Golden Minerals Company

As I mentioned in 'The Wrap' in Friday's column, gold didn't do a lot in Far East trading. It got sold off about twenty bucks in the early afternoon in the Far East...but recovered smartly into the London open...and was actually up from Thursday's close.

But, alas, the selling began almost immediately after the London open...and by the time 8:00 a.m. in New York rolled around, the gold price was down just about fifty bucks. From there, the price didn't do a whole heck of a lot until five minutes after London closed for the weekend, which translated into 11:05 a.m. Eastern time.

From 11:05 a.m...right up until 1:15 p.m...JPMorgan et al peeled another seventy bucks off the gold price. The low of the day was 1,628.60 spot. From that 1:15 p.m. low, gold recovered just under thirty dollars, but still closed down $79 on the day. Volume was monstrous...in the neighbourhood of 340,000 contracts net.

Here's he New York price action all by itself. The bullion banks' handiwork that began at 11:05 and ended at 1:15 p.m. is obvious.

It's a no brainer to see where the selling began in silver yesterday...and it was all down hill from there until about until the same time as gold began to flat-line...about 8:00 a.m. Eastern time.

From there, the silver price was actually rose almost a dollar until the magic hour of 11:05 a.m. when JPMorgan showed up. From 11:05 until 1:25 p.m...silver got clocked for almost $3.50 in two hours and twenty minutes!

Silver's low tick came five minutes before the close of Comex trading at $29.76 spot. From that low, silver gained back $1.17...and only finished down $4.91 on the day at $30.93 spot. Net volume was an out-of-this world 114,000 contracts. This volume represented more than 100% of silver's total open interest. Just think about that for a second.

Here's the New York chart for silver as well. Note the early rally...and then the brutal takedown moments after London closed for the weekend.

I just thought I'd throw in the 5-day dollar chart for entertainment purposes only. The dollar rose just about 4% over a two day period...and then gave a bunch of its gains back on the second day...and then it did nothing on Friday when the precious metals really got creamed in New York starting at 11:05 a.m. Eastern. Those blaming a rising dollar for gold's demise need to get their facts straight.

Here's the 5-day HUI chart, which actually only contains four days worth of data. Why Monday's trading action isn't on it beats the hell out of me.

Note the down-tick that started in late afternoon trading on Wednesday. That corresponds to an initial price decline around 2:30 p.m. on Wednesday afternoon...which is visible on the blue trace on the Kitco gold chart above. The rest, as they say, is history...with two gap-down days in a row on Thursday and Friday. From its Wednesday high tick to its Friday low, the HUI was down just about 100 points...around 15.7%.

Needless to say, the silver stocks got hit pretty hard, but not quite as bad as Thursday, if there's any consolation in that. Nick Laird's Silver Sentiment Index was down 6.72%.

(Click on image to enlarge)

One thing that we have a tendency to forget about when there are massive down days like Thursday and Friday, is this...who are the buyers? Who would catch a falling knife? Just asking.

The CME's Daily Delivery Report showed that 65 gold, along with 18 silver contracts were posted for delivery on Tuesday. The link to the action is here.

There were no reported changes in either GLD or SLV on Friday...which is a big surprise, all things considered.

However, there was finally a sales report worthy of the name from the U.S. Mint. They sold 10,500 ounces of gold eagles...2,000 one-ounce 24K gold buffaloes...and 850,000 silver eagles. Month-to-date the mint has sold 49,500 ounces of gold eagles...7,500 one-ounce 24K gold buffaloes...and 2,300,500 silver eagles. We've still got one full week to go to improve on those numbers.

There was a fair amount of activity in the Comex-approved depositories yesterday. They reported receiving 1,194,855 ounces of silver and shipped 432,237 troy ounces of the stuff out the door. The report is worth a quick look...and the link is here.

Well, the Commitment of Traders Report was everything I hoped it would be. In silver, the Commercial traders decreased their net short position by a total of 4,679 contracts, or 23,395,000 troy ounces. The net short position in silver is now down to 203.5 million ounces.

