Gold closed at 1248.40 for a gain of $11.00 yesterday. Silver rose to 19.33. Both metals

jumped immediately after the start of the comex. The final price of gold at 1248.40 is now

used on monthly closing gold charts and this is extremely bullish, especially for Europeans.

This will certainly be noticed and commented on by many financial analysts.

The open interest on the gold comex fell by 2035 contracts to 563,080 contracts. The silver

comex OI fell by 652 contracts. This is of course basis Monday as gold and silver were relatively flat so this is quite normal.

Over at the inventory and notices to deliver department at the comex, again we had

zero withdrawals of silver from the dealer and only a tiny deposit of 6708 oz.

In gold, in another strange development as we finished the entire delivery month of August, we

witnessed zero oz of gold withdrawn from the dealer. We also saw no gold deposited in the

customer account.

In gold as we entered first day notice we were informed that 180 notices to delivery were

received by longs who exercised options on Sept gold. So for the first day we have 18,000 oz of

gold standing for the non delivery month of Sept. We must wait to see how many options will

be exercised.

In silver, it looks like 15 million oz will stand as 3002 open interest contracts remain. It may

adjust with other options exercised. I will add 115,000 oz from the Aug. options in the calculations of silver standing for the delivery month of Sept.

On the first day only 292 contracts were served for a total of 1.46 million oz. This is unusual as

the seller must pay storage and insurance fees. There must be very little silver around.

The lease rates in silver went back to normal levels.

The premiums on the Central Fund of Canada reached 9% in trading Tuesday and the PHYS over 13%.

The ECB announced zero sales of gold again last week. The only supplier of gold has been

the IMF. This week the IMF removed its $500 billion cap on its facility to rescue banks. Looks like they expect that more money will be needed as more banks fail globally.

The FDIC raised its level of banks in trouble to 871 banks. They will be reporting in late Sept.

There are some important stories floating around that I would like to alert you on.

Stratfor has heard the rumours that the Chinese Finance Minister has fled the country over

his policies on the accumulation of massive usa dollars and on losses on $480 billion dollars

on bonds held. I am not sure how these losses could have happened with bond prices at sky

high prices but this is what Stratfor stated.

If true, the real consequences will be of China liquidating its usa holdings. I will watch this for you.

It looks to me that the Dow at 10,000 is a sore spot for the usa authorities and they will do

just about anything to keep the index above this magic figure.

I will give a comprehensive review of events when I get back to Toronto.

If anything earth shattering occurs, I will report on that.

So bye for now

Harvey