President of France Calls for 'New Bretton Woods'

The gold price slid $5 in the first hour of Far East trading on Friday morning... but slowly gained that back [and a bit more] by the time trading began on the Comex in New York. The high for the day was in shortly before 9:00 a.m. at $1,090.50 spot. And, as has been the case lately, that was it for the day. For the next two and a half hours or so, gold got sold down to it's low of the day, which was reported as $1,072.90 spot. From there, a recovery of sorts began, but the price took it's usual turn to the right... and by the time the smoke had cleared, gold was down $5.20 by the close of New York trading.

A cursory glance a the gold chart below shows the relentless selling by the U.S. bullion banks that starts during the New York trading session. The chart only shows the last three days... but rest assured that the gold chart [silver too!] looks almost exactly the same each day since this 'correction's started ten days ago. As I've said before... and I'll say it again... this is a 100% "Made in the U.S.A." correction.

As I mentioned last night, silver didn't stray too far from $16.20 for all of Far East and early London trading. This trend didn't change much, and silver's high price spike of the day [$16.37 spot] occurred at the same time as gold's... around 8:45 a.m. in New York. From there, silver got sold off in sync with gold. The low of the day was $15.99 spot... exactly the same low [to the penny] that occurred on Thursday.

Needless to say, a dollar 'rally' developed at the same time as gold and silver got hit around 9:45 a.m. Eastern time on Friday. It's just so obvious what the bullion banks are doing... it's becoming laughable.

The shares got absolutely crushed yesterday... and for no particular reason that I could fathom. The HUI was down at even 4.00%

Well, gold's open interest numbers for Thursday exceeded my wildest expectations. Gold o.i. fell by an astonishing 19,109 contracts. Volume was right up there again at 320,192 contracts traded. Silver's open interest declined 2,438 contracts on really decent volume of 49,788 contracts.

The Commitment of Traders Report [for positions held at the close of trading on Tuesday, January 26th] was a sight to behold, as the bullion banks reduced their net short position in silver by a very large 6,979 contracts. The did this by covering 4,692 short positions and by adding 2,287 contracts to their long position... which I knew they were doing to cover their tracks. [Add to that the 2,438 contract decline from Thursday... and silver's o.i. dropped quite a bit this week.] Not including Thursday's o.i. decline, the net short position in silver is down to 54,711 contracts... 273.6 million ounces.

To give you an idea of how concentrated the positions of the '4 or less' or '8 or less' bullion banks are in silver... the '4 or less' bullion banks are short 294.1 million ounces and the '8 or less' bullion banks are short 340.3 million ounces of silver. These amounts represent 107.5% and 124.4% of the net short position. What this means in plain English is that if the '4 or less' and '8 or less' bullion banks weren't there as the shorts of last resort... and what I call 'not-for-profit sellers'... the price of silver would explode to the outer edges of the known universe.

In gold [for the week that was] the bullion banks decreased their net short position by a respectable 25,029 contracts. This they did by covering 22,734 shorts and buying 2,295 longs. [Plus they've improved their net short position another 29,000 contracts on Wednesday and Thursday as well!] Not including Wednesday and Thursday, the gold net short position is down to 248,618 contracts... or 24.9 million ounces of gold. [And is down to 22.0 million ounces if you take out Wednesday's and Thursday's o.i. decline.]

Using the actual COT numbers, the '4 or less' and '8 or less' bullion banks in gold are short 20.4 and 25.1 million ounces of gold respectively. With the net short position being 24.9 million ounces... the '8 or less' bullion banks are basically short a bit more than the entire net short position. If they weren't there, the Commercial category of the COT report would be market neutral.

Silver analyst Ted Butler had his usual Friday afternoon interview with Eric King over at King World News... and has a few things to say about yesterday's COT report... and that interview is linked here. As per usual, I think it would be a good idea to stop reading here and listen to what Ted has to say before continuing further.

The CME Delivery Report showed that 862 gold and 2 silver contracts are posted for delivery on Tuesday, February 2nd. If you want to check out the issuers and stoppers... the link is here. There were no changes reported in either GLD or SLV... and the U.S. Mint had no report yesterday... so they ended the month at 85,000 one-ounce gold eagles and 3,592,500 silver eagles. The Comex-approved warehouses reported that another 298,734 ounces of silver were withdrawn from their inventories.

