Will the COMEX Silver Market Be Closed?

Both gold and silver got sold off the moment that trading began in the Far East early in their Monday morning session. But that didn't last long... and from there, gold struggled up to it's Far East high of the day which was around $1,127 at 2:30 p.m. in Hong Kong. Then both metals began a gentle price decline, with the low of the day coming shortly before lunchtime in London. At that point a rally began that, in fits and starts, ended almost back at the Hong Kong high of the day at the close of New York trading at 5:15 p.m. Monday afternoon. Kitco posted the high tick N.Y. price at $1,127.60 spot.

As I mentioned, silver was similar, but it did manage to close nearly on it's high of the day, which [according to Kitco] was $17.42 spot.

The U.S. dollar was down a hair... and that gave a bit of a tail wind to the precious metals prices as well... but it certainly wasn't the predominant factor.

Although gold managed to finish up about $12 from its Friday close... and silver was up around 26 cents... the HUI didn't do much. However, it did finish in positive territory, so one should be grateful for small mercies at this point. But, for the most part, the shares in the junior mining stocks did much better than their larger brethren.

Friday's open interest numbers were a real surprise... at least in gold. The big decline in gold's price saw open interest rise 907 contracts. Someone was either piling on the short positions... or the bullion banks were adding to their long positions instead of covering their shorts. This data will be in Friday's Commitment of Traders report... which is still three days away. Volume on Friday was a pretty heavy 226,670 contracts. Total gold o.i. is now 498,899 contracts. In silver, open interest did what it should on a price decline of that size... it declined by 1,551 contracts. Volume was 40,321 contracts... with total o.i. now 121,860 contracts.

Cut-off for this Friday's COT report is at the close of business today... so whatever is reported in open interest changes at the CME website late Wednesday morning... will be in that report. Last week's COT report didn't tell us much, but this one will, as the bullion banks can only hide what they're doing for so long... and their time is now up.

The CME Delivery Report yesterday showed that exactly 9 gold contracts and 43 silver contracts were put up for delivery on Wednesday. There were no reported changes over at the SLV ETF... but, despite the price decline of the last week, the GLD ETF made a small addition of 9,802 troy ounces yesterday. The U.S. Mint had something to say for itself yesterday as well. They reported using another 22,500 ounces of gold to make fractional gold bullion coins. No one ounce gold bullion coins were produced, but apparently they're supposed to making more starting almost right away. They also reported selling another 572,500 silver eagles. Total silver eagle sales this month so far is 1,686,500. 24K one ounce gold buffaloes showed no change, as they are not being produced until further notice.

Over in Switzerland at the Zürcher Kantonalbank, they reported the changes in both their gold and silver ETFs for the week ending Friday, December 11th. Their gold ETF showed a decline of 64,635 ounces... but, once again, their silver ETF showed a substantial increase of 578,167 troy ounces. In the last four weeks their silver ETF has added approximately 3.2 million ounces. That's quite a bit. Currently, their silver ETF holds 57,944,787 ounces. Once again I thank Carl Loeb for providing this data.

The Comex-approved depositories had some pretty big numbers to report yesterday as well. They showed that a very large 1,705,065 troy ounces of silver were withdrawn... 1.1 million from Scotia Mocatta... and 600,000 from HSBC, USA. These draw-downs were done last Friday [Comex reports are always one day late]... so, as of the end of last week, Comex silver inventories stood at 109,822,765 ounces. Ted Butler says that's the lowest silver inventory level since December 2006.

Nick Laird [from the land down under] over at sharelynx.com was kind enough to allow me to use the graph below to show the last 20 years of silver history on the Comex. Note the big decline starting in 1994... where silver inventories went from 280 million ounces to 80 million ounces in less than 5 years... and the price barely moved. This lack of price action with an inventory change like that would never happen in any other commodity... except maybe for gold.

Well, it's Tuesday... and there was a lot of news over the weekend... so I have quite a few stories/videos for you to wade through today. The first is posted over at matterhormnassetmanagement.com from Switzerland and is entitled "Gold is Not Going Up - Paper Money is Going Down". It's a longish read... and there are some great graphs. I thank reader Donna Badach for sending it along... and the link is here.

The next gold-related story is from James Turk's website fgmr.com. The title reads "Gold Remains Firmly Within a Major Uptrend". It has a wonderful graph, of course... and the link is here.

I see that Nouriel Roubini has become an overnight gold expert. His latest piece posted on his pay website is entitled "The New Bubble in the Barbarous Relic That is Gold". While Roubini's essay is fully available only to clients of his consulting firm, Roubini Global Economics, it already has generated some vigorous responses whose quotation from Roubini seems extensive enough to be fair. All of this [and more] is imbedded in a GATA dispatch headlined "Nouriel Roubini thinks he knows nearly everything about gold"... and the link is here.

The number one precious metals story is this piece by silver analyst Ted Butler. It was originally released to subscribers on November 17, 2009... and Ted has decided to release it in the public domain because of it's content regarding the possibility that "silver trading might be terminated on the world's largest silver exchange... the Comex." His commentary is headlined "Extreme Speculation"... is posted over at silverseek.com... and the link is here.

