World Gold Council To Launch New Paper Gold in India

Monday's trading activity [Martin Luther King Day in the U.S.A.] is shown in the blue and red trace on the graph below. It was a very quiet trading day. But yesterday's action [red and green trace] was a completely different animal, as gold shot up quickly [on huge volume] in early trading in the Far East... but by shortly after 9:00 a.m. in Hong Kong... the buying either stopped, or the price was capped. The Far East top in gold occurred at approximately 4:00 p.m. in their afternoon... around $1,138 spot... as a 'strategic' dollar rally manifested itself at precisely that time [see graph further down]. From that point, the gold price declined about ten dollars... with the low price coming at precisely 8:00 a.m. in New York. But from there, a smallish rally began that topped out almost at its Far East high... and from there it traded sideways after the close of Comex floor trading.

Silver gained about 25 cents during Monday's trading... and was quickly out of the chute on Tuesday morning as well. But, like gold, silver peaked around $18.83 spot at 4:00 p.m. in Hong Kong... and the perfectly timed U.S. dollar rally that began at that time... took the silver price with it. However, silver's low price yesterday [$18.46 spot] occurred between 9:00 and 9:15 a.m. in New York yesterday... and from there followed gold's lead in virtual lock step until the precious metals markets closed at 5:15 p.m. Eastern time.

As I mentioned previously, the U.S. dollar has a tendency to rally at the most incredible times. Here's the US$ intraday chart from yesterday.

The HUI managed to stay in the plus column for most of the day yesterday... plus finish on its high. I note that the big 100 point drop in the Dow on Friday was all mysteriously recouped yesterday. One wonders how the Dow manages to stay levitated? But, like me... dear reader... I'm sure you have your suspicions about how this is all being done.

Friday's open interest numbers were nothing special... as volume wasn't overly heavy... and price action was pretty subdued. Gold open interest fell a smallish 275 contracts. Volume was only 180,709 contracts. In silver, o.i. fell 674 contracts. Volume was reported at 31,230 contracts. Total open interest as of the end of Friday's trading was as follow... gold, 521,694 contracts... silver 129,663 contracts.

Because Monday was a U.S. holiday, open interest for that day [and yesterday] won't be available until later this morning.

There were no reported deliveries in gold and silver that were worth mentioning in yesterday's CME report. The GLD ETF reported a minor reduction of 58,785 ounces yesterday. SLV, as usual, showed no changes. Over at Zürcher Kantonalbank in Switzerland for the 'week that was'... they reported a smallish increase in their gold holdings of 17,810 ounces. There was no change in their silver holdings. I thank Carl Loeb for those numbers. Disturbingly, there was no report from the U.S. Mint again. Their lack of reporting [I can't believe it's lack of sales] is becoming deafening. So far this month/year... only 20,000 one-ounce gold and 367,500 one-ounce silver eagles have been reported sold. These numbers should already be around five times this amount in both gold and silver. Over at the Comex-approved warehouses, another 110,254 troy ounces of silver were reported taken into inventory. This was last Friday's activity.

The European Central Bank reported yesterday that the total amount of "gold and gold receivables" showed a decline of about one million Euros last week... which, they said... reflected a technical adjustment carried out by a Eurosystem Central Bank. One wonders if the ECB will ever be a seller of gold again. And the other question that must be considered as well, is... will they every become a buyer?

Talking about the European Central Bank... here's a piece from the Sunday edition of The Telegraph in London. "Fears of a euro break-up have reached the point where the European Central Bank feels compelled to issue a legal analysis of what would happen if a country tried to leave monetary union." It is, of course, an Ambrose Evans-Pritchard offering with the headline "ECB prepares legal ground for euro rupture as Greek crisis escalates"... and the link is here.

Today's next item is Ted Butler's weekly radio interview. Normally its part of my Saturday offering... but I finished my Saturday report early because I was in Vancouver... and Ted's interview wasn't available then. So here it is now... and needless to say, it's a must listen. Ted Butler was enthusiastic about the movement of the U.S. Commodity Futures Trading Commission toward setting position limits in energy and precious metals futures. The interview is seven minutes long and you can listen to it at the King World News Internet site here.

