Just Another Day Off The Calendar

Gold and silver's high for Thursday was at precisely 3:00 p.m. in Hong Kong trading yesterday... 2:00 a.m. in New York. From there, it was all down hill through the rest of Far East, London and New York trading... with the decline in price accelerating once the London p.m. gold fix was in at 10:00 a.m. New York time. The low was right at the close of electronic trading in New York yesterday afternoon at 5:15 p.m. Eastern. From it's Hong Kong peak, to the low at the New York close, gold had slightly over $20 shaved from its price.

Silver path was similar to gold's... with its high at the same time as gold's... and the sell off in price becoming much more acute after the London fix was in. Silver also closed on its low of the day... down 50 cents from its Hong Kong high.

The decline in the U.S. dollar certainly exacerbated the situation yesterday... but the price decline wasn't totally tied to the dollar... as there was obviously a seller lurking about.

There was a substantial drop in gold's open interest on Wednesday... although there certainly was no price decline big enough to warrant it. Maybe a spread trade was lifted. Anyway, when the smoke cleared, gold o.i. had fallen 10,846 contracts on pretty substantial volume of 189,848 contracts. Total gold o.i. is now down to 515,330 contracts. Since this big open interest drop occurred on Wednesday, it won't show up until the Commitment of Traders report the comes out next Friday... not today.

Silver open interest also fell yesterday... a respectable 1,975 contracts. Volume was right up there at 53,066 contracts... and total silver o.i. declined to 134,334 contracts.

The Commitment of Traders report [for positions held at the close of Tuesday's trading] will be released at 3:30 p.m. Eastern time today... and I'll report on it in my Saturday commentary. But if you don't want to wait until then... the link is here.

There were no deliveries worth mentioning from the CME's daily report. There were no changes reported at the GLD ETF... but over at the SLV, there was a big, big change!!! I had to look at the numbers more than twice [and looked one more time just now as I wrote this sentence] just to make sure I had it right. You may remember that silver analyst Ted Butler said that the SLV was owed about 35-40 million ounces. Well, 4.2 million of that arrived on October 29th... and yesterday, another 5,895,324 ounces showed up. Only another 25 million [more or less] ounces to go! The U.S. Mint showed a small increase in gold eagle production... 3,000 one ounce rounds... and nothing for silver eagles. Over at the Comex-approved depositories, another 509,372 ounces of silver were reported withdrawn from their collective inventories.

The usual New York gold commentator had a few remarks on yesterday's gold action... "India was not an importer yesterday as the rupee softened a bit... as did the stock market."

"Thursday, of course, saw continuous pressure on gold, starting from just after the TOCOM close at 1:30AM NY time [with gold at its peak of $1,123.30] and interrupted basically only by a defeated attempt to close the NY floor session at a low. December gold settled down $8 at $1,106.60: estimated volume was a heavy 171,452 lots, having jumped 21.4% in the last half hour."

"Gold shares showed no independence: the HUI closed down 3.16% and the XAU down 2.67%, both close to their day's lows."

"Early on Friday morning, local Vietnam gold stood at a $27.31 premium to world gold of $1,102.50 [Thursday $29,14/$1,102.50]."

I see in a story posted at Kitco yesterday that South Africa's gold production fell 9.3% in volume terms compared with September last year. The piece [filed from Johannesburg] is posted at allafrica.com and is entitled "Gold Price Soars, But Output Tanks"... and the link is here.

Here's another gold story that was posted at Kitco in the wee hours of Friday morning. It seems that Iran is now trying to control the internal gold price in its country by issuing 5 million gold coins... each weighing 8.13 grams. That translates into 1.3 million ounces of gold... a bit over 40 metric tonnes. That's a lot. This Reuters story is found at the tradearabia.com website and is certainly worth reading... and the link is here.

What does one trillion dollars look like? As the author says... "various numbers are tossed around like so many doggie treats" these days. But when you really look at in stacks of US$100 bills... well, that kind of cash takes on a whole new meaning. Click here to see what I mean.

Today's first story is from The Economist out of England. Here's a quote to whet your appetite... "For bullion bulls, the implication is clear: central banks no longer trust the creditworthiness of other governments. And if they have lost confidence, private investors should do the same. The next step in this chain of reasoning is to assume a stampede (or at least a quick trot) by other central banks into holding the yellow metal." The headline reads "Paper promises, golden hordes: Central banks and the bullion price". I thank reader Michael Cheverton for sending this along... and the link is here.

The next story is courtesy of the King Report. It's not a big read, but I feel it's worth your time. The headline says it all... "The Coming Collapse of the Municipal Bond Market"... and is certainly another reason why you should load the boat with all the physical gold and silver you can afford. The link is here.

It looks like the IRS isn't going to stop at peeling back the layers of bank secrecy in just Switzerland. It has now set its sight firmly on Hong Kong. This Bloomberg piece is a bit of a read... but it's certainly a warning to all American citizens that are hiding income off shore, that there is no safe place. The story is headlined "Hong Kong Is New Target of U.S. Crackdown on Global Tax Evasion"... and the link is here.

Today's last story is from the hallowed pages of The New York Times. It's another story about world-wide shipping woes... now that international trade is on the rocks. Things have gone from bad to worse... and major shipping lines are about to head into bankruptcy... leaving their creditors with ships that are now only worth pennies on the dollar, plus tens of billions of dollars in bad loans. The story is headlined "As Shipping Slows, Banks and Carriers Fear Loan Defaults"... and the link to this very worthwhile 2-page read, is here.

I note that there's a little prayer that's making the rounds on the Internet this week. I've seen it in a couple of places... the latest being yesterday's King Report. It's a variation of the Lord's Prayer... now called The Lloyd's Prayer... and has to do with the CEO over at Goldman Sachs... and it goes something like this...

Our Chairman,
Who Art At Goldman,
Blankfein Be Thy Name.
The Rally's Come. God's Work Be Done
On Earth, As There's No Fear Of Correction.

Give Us This Day Our Daily Gains,
And Bankrupt Our Competitors
As You Taught Lehman And Bear Their Lessons.
And Bring Us Not Under Indictment.
For Thine Is The Treasury,
The House And The Senate,
Forever And Ever.

Goldman

I wouldn't read too much into Thursday's action in either gold or silver. As I said before, most of it was dollar related. It's important to look at the long-term... not the day to day stuff... which Ted Butler points out to me on many occasions when I try to over-analyze things. To put some perspective on this, here's the 30-year gold chart from my friend Nick Laird over at sharelynx.com in Australia. With [or without] a short-term correction...this chart looks pretty spiffy [parabolic?] to me.

It's my opinion that, in the very near future, we will enter the next phase of this bull market in both gold and silver. If you are not invested now, it's still not too late, as the 'mania' phase still lies ahead of us. The easy money was made years ago... but now we're entering the stage where the big money is to be made. I urge you to invest the US$39 for a 1-year subscription to Casey's Gold and Resource Report. When the next stage of this bull market in precious metals gets going, the rise in prices will shock you... and probably this writer as well. And don't forget that your satisfaction is 100% guaranteed within the first 90 days, or we will immediately refund every penny you paid. How can you lose on an offer like that?

Checking the markets in the Far East, I see that gold has rallied a bit from its early low at the beginning of Hong Kong trading... ditto for silver. London has just opened, with no surprises so far...and volume in both metals is only a fraction of what it was this time on Thursday morning. The dollar has rolled over a bit, which would certainly account for most of the precious metals gains to this point. Fridays are always interesting when the Comex opens for business. I wonder what JPMorgan et al have in store for us today.

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