Welcome to the Mania

Gold declined a few dollars after it began trading in the Far East on Thursday. But, starting around 10:30 a.m. Hong Kong time, it began a slow rise which ended at gold's high of the day [$1,316.90 spot] at precisely 9:00 a.m. in New York.  Then a sell-off began that took gold to its low [$1,295.10 spot] of the day at precisely 11:30 a.m… exactly two and half hour after its high.


From its low, gold began a recovery that ended with its price sandwiched between it Tuesday and Wednesday closing prices… almost like it was set their deliberately.  There has been a thirty dollar price swing in the last three business days… and all three days close within a dollar of each other?  What are the chances that being a random event?  But more to the point, does it mean anything?  Who knows, but it sure looks strange on the chart.

Silver followed a similar path as gold… with its New York high [$22.10 spot] also set atprecisely 9:00 a.m… and it's low [$21.54 spot] at precisely 11:30 a.m. Eastern time.  Silver spent quite a few hours above the $22 mark yesterday but, after the 11:30 low, it couldn't pull off the same recovery as the gold price did… and silver finished Thursday at $21.74 spot… down sixteen cents from Wednesday's closing price.  Thursday's closing silver price was, to the penny, the same as Tuesday's closing silver price.

For a very rare moment, the dollar and the gold price were in sync… one was rising while the other was falling.  Note that gold rose about ten bucks as the dollar fell about 48 basis points between 2:00 a.m. and 9:00 a.m… the latter time being gold's high price of the day.  Then the dollar proceeded to rise almost 60 basis point from its 9:00 a.m. low to its 11:30 a.m. high.  Gold 'fell' twenty bucks.  Doesn't seem fair, does it?  The timing of the gold and silver price highs and lows matched the dollar moves to the minute… and probably the second.  This is not possible in a free market.

Naturally the precious metals stocks bottomed at 11:30 a.m. in New York as well… and even though the gold price recovered smartly… the same can't be said for the stocks.  The HUI finished down 0.79%.

Yesterday's price action was another bear raid, but it didn't have a lot behind it… and there were obviously buyers waiting for just such an opportunity to 'buy the dips'.

Well, first day notice for delivery into the October Comex gold contract came and went… and I missed the numbers because I didn't check in time.  But I can tell you that 5,275 contracts were posted for delivery today… but, sadly, I don't have a list of issuers and stoppers.  What I do have is the deliveries for Monday in gold.  They total only 303 contracts.  Fortis was the big issuer… and JPMorgan was the big stopper in both its client and proprietary trading accounts.  Deutsche Bank wasn't far behind.  There were no deliveries in silver.  The link to all the gold delivery action is here.

There was smallish withdrawal over at the GLD ETF yesterday of 29,312 ounces… and no change was reported in SLV.

The U.S. Mint reported a small increase in gold eagle sales of 5,500 ounces… and no sales in silver eagles.  For the month of September, the mint sold 88,000 ounces of gold in their gold eagle sales program, along with 1,880,000 silver eagles.  That's the smallest silver eagle sales month this year so far.  The final September number for the one-ounce 24-K gold buffalo was 10,000.

The Comex-approved depositories added a net 336,752 ounces of silver to their inventories on Wednesday.  The link to that action is here.

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¤ CRITICAL READS

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Ecuador declares emergency as police protest, president is attacked

Here's a story that's posted over at cnn.com that was sent to me by reader Scott Pluschau yesterday.  The headline reads "Ecuador declares emergency as police protest, president is attacked".  Ecuador's government appeared teetering on the verge of collapse Thursday, as national police took to the streets of Quito, the capital, and physically attacked the president over what police said was the cancellation of bonuses and promotions.  When the police are attacking the president of their own country, you know that things are coming unglued.  The link to this story is here.

Ireland Cancels All Remaining 2010 Bond Auctions Due To Market "Turbulence"

While we're still talking about Ireland, here's a zerohedge.com piece that was sent to me by reader 'David in California'.  The headline reads Ireland Cancels All Remaining 2010 Bond Auctions Due To Market "Turbulence".  As the commentary states, I'm sure it has a lot to do with the exorbitantly high interest rates that Ireland would have to pay.  It's a short story… and the link ishere.

Ireland nationalises second-biggest bank Allied Irish

My first story today is from Swiss reader B.G.  It's a piece out of yesterday's edition of The Guardian out of London.  The headline reads "Ireland nationalises second-biggest bank Allied Irish".  It also pumped billions of euros into the rest of its beleaguered financial sector, just a day after mass street protests in Dublin against public spending cuts to pay for the bank bailouts.  The bailout is the equivalent of €10,000 for every Irish citizen.  It's a longish story, but it's worth your time… and the link is here.

Charting Statistical Fraud At The BLS: 22 Out Of 23 Consecutive Upward Revisions In Initial Jobless Claims

Reader 'David in California' has another story for us today.  This one is also fromzerohedge.com.  The longish headline reads "Charting Statistical Fraud At The BLS: 22 Out Of 23 Consecutive Upward Revisions In Initial Jobless Claims".  We've always known that the numbers from the BLS are all B.S… but here are the graphs to prove it.  This item is one long paragraph, plus a great graph… and the link is here.

Ron Paul on Eliminating the Fed

Here's a video from foxbusiness.com sent to me by reader Dave Delve.  The commentator doesn't have more than two brain cells to rub together.  But he interviewed Congressman Ron Paul on Wednesday… and what Ron has to say is always worth listening to… and the link to the 7-minute video [headlined "Ron Paul on Eliminating the Fed"] is here.

