New WGC Chairman Sees $2,000 Gold In 2010

Gold reached its zenith during trading on Thanksgiving day in the U.S.A. Then the news came out about Dubai. Needless to say, both gold and silver got hit the moment that trading began in the Far East on Friday morning... although the initial damage wasn't too bad. But at 1:30 p.m. in the Hong Kong afternoon, a serious seller showed up and in a couple of hours, gold was down $26... and at that point, it appeared that the bid disappeared and gold fell another $25 dollars virtually straight down. A move like that bears the hallmark of a bear raid by a bullion bank.

The bottom came shortly before 3:00 p.m. in Hong Kong's afternoon... and shortly before the London open on Friday morning. Gold regained $25 between that low and the Comex open at 8:15 a.m. in New York. But from the open, and for the next hour's worth of trading, gold dropped $15 the ounce, before rallying strongly until shortly after the London close at 4:00 p.m. local time... 11:00 a.m. in New York. From there, gold basically traded sideways for the rest of Friday's session.

Silver's trading range on Thursday and Friday was much larger. From its high of about $18.80 the ounce at 3:00 p.m. in Thursday's trading in Hong Kong's afternoon... to it's Hong Kong low at 4:00 p.m. [exactly 25 hours later] silver got smacked for around $1.15 the ounce... with it's low around $17.65 spot. In most respects, silver's path followed gold's exactly.

I must admit that I was very encouraged by the price action of both metals after the Hong Kong bear raid on Friday. The bears did not press their advantage by much, and when the selling disappeared, both metals recovered quickly. Although they did not gain back all their loses... it was an impressive recovery nevertheless.

I'm still not sure whether we're going to get a major price correction or not. All the technical indicators show that a correction of some sort looks imminent... and the bullion banks may use this opportunity to launch an all-out attack to the downside. As Ted Butler points out in his interview below, the situation regarding the grotesque short positions in both gold and silver have not yet been resolved... either to the downside... or upside. I doubt that we'll have much longer to wait either way.

Gold's open interest on Tuesday showed a decline of 28,254 contracts on volume of about 400,000 contracts. Silver's o.i. was down 8,343 contracts on volume of 90,000+ contracts. Wednesday's open interest in gold rose 10,884 contracts... and silver's open interest fell a smallish 758 contracts...with volume just about the same as Tuesday's... monstrous! But with all the switching and spread trades being lifted and put on, it's hard to tell what it means, if anything. Because of the volume involved, most of Tuesday's data won't be in today's Commitment of Traders report... which is a day late because of Thanksgiving last Thursday. And Wednesday's data won't be in it at all. As I mentioned last Wednesday, we'll have to wait until this Friday's COT [Dec. 4th] before we can see through the smoke of options expiry and first day notice for December delivery [which is today].

Since I mentioned it, first notice day for delivery into the December contract for both gold and silver is today. Up until last Tuesday, there was still huge open interest in the December futures contract going into first notice day... but, in the last three days of the week that was, December open interest in both metals has evaporated. As of Friday's preliminary data, there were only 19,286 futures contracts left open in gold... and in silver that number was down to 4,581 contracts. These are still pretty big numbers... but have probably fallen even more since then. The final numbers for Friday will be out later this morning, and that should tell us a lot.

To wrap up these comments on open interest and delivery, I'd like to post the link to silver analyst Ted Butler's weekly interview with Eric King over at King World News. Since there was no COT report on Friday, Ted obviously doesn't discuss that... but he has lots of other things to say which fall into the must listen category... and the link is here.

The CME Delivery Report shows that the December delivery is underway. Notices for delivery on December 1st for gold show that 2,866 contracts will be delivered on Tuesday. The big news in this number is that the Bank of Nova Scotia [ScotiaMocatta] is the big issuer... with 2,857 contracts of the total being delivered by them. The big stoppers [acceptors] were JPMorgan, Goldman Sachs, Bank of Nova Scotia and Newedge USA... plus 20 or 30 smaller firms.

In silver, 836 contracts were posted for December 1st delivery. Once again, Bank of Nova Scotia delivered the lions share, with 750 contracts of that number. The biggest stopper was JPMorgan with 362 contracts. There were a lot of other small stoppers as well. And if you want to get into the details of Friday's CME delivery report... the link is here.

As far as the GLD and SLV ETFs are concerned... I've already reported the 4.4 million ounces of silver that went into the SLV last Tuesday... and on Wednesday the GLD added 176,457 troy ounces of gold. Because of the holiday, the U.S. Mint didn't have much to report. One ounce gold eagle sales are now stuck at 124,000 for November because the mint has stopped production for lack of blanks... or gold to make the blanks. They didn't report any changes in silver eagle sales... but did sell another 6,500 24K gold buffaloes. Hopefully the mint will have something to say for itself today to close out the month of November... and I'll report on that tomorrow... along with the final totals for the month. In their Wednesday and Friday reports, the Comex-approved depositories showed that silver inventories declined 363,467 ounces on the former date... and rose 63,572 contracts on the latter. The interesting thing about this delivery sequence [for December] is that normally, on any big delivery month in silver, a fairly large amount of silver is brought into stock in order to meet some of that delivery requirement. Well, that didn't happen in November at all. In actual fact, total silver inventories declined during the month. Will this result in delivery problems in the days ahead? Don't know, but if there is, the price will let us know in advance.

