Massive U.S. Bullion Bank Selling Greets $1,100 Gold

Nothing much happened in gold and silver through Far East and European trading yesterday. As expected, the real action started once the jobs report came out. Gold began rising at exactly 8:30 a.m., only to be hit for ten bucks less than 15 minutes later.

But, that was the extent of it, as the price rose briefly over $1,100, only to be hit by a wave of selling which took it down $8 to $1,092. Between then and the New York close, gold managed to recover five dollars of that, and finished up $7 from Thursday.

Clearly, the gold price wanted to rise much higher, but was stopped dead in its tracks once again.

Silver's action was similar, and the price closed down a penny from Thursday.

The jobs report was horrific, with the 'official' unemployment rate hitting a new high of 10.2%. The 'real' unemployment rate, when all the B.S. is taken out, shows 17.5%. Normally an unemployment report as negative as that would have left a great smoking hole where the Dow-Jones Industrial Average used to be, but in these days of managed markets, no one should be surprised that the Dow finished in positive territory... if only by a hair.

As Case Research's David Galland said in his Casey's Daily Dispatch commentary yesterday... As for the stock market, I’m increasingly convinced that the government and its allies on Wall Street have a plunge protection team in place. Of course, I have no hard proof, but with everything else the government is doing these days to keep the recovery story intact, I have to think something as easy as intervening in the stock market at critical pressure points would be a no-brainer. Welcome to the tin-foil hat crowd, David!

Open interest numbers for Thursday's action are as follows. In gold, o.i. fell 1,180 contracts... and in silver, o.i. rose a steep 3,886 contracts to 139,430 contracts... a new high. I started writing my report very late last night, so I don't have the volume figures, because the CME was already showing the preliminary open interest numbers for Friday... so I had to steal these open interest numbers from Bill Murphy over at lemetropolecafe.com.

The new COT report didn't show much. In silver, the net short position held by the bullion banks showed a fairly decent drop of 5,379 contracts... over 26 million ounces. But before you start cheering this number, these same bullion banks have put back on all of these short positions [and more] since the Tuesday cut-off for this report. Ted Butler says about 10,000 contracts worth... but some of those positions were spreads, which don't really count.

In gold, there were virtually no changes at all. The bullion banks added a very small 373 contracts to their net short position. Ted figures the bullion banks have added another 18,000 contracts [give or take] to their net short position in gold since the Tuesday cut-off. As of Tuesday, the bullion banks were net short 28.4 million ounces... and were probably knocking on the door of 30 million ounces by the close of trading yesterday.

So, nothing is resolved... and, as of yesterday, the situation has actually gotten worse. As usual, Ted Butler had a few things to say about the COT report, and the link to his must listen interview with Eric King of King World News is
here.

Much to my [and Ted Butler's] surprise, the November Bank Participation Report was not published yesterday like it should have been. They were late with their October report as well. Hopefully it will be published on Monday.

The CME Delivery Report had nothing worth mentioning. So far this month, 414 gold and 131 silver contracts have been delivered. This is hardly exciting. There were no reported changes in the alleged holdings of either the GLD or SLV yesterday... but the U.S. Mint finally had something to say for itself. It reported that another 26,000 one-ounce gold eagles had been minted...along with 825,000 silver eagles. The Comex-approved depositories reported receiving another 886,304 ounces of silver.

The usual New York gold commentator only had one report yesterday. This one was filed around noon Eastern time... "India was not an importer yesterday. Unfortunately for the bears, the rupee decided to firm up: closing at $1=R46.81. This bolstered the Indian gold bid. The stock market added 0.59%, closing positively for the first week in three."

"As always, the key utility in following India is to asses the downside in any given world gold price. At present, unless the rupee weakens abruptly, it appears that India would turn a strong buyer on a retracement into the $1,080s."

"TOCOM produced an interesting day. The public only added 0.3 tonnes to their long, but open interest rose considerably more -- 3.99 tonnes, or 1,283 Comex equivalent [contracts]. Very occasionally, overseas interests use TOCOM to gain cover ahead of a dynamic NY day. Perhaps this was one such case."

"Standard Bank remarked this morning that... Gold is still finding strong resistance on approach of $1,100. We expect this to hold -- unless non-farm payroll numbers come in much better than expected. Good data figures should see risk appetite increase and the dollar weaken, from which gold should benefit."

