Gold didn't do much until shortly after London opened on Friday morning...and then it got sold down to its low of the day by 10:00 a.m. local time, which was about seven dollars lower than its Thursday closing price in New York.

From that low, it basically traded sideways until the payroll data came out at 8:30 a.m. Eastern. Then gold blasted up about eighteen bucks in just over thirty minutes on all the horrific news contained therein.

But from that point, volume dropped off to next to nothing...and the gold price traded almost ruler flat until the close of trading at 5:15 p.m. in the New York Access Market. Volume was decent.

The silver price was in a forty-five cent hole at its low of the day...which, like gold, was also at 10:00 a.m. in London. From that low, the silver price began to rally...and although it popped a bit at 8:30 a.m. in New York, it got sold off shortly after, but continued to rise more or less steadily for the rest of the trading day. Volume was 'average'...whatever that means these days.

Here's the dollar chart for yesterday. Note the waterfall decline at 8:30 a.m. Eastern time...with the low coming moments before 10:00 a.m. From that point, there was a big rally almost back to its high of day, before support disappeared...and the dollar closed the day almost unchanged.

The gold [and silver] prices were in perfect synchronization from 8:30 a.m. until minutes after 9:00 a.m. Eastern time...but both before and after that waterfall decline, there was almost no co-relation between the dollar and the gold price at all.

I was encouraged by the fact that even though the dollar rallied strongly after 10:00 a.m....the gold price didn't budge.

Here's the 5-day dollar chart for the week that was. Over that period, the dollar was up about 90 basis points...or 1.2%. Gold and silver prices were up many, many orders of magnitude more than that.

Not surprisingly, the gold stocks gapped up at the open but, just like what happened on Thursday, there was a willing seller there to sell the HUI back to unchanged by 10:00 a.m. Eastern...and that's pretty much where it spent the rest of the day...and the index closed down 0.05%.

I don't know how you feel about it, dear reader, but it's obvious to me that someone was selling enough gold stocks on both Thursday and Friday to prevent the HUI and the XAU from breaking out to the upside.

Here's the HUI for the week that was. The Independence Day-shortened week showed that this index was up 4.6% over that period...and would have obviously been up much more than that if someone hadn't been dicking with the share prices on Thursday and Friday. You can see where the interference started shortly after 2:00 p.m. Eastern on Thursday...when the stocks got sold off for no reason.

There were a lot of green arrows amongst the junior silver producers yesterday...but the ones that counted in Nick Laird's Silver Sentiment Index did not fare as well...and I wonder if that was deliberate, too. The index closed down 0.07%...despite the fact that silver was up 27 cents on the day.

(Click on image to enlarge)

Just as a matter of note, since last Friday's lows on July 1st, silver is up about $2.85 or 8.5%...and gold is up about $64 or 4.3%.

The CME's Daily Delivery Report showed that 4 gold, along with 2 silver contracts, were posted for delivery on Tuesday. So far this month, only 379 silver contracts have been delivered.

The GLD ETF reported a small decline yesterday. This time it was 12,695 ounces...and there were no reported changes in SLV.

The U.S. Mint had a decent sales report on Friday. They sold another 8,500 ounces of gold eagles...along with another 1,500 one-ounce 24K gold buffaloes...and 294,000 silver eagles.

Month-to-date the mint has sold 12,000 ounces of gold eagles...2,000 one-ounce gold buffaloes...and 750,000 silver eagles. Did you buy your share?

The Commitment of Traders Report for positions held at the close of trading on Tuesday, July 5th held no negative surprises.

Although the Commercial net short position in silver increased by a rather chunky 4,285 contracts...it had nothing to do with JPMorgan and the other bullion banks adding to their short positions. Rather it was the small Commercial traders...those other than the '1 through 8' large bullion banks, the ones that Ted Butler calls 'the raptors'...that sold long positions and took profits. The actions of these small traders accounted for more than 90 percent of the increase in the Commercial net short position. For the most part, JPMorgan et al, just sat on their hands during the last reporting week.

I considered this a rather strange development considering the fact that we made a major low in the silver price on Friday, July 1st...a day that was included in this report...and the U.S. markets were closed on July 4th as well. But that's what the report shows.

The Commercial net short position in silver now sits at 167.3 million ounces. The '4 or less' bullion banks are short 173.0 million ounces...and the '5 through 8' traders are short an additional 36.2 million ounces.

