Golden Minerals Company

Department of Justice/CFTC Probe JPMorgan's Silver Trading Activity

"The time has come," the Walrus said, "To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings."

Lewis Carroll from The Walrus and The Carpenter [Through the Looking-Glass and What Alice Found There - 1872]

Well, the ECB and the IMF did it on the weekend. They came down firmly on the side of "print, or die"... not necessarily to save Greece and the rest of the PIIGS... but the banks who lent them all the money in the first place. The die is cast... our fate is sealed. Not that it wasn't before... but this really puts the final nail in the coffin. As many of have said... "you can't borrow your way out of debt... or spend your way to prosperity." More on this later.

Gold [and the dollar] got sold off the moment that trading began in the Far East on Monday morning [5:00 p.m. Eastern time in New York on Sunday night]... and before the smoke cleared, gold was down about $25 to it's Monday low of around $1,184 spot shortly after 9:00 a.m. in London trading about 10 hours later. From that point, gold began a slow rise back to close at $1,202.70 spot. A loss on the day, to be sure... but an impressive recovery.

Compared to gold's price action... silver did nothing. It's spike low of the day was at the same time as gold's... minutes after 9:00 a.m. in London... around $18.18 spot. From there it climbed to its high of the day at 9:30 a.m. Eastern time in New York. The high was recorded as $18.68 spot. Silver actually finished up a dime on the day.

The dollar gapped down about 60 basis points at the beginning of trading in the Far East at 5:00 p.m. Eastern time on Sunday evening. This was certainly a knee-jerk reaction to the bailout package that had been announced in Europe earlier in the day. The dollar sell-off lasted until around 4:00 a.m. Eastern time before bottoming... and then gained around 130 basis points by the time bullion trading came to an end on Monday afternoon at 5:15 p.m. in New York. If you hadn't noticed already dear reader, gold and the dollar bottomed at the same time and then rose together. The gold chart looks like the dollar chart.

Despite the fact that gold was down on the day... the precious metals shares turned in a pretty decent performance. And it's not too much of a stretch to think that the big rally in the equity markets pulled the precious metals along for the ride. Most of the silver stocks did OK... and a lot of the juniors had some really decent gains. The HUI was up 2.02%

Well, the rallies in gold and silver that occurred on Friday afternoon between 12:15 p.m. and 1:00 p.m. Eastern time, produced the following changes in open interest. Gold's o.i. was up 8,698 contracts to 570,927 in total. We're getting close to the record high in gold open interest... and I'm sure it's another record that will fall before this rally is done. Volume [as I mentioned on Saturday morning] was monstrous 310,291 contracts... of which about 55,000 were roll-overs. Option expiry for the June gold contracts is on May 27th... and it's obvious that the roll-overs have begun in earnest.

Silver had a huge price spike of almost dollar on Friday. Total silver volume was 62,194 contracts... less about 6,600 spreads or roll-overs. But open interest fell a whopping 3,480 contracts. Both Ted Butler and I agree that this has all the hallmarks of a short-covering rally... which is something I alluded to in my silver comments on Saturday.

The CME Delivery Report yesterday showed that 108 gold and 38 silver contracts were posted for delivery on Wednesday. All the action is linked here. The GLD reported receiving another 117,431 ounces of gold... and there were no reported changes over at the SLV ETF. For whatever reason, there was no report from the Zürcher Kantonalbank in Switzerland. Maybe tomorrow. But the U.S. Mint had a report yesterday. They sold another 4,000 one-ounce gold eagles and another 586,500 silver eagles. Month-to-day for May, one ounce gold eagles sales are already at 45,500... 24K-gold buffaloes sales are at 28,500... and silver eagles are a whopping 4,478,500.

The Comex-approved depositories showed that 196,140 ounces of silver were removed from their collective inventories on Friday.

I have a LOT of stories for you today... and I have several that directly relate to the ECB's Greek bail-out... and here's the first one. In his latest market letter, Murray Pollitt of Pollitt & Co. in Toronto writes that the "rescue" of Greece is actually a rescue of banks holding Greek bonds and the bond-rating agencies that declared those bonds to be any better than Argentinean bonds, which default and are written down every so often as a matter of course. Pollitt wonders how, when the time comes, the U.S. dollar will be "rescued." It's titled simply "Hypocrisy"... and it's certainly worth your time... and the link is here.

It's now been about 36 hours since the big bailout was announced... and some of the behind-the-scenes maneuvering is out the open. Wading into the fray, now that the smoke has partially cleared, is Ambrose Evans-Pritchard over at The Telegraph in London. E-P is not amused. "The European Central Bank risks irreparable damage to its reputation by agreeing to the mass purchases of southern European bonds in defiance of the German Bundesbank and apparently under orders from EU leaders." The headline reads "ECB risks its reputation and a German backlash over mass bond purchases". I thank Roy Stephens for sending it to me in the wee hours of this morning... and the link to this must read article is here.