"This judgment was certainly born out today, with two furious charges on $1,100 [after the payroll data] being beaten back on very heavy volume. The bulliondesk.com refers to 'waves of selling pressure'. Estimated volume at 11AM was 122,240 lots."

I noted over at the FDIC website that [as of early Saturday morning] another five banks have been closed. If you want to see if yours is on the list, click here.

I have a couple of stories today, but most of my offerings are interviews... all of which are more than worth your time.

I note that a friend of mine, Aaron Krowne, of Mortgage Lender Implode-o-Meter fame, is in the news. Nothing is at stake here except the 1st Amendment to the Constitution of the United States of America. I came across his site when he was just starting and had had less than 20,000 hits. His visitor counter now reads 44.95 million hits. The case against him "could decide if bloggers have the same first amendment rights as traditional journalists and determine if media websites can protect the identities of those who post comments anonymously." The story, posted at the New Hampshire Public Radio internet site is headlined "Fight Over Blog Comments Hits High Court"... and the link is here. The link to Aaron's Implode-o-Meter site is here.

Market analyst and [huge] GATA supporter, Peter Grandich, was interviewed about the gold market for a few minutes Thursday on Business News Network in Canada. Grandich remarked that there is little interest in gold in North America, particularly in the United States, and most of that interest is in disparaging gold. He noted that India's purchase of half the gold planned for sale by the International Monetary Fund had destroyed the big bogeyman scaring the gold market, that investment demand is replacing jewelry demand, and that demand for real gold in hand is replacing demand for paper promises of gold. The interview is in two parts... and the link is here.

GATA's secretary treasurer, Chris Powell, was interviewed for about 10 minutes Friday by Eric King of King World News. They discussed the purchase of International Monetary Fund gold by the Reserve Bank of India, the purchase of gold by the Sri Lankan central bank, the observation by Bloomberg News London bureau chief, Mark Gilbert, that pervasive government intervention has distorted all markets, and the continuing destruction of the middle class in the United States. The link to the interview, which is very much worth listening to, is here.

The next story has to do with U.S. health care insurance...and the nightmare it has turned into. Yesterday, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail. The JCT letter makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years. The story [which I thank reader, P.S. for] should be carefully read by all American citizens... and is linked here.

Here's another interview from King World News. This time it's with the legendary Pierre Lassonde, who is currently the Chairman of Franco Nevada Corporation... and served as President of Newmont from 2002 to 2006... and resigned as a director and Vice-chairman of Newmont effective as of November 30, 2007. No flies on him... and the link to this must listen interview is here.

And lastly, from over at David Tice's Prudent Bear website, comes Doug Noland's Friday Credit Bubble Bulletin. No Friday of mine is complete without reading what Doug has to say... and this week's commentary is no exception. It's entitled "About a Half Paradigm"... and you will have to scroll about three quarters of the way down the page to pick up the story... and the link is here. This is a snapshot of the credit and financial situation on a global scale.

Today's 'blast from the past' is from the late 1970s. This group was one of those one-hit-wonders. But what a hit it was! So turn up your speakers and click here. Enjoy!

Well, the expected jobs report gold sell-off didn't amount to a hill of beans this month, as strong buying showed up to negate what little sell-off there was. Equally obvious was the fact that the bullion banks were aggressive sellers once again yesterday, and I would expect that open interest went up another big chunk in both gold and silver as a result.

I'm expecting/hoping that the current situation will resolve itself [either up or down] sometimes in the next three weeks. December options expiry is a hugely important date, and the bullion banks are probably sitting on paper losses approaching $1 billion right about now. Can they engineer a sell-off to cover some of their shorts? Who knows? I certainly don't. But it must be resolved one way or another. So we wait.

Regardless of how or when it is resolved... and I expect it to be soon... I would highly recommend that you consider investing in a subscription to Casey Research's flagship publication Casey's International Speculator. It's a premium publication... but the subscription price will seem like pocket change when things really get going to the upside... and the well-researched small junior gold and silver mining stocks covered by this report, will contribute significantly to your net worth... and mine too, come to thing of it. Also included in this monthly publication is a free subscription to Casey's Gold and Resource Report. Don't forget that your satisfaction is 100% guaranteed. Never has the time been better to make such an investment... and I feel that time is running out. I urge you to give this serious consideration.

I hope you enjoy the rest of your weekend. I look forward [with great interest] to the opening of the gold and silver markets in the Far East on Sunday night.

See you on Tuesday.