Platinum spent the day rangebound between $1980 and $2010, ending at $1991/oz., down $12. Overnight, platinum has slipped lower.

Silver dipped to $16.60 at mid-morning but then had a steeper rise than gold and held most of its gains through the Globex to close at $16.80/oz., up 3 cents. Overnight, silver has declined.
(Click here for charts)

The precious metals market clearly had trouble making up its mind which direction to head in yesterday, and settled for only modest changes with the usual suspects splitting the difference as the dollar was static and oil sank for a second straight day.

Are we in for a prolonged period of indecisiveness? Some analysts think so.

Overall, “the market trend is remaining sideways and we’ll likely stay in range during the summer months,” said James Moore, of TheBullionDesk.com.

That’s a safe bet if history is a reliable indicator, since physical gold market demand typically drops off during the summer months.

Kitco’s Jon Nadler looked out shorter term, writing that, “The next three sessions could still see stabs toward higher prices if the slew of U.S. economic statistics in the pipeline contains any potentially dollar-damaging surprises.”

However, he added that Fed Chair Ben Bernanke has now stirred the pot up a bit, noting that “the dollar dips could be contained as concerns about possible direct Fed action have now replaced the perception that the only ammunition the central bank had was in the form of words.”

Meanwhile, the real bears are looking to the oil market for guidance.

“With crude oil down and looking like it will continue to be under pressure as supplies are up and the threat of a stronger dollar looms ahead, we can expect to see precious metals on a continued downward movement,” wrote Miguel Perez-Santalla, of Heraeus Precious Metals Management in New York.

Unsurprisingly, Perez-Santalla concluded that, “Overall, things are looking bearish for the metals.”

Source: Precious Metals Spinning Wheels

Instead of working both metals over for a period of days, they did it in one fell swoop. Once the Comex opened in New York, there was an avalanche of selling. And once the 50-day moving averages were broken, tech funds sell stops were triggered and that was that. But they didn’t get gold below $900. The US$ was rising and the oil price was falling long before the bullion banks started selling on the NYMEX, so that’s no excuse.

Silver, of course, suffered the same fate…but the waterfall decline was prettier and steeper. I give them a 9.2/10 on that one. My criteria for any score over 9.5 is a drop of at least a dollar, and it has to be a nearly vertical line…and the straighter the better. My scoring criteria is based on a personally modified set of rules used by the Olympic high diving judges…which I keep in the fridge beside by bottles of blue and red pills.

Open interest for Friday’s trading were as follows. Gold o.i. fell 1,692 contracts and silver tacked on a surprising 2,421 contracts. I don’t know what to make of that. If it all gets reported today, the open interest numbers for yesterday should be quite impressive. Yesterday was not only options expiry for gold, it was the cut-off day for the Commitment of Traders report for this Friday. Will it all get reported then? Don’t bet on it.

Here is what James Turk over at goldmoney.com said this past Sunday in his private newsletter to his clients on what was about to happen in the precious metals market on the Tuesday opening…

OPTION EXPIRY: The following quote is from Letter No. 423 published on April 28th. “Readers will recall from years back how we could regularly count on the gold price falling into option expiry. Most options are written by the gold cartel, given their aim to be short and profit from the contango (the difference between the spot and future months). So at option expiry the gold cartel would drive the gold and silver price lower…so that as many calls as possible would expire out of the money, meaning that the gold cartel would earn the full premium on the options they had written. Therefore it was not chance that the precious metals collapsed again last week just as options were expiring, making sure thousands of calls expired out of the money.

“I’m revisiting this point to remind everyone that this week is expiry for the all-important June options, which have a large open interest. The open interest for Comex gold calls with strike prices from 900 to 930 is 13,905 contracts, representing 1.39 million ounces of gold. As a rule of thumb, I assume that the outstanding options in the over-the-counter market are 10-times greater than the quantity of options on the Comex.

“Right now (based on Friday’s close) the calls on the Comex have an aggregate market value of $21.2 million. If gold closes on expiry at $900 or less, that value completely disappears (as would of course the value of OTC options at those same strike prices also disappear), which is a powerful incentive for the writers of these options to force the gold price lower on expiry. So I expect to see a test of wills this week.

“Will the gold cartel once again be successful in driving gold lower during option expiry? Or will the market overpower the gold cartel? It should be an interesting battle. I don’t know who will win, but we should plan for a gold cartel victory. After all, the results from recent years suggest that they are batting around 0.750 in driving down the gold price at the end of the month, so it is likely they will do so again.”

There were dozens of stories over the weekend worth mentioning, but I can’t mention them all, so I won’t mention any. However, you may find this Bloomberg story about the Titanic of great interest…and amusement! The story is entitled “Titanic Model, With Deck Chairs, Attracts Million-Dollar Bids”. The link is here.

For today’s main offering, I present silver analyst Ted Butler’s latest weekly commentary on the silver market…including his take on yesterday’s slaughter on the Comex. His essay (which is a must read) is entitled “A Few Thoughts on Silver” and is linked here.

Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion. – Howard Buffett, father of Warren Buffet – May 4, 1948

What a day yesterday was! Horrific news in all directions! The Dow rolled over into negative territory and…at precisely 12:00 noon…”gentle hands” were there to make sure it stayed positive on the day. If you feeling like you’re living in the movie “Matrix”…you would be right about that. Score one for the PPT.

See you tomorrow.

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…Wednesday, May 28th, 2008

Take a look at this chart…

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Palladium made an enormous run higher when it broke out above $400 an ounce back in February. As you can see, though, the chart went parabolic, gaining almost 50% in just one month. Moves like that never end well… Sure enough, the ensuing correction wiped out almost all of the gains and left investors feeling like they’d just stepped off the Giant Drop ride at a Six Flags amusement park.

Now, however, as most investors are grabbing their airsickness bags and swearing never to ride that roller coaster again, we can take a fresh look at the chart and explore the opportunity it presents…

The blue support and resistance lines are converging to form a consolidating-triangle pattern. When a chart breaks out of this pattern, the move is often quite large and usually equals the height of the triangle itself.

In the case of palladium, we’re looking at the potential for a $125 per ounce move. So we could see the metal challenge its recent highs up around $580 per ounce… or we could see it collapse down to last September’s low at $325.

Of course, we can’t know for sure which way the price of the metal is going to break, but I’m betting on the upside.

Palladium’s breakout over $400 back in February establishes solid support at that level. Odds are, if the price breaks down from the consolidating-triangle pattern, then buyers will step up, at least temporarily, at $400. So traders can take a position at current prices and keep a stop just under $400 per ounce.

The best way to play this trade is through shares of North America’s only two palladium mining companies, Stillwater Mining (SWC) and North American Palladium (PAL).

Neither of these companies is a good investment on its own merits. Management stinks. Their fundamentals are shaky. And they both seem to be plagued by bouts of periodic bad news that keeps a lid on their share prices.

But in the short term, the stocks correlate well with the price of palladium. So if the metal is ready to make a run higher, then perhaps these stocks are ready to run higher, too.

Best regards and good trading,

Jeff Clark

The facts haven’t changed. Precious metals are still in a secular bull market, while the almighty dollar is still stuck in a depressing bear market.

Our beloved gold has risen dramatically…nearly 280% over the past 7 ½ years. Silver has gained an incredible 350%! But both of these metals have risen in large part as a result of the fundamentally weak U.S. dollar.

Even Healthy Markets Have Healthy Corrections

That tells me we’re still in a very healthy precious metals market. But, unfortunately (or “fortunately” depending on your point of view) even healthy markets correct.

In fact, markets have to correct. There’s simply no other way to burst the speculative bubbles that develop when an asset gains price momentum. And, quite frankly, this isn’t the first time that gold has needed to take a healthy breather. This has happened before…

• February 2003 ($382.10) to April 2003 ($319.90) – 16%
• April 2004 ($427.25) to May 2004 ($375.00) – 12%
• May 2006 ($725.00) to June 2006 ($567.00 – 22%*
  *It is generally understood, when a market corrects more than 25%, it becomes a trend change.

All figures basis the London PM Fix

Thus far in this correction, we have seen the gold price pullback from US$1,011.25 on March 17th to US$887.75 on April 1st. And as of yesterday, gold has jumped back up to US$926.60.

Will we go further? We may. We may not. In the end, that seems less important than the need to recognize this short-term price correction as an opportunity.

After all, we expected this. We suggested to Mike Burnick in the January issue of The Sovereign Individual that we anticipated a correction, and we expected it by tax day. As of yesterday, we’re still in a correction. That means it’s time to buy – before this temporary correction passes.

Why Gold Is So Darn Popular, and
Everyone Hates the Dollar

Precious metals are on a tear right now for several reasons including…

• emerging middle classes have an affinity for precious metals
• investors are hungry to stock up on metals
• you now have new ways to access physical, precious metals markets
• several jurisdictions now allow you to own metals, that refused to let you own metals before (including the U.S.)
• precious metals have new industrial uses
• the low-hanging fruit has been picked already, so now it takes more time, innovation and money to get metals out of the ground

By the way, none of these factors changed over the course of the past month when gold started to correct.

Meanwhile, the dollar isn’t doing well because…

• the sub-prime lending crisis continues to weigh down the economy
• money supply has dramatically increased worldwide
• inflation is on the rise because of oil’s incredible rise
• fighting terrorism is getting expensive
• the U.S. can’t manage its own debt and deficit problems
• the housing market continues to slow
• consumers aren’t as willing to spend
• more people are out of work – with unemployment on the rise

These factors have changed over the past month. They are getting worse!

It should be no surprise to anyone that the U.S. dollar is losing purchasing power. The greenback dropped a little over 8% in value over each of the past two years. And the once “almighty buck” has already shed over 6% of its purchasing power in just the first quarter of 2008!

As the purchasing power of the dollar wanes, intrinsically valuable assets such as gold will continue to shine. After all, by historical standards, we are not even half way through this bull market. History tells us that secular bull markets in commodities last anywhere from 15 to 20 years!

At the seven-year mark in the cycle, I’m confident this particular bull market will not be the one to rewrite history.

In gold we trust…and in silver, platinum and palladium too!