Market-Manipulation Mutterings Intensify

The gold price didn't do a thing in Far East trading yesterday, but that all changed after London opened, as the selling pressure by the bullion banks began anew. By lunchtime in London, gold was down about twenty bucks...but gained ten of that back by the London p.m. gold fix at 3:00 p.m. local time, which was 10:00 a.m. in New York. The London p.m. gold fix was the New York high price right on the button at 10:00 a.m...as you'll note when you check the HUI chart further down.

Once the 'fix was in'...it was all down hill until shortly after 3:00 p.m. Eastern in electronic trading. That's when the selling stopped...and gold recovered a bit going into the close of trading at 5:15 p.m. Volume was off the charts.

The silver price was very quiet until around 2:00 p.m. Hong Kong time. But from that point on, the gold price began a long slide that didn't end until 4:15 p.m. Eastern in the New York access market. The silver price closed barely off its low of the day. Silver volume was monstrous as well.

The dollar slid about 30 basis points from the open on Thursday morning...and hit its nadir at 8:30 a.m. in London, which was 3:30 a.m. in New York.

From there, the dollar rose about 20 basis points, but really began to accelerate to the upside around 8:20 a.m. Eastern...which, conveniently, happened to be the beginning of the Comex trading session.

The dollar hit its zenith at 74.22 around 3:15 p.m. in New York trading...up 1.38 cents from its early morning low. The dollar closed the trading day just a hair off its high.

I mentioned in this column yesterday that if 'da boyz' could manufacture a dollar rally and hit the gold price, they would be able to hit the silver price even harder. I didn't know how right I'd be...and how soon.

However, having said that, the real price declines in New York didn't begin until after the London p.m. gold fix was in at 10:00 a.m. Eastern, so one would be hard pressed to pin all of yesterday's precious metal price declines on this out-of-the-blue rally in the dollar, but I'm sure that this canard was trotted out as a reason.

Gold's New York high at the London p.m. gold fix at precisely 10:00 a.m. Eastern sticks out like a sore thumb on the HUI graph below. The gold stocks pretty much followed the gold price throughout the entire New York trading session.

Once again the silver shares got smoked and...with silver down a mind-boggling $4.73 yesterday...I guess that should come as no surprise.

Here's Nick Laird's "Silver Sentiment Graph" updated for Thursday.

The CME Daily Delivery Report showed that 72 gold, along with 18 silver contracts, were posted for delivery on Monday. Here's the link.

It was another big withdrawal day over at both GLD and SLV yesterday. GLD showed a withdrawal of 516,639 troy ounces...and there was another huge withdrawal from SLV as well...3,804,699 troy ounces.

There was no report from the U.S. Mint yesterday...but over at the Comex-approved warehouses, they reported receiving 118,909 ounces of silver...and shipped 396,661 ounces out the door, for a net decline of 227,752 ounces. The link to the action is here.

With the dollar's 'surprise' rally that began at the Comex open...along with the selling pressure that began at the London gold fix...gold was down 2.86%...platinum was down 2.97%...palladium down 4.56%...and the silver price was crushed...down 12.01%. Even silver analyst Ted Butler was amazed at the brutality of this sell-off...and had this to say in a quick note to his paid subscribers yesterday...

"There is no way of predicting the precise bottom of this move; but if I'm correct, there is also no way to know how quickly and forcefully we turn back up. There is a risk of going lower in price temporarily, as almost everyone understands. But I don't think many fully understand how quickly we could turn up. That means there may be a greater risk of missing a fabulous buying opportunity for fear of further short term declines. Buying silver here is like tossing horse shoes or hand grenades...you don't have to hit the exact bottom. In long-term investments, close enough is good enough."

My bullion dealer just had the two biggest back-to-back sales days in silver in his company's history. It was wall-to-wall buyers [and some sellers]...and the phone was ringing off the hook all day long, as the buy-the-dips crowd was out in full force again, like they have been all week.

Nick Laird just sent me the following USD/Gold Graph. You can see that the tiny dollar rally we had yesterday is laughable when compared to the decline in the gold [and all the other precious metal] prices we've had this week. As Ted Butler said, this is entirely a Comex-based affair...with the CME in bed with the big bullion banks.

¤ Critical Reads

Weekly Claims Soar as Job Market Recovery Turns Sour

New U.S. claims for unemployment aid unexpectedly rose last week to touch their highest level in eight months, pushed up by factors ranging from spring break layoffs to the introduction of an emergency benefits program, a government report showed on Thursday.

There was more bad news for the economy as well: A separate report showed nonfarm productivity slowing sharply in the first quarter.

I thank Florida reader Donna Badach for this cnbc.com story...and the link is here.

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Double-dip recession is now undeniable

Home prices have double dipped nationwide, now lower than their March 2009 trough. It was inevitable, and it was predicted that a surge in sales of foreclosed properties and a big push by banks to facilitate short sales would force home prices down dramatically.

The evidence of a double-dipping housing market and economy are becoming undeniable, even to those who cling perilously to the notion that government intervention has been a salve instead of a poison.

This rather longish marketwatch.com story is courtesy of reader Nitin Agrawal...and the link is here.

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Treasury suggests $2 trillion debt cap raise: sources

The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election.

This is a Reuters story that I lifted from the King Report yesterday...and the link is here.

