GFMS Chief Belatedly Acknowledges That Official Gold Data Is No Good

Gold rose a little over five bucks at the open of Far East trading on Monday morning, then wandered around aimlessly until the London a.m. gold fix at 10:30 a.m. GMT...5:30 a.m. Eastern time. Then a buyer of sorts showed up...and gold rose to its high of the day at 8:45 a.m. in New York, before a willing seller arrived that was prepared to sell off that, plus any other rally attempt that came along.

Gold got sold down to its New York low precisely at the close of Comex trading at 1:30 p.m. Eastern...and then traded sideways for the rest of the New York session.

Silver's trading day was a bit more interesting than gold's...but only just. Silver also rallied at the Far East open... and then its second rally attempt going into the New York open got nipped in the bud, as a willing seller showed up a few minutes after 8:00 a.m. in New York.

From that high, silver got sold off to its low of the day ninety minutes later at 9:30 a.m. right on the button...and then spent the rest of Monday climbing back to its 8:00 a.m. high. And I do believe that yesterday's closing price of $36.10 spot was a new high closing price for silver in this current bull market.

The dollar lost about 20 basis points during the Monday trading session, with the absolute low coming around 2:00 p.m. Eastern time. Nothing to see here, folks.

The gold stocks gapped up at the New York open...and stayed up all day long...closing the day almost on their highs, with the HUI up 2.51%. Virtually every silver stock on Planet Earth put the HUI to shame yesterday...as they were on fire across the board.

Well, every CME Daily Delivery Report this month has been a surprise...and Monday's report was no different. There were no deliveries in either gold or silver posted for Wednesday. I don't think I've ever seen that before.

Last week there were a couple of big additions to GLD...and then yesterday there was a big withdrawal...341,339 ounces. Don't know what to make of that. There were no reported changes in SLV.

The U.S. Mint had a sales report yesterday. They sold 7,500 ounces of gold eagles, along with 562,200 silver eagles. Month-to-date the mint has sold 54,500 ounces of gold eagles...and 2,069,500 silver eagles.

Friday was another big day over at the Comex-approved depositories. They reported receiving 234,410 ounces of silver...and shipped 998,618 ounces out the door...for a net decline of 764,208 troy ounces. The link to that action is here.

Before I get into today's list of stories, here's the "Global Indices" graph courtesy of Nick Laird over at sharelynx.com.

¤ Critical Reads

Fed Will Release Bank Loan Data as Top Court Rejects Appeal

Today's first story is a Bloomberg piece that I pulled out of a GATA release yesterday. The Federal Reserve will disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view.

The order marks the first time a court has forced the Fed to reveal the names of banks that borrowed from its oldest lending program, the 98-year-old discount window. The disclosures, together with details of six bailout programs released by the central bank in December under a congressional mandate, would give taxpayers insight into the Fed’s unprecedented $3.5 trillion effort to stem the 2008 financial panic. The link to the story is here.

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Panic Selling of U.S. Dollar Could Happen Quickly

GoldMoney founder and GATA consultant James Turk told King World News yesterday that the U.S. dollar has been trading so weakly as to suggest that a panic out of it could begin soon. We'll find out pretty quick, I'm sure...and the link is here.

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UK Households Face Biggest Income Fall Since 1970s as Inflation Bites

Here's another story that showed up in a GATA release yesterday. Britons are suffering their biggest drop in living standards in 30 years, according to a new report by the Institute for Fiscal Studies. GATA's secretary treasurer Chris Powell noted that it's good that this sort of thing isn't happening in the U.S. as well...and that if it was, he's sure that Ben Bernanke would tell us. You believe that...right? This is a world-wide phenomena that you can only protect yourself with by buying precious metals. The link is here.

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New York Sun: Von NotHaus is guilty but Bernanke is innocent?

