Spot gold stood at $1,000.40 an ounce by 1459 GMT, versus $1,006.15 an ounce late in New York on Friday. U.S. gold December gold futures fell $8.30 an ounce at $1,002.00 on the COMEX division of the New York Mercantile Exchange.

Prices earlier hit their lowest since Sept. 15 at $995.50, some way off the 18-month high struck last week at $1,023.85. However, gold has gained some 13.5 percent so far this year.

Data on Friday showed speculators held a record net long position in the U.S. gold futures market for the week ended Sept.15.

Analysts said concern was growing on the extent of speculative positioning — buying to profit if the price rises — in the market, as that left gold vulnerable to sharp corrections if currency fundamentals moved against it.

“The market is a bit wary of adding new longs after the highs of last week,” Standard Bank analyst Walter De Wet said.

“Given that the spec positions in all of these metals is really very high, without substantial dollar weakness we won’t move much higher,” he added.

Analysts also said selling pressure from the physical market had weighed on bullion, setting back the quest to strike record highs above $1,030.80 an ounce — the level hit in March 2008.

IMF GOLD

The dollar rose broadly, extending its pullback from a one-year low against the euro . On Friday, IMF member countries formally endorsed a plan for strictly limited sales of 403.3 tonnes of gold from its stockpile but said sales would be done in a way that did not disrupt gold markets.

“Central banks, including China’s, could acquire the gold at lower prices via the market. However, this is likely to be market-adverse on the whole, even if the sale takes place over several years and in a way that will not disrupt gold markets,” Commerzbank said in a research note.

On Monday, Market News International reported that China is considering buying gold being offered for sale by the International Monetary Fund, citing two unnamed government sources, but the report could not be confirmed and traders said it had little lasting impact on the market.

While concerns about speculative positioning remain, most analysts agreed that upside momentum was still intact, with long-term inflation fears still stalking investors.

“People are taking a bit of a breather ahead of the FOMC and G20, that’s all,” said Simon Weeks, director of precious metals sales at Bank of Nova Scotia.

The Federal Open Market Committee is likely to hold rates steady at the meeting, which starts on Tuesday but markets want to know if there are signs that the super-accommodative policy stance will be wound back, given a pick up in economic data.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said its holdings stood unchanged at 1,086.479 tonnes on Sept. 18.

In other metals, silver fell to $16.80 an ounce, in line with gold, compared with Friday’s $16.96.

Palladium stood at $294.50 an ounce versus $299.50 an ounce on Friday. It hit $304 an ounce last week, its highest since end-August 2008. Platinum fell to $1,312 an ounce compared with $1,327.

Sept 21 (Reuters)

After that, gold had a double top at the beginning of trading in London yesterday morning. Between the London open and the London close, gold shed another $7. But once London closed at 11:00 a.m. Eastern time, the rug really got yanked, and another $13 got carved off the price in short order. After the bottom for the day, which came at precisely 12:30 in New York, gold recovered $5 in what was left of Comex trading…but once electronic trading began after the Comex close, the gold price flat-lined.

Silver didn’t really develop a downward trend until 11:00 a.m. in London…while the east coast of the U.S. was still sound asleep. From there, silver was under considerable pressure [with even more pressure coming once London closed] right up until its low tick of the day, which occurred at 12:15 in New York. From there, silver recovered about 15 cents before trading closed.

I wasn’t expecting much of a change in open interest for Tuesday’s trading…and I guessed right. But I was also happy that both numbers showed an improvement. In gold, o.i. fell another 1,632 contracts to 372,985…on decent volume of 88,693 lots. In silver, o.i. also fell…in this case by 619 contracts to 100,376…on smallish volume of 16,573 contracts. Because Tuesday was the cut off for Friday’s Commitment of Traders report…this data will, hopefully, be in it tomorrow.

Yesterday’s trading volume was monstrous…with huge liquidation in both gold and silver as well. Today’s open interest report should be impressive. In retrospect, I shouldn’t have been surprised at Wednesday’s big down day in both metals…and [probable] massive open interest decline…as it’s too late for tomorrow’s Commitment of Traders report…so this data won’t show up until next Friday’s COT report on the July 17th. This is standard operating procedure when the bullion banks want to hide what they’re doing until the last possible moment. I’ve mentioned this trading pattern on many occasions.

The Comex Delivery Report for Wednesday didn’t show a lot of activity…as most deliveries for July are already done. There were 17 gold contracts and 24 silver contracts delivered. Over at GLD, there was a rather large 333,798 ounces removed from their stockpile…and at SLV there were no changes…again. The U.S. Mint is a busy place these days! For the third day in a row they have updated their gold and silver one ounce eagle mintings. Gold eagles rose another 6,000 to 18,000 so far for July…and silver eagles are up another 200,000 to 650,000 for the month. Over at the Comex-approved precious metals warehouses, a smallish amount of silver was removed from inventory…74,327 ounces.

