Brazil Cancels Participation In Upcoming G20 Meeting

• Yesterday in Gold and Silver
• Critical Reads
• The Funnies
• The Wrap

Gold was under pressure right from the open in Far East trading on Monday morning. You can see where the bids disappeared a couple of times... once shortly after 9:00 a.m. Hong Kong time... and the second was at 9:00 a.m. in London. From that London low, gold rose in fits and starts until its high [$1,376.10 spot] at 4:00 p.m. in electronic trading in New York. From that high, gold sold off about five bucks into the close.

Silver also ran into selling at the Far East open on Monday morning... with the bid being pulled at 9:00 a.m. Hong Kong time... just like gold. Silver's low of the day was around lunchtime in Honk Kong and, in fits and starts, silver also gained back almost all of its losses by 11:00 a.m. in New York... which just happens to coincide with the London close. From there, silver didn't do much, but it managed to set its high of the day... $24.54 spot... at the same 4:00 p.m. time as gold.

Right from the Far East open at 6:00 p.m. New York time, the dollar began a rally that added a bit over 60 basis points to its 'value'. It peaked a few minutes after 4:00 a.m. Eastern time... the moment that the bids got pulled on gold in London. From that 4:00 a.m. Eastern time dollar top... until a few minutes before 4:00 p.m. Eastern time... the dollar fell 70 basis point. That was also the time that the New York highs were in for both gold and silver. Then, in just under an hour, the dollar jumped up 30 basis points... which is probably the reason the gold got sold off into the 5:15 p.m. New York close.

One has to wonder how the financial system operates at all, having the world's reserve currency trading all over the map like it was on Monday. It's a hell of a way to run a railroad.

Although gold and silver appeared to follow the goings on of the world's reserve currency, there's no doubt in my mind that 'day boyz' were out and about.

The shares hit positive territory very briefly at 11:00 a.m. Eastern time... right at the London close... right at the time when gold and silver had experienced their biggest gains of the day. After that, the shares basically traded sideways and the HUI finished down a hair.

The GLD ETF had another small withdrawal yesterday. This time it was 29,306 ounces. There was no reported change over at SLV. The U.S. Mint had a sales report. They sold 2,500 ounces of gold in the gold eagle program... plus another 100,000 silver eagles. Month-to-date, gold eagles sales total 60,000 ounces... and silver eagles sales stand at 1,725,000.

Over at the Zürcher Kantonalbank in Switzerland, they reported that both their gold and silver ETFs had withdrawals last week... which is the first time that I can remember that happening. Their gold ETF showed a withdrawal of 21,662 ounces... and their silver ETF had a withdrawal of 121,883 ounces. I thank Carl Loeb for those numbers.

Over at the Comex-approved depositories last Friday, they reported that a rather chunky 850,446 troy ounces of silver were withdrawn to end the week. Most of it came out of Scotia Mocatta... and the link to all the action is here.

¤ Critical Reads

Paging Bob Pisani: Mutual Funds See 23rd Sequential Outflow, As Redemptions Accelerate, Hit $80 Billion

My first story today is a posting over at zerohedge.com from early last week that I think is worth the one minute of your time that it will take to read. The longish headline reads "Paging Bob Pisani: Mutual Funds See 23rd Sequential Outflow, As Redemptions Accelerate, Hit $80 Billion". The two graphs included with the article are worth spending another minute on... and the link is here.

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Insider Selling To Buying Update: 2,019 To 1

Also from zerohedge.com is this piece from yesterday, which is also a very quick read. It was sent to me by 'David in California'. The headline reads "Insider Selling To Buying Update: 2,019 To 1". It's one longish paragraph and a table of numbers that's worth running through... and the link is here.

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The Stock Rally That Wasn't

Here's a graph entitled "The Stock Rally That Wasn't". It was sent to me by Washington state reader S.A. It's the S&P500 vs. Gold. No further embellishment is required from me, as it is self-explanatory.

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John Williams Warns Of "Severe And Violent Sell-Off In Stocks"

The zerohedge.com website has another offering for us today. This one was courtesy of reader Peter Handley. John Williams, of shadowstats.com fame, has something to say in this piece that's headlined "John Williams Warns Of "Severe And Violent Sell-Off In Stocks". This will take you two minutes to read... and the link is here.

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Global Indices

While we're talking about global sell-offs, here's a chart that Nick Laird over at sharelynx.com was kind enough to send along yesterday evening. It's an update of his "Global Indices" graph. If we are going to have an equities debacle, I'm sure that the PPT won't allow it to happen before the November 2nd election.

Click here to enlarge.

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FX Wars Escalate: Brazil Cancels Participation In Upcoming G20 Meeting

One last zerohedge.com story... and its a big one. 'David in California' sent it to me late last night. The headline is a stunner... and reads "FX Wars Escalate: Brazil Cancels Participation In Upcoming G20 Meeting". This story will take two minutes to run through... and is a must read from beginning to end... and the link is here.

