Russia's Central Bank Buys Another 500,000 Ounces of Gold in July

Gold declined about four bucks from the open in Far East trading Friday morning... until about an hour before trading began in New York. Then the price popped to its New York high of the day [$1,232.90 spot] just minutes after the Comex opened for business. Two short episodes of not-for-profit selling took gold to its low of the day [$1,221.30 spot] at the London p.m. gold fix... 10:00 a.m. Eastern time right on the button. Volume was decent for a summer Friday afternoon.

Here's the New York gold chart on its own so you can see how precise the timing of the low was at the London p.m. gold fix at 3:00 p.m. in London... 10:00 a.m. in New York.

Silver's price meandered in a very tight range all through Far East and early London trading on Friday. Volume was exceptionally light... and the price really didn't start heading lower until 11:00 a.m. in London. From there it fell a dime into the London silver fix at noon, rose for the next hour to a secondary top at 1:00 p.m. in London trading... and 8:00 a.m. in New York. Then, in three separate bouts of bid-pulling by the bullion banks, silver declined from about $18.27... all the way down to $17.84... with the final indignity being delivered right at the London close, which was 11:00 a.m. in New York. Silver managed to claw its way back above $18 by the close of trading... but not before the bullion banks managed to blow thousands more brain dead tech fund longs out of the water.

Illegal activity such as this paints a pretty ugly silver chart... and really makes me grumpy. But it really improves the internal structure of the market, as Ted Butler will attest to in his interview a little further along in this column.

As I mentioned in my closing comments in Friday's column, the world's reserve currency began to rise at precisely 4:00 a.m. Eastern time... and by the time the Comex opened four hours later, the dollar was up 55 basis points... and gained another 25 between then and shortly after 11:00 a.m. Eastern. If you can find any relationship between this dollar chart and Friday's gold chart... you're a lot smarter than I am. What happened to gold and silver yesterday had zero to do with the dollar and 100% to do with the bullion banks.

The precious metals shares gapped down at the open, but actually bottomed shortly before gold's low of the day... and, as the day wore on, the HUI worked its way slowly higher. It managed to finish on its high of the day... down 0.60%. It could have been worse, dear reader. Here's the 5-day HUI graph for a better overall view of the week that was.

The CME Delivery Report for Friday showed that 183 gold and 3 silver contracts were posted for delivery on Tuesday. JPMorgan was the big issuer... and HSBC USA was the big stopper. The link to the action, which is worth a brief look, is here.

There were no reports from either GLD or SLV yesterday... and nothing from the U.S. Mint. But over at the Comex-approved depositories... 356,584 ounces of silver [net] were taken into their warehouses on Thursday. There was a fair amount of activity... and the link to the action is here.

The Commitment of Traders report was pretty much what Ted Butler expected. With the tech funds buying and driving the price up, the bullion banks took the short side of all these new long positions... and actually sold some long positions as well.

In silver, the Commercial net short position increased by 991 contracts. The Commercial net short position [read bullion banks] now sits at 53,744 contracts, or 268.7 million ounces. Of that, the '4 or less' bullion banks are short 225.5 million ounces... and the '8 or less' bullion banks are short 300.9 million ounces.

In gold, the bullion banks went short another 18,590 contracts... or 1.9 million ounces. The Commercial net short position [all bullion banks] is now up to 25.0 million ounces. Of that, the '4 or less' bullion banks are short 19.7 million ounces... and the '8 or less' traders are short 26.2 million ounces.

Of course, all of that has changed [especially in silver] after the pounding it took on Wednesday and Friday. As I said in my Wednesday column, if the bullion banks were going to do the dirty, they always like to do it the day after the cut-off for the Friday COT report [Tuesday]... and that's exactly what they did. We won't see any of that action until next Friday's COT report. Do they do this deliberately, you ask? You betcha!

Here's Ted Butler's 'Days of Production' graph updated with yesterday's COT numbers... courtesy of Nick Laird at sharelynx.com.

Here's Ted's weekly interview with Eric King over at King World News... and I urge you to stop reading at this point and listen to what he has to say. The link is here.

Besides the Ted Butler interview, Eric slipped in a link to a short blog about Richard Russell's latest comments on the stock market and gold. The headline reads "Richard Russell - The Stock Market Is Crumbling". It's a must read... and the link is here.

Well, the really big gold news yesterday came courtesy of The Central Bank of the Russian Federation. As I said yesterday, they always update their website on the 20th of each month... and this time it was for July. During that month they increased their gold holdings by a further 500,000 troy ounces, bringing their total holdings to date up to 23.3 million ounces... or 724.7 tonnes. So far this year they have socked away 2.8 million ounces of the stuff... over 10% of their entire holdings in just the last seven months! These guys are serious!!!

I'm glad I shoved all those stories I did into Friday's column... because I have another pile today.

The first one is a piece that reader Scott Pluschau sent to me yesterday. It's a posting over at money.cnn.com that bears the headline "401(k) withdrawals spike"... Hardship withdrawals from 401(k) retirement saving plans rose to the highest level in 10 years during the second quarter, Fidelity Investments said on Friday, in the latest sign of a dismal economy. This is not a good sign at all. It's not a long read... and I urge all my American readers to take the time to run through it... and the link is here.

The next story is 18 months old... but it's just as applicable today [if not more so] than when it was originally published back in January of 2009. It's from The Wall Street Journal... and bears the headline "Atlas Shrugged": From Fiction to Fact in 52 Years". Ayn Rand had it exactly correct... and it's coming to fruition right before your very eyes, dear reader. Roy Stephens dug this one up... and the link to this absolutely must read piece, is here.

