Big Activity in GLD, SLV and Comex Silver Stocks

The gold price gained a whole five bucks by 11:00 a.m. Hong Kong time on Friday morning, but the moment that trading in Hong Kong ended around 5:30 p.m. local time, the gold price headed south. It rallied a bit going into the New York open, but then rolled over and hit its low of the day [$1,364.00 spot] at 11:00 a.m. Eastern time.

From that 11:00 a.m. low, gold traded higher until precisely 1:30 p.m. when floor trading ended and electronic trading began. That point was gold's high at $1,380.10 spot. The gold price traded sideways from there. Volume was very light.

The fact that the gold price did as well as it did is really quite something in the face of a dollar that was up over a full percent from its lows yesterday. More on that after my comments on silver.

Silver was an entirely different animal. It's high of the day [around $29.30 spot] was around 11:30 a.m. in Hong Kong trading... and then headed unsteadily lower to it's low of the day [around $28.67 spot] which was shortly before 1:00 p.m. in London.

From that low, silver rose a bit going into the New York open... and then fluctuated 15 cents either side of $28.90 spot until shortly before 1:00 p.m. Eastern. Silver rallied from there, right into electronic trading... before heading sideways for the rest of the New York trading session. Volume in silver was also very light.

The world's reserve currency fell all through Far East trading on Friday... about 43 basis points in total... and finally hit bottom around 10:00 a.m. in London. Six hours later, at 11:00 a.m. in New York, the dollar was up a full cent from its low... which is a very large move in a very short period of time. From that 11:00 a.m. high, the dollar gave back about 20 basis points by the close of Comex trading at 1:30 p.m... and then traded sideways into the close at 5:15 p.m. Eastern.

While the dollar gained 100 basis points in six hours... gold lost $13. When the dollar turned south at 11:00 a.m... losing 20 basis point by the end of Comex trading at 1:30 p.m.... gold had risen $16 in the space of those two and a half hours.

It should be obvious to anyone that if the bullion banks hadn't been all over the price in New York yesterday, gold would have risen materially, right along side the dollar... but that wasn't allowed to happen. Once the dollar rally ended, gold and silver prices popped pretty good. It's obvious that the precious metals wanted to go higher... regardless of what the dollar was doing.

The gold stocks hit their nadir shortly before 11:00 a.m. Eastern time before turning higher... and getting back into positive territory. However, about fifteen minutes before the equity markets closed, a sudden sell-off of one of the large cap gold stocks dragged the HUI down to a small negative close... down 0.13%. For the most part, the junior companies had a pretty good day... as did most of the silver stocks. A lot of buyers were bottom fishing yesterday. Here's the HUI for the week that was.

The CME Delivery Report showed that 126 gold and 17 silver contracts were posted for delivery on Tuesday. The link to the action is here.

Well, the ETFs were certainly busy yesterday. GLD reported receiving 488,124 ounces of gold. It's been a very long time since that much gold was deposited in the GLD all at once. But, over at SLV, they showed a huge withdrawal... 1,954,680 troy ounces of the stuff. Someone needed a big pile of silver in a hurry... and it was obvious that they either had it stored in the SLV... or bought the units in the open market and then tendered them for immediate delivery. It certainly wasn't a withdrawal based on the price action lately. Since the beginning of December, the in/out movements in SLV have been almost schizophrenic.

There was no sales report from the U.S. Mint yesterday.

On Wednesday I reported a big silver withdrawal [around 1.9 million ounces] from the Comex-approved depositories. Well, their Thursday report showed that a huge chunk of silver was deposited to take its place... to the tune of 1,469,413 ounces. All of it was added at Scotia Mocatta... and the link to that action is here.

The action in the Comex-approved depositories is also getting pretty frantic as well. I mentioned earlier this week that there was probably a lot of 'robbing Peter to pay Paul' going on... and this sort of activity is what one would expect if that was [in actual fact] what was really happening... both there and in the SLV ETF.