Of that amount, the '4 or less' traders are short 191.7 million ounces...and the '5 through 8' bullion banks are short 40.4 million ounces. Straight addition shows that these eight bullion banks are short 232.1 million ounces of silver...which is 114% of the entire net short position. They control the price, it's as simple as that...and if they and their respective short positions disappeared tomorrow, the remaining Commercial traders would be net long the silver market...just like everyone else.

In gold, the Commercials decreased their net short position by a chunky 12,840 contracts which, multiplied by 100, is a reduction 1.284 million ounces. The Commercial net short position is now down to 19.76 million ounces...and it hasn't been under twenty million ounces for quite some time.

The '4 or less' bullion banks are short 15.5 million ounces of gold...and the '5 through 8' bullion banks are short 5.0 million ounces of gold. So these eight bullion banks are short a bit more that 100% of the entire Commercial net short position. Just like in silver, they control the gold price as well.

There are 50 Commercial traders that hold short positions...and eight of them rule the price roost in gold. In silver, there are 44 Commercial traders on the short side...and considerably less than eight of them control the silver price. These are called concentrated short positions...and are flat-out illegal. This is what the COT report was designed to show, but even though it's as blatant as it can possibly get, the CFTC does nothing.

It nearly goes without saying that after Friday's price [and volume] action in gold and silver [plus a lot of other metals] there has been another massive improvement in the bullion banks short position in these metals...but we won't know how big until next Friday's COT report.

If you live and breath technical analysis, then you'll devour what reader Scott Pluschau had to say in an e-mail to me yesterday. Here it is verbatim...

"Ed, now that is some blood in the streets. A wrecking ball was taken to the metals.

I know you don't believe in TA, but the low risk play for me in gold was yesterday below $1,750, and when it broke below $1,700 that was bad news from an auction market perspective, as there was a ton of traders who were long and trapped up there in that consolidation area that formed since August. When $1,700 went, pain and/or margin calls were coming to the longs up there. That is how I see the probabilities. I mean no disrespect to other technicians out there, but it doesn't matter what stochastics, Fibonacci, or Elliot wave signals, its a two way auction and zero sum game in futures. I'll bet a bunch of traders "averaged down" and there are blown up accounts all over the place.

I think silver has a chance for some strong support here at $30, which was the most previous mature balance area.

Maybe this is a washout? Too bad we couldn't get the COT data for the action since the cutoff on Tuesday today at 3:30. Waiting till next Friday will take an eternity... [Amen to that! - Ed]

I completely understand and agree to accumulate and hold long term on fundamentals, I'm just sharing with you my philosophy on "trading". Scott"

Over at my bullion dealer yesterday, there was hardly a place to park. I had to park way down the street from where I normally do. I've never seen that many buyers in his story at one time...ever! Friday turned out to be his biggest sales day in the company's history. I would suspect that this scene was played out at just about every bullion dealer in North America on Friday...and I would guess that there will be a similar reaction all over the Far East, Australia and Europe when business resumes on Monday morning...which begins on Sunday night here in North America.

And just before I filed this morning around 6:30 a.m. Eastern time, I got this e-mail from British reader Tariq Khan about what's been happening in the bullion market in his area over the last couple of days...

Hi Ed,

Just got off the phone with my coin dealer. He has been cleaned out of all gold sovereigns. Can't get them from the Royal Mint who have also been cleaned out. This is unprecedented. He had a few 1/4 Britannia coins which I have just snapped up. He has got some silver stock but he is not willing to part with it at these prices.

Another coin dealer, not my regular one, from whom I bought some silver Britannia coins yesterday, are closed for business. They are not taking any orders. As there pricing is in real time, as opposed to London Fixes, my other coin dealer was telling me that they must be struggling with stocks too. Here's the link to their website. As you can see, they're not taking orders for anything.

Another of the coin dealers I do business with, has not picked up the phone since midday yesterday."

Tariq

Here's a very interesting chart that Nick Laird of sharelynx.com fame sent me early this morning. It's his Total PM Pools chart that I post from time to time. As Nick pointed out, despite the carnage in the metals these last few days, there's been no selling of physical in the various holdings that he watches. That could change on Monday or Tuesday, but as I mentioned above, there were no withdrawals from GLD or SLV yesterday...and only 1.7 million ounces came out of SLV on Thursday.

