From there, gold got sold down until London closed. Then it rose, but did not make it over $740 for the rest of the Comex session. Tuesday was options expiry on the Comex, so I’m sure that the JPM and HSBC didn’t want any more of those lovely options to expire in the money than was necessary.

But as bad as the price management was in gold, in silver it was the most blatant I have ever seen. They aren’t even trying to hide anymore. Silver peaked at the London open…got absolutely hammered to a new low price of around $8.40…which was the Hong Kong close. From there it rose until shortly after the London silver fix. Then the price managed to hold its own until the London p.m. gold fix…but then the dealers once again pulled their bids…with the bottom being (as usual) the close of business in London. Silver wasn’t allowed to close over $9.00. After that, silver was allowed to rise right into the close of trading on the Globex in New York at 5:15 p.m. Everything in both gold and silver yesterday had to do with options expiry and allowing JPM/HSBC to cover more silver shorts while they were at it. I said on Friday that the gold bottom was in after that take-down in the wee hours of Friday morning. Well, I think we’ve seen the bottom for silver now as well. Here’s yesterday’s Kitco silver chart. There’s nothing free market about any of yesterday’s silver price action…or gold for that matter. They don’t call the Comex, the Crimex, for no reason.

click to enlarge

I note that the big early Wednesday morning rallies in both gold and silver in the Far East got stopped dead in their respective tracks at exactly 8:00 p.m. New York time last night, after gold had the audacity to break through $750 again…and these rallies have now been totally reversed as I write this. It’s options expiry in the OTC market today, so we could see this price capping action by the boyz until we’re past that. Then there’s first day notice on Friday. We’ll see if they can keep a lid on it for that long.

On Monday, gold open interest fell another 3,619 contracts to 314,297. Silver o.i. actually rose a bit…up 174 contracts to 93,898. It will be interesting to see what Tuesday open interest change shows in silver, considering how ruthlessly JPM/HSBC went after that market. Those numbers will be reported later this morning and I’ll have them for you in my rant tomorrow.

In other gold-related news yesterday, the usual NY gold commentator had this to say…”The ECB (European Central Bank) weekly statement of condition indicated that one captive CB (central bank) sold E1Mm of gold (0.05 tonnes). Last week the amount was 2.16 tonnes. Clearly the ECB group does not wish to seem involved in what is happening in gold.” (Of course it’s not the Europeans…it’s ‘2 or 3′ US bullion banks…and we know who they are! – Ed). In a noworldsystem.com story, the headline reads “Gold Runs Out in Germany”….”Risk-averse Germans are turning to gold in troubled times – but there’s none left. German gold dealers say demand has skyrocketed this past week to 10 times normal so no more orders can be taken for the foreseeable future.” And lastly, from gulfnews.com, the headline reads “Dubai runs out of gold on Diwali”…”A massive rush at jewellery shops has led to a shortage of gold at some outlets, prompting some shopkeepers to overcharge customers…Shopkeepers said the rush, a combined result of the Hindu festival and lower prices, has resulted in a shortage of gold bars.” Shortage??? The good folks in Dubai don’t know the meaning of the word. Look at what Tulving is paying for gold and silver right now. Click here and then scroll down. Oh yeah, I almost forgot…Dennis Gartman added another “unit” to his gold position yesterday.

In other news headlines…”US home prices plunge record 16.6% in August”…”The Conference Board Consumer Confidence Index Plummets to an All-Time Low”…from 61.4 in September to 38.0 in October. “Chicago Fed Midwest factory index falls to 5-year low”…”US public pension funds face big loses”…”Citigroup (C) Won’t Make It”…”GLG chief Emmanuel Roman warns thousand of hedge funds on brink of failure”…”Britain may need 0% interest rate to avoid a depression, leading economist warns”…”PM Putin suggest Russia, China ditch dollar in trade deals”. Yep…everything is fine.

Three stories again today. The first is a story from the British paper, the Financial Times. The article is about the financial goings-on in Russia…as it to, teeters at the brink. The headline reads “Onward to 1998: Russia” and the link is here.

The next story is from Germany…spiegel.de…and is entitled “JOUSTING EGOS: Germany and France Compete for Role of Financial Saviour”. The headline says it all, and the link is here.

