Silver at $22: Where To From Here?

The SLV ETF adds another million ounces.  Gold on display [and for sale] at Russia's Sber Bank. World according to gold: here comes Tokyo Rose.  A World Monetary Earthquake is coming… and much more.

YESTERDAY IN GOLD AND SILVER

The gold price didn't do much of anything anywhere on Planet Earth on Wednesday.  The high of the day [such as it was… around $1,314 spot] occurred shortly after London opened for business at 8:00 a.m. local time… which is 3:00 a.m. Eastern.  The low [around $1,306 spot] was at the London a.m. gold fix two and a half hours after that.

Like it almost always does, the silver chart for Wednesday looked pretty much the same as the gold chart… with silver's daily highs and lows occurring at the same times as gold's.  Nothing to see here, either, folks.

The world's reserve currency didn't do much of anything either during the Wednesday trading session… and has leveled off around 78.8 for the moment.

Just like the gold price, the shares didn't do a lot yesterday… and the HUI finished basically unchanged on the day.

Wednesday was the last delivery day for silver in the September contract… and it has now gone off the board.  First day notice for Comex delivery into the October gold contract is today.  Last month they reported it a day early.  I see that they didn't make that mistake this month, so I'll have it for you in tomorrow's column.
There was no report from GLD yesterday… but the SLV ETF took delivery of another big chunk of silver… this time it was 978,324 ounces… and another record high.
The U.S. Mint reported selling more bullion coins yesterday.  They sold another 6,500 ounces of gold in their gold eagle program… and added another 200,000 silver eagles to their September total.
The Comex-approved depositories reported a net withdrawal on Tuesday of 173,259 ounces of silver.  There was a lot of in-and-out activity… and the link to all of that is here.

CRITICAL READS

I don't have many stories today, which suits me just fine after the monster columns I turned out on Tuesday and Wednesday.
The first story is from The Telegraph… and has to do with the riots, strikes and social unrest in Europe yesterday.  Here's an Ambrose Evans-Pritchard offering on this subject courtesy of reader Roy Stephens.  It was filed late last night from London… and bears the headline "Europe's austerity anger grows".  More than 100,000 marchers converged on Brussels from across the EU to protest austerity measures on Wednesday, while Spanish unions took the extraordinary step of breaking ranks with Spain's socialist government by launching a general strike.  This story is more than worth your time… and the link is here.
Before I get into my gold stories for the day, I received an e-mail from someone by the name of Dimitry the other day… and this is what he had to report… "I just came from a trip to Russia and I was surprised how one can buy and sell any type [!] of world gold or silver coins at the major quasi-government Sber Bank. Prices of precious metals are clearly posted and regularly updated.  Bullion and commemorative gold and silver coins readily available on display along with gold and silver bars up to 1 kg of Au. "Metallic" bank accounts are available and heavy promoted on window posters.  Price check: 7.7 gram Russian gold coin was selling at the bank for 10,400 rubles [US$335]."  Dimitry sent along four photos… and here they are.

My first gold-related story is from reader Carl Lindfors… and is posted at kitco.com.  It's gold market commentary by James West over at midasletter.com.  The headline reads "World According to Gold: Here comes Tokyo Rose".  He's not talking about Jon Nadler, dear reader… but, as West says… "Now that gold is muscling its way towards $2,000 an ounce, the forces of ignorance embodied by post-secondary-accredited, yet nonetheless clueless, commentators are being given voice by government-sponsored media outlets such as CNN."  The story is very much worth the read… and the link is here.
MineWeb's Geoff Candy this week interviewed GoldMoney founder and GATA consultant James Turk. The interview is headlined "Gold at $1,300, Where to from Here?" and the link to this must listen/readcommentary is here.
Yesterday, Ben Davies had a blog entitled "The World Monetary Earthquake".  Today, Hinde Capital CEO Ben Davies tells Eric King of King World News that the U.S.-China trade relationship, and the imbalances it has caused, are at the root of the international financial turmoil… the recklessness of Wall Street being only a symptom. This 10-minute interview is a much listen… and the link is here.
Lastly today is a GATA release containing the latest commentary from Murray Pollitt of Pollitt & Co. in Toronto.  Murray says "as intervention fails, only the gold market has a pulse."  The headline of Pollitt's essay [which is a must read] is headlined "Pulse"… and the link is here.

THE FUNNIES



THE WRAP

There are no markets anymore… only interventions. – Chris Powell, GATA
Although Wednesday was a pretty quiet trading day price-wise, the volumes reported in gold and silver by the CME in the wee hours of this morning were very large.  I would guess [and it's only a guess] that a large portion of that was carry-over from Tuesday's big day… and were open interest changes that just weren't reported by the bullion banks in a timely manner.  None of this, of course, will be in tomorrow's Commitment of Traders report.  Whether this was by design or circumstance is unknown… but being of a suspicious nature, I would expect the former to be closer to the mark.
With record [or near record] high open interest rates in both gold and silver… plus record high prices, every current gold and silver short is now under water.  As Ted Butler opined yesterday in a note to subscribers… "Compounding the stress to the shorts is that the short positions in gold and silver are extremely large in total. This does increase the stakes for the big commercial shorts and we must expect [that] they won’t go down without a fight. Despite the negative COT structure, my advice has been to hunker down and hold silver that could withstand a sell-off. Leveraged positions should be held via call options and not margined positions. Someday, and I think soon, the silver shorts will be overrun, with or without a final sell-off."
Here's the 3-year silver chart.  We haven't been this overbought since back in March of 2008.  I must admit [and I've said this before] that I'm as nervous as a long-tail cat in a room full of rocking chairs.

I see that we've had a bit of a pop in both metals early in London trading, with silver briefly breaking through $22 the ounce again… and gold's back over $1,310 spot.  Volume in both metals is not particularly heavy, which is encouraging.
Today's trading activity in New York could be interesting… unless we have a replay of yesterday.  Time will tell.
See you on Friday.