Gold Is The Best Asset Class To Be In

YESTERDAY IN GOLD AND SILVER

It was basically a nothing day in the gold market on Monday.  Gold got sold off a bit at the Comex open in New York, but managed to recover that and a bit more by the time that floor trading was done for the day.  In electronic trading, gold traded sideways into the close at 5:15 p.m. Eastern time.


Silver's high of the day [like gold's] was early in the morning in Far East trading before that not-for-profit seller I mentioned in my column yesterday showed up at precisely 8:00 p.m. New York time on Sunday night in both metals.  Silver declined fourty cents from that high by the time that London began trading… and basically traded sideways from that point.

The world's reserve currency hit a bottom in Far East trading early in their Monday morning… which was around 10 p.m. Sunday night in New York.  From there it gained about 50 basis points during the rest of Monday.

The precious metals stocks didn't to much… and the HUI managed to finish in slightly positive territory.

All in all, it was a quiet day.  Volume in gold was pretty decent regardless… and very heavy in silver.  Neither Ted nor I know what to read into that.  Maybe the final open interest numbers that are posted at the CME's website this morning will clarify things.  At least Monday's action will be in Friday's Commitment of Traders report.

The CME Delivery Report showed that there were no deliveries posted in either gold or silver yesterday.  The GLD ETF showed a small withdrawal yesterday… 29,308 ounces.  That's the fifth withdrawal in a row since September 28th.  There were no changes reported in SLV.  The U.S. Mint had nothing to say for itself on Monday… and the Comex-approved depositories showed a smallish decline of 30,627 in their silver inventories on Friday.

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¤ CRITICAL READS

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Fraud Factories

I'm going to start my stories today with the goings-on in the U.S. real estate market.  After spending twenty-seven years in residential real estate sales myself, I know a thing or three about it.  This whole charade has been going on for the last couple of years since the great financial crisis of 2008. But what really brought it to into the public spotlight lately was an 8-minute commentary by Republican Congressman Alan Grayson at the end of September.  Now most residential real estate foreclosures have ground to a halt.  The video is titled "Fraud Factories"… and I thank Australian reader Peter Souleles for sending it along… and the link is here.

Bank of America's Big Freeze Chills Housing Recovery

The next story in this ongoing farce is this cnbc.com story from last Friday.  It's headlined "Bank of America's Big Freeze Chills Housing Recovery".  It's not a very long read, but definitely worth your time.  I thank Australian reader Wesley Legrand for bringing it to my attention… and the link is here.

A Primer On The Foreclosure Crisis

Then on Monday came this next cnbc.com story [courtesy of Florida reader Donna Badach] headlined "A Primer On The Foreclosure Crisis". It's a continuation of the Friday story, but expands on it by quiet a bit.  This story should be read as well… and the link is here.

The Daily Show on the Foreclosure Crisis

The final word on this whole mortgage mess comes from the October 7th edition of The Daily Show with John Stewart.  John Cleese and Michael Palin ofMonty Python's Flying Circus fame, could hardly have done better.  It's a 7-minute must watch video clip.  For all my Canadian readers, the link is here.  But for everyone else on Planet Earth… the link is here. Jon's commentary about the banks and their mortgage mess begins at the 3-minute mark.  Once again I thank reader Wesley Legrand for this clip.

J.P.Morgan Commodities Chief Takes the Heat

The next item today is from the Saturday edition of The Wall Street Journal… and was sent to me by Ted Butler.  Apparently all is not well over at the commodities division at J.P.Morgan Chase these days.  Both Bear Stearns [from whom JPM inherited their huge silver and gold short positions] and silver get a mention in his article… and one has to wonder if their paper loses in these short positions aren't affecting them.  After having read the piece, I get the impression that one has to 'read between the lines' in this story.  The headline reads "J.P.Morgan Commodities Chief Takes the Heat"… and the link is here.

The demise of the dollar

The next story is another offering from Australian reader Wesley Legrand.  It's a piece from last week's edition of The Independent out of the U.K… and is headlined "The demise of the dollar".  In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the U.S. currency for oil trading.  It's a longish story, but it's worth the read… and the link is here.