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Since today is Saturday, it gives me an opportunity to empty out my in-box...which is precisely what I plan on doing. The final edit is up to you.

¤ Critical Reads

Black Friday Arrives: Biggest Weekly Move In 30 Year Bond Since Black Monday

30-year bond rates moved more than three standard deviations this past week - the greatest move since Black Monday (1987) - as it dropped 55 basis points...or seven standard deviations of a percentage move basis, given how low interest rates are.

The two graphs in this short read posted over at zerohedge.com are worth the trip all by themselves...and I thank Washington state reader S.A. for sending it along. The link is here.

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Financial Warfare

What has ensued since the Swiss intervention has been nothing short of total currency chaos throughout the emerging markets world. Here are some numbers to put things in perspective. Since the beginning of August, here is how much various currencies has depreciated versus the U.S. dollar. The Brazilian real - 20%, the Indian rupee -13%, the Korean won -13%, the Mexican Peso -20%! I could go on, but you get the point. Now, I am not going to say that these currency moves were also caused deliberately by the central planners although I wouldn’t put it past them.

The massive depreciation in these country's currencies lately has likely only made the inflation situation worse. For example, let’s take a look at the most important commodity to global economic growth, oil, in the currencies of these various markets...and we'll also look at the gold charts in these currencies as well.

This zerohedge.com story was passed around by Casey Research's own David Galland yesterday. Most of it is graphs and, like the previous story, they are worth the trip all by themselves. This is a must read...and the link is here.

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G-20 Vows ‘Strong’ Response to Slowing Economy

Well, to no one's surprise I'm sure, the meeting was a bust.

Finance chiefs from the Group of 20 nations said they will address “renewed challenges” facing the slowing global economy.

In a statement released after talks in Washington, the officials said they were “committed to a strong and coordinated international response to address the renewed challenges facing the global economy, notably from heightened downside risks from sovereign stresses, financial system fragility, market turbulence, weak economic growth and unacceptably high unemployment.”

Whatever the solution is, we taxpayers will get the bill for it.

Here's a link to a Reuters story on this that I borrowed from yesterday's King Report...and the link is here.

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Warning of a stock market rout unless a eurozone rescue package is found

EU leaders were under renewed pressure today to agree to immediate steps towards a full-scale rescue of ailing eurozone economies or risk a stock market rout when exchanges open on Monday.

Fears that months of debate over how to resolve the Greek debt crisis had brought the world economy to another "Lehman's moment" led several prominent analysts to warn that the situation could spark a run on bank stocks next week.

This story was posted in The Guardian on Friday evening...and I thank Roy Stephens for sending it along. The link is here.

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'We Won't Pay' - Greece's Middle Class Revolt against Austerity

Small business owners in Greece have long been the backbone of the economy and reliable taxpayers in a country where tax evasion is rampant. That, though, is now changing. Self-employed workers have had enough of rising taxes and have begun to revolt.

The people who could ultimately give Greece the coup de grâce are not the kind to throw stones or Molotov cocktails, and they have yet to torch any cars. Instead, they are people like 60-year-old beverage distributor Angelos Belitsakos, people who might soon turn into a real problem for the economically unstable country. Feeling cornered, he and other private business owners want to go on the offensive. But instead fighting with weapons, they are using something much more dangerous. They are fighting with money.

This absolutely amazing story is not overly long...and worth your time if you have it. It's posted over at the German website spiegel.de...and I thank Roy Stephens for sending it along. The link is here.

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William Black: Why Nobody Went to Jail During the Credit Crisis

Here's an interview from last weekend that was posted over at financialsense.com.

Bill explains to Jim Puplava why no one has gone to jail four years after the beginning of the historic Credit Crisis. Professor Black believes that the level of corruption and fraud is so pervasive that very few of the guilty will ever be brought to justice.

This level of corruption and fraud also extends to the commodity markets as well...as you witnessed with what happened in gold, silver and a whole raft of other commodities during the week that was.

