Hang Onto Gold: Jim Cramer

Despite getting sold off hard after the London open on Tuesday morning, gold managed to hang above the $1,600 spot price pretty well, as every excursion below that price...no matter how slight...got met by willing buyers.

But the second that the Comex trading session ended at 1:30 p.m. Eastern time...and the electronic trading session began... the bids got pulled in both gold and silver...and what few sellers were about during that time period, ended up selling into a vacuum...and the usual waterfall decline ensued.

The bullion banks didn't show up as buyers until gold was down over fifteen bucks from its Comex closing price...but the gold price managed to struggle higher and well of its lows by the close of trading at 5:15 p.m. in New York. Needless to say, volume was very heavy.

Silver held up over the $40 spot mark throughout most of the trading day...but then ran into the same situation at the Comex close as gold did. From the Comex close, silver got hit for $1.60 before recovering a bit in the close of the thinly-traded New York Access Market. Volume was very heavy.

This big bear raid on both silver and gold occurred after the cut-off for tomorrow's Commitment of Traders report...so none of this will appear in Friday's data. This is not the first time this has happened...and both Ted Butler and I feel that this was deliberate.

Both platinum and palladium had their respective rallies capped at the same time...shortly after the London open. Platinum was obviously about to blow through $1,800 to the upside...and palladium had already broken above $800 when the hammer fell.

Both metals did sell of a bit after the Comex close, but the effect was much less noticeable on their respective charts. Here's the platinum chart as a 'for instance'.

The dollar hit its zenith at precisely 2:00 a.m. Eastern time yesterday morning...a fact that I pointed out in yesterday's closing remarks...along with the appropriate chart. From that high, the dollar rolled over and punched through the 75 cent mark a couple of times, with the absolute low [around 74.90] coming about 10:15 a.m. in New York. The dollar spent the rest of the day struggling to stay above the 75 cent mark...and closed around 75.12.

There was about a 30 basis point spike in the dollar that began a few minutes after 1:30 p.m. Eastern time...but trying to hang the big price declines in gold and silver on that tiny rally is more than a bit of a stretch.

With the Dow up strongly at the open, the gold shares did the same. This happy state of affairs lasted all of five minutes, because the bullion banks hit gold at 9:30 a.m. Eastern time right on the button...and had it down below $1,600 in minutes. They also hit silver for around 45 cents at precisely the same moment. This is visible in the gold [and silver] chart at the top of this column...but shows up much better on the New York Spot Gold chart below.

This had the desired effect on the gold stocks...and then the roof caved in at 1:30 p.m. on top of that. Like the gold price itself, the HUI did not finish on its low...and was only down 1.45% by the closing bell. It could have been worse.

Of course, it's silver that JPMorgan et al have been after since last August...and they were obviously gunning for it again today. From its high in early London trading, to its low in the New York Access Market, silver got creamed to the tune of about $2.40...down about 5.9% from its absolute London high.

Not surprisingly, the silver shares got it in the neck again...and Nick Laird's Silver Sentiment Index was down 2.33% on the day.

(Click on image to enlarge)

The CME's Daily Delivery Report for Monday showed that 45 silver contracts were posted for delivery on Friday. The big issuer/short was Jeffries once again with 39 contracts...and the big stoppers/long holders were the Bank of Nova Scotia with 32 contracts....and JPMorgan with 10 contracts. The link to what little action there was, is here.

The GLD ETF showed a reduction yesterday, as 107,140 ounces were reported withdrawn. But it was an entirely different story over at the SLV ETF, as they reported taking in a monstrous 6,139,829 ounces of the stuff. That's obviously a large chunk of what Ted Butler said that the fund was owed.

The U.S. Mint had a smallish sales report yesterday. They sold 2,500 ounces of gold eagles, along with 2,500 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Monday, they reported receiving 585,051 ounces of silver...and shipped a very small 4,064 ounces out the door. The link to that data is here.

¤ Critical Reads

Hyperinflation to devalue debt is pols' only way out, Embry says

The world's debt can no longer be carried by income, hyperinflation to devalue the debt is the only way out for political authorities, and triple-digit silver is probable, Sprott Asset Management's John Embry told King World News yesterday.

I thank Chris Powell for that introduction...and the link to the blog is here.

View full GSD edition

Doug Casey: The loss of freedom in America

Our own Doug Casey was interviewed on This Week in Money by the good folks over at talkdigitalnetwork.com. Doug is never one to mince words, or suffer fools gladly...and this speech is no exception. I've had the good fortune to hear Doug speak in public on quite a number of occasions...and on the podium he has no peer.

