As I mentioned in 'The Wrap' in yesterday's column, gold got sold down about ten bucks shortly after trading began in the Far East on their Wednesday morning. The tiny rally in the dollar at the open of London trading took the gold price down a bit more...but by 9:30 a.m. BST, the London low price tick was in...and gold rallied a bit over ten bucks from there right up until about 9:05 a.m. Eastern time in New York.

That was the New York high price tick of the day...$1,565.60 spot...and it was a thirty dollar plus down hill ride for the next three hours from that point, as the dollar 'rallied' about 60 basis points starting about the same time. The low tick [$1,532.40 spot] came about 12:10 p.m. Eastern.

From that low it rallied back almost to its 9:05 a.m. New York high by 3:00 p.m. Eastern time...and then traded flat into the close of electronic trading.

Gold closed at $1,562.30 spot...down $6.00 on the day. Net volume was immense...in the 200,000 contract range.

Silver's price path on Wednesday was virtually the same as gold's...except silver's low [$27.04 spot] came at 10:45 a.m. in New York, rather than at 12:10 as did gold. From that low, silver managed to recover a lot of its New York losses by 3:00 p.m. Eastern...and then, like gold, traded more or less sideways into the close.

As has been the case lately, silver had a huge intraday price move again yesterday. This time it was 4.1%.

Silver finished the Wednesday session at $27.84 spot...down 36 cents on the day. Net volume was huge at 56,000 contracts.

The dollar index oscillated 10 basis points either side of 81.70 until 9:00 a.m. in New York yesterday...and then rallied about 50 basis points over the next three hours. However, the bulk of the move was in by 10:30 a.m. Eastern...and the index traded mostly sideways at the 82.10 level from there.

I suppose there were lots of pundits explaining away the precious metal price movements on the dollar decline over that period...but that doesn't explain why gold and silver came roaring back and pretty much cancelled their New York trading losses once the rally in the dollar index came to an end.

The gold stocks gapped down at the open, but rallied back to unchanged within ten minutes...and then sold off until about 10:20 a.m...which turned out to be the low for the day...and it was onwards and ever upwards from there, even though the low for gold came minutes after 12 o'clock noon Eastern time. The HUI finished on its absolute high of the day...up 4.13%. As I've mentioned just about every day recently, some very big [with a capital 'B'] buyers have been buying gold and silver stocks with both hands ever since the low last week.

And despite another loss in the metal itself, the silver stocks turned in an incredible performance as well...and Nick Laird's Silver Sentiment Index closed up 3.10%. Most of the junior producers did much better than that.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 1 gold and 27 silver contracts were posted for delivery tomorrow. The link to what little action there was, is here.

After a big withdrawal on Tuesday, the GLD ETF had an authorized participant add 87,364 troy ounces of gold yesterday. There were no reported changes in SLV once again.

The U.S. Mint had a smallish sales report yesterday. They sold 2,000 ounces of gold eagles and 100,000 silver eagles.

The Comex-approved warehouses finally updated their Monday depository numbers for silver...and the net amount was about 114,000 ounces added. Then later on Wednesday they stuck in the Tuesday update as well. On that day the Comex-approved depositories received 13,894 troy ounces of silver...and reported shipping 745,297 ounces out the door. The link to the report is here.

Silver analyst Ted Butler posted his mid-week commentary on his website yesterday...and here are two free paragraphs...

"The price action this week has been horrid. It is horrid because the crooked commercials on the COMEX have made it horrid. There is no legitimate economic justification for the price decline since Feb 28th other than the price action was created to permit the commercials every opportunity to scare and induce others into selling COMEX contracts so that the commercials could buy. Almost every day the price of silver and gold seem to be put lower in thin overnight trading. Almost every day we start out “in the hole” where it is a struggle to get back to unchanged. This is not accidental, it is a deliberate plan to demoralize and keep silver investors confused. It is shameful that the CFTC has been captured by the crooks and is content to look away."

"The good news is that the commercials have succeeded in buying record amounts of silver (and gold) contracts. It’s impossible to pick the timing of the next rally, as we are in a sort of “no man’s land” currently, where technical type buying won’t come in until the moving averages are penetrated to the upside. There still doesn’t appear to be much speculative selling remaining in silver and gold after the orchestrated take down of the past couple of months, but neither is there any impetus for technical buying below the moving averages. In this environment, it’s not hard for the commercials and HFT practitioners to put prices sharply lower at will. About the only sane reaction to all this is to accumulate and hold physical silver for the long haul, as the short term manipulative games won’t last forever."

