U.S. Mint to Resume Sales of Gold Bullion Coins

Between the Far East open on Friday morning and 12:30 p.m. in London, the gold price rose a bit over $10 to around $1,141 spot... which was the high of the day. From that point... and until 11:40 a.m. in New York, four hours later... gold got sold off about $32 to its low of the day which Kitco reported as $1,108.30 spot. Once the selling stopped, gold recovered about $5 of its decline in the next half hour of trading... and then trade sideways for the rest of the Friday session.

Gold did not break below its 50-day moving average on yesterday's price decline, but has less than $10 to go before it does, as gold's 50-day m.a. is just over the $1,102 mark. Maybe on Monday.

Silver's price action on Friday was virtually identical to gold's... with the highs and lows at precisely the same times. The high in London was just under $17.60 spot... and it's Friday low in New York was reported as $16.87 spot... which is a new low for this move.

Not to be forgotten in all of this, was the dollar's amazing 'rally', which started at precisely the same moment as gold and silver topped out during lunch hour in London... and ended moments before the lows of the day for both metals were set around 11:30 a.m. in New York. It's amazing how some gold and silver 'traders' can nail these market moves almost to the minute... isn't it!

The precious metals shares acted as one would have expected under the circumstances... but considering the severity of the sell-off, it was a very muted response... just as it has been since this sell off began a week ago.

Thursday's open interest numbers were a bit of a surprise again. Not because they didn't go down, but because [considering the severity of the price decline this week] they aren't falling faster. I've been going on about this for the last five days in a row... so why should I stop now? Anyway, gold open interest fell another 3,865 contracts on Thursday. Volume, as I mentioned yesterday, was very low... only 171,247 contracts... and total gold o.i. is now down to under 500,000 contracts for the first time in a while, at 497,992 contracts. Silver o.i. fell another 1,065 contracts on very light volume as well... only 28,614 contracts. Total silver o.i. is now down to 123,411 contracts.

Talking about open interest, here's the numbers from the latest Commitment of Traders report [for positions held at the end of trading on Tuesday, December 8th] that was released at 3:30 p.m. Eastern time yesterday. Considering the drop in price, the open interest in both metals didn't decline much... and as I said before, I think that's deliberate, as I think they're withholding data, plus hiding their tracks by going long instead of covering their short positions.

In silver, the bullion banks reduced their net short position by a smallish 2,002 contracts, which translates into 10 million ounces of silver. The bullion banks [8 or less traders] still hold about 76% of the entire net short position in Comex silver... and the '4 or less' traders hold about 65%.

In gold, the bullion banks reduced their net short position by a rather small 9,045 contracts... and the net short position has only declined to 299,186 contracts... which is 29.9 million ounces of gold. Of that, the '4 or less' bullion banks are short 21.7 million ounces, and the '8 or less' bullion banks are short 27.6 million ounces!

The concentrated short positions in both metals [especially in silver] just screams of price rigging. Anyway, silver analyst Ted Butler has a lot more to say about it in his exclusive weekly interview with Eric King over at King World News... and I urge you to stop reading right now and listen to what he has to say. The link to the interview is here. This is a must listen.

The CME Delivery Report for Friday showed that 133 gold and one [1] silver contract are up for delivery on Tuesday. There were no changes in either the GLD or SLV ETF yesterday either. The U.S. Mint added another 61,500 silver eagle sales for the month of December... and the Comex-approved warehouses reported that a smallish 47,404 ounces of silver were withdrawn from inventory. As of the close of business on Thursday, these warehouses were holding 111,525,838 ounces of silver between them.

I have very few stories again today. Here's one posted at Kitco. The headline reads "Gold exports propel Canada into trade surplus". I'm sure if Canada decided to increase the size of its gold reserves [which are currently close to zero] by trading them for U.S. dollars... Uncle Sam would not be amused. The link to the story is here.

The title for today's column comes from a story that appeared in this morning's Denver Post. The headline reads "Mint to resume sale of gold bullion coins". Well... that's true... sort of. The article is a handful of very short paragraphs, which are definitely worth reading... and the link is here.

If you listened to Ted Butler's interview earlier, he talked of the new legislation that just received approval from the House of Representatives yesterday. Here's the story to which he was referring. It's a Reuters piece headlined "House approves sweeping financial reforms"... and the link is here.

And lastly is this Reuters story, the contents of which should be no surprise to you, dear reader, as I mentioned this event several times in November. The headline reads "Russia Central Bank to Buy Gokhran gold next week - source". The amount is 30 tonnes, which is about 960,000 troy ounces. If that's the case, this purchase won't show up in their inventory until they update their website for December... which will be on [or about] January 20, 2010. The link to the story is here.

Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back. - Sir Josiah Stamp, former President, Bank of England

Today's 'blast from the past' is from the 1980s. I can't figure out why I hadn't stumbled onto this group sooner than this past week... but, I didn't. Anyway, this group had many big hits. I've selected one of my favorites... but the right sidebar at youtube.com lists many other monster hits... and you could be there for hours if you're not careful. So, turn up your speakers and then click here.

For whatever reason, the good folks over at stockcharts.com have not updated their precious metals charts with Friday's data. Normally they have it done by early evening... but it's 6:50 a.m. Eastern time on Saturday morning... and Friday's data is still not there. So I will have to make comments with no graph to back it up.

As Ted Butler mentioned in his interview, this price correction is much closer to its bottom than its top... despite the fact that the vast majority of the bullion banks' short position remains in place. Friday's graphs for both precious metals [when they're posted] should show more big declines in the RSI and MACD traces. Next week's trading will be interesting... and we'll find out pretty quick how much more spec long liquidation the bullion banks will be able to engineer.

Ted is reasonably confident that once the bottom is in, we could see a really sharp move higher in the silver price... and at that point we'll find out if the bullion banks [principally JPMorgan] are going to show up on the short side of this rally. If they don't...!!!

Enjoy the rest of your weekend... and I'll see you on Tuesday.