The situation in gold was pretty much what I expected, as the Commercial net short position declined by a further 6,753 contracts. The Commercial net short position is now down to 20.2 million ounces...and the '8 or less' traders/bullion banks are short 21.5 million ounces.

As you can see, if the bullion banks weren't sitting on these huge short positions, the rest of the traders in the Commercial category [the raptors] would be net long this market...just like everyone else in every other category of the COT.

Here's Ted Butler's Day's of World Production to Cover Short Positions graph that's courtesy of Nick Laird.

(Click on image to enlarge)

The latest monthly Bank Participation Report came out yesterday as well...also for positions held at the close of trading on Tuesday, July 5th. The data in this report came from exactly the same data as the COT is derived from...the long and short positions in the Comex futures market. So, when you see these numbers, you can compare apples to apples on this one day each month.

The report shows the Comex long and short positions held by the U.S. and foreign bullion banks in a whole raft of commodities...but we're only interested in what their current positions are in the two precious metals...and how much they've changed since the previous report a month ago.

In silver, the two U.S. bullion banks of note...JPMorgan and HSBC USA...didn't show much change in their mega short position from the June report to the July report, as they are both still short around 20,600 Comex silver contracts...which is 103 million ounces of the stuff. I would guess that JPMorgan accounts for around 90% of that number all by itself.

The eleven foreign banks increased their net short position in Comex silver to around 700 contracts from the June report. This is 3,500,000 ounces of Comex silver held net short by these 11 foreign bullion banks combined. When you do the math, their respective net short positions per bank is barely a rounding error in JPMorgan's total short position in silver. JPMorgan's short position in silver is around 18,000 Comex contracts.

The phrase 'concentrated net short position' is defined by JPMorgan's short position in silver. This is the 800 pound gorilla that the CFTC will not act against, no matter how price manipulative it is.

The situation month-over-month in gold was quite different. The four U.S. bullion banks improved their net short position by around 11,500 Comex contracts...or 1,150,000 ounces of gold...from the previous month's report...but they are still net short 83,113 Comex gold contracts as of Tuesday, July 5th.

The fourteen non-U.S. bullion banks cut their short position in gold by 9,100 Comex contracts since the June report...or 910,000 ounces of gold. As of Tuesday, these 14 banks were still net short 32,408 Comex gold contracts

All in all, the world's bullion banks [at least those that are included in this report] covered a bit over 2 million ounces of their Comex short position in gold during the month just past...and the changes in Comex silver month over month amounted to about a 1,000 Comex contract increase in the world's bullion bank short position...which is virtually no change at all.

Here's a chart that Washington state reader S.A. sent me yesterday. I have the sneaking suspicion that I may have posted this some time back, but if I did, it's worth a second look. It's titled China's Household Gold Savings...and it needs no further explanation from me.

(Click on image to enlarge)

¤ Critical Reads

U.S. labor market in all its ugliness

Here's a marketwatch.com story to lead things off...and this one is courtesy of Florida reader Donna Badach.

Actually it's just one very excellent graph...with a short paragraph of text to go with it. It's definitely worth one or two minutes of your time...and the link is here.

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Frank Rich Blasts Obama For Letting Wall Street Off the Hook

Here's a Matt Taibbi blog from Rolling Stone magazine that reader Roy Stephens sent me earlier this week, which I've been saving for this weekend. I consider Matt to be one of the great writers of our time...despite his pithy prose...and he leads the blog off in this manner...

A lot of people are talking about Frank Rich's explosive new article in New York magazine. I think it is a remarkable thing, the latest and maybe the most comprehensive in an increasingly lengthy series of articles and investigations into the Obama administration’s failure to properly investigate the causes of the financial crisis.

The gist of this blistering Rich piece is that Obama came to office at a time of unprecedented hardship and public discontent, and made a mistake in deciding not to ride that anger and take an axe to those guilty of destroying the economy. Rich isn’t saying that Obama needed to put a guillotine on Maiden Lane; he’s saying that Obama’s big problem was that his failure to clean up Wall Street coincided with a similarly inexplicable failure to address the unemployment problem.

This is a five minute read, and if you haven't read the Frank Rich piece, the link to that is included in Matt's blog as well. This is well worth your time...and the link is here.

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US Taxpayers Just Paid $780 Million To Fund The Latest Greece Bailout Tranche

Here's a zerohedge.com piece that was sent to me by Washington state reader S.A. yesterday

The IMF is delighted to announce that it just approved a €3.2 billion disbursement of cash for Greece, its fifth, as part of the €12 billion in money that Greece needs in order to continue operating in the months of July and August. And just for what purpose will this money be used, one may ask? Well, the entire amount will be promptly recycled by global financial institutions in the form of debt maturities and interest payments.