Here's a chart that Washington state reader S.A. sent me yesterday. It's titled "European Exposure". The imbedded preamble pretty much describes the situation.

Here's a chart that reader 'David in California' stole from somewhere yesterday. It shows that a gigantic pennant pattern has been formed in gold. Is a big up-move just ahead? Let's hope so.

(Click on image to enlarge)

I have the usual number of stories for a weekday, so I hope you have the time to skim all of them.

¤ Critical Reads

The Facebook IPO: Shareholders Weren't Invited to the Real Party: Matt Taibbi

A suit has been filed by Facebook shareholders against Mark Zuckerberg, Facebook, Morgan Stanley and others. It's based on a very simple concept: when internal analysts learned that Facebook’s numbers were going to be worse than expected, the company and its bankers didn’t tell everyone, but just "selectively disclosed" information to a small group of "preferred investors."

Henry Blodget, who unfortunately should know about these things, gave a good summary of it all on CBS This Morning:

I was on the phone last night with a former hedge fund CEO who was talking about this. "Facebook," he said, "is a colossal example of a complete clusterf**k where everybody wins except the ordinary investor."

This short blog over at Rolling Stone magazine contains Matt's usual pithy prose...but it's a must read nonetheless. I thank Roy Stephens for his first of many stories in today's column...and the link is here.

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Rithholtz: I Think About JP Morgan's Trading Loss The Same Way I Think About Cockroaches

Fusion IQ CEO Barry Ritholtz told Yahoo! Finance's Matt Nesto that he believed the unstable nature of JP Morgan's $2 billion-plus made the stock an uncertain investment in the future.

"The question is, 'Is this $2 bill loss going to be $3 billion, $4 billion, or $5 billion?' I don't know. The lesson we learn about cockroaches is that there's never just one," he said.

He added that the type of bets and risk the bank took on with exotic products such as derivatives made the industry hard to understand and invest in.

"The reason to own banks is that they used to be a safe, money making machine," he said. "The old joke was 'borrow at 3%, lend at 6%, be on the golf course at 4 o'clock.' That's how bankers lived. It was a boring, highly profitable business. And now, these banks seem to think they're hedge funds."

This businessinsider.com story from yesterday is Roy Stephens second offering of the day...and the link is here.

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Congress staring over edge of ‘fiscal cliff’- Lawmakers face budget dilemma

For Congress, the outlines of the pending fiscal crisis are clear: Don’t do a thing, and watch the economy slip into a double-dip recession early next year. Or cancel the looming tax increases and spending cuts, watch the deficit rise, and push the government ever closer to a European-style debt crisis.

That decision was put in stark terms Tuesday by the Congressional Budget Office, which in a new analysis said the economy will plunge into a recession early next year if Congress lets taxes rise and spending be cut, as called for under the law.

But if Congress changes the law to keep taxes low and spending high, it could add more than half a trillion dollars to the deficit in 2013, marking a fifth straight year of trillion-dollar deficits and risking the patience of the country’s creditors.

This story appeared in The Washington Times yesterday...and I thank Scott Pluschau for sending it along. The link is here.

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Euro Zone Crisis Boils as Leaders Argue, Failing at Pact

With Greece’s membership in the euro zone teetering, fears of bank insolvency rising and Europe’s leaders bickering about what to do, the euro crisis is once again intensifying and threatening to undermine fragile growth globally.

At a summit meeting in Brussels on Wednesday, regional leaders failed to signal any significant new steps to stimulate the sputtering regional economy or resolve the competing agendas of President François Hollande of France, who favors stronger action to spur growth, and his German counterpart, Chancellor Angela Merkel, who has opposed aggressive moves to ease the pressure on Europe’s weakest economies.

Yet, the urgency for a solution to the region’s debt crisis, now in its third year, may never have been greater.

This story showed up on The New York Times website yesterday evening...and I thank Phil Barlett for sending me this piece. The link is here.

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Spain struggles to meet regions' €36 billion debts

Top Spanish officials are at odds over how to help the country's highly indebted regions refinance €36 billion of debt this year, government sources told Reuters on Wednesday.

The figure, revealed in the budget plans from 17 autonomous communities, compares with previous public data of around €8 billion of bonds maturing in 2012.

