Another Day… Another Record High Close for Gold

Gold didn't do much in Far East trading during their Wednesday morning… with the low price of the day [around $1,228 spot] being set at 1:00 p.m. in Hong Kong's afternoon.  and then didn't show much signs of life until after London opened for trading.  Then the gold price tacked on about $12 to $1,242 spot before giving up eight dollars of that gain by 9:00 a.m. in New York.  From that point, gold rallied to it's high of the day [$1,249.60 spot] around 2:30 p.m. in electronic trading, before getting sold off into the New York close at 5:15 p.m. Eastern.  But, when the smoke cleared, it was another record high close for gold.

Silver declined slowly in Far East trading…. and reached its nadir shortly before London opened for the day.  From there, silver rose above $19.50… and stayed there for most of the day, with the high of the day [$19.74 spot] coming in New York trading at precisely 10:30 a.m. Eastern time.  From that point, silver fell traded sideways until gold's high of the day was in at 2:30 p.m… and silver then sold off along with gold… closing the New York trading session at $19.52 spot.  Silver has got light years to go before it breaks its old record high.

It was kind of a nothing day in both metals yesterday… at least compared to the price activity of other days.  Maybe the market is taking a rest.

The dollar swings were 70 basis points in both directions yesterday.  Neither precious metal traded like the dollar existed at all.  As a matter of fact, most of gold and silver's price rise on Wednesday was directly into the teeth of the 70 basis point price rise.  How times have changed.

I was rather surprised that the precious metals stocks didn't do better yesterday.  With the general equity markets on the rise… and both gold and silver up on the day… the sell-off in the HUI shortly after the open was strange to say the least.  However, once the highs for both metals were in at 2:30 p.m. Eastern time yesterday afternoon, the resulting sell-off was no surprise at all.  The HUI close up a smallish 0.69%.

Gold's rise on Tuesday did not go unopposed.  Gold open interest rose another 6,636 contracts.  Total gold o.i. is now up to 583,504 contracts.  There was big volume, but lots of roll-overs.  Don't forget that options expiry for the June contract is on May 26th… and roll-over and spread trades will take up a larger portion of each day's volume as we get closer to that date.  Silver's big rally on Tuesday ran into a into a not-for-profit-seller, as open interest jumped a very large 3,263 contracts on absolutely monstrous volume of about 60,000 contracts.

The CME Delivery Report yesterday showed that 226 gold and 18 silver contracts were posted for delivery on Friday.  All the 'action' is linked here.

The GLD ETF took another big chunk of gold into its inventory yesterday.  This time it was 557,785 troy ounces… 17.3 tonnes.  Not too shabby.  There was no change in SLV yesterday… BUT there was an increase on Tuesday which I neglected to report.  On that day, SLV added 882,147 troy ounces.  I finally have a report on last week's activity in the ETFs over at Switzerland's Zürcher Kantonalbank.  Their gold ETF added 69,308 ounces… and, once again, their silver ETF turned in another big week… this time receiving 1,233,277 troy ounces.  I thank Carl Loeb for finally digging up these numbers.

The U.S. Mint had a busy day on Wednesday as well.  They reported selling another 11,500 one-ounce gold eagles… 5,000 24k-gold buffaloes… and 30,000 silver eagles.  Month-to-date, the mint has sold 57,000 one-ounce gold eagles… 33,500 24k-gold buffaloes… and 1,508,500 silver eagles.  It would be my guess that most of these [plus most of what the mint sold last week] ended up in Europe.

The Comex-approved depositories showed a small increase of 76, 083 troy ounces of silver.

While still on the subject of gold and silver ETFs… here's the current status of GLD.  I thank Nick Laird over at sharelynx.com for providing this wonderful graph.

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I have the usual number of stories today… most of them about gold and silver… either directly, or indirectly.  I'll start with the non-precious metals stories first.  The first one is a Bloomberg piece courtesy of Washington state reader, S.A.  The headline says it all… "Schwarzenegger Preps 'Terrible Cuts' to Close Deficit"… and the link is here.

The next offering today is another Bloomberg piece… also courtesy of reader S.A.  The U.S. posted its largest April budget deficit on record, as receipts declined in a month that typically sees an increase in individual income tax payments.  The headline reads "Budget Deficit in U.S. Widened to $82.7 Billion"… and the link is here.

The last non-precious metals story is from Florida reader P.S.  It's from The Economist in England and consists of one short paragraph and one stunning graph.  The paragraph takes 30 seconds to read… but you may spend some time looking at the incredible chart below it.  The headline reads "Italy's roads are choked with government-owned cars"… and the link is here.

