from the midas

These are some wild times. Gold and silver firmed up modestly in Access Market trading and followed through in London on the upside. Gold took out yesterday’s high around the $1404 level, making it to $1406.40 in the early going on the Comex, where it was stopped cold. Meanwhile, silver still acts as if it is going to head for the moon any day. Its price surged early to $35.10 before the usual stuff job kept silver at bay for the rest of the Comex trading session.

The reasons for the prices of gold and silver to soar went off the charts today, which is one of the main reasons they did not (courtesy of The Gold Cartel)…

*An EU energy official said the Japan nuclear situation was spiraling out of control. The DOW quickly fell 150 points to go down nearly 200 before recovering, as that statement was characterized as dubious … Good grief, now another official is saying the situation is worsening and Americans have been asked to evacuate inside an 80 kilometer radius around the plant. The DOW, which had not rallied much, fell to down 200 again.

*The uprising in Bahrain has escalated and is raising new concerns about oil supply.

*The monthly US inflation news this morning (see below) was far worse than expected.

*The monthly US housing number today (see below) was far worse than expected too.

The Bernanke call

Bill,
During the halcyon days of the stock market it was commonly known equities had a "Greenspan put" under them. This was what got speculators salivating; they could seemingly trade with abandon from the long side with impunity. Surely as there was a Greenspan put under equities there is also a "Bernanke call" over the gold market. That's what the 1% rule is all about. Traders know if they sell paper gold short they have a maximum stop-loss above at 1% on any given day. Traders who mirror the cabal on a daily basis also know it's the short side that has the volatility. Just look at the short side profits on Monday when gold plunged $40. Those kind of day trade profits almost never occur on the long side at the Comex. Most of the time it's gently meandering up to a 1% gain. Short sellers even know that not even a devastating earthquake and nuclear meltdown in Japan can get them offsides in a hurry. In fact, as we know, selling paper gold short after all bullish developments for gold is a proven winner. This 1% rule, aka Bernanke call, is causing serious underestimation risk by short-side traders.

The Bernanke call in gold has lulled traders to sleep. It will be a rude awakening when physical gold buyers show up to stand for delivery. Gold's short sellers should be hearing the drum beat over in the silver pit and know the Bernanke call can suddenly, and without warning, end. The CFTC is duplicitous in facilitating attacks on gold. Short sellers are welcome, and in fact encouraged.

(Bill, as I was sending this at 10:46 AM gold stopped cold at EXACTLY a 1% gain and immediately fell back.)

The AM Fix this morning was $1398.50. The PM one was firmer at $1402.

As further evidence the drop in the price of gold yesterday was much more than panicky speculators, its open interest fell a piddly 3912 contracts on a $40 price drop. As mentioned, the plunge was one orchestrated by The Gold Cartel’s selling, … which then led to spec selling, much of it due to margin call issues with the price falling so much.

The silver open interest only dropped 1179 contracts to 134,914, which is nothing for a $2 plus price drop.

The price of silver remains EXPLOSIVE. All it is doing now is a bunch of backing and filling due to the pressure of The Gold Cartel. The latest input via Dave from Denver…

"Tulving is out of 1 oz. silver eagles. They do have silver maple leafs and the offer is lower than where they were selling silver eagles yesterday. But this means supply is getting very tight. The list of available silver "sku's" at Tulving is the shortest I've seen it in 8 years of buying from them."

Here is a good one:

"Fidelity offering clients 6% to borrow PSLV units"

... obviously some short sellers are willing to pay a big borrow fee for PSLV shares