Gold is My Asset Pick for the Next 10 Years: Marc Faber

What can be said about Friday's gold price action, except… "what price action?"  Volume was the lowest that I can remember in years.  Nothing to see here, folks.


Silver's price action was hardly the life of the party on Friday, either.  The price drifted below $18.00 a couple of times at the close of London trading… but managed to finish in the plus column as well.  Volume was very light.

The world's reserve currency started Friday morning in the Far East at 82.6 cents… and nine hours later [3:00 a.m. Eastern time] it had drifted down about 40 basis points to its Friday low of 82.2 cents  From there, the U.S.$ slowly worked its way higher… and by the end of New York trading, had risen to 82.93 cents.  Here's the 3-year U.S. dollar chart that puts this week's three cent rise into perspective.  Despite the big gain in the currency… gold was actually up about $15 on the week.  Go figure… and what this all means has not yet been revealed to me.

The precious metals stocks got sold off right from the New York open… and hit their nadir [along with the rest of the equity markets] at 11:30 a.m. Eastern time.  From that low, the HUI shares basically bounced along the bottom for the rest of the day… and only recovered a hair… closing down 1.26% on the day.  Here's the HUI for the week that was.  Gold was up about one percent on the week… and the shares were up about half a percent.

The CME's Daily Delivery report showed that 31 gold contracts were posted for delivery on Monday.  Once again all the 'action' was confined to the Bank of Nova Scotia and HSBC USA.

There was no activity reported in either GLD or SLV yesterday… but the U.S. Mint did have a report.  They sold another 500 ounces of gold into the gold eagle program… and another 500 24-K gold buffaloes… plus 75,000 silver eagles.  To add to the slow day in just about everything… the Friday report from the Comex-approved depositories showed no in or out activity whatsoever on Thursday… not an ounce.

The Commitment of Traders report showed almost no change in silver.  The Commercial net short position rose by a very small 210 contracts… and now sits at 52,753 contracts… which [multiplied by 5,000] comes to 263.8 million ounces.  The '4 or less' bullion banks are short 227.6 million of that amount… and the '8 or less' bullion banks are short 304.7 million ounces.  On a net basis [once all the spread trades are removed] these '8 or less' bullion banks are[conservatively] short 64% of the entire Comex silver market.

In gold, the Commercial net short position deteriorated by 8,951 contracts… and the Commercial net short position now sits at 23.1 million ounces of gold.  The '4 or less' traders are short 19.0 million ounces of that… and the '8 or less' traders are short 25.4 million ounces of gold.

The '8 or less' traders in silver… and the '8 or less' traders in gold… the same bullion banks in both metals… are in total control of the both the silver and gold prices.  The link to Friday's COT report is here.

Ted Butler's weekly interview with Eric King over at King World News is always worth your time.  I urge you to stop reading at this point… and listen to what he has to say.  The link is here.

Here's Ted Butler's "Net Largest Traders Short vs. Days of Production" graph that Nick Laird over at sharelynx.com updates on a weekly basis.  I asked Nick to change the graph to read from left to right instead of right to left… and he's now using 2009 world silver production as provided by Gold Field Mineral Services to the Silver Institute… so that has changed the numbers a bit.  I have a story about that further down in this column.  Please note in the graph that the largest short positions are held in the four precious metals… with silver being the big stand out.

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I only have seven items today… but you can safely put most of them on yourmust read/watch list for this weekend.

The first story is torn from Friday's edition of Casey's Daily Dispatch… and you have a very short window in which to read this, before it's replaced with Saturday's edition… as this story is normally subscription protected material.  If you do happen to miss it… you can go into the Casey Daily Dispatch library [for free] and find it there… but you have to sign up first.  It's an interview headlined "The Best Gold Interview of 2010".  It's between Jeff Clark, who is senior editor of our Casey's Gold and Resource Report, and Andy Schectman of Miles Franklin.  It's about the supply and demand factors that are currently in place in the retail gold and silver bullion business.  It's a fascinating read… and the link is here.

While on the subject of Jeff Clark… the moneynews.com story he sent me yesterday turned into the headline of today's column.  "Gloom, Boom & Doom Report" editor Marc Faber told a CPA Association meeting in Abu Dhabi that gold is his asset class of choice for the next 10 years.  The link to this must read article is here.

