Rick Ackerman's Tin Foil Hat Is In The Mail

In Far East trading on Thursday, gold managed to add four dollars to its price. Then, at 4:00 p.m. in afternoon trading in Hong Kong [3:00 a.m. in New York], the selling pressure began. Once the London a.m. gold fix was in at 10:30 a.m. their time, the price really accelerated to the down side...with a double bottom at the noon silver fix...also in London.
But from there, a spirited rally began that took gold to its high of the day in electronic trading shortly after the Comex close, and it closed very close to that high price.

Gold put in what is called a key reversal to the up-side yesterday. That's a very bullish technical pattern... and I can tell you now that I can count on one finger the number of times [in the last 10 years] that 'da boyz' have allowed this pattern to confirm to the upside during the following day's trading. We'll find out shortly if that trend will continue or not.

Silver's chart pattern was very similar to gold's. It, too, put in a key reversal to the upside...and closed at another high for this move. From its low at the London silver fix, to it's high of the day, was almost a 70 cent move.

Open interest changes for Wednesday's trading were reported as follows... gold o.i. rose another 7,115 contracts to 458,828... on big volume of 135,131 contracts. Silver o.i. was up again as well, this time by 1,328 contracts to 117,749... on volume of 33,008 contracts. The Commitment of Traders [for positions held at the close of trading on Tuesday] comes out at 3:30 Eastern time today... and I'll have all the sordid details in my commentary tomorrow. What Ted Butler and I are anxiously waiting to see is if the 'big four' traders in both gold and silver have gone short during the last week. For the most part, they've managed to stay out of this rally. But this report should give us a pretty good idea if they were forced to go massively short again... lest the price of gold and silver blast off to the moon.

The Comex Delivery Report showed that 16 gold and 160 silver contracts were delivered yesterday. We're a third of the way through September, and 120 gold contracts and 2,990 silver contracts have already been delivered. According to the open interest report, there are still about 190 gold and 400 silver contracts left to deliver this month... subject to any additions between now and the 30th. All looks normal, so anyone who is expecting a short squeeze in the September contract shouldn't be surprised if it doesn't occur.

Once again there were no changes in either GLD or SLV. One would think, with the price now up around the $1,000 mark, that metal should be pouring into these ETFs... but they're not. Ted thinks that the SLV is owed about 20 million ounces. It goes without saying that gold is owed into the GLD as well. But since it still hasn't made an appearance, the ETF managers will have shorted the shares in lieu of the real metal.

The U.S. Mint had another update yesterday. They reported minting another 11,500 gold and 150,000 silver eagles... which brings their September totals up to 45,500 gold eagles and 600,000 silver eagles. Over at the Comex-approved depositories, a smallish 25,702 ounces of silver were withdrawn.

The usual New York gold commentator had the following for us yesterday, which was obviously written before the Comex close early yesterday afternoon... "Indian ex-duty premiums: AM $3.64, PM $3.15, with world gold at $994.72 and $986.50. Comfortably above legal import point. India’s gold importers must have headaches after today, as not only did gold close across a wide range but the rupee was very erratic: trading up 0.4% to a six-week high in the morning and then closing down 0.2% at $1 =R48.63 (Wednesday R45.51). How much import business was transacted in these circumstances is a question, but the inference is obvious: absent a significant weakening of the rupee, the world’s largest gold importer in willing to buy on any weakening from $1,000."

"Heavy selling pressure appeared in Europe such that the [London] AM fix was $7 below Wednesday's [London] PM [fix]. Contrary to the remarks of a number of commentators, Euro gold closely tracked $US gold: this was real selling. However the low was seen just before the Floor session open, down $13.90 on the December contract. Since the NY open, gold has been trying to rally, rather impressively. Volume is heavy: 61,671 lots at 9AM... 90,928 at 11AM."

"Early this morning The Gartman Letter got spooked [along with most of the more alert observers] by the implications of the Barrick sale... and cut half its long [position]. There are those of gold’s friends who will be much encouraged by this."

The news that Barrick is covering part of its hedge book is still the talk of the town in the gold world. To give you some idea of how long Barrick Gold's forward sales has been an issue, here's an essay that Ted Butler wrote back on June 27, 1999... more than 10 years ago. The piece is entitled "The Death of Hedging" and the link is here.

Ted wrote another article on Barrick's hedge book which he made available to his private clients yesterday. I've already read it, and Ted says he'll post it in the public domain sometime next week, and I'll put it in this column the moment that it is.

Below is a graph that I stole [shamelessly, I might add] from Bill Murphy's MIDAS commentary over at lemetropolecafe.com yesterday. It, in turn, was courtesy of Nick Laird over at sharelynx.com. If you're trying to talk someone into buying gold [or silver], this would be a good chart to show them.

Besides the story above, I have four others for your consideration today. The first is a Bloomberg piece headlined "U.S. Foreclosure Filings Top 300,000 for Sixth Straight Month"... "A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18% from a year earlier, and down 0.5% from July, the Irvine, California-based company said in a statement. One in 357 households received a filing." The link is here.

The next two stories are both GATA releases. The headline of the first one reads "Rick Ackerman Joins the Gold Conspiracy Nuts". Chris Powell, GATA's secretary treasurer, mailed Rick his tinfoil hat yesterday. The link is here.

The second GATA release is commentary by Richard Russell. Mr. Russell earned his tin foil hat quite a while ago when he finally capitulated and admitted that the bullion banks and the U.S. government were sitting on the gold price. His Wednesday gold commentary says exactly that... and the link is here.

And lastly, comes this commentary from Lawrence Williams over at mineweb.com. He notes the Chinese government's investment of its credibility in stronger gold and silver prices... and makes passing reference to GATA. Williams' commentary is headlined "China Can No Longer Afford to Let Gold or Silver Price Slump". This is a must read story and the link is here.

The many woes that afflict our nation are rooted in the morally bankrupt paradigms of socialism, interventionism, and empire... that have held our nation in their grip for decades... and the only real solution to such woes is libertarianism. - Jacob G. Hornberger

The London market has been open about an hour [4:25 a.m. Eastern time] as I type this last paragraph, and it's too soon to say if a trend similar to Thursday or Wednesday is developing... that is; gold and silver getting sold off in Hong Kong once the Sydney market is safely closed for the day... with both metals sold down into the London silver fix at 7:00 a.m. New York time... and then a recovery, or an attempt at a recovery from that point on. And I'm not going to stay up to find out, either. Volumes [in Comex contracts] are getting up there... especially for this hour of the morning. Gold has traded 13,572 contracts and silver is already up to 3,705 contracts for December. Of course this sort of volume will be dwarfed during Comex trading in New York.

Gold has been sitting around $1,000 for the last five trading days, while silver has managed to set a new closing high for this move. Ted Butler has gone on record as saying that the gold and silver prices are going to go their own separate ways at some point... and that seems to be happening at the moment. But, with the bullion banks' net short position in gold now approaching 30 million ounces, I'm still very nervous... but I'm still "all in."

I hope you have a great weekend, and I'll see you right here on Saturday.