IMF Spurns Sprott Asset Management's Request to Buy Gold

Gold had a rather quiet time of it in Far East and early London trading yesterday... as volume was extremely light. And as the dollar slid slowly south, the gold price slid slowly north... and was up about $10 at 12:45 p.m. in London... which is half an hour before the Comex opened in New York. From that point, gold gave up all its small [but hard-earned] gains until the London p.m. gold fix was in... which was shortly before 3:00 p.m. in London... 10:00 a.m. in New York. Then once London had closed, gold rallied in fits and starts and closed almost on its high of the day... which was reported as $1,111.00 spot. The low was around $1,087 spot which occurred on Globex trading shortly before Sydney opened for business on Friday morning.

Silver also gained in Far East and early London trading... and was up about 40 cents by 9:00 a.m. in New York. Then 20 cents of that gain disappeared as silver got smacked down into the London p.m. gold fix. Both silver and gold hit their nadirs at the fix... and, like gold, silver too, was off to the races. From its New York low of $16.66 spot... silver climbed to $16.99 spot [its high of the day] before it got clubbed by a not-for-profit seller a couple of minutes before 11:30 a.m. Eastern time... and silver never got close to $17.00 spot for the rest of the trading session. Silver's absolute low of the day was very similar to gold's... just moments after Globex trading began in the Far East... before Sydney opens... and in the time slot that only the New York bullion banks are allowed to play.

The U.S. dollar declined about 50 basis points on Friday... and gold and silver's reaction to that was pronounced... but both ran into a not-for-profit seller about half an hour before lunch in New York yesterday, as their respective prices went either parabolic or vertical.

The shares were rather nervous about this happy turn of events, with the HUI high of the day coming a few minutes after gold and silver's respective price spikes at 11:30 a.m. Eastern time. And even though gold itself powered higher as the trading day wore on, the shares never got back to their highs... but the HUI managed to finish up a respectable 2.18%.

Although bullion was up a dollar on the week, the HUI fell 3.6%... which is down 6.6% year to date.

Well, gold open interest fell another 1,972 contracts during Thursday's trading. Volume was another huge number... 223,287 contracts... of which about 60,000 were roll-overs into the June contract. So you can see that actual new volume was pretty light. Silver open interest actually rose 277 contracts... and volume on Thursday was 30,889 contracts... about 90% of that amount was traded in the May contract... which will be the front month for silver once the March delivery month goes off the boards at the end of trading on Tuesday.

First notice for delivery into the April gold contract will be posted in the wee hours of Tuesday morning... and that will be in my commentary on that date. There's still a huge open interest number left in that contract. It fell 26,897 contracts on Wednesday... all the way down to 125,193 contracts. But that number will crash by the end of trading on Monday... and I expect a huge decline when Friday's preliminary volume numbers are posted in the [very] early hours of Saturday morning... which I'll report on at the end of this commentary.

The Commitment of Traders was pretty happy reading for a change. In silver, the bullion banks decreased their net short position by 2,310 contracts... but are still net short 45,698 contracts... or 228.5 million ounces of silver. In gold, the bullion banks improved their net short position by a very impressive 18,472 contracts... but are still net short 22.4 million ounces of the stuff. The full-colour COT graph for silver is linked here... and for gold it's linked here.

The '4 or less' traders in silver are short about 48,600 contracts... which is 106.3% of the entire net short position. The '8 or less' traders [which includes the '4 or less' traders] are short 61,200 contracts... or 133.9% of the net short position.

To put this in plain English, the Commercial [bullion bank] short position on yesterday's COT report shows that there are 75,584 short positions [in total] in that category divided up amongst 33 traders. The '8 or less' traders hold 61,200 of those contracts all by themselves. That's 81% of the gross Commercial short position held by only 8 traders... and I would guess that JPMorgan holds at least 25% of that gross short position all by itself.

Then, by the process of subtraction... 33 traders minus the '8 or less' comes to 25 traders left to divide up the remaining 75,584 - 61,200 = 14,384 contracts between them. This works out to 575 contracts for each trader.

