GLD Up Another 136,928 Troy Ounces of Gold

The gold price fell a bit as the dollar rallied during Far East and early London trading yesterday. But, by 9:30 a.m. in New York yesterday morning, gold was only down four or five dollars. Then, just before the London p.m. gold fix, gold got whacked for about $11 to it's low of the day of $1,226.40 spot. The low was set right at the London p.m. gold fix... no surprise there, dear reader. From that low, it recovered almost $20... before the buyer disappeared... or a not-for-profit seller showed up. I suspect the latter. Gold finished the trading day up a few dollars from Monday's close. Volume was huge... which was to be expected, since it was the last trading day for the June contract.

Silver fell... and then rose... as the dollar stabilized 40 basis points higher around 4:30 a.m. Eastern time. Silver also got hit after 9:30 a.m. in New York... and made its low of the day [$18.38 spot] somewhere between 10 and 11:00 a.m. Eastern time. However, the subsequent rally from that low was not allowed to gain any traction... and silver finished down two bits from Monday's close. Silver's high on Tuesday [around $18.80 spot] was in early in Far East trading.

As I mentioned in the previous two paragraphs, the dollar managed to tack on about 40 basis points in a rally that began at 2:00 a.m. Eastern time... and ended around 4:20 a.m. The dollar stabilized around 86.15... and has vacillated around that price right up until the time of this writing, which is 10:57 p.m. Eastern... and has now declined a bit as of 4:34 a.m. Eastern.

The HUI reached its high of the day at the same time as the gold and silver prices peaked... around 12:15 a.m. Eastern time... and then began a slow decline right up until about 15 minutes before the equity market closed, when bargain hunters stepped into the market. I must admit that I looked at the gold, silver and associated share price action from 12:15 onwards with deep suspicion... as the Dow was already down 250 points at the time. Was someone selling precious metals shares to paint a chart yesterday... just like they did the metals themselves on Monday? Maybe I'm just imagining things... but the share action didn't look right. The HUI finished down 2.61% on the day, despite the fact that gold finished in the plus column.

While I'm on the subject of gold funds... here's a chart courtesy of Nick Laird over at sharelynx.com. As Nick says, "It's basically a mix of all the PM funds holding all the best PM stocks...and is an excellent proxy for what's happening to the gold shares. Here it is...poised to break out... or fail."

It's my opinion that 'da boyz' are painting the charts by influencing not only the precious metal prices themselves... but the stocks as well. That's why I'm always on the lookout for counter-intuitive moves in the HUI.

Well, there sure wasn't much delivery action in the CME's report yesterday, as only 3 gold and zero silver contracts are to be delivered today. Yesterday was the final trading day in the June contract... and today is first notice day for delivery into the July contract. The CME has already posted those numbers for all metals as well... and the link to that report is definitely worth spending some time on. In silver, the big issuer was the Bank of Nova Scotia with 264 contracts... and the big stopper was JPMorgan with 147 contracts. It was ever thus... and the link to all the action is here.

The GLD is like the Energizer Bunny these days... as it reported adding another 136,928 troy ounces of gold to its alleged inventory. And it almost goes without saying that the SLV had no report. So far in June, GLD is up 1.7 million ounces... and SLV is down 2.6 million ounces.

The U.S. Mint had another sales report yesterday... probably its last for June... but I distinctly remember saying that yesterday as well... so who knows. They reported selling another 7,500 ounces of gold eagles... 500 24-k gold buffaloes... and no silver eagles.

The Comex-approved depositories had another busy day on Monday... and by the time the smoke had cleared, another 875,588 ounces of silver had been removed. The action, and there was quite a bit of it, is linked here.

Here's another chart courtesy of Nick Laird over at sharelynx.com. You may remember my comments last week on the OCC's [Office of the Comptroller or the Currency] Q1/2010 Derivatives Report for all U.S. banks. I had a bunch of numbers and percentages. But a graph is better... and here's one. Note that two U.S. banks, JPMorgan and HSBC hold virtually all the precious metals derivatives in the entire U.S. banking system. But don't forget that I qualified that by saying that any precious metals derivatives held by bank holding companies [Goldman Sachs has one] do not have to be reported to the OCC, so they don't show up here... and those could be a huge numbers as well.