The Commitment of Traders report was a bit of a surprise, as the expected huge decline in silver open interest did not materialize. Open interest was down... but only by 689 contracts net. Ted Butler did mention, however, that the '4 or less' traders managed to reduce their short position by about 1,900 contracts during the reporting week.

As of Tuesday's cut-off, the Commercial net short position [where the bullion banks are located] stood at 240.7 million ounces. The '4 or less' traders are short 210.8 million ounces... and the '8 or less' traders [which includes the '4 or less'] are short 287.0 million ounces of silver.

The big surprise in this week's COT report came from gold. There, the open interest fell a very chunky 10,538 contracts... 1.05 million ounces. The Commercial net short position in gold is currently down to 26.8 million ounces. The '4 or less' bullion banks are short 21.8 million ounces... and the '8 or less' bullion banks are short 28.1 million ounces of gold.

This COT report was as of the close of trading on Tuesday, December 16th... and there certainly has been more improvement in the COT structure since then, as we've had new lows in both silver and gold... and gold briefly went through its 50-day moving average on Thursday... and again yesterday. The link to Friday's COT report is here.

Although the price action is infuriating [and discouraging to some]... all this downward pressure on prices makes the COT stronger in preparation for the next rally in both metals. According to Ted, the COT structure in both metals is looking pretty good... but JPMorgan et al still run the gold and silver show... and we never know when they will strike next, regardless of what the COT shows.

Here's Ted Butler's "Days to Cover" graph, that has been updated courtesy of Nick Laird

¤ Critical Reads

Wal-Mart Raised Toy Prices in U.S. Stores This Month

My first story of the day was this Bloomberg piece that I stole from yesterday's King Report. In an early Christmas present to all toy shoppers, Wal-Mart Stores Inc., the world’s largest retailer, raised prices on hundreds of toys this month, squeezing more out of sales during the biggest shopping period of the year. Merry Christmas to all. The headline reads "Wal-Mart Raised Toy Prices in U.S. Stores This Month" and the link is here.

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Ron Paul: The Fed Spends "More Money Than the Congress Does

The next item is a Bloomberg video interview with Dr. Ron Paul... the first TV interview he's given since being appointed chair of the House Monetary Policy Subcommittee. It's posted over at the dailyreckoning.com website... and bears the headline "Ron Paul: The Fed Spends "More Money Than the Congress Does"... and the link is here. I thank Washington state reader S.A. for sending it along.

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Current Unemployment Numbers in the U.S.

Washington state reader S.A. was also kind enough to send along this set of three graphs about the Current Unemployment Numbers in the U.S. This is as ugly as it gets... and another set of charts that needs no further embellishment by me.

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Payrolls Drop in 28 U.S. States, Joblessness Up in 21

In a parallel story to these graphs, comes this Bloomberg offering from reader Scott Pluschau. The headline states "Payrolls Drop in 28 U.S. States, Joblessness Up in 21"... and the link is here.

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Saving the Euro: Merkel's Ironic Victory in Brussels

The next item today is a Roy Stephens offering from the German website spiegel.de. It's headline reads "Saving the Euro: Merkel's Ironic Victory in Brussels". It hasn't been an easy year for the EU, or for Angela Merkel. She played chief skeptic during the euro crisis, but the role ironically led her to forge a rescue mechanism for the continent's embattled currency. It's obvious that they're going to save the Euro the same way that Bernanke is going to 'save' the U.S. dollar... by running the printing presses 24/7 in order to bail everyone out. The link is here.

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EU shocked by Irish debt downgrade

One has to ponder how wonderful her victory really was... because moments after the summit in Brussels was adjourned... where Merkel 'saved the euro'... Moody's downgraded Ireland's debt again. Here's a story [with thanks once again to Roy Stephens] from The Telegraph that was filed Friday evening in London... and the headline reads "EU shocked by Irish debt downgrade". I guess that was the reason why the dollar was in rally mode yesterday. The link to the story is here... and I highly recommend that you find the time to run through it.