It's not difficult to figure out who controls the price. That's what those CFTC hearings were all about in Washington on Thursday.

I'll leave the final word on this week's COT to Ted Butler. His weekly interview with Eric King of King World News is linked here. As always, I urge you to stop reading at this point and listen to what Ted has to say.

The CME Daily Delivery Report showed that 7 gold and 5 silver contracts are up for delivery on Tuesday... which is the last delivery day in the March contract. There were no changes in either GLD or SLV yesterday... and the U.S. Mint had nothing to say either. But over at the Comex-approved depositories, they reported that their silver inventories declined a further 306,458 ounces on Thursday.

Today's first gold-related story is a Reuters piece filed from Singapore... courtesy of the usual New York gold commentator. Physical demand is on the rise in the Far East... as the headline reads "Asia Gold - Jewellers push premiums higher: Indian demand rises". It's certainly worth your time... and the link is here.

The next story is a GATA release with the shocking title "IMF rejects investment house bids for gold". In a Kitco interview yesterday, Frank Homes, CEO of U.S. Global Investors, let it be know that his good friend Eric Sprott of Sprott Asset Management in Toronto, "recently tried to buy gold from the International Monetary Fund and was refused. Coincidentally, GATA learned this week on the best authority that a financial house far bigger than Sprott also recently tried to purchase gold from the IMF, also was refused, and wasn't very happy about the refusal." [I know which "financial house" it is... but I've been sworn to secrecy. - Ed] This is a must read/listen from one end to other... but please carefully note the instructions on how to listen to the Frank Holmes interview as described in the GATA release. This material will keep you off the streets for a while... and the link is here.

Here's an 83-year chart of the Dow... from 1928 to 2010. Neither Bernanke nor Greenspan could see this bubble. Maybe you can spot it, dear reader. Note the 'crash' of 1987 for comparison. I thank Nick Laird of sharelynx.com for sharing it with us.

The next piece is from GoldMoney founder, James Turk. It was posted to his fgmr.com website yesterday. It's a very short piece [unless you follow all the links] and the headline reads "Bonds Have Seen Their Best Days"... and the link is here.

Since this is the weekend, I'm going to post five longish stories that I've been saving in my in-box for the last week or so. They're all worth reading... but its not the regular fare that I normally put up on weekdays. It's 'deep background' material... the sort of thing that never makes into the main-stream press in such detail... if at all. Most of these stories have to do with the "'Great Game" that Zbigniew Brzezinski wrote about in his 1998 book "The Grand Chessboard: American Primacy and Its GeoStrategic Imperatives"... a U.S. foreign policy that is now falling apart everywhere one cares to look.

The first one is a story about Turkey that's posted over at balkanstudies.org. The title reads "Neo-Ottoman Turkey: A Hostile Islamic Power". It will really help you if you have some knowledge of Turkey's past history and its place in the Ottoman Empire... an empire that was carved up at the conclusion of World War One. There is an excellent book on this subject which I highly recommend, if you feel like delving into Ottoman history... at least as seen through Western eyes. That book is entitled "A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East" written by David Fromkin. Regardless of whether you have, or haven't, read the book... I urge you, dear reader, to soldier on and spend the time on this article that it deserves. It's not that long... and the link is here.

Here's another piece from the same website... and by the same author, Srdja Trifkovic. The title of this, slightly longer piece is "Ukraine's "No" to NATO: An Example for Serbia"... "Bill Clinton’s air war against the Serbs eleven years ago marked a decisive shift in NATO’s mutation from a defensive alliance into a supranational security force based on the doctrine of “humanitarian intervention". The defensive alliance of 1949 thus had morphed into a blatant aggressor in 1999.” The link is here.

The next story is posted over at the Asia Times website. It's an article by M.K. Bhadrakumar... who was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey. I have posted his works before... and this one is definitely worth the read as well.

