Debt Crisis Explodes in Europe in a 'Market Gone Mad'

Gold's tiny rally in Far East trading ended at its high of the day around $1,149 spot at 5:00 p.m. Hong Kong time on Thursday… 4:00 a.m. Eastern time in the U.S… and it was all down hill from there.  The low of day [$1,130.80 spot] came at the London 3:00 p.m. gold fix… 10:00 a.m. New York time… and from that point, the selling pressure abated… and the gold price rose back to its New York opening price.  Then the gold price got capped for the rest of the day.

Silver's path was almost identical to gold's… but after silver's low of the day, which came about 15 minutes before the London p.m. gold fix, the silver price was only allowed to rise back to $18.00 spot… and any subsequent attempt to rally over that price, no matter how tiny, met with immediate selling pressure.  Silver's high was around $18.16 spot at 5:00 p.m. Hong Kong… and silver's low was $17.75 about 9:45 a.m. in New York.  With options expiry for May silver only three days away, $18.00 is obviously being defended.  Let's see if the bullion banks can make it until the close of business on Tuesday.

Well, the dollar and the precious metals were basically joined at the hip on Thursday… but it appeared that the precious metals didn't want to fall as fast as the bullion banks wanted them to as the dollar rallied, so they were given a shove a couple of times during New York trading. Note the beginning of the rally around 4:00 a.m. New York time… when the gold price really began to head south.  Also note the time of the rally top… which was a few minutes after 10:00 a.m. Eastern time… the London p.m. gold fix.  It was really nifty how that worked out.  Coincidence?  Not bloody likely.  And once the dollar rally ended at the p.m. fix, both gold and silver rallied quickly… regaining most of their New York losses while the dollar basically traded sideways.

The precious metals shares bottomed at 9:45 a.m. Eastern time… and the HUI gained about two and a half percent during the rest of the day… and closed almost on its high of the day.  A strong performance in face of the fact that both gold and silver were down on the day.  The HUI closed up 0.78%.

Gold open interest barely moved on Wednesday… down a whole 6 contracts.  Volume was 119,787 contracts.  Silver open interest rose another 1,200 contracts.  Volume was 45,053 contracts of which 25% were roll-overs.  Silver's open interest numbers have been really odd for the last few days.  Don't know why… or what it means.  But, whatever it is, it won't show up until next Friday's Commitment of Traders report.  Today's report will be released at 3:30 p.m. sharp Eastern time.  When that time arrives [and not a second before] click here.

For the first time I can remember, there were no gold or silver contracts posted for delivery.  But, at this point in the delivery cycle, most contracts for April have already been delivered… and there's only a handful left between now and month end.  There was a minor withdrawal from GLD reported yesterday… only 29,363 ounces… which might have been a fee payment.  There were no changes reported for SLV.  The U.S. Mint advised that another 4,000 one-ounce gold eagles were sold yesterday, but nothing for silver eagles.  The Comex-approved depositories reported a smallish decline of 68,183 ounces of silver on Wednesday.


I've got quite a few stories today.  The first two are Goldman Sachs related.  The first is a piece from The New York Times courtesy of reader Roy Stephens.  "The government’s case against Goldman Sachs is about to get its first public airing, in what could be a gripping preview of the legal battle to come."  The headline reads "Goldman Executives Are Expected to Testify Before Senate Panel"… and the link is here.

Here's the other G.S. offering, which is also from reader Roy Stephens.  It's an article from huffingtonpost.com.  It's headlined "Shadow Elite: Goldman Sachs – Fraud Is Not the Scandal".  I've always considered the likes of Goldman Sachs,  JPMorgan and the rest of the Wall Street mob of bankers and investment houses, as members of a world-wide crime syndicate… all doing the work of the American Empire… and bleeding dry every country, company and person they touch.  The world is now starting to discover that.  The link to this worthwhile article is here.

The next piece is posted at businessinsider.com.  It's a short read with an excellent graph… and the headline says it all… "Hidden In The PPI Data Was The Largest Food Price Spike In 26 Years".  It will take less than a minute of your time… and the graph alone is worth the trip.  The link is here.