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Fancy ATM skips the folding cash, spits out gold

I have a few gold-related stories for you today. The first is from reader Scott Pluschau and it's an AP story posted over at yahoo.com that's headlined "Fancy ATM skips the folding cash, spits out gold". Boca Raton now has the U.S.'s first gold ATM machine... and the link to the story is here.

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Gold-dispensing ATM Debuts in South Fla.

Casey Research's own Doug Hornig sent me a video of the same AP story that's now posted over at youtube.com. It runs 2 minutes and 16 seconds... and the gold pictures are worth the trip... and the link is here.

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Gold: Currency Wars and China

The next gold-related story is a longish piece that's posted over at safehaven.com... and is courtesy of reader U.D. It's written by John Ing of Maison Placements Canada in Toronto... and bears the headline "Gold: Currency Wars and China". The part about China and their silver standard... and what Roosevelt did to it... is a must read. The Chinese have very long memories.... and I'm sure they haven't forgotten about this. The link to the essay is here.

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Richard Russell: Dreams only last the night

Reader U.D. has one more gold-related item for us today. This one is a posting over at 321gold.com... and is headlined "Richard Russell: Dreams only last the night". Richard gets up on his golden soap box and talks about his favourite subject... gold. It's a short, but very worthwhile read... and the link is here.

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WikiLeaks -- a Big Dangerous US Government Con Job

I've got two more items to post for your weekend reading pleasure. I've been saving them for most of the week, because I really didn't have the space for them during weekdays. The first of these is a piece sent to me by Swiss reader G.B. It's a different view of Julian Assange... and also of WikiLeaks itself... by F. William Engdahl. Engdahl doesn't pull any punches in this rather interesting piece headlined "WikiLeaks -- a Big Dangerous US Government Con Job". Whether or it's true or not, is unknown... but it is food for thought and very much worth the read. The link is here.

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Matt Taibbi's Great Squid Hunt

My last offering is courtesy of Roy Stephens... and is your really big read of the day. It's a very long book review of Rolling Stone magazine's Matt Taibbi's new book "Griftopia". In the book, Taibbi argues that America has been corrupted by the merger of government and finance. Like F. William Engdahl in the story above, Matt is no shrinking violet... bringing fame to himself by describing Goldman Sachs as the "great vampire squid with its tentacles wrapped around the face of humanity". As I said, it's a longish read... and the headline states "Matt Taibbi's Great Squid Hunt". The link is here.

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Since it's the last Saturday before Christmas, I thought that my 'blast from the past' should reflect that. I think I ran this last year as well. It's a selection [But who may abide] from Handel's Messiah... and sung by the incomparable Dame Emma Kirkby. I've had the CD of this version of Handel's Messiah in my collection for around 20 years, with Emma's recording of this piece on it... and stumbled on the video of it on youtube.com a couple of years back. Needless to say, it gets a lot of play time on my computer. This version is definitive... I've heard none better. There's a short intro piece by bass soloist David Thomas before Emma starts... and the link is here.

Gold once again traded below its 50-day moving average on Friday... but recovered smartly once the dollar rolled over. I have no idea whether the price will bounce off this moving averag, or will fall below it... but at the moment it feels like both silver and gold want to power higher. Whatever direction is decided, we won't have too long to wait to find out which it is.

The demand for precious metals in all the world's ETFs is still strong going into the final days of 2010. Here's a chart that Nick Laird over at sharelynx.com sent me... and you can see that the amount of metal that investors are buying continues to rise unabated.

There's still time to either readjust your portfolio... or get fully invested in the continuing major up-leg of this bull market in both silver and gold... and I respectfully suggest that you take a trial subscription to either our International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers] today, as that will allow you the luxury of spending time during the weekend perusing the current issues, with all our best [and current] recommendations... as well as the archives. Don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Enjoy the rest of the weekend... and I'll see you here on Tuesday.