ETF's Backed By Bullion

Thursday's activity was interesting to say the least. Gold rose and fell about three bucks from the time that early Thursday morning trading began in New York, until about 2:30 p.m. in the afternoon in Hong Kong. Then a rally began that lasted right up until the London silver fix [noon in London - 7:00 a.m. in N.Y.]... got smacked for a few bucks... rose again... and then ran into the usual brick wall at the open of trading on the Comex. From there it got sold off about $8... with the bottom coming at the London p.m. gold fix [3:00 p.m. in London... 10:00 a.m. in N.Y.]. From there it rose into the London close [4 p.m. in London... 11:00 a.m. in New York]... and from there it traded sideways to down for the rest of the New York session.

There was nothing random about yesterday's price action in gold... or silver. The turning points in the gold market yesterday were as obvious as they could possibly be. The only thing that 'da boyz' didn't do yesterday was announce their intentions on BBC or CNBS They could have set Big Ben in London four times yesterday... as the timing was that exquisite.



Silver was the star of the day. It began rising at the same time as gold did in Hong Kong... shortly after Sydney closed. Silver rose steadily throughout the rest of Hong Kong trading and into the London open. There was a big spike up [about 20 cents] going into the London silver fix at noon their time. That turned out to be the high of the day, as silver got sold off until the London p.m. gold fix. Then a rally ensued that ended the moment London closed for the day. And from there it traded sideways until the close of New York trading at 5:15 p.m. Eastern Daylight Time.



Needless to say, I spent a fair amount of time on the phone with Ted Butler yesterday. He figures that the bullion banks may be trying to get the silver price to rise without setting off buying by the technical funds. That's why silver's peak price on Thursday occurred in overseas trading... before the Comex open, so the tech funds in New York couldn't [and wouldn't] react. It will be interesting to see how this scenario unfolds over the next few trading days... especially today.

Open interest for Wednesday's trading showed the gold o.i. rose 1,541 contracts to 386,543... on light volume of 71,497 contracts. In silver, o.i. rose another 538 contracts to 105,328... on monstrous volume once again, this time 46,503 shares. Today's Commitment of Traders will be posted at precisely 3:30 p.m. Eastern time this afternoon. I will be discussing it tomorrow, but if you can't wait... the link to the COT is target="_blank">clicking here… and learn more about the event by target="_blank">here.

The next item is certainly precious metals related. It's from the Las Vegas Review-Journal. "Jurors start deliberating today whether business owner Robert Kahre and several others willfully broke federal law by taking their pay in gold and silver coins, but reporting only the coins' modest face value on their income tax returns." The headline reads "Payroll conspiracy Case: Jury gets income tax case". I would highly recommend that you read this carefully, as the outcome may set some sort of precedent in using gold and silver as money. The link is The New York Times. It has to do with China, the World Trade Organization, computer censorship... and the "explosive espionage charges against executives of Anglo-Australian Rio Tinto". You couldn't make this stuff up. The story is headlined "China Warms to New Credo: Business First". It's definitely worth reading... and I thank P.S. for sending it along. The link is Globe and Mail newspaper yesterday. It, too, is one of these stories that you couldn't make up if you tried... and there's even a photo to back it up. Two American tourists from Minnesota were in Banff National Park here in Alberta a few weeks back, and they had set up their camera to photograph themselves using Lake Minnewanka and the surrounding mountains as a backdrop for the shot. A Columbian ground squirrel popped up... and the resulting photo is currently posted over at the National Geographic website... and the rest, as they say, is history. The headline reads "Fame-seeking Banff squirrel storms Internet" and the link is