The gold price didn't do much of anything during Far East trading. This state of affairs continued until noon in London, then away went the price to the upside, before it ran into some headwinds around 8:40 a.m. Eastern time in New York.

Despite that, the gold price continued to work its way slowly higher until JPMorgan et al showed up shortly after 10:30 a.m. Eastern...and within twenty minutes they had the gold price down fifteen bucks.

From there, the gold price recovered slowly but steadily for the rest of the Comex trading session...and it tacked on a few more dollars in the New York Access Market. Volume was pretty decent.

Silver was 'weaker' right from the Sunday night open in New York...and by the time the London silver fix rolled around at noon local time, silver was down about 45 cents from its Friday close.

Silver then took off, and blasted through its 50-day moving average with some real authority...hitting its high of the day [$37.04 spot] about 8:45 a.m. Eastern time.

Then the real fireworks began as JPMorgan et al showed up...and the results of their efforts are shown on the Kitco silver chart below. From its high to its low, silver got smacked for a $1.49 spot.

Ted Butler said it was a combination of dealer selling, high frequency trading...and bid-pulling that contributed to yesterday's 'price adjustment' in silver.

Silver's attempt to recover never really got anywhere, as the rally attempt during the New York lunch hour ran into the same seller of last resort...and silver finished down 96 cents on the day. Volume was pretty heavy.

For the day, gold finished up 0.66%...platinum down 0.69%...palladium down 1.42%...and silver was the big loser down 2.62%. It was ever thus!

The dollar was in rally mode right from the open of Far East trading on Monday morning, up until precisely 11:00 a.m. Eastern time. From its Monday open, to its zenith, the dollar was up about 85 basis points, but gave back about 15 of that going into the close at 5:15 p.m. in New York.

The gold price remained flat vs. the rising dollar, up until 7:00 a.m. in New York, before both began to rise together. And, despite JPMorgan's best efforts, gold continued to rally for the rest of the trading day.

The gold stocks were in positive territory until the gold price got smacked between 10:30 and 11:00 a.m. Eastern. From that low, they recovered a bit...but rolled over and closed pretty close to their lows...despite the fact that the gold price continually ground higher from its 10:50 a.m. low. I suppose the price declines in the general equity markets had something to do with it...but I felt that the gold stocks were being toyed with on both Thursday and Friday...and it looked like a not-for-profit seller showed up in the gold stocks just before lunch in New York yesterday.

But maybe I'm just looking for black bears in dark rooms that aren't there...however, with JPMorgan et al lurking about, my 'Price Management' meter is on its 'high gain' setting these days.

The silver stocks got hit pretty good as well...but my silver stock list had the odd green arrow here and there. Nick Laird's Silver Sentiment Index was down a chunky 3.31% on the day.

(Click on image to enlarge)

The CME's Daily Delivery report yesterday was a real yawner...as only four gold and two silver contracts were posted for delivery on Wednesday.

The GLD ETF showed no changes yesterday...but SLV showed another big decline, as an 'authorized participant' redeemed some shares and took delivery of 1,023,423 troy ounces.

The U.S. Mint had a sales report. They sold 2,500 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 363,500 silver eagles. Month-to-date the mint has sold 14,500 ounces of gold eagles...2,500 one-ounce 24K gold buffaloes...along with 1,113,500 silver eagles.

As Ted Butler pointed out in his weekend commentary on Saturday..."The U.S. Mint is still selling a disproportionately large number of silver eagles compared to gold eagles through the first week of July." As of yesterday's sales report from the mint, silver eagles are outselling gold eagles and buffaloes 65 ounces to 1. That's a monstrous number. If you convert this ratio into dollars of each metal, for every $1,450 worth of gold being sold, there is $2,470 worth of silver being sold. This is unprecedented.

I just hope, dear reader, that you are getting your share.

The Comex-approved warehouses took in 1,123,826 ounces of silver on Friday...and only shipped 972 ounces out the door. The link to that action is here.

Here's a paragraph from silver analyst Ted Butler's weekly review to clients on Saturday...

"Bottom line is that the silver COT structure is still quite constructive despite the increase in the total commercial net short position this week. That the raptors [small Commercial traders other than the '1 through 8' - Ed] took profits on 4,100 contracts is not of particular concern at this time. At Friday’s close, the price of silver closed right at the 50-day moving average, an average it has not penetrated to the upside for more than two months. When, not if, this average is penetrated decisively we will soon learn of JPMorgan’s intentions and the condition of the ongoing silver manipulation. The overall risk/reward ratio in silver looks particularly attractive at this point. We could see a sell-off, if the raptors look to trick the tech funds into selling so that the raptors can buy back the 4,100 contracts they just sold, but that should be temporary in nature and not particularly devastating to price. But when the 50-day moving average is penetrated decisively, if the T. rexes [the big bullion banks led by JPMorgan - Ed] don’t sell additional contracts short, we could really fly in price. In practical terms, it seems safest to play it like we will move up substantially. Like has been the case for much of the past year (May excepted), worrying about a couple of dollars worth of decline could cause one to miss much bigger upside than a couple of dollars."

