Bank of Nova Scotia Now Offers Gold Delivery to Your Home!

Gold showed a bit of life once Hong Kong opened for trading yesterday morning. Then it flat-lined into the London open, rose sharply until the London a.m. gold fix was in at 10:30 a.m. their time... then did nothing until shortly after the Comex opened. From that point, gold promptly lost all its London gains going into the London p.m. gold fix at 3:00 p.m. local time... 10:00 a.m. in New York. But as soon as the 'fix' was in... gold began a serious rally which ended on its high of the day [$1,010.30 spot] shortly before the Comex session ended. From there, the chart pattern took it's usual turn to the right... and that was it for the day. Volume at 1:00 p.m. was estimated to have been 132,184 contracts.

Silver's action yesterday was very similar to gold's... the only difference being that silver's high price point [$16.72] came in electronic trading shortly after the Comex closed for the day.

On Tuesday, gold open interest rose another 2,725 contracts to 452,994. Silver o.i. was also up again... this time by 2,505 contracts... back to its recent high of 128,507. And the jury is still out on whether these numbers can be believed or not. This information should be in Friday's Commitment of Traders report.

The Comex Delivery Report shows that another 2,067 gold contracts will be delivered on October 2nd. There were a lot of issuers [15 in all], but the big stopper was the Bank of Nova Scotia with 1,262 contracts of the total amount. JPMorgan was a distant second with 626 contracts stopped. Only 3 silver contracts are scheduled to be delivered on the same date.

The GLD ETF showed that a smallish 39,235 ounces were added to their inventory, with the SLV showing no changes once again. The U.S. Mint did a final update on their eagles totals for the month of September. In gold they added another 9,000 to bring the final September total to 115,500... and in silver they reported another 100,000 minted, bringing the final monthly total for silver eagles up to 1,703,000... the lowest production month so far this year. Year-to-date, the U.S. Mint has produced 954,000 gold eagles and 20,467,500 silver eagles. Silver eagle mintings for 2009 so far have already surpassed the entire 2008 production year... which was 19,583,500. It's obvious that when the final numbers are tallied in late December, this old record will be surpassed by a wide margin.

And finally, over at the Comex-approved warehouses, a very small 47,392 ounces were taken into inventory. The warehouses are always a day late in reporting. This report is for activity on September 29th... so the final total for the end of September won't be known until their inventory report for Wednesday is issued later today.

The usual New York commentator had the following remarks yesterday... "India's banks were closed today... but India was not an importer at the closing world gold price of $1,002.69. The Bombay Bullion Association spokesman has indicated that September imports will be 35-40 tonnes. This is respectable. Gold was not cheap in rupee terms during September... and comparisons with the fantastic business done last August/September are naïve."

As noted last night [Tuesday night - Ed], Vietnam local gold stood at an $11.31 premium to world gold of $992.10 early Wednesday morning. Early on Thursday morning, local Vietnam gold stood at a $4.47 premium to world gold, which is quite a robust response considering world gold's abrupt and large move."

"Japan was not an interested market participant on Wednesday."

"Tuesday's effort higher... and close of up only 30c... apparently saw open interest fall another 1,600 lots (4.98 tonnes) [in a previous paragraph, o.i. was show to be up 2,725 contracts. Who's right... if anyone? - Ed] As noted previously, in recent weeks, exits by shorts have been distinctly bullish. [I'm still underwhelmed, as the total net short position in both silver and gold is still in record territory... somewhere in the stratosphere. - Ed]

"Today, December gold finished up $14.90 at $1,009.30. Estimated volume was 138,257 lots... not heavy for such an important move. Of this... 73,192 [52.9%] is said to have traded by 10AM [which was close to the nadir]: so the upward thrust was not heavily contested. Euro gold tracked US$ gold very closely throughout the day."

There is an extraordinary silence on the reasons for gold's move today. Some perfunctory efforts are made to attribute it to dollar weakness, but this does not work: the Dollar Index did little on Wednesday... and in any case, as noted above, Euro gold tracked US$ gold very closely. Of course it was the end of Q3. Major window dressing would certainly not be mentioned by the bullion banks, fearful of annoying clients."