Today's first story is a gold-related piece from Reuters... and filed from Singapore ad Tokyo. The headline reads "Asia Gold-Premiums soar ahead of Lunar New Year: jewellers buy". I thank the "usual New York gold commentator" for providing the story... and the link is here.

The next item is a Bloomberg piece that bears the rather startling headline of "Secret Banking Cabal Emerges from AIG Shadows". The story starts with the following paragraph... "The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. [But] after this week’s congressional hearing into the bailout of AIG, you have to wonder if those folks are crazy after all." The story is worth your time... and the link is here.

The next story is about peak oil... and comes from Casey Research's own Marin Katusa. The peak oil scenario is real. Ever-increasing demand is running into the brick wall of earth's geology. It's a short read... but a must read... and I thank Dr. Bittar Gabriel for bringing it to my attention. The article is posted over at seekingalpha.com... and the title reads "Say Goodbye to Cheap Oil - IEA Gets Slammed Over Oil Production Figures"... and the link is here.

Marin Katusa is Casey Research's resident expert on the energy markets. His monthly commentary is well worth the unbelievably low subscription price. For only $39 you get a one-year subscription to Casey's Energy Opportunities. It's a bargain. How can you lose?

The next item is a piece that's posted over at zerohedge.com. French President Nicolas Sarkozy delivered an impassioned call for [amongst other things] "a new Bretton Woods system." It's not a very long read, and I suggest you run through it. I thank Casey Research's Jeff Clark for sending it to me... and the link is here.

Next, is another Eric King interview with Jim Rickards. This is the second one he's done with him this year... and as I've mentioned before... I have all the time in the world for anything that Rickards has to say. This is a very long interview, so pull the cork on a bottle of wine and listen away. The link is here.

Lastly, is the keynote speech given by John Embry, Chief Investment Strategist at Sprott Asset Management, at the Vancouver Resource Investment Conference in Vancouver a couple of weeks ago. As always, it's standing room only when John steps up to the podium, and this speech proved to be no exception. He had a half hour time slot... and he used all of it. It will probably take you less than half that time to read it... unless you have to use your finger and move your lips. The title to the speech is "Why gold will keep going up for years"... and the link to the GATA release is here.

Riana Van Nieuwenhizen, of the not-for-profit Feila Funds Cheetah Breeding Project, shares her South African home with four orphaned cheetahs. Here are two of them supervising/begging while she makes lunch. I thank Nick Laird of sharelynx.com for the photo.

Today's 'blast from the past' is instantly recognizable. It's from the 1970s... so turn up your speakers... and click here.

As Ted Butler said in his interview earlier in this column, there's no happy way to endure the agony of the bullion banks' forced liquidation. As he said, he just wants to reach through the phone and slap everyone at the CFTC alongside the head. The situation is particularly egregious in the silver market, where the '8 or less' traders [principally JPMorgan] are short well over 70% of the entire Comex silver market on a net basis. The '8 or less' bullion banks are short 68,060 contracts of the entire Commercial short position... which is only 83,747 contracts in size. It's my guess that the difference [83,747 - 68,060 = 15,687 contracts] is 90% spread trades... traders being long one month and short another... which are market neutral. So it's pretty safe to say that [on a net basis] there are only 8 traders in the entire Commercial category of any consequence... and they're all bullion banks. If this isn't the tail wagging the dog... I don't know what is... and I urge you to go back and listen to the Ted Butler interview one more time, until you understand that.

It's hard to say whether we've reached the bottom of this clean-out or not. I'm still looking at those 200-day moving averages in both metals with some fear and trepidation... especially gold... which is still a long way below its current spot price. But, as I keep saying... can they, or will they? Who knows.

So, what will next week bring? One thing is for sure... when Friday rolls around, the jobs numbers are released about 8:30 a.m. Eastern time. The bullion banks have an almost unblemished record of hitting the gold price when [and sometimes before] the data is released... whether it be good or bad. Let's see what they do when that time comes.

As I mentioned yesterday, with the bottom of this correction in sight, it's time to plan where to invest any capital that you may have. With blood running in the streets and sentiment as lousy as it is, the experienced investor knows that this is the time to lay down your bets. Casey Research's flagship publication... International Speculator... contains our monthly reports from all over the world on the best low-risk speculations on the planet. It comes with our 90-day money back guarantee if you're not completely satisfied. Click on the link and please check it out, as there's nothing to lose to do that.

That's it for this week. Enjoy the rest of your weekend... and I look forward to seeing you on Tuesday morning.