The gold price gapped up about twenty bucks at the open on Sunday night in New York...and basically traded flat from there until around 12 o'clock noon in Hong Kong. Then the price tacked on another twenty bucks by the London open at 8:00 a.m. BST...which is 3:00 a.m. in New York.

From the London open, gold got sold off over thirty dollars, with the low of the day coming a few minutes after 8:30 a.m. in New York. Then a $30 rally commenced that ended just before lunch on the east coast...and gold then traded sideways up until around 3:40 p.m. in the New York Access Market, before tacking on another eight bucks going into the close.

The absolute high was a tiny spike just minutes before the close of electronic trading at 5:15 p.m. in New York, where gold made it all the way up to $1,902.10 spot. The gold price closed at another nominal high on Tuesday...up $45.00 spot on the day. Volume was very heavy once again.

Silver was up over a buck in the first hour of trading, but then gold sold off, with the Far East low coming around 10:00 a.m. Hong Kong time. The price then rallied back almost to the $44 mark before getting sold off, like gold, shortly before lunch in London.

It should then come as no surprise that the bottom in silver came at the precise moment as the bottom in the gold price...about 8:31 a.m. Eastern. The subsequent rally took the silver price back up to $43.80 and, after a minor sell-off going into the close of Comex trading, silver rallied back to around the $43.80 mark...closing up 82 cents spot on the day. Silver's net volume was pretty light.

The dollar,as per normal in these times, was not a factor in the gold and silver arena once again, as it never strayed too far from the 74.00 mark all of Monday.

As I mentioned in Saturday's column, I was very encouraged by the share price action in the gold and silver stocks on Friday...because for the first time in a while, they were actually up on the day when the general equity markets had tanked badly.

Well, they were certainly in rally mode again yesterday...as the whole sector caught a pretty strong bid. The shares gapped up..and then rallied to their highs of the day shortly before lunch in New York...only giving back a very small fraction of that as the day wore on. The HUI finished up 4.09%.

The silver stocks were on fire...and I had a couple of junior producers that were up double digits yesterday...and with a very few minor exceptions that I could see, they all did well. The only drag on Nick Laird's wonderful Silver Sentiment Index was BVN-N which wasn't even up a full percentage point.

But we shan't complain...as the SSI was up a rather chunky 6.06%.

(Click on image to enlarge)

The Comex Daily Delivery Report for Monday showed that 88 gold and 4 silver contracts were posted for delivery tomorrow. The link to what action there was, is here.

I was surprised to see that GLD actually had a withdrawal yesterday...as their inventory declined 204,475 troy ounces.

The silver price is up more than four bucks in the last two business day...and the first deposit into SLV occurred yesterday when a measly 584,496 ounces were deposited. I'm sure that the this ETF is owed many, many millions more ounces that simply aren't available. I'm sure that the fund manager, BlackRock, must be shorting the heck out of SLV since they can't get the physical they need. Ted Butler said that he will be really interested in seeing what the short position in SLV is when it's posted later this week. So will I.

Over at the Zürcher Kantonalbank for the week that was, they reported adding 15,210 ounces of gold, along with a very tiny 62,340 troy ounces of silver to their respective ETFs. As always, I thank Carl Loeb for these numbers.

After two days of no reports, the U.S. Mint finally had something to say for itself. They sold 8,000 ounces of gold eagles...4,000 once-ounce 24K gold buffaloes...and a rather smallish 565,000 silver eagles. Month-to-date sales show that 91,000 ounces of gold eagles...21,500 one-ounce 24K gold buffaloes...and 2,699,500 silver eagles have been sold so far in August.

The Comex-approved depositories took in 600,934 ounces of silver on Friday...and shipped a smallish 23,688 ounces out the door.

As I said in my Saturday column, I wasn't able to talk to silver analyst Ted Butler about the strange goings-on with silver in Friday's Commitment of Traders Report...and that I would steal the appropriate info from Ted's weekend commentary. Here it is.