"News that the United States Federal Bureau of Investigation (FBI) had reached a plea bargain with David Coleman Headley, who played a key role in the planning of the terrorist strike in Mumbai in November 2008 in which 166 people were killed, has caused an uproar in India. The deal enables the US government to hold back from formally producing any evidence against Headley in a court of law that might have included details of his links with US intelligence or oblige any cross-examination of Headley by the prosecution."

The title is "A spy unsettles US-India ties". I'd heard a bit about this on the Net for a while, but was dubious/suspicious until it showed up at this website with this author's name attached to it. The Obama administration has made frantic efforts to cover up the details of the case... but the whole ugly affair is laid bare in this report... and I urge to read it. The link is here.

The "Great Game" now shifts to Israel... where this March 24th story in The Washington Post really caught my attention. The headline reads "Dispute with Israel underscores limits of U.S. power, a shifting alliance" It has something to do with the two-week-old dispute between Israel and the U.S. over housing construction in East Jerusalem... but the issues go much deeper than that... as you will find out soon enough. This is also a must read story... and the link is here.

Here's your long read of the day. It's an F. William Engdahl piece that's posted over at marketoracle.com. The headline's long, too... "Ukraine and a Tectonic Shift in Heartland Power, The USA Russia Pipeline Wars". This is where the "Great Game" rubber really meets the road... and what U.S. [and NATO] involvement boils down to in Eastern Europe, the Middle East and Asia. Turkey and Iran both figure prominently in this essay as well. It's all about oil and natural gas... and the pipelines that move them to market. This story [as well as the ones above] are all history in the making... the American Empire against Russia, China et al. Pack a lunch and blow the froth off a cool one. The link is here.

Here's the second-last piece of the day... and it's directly related to the F. William Engdahl piece above. This one is from The Economist out of England... and the headline reads "Natural Gas: An unconventional glut"... "Newly economic, widely distributed sources are shifting the balance of power in the world’s gas markets." This is a long story as well... but it's another well-written piece that fills in all the natural gas blanks in North America... just as the Engdahl piece did for that area of the world. I consider it a must read as well... and the link is here.

If energy is your bailiwick, then I urge you to consider a subscription to Casey Research's most excellent monthly newsletter... Casey's Energy Report. Marin Katusa, senior energy strategist, is a world authority on the energy markets... and this report should be a must read if you seriously follow the energy markets.

And lastly is this Eric King interview with Eric Sprott of Sprott Asset Management in Toronto. Sprott's name figured prominently in a previous story, as his firm bid for IMF gold and was told to take a flying leap. Eric Sprott is a friend of mine... and when he's talking, I'm listening. So should you... and the link is here.

Those who look upon Gold as a way to "make" money are the ones most likely to get burned. Those who understand that Gold is money, have not bothered to "time" their acquisition of it. They have simply been acquiring it as and when they can for many years now. They will continue to do so. - Bill Buckler, the-privateer.com, 13 March 2010

Today's 'blast from the past' is a Canadian that everyone in our country knows. I don't remember a time when I didn't know his name. His music, and his name, will live forever in Canadian folk history. So turn your speakers and click here.

Options expiry was on Thursday... not Friday... and as I mentioned yesterday, all the $1,100 gold and $17.00 silver options expired out of the money... again. It was the same old, same old, routine.

It was a very heavy volume day yesterday. The preliminary numbers from the CME are posted now... and they show that gold volume was a monstrous 283,838 contracts, of which roughly 72,000 were roll-overs into the June contract. Open interest for April only declined 16,713 contracts... and the total o.i. is down to 108,480 contracts... which is a very large number at this point in the month. We'll have to see if that number is revised on Monday when they post the final figures. Silver volume was reported as 32,938 contracts.

I was happy with yesterday's performance in both gold and silver, but not pleased that the bullion banks had to step in and prevent them from blasting higher in price around 11:30 Eastern time. I'm expecting next week to be very interesting and probably very volatile as well, going into first delivery day for April gold. The dollar has begun to head south... and I'm hoping that this is the start of positive things in the precious metals market. We'll see.

Enjoy the rest of your weekend... and I'll see you here on Tuesday morning.