Base metals are more precious by the week

The next story is out of yesterday morning's edition of The Telegraph… and is courtesy of reader Roy Stephens.  The headline reads "Base metals are more precious by the week".  Why are tin, copper, lead, zinc, aluminum and nickel so expensive at the moment… and is the general base metals rally sustainable?  This is very much worth the read… and the link is here.

Manipulated Markets Can Cause Ruin

Here's Chris Powell's preamble from a story out of Dubai that was posted as a GATA release yesterday… "In commentary posted at the Dubai-based business news Internet site alrroya.com, market analyst Ron Robins, wonders why so much attention is focused on China's manipulation of its currency exchange rate when market manipulation by the U.S. government, including manipulation of the gold market, is so pervasive and indeed is built into U.S. law. Robins' commentary is headlined "Manipulated Markets Can Cause Ruin" and the link is here.

Soaring prices threaten new food crisis

Here's Wesley Legrand's fourth [and last] offering of the day.  It's a story from last Friday's edition of the Financial Times out of London.  The headline reads "Soaring prices threaten new food crisis".  Fears of a global food crisis swept the world’s commodity markets as prices for staples such as corn, rice and wheat spiralled after the US government warned of “dramatically” lower supplies.  This is a must read as well… and the link is here.

Nick Laird's Graphs

Before I post my gold-related stories… here are a couple of graphs courtesy of Nick Laird over at sharelynx.com.  They show the current holdings of all the ETFs and mutual funds for both physical gold and silver… along with their respective price graphs.  Both graphs are worth your attention.

Jim Rickards: Race between gold and new paper currency

I only have two gold-related stories for you today.  The first is a GATA release of a King World News blog featuring Jim Rickards of Omnis Inc.  As always, anything Jim has to say, is worth the read… and this short piece is no exception. The headline states "Jim Rickards: Race between gold and new paper currency"… and the link is here.

Gold is the best asset class to be in

Lastly today is this piece from yesterday's edition of The Telegraph that's courtesy of Washington state reader S.A.  The headline reads 'Gold is the best asset class to be in'.  After a 10-year bull run, conventional wisdom says it's too late to join the party.  Is it different this time?  The writer points out the obvious fact that unallocated gold [including pool accounts] leave investors exposed to counterparty risk… if the custodian goes bust, you can't reclaim the gold and will simply be a creditor.  This is something that I've been going on about in this column for years… and I hope, dear reader, that you will take his words [and mine] to heart.  This is a must read… and the link is here.

¤ THE FUNNIES

¤ THE WRAP

Inflation has now been institutionalized at a fairly constant 5% per year. This has been scientifically determined to be the optimum level for generating the most revenue without causing public alarm. A 5% devaluation applies, not only to the money earned this year, but also to all that is left over from previous years. At the end of the first year, a dollar is worth 95 cents. At the end of the second year, the 95 cents is reduced again by 5%, leaving its worth at 90 cents, and so on. By the time a person has worked 20 years, the government will have confiscated 64% of every dollar he saved over those years. By the time he has worked 45 years, the hidden tax will be 90%. The government will take [in purchasing power] virtually everything a person saves over a lifetime.– G. Edward Griffin

I note that both gold and silver are drifting lower in Far East and early London trading as I put the finishing touches on today's column.  Volume in both metals [as of 4:09 a.m. Eastern time] is already pretty decent.  The dollar is up about twenty-five basis points as well.  As I've mentioned several times, both precious metals are overbought… and the dollar is oversold.  A reversal of these conditions, regardless of whether they're warranted or not, may be in the cards.  We'll see.

For the past month or so… and for whatever reason… I've noted that Tuesdays [the cut-off for Friday's COT report] have been big price movement days in both silver and gold.  So far, they've all been to the upside… so I'm more than interested in seeing what today's price action will bring.

Not that it really matters,  because as I've said many times, the ever-increasing prices for both gold and silver would hit the odd speed bump along the way… and it's important not to get panicked by the day-to-day price movements.  I'll still be 'all in' regardless of what gold and silver prices do today, next week… or even next month.  I'm just not smart enough to trade in and out of this market… especially at this point in time.

I hope your Tuesday goes well… and I'll see you here tomorrow.