The usual N.Y. gold commentator had a few things to discuss yesterday…and here they are…”This morning’s weekly statement of condition from the European Central Bank indicated a €5 million fall in ‘gold and gold receivables’ attributed to a sale by one captive central bank. This is a derisory 0.23 tonnes [7,510 ounces] – last week’s quantum was 4.33 tonnes. Perhaps it was an option being exercised. The recent behavior of the European central bank flock suggests that the 403 tonnes of IMF gold is desperately needed to sustain the 400-500 tonne central bank pace of the last decade.”

And then in commentary late yesterday evening, this was added…”UBS raises the implication that gold and silver, with huge stock/consumption ratios and politically insignificant private sector consumers, might escape: ‘we believe that gold and silver, with vast above-ground, liquid and near-to-market stocks, are the only traded commodities that are not a play on scarcity…We suspect gold and silver will be at the bottom of this list, if they are on it at all.’ Andy Smith has been arguing for some time now that the precious metals could well emerge as the only venue for the expression of what one might call ‘Free Market’ sentiment. There is, of course, considerable evidence that these metals, especially gold, have been under political price management for the better part of 20 years. But after so many years of official sector selling, the question becomes as to who will take up the selling slack when central bank dispositions come to an end.”

Ted Butler would vehemently disagree with what UBS and Andy Smith had to say in the previous paragraph. He feels that [and I'm not disagreeing] the CFTC et al will use the upcoming legislation to enforce position limits as an opportunity to get these grotesque short positions in both gold and silver cut down to size. I spoke about this yesterday But regardless of who is right…or wrong, we won’t have to wait too long before we find out.

After yesterday’s pounding, it’s now a pretty good bet that the bullion banks are going to “go the distance” and take both gold and silver prices below their respective 200-day moving averages. And despite the big liquidation yesterday…the still gigantic gold short position is the 800 pound gorilla sitting in the living room. Last year at the October lows, the bullion banks only had a short position of around 7.5 million ounces in gold…which is about 10 million ounces lower than we are now. That’s why I’m so alarmed at the current size of this short position that the bullion banks are holding. The question that Ted and I are wrestling with is the following…”Will this be a garden variety correction to below the 200-day moving averages…or will it be much worse? If it’s just a garden variety correction, the process is well along, and we might only have 30,000 contracts [or so] left to liquidate. But if they do what they did last year at this time…God help us!

Right now, if you check the RSI [Relative Strength Indicator] on the graph below, we’re fast approaching oversold on silver…and about three quarters of the way there in gold. In dollar terms, it’s about $40 in gold…and in silver it could be a dollar or so. That’s if we get the garden variety correction. The other kind of correction involves the lows approximating those of last November. Which will it be?

I have four stories today. The first story from Bloomberg shows some of the ugly truths about real estate in the U.S. The fact of the matter is that it’s worse than this story makes out…but at least it hints at it. Like I said since February of 2007…call me in 2013 and we’ll talk about the bottom of the U.S. real estate market. The story bears the headline “Delinquencies on U.S. Home Loans Reach Record” and the link is here.

The second story is also real estate related…and also understates the scope of the problems in both residential and commercial real estate. The Reuters story is entitled “U.S. mortgage fraud ‘rampant’ and growing – FBI”…and the link is here.

Here’s a story that’s really hot off the presses at The Wall Street Journal. It’s gold related…something you don’t normally see in an establishment newspaper of this calibre. It’s entitled “Catching The Gold Bug” and the link is here.

The last story today is also gold related. Speaking Wednesday on Judge Andrew Napolitano’s “Freedom Watch” program on Fox News, U.S. Rep. Ron Paul, R-Texas, remarked that one of the purposes of his increasingly popular legislation to audit the Federal Reserve is to expose how the Fed has been manipulating the price of gold to support the dollar. His comment on gold price manipulation comes at 4 minutes and 30 seconds into the interview…and the youtube.com video is linked here.

There are none so blind as those that will not see. – Rev. Matthew Henry

That quote popped into my mind when I listened to what Ron Paul had to say. I know full well that the good Lord himself could show up at the Washington monument to Thomas Jefferson, with his Son at his side carrying two stone tablets…and announce to the world that the gold market was rigged seven ways to heaven…and there would be those who would still not believe….nail holes or no nail holes! It boggles the mind.

See you on Friday.

Source: And Then There’s This…Thursday, July 9, 2009

The U.S. bullion banks [the only ones allowed to trade at that time of day] were either going long or covering shorts. This rally continued through the Sydney open in gold…and into the beginning of trading in Hong Kong for silver. At those two points, a not-for-profit seller showed up…or the buying/short covering stopped. Those were the highs of the day in both metals. It’s quite unusual for the not-for-profit sellers/price cappers to hit the metals at two widely separated times like this. Almost without exception, they hit both metals at precisely the same time. I should quickly point out that trading volume in New York on Sunday night…and in Sydney and the Far East early Monday morning….was basically air in both metals. Probably no more than a few hundred contracts in silver and not a lot more than that in gold.

