'Da Boyz' Are Back in Town... But For How Long?

Gold didn't do much early in the Monday trading day until around 1:00 p.m. in Hong Kong when a rally worthy of the description began to take shape. This lasted until precisely 9:00 a.m. in London... when it got hit at its spike high of the day... around $1,267 spot. The subsequent rally got hit again at precisely 1:00 p.m. in London... shortly before the Comex opened in New York. Then 'da boyz' really got serious around 12:45 p.m. when they pulled their bids. The low of the day [$1,229.80 spot] was at 4:00 p.m. in New York.

Silver's price path was very similar to gold's... except silver's high [around $19.48 spot] was at 1:00 p.m. in London trading... shortly before the Comex opened. Silver's low was also at 4:00 p.m. in New York... $18.67 spot.

The dollar had about a 30 basis point gap down opening as Asia began trading on Monday morning... with the dollar bottoming around 2:30 a.m... shortly before both gold and silver began to head south. By 5:00 p.m. in New York, the dollar had rallied a hair over 90 basis points... and for once, I suppose, one could say that the dollar and gold were in sync. But the precision of the intervention times on the gold and silver prices proves that to be a lie... as I see no such similar deviations in the dollar around the three crucial time points.

The stocks were obviously under pressure all day long... only recovering a tiny bit into the close. But, with the metals down as much as they were, I suppose it could have been worse. The HUI finished down 2.96% on the day.

The CME's Delivery Report showed that 95 gold and zero silver contracts were posted for delivery on Wednesday. There were only six firms involved... and they're mostly the 'usual suspects'. The link is here. There were no updates to either GLD or SLV yesterday. But the U.S. Mint reported selling another 3,000 ounces of gold eagles and a very chunky 626,500 silver eagles. Month-to-date... 110,500 ounces of gold have disappeared into the gold eagle bullion program... and 2,487,500 silver eagles were sold. The Zürcher Kantonalbank updated their gold and silver ETFs for last week. They showed that 42,478 ounces of gold and 647,402 ounces of silver were added to these ETFs for the week that was. As always, I thank Carl Loeb for those numbers. The Comex-approved depositories showed that 516,522 ounces of silver were withdrawn from their warehouses on Friday. This time it was all from Brink's, Inc.

Being Tuesday and all... I have a lot of stories today... and quite a few of them are gold-related. Here's the first one.

GoldMoney founder James Turk, a consultant to GATA, reported on Saturday that gold's price rise against major currencies is accelerating. He concludes: "As the sovereign debt crisis deepens and the debasement of national currencies at the hands of central bankers and politicians becomes increasingly recognized, more and more people are starting to understand the true nature of gold. It is not only money, but a better money than any national currency." The story, headlined "Gold Sets Another Record" is posted over at goldmoney.com... and the link is here.

This next story is really strange. Saudi Arabia just 'discovered' that they have more than twice as much gold as they previously thought... or at least that's what they have just reported to the World Gold Council. I'm not sure what to make of that... but something stinks. I fired an e-mail off to James Turk asking him for his expert opinion... but have heard nothing. GATA's secretary treasurer Chris Powell asks.. "Did they recover reserves they had lent to the LBMA? And what good are official statistics that can change so much overnight?" The story was posted at the Financial Times in London on Sunday... and the headline reads "Gold at record after Saudi reserves double"... and the link is here. We haven't heard the last of this story, dear reader... and I'll keep you posted.

Here's another gold-related story that showed up in a London paper on Sunday. This one was posted in The Telegraph... and was written by Ambrose Evans-Pritchard. The headline reads "Gold reclaims its currency status as the global system unravels". It's my opinion that anything Ambrose writes is worth the read. This one is too... and the link is here.

This next gold-related item is also from the Sunday edition of The Telegraph. This one is written by Garry White. The headline reads "Lord Rothschild fund joins World Gold Council to put £12.5m into BullionVault". Tim Levene of Augmentum Capital, a fund backed by Lord Rothschild's RIT Capital Partners, said the investment was not a bet on the gold price but on "the future growth of the BullionVault platform", which stores physical gold for private clients in London, New York and Zurich. It's a very short story... and it's worth running through... and the link is here.

In an essay posted at King World News, James G. Rickards of Virginia consulting firm Omnis Inc., as good a strategic thinker as inhabits the Western markets, outlines the world's likely return, in rather spastic fashion, to gold-backed currency. I consider Jim to be the sharpest knife in the drawer... and everything he writes is a must read... including this. Rickards' essay is headlined "What G20 Will Not Discuss This Weekend (But Probably Should)"... and the link is here.

