Currency Status to Further Boost Gold as it Breaks New Records

Gold hit its low, such as it was, in morning trading in the Far East...and from that low, it climbed ever so slowly to it's high of the day, which was the London p.m. gold fix at 10:00 a.m. Eastern.

From that high, such as it was, gold got sold off to it's New York low around $1,454 spot shortly after 12:30 p.m. Eastern. Gold gained back about five dollars of that loss before the close of electronic trading at 5:15 p.m. Volume was light.

Silver's early price direction on Wednesday was pretty aimless as well...with the high of the day coming at the same time as gold's...the London p.m. fix. Then silver price followed gold price almost right to the tick. Volume was light as well.

And, in case you missed it, gold closed at a new record high price on Wednesday...and silver closed at a new 31-year high. Can a new record high price for silver be too far off?

The dollar was under a bit of selling pressure most of the day...and closed down about 35 basis points. I suppose one could say that the gold price was influenced by the happenings in the currency markets...but it could have been a coincidence as well.

Gold's high price of the day at the 10:00 a.m. Eastern gold fix is pretty easy to spot on this chart...and the stocks pretty much followed the gold price around for the entire New York trading session after that as well. With the HUI finishing up a miniscule 0.05%...that's as close to flat on the day as you're likely to ever see.

Even though the silver price was in the black all day yesterday...there were a lot of nervous sellers out there...and the silver stocks finished mixed. Here's Nick Laird's "Silver Sentiment Index" one more time.

The CME Daily Delivery Report had almost no action worthy of the name...as only 37 gold and zero silver contracts were posted for delivery on Friday. I would suspect that the bulk of April's gold deliveries are already behind us...as gold's open interest in the April contract continues to contract at a very brisk pace.

On Tuesday, the GLD ETF showed that 48,000 ounces were added...but, despite the positive price action, a rather large 234,022 ounces of gold were withdrawn on Wednesday. I don't know what to make of that. The SLV ETF showed no change yesterday.

The U.S. Mint had another sales report yesterday...and it was of the smallish variety...only 3,000 ounces of gold eagles. That was all.

It was another quiet day over at the Comex-approved depositories on Tuesday. Only 19,996 ounces of silver were received...and 5,972 ounces were shipped out. There was one strange thing to report...and that was a negative adjustment over of Brinks...as 277,179 troy ounces of silver were adjusted out of existence.

Silver analyst Ted Butler had another commentary out for his paying subscribers yesterday...and that is where I 'borrowed' the following..."So what’s going on at JPMorgan and the Exchange? What are they thinking? I’m a big believer in putting yourself in the other guy’s shoes whenever possible; to try to think things through from someone else’s perspective. I think it’s safe to say that JPMorgan and the CME Group wish this silver situation never evolved to the point it has. If either JPM or the CME or any silver short could just blink their eyes or click their ruby slippers and make the whole silver problem go away, it would have happened already. But that’s not how things work. If you short anything, you must buy it back or deliver against it eventually. A short position is an open transaction; it is not a completed transaction until delivered against or bought back. I think that JPMorgan and the other big shorts at the CME are increasingly aware of the open nature of their short positions. It may be that they know higher prices will be necessary to induce others to sell so that they canbuy.

Here's a graph worth noting...and I think I stole this from a Frank Holmes piece on the weekend. It's titled "Gold as a Percent of Global Financial Assets"...and it needs no further embellishment from me.

¤ Critical Reads

Repeal of purchase reporting law 1099 passes Senate, goes to president

Here's a story I found in a GATA release yesterday. Kitco News reported that the U.S. Senate has joined the House in repealing the law requiring merchants, including coin dealers, to file reports with the Internal Revenue Service for every purchase made by customers greater than $600. The repeal legislation now goes to President Obama for final decision. This is worth the read as it's the bill we've all been waiting for...and the link is here.