The New York Sun today editorializes brilliantly about the ironies in the conviction of Liberty Dollar founder Bernard von NotHaus. Von NotHaus is facing the possibility of years in prison after a federal jury found his issuing of money to have been a crime. Bernanke is walking around free and being treated by the authorities with great deference. Which is which?"

The editorial, most likely written by Sun editor Seth Lipsky, is headlined "A 'Unique' Form of Terrorism". It's a must read...and the link is here. I thank reader Barnabe Geis for sharing this story with us.

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Legislator says the state needs its own currency

Reader Scott Pluschau provides the next story today which is posted over at the newsobserver.com website. It appears that state legislators in North Carolina are following in the footsteps of Utah. Cautioning that the federal dollars in your wallet could soon be little more than green paper backed by broken promises, state Rep. Glen Bradley wants North Carolina to issue its own legal tender backed by silver and gold.

The Republican from Youngsville has introduced a bill that would establish a legislative commission to study his plan for a state currency. He is also drafting a second bill that would require state government to accept gold and silver coins as payment for taxes and fees.

With a dozen other states considering gold and silver as legal tender...it's more than ironic that the U.S. government is about to trot von NotHaus off to jail for basically doing the same thing...producing a money to protect citizens from the debasement of their own national fiat currency. The story is worth the read...and the link is here.

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Bill Bonner on the Failing US Bond Market, the Coming Hyperinflation and the End of the Dollar Reserve System

Roy Stephens sent along this interview with Bill Bonner that's posted over at thedailybell.com. You hardly ever get anything out of Bill that's in the clear, so this interview is a real treat. It's a bit on the longish side...but it's well worth your time...and the link is here.

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Gold's record surge -- a rejection of capitalism?

Not likely...and as Chris Powell said in the GATA release accompanying this article...it's more like a yearning for a return to capitalism. The piece was written by John Melloy, the Executive Producer of CNBC's "Fast Money" program...and it's well worth your time...and the link is here.

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Will the Fed Blow a Gold Bubble?

Here's a rather longish piece that was sent out by reader U.D. yesterday. It's an essay posted over at the prudentbear.com website. The writer, Daren C. Pollock, a portfolio manager at Cheviot Value Management, concludes his comments by stating that..."We know of no financial mania that did not include both the general public and its financial advisors pouring money into an already over-priced market. That is not yet the case with precious metals."

As I stated, it's a bit of a read, but I think it's worth it...and the link is here.

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GFMS chief belatedly acknowledges that official gold data is no good

Here is a GATA release from yesterday that deserves your undivided attention. In the extensive preamble to this Financial Times offering headlined "Iran Bought Gold to Cut Dollar Exposure", comes this comment by Chris Powell..."[This] is confirmation from a gold establishment source of what GATA, the organization of supposedly radical loonies, has been saying for a long time: The official data about central bank gold reserves is bogus and often simply disinformation."

Powell's preamble is an absolute must read...as is the FT article itself...and the link to both is here.

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"The Golden Pyramid" by John Hathaway

If you want to know what got me started down the precious metals road back in 1999...this is the essay that did it. My stock broker here in Edmonton gave me a copy of this article way back then...and it changed my life forever. One of my readers, Bording Ostergaard, dug it up on the weekend...and I'm delighted to present it here [again] today. Here's John's intro to this lengthy essay that gives you a flavour for the whole piece...

"Think about this great business idea for a minute. Let's borrow some surplus stuff and sell it for whatever we can get. We'll buy a futures contract to get it back at some certain future date, so we're covered. Meanwhile, we'll earn an interest spread plus commissions. While we're at it, let's sell puts and calls against the stuff even if we don't have it on hand. Our mathematical models will guarantee that our position is always neutral, and we'll clean up on commissions, interest and other fees on the options too. The foregoing approximates the rationale of the present day, little-known gold derivatives pyramid."

Absolutely everything in this article still applies today. I spoke to John on the phone a couple of weeks ago and mentioned the impact that this article had on me...and how it had forever altered my thought patterns on how world was run. With this essay in hand, it was an easy step to get involved with the Gold Anti-Trust Action Committee...as I still am today.

