Is the IMF's Gold Really There? – James Turk
As is generally the case, all the major action occurred during the New York trading session on Wednesday. Gold got smacked at 8:30 a.m. in New York… and an hour later it was at its low of the day which was recorded at $1,156.20 spot. Then, surprisingly, gold caught a bid and was allowed to rise into positive territory. But the rally ran into 'resistance' by noon… and gold traded sideways into the close of electronic trading at 5:15 p.m. Eastern time. The high price tick of the day was $1,178.30 spot.
Silver's high of the day [around $17.80 spot] was in late morning trading in London… and from there, came under some selling pressure. Of course this selling pressure intensified at 8:30 a.m. in New York… as silver 'dropped' all the way down to its $17.05 spot low price of the day. Although silver rallied after that low… it never got near its closing price on Tuesday and finished down 36 cents on the day. The silver price also sliced through its 50-day moving average like a hot knife through soft butter.
As far as the dollar activity went… it didn't do much until about 6:00 a.m. Eastern time, when it began to rally… and was up a bit over 80 basis points around the time that gold and silver prices were at their nadir at 9:30 a.m. in New York. That was the top for the dollar… and since then, it has basically been moving sideways well into Far East trading in their Thursday morning.
The precious metals stocks pretty much followed the gold price… which happened to coincide with what the Dow was doing as well… as the low for the stocks was at the 9:30 a.m. market open… which, coincidentally, happened to be the lows in the precious metals. The shares turned slightly positive at noon, as gold and silver hit their respective highs for day… as did the Dow… and I'm sure that the sell-off in the general equity markets later in the afternoon, dragged down the precious metals shares with them. The HUI closed down 0.73% on the day.
Well, the open interest numbers for Tuesday were a bit of a disappointment. Gold open interest showed an increase of 674 contracts. Volume was very heavy. Silver's open interest fell 1,371 contracts… which is hardly worth mentioning considering the fact that silver was down a dollar on the day. Volume, like Tuesday's, was monstrous… over 50,000 contracts net of roll-overs and switches. Two things are obvious from these o.i. numbers… either the bullion banks covered their tracks well by purchasing longs… or not all trading data was reported in a timely manner… or a combination of both. Wednesday's open interest data should tell us more when it becomes available later this morning.
The CME's Delivery Report showed that 19 gold and only 14 silver contracts were posted for delivery on Friday. Both GLD and SLV had something to report yesterday. The GLD added a pretty hefty 225,085 troy ounces… and SLV added their first silver since February 26th… 963,153 troy ounces!!! Once has to wonder how many of their shorted shares the SLV sponsors were able to cover when the SLV custodian [JPMorgan] engineered this latest silver sell-off? Maybe the Department of Justice will look into it.
The U.S. Mint reported more sales yesterday. They sold another 15,000 one-ounce gold eagles, 11,000 more 24-karat buffaloes… and an additional 205,000 silver eagles. So far in May, these three U.S. Mint offerings have sold 17,500… 13,500… and 405,000 bullion coins respectively. Have you bought your share, dear reader? My coin guy has been doing great business since the bullion banks decided to offer silver and gold at these discount prices starting on Tuesday. Hurry and get yours, as these prices won't last, and the sale ends soon!
The Comex-approved depositories reported adding 1,167,892 troy ounces of silver to their warehouse stocks on Tuesday… which is almost identical to the amount they shipped out on Friday of last week.
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I have quite a few gold-related stories today… and I'll start with them. The first one is a GATA release that's directly related to one of the stories I posted from the mineweb.com yesterday that was titled "China, the Gorilla in the Third Gold War". This story is headlined "Paul Mylchreest sees GATA winning "The Third Gold War"… and the link to this must read item is here. Let me warn in you advance that this is a 40-page pdf file, so you may want to save it for later when you are able to give it the time it deserves.
The next item is from James Turk, founder of GoldMoney, editor of the Free Gold Money Report, and consultant to GATA. He takes note of the International Monetary Fund's refusal to account for the gold it claims to have. Turk also quotes a Wall Street Journal report suggesting that the IMF's resources are actually just pledges from the central banks of some of its financially stronger member nations. Turk's commentary is headlined "Is the IMF's Gold Really There?". This is a short read, but it's a must read as well… and the link is here.
