Gold's 200-Day Moving Average Eases Above $1,000

Well, it's pretty hard to read much into gold's price action on Thursday, when not very much happened. Gold's high of the day in Far East trading occurred shortly after Hong Kong opened for business... and from there declined in zig-zag fashion to its low of the day [$1,129.70] which occurred shortly after the close of London trading... around 11:15 a.m. in New York. A rally began which gained all of that back, and more... and gold finished up a few dollars from Wednesday's close. Thursday's high came shortly after floor trading was through for the day. Kitco shows that price as $1,147.00 spot.

Silver's price was a little more 'volatile'... as per usual... but what else is new?

Both gold and silver prices ended the New York trading session very close to their respective closing prices on Wednesday... and although both closed slightly higher than Wednesday... the HUI was down a small fraction. I was underwhelmed. And the U.S. dollar wasn't a factor in prices again for the third day running.

Wednesday's changes in open interest were rather subdued. Gold's open interest went in the right direction again... down a smallish 1,516 contracts. Final volume was reported as 256,969 contracts... with total open interest still a very hefty 521,750 contracts. Silver's open interest went up 1,340 contracts... with volume a not overly heavy 34,244 contracts. Total silver open interest is now a hair over 130,000 contracts. The new Commitment of Traders report will be available at 3:30 Eastern time this afternoon... and I'll report on that tomorrow.

The CME Delivery report showed that 16 gold and 1 [one] silver contract were posted for delivery on Monday. The GLD reported another small withdrawal yesterday... down 68,586 ounces. According to the "usual N.Y. gold commentator": "Since the end of 2009, gold has gained $47... or 4.3%... while GLD has dropped 19.87165 tonnes, or 1.75%." But over at the SLV there was the biggest one-day decline that I can ever remember, as an astonishing 4,810,418 troy ounces were withdrawn. Nowhere in the silver price action of the last couple of months has there been any decline in price that would warrant such a large draw-down. So it's a pretty good bet that whoever owned that chunk of silver, had a real-world need for it somewhere else. People have forgotten the fact that the GLD and SLV ETFs are precious metals depositories similar to the Comex... and users can, and do, store their metal there until they need it.

The U.S. Mint had nothing to say for itself yesterday either. We are half way through January and the Mint has only reported sales of 20,000 one-ounce gold eagles and a very small 367,500 silver eagles so far this month. January [along with December] are always [with no exceptions] two of the biggest sales months of the year. Ted was surprised [as was I] that December did not end on a big high note... and I'm surprised that 2010 sales are lagging this badly. The U.S. Mint is either out of blanks [or their suppliers can't keep up to demand] or the Mint is not reporting sales in a timely manner. It could be a combination of both... but I suspect the former. There are only 11 reporting days left in January, so we'll find out soon enough.

Over at the Comex-approved depositories, they reported that 563,934 troy ounces of silver were withdrawn from their inventories on Wednesday.

As the title of today's column says, gold's 200-day moving average is now above the $1,000/ounce mark. I remember mentioning gold's penetration of the $900/ounce barrier back in August ... and thought that was a big deal. Here's the 1-year chart to show you just how far... and how fast... we've come.

Well, the CFTC met in Washington yesterday and silver was one of the first things that both Chairman Gary Gensler and Commissioner Bart Chilton mentioned... even though the meeting was supposed to be all about position limits in energy. Chilton mentioned receiving "hundreds of e-mails" on this subject... so thank you, dear reader, for your efforts on behalf of the cause. A tiny Reuters piece [posted over at Kitco] stated the following... "The chairman of the U.S. Commodity Futures Trading Commission said on Thursday that the agency's planned meeting in early March to discuss possible position limits on metal futures and options contracts will focus on gold and silver contracts." Let's hope they're serious... as I didn't see much change in the energy complex. I'm sure Ted Butler is writing about it at this very minute... and I just hope that [because it's a regulatory issue] he will put in up in the public domain so we can all be enlightened by his take on yesterday's events... as I'm sure he listed to every word.

I have a fair number of stories to post today, so I hope you can find the time to wade through all of them. The first one [gold related] is from a recent GATA convert... Rick Ackerman. He has an excellent [and very short] piece posted over at goldseek.com entitled "Our Ringside Man Sees Epic Battle in Gold"... and the link is here.

Next is one that I borrowed from yesterday's King Report. It's a piece from The Times of London. The headline reads "Britain's recession the steepest for 88 years"... and the link is here.

Reader Joe Weiler from Santa Barbara, California sent me the following Bloomberg piece. His state's litany of woes just keeps getting worse, as Standard and Poor's cut the credit rating on $64 billion worth of debt... and the link to that story is here.

This gold-related story is courtesy of Russian reader, Alex Lvov. It's a piece from mineweb.com bearing the headline "Central Banks have been net purchasers of gold since the second quarter of 2009"... and the link is here.

Here's another contribution from California reader Joe Weiler. This story shows how bad things really are in the United States... and all the East Coast spin can't hide the stark reality of the situation. The story is from the Los Angeles Times and bears the headline "Freight trains carry 20% less cargo in 2009 than in the previous year". It's well worth the read... and the link is here.

And lastly is this short piece from James Turk over at his fgmr.com website. It's entitled "Hyperinflation Watch"... contains an excellent graph... and the link is
here.

Even though volumes has been huge... the gold price hasn't done much of anything for the last couple of days... ending the New York trading sessions within a few dollars of $1,140 spot. As I mentioned yesterday, I don't have any clear feelings one way or another about which way the price is going to go from here. If it went up big, I'd have one story... and if it went down big, I'd have an equally convincing story to justify why that was the case.

The CFTC meeting yesterday was interesting... with an early March meeting scheduled to discuss position limits for gold and silver. In actual fact, gold's position limits are perfectly OK... the problem is that the CFTC doesn't enforce these limits... with JPMorgan and HSBC being the two principal lawbreakers. In the silver market, it's virtually JPMorgan all by itself... and position limits that exist are so ridiculously high [and even those limits are not enforced] as to render them completely meaningless. The other problem in both metals is the ridiculous trading exemptions that the CFTC has allowed. So now we have to wait for another couple of months to see if the CFTC is going to do anything meaningful... or will it all be smoke, mirrors and posturing in order to save the big short... JPMorgan? If the CFTC is really serious, the price action over the next month or so could be interesting.

I note, as we approached the London open this morning, that gold is down about five bucks and silver's down about 15 cents. Volume in both metals is down quite a bit from Wednesday and Thursday's trading. Gold [as of 3:38 a.m. Eastern time] has traded 24,600 contracts in its front month, which is February... and silver, whose front month is March, has only traded 2,764 contracts.

Gold and silver trading on Friday's has, on occasion, been very violent... both up and down. It will be interesting to see if the action in New York ends the week with a whimper... or a bang.

I'm off to the Vancouver Resource Conference this afternoon and my next couple of columns will be filed from there.

I hope you have a good weekend... and I'll see you here on Saturday.