Golden Minerals Company

From Ed Steer:

In Far East trading on Tuesday morning, both silver and gold got sold off. The bottom was in shortly before London opened...and a spirited rally commenced until about 6:30 a.m. New York time when both metals got sold off again...with some help on the Comex open. Once the London p.m. fix was in (10:00 a.m. in New York) both metals were off to the races. The rally accelerated even more once London was closed, but a few minutes after noon in NY, the usual not-for-profit sellers showed up to cap all that "irrational exuberance"...and that, as they say, was that. And strangely enough...that particular moment was the bottom for the Dow (and the end of the US$ waterfall decline) as well. Coincidence? Not bloody likely.

On Monday's rise in the gold price, the o.i. fell 2,021 contracts and silver o.i fell a huge 3,111 contracts! That's a lot considering the silver price did next to nothing on Monday, unless the boys are just reporting now some of the damage they did last week...which I highly suspect and which wouldn't surprise me in the slightest. As Ted Butler said..."No number would surprise me anymore." Will all this be in the COT on Friday? Who knows...but with no adult supervision in sight, the boyz will do as they please.

Despite the two monster price drops in silver this year, the SLV ETF has not skipped a beat. Yesterday, they added a hair under 2 million ounces. It's obvious that demand for SLV has been sky-high all year...regardless of whether the price is going up or down. This is similar to North American retail silver sales for most of this year...booming...regardless of price. Here is a graph of the current holdings of the SLV ETF. I thank Gene Arensberg for providing it.

click to enlarge

I see that ex-IMF chief, Ken Rogoff, said "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper...we're going to see a big one, one of the big investment banks or big banks." (How about a bunch of them, Ken? - Ed). I note that American Express raised $2 billion, but had to give an almost junk interest rate to get it. In the Bill King Report last night...talking about M3...Bill said "But most importantly, like 1931, asset prices are now collapsing faster than the Fed can create credit and financial firms are hoarding liquidity." In England, LIBOR is on the rise again. And a Russian general said that the Polish acceptance of an US anti-missile system lays it open to a possible military strike. And lastly, I see that Russia is taking its sweet time about 'retreating' from Georgia. Things could get interesting when the Olympics are over.

Today's first story is from Ambrose Evans-Pritchard, the international business editor of The Telegraph in London. The story is entitled "Sharp US money supply contraction points to Wall Street crunch ahead"...and the link is here.

Yesterday I quoted David Bond of the Wallace Street Journal. Today I present the entire article from which I borrowed it. It's currently posted at silverseek.com and is entitled "Let's Be Hunts". The link is here.

Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise. - Alan Greenspan, July 24, 1998...before the Committee on Banking and Financial Services, U.S. House of Representatives

Today is an important day for the Dow and S&P. If we have another down day today, we could see things head south pretty quick. The futures have already been spun higher as I fire this off to my editor (2:38 a.m. New York time) Let's see what the boyz have in store for us today.

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

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org