Another Day… and Another Slide Down the Every-Steepening Slippery Slope
Gold didn't do a thing in either Far East or most of London trading on Wednesday… and gold was down about six bucks minutes after New York opened. But all that inactivity changed the moment that the London p.m. gold fix was in at 3:00 p.m. local time… 10:00 a.m. in New York. The gold fix also happened to be the nadir for the gold price on Wednesday… checking in at a low of $1,159.80 spot. Then gold jumped to its high of the day [$1,175.70 spot] at 11:45 a.m. Eastern time. At that point it got hit by 'da boyz'… and from there it drifted lower… losing $10 of it earlier gains. Gold finished down $3.40 from Tuesday's close.
Silver, which hadn't done much of anything since trading began in the Far East, began to get sold off starting at 1:00 p.m. in Hong Kong. The bid disappeared at the Hong Kong close… and silver's low [like gold's] was at the London p.m. gold fix, and was reported as $17.80 spot. The high for silver was also at the same time as gold's… 11:45 a.m. in New York… before the usual not-for-profit sellers showed up. After that, the silver price slid a little… and then traded basically sideways into the close of electronic trading at 5:15 p.m. Eastern. Volume in silver yesterday was virtually non-existent once all the roll-overs were removed.
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Most of gold and silver's big price rally in New York was accompanied by a 65 basis point rally in the dollar… and gold and silver's decline that started at 11:45 a.m. Eastern time was accompanied by a falling dollar. No co-relation there. Virtually all of yesterday's action was fresh buying after the London p.m. gold fix, followed by the bullion banks doing their usual thing.
The shares had an exceptional day… and even after the bullion banks showed up at 11:45 a.m… the shares held most or their gains. They gave up some of these gains around 3:15 p.m… but hung in their with the HUI closing up 2.97%. Not bad for a down day in both metals, though. Are the shares telling us something? Don't know. However, it was mostly the major and intermediate producers that did well… as I thought the juniors did rather poorly.
Well, now for open interest changes for Tuesday… which is the cut-off for tomorrow's Commitment of Traders Report. Gold's open interest was only up 8,201 contracts on the big move. But Ted Butler said that it was entirely possible that the volume and o.i. associated with the rally in electronic trading may not have been reported in this number. He was expecting an increase in gold's open interest of around 20,000 contracts. So was I, actually. So we'll have to wait until later this morning to see if that's true or not.
Silver o.i. was down again! This time by 539 contracts. Not a lot… but better down than up! Something appears to be afoot in the silver market, as it looks like someone is heading for the exit. Needless to say I'll be looking at silver's open interest numbers for Wednesday with great interest when they come out later this morning.
May open interest continues to contract. The final numbers for Tuesday that were posted on Wednesday morning showed that May o.i. fell 5,637 contracts to 14,581 contracts. I expect that number to plunge even more when I report on Wednesday's preliminary numbers in my closing comments at the bottom of this column.
The CME Daily Delivery report for Wednesday showed that 27 gold and one whole silver contract were put for delivery on Friday, April 30th. This is the last delivery day for the April contract… and the month ended as follows. In gold… 13,440 contracts were delivered… and in silver it was 486 contracts. The list of issuers and stoppers for yesterday is here. When my Friday commentary arrives in your inbox tomorrow, the figures I have then will be for first day delivery notice into the May silver contract. Those numbers should be interesting.
Well, the GLD ETF added another big stack of gold bars again, yesterday. This time it was 195,740 troy ounces… a bit over six tonnes. Of course the SLV added nothing. This is not hard to understand, dear reader, when there isn't any available on planet earth to add. I'm sure that SLV's sponsor has to stand in line at the refiners and wait his turn just like everyone else these days. It's now been more than two months since one single ounce of silver has been added to SLV… but 18.1 million ounces has been removed during that period. So the sponsor has to short the shares until he can deliver the physical metal into the fund. Right now the SLV has a reported short interest of 7.8 million ounces. At the moment, I figure that SLV is owed about double that amount. Click here to view.
The U.S. Mint had nothing to say for itself yesterday as far as either gold or silver eagles were concerned. But they are about to mint the 24K gold Buffalo again… and your favourite bullion dealer will be happy to take your order starting today.
And lastly, the Comex-approved depositories showed that a smallish 95,217 ounces of silver were withdrawn on Tuesday.
I have an odd assortment of stories for you today. The first is an item on Goldman Sachs… and the hidden agenda that may be behind the testimony given by Chairman and CEO Lloyd Blankfein. This commentary is by Catherine Austin Fitts… a GATA board member like myself. Catherine was Assistant Secretary for Housing in the U.S. Department of Housing and Urban Development [HUD] back in 1989-1990 when George Bush Sr. was president. It's posted at her web site solari.com… and is entitled "Goldman Whac-A-Mole". It's about a five minute read… and definitely worth your time. The link is here.