Doug's interview starts at the 11:30 mark...and runs for sixteen minutes. Anything Doug has to say is a must listen...and this is no exception to that rule. The link is here...and it takes a bit of time for the file to download.

View full GSD edition

We Live in an Era Where all Fiat Moneys are Suspect: Robin Griffiths

Here's an exclusive KWN blog with Robin Griffiths of Casenove Capital that Eric sent me yesterday. The headline gives a pretty good indication of what's discussed. It's worth your time...and the link is here.

View full GSD edition

Greece Threatened with Widespread, Long-Term Poverty

Greece is tightening its belt -- and the number of people living in poverty is surging as a result. Thousands line up in front of food banks and resort to rifling through rubbish bins. The country's financial crisis is rapidly turning into a social one -- while wealthy tax evaders manage to get off scot free.

This is an unhappy story that's just going to get uglier as time goes on. It's a posting over at the German website spiegel.de...and I thank reader Roy Stephens for sending it along. The link is here...and it's worth your time.

View full GSD edition

Only Germany can save EMU as contagion turns systemic

Europe's leaders have finally run out of time. If they fail to agree on some form of debt pooling and shared fiscal destiny at Thursday's emergency summit, they risk a full-fledged run on South Europe's bond markets and a disorderly collapse of monetary union.

"We are heading towards fiscal union or break-up," said David Bloom, currency chief at HSBC. "Talk is no longer enough as the fire threatens to leap over the firebreak into Spain and Italy.

"What the market is worried about is Germany's long-term commitment to the euro project. If we see unreserved and absolute backing from the political establishment of Germany, that will be a soothing balm."...and Chancellor Angela Merkel seemed in little hurry on Tuesday to convey such a message.

This is an Ambrose Evans-Pritchard offering from late last night over at The Telegraph...and I thank Roy Stephens once again for sharing it with us. It's definitely worth skimming...and the link is here.

View full GSD edition

Hang onto Gold: Jim Cramer

Cramer thinks gold should still be part of every portfolio as the metal reaches $1,600 an ounce...and every dip is a buying opportunity. This short video runs for 1:53...and is Roy Stephens final offering in today's column. It's worth a listen...and the link is here.

View full GSD edition

Geologist, investment letter writer Badiali is persuaded that gold is manipulated

Matt Badiali: "Well, let me preface this by saying I went into this as a skeptic. I'm a geologist, a scientist. I looked at the gold price at Eric Sprott's suggestion. He gave me an idea that I could test with data from Datastream. When we did the math, I was shocked. So now I do believe that the gold price is being manipulated somehow."

The link to the interview is contained in this GATA release...and you find it by clicking here.

View full GSD edition

Gold’s run is almost over: Excitement in the gold market has reached fever pitch

So says Mark Hulbert over at marketwatch.com in a piece that was posted yesterday.

"Bullion’s extraordinary run is fast running out of steam. Don’t be surprised if gold pulls back in coming sessions."

"At a minimum, such a pullback would be a health-restoring event for the bull. However, such a pullback could also be the start of something more serious. We’ll know soon after it begins."

The pull-back should be no surprise to anyone reading this column. JPMorgan and other Commercial traders in the Comex futures market have been shorting this rally all the way up...and were certainly in the market yesterday to make sure that the event that Hulbert speaks of, became a reality. I'll have more on this in 'The Wrap' further down.

I thank Nitin Agrawal for sending me this story yesterday...and the link is here.

View full GSD edition

Silver will eventually trade over $200 - Peter Schiff

Here's a short blog that Eric King sent me yesterday afternoon. The headline covers only part of the discussion between Peter and Eric...and the link to that is here.

View full GSD edition

Hong Kong Metals Exchange Opens Silver Contract Friday!

Writer 'Silver Shield' comments that "This officially breaks the Anglo-American monopoly on silver. This will be the first time that Asians can buy and take future delivery of silver in Asia.

I, too, have been waiting for this event with some anticipation...but it remains to be seen if it really makes a difference. I'd like to think so...and only time will tell.

This is a short, must read...and I thank reader Matthew Nel for sharing it with us. The link is here.

