing.

Et Tu, George?

Hedge fund legend George Soros is blaming the speculators, too, calling the oil price a bubble. Without putting too fine a point on it, this is a major piece of hypocrisy.

Why? Because the existence of men like Soros show exactly why big markets are hard to manipulate.

If the price of oil were truly in a bubble, some big hedge fund player with guts and foresight could come along and make a killing by shorting the daylights out of it… thus driving the price of oil back down to non-bubble levels in the process.

This is exactly what Soros himself did in 1992. That was the year he earned the nickname “The Man Who Broke the Bank of England,” for the huge score he made shorting the British pound.