Tyler Durden over at zerohedge.com also wades in the Greek fray with this CNBC interview with Jim Rickards. The first paragraph of Durden's preamble reads as follows... "Jim Rickards, who recently has gotten massive media exposure on everything from the J.P. Morgan silver manipulation scandal to the Greek default, was back on CNBC earlier [yesterday] with one of the most fascinating insights we have yet heard from anyone, which demonstrates beyond a doubt why any attempt by Europe to print its way out of its current default is doomed." It's titled "Jim Rickards: "Goldman Can Create Shorts Faster Than Europe Can Print Money." The video is a must watch from start to finish... just as Durden's preamble is a must read. I thank Australian reader Wesley Legrand for sending it along... and the link to both is here.

Marc Faber also has a few things to say about the Greek bail out... plus he has opinions on a bunch of other topics as well. Here he is in a Bloomberg interview that's worth your time. The headline reads "Faber Says Greece a 'Write Off,' ECB Bailing Out Banks". I thank Washington State reader S.A. for sending it along... and the link is here.

The next story is definitely gold related. The Central Fund of Canada just announced another offering after the close of trading yesterday. There's U.S. $770 million left in this shelf prospectus... and when it closes this morning, I'll be really interested to see how much of that amount is taken up. The link to the press release is here.

At the same time, Sprott Asset Management's new physical gold fund, PHYS, closed yesterday with a 30% premium to NAV. I wonder if an offering is in their future as well? Tyler Durden over at zerohedge.com has a short commentary [and graph] on that... and I thank reader U.D. for sending me the story. The headline reads "Investors Willing To Pay 31% Premium To NAV For Sprott's Physical Gold ETF In Strike Over Global Fiat Devaluation Insanity" and the link is here.

Over at lewrockwell.com is this 14-minute interview with Congressman Ron Paul. Rockwell says Paul "talks about the progress of his Audit the Fed bill, and why the Fed, the Treasury, and the banksters fear it. He also discusses the crisis in Europe and especially Greece, and the Fed's sinister and secret role.". The interview is headlined "Is There Any Gold in Ft. Knox?"... and the link to this must listen interview is here.

Here's a gold-related story that appeared in last Friday's edition of The Wall Street Journal. But because the WSJ requires a subscription, I couldn't post it at the time. Here it is in the clear as a GATA release. The headline reads "The Gold Standard: The Case for Another Look"... and the link is here.

This story about gold was posted over at marketwatch.com. It's written, as usual, by Peter Brimelow... and bears the headline "Near-record gold close has bugs divided: Hard-core gold bugs are still bullish"... and the link is here.

Here's an interview about gold that's posted over at Canada's Business New Network. Has gold's safe-haven status been reduced by the EU's $1 trillion US rescue loan package? BNN puts the question to Frank McGhee, head precious metals trader, IBS Metals in Chicago. He says it's nonsense... and the link to the 6-minute video entitled "Safe Haven of Gold"... is here. I thank reader Roy Stephens for sending it along.

Anyone who's been reading my daily rant for any length of time will know that I'm not a big fan of rt.com's Max Keiser. He's just too full of himself to suit me. But he did an interview last week that I feel that I must bring to your attention. In the second half of the show, Max interviews investment adviser Michael Krieger about "America's Disneyland and Neo-Feudal Gulag Casino Economy," financial war between the US and China; and about which nation will be the first to back its currency with gold. The interview begins at the 13:40 mark... and as far as I'm concerned, this is a must /watch listen... and I once again thank reader Roy Stephens for digging it up... and the link is here.

And lastly is my headline story of the day. It's a story that appeared in the Sunday edition of the New York Post. For the U.S. Justice Department and the CFTC to be jointly looking into JPMorgan's silver trading activities, you just know there's more than smoke to be found. This is serious stuff. The headline reads "Feds probing JPMorgan trades in silver pit". The link to this must read story is here.

All we need to do now is to wait patiently for two things. One is the $US Gold "price" exceeding its December 2009 all time highs. The other, and it will not be delayed long afterwards, is the outbreak of the REAL debate - the one about the NATURE of money itself. - Bill Buckler, The Privateer, May 8, 2010

It's my guess that this past weekend's bail-out package will exacerbate the situation for not only Greece, but for all of Europe and Euro as well. Any person with a modicum of common sense knows that this is not going to work. But the banks have left no doubt in anyone's mind... they're going to melt down the printing presses if they have to. And that, dear reader, is all you need to know.

Gold and silver didn't do too much in Far East trading earlier today... and the London open has proved to be uneventful as well. At 5:30 a.m. Eastern... gold is up $6.50 and silver is down 9 cents... a dichotomy that I do not like to see. Gold volume [net of roll-overs] is around 24,000 contracts... and silver's volume [net of roll-overs] is around 3,700 contracts.

As I've mentioned quite a few times in the last couple of months... gold and the dollar have been trading together a lot of the time. Australian reader, Wesley Legrand was kind enough to send along this chart... and now you can see it for yourself. It's only been happening for the last few months.

That's all I have for today... and I'm looking forward to the Comex open with great interest this morning.

See you tomorrow.