CFTC Chairman, Gary Gensler, Sounds Like He Means Business

Gold didn't do much in either the Far East or European trading yesterday. A smallish rally at the Comex open in New York ran into a wall of selling a few minutes before 9:00 a.m. yesterday morning. In about an hour, gold 'lost' about $11 from its peak price of $950.40 [spot]... to its low of the day at $939.30. It seems that someone didn't want the gold price to close over $950 on options expiry... and the price was turned back on both attempts to break through that barrier. From the low, gold recovered somewhat... and managed to close with a small gain over Tuesday.

As for silver, it followed its own path during Far East trading... reaching its high of the day at the London open... before running into 'selling pressure'. Then, like gold, silver also rallied on the Comex open, before it ran into the same wall of selling shortly before 9:00 a.m. It, too, recovered... but gained less than a dime on the day.

Options expiry in the OTC [Over The Counter] market is today. Last delivery day for the August contract is tomorrow... and first day notice for delivery into the September contract is on Monday. September is a big delivery month for silver... but not for gold.

Tuesday's open interest numbers for gold [which I was expecting to fall] actually rose 3,234 contracts to 379,629... on volume of 85,349 contracts. That was a surprise. But no different than silver o.i., which [like it did on Monday] did exactly the opposite of what was expected and actually fell 2,039 contracts to 101,539... on large volume of 44,672 contracts. I'll be darned if I know what to make of that. Hopefully these numbers will be in the Commitment of Traders Report tomorrow.

Yesterday's Comex Delivery Report showed that 99 gold and four silver contracts were delivered. There were no changes in either GLD, SLV or at the U.S. Mint... and only a smallish 27,995 ounces of silver were withdrawn from the Comex-approved warehouses.

The usual New York gold commentator had the following comments yesterday... "Today, gold drifted up some $5.70 to just above $950 spot about 5 a.m. N.Y. time. Recovering from pre-open weakness, it started slumping just before the Durable Goods data... as the dollar surged. The fall in U.S. dollar gold is causing a divergence from Eurogold. Volume at 10 a.m. was a moderately heavy 47,625 lots."

"Standard Bank remarked this morning: We still see good buying whenever gold falls towards $940. This level seems to provide good support. However, without substantial dollar weakness this week, we find it difficult to see gold targeting $960. Selling interest at this level remains strong. Nothing was volunteered as to the character of the selling."

Today's first story is a Dow Jones Newswires report that's posted at nasdaq.com. It's only three paragraphs long. French President Nicolas Sarkozy told foreign ambassadors that "a multipolar world can't count upon one currency only.". The story is headlined "French President: Dollar Can't Remain World's Only Reserve Currency" and the link is here.

The next story is from the Financial Times in London. The headline reads "CFTC 'Considering' Fresh Limits on Positions". The good news in the story is that the U.S. Commodity Futures Trading Commission may not be done setting position limits in futures markets with especially concentrated positions. The bad news is the suggestion that the commission's objective is to prevent an increase in commodity prices, not to liberate markets. You be the judge... and the link is here.

The last story quoted CFTC Chairman, Gary Gensler, quite a bit. Here's a CNBS interview by Maria Bartiromo with him as a guest. The $64,000 question is whether he will deal with the silver price management issue, where two U.S. banks are massively short the silver market [and the gold market]. Ted Butler thinks he is not only 'talking the talk, but walking the walk'... and he certainly sounds like he means business in all markets in this interview... but the acid test is how he will deal with silver. Absolutely nothing else matters, as the rest of the commodities are basically OK as they stand. The interview runs about seven minutes and the link is here.

The last story is posted over at goldseek.com. Market analyst Peter Degraaf's new commentary produces some interesting charts to suggest an affirmative answer to the question: "Are the Bullion Banks Losing Their Grip on Gold and Silver?" and the link to the story is here.

The more powerful government becomes, the more abuses it commits and the more lies it must tell. - James Bovard

Yesterday was sort of a nothing day... although it was obvious [at least to me] that the U.S. bullion banks didn't want gold to close over $950, or the silver price to get out of hand to the upside. London has just opened as I write this, and nothing much is happening, and nothing at all happened during Far East trading. I'm still of the opinion that we won't see a lot of price action either way until after the Labour Day holiday. After that... who knows?

CFTC chairman, Gary Gensler, says that they will make whatever decisions they're going to make regarding position limits and concentration "sometime in the fall". That covers the time period of September 21st to December 21st... which is a pretty big window... so we'll just have to wait it out.

Today is also the day that the U.S. government reports the GDP number. Whatever it is, it won't reflect reality... and I'll be amazed if 'da boyz' don't hit gold [and silver] the exact moment that this number is released...or maybe even sooner.

But I'm still 'long and strong' both silver and gold... and intend on staying that way until further notice.

See you on Friday morning.