From Ed Steer:

The gold price stayed within five bucks of $950 in Far East trading on Tuesday morning. The bottom for gold was in at 1:00 p.m. in Hong Kong. From there, it rallied a bit into the London open and then fell five dollars into the London silver fix. From there, a smallish rally began which ran into the usual New York not-for-profit sellers around 9:15 a.m. on the Comex.

Volume wasn't particularly heavy yesterday, so it wasn't hard to move the precious metals' prices around. The usual N.Y. commentator had the following to say..."Today's Comex open was buoyant, with Comex gold up $12 shortly after 9 a.m. But Western follow-through was lacking...volume almost disappeared after 11 a.m. and estimated volume between 1:00 p.m. and the close was only 2,300 lots - which might be a record [low amount]. August gold finished up only $2.20 with estimated volume of 86,944 contracts."

Silver rose a dime into Sydney trading and, like gold, had its low of the day at 1:00 p.m. in Hong Kong. From there, it rose nicely into the London open, fell into the London silver fix [noon in London...7 a.m. in New York]...and then took off before running into JPMorgan at 8:30 a.m. in New York. From that point on, even the smallest rally attempt ran into a determined seller.

Much to my [and Ted Butler's] surprise, Monday's gold down-day resulted in a rise in open interest of 2,940 contracts for a total gold o.i. of 394,900 contracts. Volume was 106,240 contracts. In silver, o.i. rose 434 contracts to 106,225. Total volume traded was 37,362 contracts on Monday. Ted and I were expecting another decline in open interest in both metals...and it didn't happen. We are both discouraged by the fact that it appears that the bullion banks are in no hurry to cover their short positions...as we had originally assumed they were. Yesterday's trading volumes...which should also show a rise in open interest in both metals...should be in Friday's Commitment of Traders report.

The Comex Delivery Report showed that 309 gold contracts were delivered yesterday...along with those 200 contracts of silver that suddenly showed up for delivery on Friday. They [Triland USA Inc.] didn't waste any time delivering 190 of those contracts to The Bank of Nova Scotia. That leaves [as of yesterday morning] about 2,000 gold contracts and 15 silver contracts left in for June delivery. It's my bet...that with June less than half over...there will be a lot more deliveries added to these numbers before this month is done.

In other gold news, I see that the U.S. Mint has updated their website and shows that another 15,000 one-ounce gold eagles have been minted since last Wednesday...and another 400,000 silver eagles over the same period. It's obvious to me that production in both is down. That would jibe with what's going on in the retail market with slowing sales and falling premiums. There were no changes in either SLV or GLD...and no changes worth mentioning in silver over at the Comex-approved warehouses.

I note in a businessday.co.za story posted at Kitco yesterday that "In the first quarter of this year, South Africa produced 49,710 tons of gold...4,8% less than in the same quarter last year." And in a Reuters story carried at uk.biz.yahoo.com...and also posted at Kitco...is this tidbit "Gold and gold receivables held by euro zone central banks fell by €18 million...in the week ending June 5, the European Central Bank said on Tuesday... Gold holdings fell because of sales by two euro zone central banks, consistent with the 2004 Central Bank Gold Agreement." This is well under one tonne of gold...31,250 troy ounces. The 'run rate'...the maximum amount of gold that the ECB is allowed to sell each week...is 9.6 tonnes [500 tonnes/year]...a figure that the ECB hasn't come remotely close to selling in the last couple of years of the current Central Bank Gold Agreement. The current CBGA expires in September. There is talk of renewing it for another five years...but so far, that's all it's been...talk. It wouldn't surprise me if the IMF gold makes an appearance here...if it actually owns any, that is.

I have three stories today...and the first one is by far the most important. It's silver analyst Ted Butler's latest weekly commentary. In my Saturday rant, I mentioned the huge short positions in both the COT and latest Bank Participation Report. Ted goes into it in more detail, and I urge you to read what he has to say, very very carefully. It's entitled "Bad News, Good News" and the link is here.

The next story is from smartmoney.com...and it, too, is well worth your time. They have published a profile of John Williams, proprietor of the Shadow Government Statistics Internet site, who long has documented how the U.S. government has been falsifying economic statistics. The profile is headlined "True or False: U.S. Government Statistics Lie," and you can find the story linked here.

Today's last story is from the American Press news service...and published in yesterday's edition of The Independent in London. It bears the headline "North Korea would use nuclear weapons in a 'merciless offensive’.” In a quote from the story..."Relations between the two Koreas have significantly worsened since a pro-US, conservative government took office in Seoul last year, advocating a tougher policy on the North. Since then, reconciliation talks have been cut off and all key joint projects except the factory park in Kaesong have been suspended." The article is well worth reading...and the link is here.

I received the photo below from a kind reader [Dave Delve] while I was at the natural resource conference in Vancouver on the weekend. He recently retired from working at one of Alberta's tar sands operations in Ft. McMurray. The picture bore the caption "Recession Forces Oilsands to Scale down Operations". The photo tells all.

click to enlarge

Gold was not selected arbitrarily by governments to be the monetary standard. Gold had developed for many centuries on the free market as the best money...as the commodity providing the most stable and desirable monetary medium. - Murray N. Rothbard

Both gold and silver showed some life in Far East and early London trading this morning...but, as I've noted in the past, all this is done on very little volume...a few thousand contracts in both metals at most. As I've mentioned previously, well over 90% of all trading volume occurs in New York. Let's see what they have in store for us today. And while you're waiting around, I urge you to run through Ted Butler's commentary one more time.

See you on Thursday morning.

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