gwr1 must be on the road.

The U.S. Economy Will Not Recover For At Least Another Decade - F. William Engdahl

As I mentioned in the closing commentary of yesterday's column, there wasn't much happening in Far East trading in early Tuesday trading... and most of the price action was currency related. Then I mentioned that at 3:00 a.m. Eastern time, a sell-off began that didn't look dollar related to me... and I was wondering how far this decline might go.

Now, with another 24 hour come and gone, I can look at it with 20/20 hindsight. Gold's decline that began at exactly 3:00 a.m... ended at exactly 5:00 a.m. Eastern time... which was shortly before the London a.m. gold fix. This was gold's low of the day... around $1,122 spot. From there, gold rallied about five bucks into the New York open... and at 9:00 a.m. in New York, a buyer showed up, and the price rose until exactly 11:30 a.m. when the high for the day was in. Kitco reported the high tick as $1,139.90 spot. From that high, the gold price faltered... and gave up most of Tuesday's gains in the process... such as they were.

Silver's price action was similar to gold's. The low of around $17.83 spot occurred at 10:00 a.m. in London... 5:00 a.m. Eastern time. The high was at 11:30 a.m. in New York... and reported as $18.11 spot. From it's high, the silver price fell back sharply [compared to gold] and closed down 16 cents from Monday. I was underwhelmed.

However, both metals acted rather well in the face of a U.S. dollar that rose over 50 basis points from the beginning of Far East trading... and right up until the dollar's high tick at precisely 9:00 a.m. Eastern time... the same moment that the gold and silver prices went vertical in New York. Then, between 9:00 a.m. and 3:00 p.m. the dollar lost over 30 basis points of its gains... and it took pretty serious intervention by the bullion banks to drive the metals prices down in the face of a falling dollar.

Of course the high on the HUI was at the high tick price in gold at 11:30 a.m. in New York... and it was, as they say, all down hill from there... and the HUI closed down a smallish 0.39%. Gold was only up a couple of bucks yesterday... and silver was actually down 16 cents, so I wouldn't read a lot into the share price action.

As for open interest on Monday, gold o.i. was up a very small 1,116 contracts. Because London was closed, trading volume [as I mentioned in my Tuesday column] was very light... only 80,165 contracts were traded. Silver's volume was 27,660 contracts... and open interest actually fell 51 contracts. However Tuesday's open interest numbers in both metals aren't going to be pretty [especially for gold] when they're posted on the CME website later this a.m... as the U.S. bullion banks were out in force to prevent a major break-out in the gold price yesterday. They were successful... for the time being.

The CME Delivery Report on Tuesday showed that 503 gold and 34 silver contracts are posted for delivery on Thursday. All the 'usual suspects' were present in gold... with JPMorgan and Deutsche Bank grabbing the headlines. The link to yesterday's delivery report is here. So far this month, 1.19 million ounces of gold and 1.55 million ounces of silver have been delivered.

Neither GLD or SLV had anything to report yesterday... and neither did the U.S. Mint. As promised, here are last week's updates from Switzerland's Zürcher Kantonalbank. Their gold ETF was up a smallish 21,569 ounces... but their silver ETF actually fell 27,553 ounces. Ted Butler said it might have been a fee payment. I thank Carl Loeb for providing these numbers. And lastly, the Comex-approved depositories reported receiving 384,035 ounces of silver on Monday.

It was a slow news day yesterday... and the only gold-related story of note was this GATA release yesterday afternoon. It has to do with Eric Sprott's attempt to purchase some of IMF's gold. I spoke with John Embry yesterday, and he said that the good folks at the IMF basically told Eric to go pound salt... literally. That story is now all over the Internet... and has appeared in this column as well. But this story adds a new twist. Chris Powell, GATA's secretary treasurer, has already written an extensive preamble to it... and I neither wish to steal his thunder...nor re-invent the wheel. The story is headlined "Of Course Sprott can't buy IMF gold: There isn't any!". This is a must read story from one end to the other... and the link is here.

The next story I received from several people yesterday... and the first one through the gate was California reader, Joseph Weiler. "The state of California's real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported. To put that number in perspective, it's almost seven times greater than all the outstanding voter-approved state general obligation bonds in California." The story is in yesterday's L.A. Times... and the headline reads "California's $500-billion pension time bomb"... and the link is here.

Here's an interesting story that was filed by Deutsche Presse-Agentur in Brussels on March 24th. "NATO and Russia clashed over how to tackle the drug problem in Afghanistan. The country is the world's largest producer of poppy seeds, a key ingredient in the manufacture of heroin. Heroin addiction is a big problem for Russia. According to cited figures, Russia was the single largest consumer of heroin in 2008, with 21 per cent of world production ending up in its territory." The headline reads "NATO rejects Russia's demand to destroy Afghan poppy fields"... and the link is here.

I do have another gold-related story today. This was sent to me in the wee hours of this morning by Russian reader, Alex Lvov. It's already well into their Wednesday morning in his time zone... and he was kind enough to forward this piece that was in the Tuesday edition of The Independent out of the Britain. The author, Stephen King, works for the investment banking division of HSBC USA [8 Canada Square, London] the holder of the second largest gold and silver short on the Comex. The article delves into the gold standard. This article is well worth the read... and bears the headline "Stephen King: A lesson in public finances history"... and the link is here.

In my Saturday column, I posted a link to F. William Engdahl's book "Full Spectrum Dominance: Totalitarian Democracy in the New World Order"... and if you didn't check out that link, I urge you to do exactly that right now. As many of my long-time readers know, I'm a fan of just about everything that Engdahl writes. Except for a blurred photo, I'd never laid eyes on the man... or heard him speak. That changed yesterday when reader Roy Stephens sent me a Russia Times interview that he did a couple of days ago. It runs for about 12 minutes... and I urge you to watch it and hang on his every word. Then, if you combine what he says in the TV interview, with what he writes about in his book "Full Spectrum Dominance"... you'll have a pretty good grasp of the American Empire... and it's ugly! The link to the TV interview, loosely titled "American Bankers: The Gods of Money", is here.

The way to crush the bourgeois is to grind them between the millstones of taxation and inflation. - V.I. Lenin

If you listened to Ted Butler's Friday interview with Eric King over at King World News, you may remember that Ted mentioned that the set-up is in place for a major move to the upside in both metals. I agree with that assessment. The only thing standing in the way of that outcome is the '4 or less' bullion banks that are riding shotgun over the two monetary metals at the moment. When they decide to stand aside and let the metals run for a while... it will be obvious to all. If they don't, then we'll have more action [or lack thereof] like we had on Tuesday... a run-up that's halted in its tracks. We'll have to wait and see.

Right now... as of 5:04 a.m. Eastern time... gold volume in Far East and early London trading is around 17,800 contracts... and silver's volume is around 2,950 contracts. The dollar isn't doing much of anything... and I note that both metals ran into a bit of selling pressure at the usual 3:00 a.m. Eastern time slot... just like they did on Tuesday. We'll see how long this lasts. Yesterday it lasted exactly two hours.

The CME's preliminary volume figures for Tuesday's trading are now posted. They show that gold volume was 136,574 contracts... and silver's volume was 35,468 contracts. And as I said earlier, I'm not looking forward to the open interest numbers when they're posted later this morning.

Today could be another interesting precious metals trading session when New York opens.

I'll see you tomorrow.