The last story is one I referred to in a prior paragraph. It’s from The Telegraph in London and is entitled “GLG chief Emmanuel Roman warns thousands of hedge funds on brink of failure”…and the link is here.

A bear market rally is all we had yesterday. Will it last until election day? It matters not…just like it doesn’t matter who is the next president. And whatever interest rate cut we get today…that won’t matter either. As I said yesterday, nobody (including either one of them) can stop the great unwinding. Doug Casey is right…the “Greater Depression” is exactly what it’s going to be.

Source: And Then There’s This Wednesday, October 29, 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 

Although gold made a new intra-day high for this move, the price was capped the moment London closed. Only about $3 of gold’s excellent move on Friday was in New York trading. However, it’s nice to see a $900 handle on the gold price once again. Let’s see how long it lasts.

Silver appeared to show little enthusiasm, but it continued to work its way slowly higher from the moment that Globex trading began in the Far East on Friday morning. The three small rallies that occurred in New York trading were all sold down by some not-for-profit seller. According to Kitco, silver made an intra-day high of $17.08…but it got sold hard at the London close, and actually finished lower in price than when it opened on the Comex. The silver price really wanted to break out strongly, but someone (or more than one someone) was there to make sure that that didn’t happen. Can’t have silver strongly confirming the gold price break-out, now can we?

Open interest for Thursday was interesting. In gold, o.i. rose 4,412 contracts, so Thursday’s price run-up was not due to much short covering. It now appears that it was mostly new buyers. Were they the tech funds? Don’t know…but maybe…probably. The price action next week should tell us a lot, as we broke above the 20-day m.a. by a substantial $19 yesterday.

In silver, the o.i. increased a minuscule 8 contracts. Friday’s price close was less than a dime above its 20-day m.a. If the tech funds were responsible for the 3 short rallies in silver on Friday, they got stuffed right away. Heaven only knows how high the silver price would have gone if those previously mentioned non-for-profit sellers hadn’t been lurking about.

The Commitment of Traders report for positions held as of 13 May 2008, didn’t show much of anything in silver. The ‘technically inclined’ in the Non-Commercial category went net short another 1,100 contracts or so…and the Commercials added 191 long positions and covered 688 short positions. Almost a big zero all around. In gold, there was a little more action. The players in the Non-Commercial category added 5,090 contracts to their long position and went short a further 8,119 contracts. The bullion banks (Commercials) added 7,051 longs and 1,920 shorts during this reporting period. It will, of course, be of great interest to see who went long (and short!) in the $35 price increase we’ve had in the last two trading days of this week. Concentrations? Currently, the bullion banks (’8 or less’ traders in the Commercial category) are short 78% (silver) and 76.5% (gold) respectively, of the entire Comex silver and gold short position. The CFTC sees nothing wrong with this at all.

One thing of note in the gold world yesterday…Dennis Gartman has gone long gold once again. He hasn’t always been right about picking tops, but he’s had an uncanny knack for picking bottoms. It will be interesting to see how this turns out. Needless to say, we will all be delighted if he’s right…yours truly, included!

Since today is Friday…as I write this…I’m cleaning out my in-box, and couldn’t resist passing along the following set of pictures. I remember the eruption of Mount St. Helens back in 1980 very well. We even got a little ash as far north as Edmonton, where I live. Another volcano, this one in the Andes Mountains in Chile, decided to erupt two weeks ago…and a dozen excellent photographs are linked here.

As usual, I’ve got two stories today. The first one is from mineweb.net and is a report on first quarter de-hedging by the gold miners. It’s entitled “Global gold hedging declines by 4.8 Moz in Q1/08 to 22.0 Moz”. The link is here.

The second story is somewhat off the beaten track. Actually I was surprised that an article like this would show up at all…especially on Bloomberg. It’s an exposé on Jacob Zuma, who is poised to become South Africa’s next president. Having been in Africa and seen some of the tribal politics of that continent first hand, you’ll excuse me if I have some deep reservations about how his tenure may unfold…think Robert Mugabe in Rhodesia…now Zimbabwe. I have no investments in South Africa…and don’t plan on any…ever. The link is here.

