Matt Taibbi of Rolling Stone Magazine Mentions 'Ponzi Schemes in the Precious Metals Markets'

Well, I wouldn't read a thing into gold's price action on Thursday, as it spent virtually the entire trading day meandering between $1,165 and $1,170 spot.

For the most part, silver didn't do much either... especially in Far East and London trading... and I wasn't expecting much, since yesterday was the last day of trading in the April contract, and the stampede was on to switch into a future month... or stand for delivery. But a funny thing happened after silver's low price of the day [$18.03 spot] shortly before 9:00 a.m. in New York... the price started to rise. By 10:30 a.m. [sharp] it was up 30 cents. From there, the silver price gave back about a dime in the next hour, before beginning a gentle rise that began to go parabolic at the close of Comex trading. At the commencement of electronic trading, either the buyer disappeared, or a not-for-profit seller showed up with a big stick. Silver's high price spike was an astonishing $18.59 spot!

Ted Butler could not remember silver ever turning in a performance like this going into first notice day... and he's got a very long memory. He's very excited about this turn of events, especially considering all the happenings swirling around the silver market at this point in its history. I understand his reasons completely, but the part of me from Missouri won't let me get too excited.

Here's the New York session broken out separately to give more clarity to yesterday's events.

Here's what the dollar did yesterday... and it's obvious that it's movements had no bearing whatsoever on precious metals prices.

I was underwhelmed by the performance of both junior and senior silver producers. However, to be fair, interest in the precious metals stocks is, at the moment [unfortunately], driven by what's happening with the gold price. This will change as the silver price breaks out on its own... but that obviously didn't happen yesterday. But the HUI was up... but only 0.83%.

Now for open interest changes on Wednesday. Gold o.i. only rose 777 contracts, so it doesn't appear that there was any spill-over from Tuesday's big day... which was something that both Ted and I were concerned about. This looks like an 'honest' number for Wednesday... and it appears that there are no Tuesday numbers in it. Volume on Wednesday was a rather large 178,145 contracts... and only about 8,000 of that was roll-overs or spreads. Silver o.i. was an entirely different animal. Silver's open interest fell again... this time by 1,090 contracts As I reported in my commentary yesterday morning, most of the volume in silver on Wednesday were roll-overs... and the final volume figures confirm that. Silver traded a huge 81,079 contracts... but about 36,500 of that was switches. Since only around 44,500 contracts traded in May, that only left about 8,000 contracts of new buying yesterday. I expect much the same kind of activity when Thursday's preliminary numbers become available at the CME's website later.

As of the close of trading on Wednesday, May open interest was down to 8,059 contracts... as another 6,522 contracts were rolled over in to future months. That should show another big decline when Thursday's preliminary numbers are available further down.

Having said all that, the CME's first day notice Delivery Report for May, showed that 705 gold and 1,796 silver contracts were posted for delivery on Monday, May 3rd. Two of the biggest deliveries were from JPMorgan and Bank of Nova Scotia. They were also the biggest receivers by a country mile. The list of all the issuers and stoppers is well worth a look... and the link is here.

The GLD ETF had another big day again yesterday. This time it took in 195,738 troy ounces. And, for the 64th day in a row, no silver was added to the SLV.

The U.S. Mint had a lot to say for itself yesterday. They reported selling another 7,000 one-ounce gold eagles and another 337,500 silver eagles. Month to date [and this was probably the mint's last update for April] the U.S. Mint has produced 60,500 one-ounce gold eagles and 2,507,500 silver eagles. And, for the first time this year, they announced sales of the one-ounce 24K gold buffalo bullion coin. Yesterday they reported sales of 48,500 for the month of April. In 2009 they minted 200,000 of these bullion coins in total. Last year they got started in October. In 2010, they started in April, so unless they cut off sales early, the mint should produce a lot more this year than last.

And, for whatever reason, the Comex-approved warehouses did not update their website yesterday... so they're still showing Tuesday's activity. I'm sure they'll make amends today... and I'll report on that tomorrow.

Today's first item of interest is something that I shamelessly ripped from yesterday's edition of Casey's Daily Dispatch... which you can sign up for free, I might add. The headline reads "CMBS Delinquencies Above $50 Billion". According to Horsham, Pennsylvania-based Realpoint LLC, the delinquent unpaid balance for commercial mortgage-backed securities (CMBS) rose 6.8% in March, up to a staggering $51.05 billion.

