Gold Has Its Highest Monthly Close in History

It was almost a nothing day yesterday. Gold's high for the day was at 9:00 a.m. local time in London, and then it was all down hill for the next four and a half hours... until 8:30 a.m. in New York. From that point, gold rallied for about an hour, before falling to it's low of the day at 12:00 noon... and that was basically it for the day.

Silver spent the first 16 hours of Thursday within a dime of $16.60... before selling showed up at noon in New York. Silver closed the day almost at its lows.

The rise in the 'value' of the U.S. dollar certainly had a bit of an effect on precious metals price... however, one would have thought that gold was down $20 and silver down a buck the way that the shares reacted. Of course the general sell-off in the U.S. equity markets did not help things either. I shudder to think what the bloodbath would be like in the precious metals shares if 'da boyz' really get serious about covering their short positions.

According to figures posted over at lemetropolecafe.com, gold open interest for Wednesday rose 1,716 contracts to 454,710... which isn't very much considering the substantial rise in the price. Silver o.i. fell 835 contracts to 127,672. But the usual N.Y. gold commentator said that gold o.i. on Wednesday rose 5,706 lots to 458,691. I consider this dichotomy serious enough that I will no longer report changes in open interest until this issue has been resolved. It used to be so simple before the CME took over reporting daily open interest numbers.

Today at 3:30 p.m. Eastern, the latest weekly Commitment of Traders report will be published... and I'll report on it in my Saturday column.

The Comex Delivery Report has now become the "CME Group Daily Delivery Notices". Yesterday it reported that 199 gold and 10 silver contracts will be delivered on Monday, October 5th. There were no changes reported in either GLD or SLV... but over at the U.S. Mint, they were quick out of the gate with some numbers for October, showing 3,000 gold and 200,000 silver eagles produced on the first day of the month. Undoubtedly these were minted in September and were just reported yesterday. There was a minor increase in silver inventories at the Comex-approved warehouses... really minor... to the tune of 7,896 ounces.

The usual New York gold commentator had the following yesterday... "India was only a marginal importer yesterday. India will be closed on Friday to mark Gandhi's birthday; a holiday, I'm informed, is generally observed."

"Bloomberg has produced its version of the Indian import story noted yesterday, rather confusingly quoting a different Bombay Bullion Association official saying September imports 'may total 50 tonnes' compared with 35-40 tonnes cited in the Reuters story. The Bloomberg story is linked here.

"From the point of view of the Western observer, the key element here is surely that there is every reason to expect strong India buying to check any effort to sell world gold down."

"Vietnam gold stood at an $11.01 premium to world gold early Friday morning... and Japan's TOCOM continued to sell into the rally."

"Turkish gold imports in September were posted on the Istanbul Gold Exchange website: 1.76 tonnes... down 86% from August and 94% from September last year. Turkish September imports do usually decline from August, partly because of Ramadan... and last September's extraordinary 29.7 tonnes of imports reflected the aggressive selling of gold seen in the West last August and September. After that, Turkish gold imports stopped: only since June has Turkey started importing again."

"In a valuable observation, UBS reports today that... "Over the past week, Turkish gold trading volumes have increased notably, despite the gold price remain close to $1,000/oz. Over the past five days, 5.7 tonnes of gold have traded on the Istanbul Gold Exchange [IGE], the most since mid August when gold was trading between $930-950. The premium for gold on the IGE has also turned modestly positive..." UBS suggests, plausibly, that this may be a sign of geopolitically-motivated demand from Iran. Turkey is thought to be important conduit for Iranian gold purchases. If correct, this is an extremely important development."

In gold news yesterday, I noted a Reuters story posted over at mineweb.com with a headline that reads "Russian gold output jumps 18.5% in 2009 to date". Russia, the world's #5 gold producer, produced about 8% of the world's gold last year and plans to significantly increase this share by developing its reserves that are second only to South Africa's." The link to the story is here.

I have five stories today. The first one is from Casey Research's own Jeff Clark. It's a Bloomberg commentary written by Jonathan Weil about how Atlanta-based Georgian Bank came crashing down last week... and it wasn't even on the FDIC's latest list of "problem" banks either. As I've said for years, more than 95% of all American financial institutions are technically insolvent right now. The headline of Weil's commentary is entitled "Banks Have Us Flying Blind on Depth of Losses"... and the must read story is linked here.

While I have Jeff's name in the limelight, here's another story he sent me about Mad Max Jim Cramer. On September 30th Cramer was screaming that CIT was "Primed For Upside... I would buy". Well, the stock lost 45% the next day...yesterday... and the Internet is loaded with stories about this 'pump and dump'. The one Jeff Clark sent me is a video posted at stocksonalert.com, which is well worth the five minutes it takes to watch. The link is here.

While I was poking around the mineweb.com's website last night, I found another interesting story. On the Comex, the market management of both gold and silver by a handful of bullion banks, continues without a word coming from the CFTC. But over at the LME [London Metal Exchange] traders are reporting similar problems in the tin market of all places. "Traders have, for some months now, warned prices do not reflect reality as one entity controls more than 90% of stocks and cash contracts." The story, which is headlined "LME tin market branded 'disorderly'", is linked here.

The next story is a GATA release regarding an essay written by Peter Grant... senior metals analyst for Centennial Precious Metals/USAGold.com in Denver. The essay, which is entitled "Gold Is a Bargain, Even Above $1,000", is linked here.

And lastly is this short essay from James Turk over at goldmoney.com. Turk argues that something important happened on September 30th that is being widely overlooked: Gold made its highest monthly closing price in history in U.S. dollar terms. Turk writes that gold has yet to achieve that record in some other currencies, but his advice is to be patient. Turk's commentary [along with a most excellent graph] is headlined "Another New Record" and you can find it linked here.

The object and practice of liberty lies in the limitation of governmental power. - General Douglas MacArthur

I believe that the [Un] Employment data will be released this morning about 8:30 Eastern time. Almost without fail, the gold price gets hit hard the moment that this number is released. It will be interesting to see if that happens this time.

I keep harping on the issue that the grotesque and obscene [not to mention illegal] short positions in both gold and silver have not yet been resolved. But with gold and silver prices this high, it's encouraging to see both the 50-day and 200-day moving averages in both metals working themselves slowly-but-surely higher with each passing day. This means that if the precious metals do get hammered, the fall won't be as far to clean out the speculative longs.

I guess that sort of thinking is rather cold comfort to some, but it's the best 'good news' that I can come up with at the moment.

I note, as I put the finishing touches on this column, that London is now open for business. Nothing much happened in the Far East during their trading day on Friday... and I wouldn't read a thing into the gold and silver market based on the activity so far. However, trading volume is more than decent for this time of day [as it has been for the last week or so], so it's obvious that the New York bullion banks have been sticking their noses in both markets via the Globex trading system.

It should be an interesting day on the Comex.

Enjoy your weekend and I'll see you here tomorrow.