More gold goodies from John Brimelow…

Last night:

To Bears: Forget it

Friday’s $11.60 Comex regular session loss and subsequent c. $5 further erosion saw a substantial 6,846 contracts cut from open interest – 20.17 tonnes (1.8%). Evidently, on balance, more longs were evicted. This means that open interest has dropped 17,034 contracts (54.8 tonnes or 4.6%) since the last Comex cut-off (Tuesday), since when world gold lost 2.7%.

Today of course was another bearish rampage. The major bank seller - referred to by Mitsui HK this morning - drove world gold down to $874; a drift in European dealing was succeeded by a furious selling bout as the NY market opened – down $10 in an hour: 68% of the day’s estimated Comex volume done by 10AM; June gold down to a down $27.20 low by 10-30am ($865.50 spot).

After that, curiously, the pressure came off; gold drifted for the rest of the day, closing the floor session down $24.50. Estimated volume was 119,802 lots with a switch effect of 2,840. Dedicated optimists amongst the Bulls would note that the gold shares, after their initial bashing, drifted up all day. Nevertheless the HUI closed down 4.06% and the XAU 3.36%: technically unappealing postures.

The GLD ETF gold holdings were reported unchanged at 1127.37 tonnes – unchanged from Friday and except for 0.7 tonnes (2,251 ozs) unchanged for 7 business days. During this time gold dropped $25.50 (2.76%) and open interest lost 19,564 contacts (60.8 tonnes, or 5.2%).

Market Vane’s Bullish Consensus for gold recorded a three point drop to 70%. The HGNLI was unchanged at +3.5%.

Even hardened gold veterans must be impressed by the amount of jawboning to which gold has recently been subjected. The ECB gold sale (this outfit has made it quite clear it is exempt from the reporting rules to which it subjects its captive CBs - so why announce now?). The IMF sale. The UK exaggeration of the IMF sale. And now European Central Bank Governing Council member Ewald Nowotny has implied to Reuters that the WAG CB gold sale restrictions might not be renewed. See

http://www.forexpros.com/news/forex-...
-gold-agreement-is-irrelevant-ecb's-... http://www.business-standard.com/ind...

Objectively, the circumstances which were thought at least partially to have caused WAG1 – the social consequences of the devastating of 3rd World Gold Mining - have been only mildly alleviated. Escalating operating costs have eaten up the difference.

Subjectively, why should a likely seller warn the market?

There is a distinct smell of the late ‘70s about.

Happily, if the Official Sector throws a tantrum about gold’s buoyancy, and like the 70’s tries to repress it, they will now run into India: see

According to an analyst, Indian banks currently hold about 5-6 tonnes of gold which is equivalent to hardly two-days of domestic consumption as per a conservative estimate based on last year’s imports.

India is in reality hugely price- sensitive: the next few days will be important for world gold.

Unfortunately India’s formal markets are closed tomorrow.

***

Today:

over to India

Indian "Financial" markets were closed today, including the Stock market. However, most gold markets were functioning, as usual. Using the (usually upskewed) off-shore rates, local gold appeared to be at an ex-duty premium of at least $3, which would be very ample for legal imports.

Viet Nam re-opened: and showed a huge $18.42 premium, with world gold at $877.40. Apparently this very dedicated – and significant – bullion buyer is back in the market.

The Shanghai Gold Exchange showed a $1.11 premium too. I am dubious as to what this means, but from the point of view of gold’s friends it is positive. Recently the SGE has been showing quite material discounts.

TOCOM traded the equivalent of 14,630 NY lots, with the active contract losing 34 yen. Open interest added 0.89 tonnes (260.1 Comex); according to Mitsubishi the "General Public" added 0.7 tonnes – 547 Comex lots - to their long.World gold went out $6.10 above the NY floor close.

A survey of the Bullion coin dealer web sites suggests US premiums have risen slightly.

This is dangerous territory for Bears.