From Ed Steer:

It was another stellar day for all the precious metals yesterday...gold, silver platinum and palladium. Gold was up a hair over two percent...and the other three metals were up four percent plus.

Gold rose almost from the Globex open at the start of Friday morning trading in the Far East...and really moved to the upside the moment that Sydney closed for the weekend. From there, it rose steadily through London and the Comex open...with the peak price coming at the 4:00 p.m. London close...11:00 a.m. in New York. However, gold managed to close very close to its highs of the day [for a gain of almost $20] by the time electronic trading on the Globex system was over at 5:15 p.m. late Friday afternoon. The usual N.Y. commentator added this..."Aggregate estimated volume was only 100,104 lots and less than 25,000 contracts traded in the last three hours."

However, the star performer was silver. It, too, never looked back once Globex trading opened early Friday morning in the Far East. It finished trading on the Comex on its high of the day...and then went on to power higher in electronic trading...closing on its high tick [up 64 cents] at the end of Globex trading at 5:15 p.m. yesterday. I cannot remember the silver price doing that before...ever! Despite this stellar performance...most of the silver stocks were down on the day. Go figure!

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The HUI and XAU both finished in positive territory yesterday...but, considering the price moves in both metals, I was underwhelmed. However, I noted in commentary over at Bill Murphy's lemetropolecafe.com that gold had an all-time high close for May. Silver had its biggest one-month price gain ever. In a marketwatch.com story [thanks Craig] comes this snippet..."Silver futures gained 3% Friday, ending May with their biggest monthly gain in 22 years as inflation worries and hopes for an economic recovery boosted the metal." [...economic recovery??? Right! - Ed]

Thursday's open interest changes are as follows. Gold o.i. actually fell 6,536 contracts. Neither Ted nor I saw anything in gold's price action on Thursday that would indicate short covering was occurring. Total gold o.i. fell to 391,770 contracts, and volume was 206,955...which is quite a bit. In silver, o.i. rose a chunk...1,918 contracts to 102,573...with total volume traded a rather large 26,990 contracts.

Friday was first day notice for delivery into the June contract. Of the 9,618 gold contracts standing for delivery, only a smallish 1,512 contracts were actually delivered. In silver, a rather large 331 contracts was delivered on first notice day...but that was the lion's share of the 354 contracts that stood for delivery yesterday. Ted and I were both surprised about the small number of gold contracts delivered. Maybe the big delivery days will be early next week. I'll keep you posted.

Yesterday's new COT had a couple of minor surprises. The first one was that silver wasn't as bad as expected. The bullion banks only increased their net short position by a smallish 1,232 contracts. But that doesn't change the fact that the '4 or less' traders in the Commercial category [JPMorgan et alS] are net short 70% of the entire Comex silver market. The full-colour COT report is linked here. But in gold, the numbers were about as expected...the bullion banks went short against all comers. Their net short position increased a whopping 25,071 contracts...about as expected...and as Ted Butler and I mentioned last week. The '4 or less' traders in gold hold about 60% of the entire Comex short position. JPMorgan et al are now short 20.8 million ounces of gold. The big surprise in gold was the small traders. Although they added 6,519 contracts to their long positions, they also added a whopping 9,172 contracts to their short position as well. The full-colour gold COT report is linked here.

In other precious metals news...there were no changes at SLV, GLD...or at the U.S. Mint. Comex silver stocks dropped a smallish 17,834 ounces. The big news story comes courtesy of the usual N.Y. commentator..."Dow Jones reported yesterday that Congressional approval of IMF gold sales is in effect being smuggled through and may be achieved next week...Most observers presume sales will be modulated and consistent with the yet-to-be-renewed Washington Agreement. I would be surprised, however, not to see this news used as the occasion for a Bear counter-attack." The article appears at commodityonline.com and bears the headline "IMF gold sale: US Congress approval next week". Needless to say, I think you should read this...and the link is here.

Today's chart presents the median single-family home price divided by the price of one ounce of gold. This results in the home/gold ratio...or the cost of the median single family home in ounces of gold. For example, it currently takes 192 ounces of gold to buy the median single-family home. This is considerably less than the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down 68% from its 2001 peak and remains within the confines of its four-year accelerated downtrend. I thank P.S. for this info.

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Al Korelin of Korelin Economics was kind enough to interview me yesterday. If you wish to hear what I have to say, the link is here.

Since it's the weekend, I have a few items for your consideration...three stories and an interview.

The first story is from The Independent in the U.K. The headline reads "Ireland set to go bust, claims economic historian". His chosen prime candidate to go bust is "Ireland, followed by Italy and Belgium, and the UK is not too far behind". As usual, I thank Craig McCarty for the story. The link is here.

Courtesy of the King Report on Friday is this Bloomberg piece entitled "U.S. Inflation to Approach Zimbabwe Level, Faber Says". "I am 100 percent sure that the U.S. will go into hyperinflation...the problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so, and so inflation will start to accelerate." [Well, that's the only reason I need to load the boat with all the gold and silver I can afford. - Ed] The link is here.

In commentary over at marketskeptics.com, Eric deCarbonnel provides some very convincing evidence that the world's 2009 wheat/grain harvest will be a disaster. Being an ex-farm boy myself, I can tell you that things aren't looking that great around Edmonton either. The article [thanks once again, Craig] is entitled "Terrible Outlook For 2009 Global Wheat Output" and the link is here.

And lastly, for those of you who are not familiar with [or not entirely convinced that] the U.S. government, its Treasury Department and the Fed would suppress/control/manipulate gold and silver prices, here's an interview with GATA's secretary treasurer, Chris Powell that occurred on Tuesday, May 26th. The discussion centered on the specific evidence of the gold price suppression scheme of the Western central banks. The Powell interview begins at 18:30 into the program and lasts for about 15 minutes. It's well worth the listen...and the link is here.

…another rise in gold. But this time the rise was 17 points and I have to wonder whether gold is ready to go parabolic. Gold has been in its corrective mode for many months and thus a lot of energy has been stored up in the yellow metal. - Richard Russell, 29 May 2009

It's hard to believe that this 'blast from the past' is 35 years old already. The 1970s seem like just yesterday. This group has never faded away...and their music is just as popular today as it was back then. There was even a movie made recently using their music...including this song. Turn up your speakers...click here...and sing along if you wish!

So...we have the US$ apparently heading for oblivion, the Fed about to monetize debt big time, interest rates on the rise...and gold and silver on a tear. On the other side of the gold and silver coin is the danger signals that are ringing loud and clear from the Commitment of Traders report. Even though life is good right now, and everyone is as happy as can be...the bullion banks are still there, still in control and still very dangerous. How will you be able to tell if they have thrown in the towel...either over run, or buying back their short positions? As Ted Butler has said to me many times...just look at the price action. We'll have disorderly markets...and huge price moves to the up-side. It will be a sight to behold, and you won't have to ask..."is this it?"...as it will be self-evident. But we're not there yet.
Enjoy the rest of your weekend and I'll see you here bright and early on Tuesday morning.

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