Eric King of King World News has called attention to a conference called for May 11th in Zurich by the International Monetary Fund and the Swiss National Bank to discuss the international monetary system. King speculates that the conference will have immensely favorable implications for gold. You can find King's report, headlined "Explosive Gold Catalyst" linked here. It's a short read… and definitely worth your time.
My last gold-related story is another GATA release. Ted Butler's and Jim Rickards' interviews last Friday with Eric King of King World News about the Department of Justice involvement in the silver price suppression scheme, got mentioned on CNBC yesterday morning. The headline of the GATA release reads as follows… "CNBC is incredulous at Rickards' interest in metals price suppression". This is a must watch video clip… and the link to whole story is here.
The rating agencies, such as Standard and Poor's, have always been criticized [and rightly so, I might add] for enabling this entire financial debacle. I received three different stories about them yesterday. In this piece, posted over at wallstreet.blogs.cnn.com, comes this commentary headlined "[Bill] Gross rips the rating agencies". I'm not a huge Bill Gross fan by any stretch of the imagination… but he's absolute right on in this commentary. I thank Australian reader Wesley Legrand for bringing it to my attention… and the link is here.
Here's a story from yesterday's edition of The Telegraph in London. The European Commission has waded into Britain's election debate on the eve of polls after warning that British public debt is expected to be higher than any other European Union country this year. One has to wonder where the rating agencies are, now that things are this bad in Britain. The headline reads "General Election 2010: Europe issues warning over Britain's debt". It's not a long story… and it very much worth your time. I thank Australian reader Wesley Legrand for this story as well… and the link is here.
Today's last story is a Bloomberg piece courtesy of reader Scott Pluschau. With the Federal Reserve facing massive deflation… David Rosenberg, chief economist of Gluskin Sheff & Associates in Toronto, says that "The central bank will likely reintroduce quantitative easing measures because the other stops are already pulled… the Fed will be expanding its balance sheet even further". Rosenberg also says that deflation will push gold prices to record highs, and is forecasting that the precious metal will reach $3,000 in the next several years. I couldn't agree more. The entire world's financial system is now in "print… or die" mode… and that's exactly what they will do. The link to this very brief story headlined… "Fed Faces Deflation With Few Weapons, Rosenberg Says"… is here.
Well, the rout in silver continued again yesterday… despite gold's positive close. As Ted Butler and I keeping harping on… silver is the center of the universe for the bullion banks. They have none, can't get any… and are naked short at least five months of world silver production on top of that. They're going to beat the living snot out of this market until they figure that they've covered as many of their short positions as they can. How long this process takes remains to be seen… but judging by the fact that silver was taken down almost $2 in one 24-hour period… I'd say that they are in one hell of a hurry to get it done.
Tomorrow morning [Friday] at 8:30 a.m. Eastern time is the US jobs report. I've got a ten spot that says that the U.S. bullion banks [led by JPMorgan] will hit both gold and silver hard… and silver the hardest… at, or just before, that report is released. This has been their standard operating procedure for at least the last five or six years… regardless of whether the numbers are positive or negative. As I pointed out earlier in this column, 'da boyz' took out silver's 50-day moving average like it wasn't there at all. Will they go after the 200-day moving average? Beats me, but it's not that far away. If the phone call goes out… and they collectively pull their bids at the appointed time… then 'Bob's your uncle!' Let's see if that happens. Here's the 3-year silver chart.
Both metals didn't do much earlier today in Far East trading. There was a slight pop in the gold price at the London open at 8:30 local time… 3:30 a.m. Eastern over here… but that's all I can see at the moment. Gold has traded around 18,000 contracts so far… and silver's volume [which was a spectacular 8,400 contracts this time yesterday morning] is still a very chunky 4,600 contracts as I write this.
While I'm talking about volume, the CME has posted their preliminary numbers for Wednesday's trading… and they are as follows… gold had another big volume day of around 182,000 contracts net of spreads… and silver had another monstrous volume day as well… over 60,000 contracts net of spreads. There was massive long liquidation in silver on both Tuesday and Wednesday. It's showing up in the volume numbers, but the bullion banks covered their tracks yesterday by going long. Will the pattern persist when Wednesday's open interest numbers are posted later this morning? I don't know, but it will be the first thing I check when I turn on my computer later this morning.
I hope your Thursday goes well… and I'll see you tomorrow. I'm off to bed.