This is a very interesting 5-minute read...and the link is here.

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Generations of Pork: How Greece's Political Elite Ruined the Country

Here's a story from the German website spiegel.de that Roy Stephens sent me earlier this week.

The latest tranche of loans from the EU and the IMF has helped buy debt-ridden Greece some time. But the Greeks will find it hard to get back on their feet. Their country has been ruined by three political dynasties, which created a bloated system of cronyism that is hard to change.

This is a very depressing deep background story on how Greece ended up in the situation that it currently faces. It's on the longish side, but if you have the time, it's worth it...and the link is here.

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A National Industry in Trouble: Greek Olive Grower Squeezed Dry By Crisis

This is another Roy Stephens offering that he sent along on Thursday.

The olive is Greece's leading export and is central to the country's national identity. But olive prices are plummeting amid the crisis and farmers are struggling to stay afloat. SPIEGEL ONLINE visited a farmer on the brink.

With his full beard and chiselled features, Nikolaou, a farmer from the town of Stylida northwest of Athens, looks like a mixture of Charlton Heston and Santa Claus. He wanders through his olive grove as if it were paradise on Earth. He touches the trees, reaches for the thin branches and praises the "healthy and delicious" olives, describing them as the perfect fruit. Then Nikolaou sighs deeply and begins to tell his story.

It's a short story, but shows just how hopeless the situation is for the average citizen of Greece. I'm sure glad I don't live there. This is another 5-minute read that's worth your while...and the link is here.

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European markets slide over Italy stability fears

Italy's benchmark index, the FTSE Mib, closed 3.5pc down amid worries that political jostling in Rome threatens the country's fiscal stability. France's CAC 40 Index also suffered, dropping 1.6pc, and Germany's DAX lost 0.9pc. In Spain, the Ibex fell 2.6pc, while Portugal's PSI 20 ended 1.3pc lower.

The flight from Italian government debt saw the yield, or return, on its 10-year bonds touch 5.3pc, a euro-era high...and Mike Riddell, a fund manager at M&G, described the situation as a "bloodbath".

This is another Roy Stephens offering from yesterday's edition of The Telegraph. It's a very short piece...and the above three paragraphs form a large portion of it. This story is a must read...and the link is here.

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UniCredit Stock Halted After Plunge As Fresh Wave Of Italian Fears Emerges

Here's another zerohedge.com piece...this one sent to me by reader Nitin Agrawal.

Another day, another implosion in Italy, this time focusing on core bank UniCredit, which earlier dropped by 6.5% resulting in a stock halt, only to reopen just modestly higher. There was no immediate catalyst, just more of the same: rumors that Finance Minister Tremonti is resigning, especially following the arrest of Marco Milanese which indicates the fallout is imminent, rumors that Italian banks are failing stress tests, rumors that Italy has the most exposure to Greece, and other generalized fears which today coalesced around the bank that was the most active today on the European version of Sigma X.

This is another short must read article, with some excellent graphs...and the link is here.

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As More Investors Seek Shelter in Gold, Russia Is Only Too Happy to Sell

This is a story that showed up in the Thursday edition of The New York Times. One of my readers sent it to me on Thursday and I declined to post it because it was so full of disinformation that I just couldn't stomach the idea of sticking it in this column...plus spending the time to write an introduction explaining all of that.

But wonder of wonders, Russian reader 'Dmitry' not only sent me the story yesterday...but wrote the preamble for me...and he's in far better position to comment on this than I am. I'm delighted to present what he had to say virtually word for word...

"A story from today's NYT to consider."

"The author of the story seems to be utterly confused between position of the Russian Central Bank (buying) and Russian Gold mining industry (obviously selling). The article falls into "confuse the masses" category, but nevertheless is a good read. I love the photo of Putin with a [gold] brick in his hands - his facial expression speaks volumes - he knows that this is the real deal and everything else is garbage."

"Also - a side note - briefly mentioned in the story that Gokhran has some couple hundreds of tons [of gold], but that is exclusive of the WWII captured metal - considering that the Soviet Union captured 1/2 of Europe, including much of Germany's war spoils, plus everything what was confiscated during the purges of 1930's - I have to assume that the total amount is a number of magnitude[s] greater than publicly stated."

The link is here.

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Swiss Parliament to discuss gold franc: Right-wing party seeks way back to gold standard

Here's a marketwatch.com story filed from Zurich yesterday that was sent to me by reader Scott Pluschau.

