However you will carefully note that although the dollar did a round trip in value between early Monday morning and Tuesday afternoon…neither gold nor silver were allowed to get a sniff of their Monday highs that occurred in early Far East trading. On Monday, both gold and silver got lots of down-side help during Comex hours as the dollar rose…but all there was on Tuesday was more down-side help during Comex hours as the US$ fell back to where it was on Monday. Funny how that works…isn’t it?

The silver chart shows that phenomenon better than the gold chart, and it’s shown below.

Open interest changes for Monday’s big down day were more in line with my expectations. Gold open interest fell a chunky 9,018 contracts…cutting total o.i. to 387,585 contracts. As reported yesterday, volume wasn’t large…only 98,398 contracts. Silver o.i. had a great fall as well…down 2,881 contracts to a total o.i. of 106,351 contracts. Volume was largish once again…37,842 contracts. These numbers look right, and I’m happy they were big numbers too. Because of the trading range yesterday, I don’t have a feel for Tuesday’s open interest numbers…but we’ll find out in a few hours.

The Comex delivery report showed only 14 gold contracts delivered. The report also showed that as of yesterday, there were still 1,140 gold contracts left to be delivered in June. But the big surprise was in silver. For the second time this month…and totally out of the blue…200 contracts of silver were delivered again. So far this month 785 silver contracts have been delivered. That’s a tad over 3.9 million ounces. Not too shabby for a non-delivery month. There were no changes in GLD yesterday…but finally there was some activity in SLV…with the inventory rising by 3.85 million ounces. No changes either at the U.S. Mint…and Comex-approved warehouse silver stocks rose 602,093 ounces.

In other gold news, I saw a story posted at Kitco from foxreno.com. The headline read “Nevada Gold Production Down in 2008″…”A fact sheet from the Nevada Division of Minerals says Nevada gold mines produced fewer ounces of gold in 2008, 5.7 million ounces compared with 6 million ounces in 2007.” And in another story of note…coin market watcher Michael Zielinski, proprietor of the Mint News Blog, reported that the U.S. Mint has ended its rationing of gold and silver coin sales, an indication that supply and demand are moving toward some balance. The story…entitled “Gold and Silver Eagle Bullion Allocation Programs End”…is well worth the read, and the link is here.

The usual N.Y. commentator had the following yesterday…”The European Central Bank’s weekly statement of condition indicates a fall in ‘gold and gold receivables’ of €21 million [0.945 tonnes], attributed to a gold sale by one captive central bank. Last week, sales by two central banks totaled 0.81 tonnes. Obviously far behind schedule if the Second Washington Agreement on Gold quota is to be met. The Gartman Letter went long one ‘unit’ of gold this morning, citing technical factors. As noted, TGL’s buy record on pullbacks is quite reasonable….Maybe the storm has passed.” [We'll see. - Ed]

Today’s first new item is from Yekaterinburg, Russia. It’s a Reuters story bearing the headline “BRIC demands more clout, steer clear of dollar talk”. And surprise, surprise…the word gold showed up! “Medvedev’s chief economic aide, Arkady Dvorkovich, called on the IMF to expand the basket of SDRs to include the Chinese yuan, commodity currencies such as the Russian rouble, Australian and Canadian dollars as well as gold.” The link is here.

Today’s next story is from Ambrose Evans-Pritchard from The Telegraph in London. It’s three days old, but still very much worth reading. The headline says “German credit crunch deepens”….”Germany’s top industrial group has warned that credit conditions are going from bad to worse across much of the country’s manufacturing base, dashing hopes for a swift recovery.” The link is here.

To add to the world’s litany of woes, comes this story from the Chicago Tribune. I thought that any of you that eat bread at least once a day, might be interested. Any wheat farmer can tell you what rust is…and being a farm boy from Manitoba in the 1950s and 60s…I’ve seen it [and its results] first hand. Apparently there’s a new strain out known as Ug99. I know it sounds like it belongs in a version of the X-Files…but it could become a reality in all our lives some day…and it’s worth spending the one minute it will take to digest this story. The headline reads “Fungus called ‘time bomb’ for world wide wheat crop” and the link is here.

And lastly is silver analyst Ted Butler’s latest commentary. For all of you who can’t [or won't] acknowledge the dominating presence of ‘3 or less’ U.S. bullion banks that control silver and gold prices, the two graphs contained in this commentary just might change your mind. I urge all of you to print off a full-colour copy of each, and pin them up where you can see them every day. Staring you in the face is 100% of the reason why there’s been a lid on the price of gold and silver…the concentrated short position of these ‘3 or less’ U.S. bullion banks. Ted’s commentary is entitled “Making the Case”…and that it does. The link is here.

There ain’t no rules around here! We’re trying to accomplish something. – Thomas Edison

The following was posted over at lemetropolecafe.com yesterday. It’s an interesting post card mailed back in June of 1929. This is a postcard with the stamp already printed on it. The parts and labour list on the back shows what currency debasement has done in eighty years. True, parts are more complicated today, but that’s not the point. If the parts and labour list don’t do a thing for you, just find out what it costs to mail a postcard in 2009 [not including the card]…and then compare it to the price on this one. You’ll be shocked.

As you can tell, some pundits are hoping that we’ve seen the bottom for gold at the moment. The N.Y. commentator for one…and Dennis Gartman with his long ‘unit’ of gold he placed yesterday…for another. Have we? Don’t know…but we’re not below the important 50-day moving average in either gold or silver yet. Could gold [and silver] rise from here? Absolutely…provided that the ‘3 or less’ U.S. bullion banks refrain from going short against any new longs that are placed. If you grasp the meaning of Ted Butler’s graphs…you’ll understand why I personally feel that the jury is still out.

