A Tungsten-Filled Gold Bar Shows Up In Germany

Gold didn't do much worth mentioning on Monday... but the usual rally at the usual time in Hong Kong, ran into what was probably one of the usual not-for profit sellers. That Hong Kong peak of around $1,124 spot, turned out to be gold's high for Monday... and from there, gold got sold off about ten bucks, with the low of the day [around $1,112 spot] coming at precisely 8:00 a.m. in New York. Then the gold price, in fits and starts, climbed back to virtually unchanged from its Friday close of $1,117.90 spot.

Silver's price action on Monday was very similar to gold's... with the peak price [around $16.78 spot] coming about 4:30 a.m. in Hong Kong... moments before London opened for the day. Silver's decline from that point also ended at precisely 8:00 a.m. in New York. From that point, silver vacillated around the $16.50 price point for the rest of the trading day... closing a few pennies under Friday's close. Silver's low price for the day occurred in New York... and that was reported as $16.41 spot.

The U.S. dollar had a big rally starting during Hong Kong hours... and the buck was up about 80 basis points in a little more than two hours. If you examine either of the precious metals charts above, it's a real stretch of the imagination to pin gold and silver's decline on that move. The subsequent decline in the dollar later in the day [such as it was] produced little effect on gold's price either. I would guess that the metals moved independently of the U.S. dollar yesterday... and may have had more to do with what was going on with the British pound and the Euro yesterday...as gold hit new highs in both those currencies yesterday.

Here's the dollar chart for yesterday...

Below is the Gold/Euro chart. Note the new closing high price yesterday. I thank reader S.A. for bringing it to my attention.

The gold and silver shares did OK yesterday... but they seemed to have a mind of their own... not following the precious metals prices or the general equity market either, for that matter. The HUI peaked shortly after 11:00 a.m. Eastern time... and closed very close to that price as well. The HUI tacked on 1.79%.

Open interest for Friday's trading showed that gold o.i. fell 4,818 contracts. Volume was a very light 141,277 contracts. This drop was a surprise... just as much of a surprise [considering Friday's price action] as the 12,000+ increase in gold's open interest was on Thursday. Total gold o.i. currently sits at 467,387 contracts. It's still monstrously high, but not as bad as it was. Silver's open interest was down as well... this time by 869 contracts. This was even a bigger surprise [considering Friday's price action] than gold's o.i. numbers were. Volume was just OK at 35,643 contracts. Total silver o.i. is now down to 107,635 contracts. Like gold, silver's open interest is still high... but not as high as it was.

I suppose Friday's activity could be chalked up to short covering...as that would certainly account for a drop in open interest as prices were rising. If that's the case... then what accounted for Thursday's big out-of-nowhere rise in open interest? Just asking. We, dear reader, will just have to twiddle our thumbs until this Friday's COT report.

Yesterday's Daily Delivery Notice from the CME's website showed that 25 gold and 253 silver contracts were put up for delivery on March 3rd... tomorrow. In silver, Deutsche Bank was the big issuer and the Bank of Nova Scotia was the big stopper. An issuer is the company that is delivering a contract...and a stopper is the company that receives the contract. Click here for all the numbers.

Neither GLD or SLV reported any changes yesterday. But the U.S. Mint posted some sales for the first day of March. They showed that 10,000 one-ounce gold eagles and 425,000 silver eagles were sold on Monday. Ted Butler and I agree that these sales were probably from last week, but the mint didn't want to report them then, because it would have shoved year-to-date silver eagles sales over the 6 million mark for the end of February... which is where they are now... 6,067,500 to be exact. The Zürcher Kantonalbank in Switzerland did not issue their usual weekly report for their gold and silver ETFs yesterday. Maybe they will today. But over at the Comex-approved depositories, a rather large 1,054,450 troy ounces was taken into their inventories on Friday. Their end-of-month inventory for February shows that they hold 109,969,206 ounces in the Registered and Eligible categories combined. Click here for the end of February stats.

Because of the weekend, I have the usual large number of stories for you today... plus a long King Report audio interview at the end. I hope you, dear reader, can find the time to wade through them all.

I've got a couple of gold-related stories for you today. The first one is a piece posted over at investwithanedge.com stating that Sprott Asset Management's new physical gold fund, the Sprott Physical Gold Trust, began trading Friday on the New York Stock Exchange under the symbol PHYS and that a listing in Toronto is pending. Shares are redeemable for gold bars and the trust's metal will be stored at the Royal Canadian Mint. The report is headlined "PHYS: Now You Can Store Your Gold in Canada" and the link is here.

The next story is posted at vnnnews.net in Vietnam. It's a brief story [with an interesting photo] that's courtesy of the usual New York gold commentator. The headline reads "Gold companies impatient with import blocks". It gives a brief glimpse into the current state of the gold world in Vietnam. I consider it a must read... and the link is here.

What appears to be the first documentation of counterfeit gold bars made of plated tungsten was noted today by Zero Hedge... and was reported by a German television station. The counterfeit bar reportedly is in the possession of the W.C. Heraeus gold foundry in Hanau, Germany, said to be the world's largest. This sort of thing might shake the gold market even more than, say, the IMF's confession that it really doesn't have any gold... and that it has been selling only bookkeeping entries all this time.The Zero Hedge report and video of the German TV station's broadcast can be found linked here.

