Friday's action in goldHere's Ed Steer's commentary form Friday's Casey's resource plus......
There was absolutely nothing in Far East trading early Friday morning that gave any hint of the explosion that was about to take place at the London open. From its lows at that point, gold popped $20 right away...stayed flat from there until the Comex open...and then tacked on another $30 in spectacular fashion before someone said "enough is enough." But it didn't matter...gold is now off to the races as this spectacular P&F chart indicates. As I said yesterday, gold would have to break through $895 to indicate another big up-leg in this bull market...and that it did...and in spades! The chart says that there has been a 'quadruple top breakout' and the new target price based on that is $1,015 per troy ounce. I'm just hoping that it's not a false breakout. Fingers crossed!
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Silver had another roller coaster ride like it had on Thursday. The price retested the London opening low, and when it finally broke free, it was like a NASA space launch...before running into the same 'gentle hands' as did gold...shortly after 12:30 in New York.
Both metals did well in after-hours trading on the Globex. They had sold off from their 'highs', but recovered most of that in electronic trading after the floor session was over. As can be imagined, gold volume yesterday was pretty substantial. 96,821 contracts traded before 9:00 a.m. Eastern time...and the total volume for the day was a hefty 195,572...including spreads.
Thursday's price activity in gold brought a further increase in open interest in both metals. Gold o.i. rose 2,041 contracts to 34,088...and silver o.i. rose 1,043 contracts to 87,256.
The Commitment of Traders report was another surprise...nothing like Ted or I expected. The short position in silver actually got worse, as the '4 or less' bullion banks in the Commercial category increased their short position by 1,250 contracts. This was the result of them selling 319 long contracts and purchasing 1,569 shorts. In gold, the '4 or less' bullion banks
reduced their net short position by 2,632 contracts. They did this by purchasing 9,198 long positions and covering 6,566 shorts. Ted and I were expecting the opposite configuration...the '4 or less' traders improving in silver and the short position deteriorating in gold. Not so. Based on the trading action of that reporting period (Jan 14-20th) that's what should have happened. It's apparent to me that they are 'cooking the books' by not reporting everything. Yesterday's COT report is linked
here.
I have two gold news items to report today. The first is about the GLD ETF. On Friday, another 13 tonnes was added...bringing the total up to another new record...832.5 tonnes. That's a whopping 1.2 million troy ounces that's been added in the last four days...worth a cool US$1 Billion dollars! Thats big
big money! Someone wants gold badly...and in a hurry! The second item is a story out of India at
commodityonline.com. The headline read: "India Gold ETFs dismal; hold only 5 tonnes of gold"...MUMBAI: Nearly two years after India launched the Gold Exchange Traded Funds (ETFs), gold collections by the five gold funds in the country have been dismal. India’s Gold ETFs hold just over 5 tonnes of gold whereas Indian households own about 15,000 tonnes of gold, comprising around 10 per cent of global stocks of the yellow metal." (Why is this a surprise? Selling paper gold to the Indians is like trying to sell pictures of ice to the Eskimos. - Ed)
Besides the plethora of bad news today, I want to highlight a short comment from a 6-page report by Albert Edwards from the French firm Société Générale..."Investors now reluctantly accept that this recession is the worst since The Great Depression. But the one event from the 1930s investors hope will be repeated is that the inauguration of a new president will mark a similar 75% rally in the equity markets. In the UK, it is notable that despite the implosion of bank share prices, the market has been rallying outside of this sector. Yet beware: outright deflation has already arrived and world trade is collapsing. Korean GDP has just declined a MASSIVE annualised 21% in 2008 Q4! China is now joining the rest of the world in the stinking cesspit of uncontrolled economic slump. As other Asian currencies slide, the trade-weighted Yuan is rocketing up. The Yuan needs to be devalued." The report is a 'must read' and is linked
here".
I guess you're aware that Bernard Madoff lost $50 billion of his client's money in a giant Ponzi scheme. Well there is excellent news for his investors...the money was found...in Zimbabwe, as you can see from the photo below. I urge his investors not to spend it all in one place.
The first story is from Iceland. "The government of Iceland today became the first to be effectively brought down by the credit crunch. After several nights of rioting over the financial crisis, Prime Minister Geir Haarde, surrendered to increasing pressure and called a general election for May.
Special forces had to rescue Haarde from his car after he was surrounded by an furious mob hurling eggs and cans outside the government offices, in Reykjavik." The story is from
The Daily Mail in the U.K. and is linked
here.
The second story is from Berlin, and is to be found at
spiegel.de. The title says it all..."German Banks Are on the Edge of the Abyss"...and the link is
here.
The last story is about the ongoing manipulation of the silver market. The author, Rob Mackinlay, is from the U.K. and his story is entitled "Silver Investigation: Stakes are enormous" and the link is
here.
Great spirits have always encountered violent opposition from mediocre minds. - Albert Einstein
Today's 'blast from the past' is from 1968...and the video is in black and white. The song is great...and brings back lots of memories...at least for me! Turn up your speakers and then click
here.
Well, the Dow got saved from falling below 8,000 for about the tenth day in a row. When the President's Working Group finally does decide to give up on it...look out below! It could be Monday, because I just received a sign from heaven. When I checked into the Pan Pacific Hotel in Vancouver yesterday for the Vancouver Resource Conference that I'm currently attending, the very nice girl behind the reception desk handed me the keys to room #1929.
The gold market should be interesting to watch when it opens for Monday morning trading in the Far East...which is Sunday evening in most parts of North America.