Russia's Central Bank Buys 400,000 Ounces of Gold in September

Gold hit its high tick of the day about 3:50 p.m. in Hong Kong trading in their Tuesday afternoon. That was also the bottom for the U.S. dollar. Since then, gold [and silver] have been in a down trend... with most of the damage starting shortly before the Comex open and ending shortly before lunchtime in New York.

Silver's path was similar except its high came earlier in the Hong Kong session.

Here's the daily U.S. dollar chart.

Note the low spike at 2:50 a.m. New York time on Tuesday morning... which is 3:50 p.m. in Hong Kong's afternoon the same day. Gold topped, and the U.S. dollar bottomed, at the same instant. It just remains to be seen if this is the start of something... or maybe it's nothing at all. The reason I'm fixating on this particular time of day has to do with hard experience from the past nine years with GATA. If something really big was afoot, the action between the Sydney close and the Hong Kong close was always a time gap to watch... especially 3:00 a.m. in New York... 4:00 p.m. in Hong Kong.

Carefully stashed away in the innards of my computer is an e-mail dated December 31, 2007. It was a 'cut and paste' from Bill Murphy's MIDAS commentary over at lemetropolecafe.com... which I'm dragging out into public view again. It reads as follows... "Did you realize that EVERY new multi-decade high gold has reached, from $425 or so in 2003 to $735 in 2006 to $843 in November to $843 last night, has occurred at 3 am EST on a Sunday night? EVERY SINGLE TIME! And EVERY SINGLE TIME gold has been IMMEDIATELY clocked to make sure that any excitement/sentiment/follow through that might occur is IMMEDIATELY squashed."

I realize that last night was not Sunday night... but after ten years of watching every tick in the gold and silver price, I am sensitive to that time period in general... and that precise time in particular. I'm not the only person who is aware of it. This particular point was made in Bill's commentary again yesterday afternoon as well... "...we have identified a zillion times how the London Gold Cartel traders often make their move at 3 AM NY time. It only takes a modicum of common sense and market understanding to appreciate that only an organized operation would enter the gold selling scene over and over again AT THE SAME TIME. If gold were freely traded, patterns such as this would not be so recognizable. Gold is not a randomly traded market; it is a managed market..."

Whether or not this pattern is repeated again, remains to be seen. But it's a pattern that's been around a long time. Other major turning points that you see frequently are the London a.m. gold fix, the London silver fix, the Comex open, the London p.m. gold fix... and the London close. The New York bullion banks can enter the market at any time they wish through the New York Globex trading system... but these particular times are worth noting... and I mention them frequently.

Dimitri Speck has an 8-year gold chart that shows the trading pattern that the bullion banks use... which they try to disguise as normal market behaviour, except his analysis rips the mask off their market management tactics. Here's the chart, and the essay from which I stole this, is posted at gold-eagle.com and is linked here.

As far as Monday's changes in open interest for gold, o.i. actually fell 4,730 contracts... so there was some short covering. Total open interest is now 'only' 509,988 contracts. Volume was 102,591 contracts. Silver o.i. was up a very small 118 contracts to 136,505... and volume was an extremely light 22,762 contracts.

There was nothing on the CME Daily Delivery Report that was worth mentioning. October is not a big delivery month for either gold or silver. The front month now is really December, which is a big delivery month for both metals, and all eyes will be on it from now on. There were no reported changes in either the GLD or SLV yesterday. Ted still says that the SLV is owed north of 35 million ounces of silver. It's hard to deliver this kind of quantity of silver when it doesn't exist. Well, if the truth were known, it really does... but for the SLV managers to go out and buy it... they would drive the price of silver to the moon in the process. This is why they short the shares instead. And what makes matters worse, these shorted shares have absolutely no silver backing at all... but the new owners of these shares don't know that. That's fraud... pure and simple.

The U.S. Mint updated their eagle numbers again yesterday. Gold eagle production is up another 6,000 and silver eagles are up another 100,000. Month to date... 69,500 gold, 1,625,000 silver. At this point in the year, over 1.02 million ounces of gold and 22.09 million ounces of silver have been converted into eagles. That's a lot! Over at the Comex-approved depositories, it was reported that 235,135 ounces of silver were taken into inventory.