Political language is designed to make lies sound truthful and murder respectable…and to give the appearance of solidity to pure wind. – George Orwell

Today’s fun youtube.com video idea came from another reader of my daily rant. But I found a version that I liked a little better…and that’s the one that’s posted here…but a big thank you to Karen for coming up with the piece in the first place. The link is here. Enjoy!

With consumer confidence reported to be at a 28-year low, the Dow only managed to lose six whole points. If it had been a 35-year low…or greater…without a doubt, the Dow would have been up triple digits. Maybe something like that will happen next week.

Enjoy what’s left of your weekend, and all of us at CDR+ will see you here 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, May 17th, 2008

However, oil was up $3.80 a barrel, and one would figure that gold and silver should have done better…but they didn’t.

Well, the open interest numbers for Thursday finally make some sense in gold for a change. Gold o.i. was down 4,079 contracts…and silver fell another 1,063. These numbers are very believable.

But now for the Commitment of Traders. Ted Butler and I had a chat about these long anticipated numbers, and here are the highlights…such as they are. In silver, the tech funds added a tad over 1,200 contracts to their net long positions. One would have expected that number to have dropped…not gone up…because the silver price has been dropping. The tech funds in the Non-Commercial category are supposed to be pitching their longs and the Commercial traders are supposed to be covering their shorts. That obviously didn’t happen.

To add to the mystery, the traders in the Commercial category added about 800 longs. This is perfectly legal, as they can go long instead of covering shorts…if that’s what they wish to do. The big changes were in the spreads.

In the Non-Commercial/tech fund category, 14,208 spread trades disappeared, and in the Commercial category another 12,000 were also removed. Total o.i in silver dropped 26,730 contracts for the week…virtually all of it spread related. But the ‘8 or less’ traders are now short 83% of the total silver market…up 1% from the COT the previous Friday. Other than the spreads, the COT in silver was almost a non-event. By the way, the silver ETF…SLV…added another 3.5 million ounces on Thursday despite the massacre.

In gold, the Non-Commercial/tech funds decreased their longs by about 5,400 contracts. The Commercials (including the ‘8 or less traders’) improved their position by roughly 14,000 contracts. They did this by adding 5,800 contracts to their long position and covering 8,200 shorts. The other big area of activity was the Nonreportable category where the thousands of small traders do business. Here they added 5,570 contracts to their long positions and a whopping 12,712 contracts to their respective short positions.

I must admit that I’m somewhat (more than somewhat, actually) suspicious of this. Here’s the reason. The Non-Commercials and Commercials are required to report their trading positions to the CFTC by the end of trading on Tuesday. The CFTC takes these numbers and plugs them into the spread sheet that produces the COT report. If it doesn’t balance (which it never does), they arbitrarily assign long and short positions in the Nonreportable category so that it does balance…because the number of shorts and longs must be the same.

This category is a balancing mechanism for the other two categories. It’s my opinion that if everything that should have been reported by Tuesday’s cut-off was actually in there, those positions in the Nonreportable would be entirely different…as would the rest of the report. The long form of Friday’s COT is linked here.

I spend a lot of time (as does Ted Butler) talking about the ‘4 or less’ or ‘8 or less’ traders. Who are they? Here’s the members list of the LBMA. There are eleven members in the category of Market Maker. They are the first eleven names on the list. It’s pretty safe to say that most, if not all, of these traders are there. The list is linked here.

Today’s story has to do with another infusion of cash into the banking system by the Fed…and the ECB. I see that the Fed has increased its term auction facility to $150 billion/month. In December it was $40 billion/month. The problem is still that banks don’t want to lend to each other. The story is from Bloomberg and is entitled “Fed Revs Up Emergency Lending in Latest Jolt to Credit Market”. The link is here.

Today’s fun video is a bit of a change from the normal music video. It’s a video about a pool shark. I’ve always considered excellence with the billiard cue to be the signs of a misspent youth…and that would be from personal experience. That’s not quite the case with this one. Click here.

Another winning day on the Dow. It was heading for negative territory, and below 13,000…but that never happened. I also note that the jobs report showed a loss of only 20,000. But that number included 267,000 fictitious ‘birth/death model’ jobs which the BLS made up out of thin air. All in a day’s work for the US government.

