The Russians are Coming! The Russians are Coming!

I wouldn't read a lot into Thursday's trading activity in either gold or silver. True, both metals got hit on the Comex open... and it appeared that gold was not being allowed to take out $945 on the upside, and silver was being held under $14. However, volume was so low yesterday, it was easy to keep a lid on prices... if you're one of the New York bullion banks that's inclined to do so. The usual New York gold commentator said..."By 9:00 a.m... 49% of the day's estimated volume of a mere 50,792 lots had traded, and for the next four and half hours of the session, there was little movement. This evening, ScotiaMocatta mentions that selling was seen for the last two days at $946 [spot], which is very obvious from the hourly chart." [It is indeed! - Ed]



Yesterday's big spike in the gold price produced an increase in open interest of only 415 contracts, bringing total gold open interest up to 374,225 contracts. Volume was pretty decent at 90,953 contracts traded. In silver, o.i. fell 1,445 contracts to 102,082 contracts... and that was due to the fact that there was a new price low set for this down-move in silver, and more tech funds pitched their longs. Ted Butler figures that there was even more liquidation than that, but they hid it well... and won't be seen until next week's COT report. Total volume in silver trading was very large... 58,349 contracts... but most of that was switches and spreads, as options expiry for September is quickly approaching. The date for that is next Wednesday, August 26th. September is a big delivery month in both metals.

The Comex Delivery Report for yesterday showed that only 29 gold contracts were delivered. There were no changes once again in either the GLD or SLV ETFs. The U.S. Mint did update their eagle production numbers again. In gold eagles it reported another 2,000 minted... and in silver eagles, another 175,000 were produced. And over at the Comex-approved warehouses, a smallish 49,804 ounces of silver were withdrawn.

But the really big gold news yesterday came from The Central Bank of the Russian Federation. About 15 minutes after I filed my Thursday commentary, I noted that they had updated their website for July... finally! They reported that they had purchased 600,000 ounces of gold...bringing their total gold reserves to 18.3 million "fine troy ounces". That's the biggest number I can remember, and I've been reporting their monthly changes for almost 18 months now. To go along with that, June was also a big month, with the Russian central bank adding 300,000 ounces. So, in the last two months, the Russians have added about 30 tonnes of gold to their reserves. That's a lot more than their country's average monthly gold mining production. Are they buying on the open market? Have they had it all along and are just reporting it now?Those are good questions for which I have no answers. The Russians, who are as clever as they come, will play their golden cards carefully.



Year-to-date, the Russian Central Bank has added about 1.5 million ounces to their gold reserves. Based on their last two months of activity, that number will be much larger by the time they close the books on the 2009 fiscal year.

This additional data from Russia proves beyond a shadow of a doubt, that the Gold Field Mineral Services and the World Gold Council story about gold production and consumption announced yesterday in a Bloomberg story, is pure horse manure!

Eric King over at kingworldnews.com was kind enough to interview me for about 15 minutes yesterday. We talked about the diminishing supply of gold and silver (the metal, not the futures contract paper), the movement of the U.S. Commodity Futures Trading Commission against concentrated positions in the futures markets, and an essay written by silver market analyst Ted Butler in 2003 about the complete lack of daily price limits in gold and silver on the Comex. The link is target="_blank">Almaden Minerals Ltd. is an exploration company specializing in the generation of new minerals projects with world-class potential.

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The next story of interest is a piece written by Peter A. Grant, senior metals analyst for Centennial Precious Metals in Denver. He has produced some fascinating technical analysis of the gold price. He writes that since February the gold price chart has developed a "symmetrical triangle," a pattern sometimes called a "coil," like "a spring being compressed as it coils in an increasingly narrow range." Such patterns in gold in recent years have preceded upward breakouts, Grant writes. He has some great charts and you can find his commentary, "Symmetrical Triangle Continues to Develop in Gold," at Centennial's Internet site, USAGold.com... and the link is target="_blank">here.

And lastly is another commentary by Ted Butler... but it's one of his old ones from back in December 2003. The contents of this essay made such a dramatic impression on me when I first read it, that I've never forgotten it... and this is the third time in two years that I've run this essay in my commentary at Casey Research. Because of the upcoming [hopefully] position limit changes in silver, this article may become very relevant. While you're reading it, please keep asking yourself these two all-important questions: a] Why did this change only apply to gold and silver... and not other commodities, and b] Why did they change this rule [about 15 years ago] to what it reads now unless they planned on using it at a future date. Could that date be approaching now? The essay is entitled "Take it to the Limit" and the link is

In closing, I received the following youtube.com video from Michael in Ottawa. Normally, I would save something like this for Saturday... but thought I'd share it with you today instead. Kseniya Simonova is a Ukrainian artist who just won Ukraine's version of "America's Got Talent." She uses a giant light box, dramatic music, imagination and "sand painting" skills to interpret Germany's invasion and occupation of Ukraine during WWII. The Ukraine [and Poland] both suffered heavily under both German and Russian occupation, and emotions still run deep, as can be seen by the audience reaction to this amazing sand drawing. It runs for about nine minutes, is definitely worth watching, and the link is target="_blank">Casey's Gold & Resource Report. Right now, if you subscribe today... for only $39... you save 50% off the regular retail price of $79/year. So I urge you to seriously consider this offer.

Take the rest of the day off with pay... enjoy your weekend... and I'll see you right here on Saturday morning.