Let’s see what today brings…and I’ll see you here bright and early on Thursday.

Source: And Then There’s This…Wednesday, June 17th, 2009

The usual New York commentator had the following regarding yesterday’s trading…”Obviously the $960 level is being aggressively defended. Unfortunately for the defense, the problems in the bond market make the defense look forlorn…even desperate. N.Y. gold Bulls, exposed as many are in the highly leveraged futures market, are always susceptible to rout. This particular group, however, are impressive.”

Tuesday’s big down…and then up…day, resulted in an increase in gold open interest of only 202 contracts to a total o.i. of 396,965. This is a very tiny change considering Tuesday’s total volume of a stunning 265,250 contracts. Most of this was spreads and switches associated with options expiry. In silver, open interest increased a largish 1,351 contracts…bringing total open interest to 98,120 contracts. Volume was a 22,080 contracts…once again options expiry related.

Of course none of Wednesday’s action will be in the COT tomorrow, as the cut-off was Tuesday at the close of trading. I’m just hoping that all the activity I mentioned in the previous paragraph is in the COT like it should be.

There wasn’t much in the way of other precious metals news yesterday. The U.S. Mint did update their website for gold and silver eagle mintings. In gold they only made another 2,000 compared to the prior week…which is nothing at all. In silver, 301,500 silver eagles were minted…which is about half of what they normally produce in a week. Is the market saturated? I mentioned here about ten days ago that there was lots of silver around and that premiums were falling rapidly. That’s still the case today…at least that’s what my coin guy is telling me. The Comex delivery report showed that 13 gold and 11 silver contracts delivered yesterday. And I also note that Comex-approved warehouse stocks were down 450,766 ounces. There were no changes in either GLD or SLV yesterday either. Today is last day for delivery into the May contract…and tomorrow is first day notice into the June contract. It will be interesting to see how many stand for delivery. Tomorrow is also the day for the latest COT…which both Ted Butler and myself await with great anticipation. We already know that the data won’t be good news.

As a matter of interest, and before I get into my stories for today, I received this extremely interesting monthly chart of the US dollar. It’s a ‘big picture’ graph in every respect, as it spans a 13-year time frame. Superimposed over it, is a trace called an SAR pattern…short for Stop and Reverse. The chart speaks volumes…and you can find out more about SAR Reversals in this pdf file by clicking here. I thank the “Charleston Voice” for sending it to me. He included the following commentary, which I am reproducing here…”In this monthly chart you can see the new dot that now appears ‘north’ of the price bars signifying a definitive reversal in the dollar’s direction…DOWN. None of these SAR reversals are fleeting…and can run for a very long time, albeit perhaps in a jerky fashion.” The graph is certainly worth spending some time on.

The first story today is from The Telegraph in London…and no, it’s not Ambrose Evans-Pritchard…it’s Louise Armistead. The headline reads “British banks revolt against Obama tax plan”…”British banks and stockbrokers may refuse to take on American clients if new international tax proposals outlined by President Obama are passed.” It appears that the Americans want the British to become tax collectors for Uncle Sam. I thank P.S. for sending me the story. The link is here.

The next story is from barrons.com. It’s a very timely real estate story about the upcoming second leg down in the residential real estate market. I’ve talked about this since early 2007…and now it’s here. The problem this time is called an ‘option ARM’. This new raft of foreclosures will take the next three years to complete. Then…and only then…will there be any clue that we’re near the bottom of the real estate cycle. The headline reads “The Housing Hurricane Will Howl Again”. I thank Craig McCarty for sending it along, and the link is here.

In another U.S. dollar-related story, GATA consultant James Turk, founder of goldmoney.com, writes that Treasury note yields have made “a huge round trip” and now are rising as the U.S. government devalues the dollar by turning debt into currency. “The more Treasury paper the Fed buys, the lower the dollar will fall in the foreign exchange markets and, more to the point, the higher gold will rise.” Turk’s new commentary is headlined “Updating the Charts” and the link is here.

Two more stories courtesy of Craig McCarty. The first is from Bloomberg and bears the unhappy title of “Mafia Cash Increases Grip on Sinking Italy Defying Berlusconi”…”Unlike overleveraged companies burned in the credit crisis, the Mafia and its cash-based, debt-free business model are breezing through economic hard times. With young, savvy leaders at the helm, organized crime is poised to expand as legitimate companies founder.” Not even their billionaire Prime Minister has been able to control the mob and its riches. The link is here.

And lastly is this piece from The Independent in the U.K. The problems described in this story are certain to become more widespread…and not just confined to Russia. It appears that “Impoverished workers resort to eating salads of weeds and nettle soup…as the Kremlin’s worst fears are being played out.” The headline reads “Cold, hunger and job losses ignite dissent in Russian town”. The story is a must read…and the link is here.

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. – Ernest Hemmingway…Notes on the Next War: A Serious Topical Letter…1935

In the King Report last night, Bill King was incensed about the fact that the S&P 500 Future Contract was saved three times [at the 875 level] in the last four trading sessions. “This strongly suggests something other than real or organic buyers were at work.” [Note to Bill: You would be right about that...as there are no markets any more, only interventions. - Ed]. And not only did the Dow fall out of bed late yesterday, but the 10-year Treasury Note yield blew out big time. The Treasury has boatloads of paper it has to sell, and although the 5-year went reasonably well, it’s obvious that behind the scenes, there’s big big trouble in River City. But [surprise, surprise!] through all that, the US$ somehow was manouvered higher.