The next gold-related item is an AP story filed from Kuala Lumpur… and is posted over at google.com.  I ran a story on this over a month ago… and it has finally come to pass.  Both gold and silver [the golden dinar and silver dirham] have come back as currencies in one of Malaysia's northern states.  Here's the story about that headlined "Malaysian state introduces Islamic currency"… and the link is here.

Florida reader Donna Badach sent me an 11-page pdf file from thesilverinstitute.org website.  The real 'juice' of the report doesn't start until page 6… so you can safely forget about the first five pages.  The title of the report is "World Silver Survey 2010… A Summary".  It's an interesting read… but I'm not sure how accurate this Gold Field Mineral Services report really is.  You will carefully note, dear reader, that nowhere in this report [or its full length version] does it mention the fact that '8 or less' bullion banks are short 64% of the entire Comex silver market… and 43% of world silver production.  Just think about that for a second.  Don't you think that this fact should be considered a material omission?  Just asking.  The link to the report… such as it is… is here.

Today's next gold-related story is in the form of a GATA release that came out yesterday morning.  It was an interview on CNBC out of Hong Kong with Tyche Group's associate director, Martin Hennecke.  Part of the interview was about the central bank intervention in the commodity markets in general… and the gold market in particular.  The GATA headline reads "Martin Hennecke on CNBC: Most market manipulation suppresses commodities, gold".  The interview, and Chris Powell's preamble, are more than worth your time… and the link to both ishere.

The next story is video interview posted over at Russia Today.  It's an interview with William K. Black… and its an absolutely stunning indictment of the U.S. banking system, Wall Street and the U.S. government.  Bill Black really takes the gloves off this time… no more Mr. Nice Guy like his last interview on PBS with Bill Moyers.  Max Keiser does the interview… and even though I'm not overly fond of his style… he's at the top of his game here.  The interview starts at the 13-minute mark and runs for about 15 minutes… and the closer to the end of the interview you get, the more fantastic the revelations become.  It's anabsolute much watch… and I thank reader U.D. for bringing it to my attention… and the link is here.

Lastly today is the July edition of the Markets at a Glance commentary from Eric Sprott and David Franklin over at Sprott Asset Management in Toronto.  Here's a paragraph from this essay… "Keynesian stimulus can’t be blamed for all our problems, but it would have been nice if our politicians hadn’t relied on it so blindly. Debt is debt is debt, after all. It doesn’t matter if it’s owed by governments or individuals. It weighs on the institutions that issue too much of it, and the ensuing consequences of paying off the interest costs severely hinders governments’ ability to function properly. It suffices to say that we need a new economic plan – a plan that doesn’t invite governments to print their way out of economic turmoil. Keynesian theory enjoyed a tremendous run, but is now for all intents and purposes, dead… and now it’s time to pay for it. Literally."

As economist John Kenneth Galbraith said in chapter seven of his 1977 book The Age of Uncertainty: A history of economic ideas and their consequences"… "The Age of Keynes was for a time… but not for all time."  Amen to that!  The report, headlined "Fooled By Stimulus", is well worth the read… and the link is here.

There are no markets anymore… only interventions. – Chris Powell, GATA

Today's 'blast from the past' doesn't go too far back in time… only into the 1980s… which seems like a lifetime ago now.  You may not recognize the song when it first starts out, but give it a minute and I'm sure you will.  So turn up your speakers and click here.

Yesterday was a nothing day.  It looks like the bullion banks took the day off.  Volume was incredibly light.  There was nothing much happening anywhere in the gold and silver world anywhere you cared to look… as the earlier part of this column indicates.  The 'summer doldrums' lived up to their name yesterday.

But summer is winding down in the northern hemisphere.  Fall is already in the air… at least at my latitude on Planet Earth… and September will be upon us before we know it.  There weren't too many sale prices available in the precious metals stocks over the last six weeks or so… and unless we have a major crash in the equity markets, I'm not expecting that to happen in the future either.  If we do get a decline in the equity markets, it's my feeling that yes, the precious metals stocks will be affected… but certainly not to the extent that they were in 2008.  This time it really is different.

So, before the gold and silver markets begin to heat up in earnest… which could be at any time… I urge you to invest a few dollars and pick up a subscription to either Casey's Gold and Resource Report… or Casey's flagship publication, theInternational Speculator.  Investments in your future well-being such as these, I do not consider as a cost at all.  And don't forget that your satisfaction is 100% guaranteed… and our usual money-back policy is in place.  Please click on the above links and check them out, as it costs nothing to do so.

I hope you enjoy what's left of your weekend… and I'll see you on Tuesday.