However, if one looks at the silver chart, it looks like someone found a cliff to shove the price off of shortly before 4:00 p.m. during Hong Kong trading. The silver price dropped about two percent in half an hour or so…as some not-for-profit seller was about. That turned out to be the low of the day…despite the usual shenanigans at the Comex open. The 3-day silver graph doesn’t look like normal supply and demand buying or selling to me.

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Yesterday’s roller coaster ride in gold produced an increase in open interest of 1,901 contracts to 359,517 on big volume…151,219 contracts…including switches. It should be no surprise that silver o.i. fell…1,107 contracts to 95,439 contracts. Volume was average…18,562 contracts, including switches.

Very little to report in “other” gold news. Nothing from the U.S. Mint. There were no changes in either the GLD or SLV. The Comex Delivery Report showed only seven gold contracts were delivered…and 94 in silver. There are still about 1,050 silver contracts yet to be delivered for May. Silver stocks at the Comex-approved warehouses rose another 624,219 ounces…that’s about one 18-wheeler full of silver. I see that the strike at Peñoles precious metals refinery in Mexico was over on April 25th…and they’re now accepting precious metals concentrate again. I wonder if they’ve lifted their force majeure that they declared back then, as I haven’t seen anything written about this news item anywhere else. It’s my bet that it will take them at least a year to get their lost business back…if then.

I’m still trying to catch up the raft of excellent stories that I received while I was on vacation. The first story is from Oklahoma, of all places. It appears that a serious attempt is being made by the state legislature to restore Oklahoma’s sovereignty. A resolution to reclaim Oklahoma’s sovereignty has already passed the House and is now in front of the Senate. It seems that many federal laws violate the 10th Amendment, which says powers not delegated to the U.S. government “are reserved to the states respectively, or to the people.” I thank P.S. for the story entitled “House bypasses governor’s veto to claim Oklahoma’s sovereignty” and the link is here.

The next story is from the Financial Times in London. Someone has taken notice of just how much money that European central banks have lost by selling off chunks of their gold reserves over the last ten years. It adds up to around US$40 billion. The link is here.

Here’s a story from the Germany that’s posted at spiegel.de. It shows the physical manifestation of the effects of the breakdown of the Baltic Dry Index…both in words and pictures. Business is booming in the ship scrapping business in both Bangladesh and Pakistan. The photo gallery is great…and the article is first rate as well. The story is entitled “Shipbreaking Boom: The Freighter Graveyards of South Asia”. I thank Craig McCarty for sending it along…and the link is here.

It’s hard to write my daily rant without a piece by Ambrose Evans-Pritchard showing up in it at least a couple of times a week. Here’s commentary that he had this past weekend. This story was something he posted on Sunday…but which is still very much worth taking note of today. The title says it all…”Enjoy the rally while it lasts – but expect to take a sucker punch”. I couldn’t agree more…and the link is here.

Here’s a piece from the Asia Times. It was written by John Browne of Euro Pacific Capital. I’m not as enraptured as he is with all this improved Chinese manufacturing activity, but the rest of his commentary about China and gold is worth your while. The article is entitled “China stirs a pot of gold”…and once again I thank Craig McCarty for sending it along. The link is here.

As we all know, one of the next shoes to drop is the commercial real estate market in the United States. Much has already been written about that, but here’s a Bloomberg piece [courtesy of Craig McCarty once again] that shows what’s happening over in London’s business district. It’s a bit of a read, but definitely worth it. The article is headlined “Rents Crashing in London to 1991 Prices: Le Garoche Shows Gone” and the link is here.

And lastly is this illustration posted over at zerohedge.blogspot.com [with thanks again to Craig McCarty]. The map below demonstrates the massive impact that just the initial round of Chrysler dealer shutdowns will have on the US economy. As is evident, the pain will be focused east of the Rockies, although major West Coast cities will not be spared either. Every dot represents an automotive dealer that Chrysler will make redundant.

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As far as the Fed and the Treasury are concerned, this is an all-out WAR. They’ve put the viability of the United States at risk through creating trillions of dollars of debt. I believe this government will stop at nothing in their furious battle against the bear market and deflation. And if manipulation helps, they’ll do it.

For decades I’ve heard stories and rumors about manipulation. I’ve always brushed those rumors aside. But this is a different world, and the nation is literally fighting for its life. People ask me, “Do you really believe the government would manipulate the markets?” My answer, “You bet I do, they’re willing to do absolutely anything in their struggle to get the US economy back to ‘normal’ again. – Richard Russell, 14 May 2009

I note in a Reuters story that Standard & Poor’s said that “the nation’s banking crisis has ‘merely entered a new phase’ and might not end before 2013.” We’ll all be lucky if that’s the case. I’ve commented before that we won’t see a bottom in the U.S. real estate market until 2013…and that I’d be a very old man before this “greater depression” has breathed its last. I still stand by that statement.

See you on Saturday.

Source: And Then There’s This…Friday, May 15th, 2009

This from Ted at Investor’s Daily Edge:

The stock market is still in panic mode; investors have lost too much and are dumping their stocks in an attempt to salvage what little money they have left.

The more they sell, the worse the market gets. The worse the market gets the more they sell. It’s like a nightmarish game of dominoes.

Granted the new giant stimulus package, a bigger round of rescues, and the largest deficit financing of all time are going to have an effect on this economic crisis. Some of these policies will help, but they may also backfire and aggravate the crisis. Just don’t count on the government to bail you out.

Unfortunately, it looks like the stock market will actually get worse before it gets better. Please don’t try to pick a bottom, bottom picking in this bear market is extremely risky so be careful. Wait to see a sustained recovery before stepping back into stocks.

Here are a few reasons to be bearish:

• GDP declined 6.2% in the fourth quarter and GDP will probably have a similar decline in the first quarter of this year. This is a much bigger drop than most experts were forecasting. And there is evidence that the decline is accelerating.
• U.S. consumer spending is dropping like a rock and this is killing the economy. Consumer spending accounts for about 70% of total economic activity in America.
• The media is extremely negative. Every time you turn the nightly news on, you see financial disaster everywhere. The news loves to report that more people are being laid off, more businesses are going bankrupt, real estate is going lower, etc. All this negativity scares people into selling their stocks and spending less.
• Government borrowing is exploding and this will have dire consequences including higher inflation.
• We are witnessing the collapse of a mountain of debt in the private sector and the public sector may be next. Many governments around the world could end up defaulting on their debt, which would have severe economic repercussions.
• The number of troubled banks is increasing and the amount of toxic assets on their books is continuing to expand rapidly.

The bad news is there is no growth engine, at the present time, to pull us out of this economic slump.

So what are we supposed to do now?

You need to protect your nest egg and protect yourself against further losses. Get your money growing again and protect your capital by cutting your losses. Lower your exposure to the stock market by selling off the poor performers and diversifying into contrarian investments like natural resources including gold and silver. Just use common sense and stay flexible with a well-balanced portfolio.

You should have at least 10% of your assets in gold and silver as an insurance policy. All of my indicators suggest these hard assets will soon move to new record highs. In fact, I think gold and silver are in for an extended bull market even as most stocks face an extended bear market.

You should also think about doing put options or shorts on weak companies. You can make a tremendous amount of money as a company’s stock declines. A good service to look at is Andrew Gordon’s Red Flag Insider. His service has performed extremely well in this bear market.

This economic crisis may not be over for years, but after the selling wave in stocks is over — I expect to see a major rally take place, with the Dow gaining back 50% or more of its losses in just months. So be prepared and I will keep you posted on how to play it.

Source:  Is Dow 5,000 a Possibility?