"GATA Is Right About Gold Manipulation." - John Hathaway

Neither gold nor silver did much of anything in either Far East or London trading yesterday. That changed the moment that the Comex opened, as both metals took off to the upside, only to get capped... gold under $1,070, and silver under $18. Once the London p.m. gold fix was in at 3:00 p.m. in London [10:00 a.m. in New York], down went the prices... until 15 minutes after the London close, when both metals got hit again. There was a brief spurt of buying in both metals that stopped a further decline cold... and from there, trading tailed off into the New York close at 5:15 p.m. The usual N.Y. commentator mentioned that... "Gold is having a wild morning on very heavy volume. Estimated trade by 10AM was a very heavy 90,810 lots." I wonder how many short positions had to be put on by the bullion banks to kill the Comex rallies in both gold and silver yesterday? We'll find out on Monday.

Once again, the gold and silver charts were virtual mirror images of each other... and you wouldn't know which was which until you looked at the price.

None of Friday's activity had anything to do with what the U.S. dollar was doing, as the dollar rose steadily through the entire trading session. It should be obvious that prices of both want to rise... and equally as obvious is the force that's above it making sure that they don't. And, for whatever reason, the bullion banks don't want gold to close over $1,070... or silver over $18 bucks at the moment. Here's the 4-month silver graph. Note the $18.00 cap on the closing price for the last 12 trading days.

The 4-month gold chart looks suspiciously similar.

Does it mean anything? Don't know, but it obviously does to someone, or those prices would not be defended as vigorously as they have been. We'll just have to wait and see which way the prices break from here... either up, or down.

The final open interest figures for Thursday's trading shows that gold o.i. fell 10,134 contracts to 506,698 contracts on decent volume... 115,232 contracts. Silver o.i. also fell, this time by 1,674 contracts. Total silver open interest is 135,763 contracts.

As far as the Commitment of Traders report went, there was slight deterioration once again in both metals. In silver, the bullion banks added 578 contracts [2.9 million ounces] to their net short position... and in gold they increased their net short position by 1,567 contracts [156,700 ounces].

So, as of Tuesday's cut-off, '4 or less' bullion banks are short 64,206 Comex silver contracts, which represents 97.3% of the entire net short position in silver. The '8 or less' traders are short 76,939 contracts which represents 116.6% of the entire net short position in Comex silver. The net short position in silver right now is 66,004 contracts... 330 million ounces. The full-colour COT graph is linked here.

In gold, the '4 or less' bullion banks hold 66.5% of the entire net short position in Comex gold... and the '8 or less' bullion banks hold 93.0% of the entire net short position in gold. The total net short position in gold is 29.75 million ounces. The full-colour gold COT graph is linked here.

Eric King, of King World News, had his usual Friday afternoon interview with silver analyst Ted Butler... and, as usual, it's well worth listening to. The link is here.

The CME's Daily Delivery report showed that 104 gold contracts are up for delivery on Tuesday. There were no reported deliveries in silver. Neither the GLD, SLV or U.S. Mint had anything to say for themselves yesterday... and the Comex-approved depositories reported that they added 838,711 ounces of silver to their inventory.

The usual New York gold commentator had the following to report on Friday morning around 11:30 a.m... "It appears that India was not an importer today. The stock market closed up a small fraction... concluding its worst week in almost three months. The rupee was up about half a percent. Rupee action is critical to world gold at present."

"In an enterprising move, the World Gold Council has attempted to measure Indian gold purchases over the Diwali festival, an endeavor I would have thought very difficult given the secretive nature of Indian gold dealing. They conclude [that] gold consumption by volume was up 5.6% in tonnage compared with 2008... a very respectable performance."

"The TOCOM general public continued to quietly accumulate. They added 1.45 tonnes to their long... up 7.9%."

"The Russian gold sale story of yesterday is being generally downplayed. A particularly astute analyst presents an argument that the amount involved may be as low as 2 tonnes."

"Irritatingly, the open interest report distributed by the NYMEX is starting to diverge from what their website shows again. Thus, several commentaries [mine included - Ed] report a 16,500 lot jump on Wednesday, whereas the website indicates only 7,154 lots. Open interest on Thursday dropped by 10,314 lots [32.08 tonnes] to 506,518 lots. Given the hammering gold took in Wednesday's aftermarket... and into the early Comex session... this looks like a clumsy elephant exiting."