And yesterday was the day that the Central Bank of the Russian Federation updated their website with their September numbers. They show that their gold reserves rose another 400,000 ounces during the month that was. Their total gold reserves [at least what they're reporting] shows that they hold 19.0 million 'fine troy ounces.' So far this year, they've purchased a whopping 2.3 million ounces for their reserves. I thank Richard Nachbar, a rare coin dealer in upstate New York, for providing the graphs below. His website... coinexpert.com... can be found by clicking here.

The usual New York gold commentator had the following to report yesterday... "India was an importer during the entire day on Tuesday.

"As noted last night, Vietnam local gold stood at a $17.29 premium to world gold on Tuesday morning... and early on Wednesday morning, the premium now stands at $19.99 to world gold of $1,054.50. Japan turned a buyer. Volume was high... and the "General Public" added 3.02 tonnes [up 22%!] to their long."

"The European Central Bank weekly statement of condition indicates a €1.0 million purchase 'of gold coin by one Eurosystem central bank'. Why not use gold holdings to create coins -- like the Bundesbank? Could this be a surreptitious buying of gold by a dissident captive Central Bank? Probably not. In any case, the ECB Central Bank squadron appears to be out of the gold market. Last week saw a 'sale' of only 0.09 tonnes." [Whatever happened to this 403 tonnes of IMF gold that's supposed to be sold? - Ed]

"UBS raises an interesting point... "We wonder whether some cash is being diverted to precious metals futures -- especially from energy futures -- due to concerns about the potential impact of imminent tighter CFTC regulation of commodity markets. Although all commodity markets will probably be affected by these expected moves, energy is the primary focus of policymakers' attentions, followed by agricultural commodities."

"Gold sentiment seems to diverging: America versus the rest."

I only have three stories today... and I'm happy about that, and hope you are too. The first two items couldn't be more different... or more related. One comes from the top of the socio-economic order... and the other tracks one family's fall into homelessness. Both were provided by Craig McCarty... for which I thank him.

The first is an Op-Ed piece by Bob Herbert from the New York Times... "We’ve spent the last few decades shoveling money at the rich like there was no tomorrow. We abandoned the poor, put an economic stranglehold on the middle class and all but bankrupted the federal government — while giving the banks and mega-corporations and the rest of the swells at the top of the economic pyramid, just about everything they’ve wanted." It's not a particularly long article, and definitely worth the read. The link is here.

The second story is from theatlantic.com. It runs a bit longer than the previous piece... but it, too, is worth your time. It's a story from the other end of the social spectrum. The headline reads "Milking the Poor: One Family's Fall Into Homelessness"... and the link is here.

The last story is gold related. It appears that a [142 page] class action lawsuit has been filed against the company Cash4Gold in federal court. The lawsuit states that... "institutional culture is corrupt to its very core, designed at all levels to commit fraud." The headline reads "Cash4Gold Hit With Racketeering and Fraud Class Action Lawsuit". I thank Donna Badach for sending me the story... and the link is here.

As I said sometime in March, the balance of this year is going to be a fascinating one for both gold and silver. On one side we have the huge short position that's held by the eight bullion banks as they attempt to keep the price rallies in check... and on the other is the changes in position limits about to be proposed by the CFTC. I'm sure there is a lot of back-room fighting going on right now, and I'd love to be a fly on the wall at JPMorgan, as they're the ringleader in the price management scheme in both metals. But behind them, calling the shots, stands the U.S. Treasury and the Federal Reserve... so the CFTC and the SEC have them to contend with as well. How it's all going to turn out is the $64,000 question. I'm hoping for the best, but expecting the worst... as I see nothing in the actions of the bullion banks over the last couple of months that indicates anything other than 'business as usual.' Maybe this time it will be different... but then again, maybe not.

That's why I'm still sitting on the proverbial fence... a place I'd rather not be... but right now, the only place to be in my opinion... as nobody knows how this is going to play out.

We certainly live in interesting times. Historic times, actually. And, as I've said many times before, we'll just have to wait it out.

See you Thursday.