Russia's Central Bank Purchases Another 200,000 Ounces of Gold

As I mentioned in my commentary on Thursday, the bullion banks showed up on the sell side at 1:00 a.m. Eastern time during Hong Kong trading… which turned out to be the high of the day around $1,198 spot.  Then, except for a mild recovery that peaked shortly after London opened yesterday, it was all down hill until 8:30 a.m. in New York.  That was gold's low price of the day recorded at $1,174.20 spot.  Then gold rose until the London p.m. gold fix at precisely 10:00 a.m. in New York… sold off until the London close… and then rose again to form a double top at precisely 11:00 a.m., before selling off gently into the close.

Silver was guided down the same path as gold… with the low [$17.47 spot] at precisely 8:30 a.m. in New York.  Silver's New York high [$17.97 spot] was at precisely 11:30 a.m.  The high of the day was around $18.30 spot sometime during Far East trading.

You will carefully note, dear reader, that every day in this engineered sell-off in both gold and silver, a new low is set… and more brain-dead tech funds are forced to puke up their longs… and the bullion banks either take the tech fund longs and keep them for themselves [no change in open interest] or they take that long and close out one of the short positions they hold [open interest falls by one].  Only traders in the Commercial category [read bullion banks] are allowed this outrageous privilege… as traders in the Non-Commercial and Nonreportable category of the COT aren't allowed to do that.

The U.S. dollar was a joke again yesterday.  I'm posting the graph for entertainment purposes only.

The shares got their lights punched out for a second day in a row… not helped by the fact that the Dow really got smoked as well.  The bright spot was the fact that the low for the precious metals shares came early in the trading day when the Plunge Protection Team showed up shortly before 10:30 a.m. Eastern time.  They showed up again at precisely 1:00 p.m… and from there, the HUI traded mostly sideways, while the Dow fell out of bed in the last half hour.

The CME's Delivery Report on Thursday showed that 272 gold and zero silver contracts were posted for delivery on Monday.  The issuers and stoppers pdf file is linked here.  Neither GLD nor SLV had anything to say for themselves yesterday but, once again, the U.S. Mint had another report.  Their website showed that they sold another 17,000 one-ounce gold eagles… 2,500 24k-gold buffaloes… and 203,500 silver eagles.  Month-to-date the mint has produced 127,500 one-ounce gold eagles… 57,500 24k-gold buffaloes… and 2,659,500 silver eagles.  The Comex-approved depositories showed that a smallish 49,894 ounces of silver were withdrawn from their warehouses on Wednesday.  There was activity in all of them… and the Metal Depository Statistics are worth looking at… and the link is here.

Well, the Russian Central Bank gold holdings were updated yesterday and they only added 200,000 ounces to their stockpile in April.  I was hoping for more… but the numbers are what they are.  As of the end of April, the RCB holds 21.5 million ounces of gold… about 668 metric tonnes.  I thank Susan McCarthy over at Richard Nachbar Rare Coins for providing the graph below.

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There wasn't a lot of big news yesterday… it was just more rearranging of the deck chairs… along with the growing world-wide realization that the problems every country faces are unsolvable.  Having said that, my readers have managed to find some very solid stories and interviews that are more than worth your time.

Today's first story is from yesterday's English language edition of the German website spiegel.de. Hedge fund regulations, a tax on financial markets, a ban on naked short selling. The EU's bid to rein in the speculators has the London financial industry up in arms. Lobbyists are already preparing to systematically attack the new proposals.  The headline reads "London's Lobbyists Prepare to Return Fire".  I thank reader Roy Stephens for sending it along… and the link is here.

And, in a story filed in The Washington Post early this morning, the headline reads… "Senate passes financial regulation bill".  This will certainly change a lot of things on Wall Street and in the banking system when it's finally signed into law.  It's a long story, but an important one.  I thank Washington State reader S.A. for staying up late enough to find it and send it… and the link is here.

Here's another story that's courtesy of Washington state reader S.A.  This one's from Bloomberg's businessweek.com website.  The headline reads "Fed Assets Reach Record $2.35 Trillion on Mortgage Purchases"  The Fed is really being kind to itself by classifying what they have on their books as "assets".  My guess is that they're worth pennies on the dollar and most of them are so toxic or radioactive that they probably glow in the dark.  Watch this pile of "assets" grow even bigger as time goes on… no matter how much smoke they try to blow up your rear end in this short article.  The link is here.

This story arrived in my in-box just after midnight… and it's courtesy of reader Roy Stephens.  It's an Ambrose Evans-Pritchard offering from The Telegraph in London.  The headline reads "'Perfect storm' as market tremors hit China, Europe and the US"… Capitulation fever has swept global markets on triple fears of faltering recovery in the US, Chinese credit curbs and Europe's intractable escalating debt crisis.  This rather short article is well worth your time… and the link is here.

As I've mentioned before, I have all the time in the world for anything that F. William Engdahl has to say.  Engdahl nails the key point [unspoken by the main stream media] that the whole EU crisis is a diversion brought about by Wall Street's orchestrated financial warfare – to direct focus away from US financial system/dollar woes and harm the Euro… the only real alternative reserve currency to the US Dollar.  The 5-minute interview is posted over at rt.com… and is a must watch/listen from one end to the other… so please do exactly that.  The link is here.

Here's a wonderful item posted at abc.net.au.  In this case, the ABC stands for the Australian Broadcasting Corporation… and was sent to me by Nick Laird of sharelynx.com fame… who just happens to lives "in the land down under" himself.  It's a little skit about who owes who what over in Europe.  It's hilarious and tragic all at the same time.  It's the 21st century's financial equivalent of "Who's on First". This is a must watch/listen… and the link is here.

I see that the bullion banks have been busy again… as this current precious metals liquidation cycle continues.  This time they took gold to new lows late last night… which was early in the Far East's trading day this Friday morning.  I also note that both platinum and palladium have seen new lows as well. Silver hasn't been taken down to new lows yet… but the day is still young.  The bullion banks, led by JPMorgan, will just keep bashing away until they figure they've forced every long possible to sell their positions.  As I said, this could last all of next week as well, with options expiry and the new delivery month just around the corner.

Volume in Far East trading in gold on Friday around 10:30 a.m. in Hong Kong [9:30 p.m. Thursday night in New York] was already very heavy.  Most of that volume was associated with that big spike down in price.

As bad as the sell-off in gold and silver have been… platinum is down about $250/ounce and palladium's down over $100/ounce from their respective highs.  These are gargantuan percentage moves… and both metals are entering oversold territory.  Neither gold nor silver are remotely close to that… yet.  Silver is now well below its 50-day moving average… and even though the open interest numbers don't show it, there has been massive spec long liquidation.  Today's Commitment of Traders report… due out at 3:30 p.m. Eastern time… will only show part of the improvement of the COT structure… as the bullion banks are masters at hiding their tracks.  We'll probably have to wait until next Friday's report… or even the first one in June, to get an idea of how many short positions the bullion banks have managed to cover.  The link to today's COT report [when it's available] is here.

Here's the 3-year silver chart once again so you can see how the JPMorgan-led liquidation cycle is proceeding.  As you can see, the RSI shows that we have a ways to go before we get into oversold territory… and the same applies to gold.

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Friday's trading in the precious metals has a tendency to be rather dramatic at times… and I'm fully expecting that today's action will prove that to be true… and we'll find out soon enough.

I hope you have a great weekend… and I'll see you tomorrow.