'Goldman Sachs is the Undeclared Enemy of the State' – Jim Rickards
Gold didn't do much of anything in Far East trading on Wednesday… up just a few dollars from its New York close on Tuesday. And, as I mentioned in my closing comments in yesterday's column, once London opened, the activity level picked up quite a bit… with the London high in gold coming around 11:00 a.m. local time… which was 6:00 a.m. in New York. But that was it for the day, as gold basically traded sideways all through the rest of London trading, plus all of New York. Gold's high of the day [$1,217.80 spot] occurred shortly before 11:00 a.m. Eastern time.
Volume was extremely light for the second day in a row… with no big buyers or sellers lurking about. But the roll-over and switching volume in gold is enormous… as today is the last day of trading for the May contract.
Silver's price, as usual, was more 'volatile'… but generally followed the gold price. The high price point for silver occurred at the same time as gold's high… and that price was $18.42 spot. But from there, silver got sold off… and by the time trading ended on Wednesday… silver was only up about a dime.
Once again there was no sign at all that the U.S. dollar and gold had any co-relation at all on Wednesday. The dollar gained around 100 basis points from the Far East open yesterday morning… right up until the close of precious metals trading in New York yesterday afternoon. The gold price was up regardless. Here's the 3-day dollar graph… provided for entertainment purposes only.
At the beginning of trading yesterday, precious metal shares did very well for themselves… especially since the Dow got goosed right at the opening… as 'da boyz' had the futures spun higher after Tuesday's disaster. The HUI topped out at the same time as gold and silver prices peaked out… shortly before 11:00 a.m. Eastern time yesterday morning. Then it was, as they say, all down hill from there… with the HUI finishing slightly in the negative column… down 0.08%. However, it was mostly the major gold companies that suffered losses… as lot of the junior and intermediate producers did OK… especially the silver companies. But they did give back some of their rather impressive gains as the trading day came to an end.
The CME Delivery Report showed that 3 gold and 28 silver contracts are up for delivery on Friday. As I mentioned yesterday, the deliveries are melting away as month end approaches. I just checked the CME's 2010 Expiration Calendar and I see that Monday is Memorial Day in the U.S… so the last trading day in the May contract is today… and first day notice for delivery into the June contract is tomorrow.
The GLD had a tiny addition to its gold reserves yesterday… 9,784 ounces to be exact… which isn't even a rounding error. Of course SLV showed no change. The U.S. Mint had something to say again. This time they reported selling another 18,000 one-ounce gold eagles… and 4,500 24-k gold buffaloes. There were no reported sales in silver eagles. Month-to-date: one-ounce gold eagles sales are 176,000… 24-k gold buffaloes are at 70,500… and silver eagles remain at 3,500,000. It would be my guess [once again] that the bulk of these sales would be into Europe. With only two more reporting days to go, it will be interesting to see if the Mint sells enough silver eagles to break the 4 million mark for the month of May. Both Ted Butler and I have noticed that sometimes the Mint will withhold data at months' end to prevent any particular month from looking too spectacular… and if there was ever a month they were going to pull that particular stunt… it would be this month. I'd love to be proven wrong… and, as they say, we'll find out in the fullness of time.
The Comex-approved depositories showed that silver inventories declined 639,170 troy ounces on Tuesday. The link to the action is here.
Here's another terrific graph provided by my friend Nick Laird over at sharelynx.com. It's a total of all the gold in all the depositories, ETFs, funds… and e-funds. It's current as of Tuesday. The graph on the left is in ounces [77.65 million] and on the right, it's U.S. dollar value… in this case… $93.05 billion. That 77.65 million ounces is within a few percentage points of one years total world gold production.
Every day I hope that the list of worthwhile reading that I present will grow shorter… but that's not the case again today, either.
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My first story is out of today's edition of theaustralian.com. It appears that the Australian government is doing a serious rethink of its $12 billion tax on the mining sector that it proposed only three weeks ago. I thank 'Verne from Ventura' for the story that's headlined "Kevin Rudd to backflip on mining tax rate"… and the link is here.
Here's a longish article that I found over at the mineweb.co.za yesterday. It's an interview with Doug Groh of the Tocqueville Gold Fund. He reckons that gold rising in all currencies is a reflection of the concern and distrust for central bank authorities, political authorities and what's going in the world. [He's exactly right about that. – Ed] The headline reads "Gold is rising in all currencies sign of distrust"… and the link is here.
