From Ed Steer:

Gold was taken down a few dollars in Sunday night trading by the bullion banks in New York...but once Sydney and Hong Kong opened for the day, gold [and silver] returned to the plus column. Gold saw its highs moments before Hong Kong closed...and silver shortly after...in early trading in London. From there, both metals got slowly sold off. The real action didn't start until the Comex open, where every rally attempt in either metal...but gold in particular...got sold off by a not-for-profit seller.

click to enlarge

With oil up, the US$ down...and the CRB making a major upside move...$1,000 gold was a 12" putt. But it was obvious [at least to me] that someone didn't want that to happen...at least not yesterday. Platinum and palladium were both up almost two percent.

The open interest numbers for Friday's big up day in both gold and silver were not what I was expecting at all. Gold o.i. actually fell 3,138 contracts to 388,632 on smallish volume of 114,359 contracts. If someone had actually been covering their short positions, Friday's price activity would have been much more spectacular to the upside. Silver o.i. was only up 58 contracts to 102,631 on pretty big volume...33,164 contracts. My bet is that the N.Y. bullion banks were actually going short against all longs in both metals...as they've been doing all along...and that it was disguised by spread trades being lifted. The cut-off for this Friday's COT is at the close of trading today. This data will most certainly be in it.

The Comex Delivery Report indicated that another 850 gold contracts were delivered yesterday...plus another 17 in silver. I also noted in yesterday's COMEX numbers that by the time the smoke cleared on Friday, there were only 4,931 gold contracts that were standing for June delivery. From that, you have to subtract the 850 deliveries yesterday, so there's about 4,100 contracts left to deliver in June...which isn't a lot...410,000 ounces. There was no news from the U.S. Mint or the ETFs...either GLD or SLV. All I can tell you is that both the GLD and SLV are owed a lot of metal. Ted figures that the SLV alone is owed in the neighbourhood of 25 million ounces...so the boys and girls at SLV are shorting the shares since they don't have the physical. It will be interesting to see how long it takes them to get it...unless their custodians [JPMorgan in silver and HSBC USA in gold...the ring leaders of the gold cartel] can engineer a horrific sell-off in both metals so that it never has to be delivered. If you think that reeks of conflict of interest...you would be right about that! And lastly, silver inventories at the Comex-approved warehouses fell 271,411 ounces yesterday.

I found an interesting graph regarding new homes sales in the U.S. on the Internet over the weekend. It speaks volumes about the current situation in the real estate market. I'm sure that the graph for resales homes is just as [if not more] horrific than this.

click to enlarge

I have a few stories today. The first is one that I received many copies of over the weekend. This copy was courtesy of CDR+ reader, Brad Robertson. It's from market-ticker.denniger.net and bears the headline "What was THAT? [Friday Market Close]". Friday's close was "interesting" to put it mildly. Even Bill King over at the King Report was screaming bloody murder about it...yelling "Hey, SEC...Here is what blatant market manipulation looks like!"..."Trading sources allege that JPMorgan bought 2,500 SPMs near the close on Friday." Karl Denninger fills in the ugly details, and the link is here.

I see that little Timmy Geithner gave a speech to students at Peking University yesterday. He said, in response to a question..."Chinese dollar assets are very safe." His answer drew loud laughter from his student audience. [Note to Little Timmy: I wonder why they would mock you...you being the U.S. Treasury Secretary and all? - Ed] Later in the day, China's former central bank advisor Yu Yongding said in a Bloomberg story..."I wish to tell the U.S. government: 'Don't be complacent and think there isn't any alternative for China to buy your bills and bonds. The euro is an alternative. And there are lots of raw materials we can still buy’." [I would bet that gold would be one of them. - Ed] The link is here.

The next story is also from Bloomberg...where "Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company's 152-year history to hedge against further asset declines." [I wonder what kind of gold they bought...real gold...or paper gold? - Ed]. The link is here.

And lastly, like I posted on Saturday, here's another story for those of you that are still 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. This is an in-depth interview with GATA chairman, Bill Murphy, by thedailybell.com...an Internet site based in Switzerland. It goes into far more detail about the evidence that GATA has...and the work they've done. The link is here.

Here's something you don't see every day...On May 26th, two photographers were chasing a thunderstorm along a beach in Vlissingen, the Netherlands, when "the storm turned around and came a little too close for comfort."...so they hid under a balcony. The photo is courtesy of spaceweather.com.

click to enlarge

The American people will never knowingly adopt socialism. But under the name of ‘liberalism’ they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened... I no longer need to run as a Presidential candidate for the Socialist Party. The Democrat Party has adopted our platform. - Norman Thomas, six-time U.S. presidential candidate for the Socialist Party, 1944.

As you are already aware, I wasn't enamoured with yesterday's gold and silver activity. The usual N.Y. commentator said "Without fresh buying...from Western Hemisphere perspective...gold looks like pausing, especially with a 1.6 million ounce addition to the net speculative long position [COT - Ed] last week." Richard Russell said this yesterday..."Gold is overbought now, and it would not be surprising if it backed off, prior to the final attack on the highs. As you can see [by the reverse head-and-shoulders on the] chart, gold is in a potentially explosive position." So...are the bullion banks going to 'ring the cash register' again by going after all the long positions that the tech funds purchased all through May? That's the bullion banks' modus operandi. Or are they going to get overrun? I doubt that we'll have long to wait to find out.

See you on Wednesday.

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