Russia Cuts Gold Sale Estimates, May Sell Only Domestically

As I mentioned in my closing comments yesterday morning... gold was up about five dollars in Far East trading on Thursday... and had popped for another couple of dollars shortly after the London open. From there, it didn't do much until shortly after the Comex opened for business in New York. Then a rally began that lasted until a few minutes after the close of floor trading. Then the price went sideways into the close of electronic trading at 5:15 p.m. By the time the smoke had cleared, gold had gained $18.10 from its close on Wednesday... a decent move.

Yesterday I reported that silver was up about 15 cents shortly after London opened for trading yesterday. From there, it [like gold] basically went sideways until precisely 8:30 a.m. in New York, when it [along with gold... also at precisely 8:30 a.m.] took off to the upside as well. The peak price in silver came about an hour before the peak price in gold... and from there, also traded sideways into the New York close.

It nearly goes without saying that the shares did very well for themselves yesterday, and all the long faces out there [this author's included] were much happier with Thursday's activity then they were with Wednesday, Tuesday, Monday... and also Friday of last week too!

Well... the CME's 'preliminary' open interest numbers for gold that were published early Thursday morning for Wednesday's activity... and that I posted in yesterday's commentary... were, in a word, garbage. They bore absolutely no resemblance whatsoever to the final numbers. Wednesday's final o.i. numbers for gold showed a decline of 8,757 contracts. That's a much more believable number, and I'm relieved to see it. The 'preliminary' gold o.i. showed a rise in open interest of 3,537 contracts... a 12,500 contract swing! The final silver open interest numbers showed a decline of 2,536 contracts... with the preliminary number indicating a decline of 1,571 contracts... a 50% difference. I will no longer report preliminary open interest numbers until I see some signs that this kind of dichotomy disappears, as differences this size render the 'preliminary' data totally useless.

Yesterday was the final delivery day into the October contract for both gold and silver... and today is first notice day for delivery into the November contract. I expect deliveries in November to be just as unexciting as October. As I've stated before, the real action begins in the December delivery month. Options expiry for the December contract is November 23rd... and first day notice for delivery into the December contract will be Monday, November 30th. And, having said all that, there were only a handful of gold and silver contracts delivered yesterday... as they close the books on October's delivery month. In the October month... 7,825 gold contracts were delivered, along with a magnificent 106 silver contracts.

There were no changes reported over at the GLD ETF... but there was finally some major activity over at the SLV, where they took in an absolutely monstrous 4,225,780 ounces! That's the biggest one-day intake in at least six months. I wonder how many more tens of millions of ounces are still owed? The U.S. Mint decided to end the month in a spectacular way as well, with gold eagle mintings up another 8,500 and silver eagles production up an impressive 539,000. Month-to-date, gold eagles are at 111,000... with silver eagles at an impressive 2,779,000. I would be surprised if they have another update today... but we'll see. Over at the Comex-approved warehouses, there was another 258,241 ounces of silver taken into their inventories.

The usual New York gold commentator had two reports yesterday... "India was definitely an importer on Thursday. Reuters reports: 'Gold traders in major bullion consumer India, are continuing to stock up for the wedding season, tempted by the recent price decline.' Traders have responded well to the recent correction after Diwali, and a lot of orders are getting filled, said Pinakin Vyas, chief-manager treasury of Mumbai's IndusInd Bank." [The link to the Reuters story is here.]

"Standard Chartered has published a report predicting meaningful appreciation for the rupee. This matter is of the first importance for world gold demand."

"Vietnam local gold stood at a $24.94 premium to world gold of $1,031.30 early Thursday morning. [Friday morning... this morning... Vietnam gold stood at a $21.01 premium to world gold of $1,045.40... a robust response.]"

"Finding world gold $10 lower than their last close, the Japanese public turned aggressive buyer on huge volume... and they added 8.268 tonnes to their long... an increase of 33%!"

"Mitsui has published its valuable Refining Monitor for September... With gold trading up to historical levels in nominal terms, it's natural to estimate quite a material increase in scrap metal travelling on to the market... Of course we know that sometimes this pattern can be pushed to the extremes such as the case in Q1 this year.

"This time around, the story is quite different. While intense levels of gold selling activity have been evident, particularly in Asia, these occasions have been... and continue to be... on balance, relatively contained. Why is this the case? We believe there are 3 factors: that holders are estimating higher prices and thus a wait-and-see approach prevails; that physical stocks in some markets are quite low; and thirdly, we have heard that certain physical hubs are actually short. It's likely to be a combination of all three forces that have contributed to the make up of the physical market landscape at present."

I'm happy to report that I only have three stories today... or which, the first two are gold related.

The saga of Russia's 'on again, off again' gold sale is... ??? This news story... headlined "Finance Ministry could sell 25 tonnes of gold, possibility on domestic market"... is filed from Moscow and posted at interfax.com. The link is here.

The next story is about that Darth Vader of gold companies... Barrick Gold. The headline from the story posted at canadianbusiness.com reads "Barrick Gold posts US$5.4 billion net loss on windup of gold hedging program". Well, Barrick is a little late to this party, but anybody who knows their history... and of their wonderful long-term relationship with their bullion bank, JPMorgan... will need no explanation. Despite what the headline reads, Barrick still has a significant hedge book... somewhere in the two million ounce range. But the fact that Barrick is heading for the hedge book exit... probably with the prodding of the 'powers that be' at JPMorgan... means that the writing is probably on the wall for the gold suppression price scheme. The link to the story is here.

And lastly... in his latest commentary... Hugo Salinas Price, president of the Mexican Civic Association for Silver, gets to the heart of the big issue of the world financial system. That is, as the only world reserve currency, the U.S. dollar has become the mechanism with which the United States wages war on the whole world. Salinas Price's commentary is headlined "It's Time to End World War II". This is certainly a must read... and the link is here.

Do you recognize this place? Answer at the bottom of this commentary.

Keynesian economics... and socialist central planning... have trapped the Western economies into a slow death. - Wayne N. Krautkramer

Well, despite Thursday's wonderful day in the gold and silver market, nothing has really changed. Yes, the grotesque short positions in both gold and silver are slightly less grotesque then they were a week ago, but the big picture remains unresolved...either to the upside, or the downside.

Can the price move higher from here? Absolutely... and all that has to happen is for the bullion banks not to take the short side against any new longs that come into the market. They don't even have to cover their current short positions... all they have to do is withdraw from the market. If that happened, we'd have a pretty big gold [and silver] price by the end of today's trading.

Since it's my opinion... and the opinion of many others... that a fairly major upwards move in the prices of both gold and silver is somewhere in the near future, I would suggest to you, dear reader, that it's time to make some serious investment decisions. The easiest [and cheapest] way to do that is to invest the US$39 it takes to subscribe to Casey's Gold and Resource Report. It provides, amongst other things, ongoing analysis and recommendations of the world's most active and well-positioned gold and natural resource stocks... and you satisfaction is 100% guaranteed!!!.

And I note, as I type this paragraph, that both gold and silver are heading lower. The sell-off started almost the moment that Sydney closed for the day... and is continuing through the London open. Today is Friday... and also the last trading day of the month. I wouldn't want to hazard a guess as to what's going to happen during the New York session... but it could get interesting.

I hope you have a great weekend... and I'll see you right here tomorrow.

NOTE: The photo above is of the Rock of Gibraltar. The entire 'country' of Gibraltar... a British 'colony'... is in the photo. Spain is directly below the aircraft from which this picture was taken. The view is almost due south. Morocco [in Africa] is easily visible across the strait.