North Korean Finance Chief Executed For Botched Currency Reform

Gold didn't do anything worth mentioning in Far East or London trading on Monday... and was down about five dollars when the Comex opened for business in New York yesterday. From that point, it got sold off about $14... with the bottom coming shortly after the London p.m. gold fix... which was 10:00 a.m. Eastern time. The low price tick was reported as $1,091.50 spot. The high of the day... about $1,108 spot... was at the Sydney close at 5:00 p.m. local time... 1:00 a.m. in New York.

Silver, like gold, didn't do much in Far East trading yesterday either... but a sell-off began shortly after 10:00 a.m. in London... close to the London a.m. gold fix. Silver sold off a bit more than a dime between that point and the New York open. Then the New York bullion banks sold it down to its double bottom low of the day at $16.61 spot. From that low, silver managed to rally back strongly and closed exactly on it's closing price from Friday. Silver's high of the day [around $16.98 spot] was around 12:20 p.m. Monday afternoon in Sydney... and moments before Hong Kong opened for trading at 9:30 a.m. in their Monday morning.

The dollar had a 50 basis point sell off between 9:00 a.m. and 12:30 p.m. in New York trading... but one would be hard pressed to find much evidence of that in either the gold or silver price action during that time period. It's almost like the dollar action didn't matter, as the precious metals did their own thing.

The bottom was in for both gold and the gold stocks shortly after 10:00 a.m... and the shares continued to improve for the rest of the day... with the HUI closing near its high... and almost in positive territory... only down 0.05%. I continue to be cautiously optimistic about the share price action in the face of the price adversity they've had over the last little while. However, as I said on Saturday, I reserve the right to change my mind on this.

Friday's crucifixion in the precious metals market didn't drop the open interest in either metal as much as I had hoped. Gold o.i. only fell 6,203 contracts... and silver's o.i. was only down 440 contracts. It's possible that the New York bullion banks were buying long positions... as well as covering their shorts... which may be the reason these numbers aren't as impressive as I was expecting. It's also possible that they didn't report everything in a timely manner. I'll be watching Monday's o.i. numbers with great interest when they're posted later this morning... and Friday's Commitment of Traders report should tell us a lot as well. Gold had pretty big volume last Friday... 200,736 contracts. Silver's volume was 37,201 contracts.

The CME's Daily Delivery Report showed that 65 gold and 75 silver contracts are up for delivery on Wednesday. The 'issuers and stoppers' report is linked here. Neither the GLD, SLV or U.S. Mint had anything to report yesterday... and the Comex-approved depositories showed a decline of 193,379 ounces of silver on Friday. Click here for the warehouse stock report. But over in Switzerland at the Zürcher Kantonalbank, their gold ETF added 87,407 ounces... but their silver ETF, for only the second time I can remember in about a year, showed no increase at all. This is a bit of a surprise considering the big jump in gold. I, as always, thank Carl Loeb for those numbers.

I started out early yesterday evening with only a few stories... which is quite something after a weekend. But I should have known it wouldn't last, because by midnight I had the usual number... and a couple of them are just going to have to wait until tomorrow.

My first story today is from British reader Andrew Middleton. He sent me this story from The Guardian out of London... which is a local paper for him. Remember the disastrous 100-1 currency revaluation of the North Korean won last November? Well, someone ended up in front of a firing squad over this... put to death as "a son of a bourgeois conspiring to infiltrate the ranks of revolutionaries to destroy the national economy"... as South Korean news agency reported last week. V.I. Lenin would be proud! The headline reads "North Korean finance chief executed for botched currency reform"... and the link is here.

Here's a story that was filed at yahoo.com late Friday night. The headline says it all... "Regulators shut 7 banks in 5 states; 37 in 2010". These seven banks add up to about $1.3 billion for the FDIC. I thank reader Scott Pluschau for bringing it to my attention... and the link is here.

My next offering is a very short work from GoldMoney founder, James Turk. It's posted over at his fgmr.com website... and the title reads "Don't Count on the Consumer". It's definitely a must read... and the link is here.

The next story turned up in a GATA dispatch yesterday afternoon... and it's definitely worth sharing. It's a piece from the huffingtonpost.com. Chris Powell gave it the headline "N.Y. Fed Illegally Warehoused Junk for Lehman, Examiner Finds". Well, dear reader, I'm sure this is one of the many reasons [along with the rigging of the gold and silver prices] that the Fed does not wish to be audited. This story is highly recommended reading... and the link is here.

