QE is dead! Long live QE!

The gold price was up about seven bucks shortly after London opened on Friday morning...and then suffered the same fate as silver, but to a much lesser degree...as it was obvious that the bullion banks were really going after the white metal. The low came at noon in London, with a secondary low around 9:30 a.m. in New York...and then, it too, climbed to its high of the day [$1,425.50 spot] just minutes after the Comex close...but gave up a lot of those gains, as it got sold off in electronic trading.

Well, the cliff that JPMorgan manufactured for silver to dive off early yesterday morning, found a bottom at the daily London silver fix at twelve o'clock noon GMT...7:00 a.m. in New York.

The silver price recovered from there, had a secondary bottom at precisely 9:30 a.m. Eastern...and then ran up to its high of the day...$36.20...which occurred just minutes after Comex trading ended at 1:30 p.m. The silver price then traded sideways into the close of electronic trading at 5:15 p.m. in New York.

The dollar meandered about ten basis points either side of 77.2 cents yesterday. The buck then curled up its toes at exactly 8:30 a.m. New York time...and fell almost 65 basis points from its high to its low of the day at 76.73 cents.

It was another day where the dollar actions never quite mirrored the gold price action. As I said yesterday, it matters not what other markets are doing when JPMorgan et al are on the hunt.

The gold shares had a mind of their own yesterday...peaking at least an hour before the high price for both gold and silver were in. From that high, the HUI gave back about a percent of its gains, but closed up 1.69% on the day. And, as a group, the silver stocks did much better than their golden brethren. Here's the HUI for the week that was.

Just to put everything silver related into some sort of perspective, here's Nick Laird's "Silver Sentiment Index" updated as of Friday's close.

Friday's CME Delivery Report showed that zero gold and 72 silver contracts were posted for delivery on Tuesday. The biggest issuer with 64 contracts was the Bank of Nova Scotia, with the biggest stopper being Barclays with 40 contacts. Not much to see here...but here's the link if you wish to have a look.

There were smallish declines in both GLD and SLV yesterday. GLD was down 58,521 ounces...and SLV was down 536,951 ounces.

The U.S. Mint reported selling another 3,000 ounces of gold eagles...but didn't report selling any silver eagles.

The Comex-approved depositories received 62,396 ounces of silver on Thursday...but shipped out a rather large 767,603 ounces. The link to that action is here.

Ted Butler said that Friday's Commitment of Traders report was pretty much as he expected. The bullion banks improved their net short positions in both metals by small amounts. In silver, they covered 1,110 contracts...which is 5.55 million ounces. In gold they covered 3,132 contracts...or 313,200 ounces.

As of the Tuesday's cut-off, the '8 or less' bullion banks were short 276.3 million ounces of silver along with 22.9 million ounces of gold. One can only imagine what the prices of both precious metals would be if JPMorgan et al weren't there to keep the proverbial cork in the bottle.

Nick Laird over at sharelynx.com was kind enough to provide silver analyst Ted Butler's updated "Days of World Production to Cover Short Contracts" graph. Silver and gold are still the standout features on this chart...but the bullion banks' short positions in both platinum and palladium are starting to sneak up there as well.

¤ Critical Reads

Japan's Magnitude 8.9 Earthquake

The big story yesterday was the monster subduction earthquake just off the coast of Japan. As bad as the earthquake was, and it was catastrophic, it was the resulting tsunami that did the most damage close to the epicenter.

Washington state reader S.A. sent me the following cnn.com blog on all of this...and the photos and video clips are horrendous...and more are being added all the time. There are quite a few videos imbedded in this link, so it may take some time for the web page to download...but they're all worth viewing, so please be patient. The link is here.

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iPad price remark gets Fed's Dudley an earful

Today's first story is courtesy of reader Scott Pluschau...and it's a posting over at finance.yahoo.com. Memo to central bankers: Best not to cite the price of the new iPad as an example of why inflation isn't a problem when you head into a working-class neighborhood. In Queens, New York, on Friday, New York Fed President William Dudley did just that. He got an earful. "When was the last time, sir, that you went grocery shopping?" one audience member asked. "I can't eat an iPad," another said...and it was all downhill from there. The link to the story is here.

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Portugal cuts deeper as EU nations hold crisis meeting

Roy Stephens first offering today is this piece from yesterday's edition of The Telegraph. Portugal unveiled further spending cuts on Friday to try to restore confidence in its finances as eurozone leaders met to discuss the crisis in the single currency.

The yield on Portuguese five-year debt hit a new high of 7.99pc amid mounting speculation that it will join Ireland and Greece in seeking a rescue package. Yields on Greek and Irish sovereign debt also rose, making it more expensive for them to borrow. The link is here.