Silver is known as gold’s little sister. She’s worse than that. She’s errant, irascible, moody and unpredictable.

But you can’t help loving her…

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Silver is frustrating – but it’s still a great investment

If gold bugs are cranky and eccentric, silver bugs, of which I am one, are, well, positively loopy.

I am hugely bullish on the metal in the long-term.

People are finding more and more uses for silver. It’s highly conductive, which means it is being used more and more in electronics and computing. Its reflectivity sees it used in mirrors, optics and, though less so now, in photography.

It has germicidal and antibacterial qualities too, which see it used in medication, indeed throughout the medical industry and beyond – now in clothes, washing machines and fridges. There is even a new line of lavatory seat that has silver ions embedded to kill germs. There is talk of silver replacing platinum and palladium in catalytic converters. And, of course, its preciousness in these inflationary times mean it’s used as a store of wealth. (The French word ‘argent’ means both silver and money, ditto the Spanish ‘plata’).

With gold, platinum, copper, zinc, nickel, lead and you-name-it all having hit record highs in this bull market, silver is the only metal that hasn’t. It would have to triple from here to reach its 1980 high of $50. If you adjust that high for inflation, you have a target of $250. With silver currently at around $17, you’re looking a potential fifteen-bagger. David Bensimon, who uses complex mathematical formulae to develop price targets, is more bullish on silver than any commodity or index. He sees silver going somewhere between the sky and the moon. Look at this chart of silver adjusted for inflation and you see what’s possible. The problem is negotiating what goes on in between.

(If you cannot see this graph, click here: http://www.moneyweek.com/uploaded/images/MM30April.gif)

Of course, just because it went there before doesn’t mean it will again. And that 1980 high is a slightly illusory figure. There was a sudden, but massive supply squeeze as the Hunt brothers attempted to corner the market.

Why silver is widely shorted

Nevertheless, you see the potential – and many commentators believe the same supply squeeze could happen again. Rumours abound of manipulation in the silver futures exchanges and, on a proportional basis, more traders are reputedly short silver than any other commodity. It’s been noted that the short position sometimes amounts to more than above-ground supply.

But silver is a tiny market. When you get a sudden surge in demand, perhaps if silver hits the mainstream news as it does every so often, retail investors pile in, there is a temporary lack of physical supply, rumours abound of physical shortage, the shorts run and cover, and the price suddenly and dramatically spikes.

One reason, by the way, that silver is so shorted on the exchanges is that many mining companies produce silver as a bi-product of mining for other metals, particularly zinc and gold. Not being primary silver producers, companies tend to ‘lock’ in prices, which translates into a short by a futures trader.

Silver’s movements tend to occur later in gold’s run – and often signal that the end of the run is at hand. We saw dramatic underperformance by silver of gold from August to December. Then, in less than three months, silver went from about $13.70 to over $21 – a 55% move. Two weeks later and it had given over half that move back.

How far could silver fall?

So if you’re going to trade this metal, you need to be nimble, patient, thick-skinned and have nerves of, well, silver-plated steel. If you’re doing it via a spreadbet or a CFD, good luck to you. Alternatively, you could just buy a load of physical and leave sell orders in way above the market and let the price come to you, as it will one day.

For what it’s worth, I see strong support at $15 (and for gold at $850). I would be surprised to see silver go below $15, unless we get another one of those awful days when three banks implode and the world panics. But I would expect to see the $15 mark tested within the not too distant future. If it gets there, back up the truck. On the upside, there is now resistance at $21, but I have $25, $50 and even $100 as targets over the next few years.

If you think owning silver is frustrating, you should try owning silver stocks. Nevertheless there are some great silver juniors out there. First Majestic (CA:FR), a proper mining company – and not really a junior any more – is one of my favourites. It’s a buy down here below $4. If silver re-tests $15 over the next week or four, you should be able to pick it up even cheaper. Also look at Great Panther (CA:GPR), Excellon (CA:EXN), and Hochschild (LSE:HOC). They’re all looking cheap. Though that’s not to say they won’t get cheaper…

Editors Note: What Next for the Silver Price? by Dominic Frisby was originally published in Money Week April 30, 2008