The next item comes from Reuters. It was filed early yesterday afternoon. It appears that Bart Chilton, "the strongest proponent at the CFTC for position limits said he does not think his fellow commissioners are currently willing to support a move to curb speculation for metals contracts." What this means in a nutshell is the market management of the precious metals will be allowed to continue. We'll see... as talk is cheap... and Bart isn't the chairman. The headline reads "Tough road for metals position limits: Chilton"... and the link is here... and it's worth the read.

In commentary posted last night at the Free Gold Money Report Internet site, FGMR editor and GoldMoney founder James Turk remarks on the United States' catastrophic transformation from world's greatest creditor to worst debtor and the collapse of debt-based growth. Turk's commentary is headlined "Debtor Nation" and is a must read from one end to the other. The link is here.

My second-last offering of the day is a rather longish piece dated Saturday, March 20th... and is posted over at economicedge.blogspot.com. It's entitled "THE Most Important Chart of the CENTURY". The chart is so important, that James Turk 'borrowed' it from the original source [Nathan Martin] for the previous story... Debtor Nation... above. What makes this essay long, is the number of graphs, which are well worth your time. The story is a must read... and the link is here.

And lastly comes this John Hathaway interview by Eric King over at King World News. John Hathaway, portfolio manager for the Tocqueville Funds, including the Tocqueville Gold Fund, which has risen more than 70 percent in the last year, believes that gold's run is no more than half over and he expects a major upward revaluation of gold as investors realize that currencies and government bonds offer only devaluation. The interview is about 25 minutes long and is well worth your time. The link is here.

Japan has been suffering from its role as the major US “trading partner” ever since its markets toppled two decades ago. One of the major contributors to this malaise is the simple fact that the Japanese Yen soared from 360 to 80 against the $US in the decade between 1985-1995. The Japanese did what the Chinese are refusing to do, they let their currency appreciate - MASSIVELY - against the $US. Today, in stark contrast to China, the Japanese banks are not lending and the Japanese people are not borrowing. The Japanese central bank cannot lower rates, they have been between 0.00 and 0.50 percent for a decade. The Japanese government is getting to the end of their tether as far as more “stimulus” spending is concerned. And the Japanese people can no longer absorb the debt paper printed by their government. China has seen the price Japan paid for being the major “trading partner” of the US. They do not intend to pay the same price themselves. - Bill Buckler, The Privateer, 21 March 2010

Well, I'm still at a loss as to which way the precious metals prices will be allowed to go. As I mentioned on Saturday, we have options expiry on Thursday... plus first notice day for April delivery in gold on Tuesday, March 30th. The U.S. bullion banks have not shown much mercy over the last couple of trading days... and looking at what's happening in Far East action at the moment, it looks like there's still a little downwards pressure. But, as is normal, what happens in either the Far East or London is virtually irrelevant, as 80-90% of all volume traded during any given day is done during trading on the Comex... or the Crimex as some people [including me] call it at times.

Gold is back under its 50-day moving average... and silver is currently sitting right at its 50-day moving average... which is just bounced off of as I edit this. Nothing I've seen in trading action this month gives any indication that the U.S. bullion banks care one iota about these hearings on precious metals position limits this Thursday. But it's only fair to see how they turn out before writing it off as a total loss. As Ted Butler pointed out to me yesterday, the type of questions... and who asks them... will set the tone for this hearing. I notice that there's no representative from JPMorgan to defend their grotesque short position in silver and gold. It's my bet that they made sure they weren't invited. I wonder if HSBC will be acting on their behalf... as they and JPM are the two biggest precious metals shorts on planet Earth. Stay tuned.

Not much is happening in either metal as I write these last few paragraphs. Hong Kong is still open... and London just opened. Gold volume [as of 4:32 a.m. Eastern time] is around 11,300 contracts in April... net of spreads. Silver's volume is a very low 1,950 contracts [net of spreads] for May.

The CME has posted its preliminary volume numbers for Monday... and they show that gold traded a pretty hefty 198,467 contracts. But a big chunk of that was roll-overs [around 30,000 contracts] into June... the next big delivery month for gold, once April is off the boards. Silver traded 34,574 contracts... and less than a couple of thousand contracts were spread related.

I expect it will be another interesting trading day in New York... so be prepared for anything.

I'll see you on Wednesday.