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Marc Faber: Bernanke is killing the middle class

Chris Powell saved me some more wordsmithing with this GATA release last night. Market analyst and newsletter editor Marc Faber told King World News that the markets increasingly are recognizing that gold and silver are currencies, not industrial commodities, even as the Federal Reserve's money printing is driving commodity prices up and destroying the middle class. The link to the KWN blog is here.

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Our Unaccountable Fed

"I will maintain to my deathbed that we made every effort to save Lehman, but we were just unable to do so because of a lack of legal authority." So said Federal Reserve Chairman Ben Bernanke in 2009.

Not having a real budget means the Federal Reserve doesn't have to compete with anyone for scarce resources. What the central bank needs is a little money competition.

This op-ed piece was posted in yesterday's edition of The Wall Street Journal...and is a GATA release, as it's subscriber protected. The link is here.

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Unreported Soros Event Aims to Remake Entire Global Economy

On April 8th, a group he's funded with $50 million, is holding a major economic conference at Bretton Woods in New Hampshire...and Soros's goal for such an event is to "establish new international rules" and "reform the currency system." It's all according to a plan laid out in a November 4, 2009 Soros op-ed calling for "a grand bargain that rearranges the entire financial order."

Have no doubt about it: This is a Soros event from top to bottom. Even Soros admits his ties to INET are a problem, saying, "there is a conflict there which I fully recognize." He claims he stays out of operations. That's impossible. The whole event is his operation.

I thank reader Michael McKay for sending me this story that was posted at the end of March in the online version of The Wall Street Journal...and the link is here.

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Germany’s Future Rising in East as Exports to China Eclipse U.S.

With its consumers and companies sating their appetite for power turbines, cars and electronics, China became Germany’s largest non-European customer at the end of last year. “This is a turning point in Germany’s economic history,” said Andreas Rees, chief Germany economist at UniCredit Markets and Investment in Munich. “China could become the largest export market of all by 2015.”

Washington state reader S.A. provided this longish Bloomberg story from yesterday...and the link is here.

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Portugal: 'We need European aid'

Portugal is now another piggy at the European Bailout Reserve trough.

In a televised evening address to the nation last night, Prime Minister Jose Socrates said: "I want to inform the Portuguese that the government decided today to ask...for financial help, to ensure financing for our country, for our financial system and for our economy."

Reader Roy Stephens sent me the story the moment that it showed up on The Telegraph's website last night...and the link is here.

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Currency status to further boost gold as it breaks new records

I only have a small number of gold-related stories for today's column...and the first one is this mineweb.com story from yesterday that was sent to me by reader George Findlay.

Speaking on Mineweb.com's Gold Weekly podcast, Nicholas Brooks, head of Research and Investment strategy at ETF Securities said the growing demand for gold as an alternative currency, which has built up steadily since the financial crisis of 2008, is one of the key factors underlying the current strength in the gold price and, is one that is likely to continue. The link to the story is here.

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Lew Rockwell: Use the dollar or else

Here's another GATA release where I'm going to let Chris Powell do the honours...because you'll find out real quick that I can't improve on his preamble one bit.

Rockwell writes: "A nation that is confident about its money's future would not fear currency competition. A nation with a dying money uses every possible means to crush the competition. That is precisely what is happening in the case of the so-called Liberty Dollar."

As Seth Lipsky wrote in The Wall Street Journal, "it's a loser's game to suppress private money that is sound in order to protect government-issued money that is unsound."

This is a must read...and the link is here.

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On CNBC Asia, Ben Davies explains why gold is better than gold ETFs

Touring the world promoting gold as an alternative form of money [and his fund as a good way of investing in it], Hinde Capital CEO Ben Davies turned up on CNBC Asia's "Squawk Box" program Sunday and explained why gold is under-owned, why governments wage war against it, and why exchange-traded funds are not the most efficient and reliable way of investing in gold. The interview is a little more than 6 minutes long and the link is here.

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Gold: 40 years of turmoil

Gold prices hit a new high of $1,462.93 an ounce on Wednesday, setting a record for a second-consecutive day on inflation fears and a falling US dollar. Here, we look at the key moments in gold trading over the past 40 years.