Here's a chart that Nick Laird sent me late last night. As you may remember, I've been noting that the gold price has been rising in tandem with the dollar the last little while. Well, this chart proves my point [and Ted Butler's] that any co-relation between the dollar and the gold price is mostly coincidence.

The chart is titled "Live Gold vs. US Dollar Index". Nick's comments were as follows..."Lookee here.....A tango born in heaven......"

(Click on image to enlarge)

Because of ruthless editing, I don't have the usual deluge of stories for a Tuesday...and I hope you find the time to get through them all.

¤ Critical Reads

Chase Bank Reportedly Has Man Jailed Over Check They Issued Him

Last June, 28-year-old Ikenna Njoku of Auburn, Washington was reportedly imprisoned for four days after trying to cash a Chase check the bank itself had issued to him.

Mr. Njoku, who at the time claims he had become a new homeowner, qualified for the first-time home buyer rebate on his tax return, for a total of $8,463.21 after overdraft fees, reports King 5 Seattle.

When Chase mailed him the check, he says that he sought to cash it as quickly as possible. But when he arrived at the Chase bank, the banker allegedly thought the check, and his claim that he owned a home, were fraudulent.

This huffingtonpost.com story falls into the 'you can't make this stuff up' category...and I thank Washington state reader S.A. for sharing it with us. The video at the end of the story is well worth watching...and the link is here.

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JP Morgan Chase Fine: Another Slap on the Wrist for Wall Street

What these banks did is they got together and carved up territory between them, arranging things so that they wouldn’t be bidding against each other in municipal debt auctions. That means the 18 different states involved in these 93-odd deals all got screwed out of the best prices, leaving the taxpayers in those places severely overcharged for their public borrowing.

This is absolutely no different from what mafia groups in New York used to (and probably still do) do for public contracts – the proverbial five families would get together, divide up the boroughs and neighborhoods between them, and each family would individually buy or intimidate their way into the bidding process, corrupting the game so that the public had to overpay for their garbage collection or their construction labor or whatever. The only difference here is that we’re talking about debt, not garbage. But the concept is exactly the same; it’s the same crime.

Matt Taibbi over at Rolling Stone magazine has it exactly right. Wall Street is basically a criminal organization...and these fines that are being handed out are licensing fee to continue to do what they're doing...ripping everyone's face off.

It's a 5-minute read [maximum] that I think is well worth your time...and the link is here.

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House boosts military budget: Measure includes $119 billion for Iraq and Afghanistan

Money for the Pentagon and the nation's wars in Iraq and Afghanistan is proving largely immune from the budget-cutting that's slamming other government agencies in the rush to bring down the deficit.

On a 336-87 vote Friday, the Republican-controlled House overwhelmingly backed a $649 billion defense spending bill that boosts the Defense Department budget by $17 billion. The strong bipartisan embrace of the measure came as White House and congressional negotiators face an Aug. 2 deadline on agreeing to trillions of dollars in federal spending cuts and raising the borrowing limit so the U.S. does not default on debt payments.

This AP story was posted over at msnbc.com late last week...and I thank Casey Research's own David Galland for sending it along. The link is here.

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Something More Important than the Debt Limit

Here's an article from the Free Gold Money Report that arrived in my in-box around midnight last night.

Discussions by policymakers to increase the US debt limit are in the eleventh hour. Sadly, so far the circus of intense political posturing has avoided highlighting the real issue.

It is not the debt capacity of the US government that is of primary importance, nor how much will be cut from proposed federal spending over the next ten years. There is something fundamental at stake here and much more important to the future of the US. It will be made clear by the outcome of budget cuts, if any are finally made. It is, namely, the adversative relationship between the country’s public and private sectors, or to put it bluntly, the tax-eaters versus tax-payers.

This is well worth the read...and the chart alone is worth the trip. The link is here.

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ShadowStats' Williams sees hyperinflation, dollar collapse

John Williams of the ShadowStats letter told King World News yesterday that still more money creation and debt are on the way and likely will lead to hyperinflation and a dollar collapse. An excerpt from the interview can be found linked here.

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Alasdair Macleod: Inflation is beyond the tipping point

I stole the following story...and the preamble...from a GATA dispatch yesterday.

