How Goldman Sachs Screwed Ghana

I wouldn't read much into Wednesday's trading action in gold. The price spent most of the day vacillating between $1,140 and $1,150 spot. There was a bit of a breakout shortly after 11:30 a.m. in New York... but gold's attempt to break above $1,150 ran into firm selling at precisely 1:00 p.m. Eastern time... and by the end of the New York trading session was only up about six bucks from Tuesday. The spike high was reported as $1,151.70 spot.

Silver's price activity was a bit more interesting yesterday... but only barely. Silver's high in Far East trading was shortly before 4:00 p.m. in Hong Kong. From there it didn't do anything for the next three hours, but at precisely 10:00 a.m. in London, silver ran into some stiff selling pressure... with the low of the day [$17.70 spot] coming about 15 minutes after trading began on the Comex in New York. From that low... and in fits and starts... silver made it to its absolute high of the day [$18.16 spot] at the unusual time of 4:30 p.m. in electronic trading... and closed close to that high.

Like Tuesday, the dollar was not a factor in Wednesday's trading, either.

The shares managed to stay in positive territory yesterday... but for a while, it didn't look like that was going to be the case. The HUI finished up 1.06% on the day.

I mentioned in yesterday's report that, based on Tuesday's price action, there wasn't going to much change in open interest numbers when they were posted on Wednesday morning. How wrong I was! Gold open interest fell 6,617 contracts. Volume was 130,931 contracts. Silver open interest went the other way... up 1,145 contracts on 53,898 contracts... of which about 40% of that total was roll-overs. This shouldn't be a surprise, dear reader, as we're coming on options expiry for the May silver contract next Tuesday, so the action in the silver market will be fast and furious right up to that date... and first notice day on Friday, April 30th.

Both Ted Butler and I were surprised at these changes in open interest for Tuesday's trading, as there certainly wasn't the price action to warrant it... so we didn't know what to make of them. But all will be made clear [fingers crossed] in Friday's Commitment of Traders report... as these numbers will be included.

It was another quiet CME Delivery Report on Wednesday, as only 30 gold and zero silver contracts were posted for delivery tomorrow. There were no changes reported for GLD, SLV... or the U.S. Mint. The Comex-approved warehouses reported that their silver inventories rose by 590,835 troy ounces on Tuesday.

Today's first gold-related story is from Thursday's edition of The Telegraph in London... and the headline pretty much says it all. It reads "Gold: safe haven from shrinking sterling and rising inflation". It's a short read... and I thank reader J. Charles from Brussels in Belgium for sending it along... and the link is here.

The next gold-related story is the source of my column's title today. It's posted over at ghanaweb.com... and is a must read from one end to the other. The title declares "How Goldman Sachs Screwed Ghana". The story showed up in a GATA release late last night... and our fearless secretary treasurer wrote an excellent preamble to it, which is a must read as well. It's not a long article... just the facts... and the link is here. And read the last paragraph a couple of times to let it all sink in. I remember the actual event itself, all too well.

Here's a Bloomberg piece on an issue that comes up every month... the U.S. Treasury Department's auction. The primary dealers are saying that next week's blizzard of money made up out of thin air, could be a record $128 billion. And, without doubt, the Fed will be there to vacuum up what's left over and make sure that the issues are well subscribed. They certainly would want to make it appear like there's an insatiable world-wide appetite for more U.S paper. Well, dear reader, there ain't. You can bet your last nickel that the Fed is eating the vast majority of it, no matter what the reports to the contrary may say. The headline reads "Treasury May Sell Record Amount of Notes, Primary Dealers Say"... and the link is here.

The last gold-related story comes from the mineweb.com... and it's a story I found in Bill Murphy's MIDAS commentary over at lemetropolecafe.com yesterday. The headline pretty much says it all... "John Embry will be surprised if gold not up $500 in 6 months"... and the link is here.

A nation that encourages its people to spend more and save less... promotes economic backwardness, social decay and its own financial doom. - Dr. Kurt Richebacher

With options expiry and first day notice for delivery into the May silver contract coming up next week... all topped off with a record auction of Treasury debt... I'm not optimistic about anything earth shattering happening with either precious metal until that is out of the way... which won't be until the first week in May.

Any substantial rally after that [or even before, if I'm wrong about the time line] will depend entirely on whether the bullion banks show up to go short against any [or all] new longs that are placed. They don't even have to cover their short positions... all they have to do is put their collective hands in their collective pockets and do nothing... and we'll see a rallies in both metals that will truly take you breath away.

As the following graph shows... which I ran late last week... it's the U.S. bullion banks that are keeping a lid on prices. The four years worth of data in this chart shows that the gold [and silver] price gets hammered once the London p.m. fix is in... and the word 'fix' is very apropos here. Once again I thank Nick Laird over at sharelynx.com for his brilliant work in producing "Exhibit A" in the gold and silver price suppression scheme... with a tip of the hat to Dimitri Speck as well.

A full-sized version of this graph is linked here.

There's not much happening in Far East trading [or at the London open] as I write this paragraph. Both metals are basically unchanged since Wednesday's close... and the U.S. dollar isn't doing anything of note, either. Gold volume is a very light 16,000 contracts for June at 4:31 a.m. Eastern time... and silver's volume for May is a microscopic 2,500 contracts... net of what little roll-overs there are.

The CME has posted its preliminary volume numbers for Thursday's trading. They show that gold traded a smallish 119,787 contracts... of which approximately 4,500 contracts were roll-overs into future months. As expected, silver volume was a substantial 45,053 contracts... of which about 10,000 were roll-overs, mostly into July, which will be the next front month once May goes off the board.

Once all the madness of the next seven business days is out of the way, I'm expecting to see some positive action in the metals. When all is calm, is the time to quietly place your bets... not when the market is screaming to the upside... and you're frantically trying to chase it. And we've all been guilty of that at one time or another... haven't we, dear reader! Therefore, I once again urge you to seriously consider how best to invest your capital for what may lie ahead by purchasing a subscription to either Casey's Gold & Resource Report... or Casey Research's flagship publication... the International Speculator. It costs nothing to click on the links and check them out. Our 100% satisfaction guarantee is always in place.

I hope your Thursday goes well... and I'll see you here on Friday.