From Ed Steer:

The top gold price in Hong Kong on Friday was at 4:00 p.m. in their afternoon...which was 8:00 a.m. in London...and 3:00 a.m. in New York. As soon as London opened, gold began drifting slightly lower. Once London was closed for the weekend...4 p.m. London/11:00 a.m. New York...the gold price rose a bit and nearly finished on its high of the day. It was a hugely bullish performance occurring as it did on Comex option expiry. The Comex floor session close was up $7.50 on an estimated volume of 77,210 contracts...including a switch effect of 4,878.

Silver did practically nothing...and spent most of Friday within a dime of its Thursday close.

But having said that, the shares turned in a one of their best days of the last year or so. Both silver and gold shares sparkled...with the HUI up 6.94%! That's a lot considering that Friday's price action was almost not worth mentioning....but we'll take it anyway.

Open interest numbers on Thursday's vertical spikes in both silver and gold were quite amazing. O.i. in gold jumped 8,224 contracts to 344,626...which is quite a bit. Silver also went up a respectable 1,334 contracts to 97,077. It's difficult to tell with all the switching going on, as to who was doing the buying and the selling. Normally the tech funds [in the Non-Commercial category of the COT] would show up as buyers once the 50-day moving averages were broken to the upside. But on Thursday, both 50-day m.a. were still intact...and weren't even broken on Friday's trading action.
So...who was going long? Maybe somebody was covering a big short position and hiding behind a curtain of spread trades put on at the same time, in order to hide their tracks. It seems like I'm always waiting for one more Commitment of Traders report to see what the bullion banks have been up to.

Speaking of the COT...the one that Ted and I were waiting for was released yesterday at 3:30 p.m. Eastern time. In a sentence...the silver numbers were spectacular, and the gold numbers were disappointing. In silver, the bullion banks in the Commercial category covered a whopping 3,275 short positions plus they added 412 long positions as well...for a net increase in long position of 3,687 contracts In the Non-Commercial category, the tech funds decreased their net long position by 2,808 contracts. The hundreds [if not thousands] of small traders in the Nonreportable category decreased their collective long positions by 879 contracts as well. The full-colour COT report for silver is linked here.

The tech funds are now at their second-lowest net long silver position in the last 15 months or so. The last time the COT in silver was configured in this way, the silver price was around $8.70 the ounce. Now we're sitting at $12.90. Is this bullish? You betcha!

Both Ted Butler and myself were disappointed with gold. The bullion banks in the Commercial category increased their net long position by only 3,901 contracts, while the tech funds in the Non-Commercial category decreased their long position to the tune of 1,528 contracts and to balance that out, the small traders in the Nonreportable category decreased their long position by 2,373. The full-colour COT report for gold is linked here.

As I've been saying for a month or more...the only fly-in-the-ointment is the huge net gold short position that the major bullion banks still hold. The dichotomy that exists between gold and silver in the COT report is a little unnerving. Is this the best the bullion banks could do in their attempt to clean out all the gold long positions so they, in turn, could cover their shorts? I don't expect we'll have to wait too long for an answer on that.

As I mentioned back in the first paragraph, yesterday was options expiry. It's a rare occurrence when gold and silver prices rise [or are allowed to rise] into this event. I consider it to be bullish. First day notice for delivery into the May silver contract is Thursday, April 30th. One way or another, next week should be interesting.

The Comex Delivery Report for Friday showed that 331 gold contracts were delivered. The big issuer was Bank of America [314 contracts] and the big stopper was The Bank of Nova Scotia [199 contracts]...and there were nine other smaller ones. Two contracts were delivered in silver. Even with the 331 contracts delivered yesterday, there still remains about 700 more gold contracts to be delivered before the end of April. Over at the Comex-approved warehouses, a very smallish 12,941 ounces of silver were taken off the exchange.

Of course the really big story in the gold world yesterday was out of China...when "China revealed that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes." For all of us at GATA, this is old news. Because of a few friends we have in 'high places'...we have been aware that this had been going on almost from the moment that they bought their first gold bar back in 2003. But it's always gratifying to be proven correct in the public press. There are many versions of this story floating around the Internet, and I have chosen this one from the Financial Post in Toronto. The headline reads..."China admits to building up stockpile of gold". I thank Wistar Holt for sending it to me...and the link is here.

The usual New York commentator had the following thoughts on the above..."China’s announcement overnight that it has raised its gold reserves by 75% since 2003 raises a number of points. Firstly of course, it further demonstrates that the central bank's gold holding statistics are close to worthless. Secondly, from a broad economic perspective, it calls into question Chinese foreign exchange policy. This puts them directly at odds with the Americans, who have clearly been hostile to central bank gold accumulation for more than a generation. Optimists might think the Chinese are planning to forgo the undervaluation privilege which has been central to their U.S. relationship...the rule of Robert Rubin. This could help reflate their economy. More likely, in my view, the risibly cosmetic revaluation charade will be abandoned, triggering competitive devaluations across the Far East."

Al Korelin of Korelin Economics was kind enough to interview me on Thursday. If you think what I have to say might be of interest, the link to that interview is here.

Besides the gold story above, I have three more items of interest. The first is a story from indiaexpress.com where it appears that there are big problems with the wheat harvest in the Punjab...both in quality and yield. The headline reads "No bumper wheat harvest in Punjab". I thank Craig McCarty for sending me the story...and the link is here.

The next story is from miningmx.com. It appears that wage negotiations with gold mining companies in South Africa could be a battle this year. The story is entitled "Signs point to tough S.A. gold wage talks". I thank the 'Charleston Voice' for sending me this story...and the link is here.

And lastly comes this story from the May issue of The Atlantic. This has been sitting in my in-box since Monday. It's a little on the long side for week-day reading...but for the weekend...it's perfect. According to a former chief economist of the IMF, the crash in the United States has allowed the financial industry to effectively capture the U.S. government. The essay is entitled "The Quiet Coup" and is a 'must read' if there ever was one. I thank P.S. for sending it to me...and the link is here.

Prosperity cannot be restored by raids upon the public Treasury. - Herbert Hoover

Today's 'blast from the past' is a theme from a James Bond movie from 'way back when'. The song is great...as is the singer. So turn up your speakers and click here.

So...China finally came out of the closet on their gold purchases. They know what real money is...and isn't. I wonder how many other countries [and their respective central banks] are lying through their teeth and accumulating on the sly? As the N.Y. commentator so succinctly put it..."it further demonstrates that the central banks' gold holding statistics are close to worthless." This is just another reason, dear reader, that you should be buying the stuff with both hands yourself.

Enjoy the rest of your weekend, and I'll see you here on Tuesday.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.