Russia's Central Bank Buys 600,000 Ounces of Gold In October

Yesterday in Gold and Silver

Well, with 20/20 hindsight, it's obvious that I filed my Friday commentary right at gold and silver's high of the day… which was shortly before 5:00 a.m. Eastern time yesterday… as it was mostly down hill from there.


Gold's high price print was around $1,363 spot in early London trading… but then quickly ran into not-for-profit sellers that sold the price down to its low of the day [$1,340.90 spot]… which occurred at the London p.m. gold fix at 10:00 a.m. Eastern time.  The price bounced back quickly during the next hour of trading… and then went sideways for the rest of the New York trading session, finishing up a magnificent 60 cents.

Silver's high tick of the day [around $27.45 spot] appeared to come at 8:30 a.m. in London, before the selling pressure began.  It should be no surprise to you, dear reader, that the low [$26.36 spot] came at the same time as gold.  But silver had a much stronger recovery… and finished up 36 cents on the day.

I once again provide the world's reserve currency graph for entertainment purposes only… as it bears little resemblance to the price moves in the precious metal markets yesterday.

The gold stocks pretty much followed the gold price while the equity markets were open… with the bottom coming at the low for gold and silver at the London p.m. gold fix at 10:00 a.m. in New York… followed by the recovery spike during the next hour of trading.  From there, the gold stocks pretty much traded sideways for the rest of the day.  The HUI finished up 0.57%.

Here's the HUI for the week that was.  It declined about 1.1% over the last five days… and reflected what the gold price did during the last five trading days… almost to the dollar.

And, as I mentioned briefly yesterday, the silver equities are starting to vastly outperform their golden cousins… simply because the silver price continues [and will continue] to outperform the gold price going forward.  That's why I'm 60/40 silver/gold in my own portfolio.  But… I'm not an investment advisor.

Here are two charts from Nick Laird over at sharelynx.com.  Note how the big sell-offs in both gold and silver have barely made a ripple in these graphs.  The first is the "PM Fund Index" graph…

Click here to enlarge.

And this one is the "Silver Seven Stock Index" graph.

Click here to enlarge.

Friday's CME Delivery Report showed nothing of consequence.

Over at the GLD ETF, they added 97,653 troy ounces of gold to their stash yesterday.  Not to be outdone, the SLV ETF showed another big increase on Friday.  This time it was 'only' 1,319,879 ounces.

The U.S. Mint had its fourth sales report in five days on Friday.  The reported selling another 10,000 ounces of gold eagles, along with another 600,000 silver eagles.  Month-to-date… 72,500 ounces of gold eagles have been sold, along with a knee-wobbling 3,775,000 ounces of silver eagles.  So far this year, the U.S. Mint has sold 32,405,500 silver eagles.

This is record production for one month… and for the year to date.  And, unless the wheels fall off the silver market over the weekend, the mint should break through the 4 million silver eagle barrier with ease next week.  But, at the same time, one has to wonder how long they can keep these production numbers up… and where are they going to get the silver from?  Silver eagles are mandated to be made from silver mined in the U.S.A… and, at these production levels, we're getting very close to seeing the U.S. Mint turn every single ounce of U.S. silver mining production into only one thing… silver eagles.  Who would have thought that possible just three short years ago?  The last question to be asked is… do you have your share?

'David in California' sent me a zerohedge.com article about all this.  The headline reads "US Mint Reports Soaring November Month-To-Date Silver Coin Sales Surpass 2010 High Following Massive Rush Into Precious Metal".  The link is here.

Over at the Comex-approved depositories, they reported receiving a rather large 978,805 ounces of silver on Thursday.  The link to that action is here.

Let's get back to gold for just a minute.  With the 20th of the month falling on a Saturday, The Central Bank of the Russian Federation updated their website for October on the business day prior to that… which was yesterday the 19th… a habit which I'm grateful for.  They reported adding another 600,000 ounces of gold to their official reserves, which now stand at 24.9 million troy ounces.  Year-to-date, the Russians have added 4.6 million ounces of gold to their reserves.  That's a lot!!!