I note, as I hit the send button, that gold and silver are showing signs of life in early London trading. It could be a wild day in the Comex gold and silver pits in New York this morning…so hold onto your hats.

See you on Friday.

Source: And Then There’s This…Thursday, May 28th, 2009

However, the HUI and XAU were on a tear yesterday…with the HUI up a wondrous 5.18%. Most of that gain occurred in the first hour of trading…with the absolute top coming less than half an hour after the London p.m. fix. We’ll take it!

Tuesday’s rather smallish gains in gold resulted in an increase in open interest of 2,300 contracts to 367,931, on real decent volume of 123,605 contracts…including switches. Silver had a much more substantial increase in price on Tuesday, but resulted in an increase in o.i. of only 1,406 contracts to 96,079, on a smallish volume of 16,030 contracts.

In other precious metals news yesterday, I note that the Central Bank of Russia has finally updated their website with the April numbers…and I see that they have, once again, increased their gold reserves by another 200,000 ounces for the second month in a row. Their current reserves are 17.1 million “fine troy ounces”…which is a hair under 532 tonnes. And the U.S. Mint has updated their gold eagle production for the third time in less than a week…which is very strange. This time they’ve added 9,500 to this month’s total, which now sits at 63,000. There were no reported changes in silver eagle production. Wednesday’s Comex deliveries in both gold and silver are not worth mentioning…and another 281,096 ounces of silver was added to the Comex-approved warehouses. GLD and SLV remain unchanged…although one would think with the activity of the last few days, that both ETFs would be owed something by now.

All eyes seem to be focused on what’s happening with the U.S. dollar. There’s no question that the 3-year chart posted below is an ugly one. The greenback is now well below its 200-day moving average. The next line in the sand looks to be slightly under 78 cents…which isn’t too far off…considering the way it’s been falling. The question is…will it stop there?

click to enlarge

While I’m on the subject of the almighty U.S. dollar, I’d like to point out that the dollar could do absolutely nothing…and the price of gold or silver could still explode to the upside…or crash and burn. Please don’t ever forget that two or three U.S. bullion banks are still in total control of these two markets. Their decision to go short [or not go short] is entirely what’s driving the price pattern…either up or down. This rally we are now in, is the same as every other rally that we have ever had…and will end the same way…unless these American bullion banks change their modus operandi. It’s as simple as that. So, let’s enjoy the ride…but always be on the lookout for “in your ear.” The HUI is up more than 100% from its October lows…but still looks like it has room to run…JPMorgan (NYSE:JPM) et al…willing.

Today’s first story is from CNBC if you can believe it. As you know, I’m not a big fan of theirs, but they have this wonderful [and short] print version of what was obviously a TV interview with Jim Rogers that was done over in Asia. Mr. Rogers says all the right things that make my heart go pitter-patter…and I know it will for you too. I thank P.S. for sending it to me…and the link is here.

Here’s a story that seems to be another brick in the wall for the U.S. dollar. It appears that “Brazil and China will work toward using their own currencies in trade transactions rather than the U.S. dollar…” The story is from the Financial Times in London and is headlined “Brazil and China eye plan to axe dollar”…and the link is here.

Today’s last offering is a Bloomberg story filed from Dubai. The six nations of the Gulf Cooperation Council have been trying to create a monetary union of some sort for quite a while now. The bickering has been going on for years. Yesterday, the United Arab Emirates withdrew from negotiations. The story is worth your time. It’s entitled “Saudi Arabia’s Dominance in Gulf Challenged as U.A.E. Rebels”…and the link is here.

The dollar does look vulnerable…Pushing government steadily leftward, the Obama Administration has set up the possibility of a US dollar rout. This is especially so, noting that the US$ Index has now closed below its 200-day moving average for the first time in months. If this persists, commodity prices generally shall rise…and rise materially, and gold shall too. – The Gartman Letter, 20 May 2009

With the gold price now on the right side of $930, it will be interesting to see if the price will be allowed to add to its gains. All the conditions are in place for that to happen…it just remains to be seen if it will. Right now, gold is up $4.30 and silver is up 6 cents in early London trading, but the bullion banks on the Comex will decide gold’s fate again today…and that will have happened long before I roll out of bed this morning.

All of us at Casey’s Daily Resource Plus hope that your Thursday goes well, and we look forward to seeing you here early on Friday morning.

Source: And Then There’s This…Thursday, May 21st, 2009

Although trading appeared quiet, the usual N.Y. commentator said otherwise…”Today’s up $5 June gold Comex close [at $926.70] was quietly dramatic. A rally effort on the Comex open was contained under $3 on very heavy volume [41,523 lots estimated by 9 a.m.]. Very powerful attempts to move gold up after 12 noon were also blocked. Estimated volume jumped 25.6% in the 12 noon/1 p.m. space for a totally reversed gain of $2. An astonishing 36.4% [20,000 contracts] leap in estimated volume between 1 p.m. and the close [less than a tenth of the trading day] established a gain of less than $1. Final estimated volume was 120,029 lots. After the floor [Comex] close, gold was run up almost $2 and then was sold aggressively into the stock market close, losing almost $5. The gold shares did not like this and gave ground; however the HUI still closed up 2.76% on the day.