The next story has to do with an amendment to the Wall Street reform bill that's currently being discussed in Washington at the moment. It would open the Federal Reserve to a serious audit by the Government Accountability Office [GAO]. The language is modeled after an amendment that passed the House, sponsored by Reps. Alan Grayson (D-Fla.) and Ron Paul (R-Texas). The story can be found over at huffingtonpost.com… and is headlined "Broad Bipartisan Coalition Fighting Fed in Senate". It's less than a five minute read… and the link is here.
You may remember, dear reader, the sad story about the plane crash in Russia that took the lives of a lot of Poland's top leaders just recently. It's was tragedy, of course… but the crash was only part of the story. These leaders were on their way to a memorial ceremony in remembrance of the Soviet Union's massacre of 20,000 Polish officers and other prominent citizens that was ordered by Stalin in 1940 as WW2 was really getting serious. I never saw anything about this posted in the North American media… but here are the details in an article filed in yesterday's edition of chinadaily.com.cn. You won't find this story in any school history book you've ever read. The headline reads "Russia posts Katyn massacre documents on Internet". I thank Australian reader Wesley Legrand for sharing it with us. It's an eye-opener… and the link is here.
The next piece is a 5-page report posted over at my friend Ian Gordon's website longwavegroup.com. It's on the raging credit boom going on inside China at the moment. The author expects that a very large-scale financial crisis is in China's future at the rate things are going. The title of this essay is "The Sino-American Syndrome"… and the link to the pdf file is here.
The next item is a 5-minute interview that was posted over at rt.com yesterday. As I've mentioned a few times this month, there is a strong possibility that Greece will drag everyone else with it. This interview goes directly to the heart of the matter… and is headlined "The implications of the Greek debt crisis". It's definitely worth viewing… and I thank reader Roy Stephens for sending it along. The link is here.
Lastly is this item from Ambrose Evans-Pritchard from The Telegraph in London that was posted to their website late last evening. It's more about contagion, now that Standard & Poor's has downgraded Spain. German leaders have agreed in principle to a rescue package of up to €135bn for Greece in emergency talks with EU and IMF officials, but failed to offer any clarity on the conditions for such aid. The headline reads "EMU domino fears as Spain downgraded, Germany drags feet on rescue". This is serious stuff, dear reader… and this article [which isn't very long] is certainly worth the read… and the link is here.
In reality, no variety of "prosperity" has ever been built on debt. The very notion is absurd. The notion of regaining lost prosperity by issuing even more debt is even more absurd. The ONLY way out of the mess we are in, is to return to sound money. Better to get there first while the "authorities" founder… and dig the grave of the paper system even deeper. – Bill Buckler, the-privateer.com… April 24, 2010
Another day, another slide down the every-steepening slippery slope. There is no way out, dear reader…none! The current monetary and financial system is in rapid and terminal decline. Bill Buckler's quote above is prescient. You have to remove as large a part of your financial wealth from the current fiat money system as you can afford to do. As Thomas Jefferson said… "Paper is poverty, it is but the ghost of money… not money itself." Buy, and take delivery of, all the precious metals you can. Buy good quality precious metals stocks. Then hope for the best.
The CME has now posted preliminary volume numbers for Thursday's activity in both precious metals. Gold volume was right up there at 178,145 contracts… minus about 8,000 roll-overs. Total open interest in gold… now over 550,000 contracts… is back at nose-bleed levels again… and even higher then it was back in early December. Silver's volume was a monstrous 83,779 contracts… but if you remove all the roll-over and spreads, only about 10,000 contracts were traded yesterday… which is really low. Ted Butler said that it was really unusual to see this sort of activity going into a delivery month.
May open interest was reported down another 4,641 contracts to 9,940 contracts still open. Today is the last trading day in April… so this numbers will take a big hit going into first notice day tomorrow. I'll have another update on this in my column tomorrow morning.
Neither gold, silver, nor the dollar did much in Far East trading earlier today… but now that London is open, both metals are showing a bit of life. How much life they'll be allowed to show as the day wears on, won't be known until they begin to trade in New York. As I've mentioned many times before… at least 80-90% of all gold and silver trading is done during Comex hours… and the U.S. bullion banks make the rules there. Don't forget Nick Laird's famous chart from sharelynx.com. Let's see what happens both before and after the London p.m. gold 'fix' is in at 10:00 a.m. Eastern time this morning.
Gold volume at the moment [5:20 a.m. Eastern time] is a very light 16,500 contracts with almost no roll-overs at all. Silver already has big open interest… but virtually all of it's roll-overs into July, as today is the last trading day for April… and today every April contract holder that's still left has to either roll-over… or stand for delivery. The final stampede out of the April contract is on in earnest as I write this.
I highly suspect that today will be another 'volatile' day in both gold and silver once trading in New York gets underway.
I hope your Thursday goes well… and I'll see you here tomorrow.