"In silver, there was a sizable 5,300 contract increase in the total net commercial position to 40,700 contracts (203.4 million ounces) on the previously mentioned $2+ increase in price for the reporting week. A big chunk of the weekly increase in the total commercial short position was due to silver raptor selling of long positions of 3,700 contracts. The big 4 added 1,000 contracts to their short position, with the 5 thru 8 accounting for the balance. Interestingly, the reciprocal buying by speculators was mostly confined to short-covering, rather than new speculative long positions being established. Given the choice, speculative short-covering is better than new long positions being established, as it lessens the likelihood of eventual panic long liquidation at some point. Overall, the silver COT structure is still bullish, while the gold COT structure remains neutral through the end of the reporting week."

Here's a nice photo of gold bars that I lifted from a story that I didn't post on Saturday, as the story just wasn't worth it...but the picture was too nice not to share.

Here's a nifty chart that's courtesy of Nick Laird over at sharelynx.com. It shows the deviation of the 200-day moving average in gold from its mean. At 28.3%...it's getting up there.

(Click on image to enlarge)

You just know that the gold market is starting to heat up when the editing process reaches the point where one has to start tossing gold or silver-related stories out the window, as there were just too many of them. This is the stage the I reached with today's column...as the weekend papers and Internet were wall-to-wall precious metals commentaries.

I did my best...but there is still a pile of reading, watching and listening to do. I'll wimp out once again and leave the final edit up to you.

¤ Critical Reads

Wall Street Aristocracy Got $1.2 Trillion From Fed

Citigroup and Bank of America were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.

By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.

The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010.

I thank Washington state reader S.A. for this Bloomberg story from early yesterday morning...and the link is here.

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Gold ETF Now Bigger Than S&P 500 ETF

Ladies and gentlemen, here is today’s market in a nutshell:

GLD, the SPDR Gold Trust ETF, is now bigger in terms of assets than SPY, the SPDR S&P 500 ETF. GLD has $77 billion in assets, compared with $75 billion for SPDR, according to Dave Lutz at Stifel Nicolaus.

At last check, GLD was up more than 2%, compared with SPY, up about 0.3%.

That's the entire blog from yesterday's edition of The Wall Street Journal. The picture of gold bars is worth the trip, so here's the link. I thank West Virginia reader Simon Elliot for this story.

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Oakland Robbers Snatching Gold Chains Off Victims

The Oakland Police Department is alerting residents about an increase of street robberies that target people wearing gold chains.

Most victims have been women and the suspects usually approach on foot, snatch the chain from the neck and run away, Oakland police said.

The story was posted last Friday over at CBS San Francisco...and I thank California reader Martin Arnest for sending it along. The link is here.

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The next De Gaulle: The New York Sun

Following up on its editorial on Friday about French President Charles De Gaulle's recognition of the monetary issue, Saturday's edition of The New York Sun looks around for the next De Gaulle and examines the tireless work of gold advocate Lewis Lehrman, a member of President Reagan's gold commission, an ally of U.S. Rep. Ron Paul in the pursuit of a sound monetary system...and a sponsor of The Gold Standard Now project.

I stole the preamble...and the editorial...from a GATA release on Saturday...and the link to this very worthwhile read is here.

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Venezuela pushed the golden Humpty Dumpty off the wall: Mike Kosares

The Chauvez story about Venezuela's gold has generated an outpouring of stories...and few are more capable of describing the current situation better than Mike Kosares over at Centennial Precious Metals.

Here's a GATA release with the short Kosares piece imbedded in it. Chris Powell's intro is a must read...as is the short Kosares essay. The link to all is here.

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Will Venezuela's gold repatriation prove GATA's case? - Mineweb

Mineweb's Lawrence Williams comments on how Venezuela's attempt to repatriate its gold may test GATA's view of the gold market. Williams' commentary is headlined "Chavez Move Could Drive Gold through the Roof -- and Put Confiscation on the Cards Again"...and the link to the story is here.

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Venezuela formally asks Bank of England to return its gold

Venezuela's central bank has requested its 99 tons of gold holdings from the Bank of England, according to a bank statement sent by e-mail, citing the institution’s president Nelson Merentes.

“We’ve contacted the Bank of England and the corresponding protocols have been initiated to complete this operation as soon as possible,” Merentes said, according to the statement. “Once that’s done, the shipments will begin by sea.”

This story was one I picked out of a GATA release on Sunday...and the link is here.