From what I remember of Russian gold production in 2009… it looks like they're buying everything that they're digging out of the ground… and maybe a bit more.  This is basically an 'up yours' gesture from Russia to the west's central and bullion banks.  The Chinese government is doing exactly the same thing, except they do it in secret.  One has to wonder when their next big announcement of an increase in gold reserves is going to come… and how much it will be.

Here's the most excellent graph of 'all of the above'…

Click here to enlarge.

Well, yesterday's Commitment of Traders report [for positions held at the close of trading on Tuesday, November 16th] lived up to Ted Butler's advanced billing, as there were big decreases in open interest in the Commercial category of both silver and gold.

In silver, the Commercial open interest fell 4,831 contracts…24.2 million ounces… as the shorts covered… and others went long.  The Commercial net short position is now down to 228.3 million ounces.  The '4 or less' bullion banks are short 234.7 million ounces… which is about 103% of the entire net Commercial short position!  Is this grotesque, or what???  The '8 or less' bullion banks are short 304.4 million ounces… which is even more grotesque.  Ted Butler says that there are now 25 lawsuits filed against JPMorgan and HSBC USA.  The data in this paragraph is all the evidence they'll need.

In gold, the bullion banks covered 26,045 contracts, which is equal to 26.0 million ounces.  The Commercial net short position in gold now sits at 26.5 million ounces  The '4 or less' bullion banks are short 21.9 million ounces of that… and the '8 or less' bullion banks are short 28.9 million ounces.  Any questions?

Ted says that there has been even more short covering since the cut-off on Tuesday… and it remains to be seen whether it will show up in next Friday's report.  It all depends on the price action between now and next Tuesday's cut-off.  We'll see.

Here's Ted's updated "Days to Cover" graph [courtesy of Nick Laird over at sharelynx.com] for all the Comex-traded commodities.  Despite the fact that the bullion banks have been trying to get their short positions covered in both silver and gold, they're still obscene compared to all other commodities.

Click here to enlarge

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¤ CRITICAL READS

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Chris Martenson And Ted Butler Discuss The End Of Silver Price Manipulation

I might as well start my stories for today with another zerohedge.com piece… also from reader 'David in California'.  This one involves silver analyst Ted Butler… and if you're interested in silver… then this is a must read.  The headline states "Chris Martenson And Ted Butler Discuss The End Of Silver Price Manipulation"… and the link is here.

Bernanke Takes Aim at China

The next story is courtesy of reader Scott Pluschau.  It's a piece out of yesterday's edition of The Wall Street Journal headlined "Bernanke Takes Aim at China"… "By keeping their currencies artificially weak, Mr. Bernanke argued in Frankfurt Friday, China and other emerging markets are allowing their economies to overheat, preventing trade imbalances from adjusting and worsening what he called a "two-speed" global recovery." As Scott pointed out… "Theking of devaluing his own country's currency is pointing fingers."  The link to the story is here.

Bernanke defends bond-purchase plan, warns China

Here's another story from Scott.  This one's posted over at finance.yahoo.com… and bears the headline "Bernanke defends bond-purchase plan, warns China".  It's basically the same story as the one above, with a couple of huge differences.  Here they are… "The Fed's Treasury bond-buying program is intended to invigorate the economy in part by lowering interest rates, lifting stock prices and encouraging more spending. Lower interest rates on loans would prompt companies to borrow and expand.  And higher stock prices would boost the wealth and confidence of individuals and businesses, Bernanke has suggested. The additional spending would lift incomes, profits and growth."  This is insanity!  The link to the story is here.

Four episodes of Fed money printing

While we're on the subject of QE2… here's a nifty graph that Australian reader Wesley Legrand sent me yesterday morning.  It's entitled "Four episodes of Fed money printing".  This is another case where a picture is worth a thousand words.