“The c. $930 level is being more violently defended than casual observers realize: it will be remembered there was a seller on the London a.m. fix today as well. But with India in buying mode, there can be only one result – unless the Reserve Bank can be induced to weaken the rupee.” [Which is exactly what they did in early morning trading in the Far East today...and I'll let you know tomorrow if it made a difference in Indian imports today. - Ed]

Silver didn’t do much until around 11:00 a.m. in London yesterday morning. From there, it ran up 50 cents…before, it too, got sold off exactly as gold did. The silver shares did really well yesterday.

Yesterday’s brutal sell-off in both gold and silver produced the following changes in open interest. In gold, o.i. fell 1,601 contracts to 365,631 contracts on a volume of 122,086, including switches. In silver, o.i. rose a smallish 177 contracts to 94,673 contracts on light volume of 16,891…including switches.

In other gold news…and in further remarks from the usual N.Y. commentator…”there was a Reuters story yesterday that confirmed the revival of Indian gold demand…’Demand has increased many fold compared to last week as prices have fallen,’ said a dealer with a state-run bank in Mumbai. And further…’Indian jewellers chased gold bars as a firm rupee sparked buying… India is active. There’s been good physical demand. The rupee could be a reason, but they haven’t imported much gold for quite a while. It’s time for them to replenish stocks,’ said a dealer in Singapore. The European Central Bank’s weekly statement of condition indicates that ‘gold and gold receivables’ fell €14 million last week which ‘reflected the sale of gold by one Eurosystem central bank.’ That is 0.63 tonnes: last week’s sales was 0.54 tonnes. At present, the ECB squadron appears unwilling to be seen in the gold market.”

There were no changes at GLD, SLV, or the U.S. Mint. At the Comex yesterday, there were 44 gold contracts delivered and 114 silver contracts as well. There’s not much left to deliver in the May silver contract unless some new orders demanding physical show up before the end of the month. Over at the Comex-approved warehouses, silver stock fell a smallish 158,162 ounces…bringing the total Comex silver inventory to 119,527,422 troy ounces.

I see in a Bloomberg story that U.S. housing starts plunged to a record low in April, despite a gain in starts in single-family home. In a banner on Bloomberg’s website, they were also bemoaning the fact that sales and prices were falling precipitously in the Hamptons, and the rich in California were defaulting on luxury homes just like the subprime victims. They also noted that Q1 home prices in southern California had fallen another 36% year/year. As I keep saying…call me in 2013 and we’ll talk about a bottom in the U.S. real estate market.

I have five stories again today…and they’re all worth your time…and I mean it. The first is a piece from Casey Research’s own Managing Editor, David Galland. It’s posted over at kitcocasey.com and bears the title “Tax Revenue Tanking”…”a disturbing trend on the other side of the equation is now emerging: how much [or rather, how little] the U.S. government is receiving in tax revenues.” The link is here.

The second story is from Bloomberg. The BIS has released its bi-annual derivatives report for the last half of 2008. “The amount of outstanding contracts linked to bonds, currencies, commodities, stocks and interest rates fell 13.4% to US$592 trillion…the first decline in 10 years of compiling the data.” Naturally, credit default swaps were right at the top of the heap. It appears that the entire derivatives market is in full-scale retreat at the moment. I guess it’s easy to figure out where all that TARP money has been spent. The article is entitled “Derivatives Market Declines for First Time on Record” and the link is here.

And in the “You can’t make this stuff up!” category is this Bloomberg story. In it, two economists are suggesting that a 6% rate of inflation for a couple of years “would make it easier for debt-strapped consumers and governments to meet their obligations. It might also help the economy by encouraging Americans to spend now, rather than later, when prices go up…if Americans were convinced of the Fed’s commitment [to higher inflation], they’d buy and borrow more now…”. [You can check out any time you want...but you can never leave. - Hotel California] The headline reads…”U.S. Needs More Inflation to Speed Recovery, Say Mankiw, Rogoff” and the link is here.

Bloomberg also provides the fourth story today. This one was tucked away in one of the darker recesses of their website…and it was only by pure luck that I stumbled upon it. It [like the rest of the stories posted today] is worth reading. The headline says “Gold Demand Rises 38% in First Quarter, World Gold Council Says”. The link is here.

And lastly is this piece by Rob Mackinaly of Financial Express in London. He reports that European gold ETFs are disputing each other’s costs and claims of safety. It’s turning into a pissing match extraordinaire, with Hugo Stalder, product manager at ZKB [Zürcher Kantonalbank] saying “If someone is looking for the best security, he looks at our ETF with a spread of 0.5 per cent and he may look at iShares where he’s not sure he has full coverage of gold.” Stalder said that this was not his view, but the view of some of ZKB’s clients. A spokesperson for iShares would not comment on the claim. [Not comment? Gee, I wonder why? - Ed] Mackinaly’s story is headlined “$4 Billion Swiss Gold ETF: Paranoia Premium or Plain Expensive?” and the link is here.

Regulation of derivatives transactions that are privately negotiated by professionals is unnecessary. – Alan Greenspan…July 30, 1998

In closing, here’s a Bloomberg story that just didn’t make the cut. That was the news that Japan’s GDP fell an annualized 15.2% in the first three months of 2009…as “exports collapsed and consumers and businesses slashed spending.” The story was filed from Tokyo this morning. Welcome to the “greater depression.” The only solutions left are “inflate…or die!” Inflation it will be…and lots of it.