Anyway, the balance of Monday’s trading through the rest of the Far East, London and New York, was down. Both gold and silver closed Monday’s electronic trading session virtually on their lows of the day. There was light volume in both metals yesterday…even when you add in London and New York.

Before continuing further, I must admit to an error in my commentary virtually every day last week. Friday, as it turned out, was not options expiry in gold and silver…it was yesterday…Monday. I was reading the CFTC’s 2008 chart. I won’t make that mistake again. My apologies to you.

Open interest for Friday’s trading showed the following changes. In gold, o.i. rose 2,010 contracts to 346,636. And silver o.i went the other direction…down 1,467 contracts to 95,610. As I’ve been pointing out for the last week, it’s very difficult to read anything into these numbers because of the switching that traders are doing right now. Those that hold contracts for May [both in silver and gold] are switching them into future months [or closing them out] to avoid having to take delivery when first day notice arrives on Thursday. Today [Tuesday] is the last day that the April contract in gold and silver can be traded on the Comex. Tomorrow [Wednesday] is the last delivery day for the April contract. And, as I mentioned a couple of lines back, first day notice for delivery into the May contract is Thursday, April 30th…the last day of the month. If they haven’t switched their contracts by then…they have to stand for delivery…which requires them to come up with a lot of money.

While I’m discussing Comex deliveries, there were 460 gold contracts delivered on Monday. The big deliveries [issuers] were Bank of America (NYSE:BAC) [again!] with 311 contracts and Goldman Sachs (NYSE:GS) with 95 contracts delivered. The big stopper [receiver] was the Bank of Nova Scotia (NYSE:BNS) [321 contracts]…with a raft of smaller stoppers picking up the rest. So, with those 460 contracts delivered on Monday, there are 523 gold contracts left to deliver in the next two trading days…plus whatever contracts are purchased today…the last trading day in the April contract [which I mentioned in the previous paragraph].

In other gold and silver news, I note that silver inventories over at the Comex-approved warehouses on Monday, declined by 573,422 ounces. Over in Europe at the Zürcher Kantonalbank in Switzerland, their gold ETF was up a smallish 9,996 ounces last week…and their silver ETF was up a respectable 298,534 ounces. I thank Carl Loeb for those updates. This week, the U.S. Mint decided to update their eagles early…and they are very nice numbers. The 1-ounce gold eagles showed an increase of 27,000 last week…now up to 147,000 for the month, while the 1-ounce silver eagle mintings were up 611,500 for the week that was…for a monthly total of 2,479,500. There are still four more production days in April. The U.S. Mint may [or may not] update them one more time this month…or, as they frequently do, they’ll just include the rest of this month’s production in next month’s. There were no changes in either GLD or SLV yesterday.

Because of the weekend, there were a lot of stories that are worth your time. I’ve narrowed it down a bit…with the hope that there is no news today that is worth mentioning…so I can run the balance of these weekend stories tomorrow.

The first is from Ambrose Evans-Pritchard at The Telegraph in London. As Ambrose says…”The world is running out of capital. We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere.” The story is entitled “The capital well is running dry and some economies will wither.” and the link is here.

Today’s second offering comes from James Turk over at goldmoney.com. James has analyzed the gold price chart and finds a reverse head and shoulders pattern that he finds very bullish. Turk’s analysis is headlined “Gold’s Strong Technical Position” and you can find it linked here.

The next essay is from Michael Kosares at usagold.com in Denver. The title says it all…”China turns IMF gold sales into a wet noodle”. The story is contained in a GATA dispatch, and the link is here.

The next story is from the hallowed pages of The Wall Street Journal. It’s written by Judy Shelton. Ms. Shelton, an economist, is the author of Money Meltdown: Restoring Order to the Global Currency System. The commentary is entitled “The IMF’s Gold Gambit: The fund’s misuse of bullion reserves is crucial to its plan to use the financial crisis to expand its power”. The link is here.

And lastly…silver market analyst Ted Butler’s new commentary notes the recent scandal involving Bank of America, the U.S. Treasury Department, and Federal Reserve and wonders aloud what many of us may have been thinking. That is, if the U.S. government is intervening surreptitiously in the financial stock market, why is it so wild to suggest that the government is doing the same thing in the precious metals markets? Butler also examines the current structure of the silver futures market and concludes that the chances for a sharp rise are good. Butler’s commentary is headlined “Dangerous Parallels” and you can find the story linked here.

click to enlarge

I note that the S&P futures aren’t looking too good for the Tuesday open right now. Of course they weren’t great on Monday either…and it looked like there were ‘gentle hands’ in the equity markets for a while yesterday…and that dollar rally looked suspicious as well. In early Tuesday morning trading in Sydney, I see that we had a discontinuous event in gold…and nearly the same in silver, as the not-for-profit seller was driving the price down in both metals. Only a handful of contracts were being traded at the time. Let’s see how things look in gold and silver on Friday once first day notice for the May contract is out of the way.

See you on Wednesday.

Source: And Then There’s This…Tuesday, April 28th, 2009