I thank reader Daniel Barr for sharing this with us...and the link to the interview [or the transcript] is here.

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The Attack on Accidental Americans

When Julie Veilleux discovered she was American, she went to the nearest US embassy to renounce her citizenship. Having lived in Canada since she was a young child, the 48-year-old had no idea she carried the burden of dual citizenship. But the renunciation will not clear away the past ten years of penalties with the Internal Revenue Service.

The IRS is making a worldwide push to squeeze money from Americans living abroad and from anyone who holds dual citizenship, whether they know it or not. It doesn't matter if the "duals" want US status, have never set foot on US soil, or never conducted business with an American. It doesn't matter if those targeted owe a single cent to the IRS. Unlike almost every other nation in the world, the United States requires citizens living abroad to file tax forms on the money they do not owe as well as to report foreign bank accounts or holdings such as stocks or RSSPs. The possible penalty for not reporting is $10,000 per "disclosed asset" per year.

This fairly long read is posted over at mises.org...and if your an expat American citizen, I would suggest that its more than worth your while. I thank West Virginia reader Elliot Simon for sending me this story earlier this week...and the link is here.

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Video Interview with Doug Casey

Here's a 30-minute interview with our very own Doug Casey. It's part of the 'Speculator Series' by Cambridge House International. It arrived in my in-box courtesy of Casey Research CEO, Olivier Garret. This is an absolute must watch...and the link is here.

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George Carlin - Definitely an "R" rating here!!!

I've never asked Doug Casey this question, but I'm sure he holds George Carlin in high esteem. Here's a 3:19 video clip posted over at youtube.com that's a must watch...because everything George has to say is absolutely true. He's obviously read G. Edward Griffin's book "The Creature From Jekyll Island". But be warned in advance, that there is some very bad language in here.

I thank Edmonton reader B.E.O. for sending me this clip last weekend. The link is here.

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London Metal Exchange reveals it has received multiple takeover bids

A bidding war has broken out for the centuries-old London Metal Exchange, with the company disclosing that it has received several expressions of interest and that an auction process is under way.

The global commodities boom, although it has abated amid fears for the world economy, is the driving force behind the desire to acquire the LME, along with a growing trend for exchanges to merge to cut costs.

Founded in 1571, the LME is the biggest exchange of its kind and last year reported that its total value of trading had exceeded an astonishing $11.63 trillion as prices of base metals soared.

This story was posted in The Guardian on Friday evening...and I thank U.K. reader Tariq Khan for sharing it with us. The link is here.

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Ron Paul holds hearing on legalizing competition in currencies

This story was contained in a GATA release last weekend...and I just haven't had the space for it until now. Since Chris Powell has written the preamble...and included several relevant links, I'll leave it up to him to do the honours. The link is here.

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CME raises gold, silver, copper margin requirements

The dust had barely settled after one of the biggest criminal take-downs in precious metals history, when the CME announced that they were raising margin rates for gold, silver and a couple of other commodities. This they did after the close of business on Friday...long after the damage had been done. Margin requirements are always raised in rapidly rising markets...not after the commodities in question lie bleeding on the trading floor.

This takes effect at the close of business on Monday...and is just one more way of beating the last leveraged longs out of their positions so that the bullion banks can cover more short positions. This is as criminal as it gets.

If there are that many leveraged long positions still left, this will negatively impact the prices of these commodities during the Monday trading day as these longs toss in the towel as well.

This short story, from The Wall Street Journal last night, is printed in the clear in this GATA release...and is a must read. The link is here. If you want to read the full text of the CME advisory, the link to that is here.

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Sprott Money Temporarily Runs Out of Silver

With gold and silver prices plunging, King World News sources are reporting massive physical demand. One example is Sprott Money, which completely ran out of physical silver. Larisa Sprott, President of Sprott Money told KWN, “It’s been pretty wild, especially the last three or four days because of the price drop. People are trading in their paper money for gold and silver, but we are seeing more purchases of silver net. In fact the buying has been really skewed in favor of silver, there is tremendous demand.”