If you're interested in meeting Mr. Butler in the flesh, he will be one of the speakers at the Cambridge House Investment Conference in Phoenix on February 4th and 5th. The link to the pertinent information on that is here.

Next is a Reuters piece from Sunday. It appears that the N.Y. Fed worked steadily with AIG to avert bailout disclosures. The headline reads "New e-mails show AIG mulled bank payment disclosure"... and the link is here.

In the Sunday edition of The Times of London come this story of the world's biggest payday. The press has been talking about it for weeks, but here's the first one I've seen with a number attached. "Four of Wall Street’s biggest banks will this week reveal plans to pay their staff a total of close to $100 billion (£62 billion), reigniting the row over bankers’ bonuses." I thank reader Roy Stephens for sending it along... and the link is here.

And in another story about the banks "making fortunes in markets that were rigged to their advantage" comes this piece that was in London's Financial Times on Monday. This story also refers to the obscene bonuses being paid by banks that are basically insolvent and are only alive because of government largess with taxpayer's money. The headline reads "How the big banks rigged the markets"... and the link is here.

Today's headline for my column comes from the following item that appeared in commodityonline.com... and was filed from Ahmedabad, India. The title to the piece reads "WGC to Launch New Paper Gold In India"... and the link is here. [Is it just me... or doesn't the World Gold Council's mandate/mission statement say something about selling real gold... not its paper equivalent? Just asking! - Ed]

The last item today is a must read excerpt from GlobalEurope Anticipation Bulletin #41. The excerpt has to do with gold... and that section is titled "The Decade 2010-2020: Towards a knockout victory by gold over the Dollar". I received copies of this report from many readers, but the first one to arrive in my in-box was from Russian reader Alex Lvov... and the link is here.

For your race, in its poverty, has unquestionably one really effective weapon -- laughter. Power, money, persuasion, supplication, persecution -- these can lift at a colossal humbug -- push it a little -- weaken it a little, century by century; but only laughter can blow it to rags and atoms at a blast. Against the assault of laughter nothing can stand. - Mark Twain, The Mysterious Stranger

I wouldn't want to hazard a guess as to what both gold and silver are going to do in the very short [or medium] term... but the long term is not in doubt. The 'standing room only' presentation by John Embry at conference in Vancouver on Monday puts Paid to that. I'm hoping that Sprott Asset Management in Toronto will post his speech on their website... and the day after it is... it will be linked in this column.

Right now the U.S. dollar is making every attempt to rally... and probably getting some help doing it. This will certainly influence the price of our two favourite metals while this is happening... but will only delay the inevitable.

In Far East trading this morning, both gold and silver were having decent rallies... before a not-for-profit seller showed up. The peak prices occurred at precisely 9:00 a.m. in Hong Kong... with a 'bottom' in gold occurring at precisely 4:00 p.m. in Hong Kong trading... just before the London open. Whether this is the low of the day remains to be seen... as the action during New York trading could be interesting once the bullion banks receive their marching orders from the Fed, Treasury or PPT. Normally I would post the Far East volume figures for both gold and silver at this point, but the link doesn't work for either at the moment. I can't even access Tuesday's preliminary volume numbers for either metal... so it appears that the CME is having some website issues.

Before closing, I'd like to take this opportunity to thank all my daily readers who were kind enough to introduce themselves to me at the Vancouver conference. It was a pleasure meeting each of you.

I did not have a report on Tuesday for two reasons: firstly, it was Martin Luther King Day in the U.S. on Monday, and I'm not really required to file a column even though the precious metals markets were open... plus I didn't get back to my hotel room until almost midnight Monday night, and had to get up to catch a plane at 6:30 a.m... so I had to sacrifice the column. I'll try not to let it happen again.

See you on Thursday.