The Bullion Banks Pull the Lever Again!

The gold price did absolutely nothing all through Far East trading on Monday. This lasted until noon in the London trading day when about three bucks got added onto the price in short order. A little over an hour later, around 8:15 a.m. in New York, gold was under slight selling pressure from the moment that the Comex opened... and, by 1:00 p.m., gold was down about four bucks from it's high of the day. Then, along came 'da boyz'. They sold gold down hard, tripping sell stops. Then they pulled their bids... and a bunch of moving averages fell in a heartbeat... literally! The damage was far worse than the Kitco chart shows. The actual low of the day was $934.20... about seven bucks lower that this chart indicates. Even the New York Spot Gold price didn't catch the last $4 of the spike down. From it's high of $856.80 at 8:15 a.m.... until the bottom of the waterfall decline... gold was hit for $22.60.

Silver ploughed its own field yesterday... as it has done of late. It was up in price right from the get-go in early morning trading in the Far East... with the peak of the day coming shortly after the London open. From there, it drifted down a dime until the 1:00 p.m. 'Comex Massacre'. By the time they were through with silver...it had lost all of its 30 cent gain... and closed down a penny from Friday.

The CFTC is supposed to have a watchdog to make sure that this sort of blatant market management isn't allowed to happen... but what do the rules mean anymore?

The open interest numbers for Friday's big Comex-opening moon shot, produced an increase in open interest that surprised even me! Gold o.i. skyrocketed 12,501 contracts to 384,272... on decent volume of 94,821 contracts. Silver had a spectacular day on Friday as well... but the o.i. only rose 913 contracts. It appears more and more like the silver market is being treated with kid gloves. Monday's open interest numbers should be quite interesting when they become available later this morning. In fact, that's an understatement.

Tomorrow is options expiry on the Comex for the September contract... with the OTC market option expiry the following day. Anything can, and probably will, happen between now and then... as we've seen from what the U.S. bullion banks handed us yesterday. And then there's also the little matter of $197 billion worth of Treasuries to be auctioned this week.

In my daily chat with Ted Butler yesterday, he said that the only way that silver is going down in price is if the bullion banks hit gold hard. He also mentioned that he was working on a new essay which, if it's not for subscribers, will be in this column as soon as it's available.

The Comex Delivery Report for Monday showed that 43 gold and three silver contracts were delivered. There were no changes in the alleged holdings of either GLD or SLV. Over at the Zürcher Kantonalbank in Switzerland, they updated their gold and silver ETFs for last week. There were no changes reported in their gold ETF... but their silver ETF added a respectable 262,478 ounces. And, as always, I thank Carl Loeb for those numbers. The U.S. Mint showed a minor increase in their gold eagle mintings... increasing their August total by 3,000... to 57,000 for the month so far. No change was reported in silver eagles. And over at the Comex-approved warehouses, their silver inventories rose by the magnificent sum of 3,710 troy ounces.

The usual New York commentator had a few things to say yesterday. His first comments were before 'da boyz' showed up..."Mitsui attributes Friday's dramatic Comex action to a 'sweep' --- i.e. one aggressive buyer. No such aggression appeared today, and gold continued to drift along just above $950 spot... where it's been since 10 a.m. Friday. Estimated volume at 10 a.m. today was only 30,018 lots"..."Today The Gartman Letter, still hanging cheerfully onto its euro-gold position, notes that the GLD ETF has been lagging gold shares of late, and indicates future gold holdings will be in the major shares such as ASA, NEM, or AEM. If followed by TGL's friends, this could be a significant development."

Then later in the day, after the dirty had been done... "Today, having been repulsed in a minor uptick at the Comex start, gold ran into violent selling after the European close... around 12:45 p.m. NY time. Over $10 was lost in under half an hour; a slight recovery allowed December gold to settle down $11 on the day at $943.70; another $2 was lost in the aftermarket. A notable feature of the sell-off is that it was perfectly matched by the action in Eurogold: this was real selling."

"The concentrated nature of the selling is illustrated by the fact that estimated volume leapt 55.5% between 12 noon and 1 p.m.; 33.6% of the day's total estimated of volume of 72,934 traded in this period. MKS refers to it as 'large selling in the electronic market'."

"Recently there has been a pattern of ostensible long liquidation of this character: but selling of this ferocity after Europe has closed [the P.M. gold fix was $951.50] is a strange way for a true long to treat a market."

"That the $960 level has a resolute defender could hardly be more noisily advertised."

Last Friday in my column titled "The Russians Are Coming!"... I mentioned that the Central Bank of Russia had added 600,000 ounces of gold to their reserves in July... and 300,000 in June... about 1.5 million ounces year to date. Well, that commentary drew an e-mail from GATA supporter Richard Nachbar... a rare coin dealer in upstate New York... whose website coinexpert.com is linked here. Richard has obviously been keeping track of the goings-on at the Russian Central Bank better than most. Below are two graphs that are completely self explanatory. It sure looks like the Russians are serious gold buyers... and if I were in their shoes... I would be too!

One other gold story that I have today, is one that was supposed to have been in my Saturday column... but for whatever reason, it vanished into the innards of the computers at Casey Research HQ, and was never seen again. The title to my Saturday column was "What Golden Secret is the Federal Reserve Hiding?"... and the story that the title pertained to, is a GATA press release entitled "GATA presses Fed to give up its golden secrets" and the link is here.

I have a few other stories as well. The first is from blogspot.reuters.com and concerns the commercial real estate market... something I've spoken of many times in this column. This short piece is well worth the read, and is entitled "Delaying the moment of truth" and the link is here.

The next story is from yesterday's Washington Post. It appears that prospecting for gold in California is making a big comeback. The story is entitled "Without Prospects, They're Prospectors" and the link is here.

Well, there might be some hope yet for GATA's attempt to find out what the Fed is doing with the United States' gold reserves. In a story that came out on many wire services yesterday, I see that the U.S. Federal Reserve now has to disclose the names of the banks that got emergency funding. Bloomberg's FOIA suit against the Fed was successful... and the link to the yahoo.com story is here.

Here's another gold-related story. This has to do with Germany's gold. Yesterday, the Bundesbank confirmed that much of its gold is held outside the country at "trading centers" where the bank conducts "its gold activities." The GATA release, entitled "Bundesbank confirms Germany's gold is in play", has an extensive preamble by its secretary treasurer, Chris Powell... and is well worth the read... and the link is here.

And lastly, is the monthly "Markets at a Glance" commentary by Eric Sprott and David Franklin from Sprott Asset Management in Toronto. Their August commentary falls into the must read category as well. It's entitled "Beyond the Stimulus" and the link to the pdf file is here.

The cartoon below comes from a 1934 edition of The Chicago Tribune. Anything you see here look familiar???

I agree to this Constitution with all its faults, if they are such, because I think a general government necessary for us, and there is no form of government but what may be a blessing to the people if well administered, and believe further that this is likely to be well administered for a course of years, and can only end in despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic government, being incapable of any other. - Benjamin Franklin... from his speech on the last day of the Constitutional Convention in 1787

If I had a dollar to bet which way the precious metals markets are going to go in the next five business days, I wouldn't know how to place it. As I mentioned earlier, we have options expiry tomorrow... plus there's another $197 billion in Treasuries to unload. And as Chris Powell, GATA's secretary treasurer keeps reminding us: "There are no markets anymore... only interventions."

See you on Wednesday.