"Gold shares were quite unimpressed. The HUI peaked up 2.9% and the XAU up 2.4% before closing up 1.94% and 1.32% respectively. However, their unwarrantedly strong up 3.2% and up 2.6% closes yesterday have to be admitted to be prescient."

I have two charts for you. The first is the 3-year gold chart. The huge reverse head-and-shoulders pattern is obvious. Currently we are still well below the March 2008 highs, and its my opinion that a breakout above that level is something that the U.S. Treasury and the Fed don't want to see happen... which is one of the reasons that they've instructed their bullion bank allies to pile on the short positions the way they have since the July 2009 low. The chart say it all.

As for silver, the pattern is similar... if somewhat lopsided... and it's obvious that we've got some work to do pricewise before we see a breakout to the upside in silver. But when it does occur, it's my bet that it will happen quickly.

I'm delighted to report that I only have three stories for you today. The first is a Financial Times offering courtesy of reader, Gerold Becker. The headline reads "IMF warns of further institutional losses". In my opinion, the IMF is stating the obvious... but what is equally obvious is that capital will be even harder to raise going forward in this economic environment... and, in the end, the major financial players will have to be bailed out...again. But there's always a chance that because of circumstance, or lack of political will, one or more of them won't make it. Then the fox will really be amongst the chickens. The link is here.

The next story was one that I dug out of Bill Murphy's MIDAS commentary over at lemetropolecafe.com yesterday. It might be a good idea to pick the next issue of Vanity Fair. It appears that they will report that U.S. Treasury Secretary Henry Paulson -- a former head of the investment bank Goldman Sachs -- tried to orchestrate secretive deals in the midst of the financial crisis but got blowback from prominent investor, Warren Buffett. Paulson, he said, would lose credibility; he would be accused of lining the pockets of his friends at Goldman; the "Government Sachs" conspiracy theories would flourish. The magazine appeared on newsstands in New York and Los Angeles yesterday, and will be available nationally on October 6th. Here's the Reader's Digest version from rawstory.com. The headline reads "U.S. secretly tried to make deal with Goldman Sachs in wake of financial crisis"... and the link is here.

The last story was sent to me by reader, Rocky Randall. Of all the gold stories I've seen in a while... this is the most unusual. It has to do with Canada's own Bank of Nova Scotia... or Scotiabank to us Canadians. The Bank of Nova Scotia... through its wholly-owned subsidiary, ScotiaMocatta, is one of the largest dealers in gold and silver bullion in the world. They are a market-making member of the London Bullion Market Association... and are directly involved [along with three other bullion banks] in both the London daily gold fixes... and [along with two other bullion banks] in the London silver fix. [To see a list of all of 'da boyz' who are rigging the gold and silver market, the link is here.] They are suspected by many [including this writer] of being one of 'da boyz' who are massively short both gold and silver on the Comex. Despite efforts by Ted Butler several years ago, they will neither confirm nor deny their involvement.

So, knowing all of the above, the following story from Monday's Financial Post in Toronto was a real surprise. The headline reads "Scotia first Canadian bank to deliver gold to your door". What does this mean? Frankly, I don't have a clue. Why would they do it? Is there money to be made with a service like that? Beats me. But maybe it's a harbinger of things that they know are coming in the future. Anyway, the story is well worth the read, and the link is here.

Do we really want the people who created $40 trillion of unfunded liabilities in Social Security and Medicare in charge of our health care? Faceless bureaucrats, power-lusting politicians, and people spending other people's money are a recipe for disaster. - Edward Crane

So, will the rally continue today? It's possible... just as long as the bullion banks don't step in and take the short side of every long that wants to put on a position... as the bullion banks are the only thing standing between the current price, and much higher prices in both metals. No other group of traders is prepared to short this market except the bullion banks, as every other trading group... the "Non-Commercials" and the "Nonreportables" [which are the small traders] are all hugely net long. That's what the Commitment of Traders has been showing for years.

Not much of consequence occurred in Far East trading earlier this morning. London is now open, and it's too soon to tell what the day will bring. But, like most days, all of the substantial activity occurs during Comex trading hours... and I doubt that today's activity will be an exception to that.

See you on Friday.