European Central Banks Sold Almost No Gold Again Last Week

On Tuesday, gold gained five dollars [in fits and starts] between the open in the Far East and the Comex open 14 hours and 15 minutes later. From there, gold was up about six bucks in half an hour... and that was it's high for the day... as at least one not-for-profit seller showed up... and the U.S. dollar mysteriously 'rallied' at the same time. By the time electronic trading was through in New York at 5:15 p.m... gold was only up a couple of bucks. Nothing to see here, folks... please move along.

Silver, once again, was in a world almost all its own. The low price for silver on Tuesday was at 3:00 p.m. in the Hong Kong afternoon. A rally got underway the moment that the silver fix was in at noon in London... with the top coming during the New York lunch hour. And by the time the day was done in New York, silver was up a magnificent 12 cents. Nothing to see here, either.

Open interest for Monday's smash-down showed that gold o.i. fell 7,877 contracts to 376,395... on 81,661 contracts of volume. I have a feeling that gold o.i. probably fell a bit more than that, but because of 'reporting delays' these numbers won't show until later this morning... which is too late to make Friday's Commitment of Traders report. Silver o.i. went in the opposite direction... with open interest up 1,445 contracts to 103,578... on pretty big volume of 39,087 contracts. This was a surprise... and I have no explanation. Hopefully the COT report on Friday will shed some light on this.

The Comex Delivery Report for Tuesday showed that 164 gold and nine silver contracts were delivered yesterday. There were no changes in the SLV ETF... but over at GLD, there was another 147,187 ounces withdrawn. The U.S. Mint updated both their gold and silver eagles yesterday... another 3,000 gold and 25,000 silver eagles were added to their August totals. And over at the Comex-approved warehouses, a rather substantial 1,362,930 ounces of silver were withdrawn from their inventories. In my conversation with Ted Butler yesterday, he was mentioning that he expected to see more silver coming into the warehouses as September delivery approached. September is a big delivery month for silver. That's one of the reasons why the open interest numbers have been so big in silver this month, as there is a lot of spreading and switching going on as we approach Comex options expiry [today], OTC options expiry tomorrow... and first day notice next Monday. The other reason for the big drop in Comex warehouse silver stocks could be related to the fact that HSBC is closing its bullion storage facility in the next week or so, to everyone but institutional investors... and this is the beginning of the shift out of their warehouse to either Brinks, Scotia Mocatta or the Delaware depository. We'll find out which story is the real deal pretty quick I would think.

The usual New York gold commentator had some interesting goodies to report yesterday... "Monday's late hammering of gold, which even the studiously non-conspiratorial Gartman Letter describes as a bear raid, is explained by Mitsui as a 'sweep' -- i.e. one seller using the electronic trading facility to hit all bids at once. Clearly it could recur. At present, however, gold seems inclined to shrug it off."

"The European Central Bank weekly statement of condition indicates one captive Central Bank sold... and another bought... for a net disposal of €8 million of gold [0.37 tonnes]. Last week saw no transactions. At one time, when a captive Central Bank bought, the ECB press release would specify it was for coinage purposes. The last two or three times, this phrase has been omitted. While the ECB has not been perfectly consistent in the way it reports gold transactions, this does allow the possibility that a member bank is buying gold for portfolio reasons."

"As the World Gold Council notes this morning, the ECB group appears certain to far undershoot the WAG2 limit this year, which [still] has a month to go. Their sales so far, some 144 tonnes, are less than 30% of the quota."

"Mark Hulbert, the originator of the Hulbert Gold Newsletter Sentiment Indicator, had a column on marketwatch.com this morning suggest that the 3.8% reading currently displayed, is bullish: 'the typical gold timing newsletter right now has virtually no exposure to the gold market whatsoever. In late May, when bullion was trading at more or less the same price as it is today... the average recommended gold market exposure was 50.2%... gold timers have surprisingly not jumped back on the bullish bandwagon. In fact, the last time they were as discouraged by gold's prospects as they are now, gold bullion was trading below $910 per ounce. The entire story is linked here."

Not only was it a slow day in the gold and silver world yesterday... but it was generally a slow news day everywhere... and I only have two stories today. The first is a Bloomberg article where the high-end hotels are cutting back because of lack of business... "Luxury-hotel chains, the biggest losers in the lodging industry’s decline, are giving up some of their hard-won stars to save money." The headline reads "Luxury Hotel Chains Dropping Five-Star Ratings to Conserve Cash"... and the link is here.

The second item is one that I alluded to yesterday... new commentary from silver market analyst, Ted Butler. It was published... and in it, he reports that while none of the formal testimony at the recent hearings of the U.S. Commodity Futures Trading Commission cited the concentrated short positions in the gold and silver futures markets, most of the nearly 400 comments submitted by the public, did. This, Butler writes, was grassroots democracy at work. He notes that the submissions from the public are now posted at the CFTC's Internet site. Butler's commentary is headlined "The Voice Of The People" and you can find posted at investmentrarities.com... and the link is here.

States with high and rising tax burdens are more likely to suffer economic decline; those with low and falling tax burdens are more likely to enjoy strong economic growth. - Lawrence [Larry] Kudlow

Since I didn't have much for you today, I respectfully request that you take the time to wander through the linked gold report in this paragraph. "While most investors sit by waiting for the next gold boom, a handful of American investors are quietly making it rich in a unique gold investment - collecting lump-sums up to $3,217 every few month - regardless of the spot gold price..." The report is entitled "The Best Gold Investment You've Never Heard Of"... and the link is here.

It's 9:55 a.m. in London [4:55 a.m. in New York] as I write this closing paragraph. Both gold and silver are up at the moment... $4.70 and 13 cents respectively. But, as you are [hopefully] more than aware by now, dear reader... 95% of the price action [and trading volume] occurs during Comex hours in New York when the U.S. bullion banks are open for business. It appears that the prices of silver and gold are one of the few things left in the world that are still tagged with the label "Made in the U.S.A." One wonders how much longer this situation [and a lot of other things] will be allowed to last.

As I mentioned earlier, today is options expiry for both metals. It could get interesting from hereon in.

See you on Thursday morning.