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Chilton to speak on silver again if CFTC doesn't do so by next month

Here's another story and intro from Chris...

U.S. commodities trading regulator Bart Chilton has told blogger Craig Duling that he's disappointed with the slow pace of the silver market investigation of the U.S. Commodity Futures Trading Commission and will make a statement on silver if his commission doesn't do so by the third week of September. Chilton's comments, confirmed by GATA, can be found at Duling's blog here.

I'll be very surprised [but very pleased] if Chilton says anything new of substance.

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No let up in India's appetite for gold

India's appetite for gold continues unabated despite higher prices and in the second quarter of 2011, its demand for gold grew 38 per cent. According to the World Gold Council's quarterly report, Gold Demand Trends, India was the strongest growth market for gold in the second quarter of 2011 accounting for 32 per cent of the global demand for gold.

Total gold demand was up 38 per cent in tonnage terms to 248.3 tonnes from 180.4 tonnes while in value terms, Indian demand increased by 70 per cent to Rs.53,800 crore from Rs.31,730 crore.

The story is a must read...and the photo alone is worth the trip. I thank reader 'David in California' for this item from late last week that was posted in The Hindu business section...and the link is here.

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Scrap gold sales peter out in India

Here's a story that appeared in Monday's edition of The Wall Street Journal. It's printed in the clear in this GATA release...and this is a must read as well. The link is here.

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Sponsor of Utah's gold and silver legislation interviewed by King World News

King World News has interviewed Utah state Rep. Ken Ivory, sponsor of that state's recently enacted legislation recognizing gold and silver as legal tender. You can listen to the interview at KWN website...and the link is here.

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Gold shines as Swiss franc's haven appeal dims

Moves by the Swiss National Bank to curb strength of the Swiss franc will fuel investors' insatiable demand for gold, adding to its relentless rise to new record highs as confidence in the franc as a safe store of value dwindles.

Analysts say this could help gold vault $2,000 an ounce within the coming weeks, with the potential for very large spikes if risk aversion on financial markets gains momentum.

This Reuters story is another item that I 'borrowed' from a GATA release yesterday. I consider this more than worth your time as well...and the link is here.

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Gold spikes to high as fears over global economy linger

The price of gold hit $1,894.80 an ounce in early trading despite a bounce in European stock markets.

Jeremy Cook, chief economist at foreign exchange brokers, World First, said: “Gold is a rocket ship at the moment and there are many factors that make us expect further gains.

This very short story [with a most excellent graph] appeared over at The Telegraph yesterday afternoon. I thank Roy Stephens for the story...and it's worth the one minute of your time it will take to peruse the chart...and read the handful of short paragraphs. The link is here.

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Gold Goes Off Charts as Gartman Sees Prices for Metal Heading ‘Parabolic’

Gold’s rally to a record above $1,900 an ounce has pushed the metal to overbought levels according to technical analysis tools, as economist Dennis Gartman said prices will go “parabolic.”

Bullion’s relative strength index has topped 70 since Aug. 5, a signal to some investors who study technical charts that prices may be set to decline. Gold hugged its upper Bollinger band most of this month, which may signal possible resistance, while a moving average convergence/divergence indicator and Elliot Wave patterns suggest prices are overextended, said Ross Norman, chief executive officer of London bullion brokerage Sharps Pixley Ltd.

That above paragraph sounds like I wrote it...but I didn't...although I've made mention of these facts many times in 'The Wrap' over the last week or so.

This Bloomberg story from yesterday is courtesy of Washington state reader S.A...and it's well worth your time. The link is here.

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GoldMoney's Turk interviews Jim Rickards at GATA's London conference

Without doubt, this the best interview of anybody, by anybody, that I have ever seen in my twelve years of involvement in the gold market. It simply does not get any better than this. I was enthralled from beginning to end.

As you know, I have all the time in the world for what Jim Rickards has to say...and this interview is sure proof that he's one of the brightest minds out there...and James was certainly up the task.