I have another gold-related story, this one also courtesy of the usual New York gold commentator. It's posted over at marketwatch.com... and bears the headline "Parsing 200 years of gold trades: What is the gold chart saying about the future price? The link is here.

On Friday I ran a story about Illinois being $13 billion in the hole with their upcoming budget. Now I see in a WSJ story that Fannie lost $72 billion last year... and has asked for $15.3 billion from the U.S. Treasury for Q4/09 - [thanks J.W]. Then there's this story from London's The Guardian where the headline reads "Los Angeles on brink of abyss" - [thanks C.Mc]. A story from London's The Telegraph notes that Jamie Dimon, chairman of JPMorgan says that "California is a greater risk that Greece" A Boston Herald story... "Massachusetts' U.I. fund goes broke". From the Straits Times in Singapore... "S&P warns Spain over deficit" And lastly in this litany of woes comes this Washington Times article headlined "Bernanke delivers blunt warning on U.S. debt: Stage is set in U.S. for a Greek tragedy". The last four stories are all courtesy of yesterday's King Report.

Next is this absolutely stunning inter-active unemployment map courtesy of Australian reader Wesley Legrand. I ran this map back in early January when it was only current up until the end of November. Now it's current until the end of January 2010. It starts back in January of 2007. This is a must watch... but before you play the video, I urge you to scroll down to the bottom and read the bit of text that go with it. Click here.

The next story is real estate related... and I thank California reader Joseph Weiler for bringing it to my attention. It's a story about real estate in China. If you thought that the U.S. had a housing bubble... it doesn't hold a candle to what's going on in certain parts of China right now. Here's the eye-popping headline, which reads "China risks property bubble as prices rise 20% a month". The story is posted in The Telegraph in London... and is filed from Huairou, China... and the link is here.

Here's another must read story for you today. It's from The Guardian out of London. A lot of the older members of the Greek population are up in arms again about what Hitler and the German army did when they occupied Greece... as they were around when it happened... and it's obvious that the wounds have not fully healed after all these years. It's headlined "Bitter legacy behind war of words between Greece and Germany: Harsh memories of wartime occupation are inflaming hostility". I thank reader Dr. Bittar Gabriel for bringing this story to my attention... and now to yours. The link is here.

GoldMoney founder James Turk reports that the Federal Reserve is vastly understating the growth of the U.S. money supply. Turk writes: "When deposit currency created by the Federal Reserve is added to the traditional definition of M1... M1 after adjustment is actually 170% higher at $2,918 billion. Its annual growth increases to 29.5%, nearly three times the rate reported by the Fed and, more importantly, an annual rate of growth in the quantity of dollar currency that is approaching hyperinflationary levels." Turk's commentary is headlined "U.S. Dollar Money Supply Is Under-reported" and you can find it at the fgmr.com Internet site linked here.

And lastly for this Tuesday is an almost one hour long interview between Eric King and Harry Markopolos... the man who blew the whistle on Bernie Madoff's $65 billion Ponzi scheme. In the interview, they discuss Harry's new book entitled No One Would Listen: A True Financial Thriller.

David Einhorn from Greenlight Capital wrote the foreword to the book... and called Harry a hero for what he did. Harry's been very much a media darling these days... but what he says in this interview with Eric were things that he didn't [or couldn't] say in the main-stream press. Markopolos really tears the cover off the ball in this interview. It's a must listen... and the link is here.

Gold makes sense as an investment. Just because the price of gold is going up for the 10th year doesn’t mean it’s a bubble. - Jeffrey Christian, CPM Group, Bloomberg, 01 March 2010

I note that there are rumours around that France and Germany are working on some sort of deal to save Greece. Germany says nothing's been decided... yet. The rest of the European countries are saying no... or are being as quiet as church mice. But, as I mentioned before, the gold price in British pounds and Euros is speaking volumes to those who care to listen.

And it's not just the pound or the euro, dear reader...it's all fiat currencies that are being debased. That's why physical gold and silver... and their shares... are the only investments that I'm in. I urge you to give serious consideration to investing in a subscription to either Casey's Gold & Resource Report... or Casey Research's International Speculator. I just read the March edition of the International Speculator as soon as it was published yesterday... and it's exceptional. And don't forget about our 100% satisfaction guarantee!!!

I note that the dollar is in the middle of a smallish rally at the moment... but both gold and silver are attempting to rally at the usual time in Hong Kong... just like on Friday morning... and, come to think of it, a lot of other mornings as well. And it now looks like that rally ran into one of the usual not-for-profit sellers as well.

As of 4:52 a.m. Eastern time, gold volume is reported to be 25,280 contracts for April... and in silver, volume is currently 3,372 contracts for May.

And, for whatever reason, the CME has not posted preliminary volume figures for Monday's trading activity. But I can safely say that volume in both gold and silver was extremely light... and that's why I wouldn't read too much into yesterday's price action in either metal. The CME should post their final Monday volume and open interest numbers later this morning. Silver open interest for March dropped exactly 2,000 contracts yesterday... and total open interest is now down to a smallish 1,752 contracts. I expect it to decline further in the days ahead.

I hope your Tuesday goes well... and I'll see you here tomorrow.