The link to this must read KWN blog is here.

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Where will India get its gold in 2014?

In 2010, Indian gold demand for coins, bars and other investments rose 83%, while gold jewelry demand increased 36%! So far in 2011 Indian gold demand has continued its rapid rise. World Gold Council data shows investment demand in Q2 2011 rose a whopping 78% year-over-year, while jewelry demand jumped 18%.

Based just on Indian gold projections there is going to be a serious gold supply problem in the very near future. If you factor in China and the rest of the world, you've really got to wonder just how high gold is going to go. Anyone proclaiming a gold bubble is clueless and dangerous to your financial health.

This short item was posted over at the solitudecanyon.com website...and I thank reader Randall Reinwasser for sharing it. The link is here.

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A Gold Rush Wanes as Hedge Funds Sell

This story out of Thursday's edition of The New York Times is typical of the drivel that comes out of the main stream media most of the time. They look at the effects of the price action...and never the cause. The truth of the matter, as you should already know, is that all these hedge funds were blown out of their positions...and did not sell because they wanted to, but because they had to.

I'm posting this Roy Stephens offering for entertainment purposes only...and the link is here.

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Asian Buying Will Overwhelm Manipulation in the Paper Gold & Silver Markets: Ben Davies

Here's a little something that Eric sent me in the wee hours of Saturday morning...and the link to this King World News audio interview is here.

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Gerald Celente Announces He's Buying Silver

This King World News blog was another item that I got from Eric earlier this morning...and the link is here.

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Witnessing the Republicans and Democrats bicker over the U.S. debt, is like watching two drunks argue over a bar bill on the Titanic. - Author Unknown

Today's blast from the past is, without doubt, one of the most famous rock songs ever written...and certainly in the top five hits of all time. No introduction is necessary to either the song, or the group. So turn up your speakers...and the link to the youtube.com video is here.

Well, there's not much to be said that I haven't already mentioned in this column yesterday. The 3-year silver chart shows you all you need to know. The smashing that silver got on Thursday and Friday was even worse than the drive-by shooting that took place on May 1st...and silver is now more oversold than it has been at any point during the last three years, including the 2008 melt-down.

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The charts for gold, platinum, palladium and copper all show the same type of carnage but, as always, silver is JPMorgan et al's number one problem child.

Here's the 3-year gold chart for comparison purposes.

(Click on image to enlarge)

'Da Boyz' are obviously in a big hurry to get this done, but the reason for that is still not known to us. The volume in both gold and silver was off the charts...and is indicative of the volume one would encounter when a major low is being set. This may be the case here.

The preliminary open interest numbers for both gold and silver on Friday show big increases in o.i...and it's really impossible to tell what the final numbers will be when they're posted on Monday morning.

Thursday's final open interest numbers, were marked down considerably from what the preliminary o.i. numbers were. Gold showed a big improvement...and silver's final o.i. improvement was rather small.

Nothing will be known for sure until next Friday's COT report, which is why I'm loath to mention all these preliminary and final numbers, because they only hint at what the COT might show. But one thing is for sure, the clean out of the leveraged long holders in all precious metals was on an almost unprecedented scale, with the bullion banks now holding the smallest short positions in these metals in many years.

The question then needs to be asked, is whether or not these same bullion banks will go short on the next rally. So far to date, it's been the same old routine. Maybe this time it won't be. I'm only guessing here, but I don't think we'll have to wait to long to get the answer to that question.

It will also be interesting to see if these huge increases in margin for both gold and silver have much affect on the price, because we're already at the bottom of the barrel in silver...and very close to that in gold. But it's obvious that the CME and JPMorgan are leaving no stone unturned.

Ted Butler always said that before the bullion banks let the precious metals run to the upside, that the final smash-down in gold and silver would scare the living hell out of everybody. These last few days certainly qualified for that. Now we have to wait to see what happens from here.

I'll be very interested to see how the precious metals open in Far East trading on Monday morning...Sunday night here in North America.

As I mentioned in this column yesterday...there's still time to either re-adjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Enjoy what's left of your weekend...and I'll see you on Tuesday.