The delinquent unpaid balance is now up 268% from a year ago and more than 23 times the low point of $2.21 billion in March 2007. Furthermore, the March delinquency ratio of 6.4% is nearly four times the 1.66% reported in the same month last year and about 23 times the Realpoint recorded low point of 0.28% in June 2007. Here’s a chart showing monthly delinquencies since May of 2008:

Today's first story is posted over at Bloomberg... and was sent to me by Washington state reader, S.A. The first paragraph reads as follows... "Investors are abandoning the euro at a rate not seen since the collapse of Lehman Brothers, as Europe’s worsening fiscal crisis threatens to splinter the 16-nation currency union." The headline states "Euro Sales extend as Morgan Stanley Mulls EU Breakup". It's a bit of a read... and the link is here.

The next item is from Bloomberg out of Hong Kong earlier this morning. It's a video interview with BlackRock's Evy Hambro. It's all about commodities and gold. Hambro seems to be wildly bullish on gold. This 8-minute interview is certainly worth your time. It's entitled "Hambro Says Miners May Face Rising Resource Nationalism"... and I thank Russian reader Alex Lvov for sending it to me in the wee hours of this morning... and the link is here.

By the way, BlackRock is the sponsor for the SLV ETF. It's up to them to come up with the approximately 15 million ounces of silver that the SLV currently needs to get back to where they should be. One has to wonder how they're doing in that regard.

The next story is from The New York Times... courtesy of reader Roy Stephens. It's a fascinating snap shot of how [some] Greeks feel about what is happening to their own country. It's not a long read... and I recommend you take two minutes of your time to do it. The headline reads "Digging Deep and Seeing Greece’s Flaws"... and the link is here.

The next item is from yesterday's edition of The Wall Street Journal. The headline reads "Criminal probe looks into Goldman Sachs trading". Since it requires a subscription to view this story in full, here it is as a GATA dispatch... and the link is here.

The following story is another from the good folks over at bloomberg.com. I didn't know whether to laugh or cry when I saw the headline, which partly reads as follows... "Moore Capital fined in CFTC platinum/palladium manipulation case". The first paragraph reads as follows... "Moore Capital, the $15 billion hedge fund run by Louis Bacon, will pay $25 million to settle the U.S. CFTC’s allegation that a former portfolio manager attempted to manipulate platinum and palladium futures during a surge in prices two years ago, the regulator said yesterday." The silver and gold price management scheme has been going on for decades. It's the biggest ongoing commodities fraud in the history of planet earth... and this is the sort of thing that the CFTC is keeping track of? What a joke. The link to the story is here.

Today's last story is a GATA release as well. The headline pretty much sums up where this article is headed. It reads "In Rolling Stone, Matt Taibbi mentions precious-metals Ponzi schemes" The preamble to this story by GATA's Chris Powell is a must read as well. The link to the GATA release is here. And, for whatever reason, the actual link to Taibbi's new essay [titled "The Fed's vs. Goldman"] in the GATA release is not live, so I have linked it here. But be warned in advance that it's a big read, so you might want to refill your coffee cup before you start. But read Powell's comments first.

Governments lie; bankers lie; even auditors sometimes lie. Gold tells the truth. - Lord Rees Moog, former editor of The Times of London

We certainly live in interesting times. The European Union, European Central Bank... and the IMF are wringing their hands about the European contagion that will soon spread throughout the world. But here is nothing they can do about it. They are doomed whether they turn on the printing presses or not. It's death by deflation... or death by hyperinflation. Re-pricing gold... and a return to some sort of international gold standard... is the only viable solution left. Russia and China have got that figured out already. I'm sure that virtually every ounce their digging out of the ground these days is going straight into the vaults of their respective central banks. I hope, dear reader, that you've got that figured out, too.

There's not much happening in Far East trading in either gold or silver at the moment. London has just opened... and there isn't much happening their either. As of 5:22 a.m. Eastern time, gold has traded about 23,400 June contracts net of spreads... and silver's volume is around 4,400 contracts in the next front month, which is July.

Thursday's preliminary volume figures from the CME's website show that a smallish 115,853 contracts were traded in gold... of which about 4,000 were roll-overs. Silver's volume was down to 61,047 contracts traded... a lot of which was roll-overs and spread trades, as April went off the board yesterday.

May open interest in silver is now down to only 3,647 contracts. It probably started out a bit higher than that yesterday, but the 1,796 silver contracts that are to be delivered on first notice day automatically reduced open interest by that amount.

Today's Commitment of Traders report will be out at 3:30 p.m. Eastern time. Both Ted and I are hoping for a fairly large decline in silver open interest, as its been declining all week, even in the face of rising silver prices... which, under normal circumstances, is a very bullish sign. The link to the CFTC website is here.

Today is Friday... and just as I put this last paragraph to bed, I see that both silver and gold have made marginal new highs... both of which came close to the London a.m. gold fix. But, considering what happened to the silver price right out of the blue in New York yesterday... today might be full of surprises as well... and we'll find out soon enough.

I hope you have a wonderful weekend... and I'll see you here tomorrow.