Ed Steer
Ed Steer has been involved with GATA (Gold Anti-Trust Action Committee, Inc.) for more than five yea... More
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3.4011/20/2009
Ed Steer's Gold & Silver Daily
I'm not going to read a lot into Thursday's trading in either gold or silver. Yes, both got sold off starting in the Hong Kong afternoon, but 11 hours later... around 11:15 a.m. in New York, and just minutes after London trading closed for the day... both metals had rallies that took them back to virtually unchanged from their respective closing prices on Wednesday. I have to agree with Ted Butler's take on all this... it was just another day off the calendar.
And the Kitco silver graph looks somewhat similar...
Despite the early morning sell off in gold and silver, the shares caught a bid on the subsequent rally, and managed to close slightly in the plus column, which is very encouraging.
Wednesday's open interest numbers in gold showed an increase of only 340 contracts. Volume was pretty monstrous at 222,574 contracts. Total gold open interest is 526,959 contracts. Silver open interest actually fell 1,408 contracts. Volume was, once again, very heavy at 68,674 contracts... and total o.i. fell to 139,738 contracts. Volume will continue to be high in both metals going right into options expiry on Monday... and maybe a few days beyond... so, on sober second thought, these huge volume figures should come as no surprise this time of month, and in front of a big delivery month to boot.
As I mentioned yesterday, it will probably be next Friday's Commitment of Traders report before we can get a clear picture of what has happened around Monday's option expiry. Today's COT report will be out at 3:30 p.m... and I'm not expecting really big changes. So far, it doesn't look like either the longs nor the shorts are blinking much. The outrageous short positions in both gold and silver still exist... and the bullion banks still are going short against all new longs placed... and there hasn't been anything more than a hint of an orchestrated sell-off yet. Maybe it won't happen... and with only two trading days left to go... it's looking more unlikely with each passing hour. But, as Yogi Berra said... "It ain't over 'till it's over."
The CME Delivery Report showed virtually no deliveries in any metal. There were no changes reported at the GLD ETF yesterday... but, once again, it was different story at SLV. For the second day in a row... and the sixth time this month... they reported another huge inflow of silver. This time it was 3,045,669 troy ounces... which brings their November silver intake up to 12.1 million ounces. My back-of-the-envelope calculation indicates that they still need to bring in at least another 25 million ounces to cover the short positions that the SLV managers have in lieu of the real metal. Normally, JPMorgan [the custodian of the SLV's silver] would just engineer a sell-off in the silver market, the price would fall, the SLV mangers would buy back the shares they sold short... and not have to provide the metal to their silver ETF at all. This also allows JPMorgan to cover a boatload of their obscene short position on the Comex as well. It appears [at the moment] that this option is not in the cards. Don't you just love 'free' markets?
There were no reported changes over at the U.S. Mint yesterday... and the Comex-approved depositories showed another decline in silver inventories, this time by 270,419 ounces.
I got an e-mail from the usual New York gold commentator yesterday morning saying that the he had erred regarding the Wednesday afternoon Vietnam gold price. He had stated that the local gold price "stood at a $20.92 discount to world gold of $1,139.84." In fact it should have read "premium to world gold"... which is a huge difference. Obviously a big shortage of physical gold still exists... and there's more on that in the story below.
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I don't have a lot of stories today... but I'm sure you're just as happy about that as I am. However, the quality of the stories is high, and deserve your undivided attention. The first is a Reuters piece filed from Hanoi and the headline reads "Vietnam to import 6 tonnes of gold this month - State TV". The story is only three paragraphs in length and should take all of 20 seconds to read... and the link is here.
The following video chart is courtesy of reader Brian Clark... and is one of the most stunning charts I have ever presented in my commentary in the last three years. It shows the deteriorating U.S. unemployment rates by county... starting from January 2007 -- approximately one year before the start of the recession/depression -- up to [and including] September 2009. But, before you hit the "Play" button, I urge you to scroll down and read the small amount of text that accompanies it. The video/chart is courtesy of americanobserver.net and bears the title "The Decline: The Geography of a Recession". In actual fact, it should be called "The Geography of a Depression"... but I digress... and the link is here.
And from Europe comes this "GlobalEurope Anticipation Bulletin"... It's entitled "Global Systemic Crisis -- [nation] States [are] faced with three brutal options in 2010: inflation, high taxation or default"... "[We] wrote in February and March 2009, that if the international monetary system was not completely reconsidered before summer 2009, the world would inevitably move towards a situation of global geopolitical dislocation, some sort of a worldwide “very great depression”, centered on the collapse of yesterday’s world’s pillar, the US. That’s where we are now." This story, and graph in the previous story, should tell you everything you need to know, dear reader... and the link to this must read every word article is here. This is Doug Casey's "greater depression" scenario coming at you.
Yesterday, Jim Rickards, director of market intelligence for McLean, Virginia-based consulting firm Omnis, was allowed onto CNBC again to make gold-friendly comments. The first time he was on CNBC back in September, he said When you own gold, you're fighting every central bank in the world. This time he said that gold should easily reach $2,000/ounce next year... and if gold should start being considered money again, it would have to rise to between $4,000 and $11,000 to support the big increase in the world's money supply. This GATA dispatch contains his original September CNBC interview... along with the new one. Both are absolutely worth watching... and you can hear a pin drop in the studio when he's talking about gold and where the price is going... and the link is here.
As I said about three weeks ago, regardless of what gold is doing the day after options expiry on Monday, November 23rd... I will be investing the last of my cash in the precious metals market. The position limits issue that the CFTC is going to be bringing in to effect in early December will [hopefully] deal with the obscene short positions that are held by JPMorgan [and a few other bullion banks] in both silver and gold. If it does, that will change everything in a real hurry.
If you are thinking about investing in the precious metals market, I urge you to seriously consider a subscription to Casey's Gold & Resource Report. It's only US$39/year with a 100% guarantee of satisfaction, or you can cancel within 90 days, and we'll immediately refund every penny you paid... no questions, no risk... you like it, or your money back. How can you lose?
Not much happened in the Far East during their trading session on Friday. The London market is now open... and not much is happening there either. Volume in gold is sitting at 20,827 contracts at the moment [4:10 a.m. Eastern time]... and silver is showing 3,096 contracts traded. Both volume figures are down substantially from this time Thursday morning. No fireworks here... yet. It will be interesting to see if any develop when gold and silver start trading in New York this morning.
I hope you have a great weekend... and I'll see you here on Saturday.