View full GSD edition

When Bernanke was asked if gold was money, he answered "No." When Bernanke was asked why the US held the largest hoard of gold of any nation on earth, he answered, "Convention." My take -- Bernanke is either dishonest, a liar or ignorant. Take your choice. My pick -- he's up against the wall and dishonest. The Federal Reserve is all about fiat money. Is it any wonder that the Fed Chairman had to deny that gold is money? - Richard Russell

Gold volume yesterday was a rather robust 140,000 contracts net of all roll-overs. We are well along in the roll-over period for the August delivery month in gold. Comex futures traders either have to sell their positions, roll them over into a future month [mostly December]...or stand for delivery. First day notice for delivery into the August gold contract is next Friday...the last business day of the month...and virtually all these trades must be put to bed by the end of the trading day next Wednesday.

The preliminary open interest number for the Tuesday trading day showed an increase of only 6,205 contracts...and most of that increase should disappear when the final number is posted later this morning.

The final open interest number for Monday's trading day in gold showed an increase in o.i. of 10,523 contracts which, considering the price action, was no surprise. This number, plus whatever the final o.i. number is for Tuesday, will be in tomorrow's Commitment of Traders Report.

Silver's net volume yesterday was an absolutely enormous 71,000 contracts...and it's a pretty good bet that a lot of that was because of the high frequency traders in the market.

Considering the price action yesterday, silver's preliminary open interest was up a rather chunky 3,822 contracts. I'm guessing that the real change in open interest was hidden by new spread traded being put on...and I very much doubt that the final o.i. number this morning will shed any further light on yesterday's trading action. But whatever the number is, it will be in tomorrow's COT report.

I mentioned yesterday that based on the preliminary open interest number in silver, the final open interest number for the Monday trading day would be neutral....and it was, as it showed a tiny increase of only 52 contracts...which is just about as neutral as you can get.

Based on this...and the other very low final open interest numbers in silver during this past reporting week...there are obviously totally different dynamics at work in the Comex futures market in silver, than in gold. Monday's [and Friday's] final open interest numbers being cases in point.

As I mentioned yesterday, gold stuck its nose into overbought territory for the first time on Monday...and we didn't have long to wait to see the reaction from the bullion banks. And, as Mark Hulbert stated in his column above...and Ted Butler said in his weekend commentary...how long will this decline, once its started, last...and how deep could it go?

Ted said that the big bullion banks could take gold all the back to its 50-day moving average...$1,529 spot...as their short position has really blown out since the July 1st low. But can they...or will they? It's impossible to know. Here's one of the paragraphs from Ted's Saturday commentary which I posted in this column yesterday...

"...nor is gold any longer in a bullish COT structure. The gold COT structure is now neutral at best. Does this mean gold will decline sharply? Not necessarily, but there is much more risk than there was 2 weeks ago. Gold is not at extremely bearish COT readings, but will be quickly if current trends continue. I have always found it easier to identify price bottoms with COT analysis, compared to tops...On a strict COT basis, gold is not the low-risk buy it was as recently as two weeks ago, although it can still move higher...perhaps sharply. My main concern with gold is how it may impact silver. A recurring thought of mine is how will a gold sell-off impact silver?"

Well, dear reader, we found out yesterday, starting shortly after the London open.

Since this bear raid occurred after the Comex close, none of this trading volume, or open interest data, will be in Friday's COT report...and, as I said at the top of this column, I'd bet money that it was deliberate.

Here's the 1-year gold chart. It only shows the trading activity from the Comex open, right up until the Comex close at 1:30 p.m. Eastern time. The bear raid that occurred right after that won't show up until this graph is updated at the end of trading today...and I'll post it here tomorrow. The silver graph looks similar.

(Click on image to enlarge)

Neither silver nor gold did much of anything during the Far East trading session on Tuesday. Now that London has opened, both metals are in positive territory, at least for the moment. Volume in both metals...as of 4:47 a.m. Eastern...is nothing out of the ordinary...and the dollar is down a bit.

I haven't the foggiest idea as to which direction the gold price will go during the Wednesday trading session. But, as I mentioned before, the roll-over out of the August gold contract is coming up hard...and I wouldn't be surprised if this weakness/sell-off continued until next Thursday when the August contract goes off the board. That's pure speculation on my part...and we'll just have to wait it out.

But don't lose sight of the fact that new record high prices are not normally set in the summer months...as this is this is supposed to be the 'summer doldrums'. So far it has proven to be anything but.

And, regardless of the rather unhappy price action we had yesterday, I wouldn't be out of [or short] this market for any reason I can think of.

The rest of the Wednesday trading day should tell us a lot.

See you on Thursday.