GATA Sues Federal Reserve to Disclose Gold Market Intervention Records

After a brief attempt at a rally [to its Wednesday high] at the opening in Far East trading yesterday morning, both metals came under selling pressure. Gold was hit for five bucks... and then spent the next seven hours and change trying to regain that loss. But, as I mentioned in my closing comments last night... just before the London open, a not-for-profit seller showed up, or a someone went short... and gold was back to $1,090 in a heartbeat. But once New York opened, the usual sellers showed up and sold gold to its low of the day at the London p.m. gold fix. The low was $1,084.80 spot. The subsequent rally only got so far before running into a seller shortly after noon Eastern time. Gold closed at $1,092.10 spot... only $3.80 below its close on Tuesday.

Silver's high yesterday also occurred shortly after trading began in the Far East yesterday morning. It got sold down a bit to $17.00... and basically sat at that price until the New York open. Silver's low of the day was around 10:45 a.m. Eastern time when it hit $16.71 spot. Silver closed down another 32 cents yesterday

It should be obvious that the bullion banks [specifically JPMorgan] are putting the real selling pressure on silver, as this is their big problem child. They are using a declining gold price to get the silver price down as well. The silver price did not break to new lows for this move down on yesterday's action, but it came very close. Silver's 200-day moving average is only about $1.50 below yesterday's closing price. Is that they're objective? Can they do it... and will they do it. These are the questions both Ted Butler and I have been asking ourselves for months. With light holiday volume, the sellers definitely have the upper hand at this juncture. Here's silver's 6-month chart...

Open interest for Tuesday's fall in price was pretty much what I expected in gold... but not what I expected in silver. Gold o.i. fell 6,299 contracts to 491,712 contracts on volume of about 105,000 contracts. But silver's open interest, despite its big 40 cent price drop on Tuesday, was up 33 contracts to 124,334 contracts on volume of 19,700 contracts. Were the bullion banks going long instead of covering their shorts? An activity like that would produce that sort of open interest reading. Fortunately this data will be in Monday's Commitment of Traders report. I'm hoping that this report will provide more clarity than the last couple we've been presented with... but I wouldn't be surprised if it didn't. And the open interest in both metals is still sky-high despite the sell off in both metals, as there hasn't been the spec long liquidation that normally occurs in conjunction with a price decline of this size and severity.

The CME reported their first deliveries into the January contract yesterday... 881 gold and 60 silver contracts are up for delivery on January 4th. As I've mentioned a couple of times, January is not a traditional delivery month for either metal, so once the initial flurry of deliveries is over in the next few days, I will stop reporting them until we get into gold's next major delivery month, which is February. Neither ETFs had anything to report yesterday. The U.S. Mint had a very small change in gold eagle sales yesterday... another 3,000 ounces worth. Today is their last reporting day for the 2009 calendar year... and it will be interesting to see if they've been sitting on any big sales numbers that they haven't reported yet. And the Comex-approved depositories reported a smallish decline in silver inventories of 56,195 ounces.

I see that the U.S. government is about to become the majority shareholder [56%] in GMAC with another $3.8 billion financial injection. In a Bloomberg piece yesterday headlined "Bankers Get $4 Trillion Gift From Barney Frank", I noted that the reporter on the story read the entire 1,279 page financial reform bill. In it, he found authorization for the "Federal Reserve Bank to provide as much as $4 trillion in emergency funding the next time Wall Street crashes." [They'll need it! - Ed] And lastly, the folks over at judicialwatch.org have put President Obama on their "Ten Most Wanted Corrupt Politicians" for 2009. It took him less than 12 months from the time he was sworn in to make the list. That must be some sort of record.

James Turk has a new commentary posted over at his fgmr.com website which I consider to be well worth the read. It's titled "The Federal Reserve Needs More Money". It will take you less than 2 minutes to run through it... and the link is here.

In a story posted over at chinamining.org comes the following piece headlined "China becomes world's biggest gold buyer in 2009". The first paragraph reads as follows... "World Gold Council (WGC) data reveals that for the first time in 21 years the world's central banks have been net buyers of gold and China has been the biggest buyer this year, adding 454 tonnes to bring its central bank reserves to 1,054 tonnes." I thank Russian reader Alexander Lvov for bringing this story to my attention... and the link is here.