See you on Thursday.

Source: And Then There’s This…Wednesday, May 20th, 2009

I find it highly suspicious that the Dow hit its high of the day and the US$ hit its low of the day at precisely the same moment that the vertical gold and silver price rallies were cut off at the knees around 10:30 New York time. You can read into that whatever you want.

click to enlarge

Open interest changes for Thursday’s trading are as follows. In gold, open interest rose 1,307 contracts to 361,418. Volume [including switches] was a respectable 100,278 contracts. Silver o.i. rose another 721 contracts to 95,439. Volume was on the lighter side…15,326 contracts.

Well, the contents of Friday’s Commitment of Traders report [for positions held at the end of trading on May 12th] was no surprise, as it confirmed the price action of the last week or so. As I mentioned yesterday…it’s the ’same old, same old’ routine. Neither Ted Butler nor myself were happy about the numbers. In silver it showed that the technical funds in the Non-Commerical category had increased their net long position by 3,696 contracts…and ditto for the small traders in the Nonreportable category [those traders holding less than 150 silver contracts], as they increased their net long position by 1,432 contracts. Going short against them, as usual, were the bullion banks in the Commercial category. They increased their net short position by the same amount…the total of these two numbers…which is 5,128 contracts. Don’t forget, there has to be a short for every long. The link to the full-colour graphics-intensive silver COT chart is here.

It was basically the same in gold. The technical funds in the Non-Commercial category increased their net long position by 8,886 contracts…while the small traders in the Nonreportable category increased their net long position by 1,849 contracts. The bullion banks in the Commercial category took the short side of all those trades to the tune of 10,735 contracts. The gold COT graph is linked here.

Even though the net short position in silver by the Cartel is deteriorating, it’s still pretty low when you look at past history. But what concerns me the most, as I’ve been harping on for the last couple of months, is the large [and growing] short position in gold by the same crooks. Right now in gold, the Gold Cartel is net short 17.1 million ounces in the Commercial category of the COT. During the last twelve months or so, the Gold Cartel’s net short position has varied between 6.9 million ounces when the gold price was at its lows late last year…and 25+ million ounces when the gold price was at its highs early in 2008. So there’s lots of room for the gold price to run to the upside…and even more room for silver. But will JPMorgan (NYSE:JPM) et al, allow it?

I see in a mineweb.com story that Anglogold Ashanti (NYSE:AU) cut their hedge book by another 154,000 ounces during the last quarter and pledges to cut another 150,000 ounces out of its hedge book in the current quarter. As of the end of March, the company had a hedge book of 5.84 million ounces. Between them and Barrick (NYSE:ABX), these two companies hold at least two thirds of world’s remaining forward sales. JPMorgan is the counterparty to a large portion of their respective hedge books. The entire story is linked here.

The Comex Delivery Report for Friday showed that 101 gold contracts were delivered. In silver a very large 782 contracts were delivered…finally! The big deliveries were by Goldman Sachs (NYSE:GS) [220 contracts] and JPMorgan [562 contracts]. The big stopper was Bank of Nova Scotia (NYSE:BNS) with 556 contracts accepted.

I also noted yesterday that the U.S. Mint updated their gold and silver eagles numbers. Friday is a strange day for them to do it. Anyway, the changes weren’t large. One ounce Gold eagle mintings rose a smallish 6,000…and silver eagles rose 55,000 to 1,089,500. My coin dealer [and the usual N.Y. gold commentator] both mentioned yesterday that lots of silver was available now and that premiums on just about everything were falling rapidly. There were no changes in either GLD or SLV yesterday…and Comex-approved silver warehouse stocks rose again…this time a smallish 265,915 ounces.

While the stock market is up sharply since early March, the economy as well as corporate earnings continue to suffer. Today’s chart helps provide some perspective as to the magnitude of the current economic decline. It illustrates that 12-month, as-reported S&P 500 earnings have declined over 90% over the past 20 months [with over 90% of S&P 500 companies having reported for Q1/09], making this by far the largest decline on record [the data goes back to 1936]. In fact, real earnings have dropped to a record low and if current estimates hold, Q3/09 will see the first 12-month period during which S&P 500 earnings are negative. I thank P.S. for sending this along. The graph below tells all…

click to enlarge

I only have three stories today. The first is a GATA dispatch from last weekend entitled “Is U.S. buying back gold pledged to IMF for $100 billion?” It’s a very interesting spin on the ongoing saga of IMF gold and who really physically owns it…or those who may have paper claims on it. The link is here.

The next item is from the Finance and Economics section of The Economist dated May 7, 2009. “But do not mistake the bottom for a vigorous rebound. Consumption may be growing again, but there is every chance it will remain depressed in coming years because of weak income growth, depleted wealth and tightened credit.” That’s the understatement of the year, in my opinion. I thank P.S. for sending the story along. It’s entitled “Off their trolleys” and the link is here.

Lastly is commentary from Eric Sprott over at Sprott Asset Managment in Toronto. He and David Franklin address the question of the derivatives market in an article entitled “The Elephant in the Room”. It’s definitely worth the read, and the link to the pdf file is here.

My momma always told me, the bucket brings up what’s in the well. – J.C. Watts

Today’s blast from the past needs no introduction whatsoever. It’s by the late, great Roy Orbison…and that should tell you all need to know. Turn up your speakers and then click here.