The Swiss Parliament is expected later this year to discuss the creation of a gold franc — a parallel currency to the official Swiss franc, with the fringe initiative likely triggering a broader debate about the role of the precious metal in the Alpine nation.

The initiative is part of “Healthy Currency,” a campaign sponsored by politicians from the right-wing Swiss People’s Party (SVP) — the country’s biggest — that is seeking to capitalize on popular fears about global financial turmoil and inflation to reverse the government’s current policy on gold.

This is, of course, a must read...and the link is here.

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World’s biggest treasure the Europeans failed to steal

India was never a poor country until the Europeans landed on this side of the world. A speck of its late richness was recently unveiled when a treasure trove was discovered in Sree Padmanabha Swamy temple, in India’s southern state of Kerala following a Supreme Court order.

The so called treasure, which could be termed as the world’s biggest treasure, comes from the savings of a small kingdom at the southern tip of India. And if such was the richness of a small kingdom, then what wealth would have been the great ancient India possessed?

Europeans plundered India and its people for more than five centuries. And finally, when the English left the place, there formed a united greatest democracy of the world which was only a poor country by then.

The British did the same thing to China in the 19th century, as well. This is an eye-opening story...and I once again thank Nitin Agrawal for sharing it with us...and it's another must read. The story is filed from Kochi...and is posted over at the commodityonline.com website...and the link is here.

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King World News interviews with Jim Rickards & John Hathaway

Eric King sent me these two interviews in the wee hours of Saturday morning...and I haven't had time to listen to either one. But that doesn't matter, as I consider both of them to be must listens. The link to Jim's interview is here...and John's interview is here.

Jim Rickards will be speaking at GATA's Gold Rush 2011 conference in London in just four short weeks from now. There's still time to make plans to attend...and the link to the conference information is here.

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Getting Used to Life Without Food: Wall Street, BP, Bio-Ethanol and the Death of Millions

Here's a story that reader Stewart Wilcox-Sollof sent me last weekend that was too late to make my column last Saturday...which is just as well, considering the fact that it would have disappeared into cyberspace along with the last half of my blog.

This F. William Engdahl piece is a 2-part essay that I consider to be a must read from start to finish. You'll be forgiven if you find strong parallels to what's going on in the world of agriculture and the world of precious metals.

I've read about most of this stuff before over the last decade or so, so there were few surprises in here for me...but Engdahl updates it with fresh information that I had never considered before.

This is an amazing piece of journalism. It's posted over at financialsense.com...and the link is here.

View full GSD edition

When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you...you may know that your society is doomed. - Ayn Rand - Atlas Shrugged

This week's 'blast from the past' is one that I just stumbled on earlier this week. I have the CD...and have heard it on the radio for decades...but this is the first time I've ever seen this particular singer 'in the flesh' so to speak. You'll know the song, so turn up your speakers and then click here.

Gold's volume yesterday came in around 125,000 contracts once all the roll-over were removed. The preliminary open interest number was up a whopping 17,883 contracts. I would bet big money that this was tech fund buying...and bullion banks going short against all comers once again. I'm not happy about this state of affairs.

However, I'm sure that JPMorgan et al were lying in wait for this rally...and pounced before it got completely out of hand to the upside, as I'm sure they knew what the numbers were before they became public.

Gold's final open interest number for Thursday's trading day showed a reduction of 1,831 contracts...which was very much in line with what the preliminary number indicated.

Silver's price action yesterday was more subdued...and the net volume was a moderate[?] 45,000 contracts. The preliminary open interest number showed a rather small increase of only 2,021 contracts. I was very happy to see this, as I get the impression that JPMorgan is not overly anxious to jump back on the short side of this rally in silver...and I would think that the final o.i. number should be pretty neutral...and may even be negative.

The final open interest number for Thursday's trading day was a negative number...as o.i. declined 601 contracts. But the real proof of what's happening under the open interest hood is never really revealed until each Friday's COT report comes out...and we're still a week away from the next one.

The gold price is now solidly through its 50-day moving average to the upside. Silver is now within two bits of its 50-day moving average...and I'm curious to see whether we break through to the upside, or whether it 'fails' at this point...with a little help from JPMorgan and friends. I would think we'll find that out soon enough...probably Monday. Here's the 1-year silver chart.

(Click on image to enlarge)

That's all I have for today...and for the week...but before I hit the 'send' button, I'd like to remind you that 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.

See you on Tuesday.