Gold Coin Sellers Angered by New Tax Law

It was very quiet in Far East and early London trading on Wednesday... but at 10:00 a.m. local time [5:00 a.m. Eastern in New York]... gold began to rise briskly. But, at noon local time, with gold about to break the $1,200 price level to the up-side... a not-for-profit seller showed up. Every subsequent rally attempt after that [no matter how tiny... and there were five in all] ran into a seller. The last sell-off occurred when Weimar Ben opened his mouth at 2:00 p.m. in New York.

The high for the day was at noon in London and... eyeballing the chart... I'd say that gold came within an eyelash of $1,200 spot at that point. The low occurred after Weimar Ben closed his mouth... and was reported as $1,182.70 spot. Volume was on the lighter side.

Silver followed almost the same pattern as gold on Wednesday... complete with the not-for-profit bullion banks capping every little rally attempt. However, silver's high of the day [$17.92 spot] was at 9:45 a.m. in New York, as it was about to blast through $18 to the upside. It's low tick of the day [$17.57 spot] was also after Bernanke spoke yesterday afternoon. Volume was very light.

One of the only beneficiaries of Ben Bernanke's pearls of wisdom was the world's reserve currency. While most everything else was heading south at 2:00 p.m. Eastern time yesterday...including the equity markets... the dollar headed north and gained about 45 basis points during the next 30 minutes... and has been slowly declining ever since.

Just as a point of interest on both metals. Tuesday's trading [not yesterday's] showed some decent drops in open interest in both metals once again... 5,198 contracts for gold... and 1,371 contracts in silver. So Friday's Commitment of Traders report should show another big improvement in the bullion banks' short position in both metals... and Ted and I are certainly looking forward to that report.

The HUI suffered the same fate as everything else yesterday... and showed a loss of 0.99% by the time that trading in New York ended.

The CME Daily Delivery report showed that zero gold and 98 silver contracts were posted for delivery on Friday. The link to Wednesday's action is here. There were no reported changes in GLD or SLV... but the U.S. Mint reported selling another 5,000 ounces of gold into their gold eagle program, plus another 1,000 24-K gold eagles. No silver eagles were reported sold. There was a lot of activity at the Comex-approved depositories on Tuesday... and by the time the dust settled... they had added a smallish 77,434 ounces of silver. The link to all that action is here.

Nick Laird over at sharelynx.com slipped another series of charts into my in-box yesterday morning. As we are all aware, every fiat currency is losing purchasing power against gold. As bad as the U.S. dollar's record is on this matter... here's a chart that shows how many ounces of gold it takes to buy 1,000 British Pounds going back to the year 2000. Not pretty, is it?

Today's first story is the Bernanke commentary that caused all the commotion at 2:00 p.m. Eastern time yesterday. This is a Bloomberg piece headlined "Bernanke Says Fed Is Prepared to Act as Needed". But, in the end, what did he really say of any substance, dear reader? Nothing that I could make out... and the link to the story is here.

"Gentle" Ben Bernanke also opens his mouth again this morning in the House at 9:30 a.m. Eastern. Let's see how that's spun by the markets.

Eric King over at King World News sent me something from his blob entitled "The Gold Bull Will End In A Mania". It's not a long piece... and there's a great graph. It's worth the one minute of your time it will take you to read it... and the link is here.

Here's a story from reader Roy Stephens that arrived in my inbox very early this morning. It's an Ambrose Evans-Pritchard offering from The Telegraph that was posted late last night. Switzerland is fighting a losing battle to stop massive inflows of funds from investors fleeing sovereign risk in the euro area and the rest of the world, raising the risk of a violent spike in Swiss franc if global debt jitters return. The headline reads "Swiss endure safe-haven agony from euro flight"... and it's definitely worth the read... and the link is here.

Here's another story about the amendment that was slipped unnoticed in the Health Care Legislation that would tax any sale or purchase over $600... including gold and silver coins. This story showed up in a GATA release late last night... and it's posted over at abcnews.com. The headline reads "Gold Coin Sellers Angered by New Tax Law". It's a fairly long read, but I would suggest that you put it on your must read list... and the link is here.

My next gold-related story is a GATA release headlined "Jay Taylor interviews GoldMoney's James Turk on many gold and silver topics". The interview is in two parts... with most of the first part being an infomercial for goldmoney.com... which is OK if you know nothing about it and want to own gold outside of your country of domicile. The two interviews run about 30 minutes... and the link to both [along with Chris Powell's excellent preamble] is here.

Today's last story is a piece that silver analyst Ted Butler posted in the clear yesterday. Ted notes that the financial regulation law enacted yesterday requires the U.S. Commodity Futures Trading Commission to do what he has been urging it to do for years: establish position limits in precious metals futures trading. Now, Butler notes, the CFTC has to act... and the question becomes the level of position limits. Butler again argues for a limit of 1,500 contracts. His commentary is headlined "When, Not If" and is posted over at silverseek.com... and the link is here.

In his commentary, Ted asks once again that all readers send a quick e-mail to the CFTC [all the e-mail addresses are provided in the essay]... urging them to establish a 1,500 contract limit in the Comex futures market. Ted wants to press them to enforce the law now. My e-mail went in yesterday. I urge you, dear reader, regardless of your location on Planet Earth... to exercise your democratic right to be heard on this issue that affects every one of us... and our respective financial futures.

With the low volumes we've seen in both gold and silver during July, it hasn't been difficult for the bullion banks to have their way with the price of both metals. As I mentioned earlier, Bernanke will conduct more 'open mouth' policy meeting this morning at 9:30 a.m. Eastern... so it's impossible to gauge how the metals markets will be allowed to react. Time will soon tell.

Silver is currently bouncing along its 200-day moving average... and gold's 200-day m.a. is still down another $40... and it's really hard to say what the bullion banks have in store for the rest of the summer. But I expect that all will remain quiet through the end of the month... as next week is a busy week with options expiry in both the OTC and futures market, last day of trading in the July contract, plus first day notice for delivery into the August gold contract next Friday. Anything could happen between now and then, of course... but I wouldn't bet the ranch on it. Here's the 6-month gold chart to show you what 'da boyz' may have in store for the gold price.

Not much happened price-wise in Far East and early London trading this morning [as of 4:27 a.m. Eastern]... and volume in both metals is almost non-existent... the lowest I can remember for this time of day. So it's obvious that the bullion banks haven't had to stick their noses in the gold and silver markets yet. But they will sooner or later.

Today should be another interesting trading day in New York.

See you tomorrow.