The difference is due to bilateral loans from Spanish banks to the regions worth €28 billion that were not made public previously. It could unnerve further investors concerned by the capacity of Spain to curb its public finances and reform its banking sector.

This Reuters story was filed on their website late yesterday afternoon...and I thank Roy Stephens once again for bringing it to our attention. The link is here.

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Papademos, Grexit, and catastrophe blackmail: Ambrose Evans-Pritchard

Greece's ex-premier Lucas Papademos has put a figure on the post-drachma fallout.

"Some calculations I have seen suggest that inflation could accelerate to 30pc or even to 50pc, depending on the impact of such developments on inflation expectations and on the strength of the second-round effects of price increases on wages," he told the Wall Street Journal.

It certainly could, but there is no reason why it should. That would be a policy error.

This AE-S offering was posted on The Telegraph's website yesterday...and is another story courtesy of Roy Stephens. The link is here.

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Greek Businesses Fear Possible Return to Drachma

For the last couple of weeks, the phone at Tasos Ioannidis’s five-star hotel on the breezy island of Mykonos has been ringing steadily, but not with the types of inquiries he wants to field.

“People are saying they don’t want to confirm a stay or make deposits,” said Mr. Ioannidis, who owns the luxurious Belvedere Hotel, perched on a cliff over the Aegean Sea. “They are afraid of what could happen to their money if Greece leaves the euro and returns to the drachma.”

Worries that Greece might default on its debts or even leave Europe’s currency union have deepened since May 6, when Greeks voted in shocking numbers for a left-wing party willing to tear up Greece’s $170 billion international bailout agreement. These days, even though 80 percent of Greeks say they want to stay with the euro, talk of “drachmageddon” can be heard in conversations all around Athens — in executive suites, at mom-and-pop shops and even in nightclubs.

This story was posted over at The New York Times on Tuesday...and I thank Phil Barlett for sending it. The link is here.

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Free Money: German Central Bank Issues Zero-Rate Bonds

For the first time in history, Germany issued long term bonds with a zero percent coupon rate on Wednesday. The demand reveals the deep concerns investors have about the euro zone and their desire for a safe place to park their capital -- even if it costs them money to do so.

For now at least Germany and Greece share the same currency. But don't tell that to investors. On Wednesday the German Finance Ministry pulled off a remarkable feat for a country in a threatened currency union: It issued €4.6 billion of two year bonds with a rate of zero percent. In other words, once inflation is factored in, investors are essentially paying to park their money with the German government.

According to German officials on Wednesday, demand for the zero percent bonds was robust and added that Germany does not intend to offer up bonds with a negative interest rate. "As such, a coupon of zero percent is the lower limit," Reuters quoted a finance official as saying.

This is another story posted over at the spiegel.de website yesterday that Roy Stephens sent me...and it's worth the read. The link is here.

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Three Stories from the Tehran Times

The first story is headlined "Iran, 5+1 group offer new proposals at Baghdad talks". The second one is entitled "Turkey's Gul calls for meaningful dialogue with Iran on nuclear issue". And lastly is this headline that reads "Nothing can weaken strong ties between Tehran, Ankara: Ahmadinejad". All these stories are courtesy of Roy Stephens.

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Deal or no deal, Iran may be bombed – Israeli minister

A military strike against Iranian facilities is not out of the question, even though Tehran has reached agreement on a probe with the UN’s nuclear watchdog, says Israeli Defense Minister Ehud Barak.

­The official was referring to a deal announced on Tuesday by the International Atomic Energy Agency. Barak called it an Iranian ploy to fend off international pressure.

The minister told Army Radio that "a nuclear Iran is intolerable and no options should be taken off the table," referring to the use of force.

This story showed up on the Russia Times website early yesterday afternoon...and is Roy's last offering in today's column. The link is here.

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The Mounting Reasons to Stockpile Gold

The price of gold and the number of reasons to own it are moving in opposite directions.

Gold continues to seek support after dipping beneath $1,550 per ounce recently, while current global developments and increasingly visible macroeconomic scenarios underlying the bullish long-term outlook for the monetary metal have only increased in number and scale. Given the most attractive entry prices that investors have seen in some time, let's have an updated look at the bullish fundamental landscape for gold and the array of seasoned professionals who have recently accumulated gold exposure.

Christopher Barker over at The Motley Fool website sent me his latest essay yesterday...and I'm more than happy to share it with you. The link is here.