Here's a really interesting video from CNBC Europe's "Squawk Box". They interviewed Ben Davies, CEO of Hinde Capital in London… and co-manager of its gold fund. He remarked, seditiously, that "central banks and governments are very good at obscuring facts,"… and that there is some doubt that the United States has the 8,000 tonnes of gold it claims to have… and that GATA has brought legal action to try to find out. This 7-minute video clip is certainly worth your time… and it's imbedded in this GATA release which is linked here.
This next story [which I stole from yesterday's King Report] is posted over at Bloomberg's businessweek.com website. David Stevens, the head of the FHA had this to say about the current state of the U.S. real estate market… “This is a market purely on life support, sustained by the federal government,” he said at the Mortgage Bankers Association conference. “Having FHA do this much volume is a sign of a very sick system.” Let's face it, dear reader… if the U.S. government wasn't borrowing and spending… plus propping up every market in sight… the world would now be in a depression many orders of magnitude worse than that of the 1930s. The link to this very worthwhile story is here.
Yesterday I ran a brief video clip from Russia Today where Jim Rickards stated that Goldman Sachs was the "undeclared Enemy of the State". The clip was only 89 seconds long… and I opined that it was probably a snippet from a much longer interview. It was… and reader Randall Reinwasser came through with the whole thing. It's posted over at youtube.com… and the Rickards interview starts at the 13:00 minute mark right on the button… and the link is here. It's definitely worth watching.
Here's a rather ominous story from late last night that was posted at The Telegraph in London. It's an Ambrose Evans-Pritchard offering that begins as follows… "The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history." The headline reads "US money supply plunges at 1930s pace as Obama eyes fresh stimulus". The story was sent to me by reader Roy Stephens… and the link to this must read piece is here.
And lastly today, is one that I've been saving since the weekend… hoping that things would slow down a bit… but they haven't. The first piece is on the long side… but it's more than worth your time. Switzerland's Daily Bell Internet site has just posted a wonderful interview done by Scott Smith with Hugo Salinas Price, founder of the Mexican Civic Association for Silver. The interview addresses not only Salinas Price's plan to liberate his country by re-monetizing that precious metal, which abounds in Mexico, but also his views on his country's future and worldwide economic conditions. The interview is headlined "Hugo Salinas-Price on the Nature of Money and Why Silver Should Be Legal Mexican Currency". A wonderful man… and he's right up there in net worth along with Eric Sprott over at Sprott Asset Management. No flies on this guy… and the link is here.
Gold and silver aren't doing much of anything at the moment… 6:20 a.m. Eastern time. Volume is super light in gold…net of roll-overs… and only 4,600 contracts in silver have traded so far. Since the Far East opened for trading on Thursday morning at 6:00 p.m. New York time last night… the dollar lost the 100 basis point gain that it tacked on during Wednesday's trading. That helped gold and silver a little during morning trading in the Far East… but both metals have traded sideways to down ever since. But the moment that London opened, the dollar had a miraculous recovery… and the gold price is now where it was at the New York close yesterday afternoon. Silver is up about two bits.
This three day rally that began on Monday has [according to Ted Butler] now taken the open interest in gold almost back to its old highs of about ten days ago. Silver's open interest appears to be slightly better than that… but we won't know for sure exactly what's happening until the Commitment of Traders report comes out tomorrow afternoon at 3:30 p.m. Eastern time. And don't forget that this COT report will be only for positions held up to and including the close of trading on Tuesday… options expiry day.
Looking at the RSI [Relative Strength Indicator] for both gold and silver, there seems to be a lot of room to run to the upside…ditto for silver. But that will most certainly drive gold's open interest to new highs if the bullion banks go short against all the new longs that will be pouring into the market. Here's the 1-year gold chart to emphasize my point… not only in this paragraph, but what I comment on in the paragraph below.
As I've said a couple of times in the last week, we'll probably have to get past the Memorial Day long weekend to see any significant changes in either gold or silver prices. There's lots of room to the upside to be sure, but sky-high open interest levels always make me nervous. It's always possible that the bullion banks could roll the precious metals market over to the downside once again… but economic and financial headwinds [not to mention huge bullion demand from all over] will make it difficult. So we just have to wait and see.
There's no doubt in my mind that the PPT was all over the U.S. equity markets yesterday… especially in the futures market before trading began… and their attempts to prevent a late afternoon rout were less than successful. I can't imagine 'da boyz' wanting the market to head south just before a long weekend, so these last two trading days in May… today and tomorrow… could be exciting to watch. I've bet myself $10 that the Dow will be safely back over 10,000 by the close of trading on Friday… and I hope I win!
That's it for today… and I'll see you tomorrow.