I have quite a few stories [plus another interview] today... and I'm glad it's the weekend, so you can give these items the time that they deserve.

The first is a story that just went up at cnnmoney.com late Friday evening... so it hasn't seen a lot of press... yet. Another 7 banks were taken over by the FDIC at the end of the business day yesterday. The story is headlined "Bank failures stack up: Now 106 for 2009". I thank Donna Badach for sending it along... and the link is here... and here's one of the graphs from the story.

Here's a Reuters story that appeared in the October 22nd edition of The Telegraph out of London. If you always want to read positive and happy stories about gold, you may want to skip this one. "Speculators have driven the price of gold to record levels at the expense of demand from the jewellery sector, making it prone to a correction, according to dealers at a bullion conference [in Hong Kong]" The headline reads "The gold price is too high now. No one wants to buy"... and the link is here.

To counter that story is a Bloomberg piece that was mentioned yesterday by both Bill Murphy at lemetropolecafe.com and Bill Fleckenstein in his Daily Rap. There was no link to it in either commentary... but lo and behold, the usual N.Y. gold commentator had it in his report yesterday, so I stole it. The first paragraph reads as follows... "Pension funds will increase gold holdings to acquire 'financial insurance,' pushing prices higher as currencies drop, according to Shayne McGuire, director of global research at the Teacher Retirement System of Texas." The story, which isn't very long, is well worth your time... and the link is here.

The next story is one co-written by my good friend Ian Gordon over at Longwave Group in British Columbia. Ian is very much in the deflationist camp... just as much as James Turk over at goldmoney.com is in the hyperinflation camp. The essay, which was published this week, is an illustrated study arguing that a deflationary collapse of the world financial system is more likely than an inflationary one and that gold will perform even better in deflation. The Gordon/Funston study is titled "Winter Warning". This is a must read as well... and the link to the 6-page pdf file is here.

And lastly, is this Eric King interview with John Hathaway, Senior Managing Director at Tocqueville Asset Management L.P. In this interview, John discusses the current state of the gold market, the bond market, the U.S. dollar, monetization, gold stocks, acquisitions and much more. The link is imbedded in a GATA dispatch along with a preamble by secretary treasurer, Chris Powell. The news release is entitled "GATA is right about gold manipulation, Hathaway tells King World News". Needless to say, this is an interview that you should listen to more than once... and the link is here.

It is a cruel thought that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not.. - Thomas Jefferson

This week's 'blast from the past' is not old at all...it's circa 1999! I have a bottle of wine older than that! I remember this guy and his band when he performed at Woodstock back in 1969. It's a fabulous piece, regardless of age... or lack thereof... so turn up your speakers and click here... and if you know all the words, please feel free to sing along.

Well, if you've listed to Eric King's interview with John Hathaway, it's hard not to get wild-eyed and enthusiastic about what's coming down the road. Ten years ago, my broker handed me a copy of John's essay entitled "The Golden Pyramid"... and the rest, as they say, is history. That's how it all got started for me, way back then.

He's basically echoing what Doug Casey has been pounding away at for years... that the price of gold is "going to the moon". Actually, it [and silver] may go further than that before this precious metals bull market breathes its last.

And, as I keep harping on every week, the price of a yearly subscription to Casey Research's flagship publication Casey's International Speculator will seem like pocket change when things really get going to the upside... and the well-researched small junior gold and silver mining stocks covered by this report, will contribute significantly to your net worth... and mine too, come to thing of it. Also included in this monthly publication is a free subscription to Casey's Gold and Resource Report. Don't forget that your satisfaction is 100% guaranteed. Never has the time been better to make such an investment. Please give this serious consideration! Thanks.

As John Hathaway said, the worse price correction he can imagine under the current circumstances would be to around $950. Gold's 200-day moving average lurks at $943.16... and climbing daily. Is a price correction this size possible? Sure, but will it get there? Even John has his doubts. But he's being cautious and covering his behind. That's why I'm sitting on the fence... as I can read a chart just as well as John... and, like myself, he knows what the numbers in the Commitment of Traders means.

And we both agree that, correction or no correction, this bull market still has a long way to run.

Enjoy the rest of your weekend, and I'll see you here on Tuesday morning.