Another Day on the Road to Perdition

Gold was up a few dollars in early Far East trading on Monday morning… and stayed that way until it had a short rally to its high of the day [around $1,235 spot] going into the London open.  From that point, gold ran into a not-for-profit seller and, except for a brief spike into an early London p.m. gold fix, gold continued to 'fall' until precisely 11:30 a.m. in New York… which was its low price of the day at $1,215.70 spot.

From that low, gold attempted a rally, but each little rally got sold off before it could develop any legs… and gold finished down $6.10 on the day.

Silver once again followed its own path… and its price was up nicely in the early going… but its price also got capped as well… the same moment that the gold price got hit… moments after London opened for the day.  But the silver price didn't go down much… and actually began to rally sharply the moment that trading began on the Comex in New York.  Silver's high price point was when gold spiked at the London p.m. gold fix.  That high was $18.59 spot.  Then the selling began.

By the time electronic trading was done for the day at 5:15 p.m. Eastern time… these not-for-profit sellers had dropped silver's price below it's Friday's close… which was more than a 2% drop from it's peak at 9:45 a.m. Eastern time, earlier in the New York day.  These guys are shameless.

The dollar, which finished down on the day on Monday, was never a factor in gold and silver pricing.  But, the dollar's low came about 10 minutes before gold's low of the day!  Go figure!  Up is down and black is white with the dollar/gold relationship… and it's getting stranger all the time… with Monday's action being a case in point.  Maybe it's time to take a pill.  Red or blue?  You chose… but it probably won't matter.  But one will make you taller… and one will make you small.  If you doubt it… ask Alice… when's she's 10 ft. tall.  Or maybe the Mogambo Guru knows!

The gold stock were probably influenced by both the gold price action and the general equity markets yesterday… and I wouldn't read a thing into the movement of the HUI… which was down 1.92% on the day.

One thing I can say about Monday's action was that the volume was very low once again… with the emphasis on very!  And even with the bad boys in action, it didn't take a lot of selling… or bid pulling… to have an impact on prices.  When volume is this low, any serious seller [or buyer] can move prices quite easily.

Well, the CME's Daily Delivery report for Monday showed that an impressive 841 gold contracts were put up for delivery on Wednesday.  All the 'usual suspects' were present… with the big issuer being the Bank of Nova Scotia… and the big stoppers being JPMorgan and Deutsche Bank.  The link to yesterday's action ishere… and it's well worth looking at.

There was one whole silver contract put up for delivery yesterday.

There were no changes in GLD, SLV… or any reported sales from the U.S. Mint yesterday.  But, at the Zürcher Kantonalbank in Switzerland, they reported that 46,547 ounces of gold and 670,890 ounces of silver were added to their respective ETFs last week.  As always, I thank Carl Loeb for those numbers.  The Comex-approved depositories showed that their silver inventories fell by 426,094 troy ounces on Friday.  All four warehouses showed activity… and the link to all the action is here.

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Since it's my Tuesday commentary, I have three days worth of news stories to post.  The first three stories are gold related.  I'll start with this one from the Sunday edition of The New York Times of all places.  The headline reads "Uncertainty Restores Glitter to an Old Refuge, Gold"… and I thank reader Phil Barlett for sending it along.  It's definitely worth the read… and the link is here.

Here's a story that was posted in last Friday's Financial Times in London… and if Chris Powell hadn't posted it at the gata.org website… I never would have noticed it.  The headline reads "Banks set new store on building gold vaults".  It's a very short read… and has some interesting tidbits in it… so it's definitely worth running through.  The link is here.

Today's last gold story is filed by Bloomberg's Tokyo correspondent… William Pesek.  If you remember from last week when Ben Bernanke stated that "I don’t fully understand movements in the gold price."… and we all believed him… right?  Well, the above writer would not let that pass… and wrote the following article headlined "Gold’s 30% Surge Puzzles Bernanke, Not This Guy".  Pesek has been a closet gold bug for years now… and this article is definitely worth your time.  The link is here.

Closer to home, here's a story sent to me by reader Roy Stephens that will make your head spin.  It's from Friday's edition of The New York Times.  Let's pretend that you owe Peter $50.  You see Peter and ask him if he'll loan you $50 so you can repay the $50 you owe him.  Well, dear reader, it's happening in real life… and the headline reads… "State Plan Makes Fund Both Borrower and Lender".  You can't make this stuff up… and the link is here.

'Verne in Ventura' sent me the following Bloomberg story that didn't surprise me in the slightest.  The headline reads… "Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case".  That's a lot of money that the Fed will have to print… but they're certainly up to it.  And, I can pretty much guarantee that when the final real estate bill is tallied for these GSEs, that $1 Trillion dollars will be exceeded by a considerable amount.  The link is here.

Talking about printing money… economic conditions are not improving,Freemarket Gold & Money Report publisher James Turk writes.  The U.S. stock market is now largely a function of Federal Reserve money creation. Now that this money creation has stalled, Turk writes, the market is faltering.  So he expects a lot more debt monetization soon. Turk is founder of GoldMoney and a consultant to GATA and his new commentary is headlined "A Signal from the Stock Market".  The story is well worth the read… and the graph is a stunner… and the link is here.