Huge government budget deficits are failing to produce economic recovery around the world, economist and former banker Alasdair Macleod writes this week, and Keynesian monetary policies have destroyed across all parts of the economy the stability necessary for growth. Macleod concludes that inflation is now Keynesianism's only product. His commentary is headlined "Inflation Is Beyond the Tipping Point" and you can find it at the GoldMoney research and analysis page...and the link is here.

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Pork prices drive Chinese inflation

Think prices are rising rapidly in the U.S.? Inflation is going even more hog wild in China.

China's Consumer Price Index -- a broad measure of prices consumers pay for food, housing, clothing and other common expenses -- showed prices rose 6.4% over the last 12 months ending in June, China's National Bureau of Statistics reported Saturday.

That marks the fastest pace in inflation since July 2008 and an acceleration from May's 5.5% rate.

This money.cnn.com story from yesterday is courtesy of reader Scott Pluschau...and the link is here.

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German 'Nein' leaves Italy and Spain in turmoil

Here's an Ambrose Evans-Pritchard offering from yesterday evening's edition of The Telegraph that I also snatched from a GATA release yesterday.

Italian and Spanish bond yields soared to post-EMU highs in a fresh day of credit turmoil after Germany blocked any meaningful measures to defuse the crisis.

Chancellor Angela Merkel called for more "frugality" in Italy, sticking to her script that Rome can solve its woes with an austerity budget. Her finance minister Wolfgang Schäuble said any boost to the EU's €500bn (£440bn) bail-out machinery was "out of the question".

Mr. Schäuble denied reports that Berlin was ready to empower the fund to purchase Spanish and Italian bonds pre-emptively on the open market, a move seen by experts as vital to halt dangerous contagion to the larger economies.

The market's verdict on EU foot-dragging was instant and brutal...and the link to the story is here.

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Walker's World: Double dips and worse

UPI Editor Emeritus Martin Walker has a very interesting story that he filed from Zurich yesterday. He certainly doesn't hold out much hope for the world's economy...and neither do I.

China, the locomotive that has been driving the world economy, is slowing. And since the rest of the world is in no shape to compensate, a second recession or a very prolonged slowdown is starting to look inevitable.

All we're doing is sliding further into what Doug Casey calls the 'Greater Depression'. I thank reader Roy Stephens for this article...and the link is here.

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Money gone rogue

Here's a story that appeared in the Friday edition of Canada's Financial Post that was sent to me by Edmonton reader B.E.O.

A slightly built man with wire-rim glasses and an intense gaze, Mr. Gray is a long-time Republican who believes that the United States has departed from the vision of the Founding Fathers and been ruined by years of corruption and mismanagement at the highest levels. Unemployment, skyrocketing debt and inflation have brought the country to its knees.

According to Mr. Gray, it may already be too late to avert disaster.

Like many Americans, Mr. Gray doesn’t trust the U.S. government or its handling of the monetary system, and whether or not the system goes into meltdown, he believes the country will return to the gold standard. He is not alone.

The link to the story is here.

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King World News Interviews whistleblower Andrew Maguire

In this must listen audio interview, Maguire discusses the new Pan-Asia Gold Exchange based out of Kunming in China which he says will be a 'game changer'...and I'm not going to argue that for a second.

It appears that the exchange will start trading later this month, although Andrew doesn't give an exact date in this interview.

Besides talking about the exchange, Maguire talks a lot about the silver manipulation that sounds like it was lifted right out of the last couple of months of Ted Butler's weekly commentaries...a lot of which was mentioned in this column on occasion...but with accreditation. So some of his commentary will be no surprise when you listen to it. The link to the interview is here.

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The illegality of a Greek gold sale

Here's an interesting piece posted over at mineweb.com that was sent to me by reader 'Charleston Voice' yesterday.

The question about the potential for selling Greek gold to help the country's finances has been raised once again with at least one market commentator suggesting that it makes no sense not to use Greece's gold reserves as part of the rescue exercise.

It is actually technically illegal for signatories to the Rome Treaty to sell gold reserves in order to shore up the economy.

You can read all about it here.

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Russia is still buying gold - not selling it

In the media on Thursday of last week, an article appeared in the States stating that "Russia is selling its gold". This may have alarmed those in the gold world, until they looked carefully at the words. The article gave the impression that the central bank of Russia was selling gold. But what was the real story? Is Russia selling its gold from its foreign exchange reserves? If so, it is flying in the face of its government and the policy of its central bank.

I ran that New York Times story in this column late last week, with the preamble written by Russian reader 'Dmitry' if you remember. Here, Julian Philips over at the mineweb.com, has a few things to say about that NYT story...and it's well worth reading. I thank reader 'David in California' for sending it along...and the link is here.