I see that the CEO of Sprott Asset Management in Toronto is back in the news in this Bloomberg piece that bears the headline "Sprott Says S&P 500 Index Will Plunge Below March Low". The first paragraph reads... "The Standard & Poor’s 500 Index will collapse below its March lows as an expected rebound in economic growth fails to materialize, according to hedge fund manager Eric Sprott." I thank Australian reader Wesley Legrand for sending it along... and the link is here.

Someone who definitely agrees with Eric Sprott on what will happen to the U.S. in 2010 is Benn Steil, director of international economics at the Council on Foreign Relations. His latest opinion piece in the December 28th edition of the Wall Street Journal is worth reading as well. It's headlined "Prepare for a Keynesian Hangover"... and the link is here.

This following story [along with the previous one] is courtesy of yesterday's King Report. It's from The Telegraph in London and is headlined "Britain's debt now a 'riskier proposition than Italy's". "The interest yield on gilts [British bonds] rose above 4.1% and spent most of the day higher than the yield on benchmark Italian bonds, as fears over Britain's fiscal credibility continued to haunt markets." It wouldn't surprise me in the slightest if the same thing happened in the U.S. bond market next year. The link to the story is here.

The top gold story yesterday came from the Gold Anti-Trust Action Committee, Inc... of which your humble scribe is a director. GATA has brought suit against the U.S. Federal Reserve Board, seeking a court order for disclosure of the central bank's records of its surreptitious market intervention to suppress the monetary metal's price. In a letter dated September 17 this year to GATA's law firm, William J. Olson P.C. of Vienna, Virginia, Fed Board of Governors member Kevin M. Warsh acknowledged that the Fed has gold swap agreements with foreign banks, but insisted that such documents remain secret. This story is worth your time... and the link is here.

2009 Quote of the Year: "I'm going to make that audience rock!" - Susan Boyle.

With holiday volume in both metals so light, it's easy for any interested party to steer the price any which way they wish. That seems to be the case right now... and what happens next week will be more representative of what we might expect for the rest of January. Although painful, it is something that we've endured before... and survived. It's unfortunate that the CFTC will do nothing to stop these criminal acts by America's top bullion banks.

I note that gold and silver trading in the Far East and Europe is looking more positive than it's been for a few days. But as nice as it looks at the moment, I never forget for one moment that it's the U.S. bullion banks that call the shots... and if they deem it necessary, all these early-Thursday gains will vanish in a proverbial New York minute once the Comex opens for business. I note that volume in both gold and silver is ultra-light at the moment... 14,929 contracts in gold and 2,617 in silver... at 6:10 a.m. Eastern time.

And talking about volume, the preliminary volume figures for gold and silver during Wednesday's trading have been published at the CME website... and they show that around 105,000 gold and 23,500 silver contracts were traded yesterday. I expect today's volume to be much lighter... and I also expect that all the U.S. exchanges will close at 1:00 p.m. today... or thereabouts.

As I write these closing comments, I made note of the fact that I've been writing this daily stand-alone column for four months and one week. I'm amazed and humbled at the now huge [and still growing] number of readers that find my commentary of some value.

But I did not get here by myself. As you can tell from reading my daily rants, that a lot of readers are kind enough to send me all manner of articles that they feel might interest me... and, of course... you, dear reader, as well. I cannot be everywhere on the World Wide Web, and these other sets of eyes have enriched this column on an almost daily basis. I thank Craig McCarty, P.S., Donna Badach, Wesley Legrand, Jeff Clark... and, recently, Russian reader Alexander Lvov... plus many others. And, of course, where would I be without the King Report, GATA... and Bill Murphy's lemetropolecafe.com. My thanks to all. I also thank Bill King and Al Korelin for taking the time to interview me on many occasions during 2009. And a special thanks goes out to silver analyst Ted Butler. I value his friendship and his decades of experience in the commodities markets in general, and the silver market in particular... all of which he is happy to share with me... and I with you.

Behind the scenes are the good folks at Casey Research H.Q. They have kept me on the straight and narrow path as I was finding my feet over the last few months. Thanks go to Dody Day and Veronica Champ... but the biggest thanks [and hugs] go to Megan Mulhern... the lady who performs the magic of taking my daily e-mail offering and converting into what you have in front of you now. It's electronic magic that I don't even pretend to understand.

So, on behalf of all of them, I would like to take this opportunity to thank you, dear reader, for making this daily column the success it has become. I wish you and yours all the very best for the new year... and the new decade... and I'll see you right here on Tuesday morning.