This is essential reading for the rookie gold investor...and a nice review for anyone who has been around for sixty years...or longer. I thank Florida reader Charles Dubelier for sharing this story from yesterday's edition of The Telegraph...and the link is here.

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The Casey Report’s David Galland: Major Policy Shift Ahead

Today's last reading item is not gold-related...but it's your big read of the day, so I left it right to the end.

David Galland, Casey Research partner and managing editor of The Casey Report, sees a major shift in Federal Reserve policy ahead and has advice on how to invest accordingly. Time, says David, is short. Louis James...Editor of the International Speculator...interviewed David...and the link to this must read Q & A session is here.

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There is always free cheese in a mousetrap.- H. R. Gross (1899-1987), Member of Congress (1948-1974) (R) Iowa

It was a reasonably quiet trading day yesterday, as net volume in gold was a bit under 120,000 contracts. But the preliminary open interest number showed an increase of 6,024 contracts, which I'm hoping will be cut by quite a bit when the final number is posted on the CME's website later this morning.

Despite my fervent hopes, the final open interest in gold for Tuesday's $22 rally, was posted at a whopping 20,941 contracts. What I said yesterday in this space was certainly true...this gold rally is not going unopposed. But, as Ted Butler pointed out to me yesterday, it remains to be seen who the shorts were...the '4 or less' or the '8 or less' bullion banks...or maybe the Raptors. That won't be known until tomorrow's Commitment of Traders Report...and I'll report on that in my Saturday column.

Further up in this column I mentioned the fact that based on the CME's Daily Delivery Report, there wasn't a lot of gold contracts left to deliver in April, but this preliminary report showed that there are still 2,380 contracts left to deliver. Without doubt, quite a few of these will be closed out without taking delivery...but I'm surprised that half of April's open interest in gold is still outstanding at this time of month. What are the shorts waiting for?

Net volume in silver was around 60,000 contracts...which was pretty decent. The preliminary open interest number was pretty decent as well...up 3,969 contracts.

Silver's big rally on Tuesday produced a final open interest change of +1,745 contracts...which isn't a whole lot considering the size of the rally. And, once again, it remains to be seen who was on the short side of these long positions. Friday's COT will hopefully tell all.

The final settlement numbers in the Silver Futures market showed almost no change from Tuesday...but the backwardation between April 2011 and December 2015 is now down to fourty-five cents. A month ago it was over a dollar.

Silver is well into overbought territory...but, as Ted pointed out on the weekend, last Friday's COT report showed that both metals were basically market neutral...but, with the big price rallies we've had since last Tuesday's cut-off, that position has certainly deteriorated. Just how badly won't be known until tomorrow.

Here's the 1-year silver chart for information purposes only.

Here's the 1-year gold chart as well. We still haven't entered overbought territory yet...so, if the bullion banks allow it, there's no reason why the price shouldn't continue to rise from here.

The talk is of an interest rate increase in Europe this week...and we'll find out pretty quick whether that comes to pass or not. If it does happen, it's hard to tell what effect that will have on gold and silver prices in U.S. dollar terms.

Neither precious metal did much during Far East trading...but now that London is open for business, both gold and silver have developed a slight upward bias. Volumes are very light.

In case you're interested, Casey Research is having a special promotion for The Casey Report which...along with the International Speculator...is one of CR's flagship publications. For a [very] limited time only, a 1-year subscription has been reduced to $279...which is a 20% discount over the regular price. If you buy it on a quarterly basis, it costs only $75/quarter, which is a savings of 14%. I read it from beginning to end every month...and consider the subscription price an investment, rather than a cost. If you'd like to learn more, you can click here. And, as usual, our 90-day, 100% money-back-guarantee applies.

We got a bit of a sell-off in New York trading yesterday...and it will be interesting to see what kind of action we have during Comex hours today.

See you on Friday.