As you know, dear reader, I have all the time in the world for anything that Jim Rickards has to say.  Here he is again in another interview with Eric King of King World News.  The link to the story is embedded in a GATA release… with the introductory preamble written by Chris Powell… GATA's secretary treasurer.  The preamble and the interview are a must read/listen… and the link to all of this is here.

Well, that 'Darth Vader' of gold companies… Barrick Gold… has their storm troopers in Vancouver right now.  The threat of legal action from mining giant Barrick Gold has forced Vancouver-based Talonbooks to postpone publication of a book about the Canadian mining industry.  The book, Imperial Canada Inc.: Legal Haven of Choice for the World's Mining Industries, was to be published in spring 2010, but in February, the publisher and everyone else involved with the book got a threatening letter from Barrick lawyers.  It has something to do with Barrick's mining practices in Africa.  I've read the essay about bad-boy Barrick's African activities… and still have it saved in the innards of my computer somewhere.  Needless to say, it's not pretty.  The story, posted at cbc.ca… is headlined "Barrick Gold moves to block mining book"… and the link to the story is here.  And, in case you're wondering, it's definitely worth your time.

With the melt-down in the Euro continuing… and the long-term fate of the European Union in doubt… the people of Europe are buying gold and silver at record rates.  I have two stories about that… both stolen from Kitco.  The first is posted over at busrep.co.za and bears the headline "Demand for minted gold products up tenfold: Argor"… and the link is here.

The next story on this issue is a Reuters piece filed from Vienna yesterday.  The headline reads "Austrian mint says gold sales soar on panic buys".  It's only two paragraphs long… and the link is here.

There are also unconfirmed reports that the Australian mint has been doing a roaring business for the last two weeks… all of it heading into Europe.  As I mentioned earlier in this column, that's probably where all the recent U.S. Mint sales are heading as well.

In a marketwatch.com story [filed at one minute after midnight] comes this gold story from Peter Brimelow headlined "Gold has bugs gasping, gloating — but still bullish"… "Metals' fans cheer record advance, with India the only snag."  The link to the story is here.

And, in another Bloomberg story, this one filed from Seattle yesterday afternoon, comes this piece headlined "Gold Rises to Record as Investors Seek Alternative to Currency".  The link is here.

I'll leave today's last word to Tyler Durden over at zerohedge.com.  It's about gold as well, even though the headline reads "It Is Getting Ugly Quick In Fiat Land: S&P Now Down 8% YTD In Non-Dilutable Terms"… and I thank Australian reader Wesley Legrand for bringing it to my attention.  It's a short read with a couple of good charts… and the link is here.

Liberty has never come from the government.  Liberty has always come from the subjects of government.  The history of liberty is the history of resistance.  The history of liberty is a history of the limitation of governmental power, not the increase of it. – Woodrow Wilson

There weren't too many currencies on planet Earth yesterday that didn't set a new high price in terms of gold… and I don't see anything out there that will reverse this process… except on a very temporary basis.  It's "print… or die!"  If you listened to the Jim Rickards interview earlier, you will know that the IMF is about to issue the Special Drawing Rights as a currency to take over from the U.S. dollar… another step on the road to world government.  But it will not come easily… or in a hurry.  Virtually all the world's fiat currencies are being debased like never before in history… and the precious metals will be the last men standing when that process is complete.

I'm still 'all in'… and perfectly content to stay there.

Gold is now well into overbought territory… but that condition can last for a while… and silver's catching up fast.  Here's the 6-month gold chart.

The preliminary volume numbers for Wednesday have been posted at the CME's website.  They show that gold traded a chunky 241,903 contracts… of which about 50,000 were roll-overs.  Without a doubt, Thursday's open interest will take another jump when these numbers are reported later this morning.  Silver's preliminary volume was about 45,000 contracts… less about 3,000 roll-overs.

Volume was very quiet in Far East trading during their Thursday… with both metals down a bit as of this writing.  But the activity level increased soon after London opened… and gold's volume, as of 5:15 a.m. Eastern time, is around 24,000 contracts traded… net of roll-overs.  Silver's volume is around 4,200 contracts.

Trading activity in the Far East and London have meant nothing lately… as all the action has taken place in New York.  What will happen today is anyone's guess.  Yes, we're overbought, but does that mean much anymore?  We'll find out in the days ahead.

Before closing, I thought I'd leave you with this delightful video that was sent to me by Casey Research's own Jeff Clark… editor of Casey's Gold and Resource Report.  This is a heart-warming video that proves that kids will be kids… whether they have two or four legs… and whether mom approves or not.  Click here, dear reader… and enjoy!

See you on Friday.