You Can't Make This Stuff Up!

Gold gained about one percent in light trading… as London was closed for the Easter Monday holiday.  Gold's high price of the day… shortly after 1:00 p.m. in New York… was recorded by Kitco at $1,134.60 spot.

Silver spent most of Monday struggling to get above the $18 mark… and finally made it about 11:00 a.m. in New York.  The high of the day [$18.15 spot] occurred the same time as gold's… shortly before the close of floor trading on the Comex at 1:30 p.m. Eastern time.  Silver closed above $18 spot… but just barely.

It didn't appear that the dollar was much of a factor during Monday's trading…but it's price was all over the place nevertheless.

What's of more interest is the longer term chart of the dollar.  It's hard to say whether the dollar is going to fall out of bed here… or whether it will get one more bounce and retest the recent high of 82.4 cents.  I'm not a technician, but this dollar rally [based on the one from July 08/March 09] is looking more than a little tired.  Only the continuing [and very timely, I might add] downgrades  of European sovereign debt by the U.S. credit rating agencies has kept this dollar rally alive as long as it has… at least in my humble opinion.  Here's the 3-year US$ chart.

The HUI was up 1.00% by the end of the trading day… but was up a bit more than that when both gold and silver were at their respective highs around 1:30 p.m.

On Monday morning, the CME reported final changes in open interest for Friday's 'trading' in the precious metals… even though the markets weren't open… and there weren't any volume figures posted.  The report showed that gold o.i. fell 6,101 contracts and silver o.i. fell 1,189 contracts.  How is this possible, you ask?  Beats me… but better down than up!  By the time the Commitment of Traders report is issued on Friday, everything should be straightened out.  If you want to see the CME's pdf file for Friday with your own eyes… it's linked here.

The CME's Daily Delivery Notice for Monday showed that 118 gold and 1 silver contract are up for delivery on Wednesday.  The link to that CME pdf file is here.  There were no reported changes in the GLD ETF yesterday… but, once again, SLV reported another big chunk of silver was withdrawn.  This time it was 1,250,823 troy ounces.  That makes 9.6 million ounce of silver withdrawn since February 26th… this at a time when silver prices are rising… and metal should be pouring into the SLV… not out of it.  Obviously someone needed another big chunk of silver and couldn't get it in a timely manner from either the open market… or from the refineries.

Because of the Good Friday holiday, there was no weekly report from Switzerland's Zürcher Kantonalbank yesterday.  They'll provide their update today… and I'll have it for you tomorrow.  The U.S. Mint had their first sales report for the month on Monday.  They show that 5,000 one-ounce gold and 397,500 silver eagles were sold yesterday.  The Comex-approved depositories showed that a smallish 23,677 ounces were withdrawn on Good Friday… so it's obvious that they were open for business, too.

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Thanks to Australian reader Wesley Legrand, here's a gold story out of the London's Financial Times.  This story kind of got lost over the long weekend… but here it is again.  Australia's #1 gold mining company is trying to swallow Australia's #2 gold mining company.  The headline reads "Lihir Gold rejects A$9.2bn Newcrest bid"… and the link is here.

Here's another story courtesy of Wesley Legrand.  It's from the March 29th edition of moneymorning.com.au… an Australian publication that doesn't get much readership on this side of the Pacific.  The title reads "China Buys Gold!"… and the link is here.

In his commentary at MarketWatch.com yesterday, Peter Brimelow remarks that suspicions about manipulation of the gold market has "gone mainstream." Brimelow's commentary is headlined "Paranoids Have Enemies, Radical Gold Bugs Have Wall Street"… and the link is here.

The next story is a GATA release published yesterday. Christopher Barker, a blogger at Motley Fool, joins the growing chorus of writers who realize that there is really something to the gold and silver price suppression scheme besides the tin-foil hats supposedly worn by those who complain about it. In his commentary yesterday, Barker writes: "I have been tracking this topic for several years, and we would need to sit down over a gigantic coffee to pore over all the verifiable evidence amassed by researchers like GATA, John Embry of Sprott Asset Management, silver analyst Ted Butler, and many others."  Barker's commentary is headlined "Is Your Safe Haven a House of Cards?"… and the link is here.

The next story from businessweek.com is courtesy of Washington state reader S.A.  As you aware, California is basically bankrupt.  Now Los Angeles is at the end of its rope as well.  The headline reads "L.A. to Run Out of Cash in a Month, Controllers Says"… and the link is here.

Here's a real estate story from an unlikely place… chinadaily.com.cn.  As most readers are aware, the Chinese economy has become one giant bubble… of which the housing bubble is one of the biggest.  Without doubt, this story was officially sanctioned… or it never would have been allowed to appear.  The headline reads "Collapse predicted as housing prices continue to soar"… and it's definitely worth the read.  I, once again, thank Australian reader Wesley Legrand for this story… and the link is here.

Here's an item from the "You Can't Make This Stuff Up" category.  Florida reader P.S. sent the video to me on the weekend… and reader Kevin Cassidy sent me the link to the story out of the L.A. Times.  But since then, the story has been all over the Internet.  This 3 minute video is difficult [embarrassing would be a better word] for a rational mind to watch and listen to.  Democratic Representative Hank Johnson, a former county judge, was questioning Admiral Robert Willard, head of the U.S. Pacific fleet, about the stationing of 8,000 additional U.S. Marines and their families on the western Pacific island of Guam… and was worrying that loading that many more people onto the island might cause it to tip over!!!!  Yep, you read that right.  The headline reads "Democrat Rep. Hank Johnson worries loading too many people onto Guam could capsize the island"… and the link is here.  If you, dear reader, really want to learn something about Guam yourself… this link will help.

Lastly is an interview from King World News with John Williams of shadowstats.com fame. In this interview, John discusses looming hyperinflation, gives an astounding prediction on future unemployment and also discusses some surprising inflation adjusted price possibilities for both gold and silver and much more.  The interview runs ten or so minutes… and it's worth your time.  The link is here.

The only way government bureaucrats know of keeping prosperity going is to inflate some more… to increase the deficit or to pump more money into the system. – Henry Hazlitt

As a note of interest… palladium set a new high price for this move up yesterday.  Palladium is strictly an industrial metal.  This is a metal that the U.S. bullion banks aren't involved with at all.

Silver is also a [mostly] industrial metal… but it's also a monetary metal.  Here's what it's 3-year graph looks like.  In silver, the '8 or less' bullion banks are short about 70% of the entire Comex silver market.  Their co-ordinated interventions are highly visible.  There's no sign of them in the palladium market… or the platinum market, either.

There's not much happening during the Tuesday trading day in the Far East [and the London open] at the moment.  Gold has only traded about 13,300 contracts in June [net of spreads] as of 3:42 a.m. Eastern time.  Silver's volume is a small 2,340 contracts in May.

What little action there is, is mostly currency related… but not all of it.  I note, as I do the final edit on this column, that a bit of a sell-off began in both metals at the usual 3:00 a.m. Eastern time that doesn't seem to be related to a dollar move.  Time will tell if this develops any more legs to the down-side.

With London open for the first time since last Thursday, volume and 'volatility' will certainly increase today.  But, as usual, 80% of all volume in both gold and silver is done in New York.  London is an important side show… but a side show nevertheless.

And, for whatever reason, the CME has not updated their site with Monday's preliminary volume figures in either gold or silver… so we'll find out everything once the final numbers are posted on their website later this morning… along with whatever changes in open interest there are.

That's it for Monday's action… and I'll see you here tomorrow.