Iranian Gold Traders' Strike Spreads

The last story from 'David in California' is this piece from Radio Free Europeyesterday.  The headline reads "Iranian Gold Traders' Strike Spreads".  The gold bazaar in Tehran went on strike shortly after the government announced on September 26 that it was adding a 3 percent VAT (value-added tax) on gold products.  There's more to this story than just what's going on in Iran, so this isdefinitely worth the read… and the link is here.

Sprott gold trust's value crosses $1 billion mark

Here's another story from Scott.  This is a Reuters piece from yesterday bearing the headline "Sprott gold trust's value crosses $1 billion mark".  "It shows that the market has recognized this is a good structure to own physical bullion, because not only is it a security that trades … but it is quite easy to buy, and they have the option to take delivery of the gold in the structure," said James Fox, president of Sprott Asset Management, the Sprott unit that manages the trust.  It's only a handful of small paragraphs… and the link is here.

US Mint Announces 33% Price Increase on Silver American Eagle Premiums!

Here's a story that I stole from a GATA release late yesterday evening that will be of great interest to most.  Tarek Saab of Trusted Bullion in Minster, Ohio reports that the U.S. Mint has increased its premium charge on U.S. silver eagle coins by 33 percent and that this has pushed up prices by 50 cents throughout the coin distribution system. You can find the report, headlined "US Mint Announces 33% Price Increase on Silver American Eagle Premiums!" linkedhere.

LBMA 2010: Back to the Future

The next item is a five minute read provided by reader U.D.  It's a posting over at Peter Spina's goldseek.com website, where the headline reads "LBMA 2010: Back to the Future".  Edgingabove $1300 this week, therefore, it's little wonder that "Gold: Bubble or boom?" was the big theme [both on-stage and off] at this year's London Bullion Market Association conference held in Berlin.  This is a short essay by Adrian Ash over at Bullion Vault.  It's also a must read… and the link is here.

US Is 'Practically Owned' by China: Analyst

Here's reader Scott Pluschau's last offering of the day.  It's a short read posted over at cnbc.com headlined "US Is 'Practically Owned' by China: Analyst".  The US supremacy as the top world economy will end sooner than many people believe, so gold is a better investment than the dollar despite it hitting a new record, Tom Winnifrith, CEO at financial services firm Rivington Street Holdings, told CNBC.com Monday.  There's much more to this article than presented here… and I urge you to run through it if you have the time.  It's a very short read… and the link is here.

The Meaning of Gold in the News

Today's next offering is courtesy of Australian reader Wesley Legrand.  It's a posting from the mises.org website that' headlined "The Meaning of Gold in the News".  This is your long read of the day… and for all my new readers that are just starting down that "yellow brick road"… this is a must read… and the link is here.

Turk sees silver at $23 and gold at $1,335 within hours

Wow!  Talk about sticking your neck out!  GoldMoney founder and GATA consultant James Turk has done just that.  He told Eric King over at King World News last night that he expects to see silver at $23 and gold at $1,335 by the end of the week, which is, of course, today!  This blog, bearing the GATA headline "Turk sees silver at $23 and gold at $1,335 within hours", is definitely a must read… and the link is here.

Welcome to the Mania

Reader U.D. has today's final story for us.  It's from Casey Research's own Jeff Clark… and it's posted over at the financialsense.com website.  Jeff is senior editor of Casey's Gold & Resource Report.  The headline reads "Welcome to the Mania"  With gold punching through the $1,300 mark, thoughts of what a gold mania will be like, crossed my mind. If we're right about the future of precious metals, a gold rush of historic proportions lies ahead of us. Have you thought about how a mania might affect you? Not like this, you haven't!!!  This is a wonderful read… and an absolute must read… and the link is here.

¤ THE FUNNIES

¤ THE WRAP

There are no markets anymore… only interventions.– Chris Powell, GATA [April 2008]

It was another interesting day in the markets on Thursday.  Volume was extremely heavy… especially in silver.  Ted was happy to see that there hasn't been much in the way of big increases in open interest in either gold or silver for the last three trading days.

Today is the day for the Commitment of Traders report… which is due out at 3:30 p.m. Eastern time [sharp] this afternoon.  How much of Tuesday's big up-side action will actually appear in this report is the 'question de jour' for me.  Last week's report showed basically unchanged… and I haven't got the slightest idea what to expect when this new report comes out.  The link to it, when it's finally put up on the CFTC's website, is here.

One thing I did notice from the CME's preliminary report this morning was the huge drop in gold's open interest for October.  All of the 5,200+ contracts that were delivered yesterday, showed up in this morning's report.  If you add in the other 300 or so gold contracts that were put up for delivery on Monday…which I wrote about earlier in this column…there are now less than 1,000 gold contracts left open in October…and it's only October 1st! They're wasting no time with deliveries this month.

I note that both gold and silver are in the plus column a bit now that London is open for trading.  Gold volume is pretty light… and silver volume [because of the price rise] is heavier.  Now we have to wait and see if James Turk's prediction comes true today… or not.

Regardless of where the short-term price is headed in either metal… the medium to long term is not in doubt. That's why I deem it prudent to be as fully invested as you wish to be… starting right now. I'm still urging you to put your investment dollars to work. The first place I'd start would be with a subscription to either Casey's Gold and Resource Report… or Casey Research's flagship publication… the International Speculator. Please click on the links, as it costs nothing to check them out… and the subscriptions come complete with CR's usual money-back guarantee.

On a personal note, after 13 months of writing this column without missing a day, I'm going to take a week off.  My Saturday column will be my last until Monday, October 11th.  This Monday morning report might actually make it out late Sunday night [October 10th] depending on how things go both here in Edmonton… and with the nice lady at Casey Research [Juli Placek] who gets up at 5:00 a.m. Eastern time every day to post this column.

I hope you have a wonderful weekend… and I'll see you on Saturday.