I have a couple of non-gold stories next, before the last three precious metals stories that end this column. The first is from reader Roy Stephens. This story is also by Garry White from The Telegraph in London. China said yesterday that it would allow a more flexible yuan, bringing to an end its controversial 23-month peg to the US dollar which has been accused of keeping Chinese exports artificially cheap. China didn't say when it would start or how "flexible" they were going to allow the yuan to be. The headline reads "China in pre-G20 climb-down over yuan"... and the link is here.

The headline of my next story is posted over at zerohedge.com and reads as follows... 12 American Warships, Including One Aircraft Carrier, And One Israeli Corvette, Cross Suez Canal On Way To Red Sea And Beyond Apparently this all happened on Thursday night/early Friday morning of last week. This is the third American carrier that appears to be heading for the Gulf. I thank reader U.D. for passing it along... and the link is here.

The next essay is from Mike Kosares over at Centennial Precious Metals... and rather than write the preamble myself... I'll just steal what Chris Powell wrote in his GATA release... "It has been far too long since we've heard from Michael J. Kosares, proprietor of Centennial Precious Metals in Denver... and host of its USAGold.com Internet site. But having recharged his batteries, he has begun posting an occasional newsletter, "USAGold News, Commentary, and Analysis." The June edition begins with evidence that the dollar gold price has fallen so far behind the real rate of inflation that its inflation-adjusted price should be above $7,500. That gold has not kept pace with inflation and price increases in other tangibles in recent decades, is generally acknowledged. To figure this out, it is necessary only to contemplate central bank gold dishoarding, leasing, and the diversion of gold demand away from real metal and into futures contracts and similar derivatives. Kosares' letter [which is a bit of a read, with some great charts] is headlined "The TRUE Inflation-Adjusted Price of Gold" and you can find it linked here.

The next item is also a bit of a read. It's by Don Coxe of Coxe Advisors LLP... and distributed by the Bank of Montreal here in Canada. According to the pdf counter... it's 53 pages long... but the gold-related part starts at page 28 of the report [page 32 on the pdf counter]. The sub-heading on that page reads "The Oldest-Established Store of Value Moves to Center Stage". The entire report is entitled "June Reflections: Summer's Storms and Norms". It's posted over at zerohedge.com... and I once again thank reader U.D. for sharing it with us... and the link is here.

Lastly, is an all-too-infrequent essay by silver analyst Ted Butler that's been posted in the clear over at silverseek.com. Once again I'm stealing Chris Powell's preamble... "Silver market analyst Ted Butler comments on the long silence among the U.S. Commodity Futures Trading Commission, the New York Commodity Exchange's owner, and J.P. MorganChase... about the increasing number of complaints of manipulation of the silver market. Butler figures that anyone in authority who talks openly about the issue, risks exploding the market. His commentary is headlined "Mum's the Word"... and it's a must read... and the link is here.

As long as Gold does not circulate as money, it is sometimes an excellent form of investment... but always the ultimate form of financial protection against a system which has spurned its discipline. But Gold will only have performed its real job when it does once again become money - not necessarily in the US - but somewhere in the world. The longer that day is delayed, the higher Gold will go in relation to the various pieces of paper, or plastic, which do circulate as money. It's really as simple as that. - Bill Buckler, Gold This Week, 19 June 2010

Well, I have no idea why 'da boyz' showed up yesterday... but they did. No moving averages were violated to the upside, so it's hard to find a reason why they did what they did. Maybe they want gold down for the upcoming G-20 meeting here in Canada. Maybe they just want everyone to believe that the 'summer doldrums' are upon us... and they want to make sure it really happens. These guys are experts at chart painting... as they've been doing it for at least 25 years in silver and 15 in gold. One can only imagine how sky-high the prices of both gold and silver [especially silver] would be, if the '8 or less' bullion banks were forced to cover their grotesque and market-dominating short positions on the Comex. Some day we'll find out.

But one day is not a whole market... and we've seen this sort of stuff from the bullion banks before. This, too, shall pass.

I see that both metals rallied a hair in Far East trading up until about 1:00 p.m. in Hong Kong, before losing most of those gains going into the London open this morning... but are now rallying a bit as I hit the send button. Volume in gold [as of 4:46 a.m. Eastern time] is pretty decent in gold... and only average in silver, as the roll-overs continue with options expiry in silver on Monday... and last day of trading in the June contract on the following day.

It's entirely possible that the bullion banks are selling both markets off so that the vast majority of call options written will expire out of the money. They've been doing that for years. But we'll have to see if this is the game they're playing as the week progresses.

See you on Wednesday.