Another Day... Another Record High Gold Price!

Well, the little rally at the London open that I spoke of at the conclusion of my commentary yesterday, didn't amount to much... and by the time that New York opened yesterday, that tiny gain had vanished. The rest of the trading day yesterday added a couple of dollars to Tuesday's close, and that was about it. Volume was pretty decent however. The usual N.Y. commentator estimates "a bit more than 130,000 lots... 75% of which traded in the first half of the day."

However, if you look at yesterday's New York spot gold market in isolation, you'll see that every little rally attempt got sold off. That's the U.S. bullion banks in action. I wouldn't be surprised if Wednesday's increase in open interest is fairly substantial.

Silver's price action was similar, and the price was up about two bits by the end of trading on Wednesday.

The precious metals shares pretty much followed the general equity markets through its ups and downs, but managed to finish slightly in the plus column by day's end.

Well, I've finally got some volume and open interest numbers that are worth the paper their printed on. Volume in gold trading on Tuesday was staggering 233,572 contracts, with open interest rising a stupendous 32,955 contracts to 484,307 in total... probably the biggest one-day jump in gold o.i. in the last ten years! In silver, open interest rose 4,884 contracts on volume of 48,440 contracts, which is a lot. Total o.i. in silver is an extremely large 131,801 contracts! As I said yesterday... Tuesday's big day for both gold and silver did not go unopposed. That has now proven to be the understatement of the year!

Tuesday was also the cut-off for Friday's Commitment of Traders report... and it was also the cut-off for this month's Bank Participation Report... both of which I'll report on on Saturday. And without question, the usual '3 U.S. Banks' will show monstrous increases in their net short positions in both gold and silver.

The Comex Daily Delivery notice yesterday showed that 123 gold contracts and one [1] whole silver contract are going to be delivered tomorrow. Over at the GLD ETF, another 282,950 ounces were taken into their inventory. And the SLV ETF added zip, zilch, nada once again. There were some changes reported over at the U.S. Mint as well. Gold eagle mintings increased by 8,500 to 26,000... and silver eagle production barely moved... up a measly 25,000 to 282,000 for the month so far. The Mint also announced yesterday that they were ceasing production on even more silver and gold products in order to concentrate on gold and silver eagles almost exclusively. The Comex-approved warehouses showed that a smallish 70,808 ounces were taken into inventory.

The New York gold commentator had the following report yesterday... "India was an enthusiastic importer in the morning but not during the afternoon. The rupee continued to surge, seeing R46.52 before softening slightly. It's certainly time India showed some sticker shock. At present, the country is still positioned to check any sell-off. This, of course, is somewhat dependent on the continuation of the rupee's recent strength."

"The TOCOM saw significant selling by the public... they cut 5.59 tonnes from their long position."

"The European Central Bank's weekly statement of condition, delayed a day for the quarterly revaluation, indicates one captive Central Bank sold €15 Million (0.9 tonnes). Last week’s net sale was 2.71 tonnes. Under the new Central Bank selling agreement 7.69 tonnes would have to be sold each week if the (reduced) 400 tonne annual quota were to be disposed of evenly. It seems plain that the gold market is simply not seeing the (public) flow of gold from the EU squadron which did occur 1999- 2007."

"The Gartman Letter, while noting an upswing in gold interview requests, added a third 'unit' of gold on Tuesday, this time in US$... then today, TGL wrote $1,040 calls against their entire position."

A couple of gold stories to start things off today. The first is a Reuters piece filed from Tokyo. The headline reads "As dollar fades, gold's currency shine brightens"... and the link is here.

The second piece is a very short read [with a great photo!] from The Telegraph in London. I thank Charles Dubelier for sending it along. The headline reads "Gold hits fresh record high"... and the link is here.

The next story is a 5-minute video clip from Russia Today. The commentator interviews Gerald Celente. It's well worth your time... and I thank Casey Research's, Jeff Clark, for sending it along... and the link is here.

Every three months, the OCC [Office of the Comptroller of the Currency] releases its quarterly derivatives report for American banks. As I report every quarter, the top five U.S. banks hold 97% of all the derivatives in the U.S. banking system. The following blog, posted at reuters.com, expands on that by adding in the derivatives that the U.S. bank's holding companies are carrying... something that is not in the total bank derivatives that are reported by the OCC. All of a sudden the total derivatives by the top five U.S. banks balloons out another 37%... or $88 Trillion dollars... from $203 Trillion to $291 Trillion. One has to wonder how much of that total is written against the precious metals. I will check out the last OCC report this weekend to see if I can find out. In the meantime, here's the Reuters blog to which I was referring... and it's very easy to follow... and I suggest you run through it. The link is here.

The last story today is from zerohedge.com. In this story is a copy of a 4-page letter written jointly by Congressman Alan Grayson and Congressman Ron Paul. It's addressed to Chris Dodd, Chairman of the U.S. Senate Committee on Banking. In it, they request that "the confirmation of Ben Bernanke be postponed until the Federal Reserve released documentation that will allow the public and the Senate to have a full understanding of the commitments that the Federal Reserve has made on our behalf." The headline of the story reads "Alan Grayson and Ron Paul Ask Whether Bernanke is "Fit to Serve"... and the link is here. By the way, the CNBS interview with Congressman Grayson that's imbedded in the zerohedge.com story is well worth watching, too.

Socialism was made to order for tyrants. - James Cook

This is getting more interesting by the day. I note that in Far East trading this morning that silver is up nicely... as is gold. The rest of London trading... and then New York trading should be another great show today as well. If this is the beginning of a major move to the upside... and lots of commentators think that it is... then this is not the time to be out of position, or in the wrong position. I [very] strongly urge you, dear reader, to take the plunge and invest in the flagship publication of Casey Research and that is Casey's International Speculator. Although you may think it pricey... investing in just about any of their recommended junior gold or silver companies on Monday would have paid for the entire one-year subscription price many times over by the time you read this! If you subscribe today, you save 25% off the regular retail price of $995 per year... and it comes with a three-month, 100% money-back guarantee! Think about it.

Anyway, in my usual long conversation with Ted Butler yesterday, we were aghast over the stunning jump in open interest numbers for both metals. Are we concerned? Yes... but there's always the possibility that the bullion banks could get over run and be forced to cover [then look out above!]... or they could simply withdraw from further shorting both gold and silver [then look out above!]. The issue of which way the precious metals market is going to resolve itself... a sharp, short, violent sell-off followed by blast off... or a blast off right from there, has yet to be resolved. But it will be resolved sooner or later... one way or another. At the moment, the latter possibility is looking good, but I'm still sitting on the fence... but, like you, dear reader, I'm enjoying the ride immensely.

I'm off to bed, as it's after 3:30 a.m. here in Edmonton... and I look forward to seeing you again tomorrow.