Golden Minerals Company

From Ed Steer:

I'd forgotten that Thursday was the day for the release of the U.S. jobs report for June. If I'd know that when I wrote my commentary yesterday, I could have predicted [with 95% certainty] that gold would have been down...and it was. It happens every time that there's a crappy jobs report. It was no surprise that the Dow got creamed...but along with a rising U.S. dollar as well??? Something doesn't smell right...or is it just me?

I could also tell even without the jobs report that it wasn't looking good for gold yesterday, because at 4:00 p.m. in Hong Kong in their afternoon...3:00 a.m. in New York...the prices for both gold and silver rolled over. I don't know what it is about that [one hour and change] stretch of time between the Sydney close and the London open...but if there is going to be a down day...it starts right there a large percentage of the time. Here's the Kitco gold chart for the last three days. Note that the two down days...Tuesday and Thursday... where the top was in for both metals during that time period. This phenomenon has been going on for years.

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Not much to say about yesterday's activity. As I mentioned, the top was in at 4:00 in the afternoon in Hong Kong...and most of the damage was done between the London a.m. gold fix [10:30 a.m. in London...5:30 a.m. in New York] and twenty minutes after the Comex opened...when gold and silver hit their lows of the day. I believe the low occurred the moment that the jobs report was released...and someone can correct me if I'm wrong about that. From that point on, both metals traded sideways until electronic trading was through at 5:15 p.m. Eastern Daylight Time.

Open interest changes in gold and silver for Wednesday's big up day were [once again] counterintuitive to the price action...as open interest fell as prices rose. Gold o.i. fell 840 contracts to 378,359...on pretty big volume; 104,120 lots. In silver, o.i. fell a huge 3,625 contracts to 100,969...on 24,265 contracts. It's very possible it could have been a short covering rally in both metals that drove the price higher on Wednesday...as the gold price rose at 8:00 a.m. and 12:00 p.m. in two vertical $8 price spikes. This action would not only cause the price to rise as it did...but open interest to fall as well. However, the silver price was nearly comatose...so that theory doesn't hold water for it. Part of silver's drop in o.i. had to do with deliveries, as once a contract has been delivered...the open interest drops by that amount...and there were 1,885 silver contracts delivered on Wednesday. It's also possible that 'da boyz' are not reporting the open interest numbers in a timely manner...further distorting the o.i. numbers.

The Comex Delivery Report for Thursday showed that 15 gold contracts were delivered and 474 silver contracts as well. Let me make this point about deliveries and open interest one more time...and I should have made this clear ages ago. When a delivery is made, a long and a short cancel each other out [as the long takes delivery of physical bullion from the holder of the short position], so open interest drops by the appropriate number of contracts. So, using today's Comex Delivery Report as a guide...total gold open interest dropped 15 contracts and total silver open interest dropped 474 contracts. This is a mechanical process that occurs automatically on delivery. I hope that makes things a little clearer.

In other precious metals news, I note that there were no changes to the alleged holdings of either the GLD or SLV. And there were big changes reported by the U.S. Mint eagles program as well...and if Ted [Hawkeye] Butler hadn't seen it...I would have missed it entirely. Here's what happened. When I reported the new mintings for July 1st...I failed to notice that the Mint had increased their June gold and silver eagle production at the same time! I wasn't even looking for that. Anyway...here are the increases I missed. The U.S. Mint added another 3,000 one ounce gold eagles to June production, bringing the total up to 116,000...and in one ounce silver eagles they upped the total by a whopping 300,000...bringing the grand total for the month of June to 2,245,000. There were no changes reported in silver inventories over at the Comex-approved warehouses.

In other gold news, the usual New York commentator passed along the following comments that Richard Russell made last evening..."Gold is now fluctuating just above its 10-week moving average. But what's so interesting is that the rising blue 10-week m.a. is above the rising red 40-week m.a. [That's the 50 day and 200 day moving averages - Ed], and gold is trading bullishly above both rising m.a.'s. Does gold have the strength to attack the $1,004 resistance level again? That's what we're going to find out in this fateful month of July." [Richard, I couldn't agree more - Ed]

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Al Korelin of Korelin Economics was kind enough to interview me about a week ago...and, for whatever reason...I just got the link yesterday. So here it is...better late than never, I suppose. Click here.

Since it's a long weekend [for my American readers], and you probably have a little more time on your hands than normal, I'm going to run a few extra video and audio clips...and a few extra stories...plus the main feature...and it's a monster! Anyway, the first story made my jaw hit the floor. If this isn't the best reason I've heard of lately to rush out and buy all the gold and silver you can afford, I don't know what is. It's courtesy of Craig McCarty [so what else is new?] and was posted in The Guardian out of London. The headline reads "Banking system like South Sea bubble, says senior Bank of England official"..."The Bank's executive director for financial stability, Andy Haldane, compared the banking system over the last 20 years to the South Sea bubble of the early 18th century and said bankers had merely 'resorted to the roulette wheel' to keep up with each other." Wow! The link is here.

The next item is a really good interview with Nassim Taleb on CNBS, author of the world-famous book "The Black Swan". It lasts about nine minutes and is worth listening to. Craig McCarty slipped me this story as well. [Don't you have a job, Craig?] The link is here.

In a story out of the Financial Times in London comes this headline..."China moves to cut reliance on dollar". "China has taken another step towards internationalizing its currency and reducing reliance on the US dollar with the announcement of new rules to allow select companies to invoice and settle trade transactions in renminbi." The link is here.

And in a GATA release yesterday comes this headline "Austrian bank's gold report cites market manipulation". The entire report's comments on this subject appears to be taken directly from the years of work done by GATA ...and silver analyst Ted Butler. The most stunning comment comes from the CEO of Freeport McMoRan, James Mofett. He is quoted as saying "The central banks are the OPEC of gold. They will control the price of gold by selling until they change their minds." It nearly goes without saying that I think this is worth reading, and the link is here.

And while I still have my gold-plated tin-foil GATA hat on...here's another interview worth your time. GATA Chairman Bill Murphy, GATA secretary treasurer Chris Powell, and your humble scribe were interviewed about the gold and silver markets for a half hour yesterday by Eric King of King World News. The link is here.

And lastly, is the biggie I spoke of earlier. The quote I used yesterday came from this essay and went like this...The world's most powerful investment bank [Goldman Sachs] is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. Here's the full article by Matt Taibbi of Rolling Stone magazine. It's entitled "The Great American Bubble Machine". This particular copy of the essay [and there are lots around] is posted at correntewire.com. I thank Don Hagema for this sending me this version. Pack a lunch, blow the froth off a cool one, then click here.

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 [1820-1906]

Today's blast from the past is another well-known chestnut from the 1960s. I have a purloined DVD of their last concert appearance in Edmonton in 1992...which I was fortunate to get tickets for...and someday I'll get around to putting up some of the songs on youtube.com. Anyway, you might know most of the words to this, so feel free to sing along if you wish. Turn up your speakers and click here.

I see that the FDIC reported yesterday that it closed another seven banks...one in Texas and seven in Illinois. I keep asking myself how long can this insanity continue without the world's economic, financial and monetary systems collapsing into a smoldering ruin. If you believe some of what the above commentators are saying, it shouldn't be too long. That's why I feel you should still be buying all the physical gold and silver you can afford.

But there's nothing that can be done about it over the [long] weekend, so I suggest that you make like this squirrel below, and forget about everything until the world opens for business on Monday.

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See you on Tuesday morning.

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