Last week I ran a story about Greece and its financial woes. Here's another. Things have gone from bad to worse. You may not think that what happens in Greece is important; but, dear reader, you would be mistaken. If you didn't read last week's story... this one deserves your undivided attention. Ambrose Evans-Pritchard from The Telegraph in London states... "Euroland's revolt has begun. Greece has become the first country on the distressed fringes of Europe's monetary union to defy Brussels and reject the Dark Age leech-cure of wage deflation." The headline reads "Greece defies Europe as EMU crisis turns deadly serious"... and the link is here.

Next is a little something about Iran. It's a video/story from The Times of London. Iran is being painted the nuclear bad boy again with this piece headlined "Secret document exposes Iran's nuclear trigger"... "Confidential intelligence documents obtained by The Times show that Iran is working on testing a key final component of a nuclear bomb." This sounds similar to the multitude of stories about Iraq's 'weapons of mass destruction'... and we all know how that ended... regardless of the truth. I thank Casey Research's Jeff Clark for bringing it to my attention... and now to yours. The link is here.

The next three items all have to do with this big climate change/new world government conference taking place in Copenhagen, Denmark right now. As you have probably already figured out, I consider this to be the biggest crock of b.s. ever foisted on an unsuspecting public... and I'm not the only one who thinks so. Here's a full-page ad that a Canadian geologist took out in Alberta's Calgary Herald last week. He paid for it himself. There's a lot to read in this all-text advertisement, but it's worth your time. The headline reads "The Scam of Our Lifetime"... "The idea that humans are causing global warming is little more than nonsense. The goal of the perpetrators is a transfer of wealth with the apparent forfeiture of power to a proposed environmental world government formed by the United Nations. A possible vote on this sociopolitical concept could be held in Copenhagen, Denmark, in December." I thank reader, C.H. from Calgary, for sending this along... and the link is here.

One person mentioned in this commentary linked above is Lord Christopher W. Monckton - 3rd Viscount Monckton of Brenchley. He was Former Prime Ministerial adviser on scientific and domestic policy to Margaret Thatcher. Lord Monckton is now, perhaps, the world's leading expert on the case against Man-made Global Warming; and, as such, is a household name in the United States and elsewhere. Eric King over at King World News spent a long time interviewing Lord Monckton last Friday... and that interview is linked here. It's an eye-opener and definitely worth your time.

And lastly... finally... is this piece from The Times in London. It's literally 'hot off the press' as they used to say... dated this morning. The man that made the Internet possible, Al Gore stepped in another fresh cow pie yesterday... "There are many kinds of truth. Al Gore was poleaxed by an inconvenient one yesterday"... "Mr. Gore, speaking at the Copenhagen climate change summit, stated that "Some of the models suggest to Dr [Wieslav] Maslowski that there is a 75 per cent chance that the entire north polar ice cap, during the summer months, could be completely ice-free within five to seven years.” Needless to say, climatologist Maslowski, politely ripped Al a new one.

Now, dear reader, I lived for two and a half years within 100 metres [that's 109.3 feet] of the Arctic Ocean that Mr. Gore spoke of. It was at Alert, N.W.T... 82 degrees 20 minutes north latitude... just about as far north on this planet as you can go and still be on dry land. I can tell you that except for one day when Category 1 hurricane force southwest winds blew the ice over the horizon for about one day in 'summer'... there was ice as far as the eye could see... every day, month and year that I was there... and it was very very thick ice. Little has changed since. Temperatures got down to -45C in the winter [8 months/year] on many occasions. Hell, it was -46.1C at Edmonton International Airport two days ago... and that's nowhere near the north pole... it's 20 kilometres from my house! Blew the old record low out of the water by 10 degrees!!! Hey Al... you can take your 'global warming' concept and shove it! The article... headlined "Inconvenient Truth for Al Gore as his North Pole sums don't add up"... is linked here.

There were no big surprises in this quarter’s “flow of funds” data. I was somewhat surprised by non-financial debt growth below 3%. Watching weekly corporate and municipal debt issuance, I expected stronger debt expansion from these sectors. I view the continued contraction in mortgage and consumer debt as supporting the thesis of a very atypical reflation and recovery. Considering the degree of monetary and fiscal stimulus, the general financial and economic response continues to be disconcerting. There is, as yet, no indication that [the] massive government pump-priming is fostering a self-reinforcing private-sector Credit recovery. - Doug Noland, Credit Bubble Bulletin, 11 December 2009... prudentbear.com

It's hard to say where gold and silver prices are going from here. Silver is showing signs that there's not much room to the downside... and Ted Butler feels that if lower silver prices are in the cards, then the bullion banks are going to have to beat the gold price down to do it. Gold is still $20 away from its 50-day moving average... which still hasn't been broken in this price correction yet. The 6-month gold chart is shown below.

I note that gold had its high price in Far East trading at half-past lunchtime in Hong Kong... and is down about $10 from that high. That pretty much jibes with what's happening to the US$ at the moment. It had its 'bottom' at 76.34 at 11:30 p.m. Eastern time [Dec. 14th], which is 12:30 p.m. in Hong Kong on December 15th. Let's see how long this particular dollar 'rally' lasts.

I hope your Tuesday goes well... and I'll see you here tomorrow.