The next item is a 12:25 commentary by Keith Olbermann that was sent to me by reader 'David in California'. After the Ayn Rand story above, this fits in absolutely perfectly. Regardless of what side of this issue you are on, I urge you to watch every second of this video which is headlined "There is no 'Ground Zero' Mosque"... and the link is here.

The only real gold-related story I have for you today was sent to me by Florida reader Donna Badach. It's posted in yesterday's edition of the Las Vegas Review-Journal and is headlined "INVESTING: Gold provides glint of hope during economic downturn". At the end of the piece they quote the Tokyo Rose of the gold world, as he hold's out his usual cup of hemlock for all gold investors to drink from... but, other than that, it's an interesting look into another side of "Sin City"... and how it fits into the gold world. The link is here.

Do you remember that story about the boxes, suitcases and pallet's of cash in the billions that was being flown out of Kabul every year? Well, here's another story [once again courtesy of Donna Badach] that popped up about that in Friday's edition of The Washington Post. The headline reads "U.S., Afghanistan plan to screen cash at Kabul airport to prevent corruption"... "Alarmed by an exodus of money from Afghanistan, U.S. and Afghan authorities are trying to constrict a flow of cash through the country's main airport, believed to be a major conduit for drug proceeds and diverted foreign aid." I wish them luck, dear reader... and the link to the story is here.

Earlier this week I ran a story about how badly things were going in Greece. It was posted on the German website spiegel.de. Not to be outdone... Ambrose Evans-Pritchard over at The Telegraph in London weighed into the Grecian fray with this story headlined "Greek crisis refuses to go away"... The European Commission has approved the next €9bn (£7.4bn) tranche of loans for Greece, but the underlying economy continues to deteriorate as Greek banks suffer a record loss of deposits... and output contracts at a quickening pace. This article is well worth your time... and the link is here.

That last story was courtesy of reader Roy Stephens... as are the next three items I have for you today. His next offering is posted over at upi.com and bears the headline "Commentary: Biblical Catastrophe". It's about the absolutely wretched conditions that the citizens of Pakistan currently find themselves in. It will take about five minutes of your time... and the link is here.

Well, the Friday deadline for attacking Iran has come and gone without incident. Here's a story that was just posted this morning over at the france24.com website. The headline reads "Tehran begins fuelling first nuclear power plant". Iranian engineers have begun loading fuel into the country's Russian-built nuclear plant in the southern port of Bushehr, marking a milestone in Tehran's atomic program despite UN sanctions. It's well worth the read... and the link is here.

The last commentary of the day also comes from Roy... and it's a 2-page essay from Thursday that I just didn't have the space for until now. It's posted over at the German website spiegel.de... and bears the disquieting headline... "On the Way Down: The Erosion of America's Middle Class". If you haven't read the Ayn Rand story further up... I would suggest you do that before you read this... as my wonderful American readers must have some frame of reference for what is happening to them... and why. This a must read... and the link is here.

Today's 'blast from the past goes back to the late 19th century. Kol Nidrei, Op. 47, is a composition for cello and orchestra that was written by Max Bruch. Bruch completed the composition in Liverpool before it was first published in Berlin in 1881. I have several recordings of this piece in my music library... and, initially, I found this version on youtube.com to be a little slow for my taste... but, within a couple of minutes, I changed my mind totally. By the end I had to consider this version as being definitive. Unfortunately, it's just long enough that it had to be cut into two pieces to fit it into the youtube.com format... which is a real pain.

Here is the Vienna Philharmonic Women's Orchestra with soloist Teodora Miteva at the St. Thekla Church in Vienna. Izabella Shareyko conducts. Part 1... and Part 2. Enjoy!

Since Wednesday, gold has only been hit for a few dollars... but silver was taken down at least 75 cents from its high on Wednesday to its low on Friday. It's very obvious that the center of the bullion bank's universe is silver. The question that now must be asked is whether or not 'da boyz' are really going to go after gold in order to hit silver even harder.

We came within a dime of silver's 200-day moving average yesterday... and as Ted pointed out in his interview earlier, it remains to be seen whether they're going to try and take out that moving average as well. But, at his point, the law of diminishing returns sets in quickly. Just how many tech funds are left to liquidate their long positions at this price, or below... and is it worth the bullion bank's efforts to go after what few are left? I suspect that we'll find out that answer to that in pretty short order.

Here's gold's 6-month chart to show how little damage to the price has actually occurred since the cut-off for yesterday's COT report... which was Tuesday at the close of trading. They could still smack gold hard if they really wanted to, as all those tech funds that have bought long positions since the end of July and moved the price up, are still sitting there... and the bullion banks could pull the lever and ring the cash register on these brain dead tech funds at any moment.

The hit that silver took in the last three trading days is really obvious... and the 200-day moving average beckons. If 'da boyz' hit gold hard, they would certainly drive the silver price well below its 200-day moving average as the tech funds puked up what's left of their leveraged long positions. But, as I said previously, how many contracts are down there? Probably not many.

Now we've got only seven summer trading days left before the northern hemisphere goes back to work. If you're still sitting on the fence regarding investing in the precious metals, there's still time to put your investment dollars to work. And there's no better place to start than with a subscription to either Casey's Gold and Resource Report... or Casey Research's flagship publication... the International Speculator. Please click on the links, as it doesn't cost a dime to check them out... and the subscriptions come complete with our usual money-back guarantee.

Monday's trading in both metals could be interesting... and I'll be watching the Monday open in the Far East at 6:00 p.m. Eastern time on Sunday night with great interest.

Enjoy what's left of your weekend... and I'll see you on Tuesday.