From Ed Steer:

In very early Tuesday morning trading in the Far East [still Monday evening in New York]...gold and silver saw their lows of the day. However, by the time that the Comex was open about 14 hours later, gold was up twelve bucks. But that was its high of the day, as the price was taken down immediately...and by the time that the Comex closed, eight dollars of that gain had been given back. Tuesday was a nothing day, really. The gold charts make it look worse than it really was…as most of gold's move on Tuesday [and Monday, for that matter] can be chalked up to the gyrations of the US$.

However you will carefully note that although the dollar did a round trip in value between early Monday morning and Tuesday afternoon...neither gold nor silver were allowed to get a sniff of their Monday highs that occurred in early Far East trading. On Monday, both gold and silver got lots of down-side help during Comex hours as the dollar rose...but all there was on Tuesday was more down-side help during Comex hours as the US$ fell back to where it was on Monday. Funny how that works...isn't it?

The silver chart shows that phenomenon better than the gold chart, and it's shown below.

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Open interest changes for Monday's big down day were more in line with my expectations. Gold open interest fell a chunky 9,018 contracts...cutting total o.i. to 387,585 contracts. As reported yesterday, volume wasn't large...only 98,398 contracts. Silver o.i. had a great fall as well...down 2,881 contracts to a total o.i. of 106,351 contracts. Volume was largish once again...37,842 contracts. These numbers look right, and I'm happy they were big numbers too. Because of the trading range yesterday, I don't have a feel for Tuesday's open interest numbers...but we'll find out in a few hours.

The Comex delivery report showed only 14 gold contracts delivered. The report also showed that as of yesterday, there were still 1,140 gold contracts left to be delivered in June. But the big surprise was in silver. For the second time this month...and totally out of the blue...200 contracts of silver were delivered again. So far this month 785 silver contracts have been delivered. That's a tad over 3.9 million ounces. Not too shabby for a non-delivery month. There were no changes in GLD yesterday...but finally there was some activity in SLV...with the inventory rising by 3.85 million ounces. No changes either at the U.S. Mint...and Comex-approved warehouse silver stocks rose 602,093 ounces.

In other gold news, I saw a story posted at Kitco from foxreno.com. The headline read "Nevada Gold Production Down in 2008"..."A fact sheet from the Nevada Division of Minerals says Nevada gold mines produced fewer ounces of gold in 2008, 5.7 million ounces compared with 6 million ounces in 2007." And in another story of note...coin market watcher Michael Zielinski, proprietor of the Mint News Blog, reported that the U.S. Mint has ended its rationing of gold and silver coin sales, an indication that supply and demand are moving toward some balance. The story...entitled "Gold and Silver Eagle Bullion Allocation Programs End"...is well worth the read, and the link is here.

The usual N.Y. commentator had the following yesterday..."The European Central Bank's weekly statement of condition indicates a fall in 'gold and gold receivables' of .21 million ounces [0.945 tonnes], attributed to a gold sale by one captive central bank. Last week, sales by two central banks totaled 0.81 tonnes. Obviously far behind schedule if the Second Washington Agreement on Gold quota is to be met. The Gartman Letter went long one 'unit' of gold this morning, citing technical factors. As noted, TGL's buy record on pullbacks is quite reasonable....Maybe the storm has passed." [We'll see. - Ed]

Today's first new item is from Yekaterinburg, Russia. It's a Reuters story bearing the headline "BRIC demands more clout, steer clear of dollar talk". And surprise, surprise...the word gold showed up! "Medvedev's chief economic aide, Arkady Dvorkovich, called on the IMF to expand the basket of SDRs to include the Chinese yuan, commodity currencies such as the Russian rouble, Australian and Canadian dollars as well as gold." The link is here.

Today's next story is from Ambrose Evans-Pritchard from The Telegraph in London. It's three days old, but still very much worth reading. The headline says "German credit crunch deepens"...."Germany's top industrial group has warned that credit conditions are going from bad to worse across much of the country's manufacturing base, dashing hopes for a swift recovery." The link is here.

To add to the world's litany of woes, comes this story from the Chicago Tribune. I thought that any of you that eat bread at least once a day, might be interested. Any wheat farmer can tell you what rust is...and being a farm boy from Manitoba in the 1950s and 60s...I've seen it [and its results] first hand. Apparently there's a new strain out known as Ug99. I know it sounds like it belongs in a version of the X-Files...but it could become a reality in all our lives some day...and it's worth spending the one minute it will take to digest this story. The headline reads "Fungus called 'time bomb' for world wide wheat crop" and the link is here.

And lastly is silver analyst Ted Butler's latest commentary. For all of you who can't [or won't] acknowledge the dominating presence of '3 or less' U.S. bullion banks that control silver and gold prices, the two graphs contained in this commentary just might change your mind. I urge all of you to print off a full-colour copy of each, and pin them up where you can see them every day. Staring you in the face is 100% of the reason why there's been a lid on the price of gold and silver...the concentrated short position of these '3 or less' U.S. bullion banks. Ted's commentary is entitled "Making the Case"...and that it does. The link is here.

There ain't no rules around here! We're trying to accomplish something. - Thomas Edison

The following was posted over at lemetropolecafe.com yesterday. It's an interesting post card mailed back in June of 1929. This is a postcard with the stamp already printed on it. The parts and labour list on the back shows what currency debasement has done in eighty years. True, parts are more complicated today, but that's not the point. If the parts and labour list don't do a thing for you, just find out what it costs to mail a postcard in 2009 [not including the card]...and then compare it to the price on this one. You'll be shocked.

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As you can tell, some pundits are hoping that we've seen the bottom for gold at the moment. The N.Y. commentator for one...and Dennis Gartman with his long 'unit' of gold he placed yesterday...for another. Have we? Don't know...but we're not below the important 50-day moving average in either gold or silver yet. Could gold [and silver] rise from here? Absolutely...provided that the '3 or less' U.S. bullion banks refrain from going short against any new longs that are placed. If you grasp the meaning of Ted Butler's graphs...you'll understand why I personally feel that the jury is still out.

Let's see what today brings...and I'll see you here bright and early on Thursday.


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