So what will happen to gold and silver next week? Beats me. However, the wonderful set-up that existed a couple of weeks ago in both metals has diminished somewhat…as it is obvious that the bullion banks are [again] going short against all longs in this rally. How long will this current rally last? Don’t know that either. But what I do know is that until the bullion banks stop doing what they’re doing, nothing will change…and they will remain firmly in control of the precious metals market…until they either give up, or are blown up.

Source: And Then There’s This…Monday, May 18th, 2009

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.

click to enlarge

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

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Silver was up a dime by 3 p.m. in Hong Kong in their afternoon yesterday…when it, too, began the long decline…with the bottom coming at 9:30 during Comex trading. The rally in silver ran into the same seller as gold…and at precisely the same time…and that was it for the day.

Initially, the precious metals shares held up well despite the onslaught…but the ‘big hammer’ that showed up at 11:30 a.m. in New York was a sign for some that maybe a short-term top had been reached, as the HUI promptly caved by four percent and never recovered. The usual New York commentator said this…”The gold shares, however, were panic-stricken, completely losing their (very modest) gains…and not recovering at all. The HUI closed down 3.97% and the XAU was down 2.86%. Behavior of this type usually means a very serious sell-off attempt in gold the next day.”

That last comment is certainly worth remembering, as one of the favourite tricks of the price managers is to hit gold and silver around 3:00 a.m. New York time on Wednesday morning…the day after the cut-off for Friday’s Commitment of Traders report. Then they can do as they wish with the price during the next eight business days…well away from prying eyes. We also have options expiry coming up for the June contract. That’s on May 26th. We’ll find out soon enough if there’s any truth to this scenario.

Tuesday’s nice rally in both gold and silver obviously increased the open interest. In gold, o.i. rose a largish 8,694 contracts to 350,823. In silver, o.i. also rose…this time by 1,006 contracts…bringing the o.i. up to 95,540 contracts. If the boyz report everything on time, these changes should be in tomorrow’s COT report.

In last Friday’s Commitment of Traders report…there certainly was deterioration…as both gold and silver have risen almost continuously since I went on vacation two weekends ago. What this means is that the tech funds in the Non-Commercial category and the small traders in the Nonreportable category are increasing their net long positions and the bullion banks in the Commercial category are taking the short side of all these trades. It’s the ’same old, same old’ pattern…at least for the moment. Both Ted Butler and I were hoping that JPMorgan (NYSE:JPM) et al wouldn’t show up to go short into this price rally…but they have. As of last Friday’s COT [for positions held as of the end of trading on May 5th] the big bullion banks were short 16.0 million ounces of gold…and this has certainly increased since then. Ditto for silver…where the deterioration has been even more pronounced. How bad it is will be known at 3:30 Eastern time on Friday when the new report comes out.

As far as Comex deliveries went yesterday, there were only 11 gold contracts delivered…along with 107 silver contracts. There are about 1,120 May silver contracts still to be delivered. That’s only 5.5 million ounces. One wonders what the issuers of these deliveries are waiting for.

In other gold and silver news, I see that the U.S. Mint has been busy while I was away. As of yesterday, there had been 44,500 gold eagles minted and 1,034,500 silver eagles stamped out. The year-to-date numbers are impressive. If you want to follow these U.S. Mint numbers yourself, the website for this info is linked here.

Over in Switzerland at the Zürcher Kantonalbank, the last two weeks of increases in their gold and silver ETFs amounted to the following…Gold up a smallish 29,984 ounces, and their silver ETF was up 796,655 ounces. I thank Carl Loeb for that info. There were no significant changes to either the SLV or GLD. I note that Comex silver stocks have risen a couple of million ounces since I was gone…with 590,540 ounces of that being deposited yesterday.

I also noted that Central Gold Trust (AMEX:GTU)…a Toronto-based fund that’s similar to Central Fund of Canada (AMEX:CEF)…completed an enormously successful offering that more than doubles the amount of gold under management…to 403,000 ounces. Their offering in January drew $38 million…this one was $201 million…a whopping increase! Somebody wants the real stuff.

And lastly, I see that the new Bank Participation Report [for May] was issued last Friday along with the latest COT. In silver, it showed that two U.S. banks were net short 26,201 Comex contracts. This represents 82.1% of the entire Commercial net short position on the Comex…while fifteen non-U.S. banks were net long 5,111 Comex silver contracts. In gold, three U.S. banks were net short 93,453 Comex contracts. This represents 58.2% of the entire Commercial net short position on the Comex…while twenty-three non-U.S. banks were net long 5,880 Comex contracts. These numbers [in both silver and gold] are an improvement in the U.S. banks’ short positions in both metals, compared to the April report. But these numbers also prove the obvious price management by these two or three U.S.-based banks. Here’s the page from the CFTC’s own report. You’ll have to scroll about two thirds of the way down the page to find silver and gold. The link is here.

There have been a lot of gold and silver stories pass under the bridge in the [almost] two weeks since I wrote my last rant. I’m presenting them all here today, because I know that more are probably going to be showing up in the next 24 hours.

The first is a lengthy, but vitally important read. For those of you who want a clear understanding of how the Gold Cartel operates…and why…nothing could be more enlightening than this piece by GATA consultant James Turk over at goldmoney.com. It’s entitled “A Short History of the Gold Cartel”. The link I’m using is from Kitco. Click here.

As you can tell from the last piece, GATA’s Bill Murphy and Chris Powell [along with Sprott Asset Management's John Embry] were in London last week taking our story to the London press. This GATA release is a story posted by Paul Mylchreest of Thunder Road News. His extensive bio is at the end of his commentary. The link is here.