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Sprott lauds GATA in Gold Report interview

Here's a GATA release from yesterday where, once again, Chris Powell has done all the work for me. It's an interview with Eric and Larisa Sprott over at The Gold Report. It's a longish interview that's headlined "Silver Poised for Power Rally"...and the link is here.

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Gold poised to make new record high

Here's a James Turk offering from last Saturday which arrived too late to make my weekend column, so here it is now.

Gold closed in New York this past week at $1,541.20, which is only $15.50 below its all-time record high close of $1,556.70. In other words, a 1% jump from Friday’s closing price will put gold at a new record. It could happen this week.

Since the end of May, I have been making the point in interviews on King World News to prepare for a spectacular moon-shot in the precious metals this summer. The rocket may have already been launched, given that since its last test of support under $1,500 on July 1st, gold has risen about $60, or 4%.

This is a very short must read...and the chart is worth the trip all by itself. The link is here.

View full GSD edition

Not one penny of US Treasury debt has been repaid for 51 years - the last time that US government funded debt actually decreased on a year-to-year basis was 1960. Ninety-seven percent of today’s funded Treasury debt total has been accumulated since August 1971. Sixty percent of it has been added in the past decade. Forty percent of it has been added since the first signs of the Great Financial Crisis emerged in early 2007. - Bill Buckler, The Privateer...10 July 2011

Gold volume on Monday was in the 130,000 contract range, net of all roll-overs...and the preliminary open interest number was up big again, this time by 11,710 contracts. So it's obvious that the bullion banks, led by JPMorgan are, once again, the sellers of last resort against all the new longs that poured into the market yesterday.

The final open interest number for Friday didn't drop much from the preliminary number...and was posted as an increase of 12,788 contracts. We are not amused.

In silver, the net volume checked in around 55,000 contracts but, considering the price action, one shouldn't be too surprised. The preliminary open interest number was a very reasonable 3,592 contracts...and this will undoubtedly be much reduced when the final o.i. numbers is posted on the CME's website later this morning.

Silver's final open interest number for Friday's trading day still showed an increase, but it was only by 667 contracts, which was down substantially from the preliminary number.

The preliminary report also showed that there are still 713 silver contracts open in the July delivery month...and we'll see how that resolves itself as the month moves along.

On Saturday, I started off this column with the following comment..."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."

Well, dear reader, that's exactly what happened...and here's the 1-year silver chart.

(Click on image to enlarge)

Silver broke through its 50-day moving average with some real authority, only to be crushed by JPMorgan et al. You have to be deaf, dumb, blind...and stupid not to see this. As GATA's Chris Powell said...and as I've quoted in this column countless times..."There are no markets anymore, only interventions." Yesterday's price action in silver [and gold] was right out of the bullion banks' playbook.

You can bet your last ounce of silver that the CFTC, CME...and your silver companies won't say a word, or lift a finger in protest.

Now that the script has unfolded as I feared it might, it's Ted and my opinion that the bullion banks may let the gold price run up a bit more from here, piling on the short positions against all new longs that show up to buy...and maybe set a new high along the way, as James Turk stated above. But when they get all the mice [tech fund/small trader longs] in the trap that they think they can get, then they'll ring the cash register and cover all the shorts in both gold and silver that they can on the engineered sell-off that will surely follow...like night follows day. This has been there modus operandi for decades.

But I also feel that this is really their last hurrah, as once the 'summer doldrums' are over...and don't forget that JPMorgan et al started the 'summer doldrums' on Sunday night, May 1st...we're going to see some major upside price action in both metals. And lets not forget the possibility that this new Pan-Asia Gold Exchange may change things as well.

Here's another interesting chart that Nick Laird over at sharelynx.com sent me last night. Along with the chart below, came this comment..."CEF dropped such that its price was running lower than it's NAV...and as such, was cheap. It looks now as though it's about to pick it's premium up again."

You can see that the NAV only spends a minimum amount of time selling for a discount...and when it's not selling for a discount, it has a pretty chunky premium. This situation would apply to most physically-backed precious metal funds...except GLD and SLV...neither of which I would touch with a 10-foot cattle prod.

(Click on image to enlarge)

I note, as I check the precious metal prices at 5:15 a.m. Eastern time, that gold is down ten bucks...and JPMorgan's high frequency traders are working their black magic in the silver market, with the price now down about 80 cents...with all of this activity hiding behind the skirts of a manufactured rally in the dollar. Volume in both metals is already enormous.

It's amazing to watch JPMorgan bash the crap out of the precious metals prices [especially their nemesis...silver] in the face of one of the worst monetary, financial and economic train wrecks in the living memory of most readers...including your humble scribe.

But, as it always does...this, too, shall pass.

It could turn into another interesting day in New York...as the action got a head start even before London opened...and don't forget to buy things while blood is running in the streets.

See you tomorrow.