Is This Goldman Sachs Gold Correction Over?

Gold didn't do much until about 3:00 p.m. in Hong Kong's Monday afternoon... when some selling pressure appeared. This lasted precisely three hours, as the low of the day came at 10:00 a.m. in London... around $1,123 spot. From there, the gold price rose to its high of the day [$1,138.50 spot] at 10:25 a.m. in New York... about five and a half hours later. From it's high, the gold price retreated about four bucks... and then more or less traded sideways for the rest of the New York session.

Silver's high in Far East trading occurred shortly after Hong Kong opened for the day... and from there, declined slowly until shortly after lunch in London, about 11 hours later. The silver price then rose to it's high [$17.79 spot] at the same moment as gold's high price... around 10:25 a.m. in New York. Not much happened after that, and silver finished a few pennies off its high of the day.

The precious metals prices more or less followed the dollar movements... such as they were. But, all in all, the dollar didn't do much from its Friday close.

The shares pretty much followed the activity in the Dow... except the Dow was up 0.67%... and the HUI finished down 0.06%... its high of the day. As far as the precious metals were concerned, it was pretty much another day off the calendar... watching grass grow... or paint dry... take your pick.

Well, the open interest numbers reported yesterday for Friday's big down day, were not what I was expecting. Gold open interest, which should have fallen quite a bit, actually rose 2,204 contracts. There are two explanations for this... the first being that Friday's open interest numbers were not all reported in a timely manner by the bullion banks... and we won't see the rest of them until Monday's open interest numbers are posted later this morning. That's what Ted Butler thinks... and he certainly could be right. However, there is one other explanation... and that is the bullion banks went long more contracts than they covered... to the tune of 2,204 contracts. That wouldn't be the first time they pulled that stunt. We'll just have to wait and see.

Silver's open interest numbers looked more conventional... down 2,716 contracts... which wasn't a lot considering the 85 cent down-move in price. Maybe the bullion banks did the same in silver as they did in gold? Monday's o.i. numbers may help... but we'll probably have to wait for this Friday's Commitment of Traders report before we know for sure.

The CME's delivery report was a real yawner, too. Only 24 gold and zero silver contracts are up for delivery on Wednesday. Neither the GLD, SLV, nor the U.S. Mint reported any changes yesterday. But the Comex-approved warehouses showed another decline in silver inventories. This time it was 663,972 troy ounces that were withdrawn on Friday. Over at Switzerland's Zürcher Kantonalbank, they reported a very small 4,956 ounces of gold and 99,185 ounces of silver added to their respective gold and silver ETFs during the previous week. I thank Carl Loeb, as always, for those numbers.

All the talk this past weekend was about Goldman Sachs... and how the law suits are about to come thick and fast. I've lost track on how many stories I've seen. There was even a story posted at Bloomberg that Merrill was peddling the same sort of paper. I'm sure that all major players on Wall Street were selling that junk to anyone who they could sweet talk into buying it. I do have a Goldman Sachs story... and that's courtesy of Washington state reader S.A. It's from the Saturday edition of The New York Times. It's co-written by Gretchen Morgenson and is headlined "For Goldman, a Bet's Stakes Keep Growing"... and the link is here.

Here's another one about Goldman Sachs that you should spend ten minutes on. This is a youtube.com video about Matt Taibbi's article on Goldman Sachs that appeared in Rolling Stone magazine a few months back. It was Taibbi that came up with the "Great Vampire Squid" description of G.S... and here he is in the flesh talking about that article. It's 5 separate video clips that run sequentially for about 10 minutes. This is definitely worth watching... and I thank reader Dave Delve for passing it along. The link is here.

With the G.S. stories out of the way, here are several gold-related items. The first is a story by Peter Brimelow that's posted over at marketwatch.com. The headline reads "Goldman guts gold, but radical bugs calm [if cynical]"... and the link is here.

The next story is a short item posted at Reuters. The headline reads "China should use more reserves to buy gold - researcher". It seems like we're hearing about a story a month from somebody in China about this sort of thing. It's a short piece which will take you about a minute to run through... and the link is here.

The last gold-related story is a GATA release from yesterday. Chris Powell's headline reads "ECB simultaneously confirms and denies currency intervention". It's another Reuters piece headlined "ECB Invested 2009 Gold Sale Proceeds in U.S. Dollars". Powell's preamble to this story is worth the read as well... and the link is here.

In the "you can't make this stuff up" category, comes this piece from the Ottawa Citizen in Canada's capital city. The headline reads "Vacationing a human right, EU chief says". "The European Union has declared travelling a human right, and is launching a scheme to subsidize vacations with taxpayers' dollars for those too poor to afford their own trips." This is, of course, total madness. I thank Florida reader P.S. for bringing it to my attention... and the link is here.

Next is a really interesting story about what lies ahead for the California wine industry... and even if the following story is only half right... it's going to be ugly. The story is posted at San Francisco-based website vinography.com. I've been making my own wine for the last eleven years, and know a thing or three about the industry... from the inside and the outside... and it all sounds plausible to me. The headline reads "The Coming Carnage in the California Wine Industry".... and I thank reader Craig McCarty for sending me the story... and the link is here. I should warn you in advance, dear reader... that, in spots, the prose is a little pithy!

My last offering today is a synopsis of the April edition of GlobalEurope Anticipation Bulletin. This story confirms everything that Casey Research's resident economist Bud Conrad has been going on about for years. As bad as 2008 and 2009 were... this year will turn out to be even worse. It will take you about ten minutes to read this... including the notes at the bottom. I thank reader Doug Beiers for sharing this... and the link is here.

If you're interested in what Bud Conrad has to say over here at Casey Research... I urge you to consider a subscription to The Casey Report. Bud is one of the best in the business... and when he's talking I'm listening. Click here to learn more.

Work is not a curse; it is the prerogative of intelligence, the only means to manhood, and the measure of civilization. - Calvin Coolidge

Well, if I was forced to bet a dollar on what gold and silver prices will be doing when I get up about 11:30 Eastern time this morning, I'd bet that they will be rising. I'm basing that on yesterday's price action in both the metals and their shares... and what's currently happening in the Far East. Here's the 6-month gold chart.

Right now, both gold and silver are up in Hong Kong and early London trading... and are rising briskly... starting at the usual 3:00 a.m. Eastern time. The U.S. dollar isn't doing anything of note. Gold volume, as of 3:22 a.m. Eastern time, is 19,400 contracts... and silver [less roll-overs] is a healthy 3,400 contracts. What these numbers tell me is that this morning's rally is already running into stiff resistance.

The CME has posted Monday's preliminary trading volumes... and they are as follows: gold... 129,465 contracts; and silver... 38,534 contracts [minus about 6,500 roll-overs].

Another big story over the weekend was the continuing eruption of Iceland's Eyjafjallajökull volcano... and the devastating effect that's having on European and trans-Atlantic air travel. Here's a wonderful set of 18 photos posted over at boston.com that reader Dave Delve sent me yesterday. Click here.

It could be an interesting day in the gold and silver pits in New York this morning. It will be interesting to see what the bullion banks do if prices become "irrationally exuberant".

See you tomorrow.