As I mentioned in the previous paragraph, the U.S. Mint has advised its dealer network that, until further notice, there will be no more one ounce gold eagles forthcoming. Let's see how long this delivery problem lasts. Because of Christmas, December is normally a big sales month for the Mint. They may have the sales, but they don't have the product. And, on another related note, there are some rumours out there that the South African Krugerrand is in short supply as well. Will silver eagles be next? The link to the story on the U.S. Mint gold eagle shortage is here. There's also a Financial Times story out of London on the same thing... with a slightly different slant. It's headlined "Gold rush forces US to clip Eagle sales"... and the link is here.

It's been four days since my last report... so I'm sure, dear reader, you can imagine the plethora of stories sitting in in-box. I'll touch on the gold-related ones first.

Here's a story that came out last Wednesday which is 'old news' by now. The headline from yahoo.com reads "IMF sells 10 tonnes of gold to Sri Lanka". The picture is pretty... and the link is here.

The incoming chairman of the World Gold Council, Goldcorp Chairman Ian Telfer, was interviewed by Liz Clayman of Fox Business News for a little less than five minutes last week and predicted that the gold price could reach $2,000 in 2010. I thank Casey Research's Bud Conrad for sending it along... and the youtube.com video clip is linked here.

The next story is from Casey Research's own, Jeff Clark. It's his latest public domain commentary posted over at dailyreckoning.com and is entitled "How to Invest in Gold Mania". It's not a long read... and is certainly worth your time. I thank Florida reader, Donna Badach for sending it along... and the link is here.

GoldMoney founder and GATA consultant, James Turk, has posted his latest gold price prediction: $1,200 to $1,400 by year-end... but with great volatility and likely a dip this week to test support at around $1,150. You can find Turk's analysis at the fgmr.com Internet site linked here... and there's a pretty snappy looking gold chart as well.

Here's a story from November 20th that slipped through the cracks until Australian reader Wesley Legrand sent it to me on the weekend. It's from BusinessIntelligence Middle East out of Dubai. The headline reads "In his gloomiest prediction yet, Marc Faber sees big financial bust leading to war." I've met Marc on a couple of occasions, plus I've heard him speak many times. He's like our own Doug Casey... blunt, to the point, and does not suffer fools gladly. The piece is definitely worth the read... and the link is here.

Interviewed by Russia Today TV about problems in the world financial system, international journalist Max Keiser remarked that sources at Germany's central bank, the Bundesbank, have told him that the Bundesbank is about to join other central banks in announcing gold purchases. As I've mentioned before, I'm not a huge fan of this guy, but [most of the time] what he has to say is worth listening to... and this interview is one of them... and the link is here.

Here's a story posted in last Thursday's edition of The Telegraph in London. It is, of course, from their International Business Editor in London... Ambrose Evans-Pritchard. The headline reads "China, gold, and the civilization shift". This is certainly worth the read... and the link is here. And if you don't want to read the story, you should at least look at the picture of the stack of gold bars.

And lastly, in the must read category, is Eric Sprott's and David Franklin's monthly Markets at a Glance commentary posted over at Sprott Asset Management in Toronto. This month's offering is entitled "Don't Bank on the Banks". I once again thank reader Wesley Legrand for sending it to me... and the link to the pdf file is here.

I have another pile of stories to bring to your attention as well. I'll just supply the headline and the link... and you can decide if you wish to read further.

1. Dubai World Seeks to Delay Debt as Default Risk Soars.
   
2. Dubai default threat rattles world stocks.
   
3. Fears over Dubai send European shares tumbling.
   
4. UAE Central Bank sets up emergency facility for banks.
   
5. Is Britain on the brink of financial Armageddon?.
   
6. Mugged over a £25 billion loan: Lloyds shareholders' fury that they were kept in the dark about ailing HBOS.
   
7. U.S. duties rock China steel industry.
   
8. Russia to Buy Canadian dollars, Mulls More Currencies.
   
9. Vietnamese Dong Drops to Record Low, Stocks Slump After Currency Devalued.
   
10. Greece tests the limit of sovereign debt as it grinds towards slump.
    
11. One in Four [U.S.] Borrowers is Under Water.
    
12. United Nations meets homeless victims of American property dream.
    
13. Fear pushes U.S. interest rates negative.
    
14. Audit would hurt economic prospects: Bernanke.

Well, it's my bet that this problem in Dubai is the beginning of the next phase of the world's financial and monetary crisis. As I've said many a time in this column, if it wasn't for the President's Working Group on Financial Markets... or PPT as it is more commonly known... the world's economic, financial and monetary system would be a smouldering ruin within a week. My opinion on that hasn't changed one iota... and the latest story from the Middle East only reinforces it.

Whether or not we see a minor [or more substantial] correction in the precious metals market is becoming more irrelevant with each passing week. The only way to save yourself is going to be the physical ownership of gold and silver [and don't talk to me about the GLD and SLV ETFs... or pool accounts]. Buy it and keep it where you can get your hands on it. Also an investment in the shares of good quality gold and silver producers would be a good idea as well. As I've said many times... I'm all in! I urge you to consider that $39 one-year subscription to Casey's Gold & Resource Report.

I note that both gold and silver didn't do much during Far East trading on Monday. London has now been open for about an hour [5:10 a.m. Eastern time] and the metals are coming under a bit of selling pressure. Futures volume in gold is currently 5,305 in the December contract and 52,964 in February. In silver, December volume is 1,085 contracts... and in February it's 5,632 contracts... just a small fraction of the activity in gold trading.

Today's trading in New York should be something to see. We are sailing in treacherous waters... and drifting ever closer to the rocks. The situation is hopeless... and the slippery slope is getting steeper with each disastrous headline... which are coming think and fast these days.

So, hang on to your hat... and I'll see you here on Tuesday morning.