If there's any doubt left that Bernanke and Co. will print the U.S. dollar into oblivion to avoid a deflationary implosion, it can be found in the following M3 money supply chart [courtesy of shadowstats.com] that goes all the way back to 1960.  This dovetails nicely with the chart in James Turk's commentary above.  A picture, they say [in this case a graph] is worth a 1,000 words.

The next four stories are all from the international arena.  The first is an item from Florida reader, Charles Dubelier… and its on a topic that I've mentioned a couple of other times in the last year… the possibility that Belgium may split up into its two constituent parts.  This would certainly add to Europe's [and the euro's] woes.  Belgium's 6.5 million Dutch-speakers and 4 million Francophones live separate lives. Just about everything there — from political parties to broadcasters to boy scouts and voting ballots — comes in Dutch and French-speaking versions.  During their recent election campaign, just ended… the new premier, Bart De Wever, said he favors an orderly breakup of Belgium… accusing Wallonia, Belgium's poorer southern half, of bad governance.  This situation bears watching… and I urge you to read this story… which is posted at thecomcast.net website.  The headline states… "Belgium party leader says squabbling must stop"… and the link is here.

Here's another story that adds to the litany of woes for both the euro and Europe.  Reader Roy Stephens sent me this Reuters piece bearing the headline "Moody's cuts Greek rating to junk"… and the link is here.

And lastly from the European theatre, comes this incredible story from UPI Editor Emeritus, Martin Walker that was filed in Paris yesterday.  Relations between the economic policy-makers of Europe and the United States are even worse in private than they appear to be in public, as Europe heads for massive spending cuts and austerity… while the United States keeps trying to stimulate growth.  This is deep background stuff that I absolutely guarantee you'll never find in the North American media… and it's definitely a must read.  I once again that reader Roy Stephens for sharing it with us.  The headline reads "Walker's World: The euro makes enemies"… and the link is here.

'Verne in Ventura' has one more story for us today.  This one is a Reuterspiece bearing the headline "India to inject $1.32 billion to 5 state-run banks".  It appears that TARP has now arrived in India as well… and the link to the two-paragraph story is here.

My last offering today is a new interview with Jim Rickards that Eric King over atKing World News sent me early yesterday morning.  It also ended up as a GATA dispatch… and I'll steal Chris Powell's intro… because at this hour, I'm just too tired to write one myself… "Market analyst" is beginning to seem too pedestrian a description for James G. Rickards, senior managing director for market intelligence at the Virginia research firm, Omnis… who, today, is back for another interview with Eric King at King World News. Maybe "planetary observer" will do for this one, in which Rickards foresees more fantastic money creation by central banks… and then the International Monetary Fund via Special Drawing Rights… before market conditions force the imposition of some sort of gold backing for currencies. It's a long interview, dear reader, but certainly falls into the must listen category… and the link is here.

…. 2 cartoons today!

Even now, not many people are buying Gold. But those who are, have clearly have come to the realisation that paper money cannot be trusted… because those who print or borrow it into existence, cannot be trusted to stop before they render it down to the "value" of the paper it is. – Bill Buckler, The Privateer, 12 June 2010

Well, it's just another day off the calendar on the road to perdition.  Nothing has changed… except that we're heading further down that road every day… and nothing can change that, except one thing… and that's spelled GOLD.  And, if you listened to the Rickards interview above, you'll know that he said exactly the same thing… and it's something that I [plus others] have been going on about for a long time.  But it will be a choice forced on banks and governments whether they want it or not.  There are very good reasons why both Russia [publicly] and China [secretly] are building up their gold reserves.  It's for that day… when it arrives.  And if you skipped the Rickards interview… I urge you to reconsider that decision.

Neither gold nor silver did much in the Far East earlier today… or in early London trading this Tuesday morning.  Gold is currently unchanged… and silver's up 13 cents.  It's now 5:05 a.m. Eastern time… and volume in both metals, which was extremely light on Monday, is almost non-existent at the moment… with gold a hair under 10,000 contracts traded… and silver under 1,900 contracts traded.  If the bullion banks wanted to kill the metals prices [or let them run to the upside] it wouldn't take much volume to make a huge difference in the price… either up or down.

We are officially in the 'summer doldrums' when it comes to the gold and silver markets… and, whether or not we experience a price decline in either or both metals, will be 100% up to the bullion banks to decide.  They hold the controlling short positions in both gold and silver… and gold's short position is still sky-high.  If they really wanted to, they could pull the lever and 'ring the cash register' if they choose to do so.  So we wait.

But, like yesterday and Friday, all the price activity worthy of the name occurs during the New York trading session… and I doubt that today will prove to be any different.

In closing today, I want to publicly thank the lady who has posted my column since its inception last August.  Her name is Megan Mulhern… and she has now moved on to 'bigger and better' things.  She started working for Casey Research right of college a couple of years ago… and all the Casey Gang at our HQ in Stowe, Vermont will miss her.  That goes for me too.  Thanks Megan… and we all wish you well.