Golden Minerals Company

23 Million Ounces of Gold

It was unfortunate that I didn't have a Saturday commentary, so I will discuss Friday's precious metals activity very briefly. As I mentioned in the wee hours of Friday morning... the jobs numbers were to be released later in the morning... and in the last five years there has only been one up day in gold when that number was released, bad or good. That's 59 out of 60 months. Now it's 60 months out of 61. A smallish rally that started at 11:00 a.m. in London went vertical the moment that the Comex opened. As soon as the jobs number was released, gold got smacked... only to come roaring back within 15 minutes or so. It had to be hit hard one more time to make it stay down for the day... and gold basically finished on its low of the day. Ditto for silver.


In early Monday morning trading in the Far East, gold stayed pretty close to $955, but slid a little as soon as London trading progressed. The U.S. dollar was enjoying a pretty decent rally, so it should be no surprise that gold was on the defensive a bit. But apparently gold wasn't falling fast enough to suit some not-for-profit seller/short seller, as gold dropped over $10 in a couple of minutes shortly after the Comex opened... and from there, the gold price didn't stray to far from $945 for the rest of the Comex and after-market trading in New York. Monday's price 'action' [such as it was] had absolutely nothing to do with the U.S. dollar Here's the Kitco gold chart for Friday and Monday





The silver chart for Monday was similar to gold's, but did manage a 20 cent rally the moment that the London p.m. gold fix was in at 3:00 p.m. [10:00 a.m. in New York]. But that 20 cent gain was reversed by the time trading in New York was done for the day.


I'll lump Thursday and Friday's changes in open interest together for both gold and silver. In those two days, gold open interest rose another 5,098 contracts to 398,293 contracts. Volume on Friday was 95,418 contracts. In silver, open interest rose 1,669 contracts to 102,476 contracts. Friday's volume was a huge 44,028 contracts. That's a lot! Monday's open interest numbers that go with the waterfall decline in both metals at the Comex open yesterday should be interesting when they're released later this morning.


Another casualty of no Saturday report was commentary on the latest Commitment of Traders report that was released on Friday at 3:30 Eastern Time. Here's the Reader's Digest version. In a word, it was wall-to-wall ugly! In silver, the bullion banks piled on another 3,155 short positions. The new net short position in silver is now up to 39,041 contracts... 195.2 million ounces. In gold, the bullion banks really piled on the short positions as they stopped this gold rally dead in its tracks. The banks in question added another 25,672 contracts to their net short position, which now sits at 228,193 contracts... 22.8 million ounces of the stuff.


If you want to see what "wall-to-wall ugly" looks like in living, breathing colour... here's the full colour COT graph for gold... which is linked target="_blank">here. Silver analyst Ted Butler had an interview with Eric King on the COT report... it's meaning... and it's probable outcome. This is well worth listening to, as Ted is the real expert in this area. The link to that is target="_blank">here. You have to scroll about two thirds of the way down the page to find silver and gold... and it's all presented in Grade 3 arithmetic.


The Comex Delivery Report for Friday and Monday combined showed that 288 gold contracts and five silver contracts were delivered. There are still about 1,400 gold contracts left to deliver in August... subject to change, of course. There were no changes in the SLV ETF over the last couple of days... but in the GLD, another 138,917 ounces were taken out. Over at the Zürcher Kantonalbank in Switzerland, there were no additions to their gold ETF last week... but, once again, a large increase in their silver holdings was reported, as their silver ETF added a chunky 774,221 ounces. And, as per usual, I thank Carl Loeb for those numbers. Their were no changes in the U.S. Mint's gold or silver eagle production numbers either. And, in the last couple of business days, the Comex-approved warehouses have added 455,587 troy ounces of silver to their inventories.


The usual N.Y. gold commentator had the following on Friday... and yesterday... "In the week closing on Thursday, December gold gained $28 [3%] and open interest added 28,866 lots... 83.56 tonnes or 7.3%. The $960 level is being quite obstinately defended; a point The Gartman Letter noted this [Friday] morning: There is clearly someone or something of size and consequence holding gold in U.S. dollar terms from moving upward through $965-$975.... Mitsui reports that the abrupt $3 drop in world gold just after the TOCOM open on Monday morning was due to a 'sweep'... a large institutional seller hitting all bids. Something similar occurred on the Comex open, with gold dropping $9 in just a few minutes. Today's down $12.60/$946.90 December gold close, was on quite light estimated volume of 77,670 lots. 80% of the day's volume traded in the first half. No heroes in N.Y. this Monday."


Because I haven't done a report for four days, I have a lot of stories today... too many to be linked... so I will hit the highlights of some of them in this paragraph. I see in a Reuters story that Little Timmy Geithner has "formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October." In a Bloomberg story Goldman Sachs says "A commodity shortage is likely next year as output of metals and agricultural products potentially rises too slowly to match revived demand... Producers of corn, copper, petroleum, coal, wheat, coffee and zinc are using more than 90 percent of their capacity." In a story in The Epoch Times, they report that "For the first time, more than 34 million Americans received food stamps." [That's equivalent to the entire population of Canada! - Ed] And lastly, in another Bloomberg story... "Turkey’s central bank adjusted its current-account records as it struggles to explain the origin of $18 billion in foreign currency inflows that have reduced the need for International Monetary Fund loans... The unexplained money has sparked newspaper reports of trucks laden with gold and banknotes rumbling across the Iranian border into Turkey, which the central bank on June 30 dismissed as false." [I'll leave it up to you, dear reader, to figure out which western country that might want to buy influence in Turkey right now. - Ed]


I have four precious metals related stories today. The first one was posted over at seekingalpha.com. It's about silver and entitled "Who Let China's Silver Bulls Out?" The article contains a video entitled "China encourages Silver Bullion for Investment". The short commentary... and the video clip... are definitely worth your time. I thank Craig McCarty for the story... and the link is http://www.gata.org/node/7672" target="_blank">here.


The fact that half of German gold is in the United States is no surprise to goldmoney.com's, James Turk. Back on April 23, 2001... Turk wrote an essay on this very issue subject entitled "Behind Closed Doors". This story dovetails nicely with the previous story. If you really want an idea of the opaque world that gold and silver are hidden in... this is a 'must read'. It's a bit on the long side, but worth the effort. This particular copy is borrowed from usagold.com and the link is


We will find out, as they say, in the fullness of time.



See you tomorrow.