In a similar vein is this story written over a month ago by John Embry of Sprott Asset Management in Toronto for the April edition of Investor’s Digest of Canada. It…along with the two stories before this…and the many to follow, falls into the ‘must read’ category. This one is entitled “Monetary measures imply big movement for gold” and the link to the pdf file is here.

The next story is so unbelieveable, that if it hadn’t appeared in print, I would have dismissed it as hearsay. But here it is. I’ve never been compared to an IRA [Irish Republican Army] terrorist before…but I guess there’s a first for everything…at least GFMS metals consultant Philip Klapwijk seems to think so. GATA’s secretary treasurer, Chris Powell, also moonlights as senior editor of one of Manchester, Connecticut’s leading newspapers…the Journal Enquirer. His commentary gives truth to the old phrase that one should “never get into a fight with someone who buys their ink by the barrel”. The commentary…and the story…is linked here.

The next story is by Murray Pollitt. Pollitt is president of Pollitt & Co., a brokerage firm in Toronto, and a veteran of mining industry finance. His essay is entitled “The gold monetization scheme is ending”…and the link, another GATA release, is here.

In a rather interesting story that came out of the United Arab Emirates yesterday is word that “Much of the region’s gold that has so far been held in London may soon return.” The story, from business24-7.ae, is entitled “DMCC vault may store region’s gold reserves”. If true, I’m sure that London will not be amused. I thank my good friend Dr. Jim Willie for passing this along. The link is here.

In a Bloomberg article from way back on May 4th, come this piece entitled “Venezuela Orders Gold Producers to Sell More Locally”. It sound like they’re following China’s lead. The link is here.

And lastly [I have lots more, but I've got to cut this off somewhere] is silver analyst Ted Butler’s latest commentary. As far as I’m concerned, everything Ted writes is worth reading. So is this. It’s entitled “A Presidential Bombshell” and the link is here.

Do I think there’s manipulation going on? You bet I do. I wouldn’t put anything past Wall Street and the Fed. I think gold is being manipulated down. I think the Dow is being manipulated UP to cover up the weakness in the dollar. Put the public’s attention on the Dow — as long as the Dow is rising, “everything must be all right.” And we know that the Fed is buying bonds. Isn’t it time for the IMF to remind us that they’re thinking of selling a load of gold? – Richard Russell, 12 May 2009

I note, as I put the finishing touches on this rant, that the boyz showed up at 3:00 a.m. New York time in the thinly-traded Hong Kong afternoon market…and did the dirty. The rest of today’s trading will be educational…especially the Comex open…but, if they’re at all serious, I wouldn’t be surprised if the New York bullion banks showed up in London today as well. And I can’t help but wonder what the boys and girls at the World Gold Council and the Silver Institute do for a living? It certainly isn’t anything that supports the mining industry. I also wonder if their collective hands shake a little as they reach for their paycheques? If I worked there…mine would.

See you tomorrow.

Source: And Then There’s This…Thursday, May 14th, 2009

Anyway, after the Sydney pounding [courtesy of the U.S. bullion banks out of N.Y. one would think], gold didn’t stray far away from $897…and was within a whisker of that price when trading began on the NYMEX/COMEX at around 8:20 a.m. in New York. Then it was lights out. A vertical decline like that can only occur if there is huge selling volume into a no-bid market…i.e. the traders for the bullion banks stand there with folded arms while the other traders try to sell. No bid…down goes the price until the bullion bank traders unfold their arms and start buying at the price they’ve been told to buy at. It’s as simple as that. It works the other way as well. A vertical price spike [and we have seen a few of those recently] means there are lots of bids…but few [or nobody] on the ‘ask’ side. But I digress…

Silver’s activity followed pretty much in lock step with gold…although the price moves weren’t as violent…and silver was helped to the down-side during London trading…a couple of hours before the boyz in New York went to work on the price.

Anyway, when you blow away all the smoke, between the Sunday night price peaks in Sydney and Hong Kong…and the lows shortly after the Comex opened in New York Tuesday morning…gold was smacked for $35, and silver for 90 cents. Most of the damage was done in three or four strategically placed hits to the market that just set the tone and the momentum. This is not normal trading at all…and it certainly isn’t a free market, as no profit-maximizing sellers ever sell like this…ever! I’ve been using that expression a lot lately. I hope you’re getting the message.

Here’s the gold chart for the period specified above. You can see every place that the New York [not for profit] bullion banks showed up.

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Needless to say, Ted Butler and I had our usual chats yesterday. He said that the volume in silver on Tuesday was super-low…like the lowest ever [net of spreads]. He felt that the senseless attack on gold and silver [especially silver] was not directly Comex-related…but could have been the bullion banks going after the silver longs held by the hedge funds that trade in the OTC market. Options expiry in the OTC market was Tuesday…not Monday.

The usual N.Y. commentator had the following to say yesterday…”Today’s European Central Bank weekly statement of condition indicates a drop of €823 million in “gold and gold receivables” which “reflected the sale of gold by two Eurosystem central banks”. This is 37.1 tonnes. Of this, 35.5 tonnes must be the sale by the ECB itself, revealed at the end of March. A 1.6 tonne sale by one of the captive CBs is a bit higher than the recent pace – last week’s reported sale was only €6.0 million…or 0.27 tonnes. Far below the notional 9.6 tonne average implied by WAG2.