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Gaddafi's Golden Oil Plan Bombed Away by Coalition Libyan 'Mission"

Some believe it's about protecting civilians, others say it is about oil, but some are convinced intervention in Libya is all about Gaddafi’s plan to introduce the gold dinar, a single African currency made from gold, a true sharing of the wealth.

This 3:11 minute Russian Today video is posted over at goldsilver.com...and is well worth your time...and I thank reader Bianca B. for bringing it to my attention. The link is here.

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Market-manipulation mutterings intensify

Here's another marketwatch.com story that's courtesy of Nitin Agrawal

This idea of manipulation seems to be spreading beyond the lunatic fringe where many investment letters dwell [often profitably]. Thus the respected institutional service The Gartman Letter wrote early Wednesday morning:

“Here in the U.S., we have seen example of ‘tape painting’ before where the market’s important indexes have hardly moved but where the broader markets have weakened materially, but yesterday’s [Thursday's] action was the ‘painty-iest’ [sic] of all.

This is an absolute must read...and the link is here.

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ETF in Focus: Silver

As a long-time contributor to this column, reader Scott Pluschau, is a technical trading associate at ETF Digest. I must admit that technical analysis is not something that I follow very much, at least in gold and silver where the prices are so heavily managed by the New York bullion banks...but those who are followers of this practice, may find something useful in this piece.

It's a 2-page article, with lots of good graphs, that's posted over at thestreet.com website...and the link is here.

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Jean Marie Eveillard interview

Jean Marie oversees $50 billion in assets for First Eagle Funds...and in this longish King World News interview, he spends most of his time talking about gold and silver, plus the Fed and the US dollar. The link is here.

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Having called the plunge, Grandich and Davies jump back in; Sinclair says: Relax!

My last offering today is a three-in-one GATA release that came out yesterday afternoon. The headline pretty much says it all...and Chris Powell has already wordsmithed the preambles to each...so I'll just post the link...and let you have at it. All three are worth your time.

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Just about anything you buy, rather than paper, is better. You’re bound to come out ahead, in the long pull. If you don’t like gold, use silver, or diamonds or copper, but something. Any damn fool can run a printing press. - Nelson Bunker Hunt

As I mentioned previously, gold volume yesterday was off-the-charts immense...with the CME report showing about 305,000 contracts net of all roll-overs were traded yesterday. The preliminary open interest number shows an increase of 7,977 contracts...which will no doubt be reduced substantially by the time the final report is posted this morning.

Wednesday's final open interest number in gold showed a decline of 1,927 contracts...which was a big improvement over the +6,410 contract increase shown in the preliminary o.i. number.

Net volume in silver was around 165,000 contracts...which is gargantuan. The preliminary o.i. number shows a huge increase of 10,736 contracts...but that number, too, will be reduced later this morning. No doubt there was tech fund long liquidation in both silver and gold yesterday...but a lot of it could have been hidden by spread trades...and that might prove to be the case this time. We'll find out soon enough.

Silver's final open interest number on Wednesday showed a decline of 1,382 contracts, which was a big drop from the preliminary o.i. number of 5,908 contracts. That may not seem like a lot considering how big a price drop we had on Wednesday...but these daily open interest numbers only convey so much information...and one has to wait until the COT report come out to get the complete picture.

Today's Commitment of Traders Report will be out at 3:30 p.m. Eastern time, sharp...and April's Bank Participation Report [for positions held at the close of trading on Tuesday, May 3rd] showed that the JPMorgan only reduced their net short position in silver by about 600 contracts between the March report and the April report. I was shocked, as I [and no doubt, Ted] was expecting much better things. I'll have more on this in my Saturday column.

The backwardation situation in silver has reached an extreme level. Only the July and September 2011 delivery months show a tiny fraction of a penny premium to the front month...and then it quickly falls into backwardation from there. From May 2011 to the June 2015 delivery month, the backwardation is now up to $1.36...which is the highest I can remember. As I said yesterday, we should find out pretty quick if this all means anything...or nothing.

Once again, here is the 1-year silver chart in all its ugliness. But, having said that, the more pain and panic we feel, the better the internal structure of the silver market becomes for the next upward move in price...and I can say pretty much without fear of contradiction [even from Ted] that the internal structure of the silver market is now the best it has been in many years. It's obvious that the JPMorgan et al are serious about exiting the short side of the silver market...and possibly the other precious metals as well...although one has to wonder how well their doing considering what April's Bank Participation Report just showed.

You can see from the graph that the RSI trace is just about to cross into wildly oversold territory...and that will certainly happen today, unless we have a huge rally. You can tell by the steepness of the decline in both the RSI and the price, that these bullion banks are in one hell of a hurry to get off the short side of this trade. The 50-day moving average got taken out with some authority.

If I was a stock trader...and buying the dips...I would be a big buyer this morning when the markets open. I think that Ted Butler's advice earlier in this column is good advice...you don't have to pick the exact bottom...you only have to be close. I think we're close.

The 1-year gold chart looks similar...and it will be interesting to see if JPMorgan tries to take out gold's 50-day moving average today.

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

And the 1-year palladium chart...

It's obvious that 'day boyz' are taking no prisoners this time around.

Gold and silver were both up a bit during Far East trading...and are still holding their own now that London is open for business. Volume in both metals is immense already...and the dollar isn't doing much of anything.

Without doubt, it will be another interesting day for the precious metals once New York opens for trading.

There's still 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.

I hope you have a great weekend...and I'll see you here on Saturday.