Today's first story is an Ambrose Evans-Pritchard offering from yesterday's edition of The Telegraph. In a story that even shocked me, Ambrose rips the Federal Reserve a new one. He opines that, "like a mad aunt, the Fed is slowly losing its marbles." The headline is straight to the point... "Time to shut down the US Federal Reserve?"... and the link to this must read article is here.

Here's a Reuters story that mentioned a new United Nations report that calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value. The report calls for the use of SDRs... Special Drawing Rights... instead of the U.S dollar. But others say that it would be a bad idea to dictate what the reserve currency should be. It is markets that decide... and any intervention would just create additional challenges and make things even less predictable. The headline reads "Scrap dollar as sole reserve currency: U.N. report"... and the link is here.

Here's an item that's posted over at cnbc.com. It's about Fannie and Freddie. I believe that I ran a similar story to this about a month ago... but it won't hurt to revisit it. The headline reads "Fannie-Freddie Bailout Could Cost Taxpayers $1 Trillion". For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg. According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, some experts caution, the cost to the taxpayer could hit as much as $1 trillion. And, when I ran this story awhile back, I said that $1 Trillion will be a minimum figure before all is said and done. I thank reader Scott Pluschau for sending me the story... and the link is here.

The next newspaper article is my first gold-related story of the day... and was posted at the blogs.wsj.com website yesterday. The headline says it all... "Gold ETF Swells To Pass $50 Billion Milestone". Normally I'd be cheering such an event... and I guess I am... but I still have my doubts whether or not they have all the gold they say they have. And I'm no fan of GLD's custodian either... HSBC, USA... the second largest holder of Comex short positions in both gold and silver on Planet Earth. It's not a long read... and it's worth your while... and the link is here.

My last three stories are all gold-related... are all GATA releases... and are all must reads. I have linked the GATA releases, as the preamble by GATA's secretary treasurer, Chris Powell, is worth the read in all three of them. The first is a posting over at commodities-now.com... and is headlined "Gensler on Brink of Position Limits Victory"... and the link is here. But this writer is still in the "I'll believe it when I see it" camp... and my tent is pitched right smack dab in the middle of Missouri at the moment.

Well, Lawrence Williams over at the mineweb.com website, has finally admitted that investment houses probably rig the gold market. His headline reads "Gold Price Manipulation -- Probably; Conspiracy -- A Matter of Semantics!". The link to the GATA release is here.

My last offering today is actually two stories in one. Powell's preamble to these stories begins with the following paragraph... "Kitco.com, home of senior market analyst Jon Nadler, perhaps the foremost denier of the international central bank gold price suppression scheme, is becoming infested with wearers of tinfoil hats." Chris mentions James Turk right at the outset... and then links two stories of interest... one by Jason Hamlin [Gold Price Manipulation Exposed]... and the other by Arnold Bock [Where's the Gold?]. The complete package bears the GATA headline "Tinfoil hats are surrounding Kitco's senior market analyst"... and the link is here.

While I'm on the subject of Mr. Nadler, I have my own story to tell. When I first began writing my stand-alone column last August, it was posted not only at Casey Research, but also at Kitco. Jon went absolutely supernova... and after three days, my daily commentary disappeared permanently from their website. So I thank you, dear reader, for hanging in there... even though my column's not fit for Kitco. Jon's daily musings can be found linked here.

A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him. - John Maynard Keynes, 1931

Well, the U.S. equity markets really got taken out behind the woodshed yesterday... with the Dow closing below the magic 10,000 level once again. I wonder if they'll have it back above that number before the July 4th long weekend? We'll find out soon enough I would think.

Not that it makes any difference, as the entire world's economy and everything associated with it, is a dead duck anyway. There are tens of trillions of dollars worth of debt in the system that have to be purged one way or another before any meaningful recovery can begin. All 'the powers that be' are doing is delaying the inevitable... plus ensuring that when the end does come, it will be worse than if they'd just let it crash and burn ten years ago. If they'd done that, we'd probably be well on the road to recovery by now. And, as I've said a number of times in this column, I will be a very old man before this bear market breaths its last.

Not much is happening as I put today's column to bed at 4:58 a.m. Eastern time. Both metals are in the plus column at the moment... but just barely. Volume is practically non-existent... especially in silver. The price action [either positive or negative] will, once again, be 100% determined by what happens during the New York trading session... so we'll have to wait for JPMorgan et al to make their move.

That's all I have for today... and I'll see you on Thursday.