Women Prefer Men That Hold State Bonds, Japanese Ad Says

Gold did virtually nothing throughout all of Wednesday's trading in the Far East and London… but minutes before London closed, gold got smacked for $13… right down its low of the day of $1,221.00 spot.  From that low, gold recovered most of its loses and only closed down $1.70 on the day.  Gold's high of the day [around $1,241 spot] occurred in early Far East trading.

Silver didn't do much either on Wednesday… and was basically trading unchanged by the time that New York opened.  But, like gold, it too got smacked just before the London close. In silver's case, it 'lost' 25 cents… and continued down from there… closing on its absolute low of the day at $18.09 spot.  Silver's high of the day was also occurred during New York trading at $18.40 spot.

The U.S. dollar was all over the map once again yesterday… with huge swings in both directions.  From 1:30 a.m. until almost precisely 11:00 a.m. Eastern time Wednesday… the dollar declined about 94 basis points.  Then, from its 11:00 a.m. low, the dollar gained back about 50 basis points of that loss by the end of New York trading.  Last year at this time, a huge swing in the dollar's 'perceived' value [either up or down] would have had a major impact on the gold price.  But not any more.  Once again I provide the graph for entertainment purposes only.

The HUI spent the first 90 minutes of Wednesday in positive territory… and was actually heading higher when that not-for-profit seller in both gold and silver showed up minutes before the London close.  That was it for the p.m. shares… as the HUI fell more than 2% before stabilizing around the 454 mark about 1:45 p.m.  The HUI finished down 1.32%.

The CME's Daily Delivery Report on Wednesday showed that 33 gold and zero silver contracts were posted for delivery on Friday.  Neither GLD nor the SLV ETF reported any changes yesterday.  But the U.S. Mint reported selling another 2,500 one-ounce gold and 2,500 24-k gold buffaloes yesterday.  Month-to-date… 30,500 one-ounce gold and 15,000 24-k gold buffaloes have been sold.  The Comex-approved warehouses reported that 831,599 ounces of silver were withdrawn from their depositories on Tuesday… most of it came out of Scotia Mocatta.  The link to the action is here.

Just as a point of interest, I was looking over the GLD and SLV inventory statistics for 2010… and found something that I thought I'd pass along.  SLV's inventory high-water mark this year was 305,205,95 ounces of January 4, 2010.  At that point in time GLD was sitting at 37,447,079 ounces.  As of yesterday,GLD's inventories had risen 5.3 million ounces since January 4th… while SLV's inventory is down 9.1 million ounces during the same period.

I have quite a number of stories today… and I hope you find them of interest.

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The first gold-related story is courtesy of reader 'Rocky R'… and is posted over at mineweb.com.  The headline reads "European gold demand – Bernhard Schnellmann: Director for Precious Metals Services – Argor-Heraeus".  It's not a very long read… and I feel that it's worth your time… and the link is here.

Here's 'Rocky R's second gold-related contribution to today's column.  It, too, is another piece that's posted over at mineweb.com.  It's an even shorter piece than the last one… and it's by my good friend, Frank Holmes.  Frank is CEO and chief investment officer at U.S. Global Investors.  The headline reads "Europeans believing in gold".  There's an excellent graph as well… and the link is here.

There was a story over in The Wall Street Journal yesterday that was headlined "Bernanke Puzzled by Gold Rally".  He was obviously talking his book, because he knows perfectly well why gold is rising… and actually says so… but stopped short of saying that it was excellent investment advise.  This two-paragraph story is courtesy of Washington State reader S.A… and the link is here.

The next item is from yesterday's edition of moneyweek.com… England's best-selling financial magazine.  The headline reads "Why no price is too high for gold".  The story is courtesy of reader Roy Stephens… and the link is here.

Here's another story from reader Roy Stephens.  As F. William Engdahl stated in an interview I posted in this column yesterday, the war is on between the dollar and the euro… and the only way that the U.S. could make its currency strong, was to make the euro weaker… which is exactly what they proceeded to do.  Here's a story about how the European Union is about to fight back.  The story comes from the English language edition of the German website spiegel.de.  The headline reads "Moving the Markets:  Europe Looks to Break US Ratings Monopoly"… and I feel that this is a must read… and the link is here.

Here's a story that's absolutely incredible… and borders on unbelievable.  “It strikes of desperation,” Christian Carillo, a senior interest-rate strategist in Tokyo at Société Générale SA said about the ad campaign. “I doubt this will be a successful strategy to attract retail investors.”  How desperate can the Japanese government be… one should ask.  How will Bernanke et al top this one?  I thank Washington state reader S.A. for sending me this Bloomberg story headlined "Women Prefer Men Holding State Bonds, Japan Ad Says".  Try not to laugh too hard as you click here.

Reader Alex Lvov found an interesting gold-related story posted in Bloombergand filed from London.  The headline reads "Gold-Coin Haven demand Saps Supply, Raises Premiums".  It's not overly long, but definitely worth the read… and the link is here.

My last two stories are courtesy of courtesy of reader Scott Pluschau.  The first is from The Telegraph in London where the headline reads "Risks to global economy have 'risen significantly', top IMF official warns".   The risks to a robust global recovery have 'risen significantly' as many governments struggle with debt, a leading official from the International Monetary Fund has warned.  The man has a keen grasp of the obvious… and the link to the story is here.

Here's your longish read of the day.  It's posted over at thestreet.com… and is an interview with Eric Sprott, CEO and chief investment strategist at Sprott Asset Management in Toronto.  The interview is posted in two parts… and this is part one.  Apparently part two will be posted tomorrow.  If it is, I'll bet that Scott has it my inbox before I get up this morning.  The headline reads "Gold Running in Short Supply"… and the link to this absolutely must read article is here.

Gold didn't do much yesterday… nor did silver.  It was, as Ted Butler keeps saying, just another day off the calendar.  What happens from here is anyone's guess.  I can give you a couple of excellent reasons why the price of both gold and silver may go in either direction.  Here's a reason why the price of gold may decline [taking silver with it] in the very short term.

The bullion banks are still massively short gold… 26.8 million ounces as of the cut-off for last Tuesday's Commitment of Traders report.  If the bullion banks decided to pull the pin… the down-side potential may be considerable.  The critical 50-day moving average sits at $1,182… with the 200-day moving average at $1,110.  Just touching those moving averages would drop the gold price by around $40 and $120 respectively.  Will it happen?  Don't know.

But, if it does happen, I expect that the silver price would be taken down as well… as this is the critical metal for these same bullion banks. I don't expect the price to remain at those low levels for very long, either.  And I'm still 'all in'… regardless of what words I write here.

Here's the 1-year gold chart.  Did the bullion banks paint a double top for all the technical traders out there?  Monday and Tuesday's price action indicates they may have.  I don't know for sure… but we'll find out soon enough.

Not much happened during early trading on Thursday in the Far East.  Gold is down about seven or eight bucks… but the price has leveled off now that London is open.  Silver's price has been basically unchanged in the first 11 hours of trading today… and volume's are very light in both metals as of 4:36 a.m. Eastern time.

It's now 5:15 a.m. Eastern… and in the time it took me to proof this, run Spellcheck, attach the graphs and cartoon… and check the links, I see that silver has taken a pretty big hit… and gold is now heading down again as well.  This, despite the fact that the dollar is down 39 basis points as I hit the send button.  It could turn into an ugly trading day if the bullion banks press the issue in New York… and we won't have long to wait to find out.

See you tomorrow.