Global Gold Hedge Book Down to 236 Tonnes

As I mentioned when I filed my Tuesday commentary in the wee hours of yesterday morning, there was nothing much going on in either the Far East or early London trading that was worth mentioning.  Gold was up a few dollars and silver was up a few cents.  This condition lasted until fifteen minutes after the Comex open in New York.  Then a buyer showed up at precisely 8:30 a.m.  After a nice spike, gold ran into a wall of selling that stopped any further price advancement in its tracks.  Gold's low price was around $1,106 spot shortly after Sydney opened for trading… and the high of the day [$1,130.20 spot] occurred at some point during the New York trading session.

Silver gained about a dime during Far East and London trading… and added about two bits in the first hour or so of New York trading… before it, too, ran into the same not-for-profit seller as gold.  Then it traded sideways for the rest of the New York session.  Silver's low occurred at the same time as gold's… in early Sydney trading… and its high was in New York at $17.51 spot.

The dollar had a 66 basis point decline that started about 3:30 a.m. in New York… and ended twelve hours later at 4:00 p.m.  You'd be hard pressed to find much relationship between the precious metals prices and the dollar anywhere in Tuesday's trading.

Gold and silver were mostly at their highs of the day by the time that the equity markets opened in New York yesterday.  The HUI opened up about two percent and added another one percent by the end of the day… and closed almost on its high… up 2.96%.

Tuesday was another one of those days when a serious buyer [either new… or short covering] showed up.  Since there were obviously few legitimate sellers around, buys stops were tripped and the price went vertical almost instantly… and if the bullion banks hadn't shown up as sellers of last resort, heaven only knows how high the price would have gone.  I also call the bullion banks not-for-profit sellers, because they don't sell into these rallies to make money… they only do it to cap the price.  That's what they're there for… nothing more, nothing less.  That's why these '4 or less' bullion banks are sitting on these grotesque Comex short positions that have built up over the decades… because there are not enough legitimate sellers out there.  They're all that's standing between us and monstrously higher prices in both silver and gold.

Tuesday's open interest in gold fell 11,617 contracts and, considering the quiet price action… Ted Butler said it was probably spreads being lifted… which makes perfect sense.  The final volume in gold trading for Tuesday was reported as 178,496 contracts.  Silver's o.i. fell by an insignificant 44 contracts in quiet trading.  Volume was a smallish 30,904 contracts.

Open interest numbers for Tuesday's trading will be interesting, as they will give some indication as to whether yesterday's price surge was a new buyer going long… or someone covering a short position.

It was a quiet day on the delivery front yesterday.  The CME Daily Notice showed that only 18 gold and 5 silver contracts are posted for delivery on Thursday.  And, once again, there were no reported changes in GLD, SLV… or at the U.S. Mint.  The Comex-approved depositories showed a decline of 312,866 ounces of silver on Monday.

I had a lot of stories in my Tuesday column and, surprisingly enough, I have a bunch more for you today.

Today's first gold-related story is a one paragraph Reuters piece filed from Frankfurt.  The European Central Bank once again reported that "gold… and gold receivables" remained unchanged for the week ending March 12th. The ECB has basically sold no gold at all in 2010.  The story isn't worth reading… but the link is here if curiosity gets the better of you.

The next gold-related story today was posted over at the mineweb.com.  "The latest Global Hedge Book survey from Société Générale, shows that at the end of 2009 the global delta-adjusted hedge book stood at just 236 tonnes, a far cry from the 2,064 tonnes when it was at its peak in 2000.  De-hedging in the fourth quarter was 125 tonnes, making up more than half the year's total of 246 tonnes… analysts expect a continued acceleration of the program this year and see the potential for around 90 tonnes of de-hedging this year."  The headline reads "Gold Global Hedge Book down to just 236 tonnes"… and the link is here.

The next [and last] gold-related article comes from Goldmoney founder, James Turk.  It's posted over at his fgmr.com website.  The title reads "Gold's $1,140 Hurdle".  Resistance levels for gold, like the current one of $1,140, are really nothing for gold investors to worry about, according to Turk.  Those levels, Turk writes, are just the trenches dug by the central bank-led anti-gold cartel as they retreat in the face of increasing demand for the metal."  The link to this must read story is here.