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Geithner: U.S. will not engage in dollar devaluation

I see that little Timmy Geithner was trying to "ease fears the United States was actively weakening the dollar to gain an export edge"... conveniently ignoring the fact that the dollar has lost 97% of its purchasing power since the Fed was founded in 1913. Here's a Reuters piece that was a GATA dispatch yesterday afternoon. The headline reads "Geithner: U.S. will not engage in dollar devaluation"... and the link is here.

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China's not the villain if the West tries to debase its debt through QE

While we're on the subject of currency debasement, here's a story from the Saturday edition of The Telegraph. The headline reads "China's not the villain if the West tries to debase its debt through QE". If you have the time, it's worth the read... and the link is here.

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Percentage Gains in Four Precious Metals Since Start of 2009

Before I start on my gold-related stories for today, here's another graph courtesy of Nick Laird over at sharelynx.com. It shows the percentage gains in four of the precious metals since the beginning of 2009. Palladium sure has been on a tear... and it won't be long before the rest of these precious metals follow suit.

Click here to enlarge.

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South Korea's central bank looks to gold

My first gold-related offering is a GATA release from yesterday's edition of the Financial Times. It appears that South Korea, holder of the world's fifth-biggest foreign exchange reserves, is considering expanding its small holdings of gold to diversify its dollar-heavy portfolio. The headline reads "South Korea's central bank looks to gold". This story is very much worth your time... and the link is here.

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Pierre Lassonde -- Strong Forces Propelling Gold

Eric King of King World News interviewed mining entrepreneur Pierre Lassonde, who, in excerpts posted at the Internet site, reported enormous physical gold demand from China. Lassonde added that China's central bank needs a lot more gold to diversify its foreign exchange reserves. King's interview with Lassonde is headlined "Pierre Lassonde -- Strong Forces Propelling Gold" and the link to this must read blog is here.

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Gold and Gold Stocks Since 2001

Here's another very interesting chart that was sent to me by Australian reader Wesley Legrand. This one's from right here at Casey Research. It's a plot of the Gold price and the HUI since January 2001. The graph is self-explanatory.

Click here to enlarge.

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Gold Shares to Outperform Going Forward

Keeping one eye on that chart... here's a blog from Eric King over at King World News that fits right in. The headline reads "Gold Shares to Outperform Going Forward". This is a very short must read... and the link is here.

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Eric Sprott on Gold and QE2

Financial journalist Ron Hera did an interview with Sprott Asset Management Chairman and CEO Eric Sprott that covers gold market manipulation as well as the declining usefulness of government "stimulus" programs. The interview is headlined "Eric Sprott on Gold and QE2" and it's posted over at goldseek.com. It's a longish read, but certainly worth your time... if you have it. The link is here.

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Should Germany worry about leaving its gold with the U.S.?

Lastly today is another GATA release. This one is headlined "Should Germany worry about leaving its gold with the U.S.?" After what Jim Rickards had to say in his KWN blog on Saturday, it's certainly a question worth asking... and German journalist Lars Schall jumped right on it. This story is very much worth reading... and the link is here.

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When bad ideas have nowhere to go, they gravitate to American universities and become courses. -- Oscar Wilde

I wouldn't read a thing into yesterday's price activity. For a change, the activities of the dollar did make a difference... and both precious metals' price charts were almost the inverse of the U.S. peso. Ted Butler pointed out that volumes in both metals were quite heavy yesterday. Gold was about 135,000 contracts, which is quite a bit... and silver's volume was over the moon, at more than 50,000 contracts. It will be interesting to see if the bullion banks managed to cover any short positions yesterday. Fortunately, all of yesterday's trading data will be in Friday's Commitment of Traders report.

Everyone seems to be waiting for a correction of some kind. Who knows if [or when] we'll get it... but if one does arrive, you won't have to guess who instigated it, how they did it... and why.

Here's the 3-year gold chart. You can see that the current price is a long way above its 200-day moving average. But, we've been higher in percentage [and dollar] terms in the past, so there's still a lot of room to run to the upside before we really get into nosebleed territory at this price level. The silver chart looks similar.

And, lest we forget, there's still those position limits for both metals that the CFTC has been going on about. I doubt that we'll see them imposed before the election... but when they do make an appearance, things will certainly get interesting.

Tomorrow we hear from The Central Bank of the Russian Federation. They will update their website with their September data... and then we'll find out how much gold they purchased during that month. Right now their stated reserves are 23.6 million ounces.

At the moment [4:43 a.m. Eastern time] the dollar isn't doing much... and neither are the precious metals. Volume in gold is pretty light... and silver volume is a bit chunkier.

The Tuesday trading day in New York could be interesting.

See you tomorrow.