There are days when you get up and want to climb right back in bed. This was one of them. Gold came in weak and then was bombed once the Comex opened. While the dollar was a bit firmer at the time, it didn’t account for the extreme bashing. It was like a lead weight was tied to the price. Somebody wanted the price of gold DOWN, as it failed to show any kind of life, not even some bounces.

My first thought was that it was related to the growing major bank problems, especially the biggie at JP Morgan Chase. Early on JPM’s share price was down another 60 cents. The Gold Cartel has been predictable over the years. The worse a financial crisis is, or the worse a US economic report is, the more they lean on the gold price …. shoot the messenger again … defuse the widely watched barometer of US financial market health.

If the Fed is doing all they can to keep Morgan patched together (as we hear and have reported), they will want the heavily gold/silver short Morgan to be onside as much as possible with those positions.

The gold open interest rose 5,463 contracts to 333,666. While way way off its highs of last year, it has now risen considerably off the bottom. Now the recent longs are underwater and the predicable liquidation drill is likely to kick in. And once again, we see the rebalancing issue was not a factor. If it were, the gold open interest would have dropped.

Dave from Denver notes…

I'd say the Govt is determined to keep a lid on gold. On 11/8, with gold at $737, the commercial short position was 166,813 contracts. As of Friday, with gold at $854, the commercial short position was 248,000, an increase of 81,000 contract representing 8.1 million ounces - slightly less that the ENTIRE reported inventory of gold on the Comex. Given all the stories we are hearing about how busy the Comex warehouses are with delivering gold and how brokers are trying to persuade customers to not take delivery, I'd say someone is attempting to get the price of gold to fall hard.

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The difference between the AM Fix of $848.50 and the PM one of $827 was dramatic.

The silver open interest rose 1,118 contracts to 87,320. The good news here is there are very few specs in silver to wash out. Unlike gold, the silver OI remains near its lows.

Our STALKER source called this afternoon and gave us some upbeat input to look forward to. Seems like the London trader got out of his gold position at $881, looking for a 10% correction, which he just about has. The trader is looking for gold to have a rough week, but he is looking to buy back in sometime next week, or when his price points are touched on the downside. His words to the Café membership are "GET READY," for a monster move to the upside is coming. Word also from London is that there is going to be some kind of official devaluation of the yen in the near future.

Friday's utterly defeated rally attempt, with a $14.80 intraday gain being ground down to an up 50c close, took a good deal of effort. Comex Open interest surged 5,463 contracts (16.99 tonnes). For the week, open interest rose 21,583 lots (67.1 tonnes, or 6.9%): gold gained only $4. Clearly some serious opposition is present.

Today gold drifted down steadily to the NY open, when it was hit with an avalanche of selling. Huge estimated volume of 86,098 lots traded by 9am, slicing almost $20 off the price, all rally attempts were smashed, and Comex gold closed down $34 on estimated volume of 149,686 lots (switch effect 18,260).

Monday morning Comex bashings seem to have become a habit. After last week¢s, little further progress was made. Perhaps, notwithstanding the soft rupee, the sharply lower world gold price will now tempt in the Indians. Today's open interest will be especially interesting.