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Four King World News Blogs/Interviews

The first blog is with Dan Norcini. It's headlined "Central Bank Gold Buyers Battling Hedge Funds Today". The second is with Peter Schiff...and it bears the headline "Massive Turnaround for Gold & the Shares". The third blog is with Richard Russell...and it's headlined "We Are Entering the Second Half of the Bear Market". The last item is the audio interview with Agnico Eagle CEO Sean Boyd. I posted the blog in this column either yesterday or the day before.

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James Turk: Only one defense against fiat currency -- dump it for gold

People moving their money from the periphery of the eurozone to Germany in pursuit of a safe haven may be in for a rude shock, according to GoldMoney founder, Free Gold Money Report editor, and GATA consultant James Turk. At the FGMR Internet site he writes that transfers to German banks still may be forcibly converted back to reconstituted and devalued national currencies. "There is only one way to seek safety from fiat currency," Turk writes. "Exit the fiat currency system altogether" and buy gold.

I borrowed the headline and the introduction from a GATA release yesterday, because it saved me the time of writing my own. Turk's commentary is headlined "Preparing for the Grexit" and it's posted at the FGMR Internet site here.

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Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates, and bear the consequences. - Susan B. Anthony

Well, you can believe what you like, but the moves in the currency market had very little to do with overall price movements in the precious metals yesterday. It was a bear raid across all four precious metals. And, as usual, it was silver that was singled out for special attention, although palladium came in a close second.

It's really too bad that all the trading action between the Tuesday cut-off for Friday's COT report...and what happened during the New York trading session yesterday...won't be in that report. My closing comment in yesterday's column read as follows..."I have no idea what will happen pricewise during the Comex trading session today, but it's pretty much a given that it won't be without incident." That's precisely the way it turned out.

And as Ted Butler pointed out in his two paragraphs in today's column, we are in "no-man's land" price wise, with the critical moving averages well above current prices, so the technical funds will be mostly M.I.A. until we break through them...starting with the 20-day m.a...and then the 50-day. So the bullion banks and their cohorts can do pretty much as they please...and they are.

But unless they are able to engineer the prices in both gold and silver lower than they were about a week ago, they are not going to get any renewed spec long selling...or fresh shorting. The only food supply for 'da boyz' right now are the new spec long positions that were placed since last week's low, and that wouldn't amount to a hill of beans.

The other thing going on at the moment is that we're coming up hard on the June delivery month...which is a big delivery month for gold. It's pretty normal at this time for JPMorgan et al to flush out all the weak spec longs prior to first notice day, and that is probably part of what's going on now. I'm not sure whether we have options and futures expiry on the Comex late this week or early next week, but I expect the selling pressure to continue unabated until then. Of course I'd love to be proved wrong.

One of other price scenarios I mentioned as a possibility in my Tuesday column was as follows..."I'm also wondering if we're going to see a repeat of what happened during the last two weeks of December 2011...where we hit an interim bottom at mid month...and a week later 'da boyz' rolled the price over between Christmas and New Years Day...and gave us our final low for that move down."

Well, we came very close to that scenario in gold over the last two trading days...and here's the 6-month chart so you can compare this mid-May move to the mid-December move of 2011.

(Click on image to enlarge)

The silver chart looks similar. We aren't there in platinum yet...but we're well below the lows set in palladium for December and early January. Is there more pain to come? Don't know...but if there is, you'll know where you've seen this picture before.

The other standout is the price action in the precious metal equities. There are very deep pockets buying everything in sight. What do they know that we don't. I always worry that these buyers are just loading up on shares to sell into the next rally in order to cap it...or are they buying because 'this time it's different'? I don't know...but I'm praying for the latter...and always on the lookout for the former.

Here's the 6-month HUI...and except for Tuesday, it's been up five days of the last six...and that's despite what the metal itself is doing.

(Click on image to enlarge)

Neither gold nor silver did much during the Thursday trading session in the Far East...but the moment that London opened at 8:00 a.m. local time, both metals got sold off a hair. The volumes in both are getting up there, but well below the volume levels of Wednesday at this time of morning. The dollar index has hardly moved at all since 6:00 p.m. in New York last night...and has pretty much flat-lined around the 82.10 level.

And as I hit the 'send' button on today's column at 5:20 a.m. Eastern time, gold is down about six bucks...and silver is down a dime.

It will be interesting to see what price action is in store for us when the Comex opens this morning. I'm always cheering for 'up'...but if it's down, you'll know why.

I hope your Thursday goes well...and I'll see you on Friday.