$3,000/ounce Gold 'Conservative Estimate' - David Rosenberg

With virtually no trading activity by the U.S. bullion banks on Monday... the gold and silver markets existed in name only. Volume was invisible... with only 12,000 contracts in gold and about 2,500 in silver traded... and I wouldn't read a thing into the price activity in either metal. As Ted Butler said in our daily phone conversation yesterday... this is proof positive that the gold and silver markets basically revolve around what the New York players do.

Silver was a bit more interesting... but only just.

The dollar traded in a 20 basis point range from the open of Monday trading in the Far East... which started at 6:00 p.m. Eastern time on Sunday evening... and it's still in that price range as I write this. This chart starts at 5:00 p.m. Central time on Monday [6:00 p.m. Eastern]... because it originates in Chicago.

The Toronto Stock Exchange was open yesterday... and the TSX Gold Index closed down a hair.

The was no Delivery Report from the CME yesterday... no updates for either the GLD or SLV ETFs... nor from the Comex silver depositories. But Europe was open yesterday... and the Zürcher Kantonalbank had a report. Last week their gold ETF received another 39, 375 ounces... and their silver ETF added another 191,401 troy ounces. I thank Carl Loeb for those numbers.

My first gold-related story today is one that you've already seen in one form... but here's an update on it. It appears that the German company that's making these gold dispensing machines is now starting to churn them out at a pretty good rate... as more and more demand shows up for them all over the world. This is a money.cnn.com piece headlined "Gold-dispensing ATMs: Coming to a city near you". I thank reader Roy Stephens for sending it along... and the link is here.

The next gold-related story was in last Friday's edition of London's Financial Times. Mark O’Byrne, of Gold Core, a London-based gold coins and small bars dealer, said it was selling sovereigns and Britannias “in the thousands”... as British investors rush to buy sovereigns and Britannia gold coins in an attempt to use a tax loophole to avoid paying more capital gains tax. The headline reads "Scramble for gold coins to beat tax increase"... and the link to this worthwhile read is here.

Over the weekend, my good friend Nick Laird over at sharelynx.com [in the land "down under"] sent me the following graph. It's one of those graphs that's worth more than a thousand words... as it speaks for itself. It's a chart of 17 global stock indexes, with a 41% weighting to the USA. This is what the President's Working Group on Financial Markets [a.k.a. the Plunge Protection Team] is fighting against... and I wish them luck.

It appears that the European Central Bank has been buying up boat loads of Greek bonds... and also bonds of other PIIGS countries. The general €750 billion rescue fund for the remaining highly indebted countries has been approved but not yet set up... and some of the central bankers have a sneaking suspicion that there is a French conspiracy at work to bail out the French banks before anyone wises up to it. With the way things are going right now, dear reader, I'll believe just about anything. Reader Roy Stephens sent me this May 31st article from the English language edition of the German website spiegel.de. The headline to this must read article reads "ECB Buying Up Greek Bonds: German Central Bankers Suspect French Intrigue"... and the link is here.

Here's a 6-minute Bloomberg video interview from last Friday. It's with David Rosenberg... former chief North American economist at Merrill Lynch. Now he's chief economist and market strategist at Gluskin Sheff & Associates Inc. in Toronto. Not only is he bearish on the U.S. stock market... but he considers his $3,000/ounce gold price figure to be "conservative". This guy is a real straight-shooter... no flies on him. I thank reader Bob Acker for sharing this must watch clip with us... and the link is here.

Here's a story from The Sunday Times out of London. The Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy. In time, dear reader, this is exactly what I expect the Greek government to do. The headline reads "Greece urged to give up euro"... and the link is here.

This next story was a real surprise. Not because I hadn't know about it for years... but the fact that this knowledge was allowed to show up in the main-stream press. "It is the common belief among Afghans that the west has no intention of ending the conflict in Afghanistan. Intellectuals and respected Afghan professionals are convinced the west is prolonging conflict to maintain influence in the region." And this should be no surprise to you, dear reader... as F. William Engdahl says the same thing in his book "Full Spectrum Dominance: Totalitarian Democracy in the New World Order" which I've linked on several occasions...including now. This is a piece from The Guardian in London... and is headlined "Afghans believe U.S. is funding Taliban". I thank reader U.D. for sending it along... and the link to this must read article is here.

Well, war tensions have certainly ramped up a couple of notches in the last week. North Korea is making all kinds of ugly threats against its southern cousin. The U.S. is sending another carrier task force into the Persian Gulf. And now Israel has announced that it is about to deploy at least one its submarines equipped with nuclear cruise missiles in the Gulf near the Iranian coastline. Reader Brad Robertson sent me this story which was posted in The Sunday Times in London. It was headlined "Israel stations nuclear missile subs off Iran"... and the link is here.

Then, to add to the tensions, Israel attacked a flotilla of mostly Turkish civilian aid ships in international waters a couple of days ago... and government outrage and fury is palpable just about everywhere... especially in Turkey and Europe. Regional conflagrations in that region of the world sometimes have a tendency to spread rapidly. Let's hope this one doesn't... but it's just another brick in the wall... if you know what I mean. The headline from this morning's edition of The Times in London reads "Death on the high seas as Israel storms aid ship". I thank reader U.D. for this story... and the link is here.

And lastly today is another gold-related story... this one from James Turk over at GoldMoney.com. James notes several recent references to a bubble in gold and argues that gold can't be in one yet because its value remains greater than its price. Turk's commentary [which is well worth the read] is headlined "Is Gold in a Bubble?"... and the link is here.

The problem that governments face today is that they cannot depreciate their money fast enough to keep their debt loads “affordable” without running an ever increasing risk of wiping it out as a viable media of exchange. Their choices are quickly narrowing down to only two. Either start cutting spending drastically in REAL terms or face the collapse of the “legal tender” which is the source of their power. There is a third choice -- habitually resorted to by governments at the end of their financial tether -- war. - Bill Buckler, The Privateer, May 30, 2010

The world continues to lurch from crisis to crisis. Lately, most of them have been of the economic, financial and monetary nature... with yesterday's resignation of German President Horst Koehler being the latest. But geopolitics, always simmering on the back burner, has had the heat turned up by quite a few degrees in the last few days... and as I said before, it's just another brick in the wall.

Gold and silver both showed signs of life in early Far East trading this morning... and volume is already very heavy... so these rally attempts during the Hong Kong trading session are not going unopposed... especially in silver. As of 3:36 a.m. Eastern time, volume in gold is already well over 26,000 contracts and silver is north of 6,000 contracts traded... and London hasn't even opened yet. The lion's share of this trading would be by the big bullion banks in New York [or their proxies elsewhere] trading on the Globex... because, as you've already seen in my comments in the first paragraph of this column, volume is next to nothing when they're not around.

Normally I wouldn't have a column today... as I'm not required to post one until tomorrow morning. But with all that happened over the weekend... and all the stories I had to post... I didn't want to wait and unload it all on you [plus what happens today] in this column tomorrow morning.

And, as I put this column to bed for another day, I see that the dollar has spiked up... so I'm already beginning to suspect that it could be a rather interesting day in New York once the Comex opens for business.

I hope all my American readers had a relaxing long weekend... and I'll see you tomorrow morning.