U.S. Pursues Sweeping Insider-Trading Probe

Here's another story from yesterday's edition of The Wall Street Journal.  This one is courtesy of Washington state reader S.A… and bears the headline "U.S. Pursues Sweeping Insider-Trading Probe".  Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter."  It remains to be seen how "vast" this investigation really is… and the link to the story is here.

Taibbi: How Can We Expect Wall St. Thieves to Stop Stealing Unless We Throw Them in Prison?

As a perfect follow-up to the story in the previous paragraph, here's a short interview with Rolling Stone reporter, Matt Taibbi.  The interview is posted over at alternet.org… and is the first of three contributions by reader Roy Stephens.  The headline reads "Taibbi: How Can We Expect Wall St. Thieves to Stop Stealing Unless We Throw Them in Prison?"… and the link is here.

Rescue Team in Dublin: Ireland Admits It Needs Help With Its Banks

Roy's next offering is an item over at the German website spiegel.de.   The Irish government finally seemed to admit that it is unable to cope with its massive banking crisis alone. Whether the talks result in a bailout from the EU-IMF rescue fund remains to be seen.  The headline reads "Rescue Team in Dublin: Ireland Admits It Needs Help With Its Banks"… and the link is here.

Ratings agencies remain strangely silent on Ireland

My next offering is from Swiss reader B.G. and is from yesterday's issue of The Guardian out of London.  The headline reads "Ratings agencies remain strangely silent on Ireland".  Experts suspect that the European Union has applied pressure to avoid making a bad situation even worse.  Worse, you say?  How about catastrophic.  There's no way out for Ireland unless it withdraws from the E.U. and reneges on its debt… just like Greece, Portugal, Spain, Italyet al are going to have to do before this is all over.  The link to the story is here.

IMF chief Dominique Strauss-Kahn urges leaders to cede more sovereignty to EU

Well, these New World Order types just don't want to give up on a cause already lost.  Here's a story that was posted yesterday afternoon atThe Telegraph's website headlined "IMF chief Dominique Strauss-Kahn urges leaders to cede more sovereignty to EU".  I once again thank reader Roy Stephens for bringing it to my attention… and now to yours.  The link is here.

Interview with Rick Rule

I have a couple of must listen interviews that Eric King over at King World News sent me in the wee hours of this morning.  The first one is an Interview with Rick Rule.  Rick discusses the recent buy-out of his firm by Sprott Asset Management in Toronto… plus the ongoing bull markets in silver and gold… plus other commodities.  The link to this interview is here.

Interview with James Turk

The second interview is with GoldMoney founder and GATA consultant, James Turk.  This Interview with James Turk is, of course, all about gold and silver… and the link is here.

¤ THE FUNNIES

¤ THE WRAP

Today's blast from the past is courtesy of reader David Mancini.  One of my favourite CD's isBrother's in Arms by Dire Straits.  I've featured this group a couple of times over the years.  This piece is instantly recognizable… and feel free to sing along.  Click here.

Gold volume on Friday was around 170,000 contracts net of all roll-overs… which was a pretty quiet day, relatively speaking.  Volume in silver was around 85,000 contracts net, which is still pretty chunky.

With the COT set up in silver as good as it was back in July… according to Ted Butler… the stage is set for the next big up-move in silver.  It's just a matter of timing.  Will JPMorgan be able to keep things under control until we get into the December delivery month… or will silver head sharply higher next week?  Nobody knows.

As I mentioned in this column yesterday, here's an offer that Casey Research had last year around Christmas.  It's our second annual Heirloom 24K holiday jewelry campaign. First Collector's Guild is now offering only one style of 24K gold necklace, bracelet and anklet – the Bhat design.  In order to arrive before Christmas, you have to order [by phone] on or before December 10th.  If you decide to place an order, please mention that you read about it my Gold and Silver Daily column.  You can check out all the details by clicking here.

I took physical delivery of more silver yesterday… and I'm still 'all in'.

Enjoy the rest of your weekend… and I'll see you on Tuesday.