For me, this essay is 'ground zero' in the gold price management scheme...and for that reason alone you should put this on your must read list. The story is posted over that the usagold.com website...so top up your coffee....and then click here.

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It is surreal that the same government agency that provides the timely [Commitment of Traders] data, the CFTC, also is governed by clear rules that hold that the very activity on which they are reporting...is illegal. So surreal...that between the odd price reaction to the news this week and the CFTC consistently verifying, yet ignoring, that price manipulation is occurring...I feel like I'm living a Salvador Dali painting.- Ted Butler, March 19, 2011

The price action in gold on Monday was very muted...and the same can be said for the volume as well. This made it easy for anyone [whether buyer or seller] to push the price around at their leisure...and I get the feeling that was the case yesterday. Gold volume was a bit under 100,000 contracts net of all roll-overs...which isn't a lot considering the fact that the April delivery month in gold is coming up hard...and all roll-overs out of the April contract have to be completed within the next five business days. The March open interest number is still pretty chunky.

The preliminary open interest number for Monday's trading was a hair over 10,000 contracts...and we'll have to see what that nets out to when the final o.i. numbers are posted later this a.m. I'm hoping that it's quite a bit lower, because the price action certainly didn't seem to warrant that big an o.i. increase...especially when the low volume numbers are factored in. We'll see.

The final open interest number posted for Friday's big price day in gold was only 3,011 contracts...which both Ted Butler and I were delighted with...especially when the preliminary number was 10,000+ contracts. Ted was very encouraged by this...as he always is when there are big price movements on low volume and small open interest changes.

As I mentioned at the top of this column, silver volume was very light yesterday as well...around 46,000 contracts net. The preliminary open interest number was only 2,674 contracts...and the final o.i. number should be much smaller than that. Considering the big price action, one would normally conclude that the o.i. number should have been much higher. Maybe Morgan was buying back short position yesterday...and that's what was causing the price rise. We'll find out soon enough.

Silver's big price move on Friday was accompanied by a tiny open increase of only 468 contracts when the final number was posted on the CME's website yesterday morning. Ted and I weren't dancing in the streets...but it got close to that. It's obvious from this figure that there was probably a lot of short covering going on...and that's why Ted and I are cautiously optimistic about what Monday's final o.i. number will be when its posted this morning.

March's open interest in silver showed a decline of 23 contracts in the CME's preliminary report early this morning...and total March o.i. is down to 875 contracts. There are six delivery days left in March...and all of these 875 contracts must be dealt with before March 31st rolls around. If/when these contracts all get delivered, it will be really interesting to see who the issuers [the shorts] and the stoppers [the longs] are.

The reason that this is getting more exciting by the day, is the fact that during the last three business days, only two [2] silver contracts have been posted for delivery...and they've got 875 contracts left to deal with in the next six days. This is a show worth watching, so don't touch that dial!

I'm not sure what to make of this backwardation situation in silver. Yesterday the CME's Silver Futures website showed that the spreads have widened out to about three cents, before sliding back into backwardation for the May 2012 delivery month. The spread between March 2011 and December 2015 is still eighty cents...which is about the same as Friday's number. This is another sideshow in this 3-ring silver circus that's going on at the moment.

The gold price didn't do much in Far East trading during their Tuesday...but shortly before 10:00 a.m. GMT in London...5:00 a.m. Eastern...both metals spiked higher.

Up until then, volume in gold, net of all roll-overs was around 9,000 contracts...the smallest number I had ever seen for that time of day...and silver [4,600 contracts] was not much heavier. These metals were trading on fumes and vapours up until that point. With this price spike in both metals, volume will certainly have increased as well.

I was expecting that all the price action would take place during the Comex trading session in New York...but that may not prove to be the case with this turn of events in London.

But, whatever happens, I'll be reporting on it tomorrow in this column...and I'll see you then.