The Markets Are Remonetizing Gold, and GFMS Is Sore About It

Gold gained about $8 between the Far East open and 9:00 a.m. in New York yesterday morning... then got gently sold off until the London p.m. gold fix an hour later. From there, gold got sold down about $14 to its low of the day [$1,117.10 spot]... which occurred at precisely 10:30 a.m. A rather substantial rally developed from that point... which ran out of gas about three hours later... and gold closed almost at its high of the day... which was $1,139.20 spot.

Silver was the star. It's low in the Far East occurred shortly after 4:30 p.m. in Hong Kong trading. From there it rose steadily until the London p.m. gold fix at 3:00 p.m. local time [10:00 a.m. in New York]. Silver, like gold, then got sold off hard for half an hour... until precisely 10:30 a.m. From there, it too, had a substantial rally and closed on its high of the day at $18.67 spot.

The precious metals shares were unimpressed... and the HUI only finished up 1.15%. Once again it was the juniors in both silver and gold that shone. That's why I keep pounding away about a subscription to Casey Research's International Speculator... as that's where dozens of junior producers and exploration companies are thoroughly covered.

Although gold's price fall was very substantial on Tuesday, gold's open interest only fell 4,555 contracts... compared to Monday's open interest rise of about 14,500 contracts. Ted Butler mentioned that a lot of Monday's open interest increase could have been spread trades being put on to disguise the real [and maybe much smaller] change in open interest. This we won't know for sure until tomorrow's Commitment of Traders report...as those sort of shenanigans will certainly show up there. Volume for gold yesterday was revised about 15% higher when Tuesday's final numbers were posted on the CME website. It was a pretty big 269,128 contracts. It's been a while since we've seen a volume of that size.

Silver open interest fell a more substantial 3,264 contracts on final posted volume of 38,514 contracts. There's a chance that all of Tuesday's activity in both metals wasn't reported in Wednesday's numbers. Wednesday's numbers [when posted later this morning] will be of interest... but won't be in tomorrow's COT report.

The CME Delivery report showed nothing worth mentioning... there were no reported changes at either ETF... and the U.S. Mint had nothing to say, either. But over at the Comex-approved depositories, they reported a smallish increase of 57,537 ounces in their silver inventory.

Not a lot of stories. But the first one is gold related. It's a piece from the Financial Times in London headlined "Investor Appetite Drives Gold to New Peak". Because there's no link, it's posted here as a GATA release which is entitled "Market is remonetizing gold, and GFMS is sore about it"... and the link to that is here.

As you are aware, dear reader, Venezuela devalued their currency by 50% last week. And that's only part of their problems... as Mother Nature isn't doing them any favours either at the moment. "Venezuela began rolling blackouts yesterday that will continue for the next five months as the worst drought in 50 years threatens to shut the nation’s biggest hydroelectric plant and collapse the power grid." The headline reads "Venezuelans Face Blackouts as Opposition Sees Opening"... and the link is here.

This next piece is a 29-minute video that's posted over at youtube.com. The program is about nine months old now... but it's well worth viewing in light of what we all know now about the financial crisis of 2008. It's a PBS program entitled Bill Moyer's Journal. Moyers sits down with Bill Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout... and it's ugly!!! If you've never seen this before, it's definitely worth your time... and the link is here... and I thank reader, Dave Delve, for sending it to me.

And lastly... the Vancouver Resource Investment Conference begins this Sunday. GATA will hold a public reception at the conclusion of this conference... from 6:00 p.m. until 8:00 p.m... Monday, January 18th, in the rooftop lounge of the Fairmont Vancouver at 900 West Georgia Street. There will be free snacks and a cash bar. Any reader attending the conference who wishes to show up, will be welcome. GATA's entire board of directors [including yours truly] will be there, as we are holding our AGM in conjunction with this conference. For further information... the link to the GATA release regarding this reception... plus the conference itself, is here.

An albino fawn. Note his size compared to the running shoe behind him.

I'm at a loss at the moment to fathom which way the precious metals markets will go in the very near term. The CFTC is having their big meeting today over position limits in the energy [and other] markets. It will be interesting to see if the word 'silver' is mentioned... as that's the only commodity on the exchange that really needs enforced limits. Every person at that meeting knows that. From the e-mails that both Ted Butler and myself received over the last day or so, the CFTC was inundated with comments on the goings-on in the silver and gold markets. Everyone in a position to do anything about it in Washington today, knows that they're every move is being watched... and I'm sure that Ted will have commentary on it the moment that the hearings end.

As I write this last paragraph, I note that not much of anything happened during Far East trading earlier today. The London open wasn't very exciting either... but both metals appear to be in a downward trend. Volume in gold is about the same as yesterday morning... 30,410 contracts [at 5:18 a.m. Eastern time]... and silver's volume checks in at a pretty hefty 4,422 contracts. The CME is reporting Thursday's preliminary volume in gold trading around 257,000 contracts... and silver's approximate volume was 34,200 contracts.

It appears that any serious action in the precious metals today may not happen until New York trading begins... and then expect anything.

I hope your Thursday goes well... and I'll see you here on Friday morning.