Chris Powell wrote the introduction this way..."During GATA's Gold Rush 2011 conference in London this month, GoldMoney founder James Turk interviewed geopolitical analyst James G. Rickards about the future of the euro and Europe, the dollar and gold, gold's likely return to a formal role of backing currencies, and the rush of China and other nations to acquire gold. Both Turk and Rickards spoke at the conference. Their absolute must watch interview is comprehensive, 42 minutes long, and you can watch it at GoldMoney's Internet site here.

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The last time the price of Gold soared to this extent was in late 1979. Back then, Paul Volcker as Fed Chairman brought it to heel by letting go of US interest rates and watching while short-term rates soared to 20 percent plus. That “solution” today would turn every nation in the “developed” world into a giant sized Greece. The fiat money system just “celebrated” its 40th birthday. It won’t have many more. - Bill Buckler - The Privateer, 21 August 2011

Gold volume was immense again yesterday. There were very few roll-overs...and the net volume came in around 275,000 contracts. The preliminary open interest number was up a monstrous 24,667 contracts. I doubt there was much short covering yesterday, but it's impossible to tell.

The final open interest number for Friday's trading day in gold showed an insignificant increase of only 64 contracts...a stunning drop from the preliminary o.i. number which showed an increase of about 14,600 contracts. I'd love the same thing to happen to Monday's preliminary open interest number as well when the final numbers come out later this morning, but I think that would be asking too much.

Silver's gross volume was pretty high, but once all the roll-overs out of the September delivery month were subtracted, it fell all the way down to about 36,000 contracts. The preliminary open interest number showed a smallish increase of 1,230 contracts.

The final open interest number for silver on Friday checked it at a huge 5,797 contracts, which was down only marginally from the preliminary number of 6,166 contracts the CME reported on Saturday morning. Ted and I were not amused.

Everyone, except those standing for silver deliveries in September, has to be out by next Wednesday at the latest. As of this morning's preliminary report, there are still 35,271 silver contracts open in September, but virtually all of those will either sell or roll to a future month by August 31st...so the activity in the Comex futures market in silver will be quite frantic from now until then.

Here's the 3-year gold chart...and if this doesn't make you nervous, nothing will. As Ted Butler has pointed out on several occasions, a lot of this has been panic short covering by the Commercial traders, but it should still give one pause nonetheless.

(Click on image to enlarge)

As I've said a number of times in the last two weeks, if the bullion banks can figure a way to engineer a price decline, they will do exactly that...as their short positions have been bleeding red ink to the tune of billions over the last little while. Yesterday alone cost them a fortune.

Here's the 3-year silver chart. It doesn't look too bad...at least not compared to gold...but if JPMorgan et al can engineer a price decline in gold, they will certainly be there to do as much damage in silver as they can, as well.

(Click on image to enlarge)

Here's the 3-year chart of the HUI. As you can see, it's just about to break out to new high ground for this move up. If 'da boyz' wanted to create the most psychological damage to the newbie precious metal investor, they would smack the gold price right around here. We'll see.

(Click on image to enlarge)

Enormous volatility, whether it be free market or engineered by the bullion banks, is the name of the game...so keep your Gravol and Rolaids handy during this next phase of the precious metals bull market.

Although hard to believe, every dip should be bought..especially in silver.

Both gold and silver spiked higher when trading began in the New York Access Market at 6:00 p.m. last night...but both rallies ran into immediate selling...and the price of both metals have been trending downwards since then. Silver is down over a dollar from it's high water mark yesterday evening in New York, now that London has opened for trading at 3:00 a.m. Eastern time.

[Late note: I'm adding this paragraph about two hours after the London open...and just before I hit the 'send' button. I see that a serious attempt at a sell off began a few moments after the open in London. Both gold and silver have rallied off their lows, but it remains to be seen how long this lasts. I note, with some amusement, that the dollar got smoked for about half a cent starting at the same time as the initial 'correction' in both gold and silver began about an hour before London began to trade..so a lot of newly-placed long positions that were put on yesterday [especially in silver] have been blown out of the water already. Volume is monstrous in both metals]

Is this beginning of the correction? Don't know...and it's too soon to tell. As usual, the big price action will take place in New York this morning...although yesterday morning, it began shortly before lunch in London, so the bullion banks got the momentum going to the downside before Comex trading began in New York. Let's see if that's the plan again today.

I await the New York open with great interest.

See you on Wednesday.