Gold Hits Record High in Britain

Once Sydney closed for the day in their Friday, the gold price began a slow rise as the dollar began a slow fall. This gentle rise ended around lunchtime in London... and then began an equally slow decline with the New York low coming at the London p.m. gold fix... 10:00 a.m. Eastern time. From there, gold rallied about ten bucks before the price was capped once the price got north of $1,165 spot... with the spike high [$1,165.90 spot] coming at the close of Comex trading at 1:30 p.m. Eastern time. From there, gold drifted lower into the close at 5:15 p.m. Eastern.

The silver price was also flat until shortly after the Sydney close as well... and then began a gentle rise that basically went on for the rest of the Friday session in Hong Kong, London and New York... with the absolute high [$18.45 spot] coming shortly after London closed for the day at 11:00 a.m. Eastern time. From there it basically flat-lined going into the New York close.

The changes in the gold price pretty much mirrored what went on with gold yesterday... as most of gold's move was dollar related... and little was fresh buying. Nothing to see here, folks.

The HUI generally reflected the precious metals prices... and the HUI closed up another 1.06%

Considering the small gains in both gold and silver on Thursday, the changes in open interst were rather large. Gold open interest was up a sizeable 9,543 contracts on volume of 128,092 contracts. Silver's o.i. was also up a chunky 2,026 contracts on volume of 39,365...of which 20% of that total was spreads and switches. It's entirely possible that some of this increase in open interest was a spill-over from Wednesday's big gains.

The CME Delivery Report showed that 461 gold and 11 silver contracts are up for delivery on Tuesday. GLD showed another increase yesterday. This time it was a smallish 19,578 ounces. There were no additions to SLV. As a matter of fact, there hasn't been an addition to SLV since February 16th. Since that date, everything has been withdrawals. The U.S. Mint had no report and the Comex-approved depositories showed that a smallish 66,909 ounces of silver were withdrawn on Thursday.

The Commitment of Traders report for positions held at the end of trading on Tuesday, April 6th were wall-to-wall ugly... and have deteriorated even more since then. The bullion banks increased their short position in silver by a whopping 5,369 contracts. That's 26.8 million ounces worth of paper silver that they've sold short to stop the price rise as the tech funds rush in. Here's the full colour COT graph for silver linked here.

Gold was just as ugly. The bullion banks increased their net short position by a monstrous 37,215 contracts... 3.72 million ounces of paper gold since the prior week. As I said a couple of times during the last week or so... this rally is not going unopposed! Here's the full-colour gold COT report linked here.

I had my usual chat with Ted Butler yesterday, and he acknowledged that once you factor in the deterioration in open interest since Tuesday's cut-off, the total open interest in gold is now back to levels that we haven't seen since gold's peak price back in the first week of December 2009... and the gold price is now $60 lower than it was then.

One thing that Ted pointed out was that JPMorgan does not appear to be going short silver on this rally... as other bullion banks are taking up the slack. I'm of two minds on this turn of events. Either the CFTC has told JPMorgan to get out of Dodge... and they're trying to do just that without the other bullion banks finding out... or, they're just spreading out the short position equally between all '8 or less' traders' to take the heat off JPMorgan. But JPMorgan is the ring leader... and by far the biggest short in silver... so we'll see how this new turn of events works as time goes on.

The Bank Participation Report for April showed almost no change in silver... with the two big U.S. bullion banks still massively short. The non-U.S. banks are net long the silver market. There was a slight improvement in gold... as the four U.S. bullion banks shaved about 5,000 contracts from their net short position... but they still hold about 8.4 million ounces short... and most of that would be the 'big 2' traders... JPMorgan and HSBC.

As always, I urge you to stop reading here and listen to the weekly interview with Ted Butler and Eric King over at King World News. The link is here.

Today's first offering was sent to me by S.A. from Washington state. It's a graph [courtesy of Bainco Research] of the CRB from 1450 to 2010.

Here's one of two gold stories I have for you today. The first is a piece from The Telegraph out of London. I stole this article from Kitco. As I mentioned earlier this week, gold has hit fresh highs in euro terms... so I guess it was only a matter of time before it happen in English pounds as well. It's a direct measurement of how fast both currencies are being devalued against gold. There's a nice photo... and the story isn't very long. The headline reads "Gold hits record high for British investors"... and the link is here.

As I mentioned in this column yesterday, the government of the Vietnam is trying to do everything in its power to disuade the Vietnamese people from using gold as money. Here's another tactic they're using. I borrowed this story from Bill Murphy's commentary over at lemetropolecafe.com yesterday. The headline reads 'Firms struggle after gold exchange closure"... and the link is here.

Today's next story is courtesy of reader Scott Pluschau. It's a story about petrol [gas] prices in Britain. It appears that gas is now almost US$9/gallon... that's an Imperial gallon... not a U.S. gallon which is 20% smaller. No wonder gold is at new high in British pounds! Britain is being taxed to death. The story is posted at the dailyexpress.co.uk website and is headlined "Misery For Motorists as petrol hits £6 a Gallon"... and the link is here.

The next three stories are all about the worlds' sovereign debt problems... not just Greece's, either. The first story is out of Thursday's edition of The Telegraph in London. I 'borrowed' this story from yesterday's King Report. "The Bank for International Settlements does not mince words. Sovereign debt is already starting to cross the danger threshold in the United States, Japan, Britain, and most of Western Europe, threatening to set off a bond crisis at the heart of the global economy." It is, of course, by Ambrose Evans-Pritchard... and the headline reads "Sovereign debt crisis at 'boiling point', warns Bank for International Settlements"... and the link is here.

The next story on sovereign debt focuses entirely on Europe.... and looks at the crisis from an entirely different perspective than the story above. It's certainly worth the read... and I thank Russian reader Alex Lvov for bringing it to my attention... and now to yours. The story is posted over at globalresearch.ca... and the headline reads "The Coming European Debt Wars: EU Countries sinking into Depression"... and the link is here.

Today's last story is courtesy of reader Roy Stephens. It's specifically about Greece's debt problem. It was posted over at the france24.com website in the wee hours of Saturday morning. The headline reads "EU agrees on Greek rescue terms as Fitch lowers credit rating". Whatever financial monster they've concocted to save Greece, certainly won't work in the current economic environment over in Europe right now. But to be seen not doing anything and letting Greece go down the tubes, is an unthinkable option right now. However, it's just delaying the inevitable. The link to the story is here.

The more corrupt the state, the more it legislates. -Tacitus

Today's 'blast from the past' is know to all. I've even quoted the artist in my column a couple of times when I've said... "It's so obvious, even Stevie Wonder could see it." So turn up your speakers and click here.

With potentially more upside price action in gold and silver, I'm still very optimistic about the future price of their associated equities. There's still time to get on board this rally, dear reader, and I urge you to look for the gold and silver stocks that have the most upward price potential. All that work has been done for you in advance... and you can find out all about it by investing in a subscription to either Casey's Gold & Resource Report... or Casey Research's flagship publication... the International Speculator. It cost nothing to click on the links and check them out.

Here's the 5-day chart of the HUI to show you how well the precious metals equities have done in the last week.

As Ted Butler was mentioning in his interview, it's imperative that we all spend 10 minutes of our lives sending off this letter regarding silver position limits to the CFTC. As he says, it's a cut-and-paste job that only requires a signature and a click on the send button. Here's the link to his short article on this... and everything you need to contact the CFTC is in it. My letter will go in this weekend. I hope yours will too.

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