as usual, ed steer has more questions than answers about silver and gold trading:

Gold open interest on Monday's big down day actually rose by a substantial 4,551 contracts. One would have expected gold o.i. to contract as the tech funds pitched longs and the bullion banks (read JPMorgan) covered their shorts. Didn't happen. One would have expected even more dramatic results in silver...which is the metal that the boyz were really after. Nope...didn't happen there either. Silver o.i. rose as well...by a scant 51 contracts to 86,088...but it rose nevertheless. What gives?

Ted Butler and I had a chat about this. Ted reminded me (for the umpteenth time) that one shouldn't read a lot into the daily changes in open interest. He pointed out that the bullion banks are very good at hiding their tracks when they're on the prowl. What he figures happened (and I totally agree, because they've done it before) is the following: Yes, the tech funds and small traders pitched lots of longs as the prices of both gold and silver were driven lower...the actual act of them selling is what caused the prices to fall. However, the bullion banks hid their tracks by going long themselves, instead of covering their outstanding short positions. I'm sure they covered some shorts as well, but net...the boyz bought stacks of long positions...and that's why the open interest went up. There could be spread trades put in place as well. That also increases open interest. We won't know until Friday's COT. Monday's open interest changes should definitely be there...but the boyz may accidentally not report to the CFTC (in a timely manner) what happened yesterday (Tuesday)...which is the cut-off for Friday's report. A criminal conspiracy as large as this requires that rules be bent, lies be told...and information withheld at key moments.

So, in a nutshell, what did I read into yesterday's activity? Don't know. It looks bullish...but who really knows for sure? I don't. I'd love to know who the buyer was in New York. Was it a new buyer...or was it short covering? Lots of contracts were traded in both gold and silver...it was a huge volume day all around. Hard facts are almost impossible to come by. As a few people in the GATA camp have said on several occasions...finding out how to build a nuclear bomb is far easier than trying to find out what's going on in the opaque world of gold and silver. There have been quite a few of these strangely anomalous days in the precious metals...all starting just before Christmas...and all surprises to the upside. Maybe they are the foreshocks of the "big one." Then again...maybe not.

In other gold news, I note that the GLD ETF added another eight tonnes to its gold pile...now up to another new record...788 tonnes. And Ted Butler says that even though there was no change in the SLV ETF, he feels that they're owed 3 to 5 million ounces. And in a Financial Times story out of London..."Peter Hambro, chairman of Russia-focused gold miner Peter Hambro Mining, is as confident as ever that gold is a long-term store of value. He is not alone...People want real gold, Mr Hambro says. ‘It is the physical market driving the price’."

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