“Why the ECB chooses to wreck the veracity of its weekly statements of condition (initially so impressive) remains a puzzle. An ECB Council member told Reuters today that Bank plans to ‘renew its commitment to the Central Bank Gold Agreement (CBGA)’ which expires in September and is running late for renewal. That goes some, but not all the way, to meaning that there will be a new one.”

Open interest changes for Monday [Comex options expiry in gold and silver] were as follows. Gold o.i. fell a smallish 157 contracts to 346,479 contracts…and silver o.i. fell a more substantial 899 contracts to 94,721. These numbers will be in Friday’s COT. Tuesday’s open interest numbers will be interesting when they become available later this morning.

The Comex Delivery Report showed that 752 gold contracts [75,200 ounces] were delivered yesterday. The big delivery was by Goldman Sachs (NYSE:GS) [710 contracts]…and the big receivers/stoppers were Bank of Nova Scotia (NYSE:BNS) [413], JPMorgan (NYSE:JPM) [161] and Bank of America (NYSE:BAC)[134]. Today is the last delivery day for April and it will be a pretty busy one…as yesterday was the last day of trading in the April contract…and it was interesting, as another 1,179 contracts were purchased for delivery in April. As I said, today is the last day for delivery into the April contract…so the Comex Delivery Report should show as many as 1,752 gold contracts delivered when it’s released this morning.

Over at the Comex-approved warehouses, silver stocks rose a smallish 203,678 ounces. There were no other changes anywhere…the U.S. Mint…the ETFs…nothing.

The only gold/silver story worth noting was the Bloomberg piece filed over at Kitco…where GFMS Ltd. was waxing philosophical on the first quarter gold scrap situation. This is sort of old news, but now they have some real numbers to go with it. The piece is entitled “Gold Scrapping May Have Reached 500 Tons, GFMS Says”. This short story is worth running through…and the link is here.

I’ve got another whack of stories again today. The first is an AP story from this past weekend that was posted at breitbart.com and is entitled “Italy’s Mafia thrives in global financial meltdown”. I thank P.S. for sending this story along…and the link is here.

In a story that appeared in The Wall Street Journal yesterday is this missive entitled “Car Dealers’ Next Headache: Inventory Loans”…”The two auto makers have about 10,000 dealers in the U.S., with the bulk of them carrying considerable debt, mainly from the money they borrow to buy cars that sit on their lots. If Chrysler or GM were to file for bankruptcy protection, the banks extending that credit could immediately begin calling dealer loans, demanding a good portion of the money back and refusing to extend any more inventory financing.” It sure sounds ugly to me. I thank Craig McCarty for the story and the link is here.

A story posted in the New York Times bears the following headline…”Italy Seizes Millions in Assets From Four Banks”. With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized abut $300 million in assets of four global banks…JPMorgan Chase, Deutsche Bank (NYSE:DB), UBS and Defa. This is another multi-billion dollar story in the making. I once again thank Craig McCarty…and the link is here.

The next story is by John Crudele from the New York Post. John smells the body odour of Goldman Sachs all over this stock market…and at the same time wonders what the President’s Working Group [PPT] is up to. The article is entitled “Questions About Goldman Sachs’ Role in Market” and the link is here.

And lastly comes this story…once again from The Wall Street Journal. It asks lots more embarrassing questions about the Bank of America and the Merrill Lynch deal. And rightly so! The title of this article is “Busting Bank of America: A case study in how to spread systemic financial risk” and the link is here.

I look at the stock, bond and currency markets and just give my head a shake. It’s amazing what blind faith, B.S. and the Plunge Protection Team can do. As I’ve said before, the world’s economy, financial and monetary system is done for. The bullion banks in turn are trying to shake the gold and silver trees for the last available long contract they can get, because I doubt very much that they will be around to short the next rally in either gold or silver…at least not at these price levels. That’s what the last several days’ shenanigans have been all about. For gold and silver, today is the last delivery day in the April contract and tomorrow is first notice day for the May contract. Then all bets will be off.

See you on Thursday morning.

Source: And Then There’s This…Wednesday, April 29th, 2009

Demand for physical gold is soaring so much that it is almost impossible to get hold of right now. And gold production is lower than in 2000. Andrew says all this means it will soon be gold’s time to shine…

More from Investor’s Daily Edge:

Gold dropped from $915 to $859 on Friday. That’s not supposed to happen while the market is crashing. What’s going on?

It’s not that gold has lost its luster. But institutional investors were forced to sell gold on Friday to meet margin calls.

If equity and hard assets continue to lose value anywhere near the rate of last week, margin liquidation will continue. And gold could go down even more.

But make no mistake about it. With the market crashing and dozens of governments printing money like there’s no tomorrow, investors want to be in gold.

Before the sell-off on Friday, the price of gold was up more than 20 percent following Lehman’s collapse.

The demand for physical gold this month has surged to what one trader calls “unprecedented” levels. The US Mint has doubled its gold-coin production but it hasn’t been enough.

Gold dealers have had to turn away customers wanting to buy coins and bars.

But it’s the physical demand (for jewelry) that ultimately decides the price of gold. Jewelry demand accounts for 60 percent of total gold demand and it’s down so far this year.

Will it pick up? The world’s biggest gold consumer is India and Diwali – the festival of lights –begins October 28th. Gold sales usually surge with the approach of this festival.

Then there’s this: Gold production today is lower than it was in 2000.

Gold is rarer than ever. The markets are going to hell. It’s gold’s time.

Source: Has Gold Lost its Luster?