Today's story on the Greek debt situation comes from a posting over at france24.com… and it's courtesy of reader Roy Stephens.  The headline reads "Eurozone finance ministers agree to Greece rescue plan"… but, like everything else surrounding this Greek tragedy, it's long on words and short on specifics… and money.  The story is a handful of short paragraphs… and the link is here.

The next item is something that's posted over at zerohedge.com.  It bears the longish title of "The Fed Is Responsible for the Crash in the Money Multiplier… And the Failure of the Economy to Recover."  Basically what it says is that for every dollar increase in the monetary base, the money supply is only increasing by 78.6 cents… which is deflationary.  The banks are sitting on their excess reserves because the Fed is paying interest on it… so there's no incentive for them to lend it out.  It's a rather long article… but you only have to read the first third to get the gist of it… which I recommend you do.  The graphs are great… and the link is here.

I stole the preamble for my next story from Tyler Durden over at zerohedge.com.  The title reads "Is the US Preparing for "The Total Destruction of Iran?".  The introduction reads as follows… "Is war just around the corner? While in theory it would make perfect sense to distract Americans from the long road to US insolvency, and other more pressing issues such as the endless criminality all around us, in practice we have so far heard merely rumors. The Herald in Scotland, however, may have credible proof that a US-led attack on Iran approaches and could be just days away."  We've all heard these war cries before, dear reader, and it's impossible to tell whether this is just more sabre-rattling… or if it's the real deal.  I thank Casey Research's Jeff Clark for sending it along.  It's well worth reading… and the link is here.

By the way, Jeff Clark's name pops up in my column on a regular basis, as he always has a keen eye for a story that might be of interest to us.  Jeff is editor of Casey's Gold & Resource Report… and at $39/year for a subscription… it's a steal at that price.  I urge you to click on the link and check it out.

Mine finance entrepreneur Murray Pollitt of Pollitt & Co. in Toronto is most likely the greatest financial columnist who isn't syndicated.  Murray remarks in his monthly commentary for clients that central banks, treasury departments, and international financial organizations are turning the whole world into something resembling an old-fashioned corrupt tropical despotism.  If you've ever read John Perkins' book… Confessions of an Economic Hit Man… you'll know of what I speak.  Pollitt's commentary is titled "Bananaland" and he has again generously allowed me to share it with you. The link to the pdf file is here.

And lastly comes another interview courtesy of The King Report.  This time Eric King has a lengthy interview with world-renown investor, Jim Rogers.  It's certainly worth the listen… and the link is here.

We are spending more money than we have ever spent before, and it does not work. After eight years, we have just as much unemployment as when we started and an enormous debt to boot. – U.S. Treasury Secretary Henry Morgenthau… May 1939

I was delighted to see the jump in bullion prices yesterday… but also unhappy about the fact that the bullion banks were there going short against all longs once the price got "irrationally exuberant".  You'd think these guys don't have a care in the world… and are thumbing their noses at CFTC chairman Gary Gensler and his upcoming hearings regarding position limits and trading exemptions for precious metals.

The price move yesterday certainly took us some distance above all the pertinent moving averages that I was talking about yesterday.  Here's the 6-month silver chart as a 'for instance'.

Trading action in the Far East was pretty quiet earlier today… with gold up a few bucks and silver up a few pennies.  But there was that little spike up in both silver and gold prices at 4:00 a.m. Hong Kong time that promptly got capped.  I'm still looking for some sort of explanation why that particular time slot is so active, as London doesn't open for another 30 minutes.  So who is it… and why?

Volume in gold [as of 5:12 a.m. Eastern time] is around 16,000 contracts once you subtract the spread trades… and silver's volume [net of spreads] is around 2,100 contracts.  This is very quiet volume… but this will certainly change once the New York traders swing around to their computer screens.

Preliminary volume numbers for Monday's trading shows that 166,414 contracts were traded in gold yesterday… and silver traded 31,331 contracts.

Yesterday's activity was a surprise… and I look forward with great interest to whatever JPMorgan et al have in store for us when the Comex opens for business this morning.

See you tomorrow.