The budget woes in California are starting to bite in the city of Los Angeles. "The nation's largest court system is in the midst of a painful budget crisis that has shut down courtrooms and disrupted everything from divorce and custody proceedings to traffic ticket disputes." The story is posted at yahoo.com… and I thank reader Scott Pluschau for sending it along. The headline reads "Budget crisis puts LA court system at risk"… and the link is here.

I ran a story on Belgium about a year ago.  Here's another.  The first one was about whether Belgium would survive as a nation state.  So is this one.  This one looks more serious… especially on top of all the other things going on in Europe at the moment.  It's a piece from yesterday afternoon's edition of The Telegraph in London… and the headline reads "Future of Belgium under threat over language row"… and the link is here.  I suggest you run through it.

Here's my headline story that was posted at The Telegraph late last night.  Greece is back in the news again big time.  "Greece's debt crisis has reached a dramatic crescendo after the EU revealed that the country's debt and deficit figures are even worse than feared and leading banks began to talk openly of debt-restructuring."  It's an Ambrose Evans-Pritchard offering that falls into the must read category.  It's headlined "Escalating Greek default fears rock Europe's debt markets" and the link is here.

Here's another offering from Ambrose Evans-Pritchard posted at The Telegraph's website. Fitch Ratings has warned that Japan's sovereign debt is rising to ominously high levels as the workforce shrinks and deflation grinds deeper, while the government's reserve assets may prove unusable for defence in a funding crisis."  The headline is similar… "Fitch warns of debt 'shock' for Japan"… and the article is definitely worth the read.  The link is here.

Lastly today comes an interview with silver analyst, Ted Butler.  This one is posted over at bullionbullscanada.com.  As you are aware, dear reader, I pay very close attention to whatever Ted Butler has to say.  This is certainly worth the read… and the link is here.

The sovereign debt crisis is now a genie that cannot be put back in the bottle.  As you read in the last Ambrose Evans-Pritchard offering, the credit markets went wild in Europe yesterday.  The slippery slope to economic, financial and monetary Armageddon got a lot steeper yesterday… as things lurched from bad to worse… much worse.

As I've stated many times before.  There are only three ways [or combinations thereof] that this whole thing will end.  A deflationary implosion, a hyperinflationary depression… or a massive re-pricing of gold in order to bolster the asset side of central banks' balance sheets.  With that in mind, it's no wonder that Russia is wolfing down internal gold production while the currencies they pay for it with are still worth something.  Along with China, one has to wonder what other central banks are doing the same thing at the moment.  James Turk's article on hyperinflation that I posted in this column yesterday, may prove prescient.  If you wish to refresh your memory… click here.

Here's the $Gold/$Euro graph going back three years.  It has been moving from the lower left to the upper right almost without a break since July of 2007.  I doubt very much that this trend will change any time soon.

And it's only a matter of time [and not too much more time, either] before the U.S. dollar is also called into question… and when that happens, we'll begin the final stage of fiat currency destruction world wide.

Nothing much happened in Far East trading earlier today… and not much is going on now that London is open.  Don't forget that as long as the bullion banks are prepared to be a not-for-profit seller by going short against every long contract on the Comex, prices aren't going to go too far.  But the pressure on the precious metals prices is now so intense, that it's only a matter of time before they either give up… or get over run.

Gold volume [as of 4:50 a.m. Eastern time] is a very light 16,300 contracts for May… and silver's volume is around 2,600 contracts net of roll-overs.  The CME's preliminary volume figures for Thursday show that gold traded 146,547 contracts, of which about 3% were roll-overs.  In silver, volume was reported as 50,568 contracts.  Twenty-five percent of that was roll-overs into future months… mostly July.

There's still time [and not a lot in my opinion, dear reader] to get positioned for the next leg up in this 10-year-long bull market in both gold and silver.  As you can tell, everything is starting to circle the drain ever faster.  I urge you to consider investing in either Casey's Gold & Precious Metals Report… or Casey Research's flagship publication… the International Speculator.  The stock picks in both of these reports are well worth your investment dollar.  Please click on the links to learn more.

It might turn out to be an interesting trading day on the Comex… and we won't have long to wait to find out.

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