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The World from Berlin: Sarkozy's Libya Move 'Shows Testosterone Level, Not Logic'

Roy's next offering is a posting over at the German website spiegel.de. French President Nicolas Sarkozy surprised and upset many on Thursday by unilaterally calling for "targeted air strikes" against the Gadhafi regime and recognizing the rebel Libyan government a day before EU members convened at a summit to hammer out a common approach to the crisis. German commentators were not impressed. The link is here.

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QE is dead. Long live QE: Jim Rickards

Here's an interview with Jim Rickards that's posted over at the King World News website. There was a blog based on this interview that was posted at the KWN website yesterday...but this is the full interview itself. As you know, I have all the time in the world for what Jim has to say...and this interview is of particular interest...and I consider it a must listen...and the link is here.

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Interview With Jim Sinclair

The first of my precious metals related stories is this King World News interview that was sent to me by Roy Stephens. I believe I posted this as a blog earlier this week...but here's the complete interview. I haven't had a chance to listen to it, but Roy says it's great...and the link is here.

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Interview With Rob McEwen

I ran the blog on this a couple of days ago...and Eric King sent me the full interview in the wee hours of this morning. Like the Sinclair interview above, I've had no time to listen to this one, either...but I will sometime this weekend. The link is here.

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A Comeback for Gold-Backed Money?

Thanks to reader Peter Handley, here's a story that was posted on Casey Research's website yesterday. Author Andrey Dashkov writes that... "No one can predict exactly how this will all shake out, but Doug Casey has long said that a return to a gold standard, or some modern equivalent, is almost inevitable." This is a short read...and definitely worth your time. The link is here.

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A Real-Life "Italian Job": Thieves Steal 100 kg of Gold

My last story today is courtesy of North Carolina reader Bob Dillon...and is a posting over at infiniteunknown.net.

Police are hunting for a gang of thieves who carried out an Italian Job-style heist by locking down an entire village to steal more than £3 million worth of gold. The spectacular operation is already being dubbed the crime of the century. Detectives believe the job was organised by the mafia and took months to plan. It's an interesting read...and the link is here.

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Today's 'blast from the past' was sent to me by reader David Mancini...and needs absolutely no introduction from me. So please turn up your speakers and then click here.

Well, the orchestrated take-down in silver was the highlight of the precious metals world on Friday. It's a pretty good bet that JPMorgan was covering short positions and going long when they pulled their bids during the London trading session...and I would bet some serious coin that JPMorgan was the big buyer during the New York rally as well.

Volume was pretty big in gold yesterday...but once all the roll-overs were removed, trading volume was only moderate at best...and the preliminary open interest number didn't put the fear of God into me, either.

The final open interest changes for gold for Thursday's trading day showed that o.i. dropped 5,504 contracts, which is a pretty decent number. I'd like to think that Friday's action will produce an equally positive change in open interest, but we won't know that with any kind of certainty until Monday morning.

Silver volume, net of everything, was a hair over 90,000 contracts yesterday...which is monstrous. The preliminary open interest number was pretty monstrous as well...6,293 contracts. It will be interesting to see what the final o.i. number is on Monday morning...but even knowing that, I'm afraid that the complete picture of what happened on Friday won't be revealed to us until next Friday's Commitment of Traders report. It always seems like we're waiting for one more COT report before we can find out what the true picture is.

The final open interest number for silver on Thursday showed a drop of 815 contracts. It's not an overly large decline but, considering the alternative, it's still pretty decent.

March open interest in silver is now 1,303 contracts...down 35 contracts from Thursday. The short holders [the ones that have to come up with the contracts to deliver] are sure dragging this out.

Not a thing has changed in the silver backwardation situation. It still looks about the same as it has for the last couple of weeks...with the front months in all of 2011 selling at a razor-thin premium to March 2011. After that, backwardation sets in with a vengeance all the way out to December 2015. What [or who] is keeping the 2011 delivery months out of backwardation is a mystery to Ted...and to me.

Here's the 1-year gold chart...

And here's the 1-year silver chart.

I don't have the foggiest idea from the above charts what kind of price action we'll see in gold and silver next week. One has to wonder just how long JPMorgan is going to beat the snot out of silver...with Friday's price action being a classic example of the mark of the beast.

But the long-term price trend, especially in silver, is not in doubt...and I'm still 'all in'. As a matter of fact, I'm even more 'all in' now, then I was this time last week, as I sold three of my junior gold producers...and bought one junior silver producer with the proceeds.

If you're going to talk the talk...then you better walk the walk.

There's still a bit of time left 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 Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

See you on Tuesday.