The gold price had another quiet day during Far East trading on Tuesday. Then shortly after London opened, a rally of sorts began that reached its zenith at noon local time...and that was the high of the day.

From there, the gold price sold off about nine dollars going into the London p.m. gold fix...which occurred at 10:00 a.m. Eastern time right on the button. The price began to recover nicely...but shortly before 11:00 a.m. Eastern, gold got sold off for another eleven bucks...with Tuesday's low price coming at 12:15 p.m. during the New York lunch hour.

The gold price recovered from that point and closed the New York electronic trading session up less than a dollar from Mondays close...and less than two dollars from last Friday's close.

There have been quite a few instances in the past [more than quite a few, actually] where three days worth of gold prices have closed within a few dollars of each other, after experiencing wild up-and-down swings in intraday prices. I chalk it up to the bored JPMorgan trader whose job it is to ride shotgun over the gold price during the 'summer doldrums' that he probably had a hand in creating.

Volume was light...and about the same as Monday's.

The silver price got sold down to about the $36.60 level before catching a bid at 1:00 p.m. Hong Kong time.

From that 1:00 p.m. low, silver rose almost a dollar until noon in London, which just happens to be the time of the London silver fix...and that, as they say, was that. This was also the top in the gold price as well.

From that high, silver had a similar price trajectory as gold...with silver's Tuesday low coming at the exact same moment as gold's...around 12:15 p.m. in New York.

Silver recovered from there...closing up about thirty-five cents from its Monday close. One can only imagine how high it might have gone if that not-for-profit seller hadn't shown up at the London silver fix. Volume was 'light'...considering the fact that there was a HFT stomping around.

The dollar hit its zenith on Tuesday around 9:00 a.m. in the Hong Kong trading day...and then declined a half a cent over the remainder of Tuesday...closing in New York almost on its low of the day.

If you can find any co-relation whatsoever between the dollar's decline...and the price action in yesterday's gold and silver market...I'd love to hear your explanation.

The gold stocks gapped up at the open...but then followed the gold price around like a shadow for the rest of the trading day...with the HUI closing down 0.30%.

This silver stocks were mixed on the day, despite the fact that silver closed up on the day. Nick Laird's Silver Sentiment Index showed a smallish increase of 0.25%. Here's the chart.

The Comex Daily Delivery Report showed that 693 gold contracts [and no silver contracts] were posted for delivery on Thursday. The Bank of Nova Scotia [333 contracts] and JPMorgan [320 contracts] were the biggest issuers by far...and JPMorgan [636 contracts] was the only stopper of note...all for its proprietary [house] trading account...as they're obviously trading against their own clients once again. The link to that action, which is worth a look, is here.

There were no reported changes in GLD yesterday...but, for a change, the SLV ETF reported receiving 926,379 ounces of silver.

The U.S. Mint did not have a sales report.

As far as the Comex-approved depositories are concerned, I mentioned yesterday that the Comex inventories were getting dangerously close to 100 million ounces, and that it was only a matter of what day this week they would bring in more silver to prevent inventories from slipping below that magic number.

Well, that day was Monday, as 829,396 troy ounces of silver were reported received at the Scotia Mocatta warehouse...and 342,301 ounces of silver were shipped out the door, leaving a net increase of 487,095 ounces. The Comex inventory level now sits at 101,022,367 troy ounces of the stuff. The games people play...and the link to yesterday's action is here.

Yesterday in this space, I 'stole' three paragraphs about High Frequency Trading [HFT] from silver analyst Ted Butler's weekend commentary to his subscribers.

He had another short commentary yesterday...and I've ripped this absolute must watch/listen video from it. Ted has already wordsmithed this...so why should I? His commentary is headlined "More on HFT"...

Coincident with my rant in the weekly review on High Frequency Trading (HFT), the CBS show “60 Minutes” featured a segment on this issue the next day. It was very well-done, presenting both the pro and con sides of the merits of the high speed mechanical trading system that has come to dominate our financial and commodity markets. It features an HFT trader, a former US senator, a NYSE official and the chairman of the SEC. This segment focuses on the stock market, but the firms involved and the computer hardware and software are the same being used in COMEX silver. It runs about 13 minutes [including 2 commercials] and a written version is also available. I suggest you watch it...and the link is here.

¤ Critical Reads

Decline and fall of the American Empire

My first story today is from the Monday edition of The Guardian and was sent to me by Australian reader Wesley Legrand.

The economic powerhouse of the 20th century emerged stronger from the Depression. But faced with cultural decay, structural weaknesses and reliance on finance, can the US do it again?

The US is a country with serious problems. Getting on for one in six depend on government food stamps to ensure they have enough to eat. The budget, which was in surplus little more than a decade ago, now has a deficit of Greek-style proportions. There is policy paralysis in Washington.

This is a short read that's well worth your time...and the link is here.

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Financial Overhaul Is Mired in Detail and Dissent

Nearly one year after Congress passed financial changes to rein in the banking sector, more than two dozen of the legislation’s rules are behind schedule, and no end to the wrangling over details is in sight.

The delays come as regulators extend public comment periods on the rules, and as some on Wall Street and in Congress resist the changes.

This is from the Monday edition of The New York Times...and was sent to me by reader Mike Smith...and the link is here.

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U.S. funding for future promises lags by trillions

Here's a story that was posted on Monday over at usatoday.com...and is courtesy of reader Scott Pluschau.

The federal government's financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows.

The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.

This gap between spending commitments and revenue last year equals more than one-third of the nation's gross domestic product.

For all my American friends, this a must read...and the link is here.

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State, local layoffs to hit record levels

Don't look to state and local governments to prop up the job market.

To the contrary, this cash-strapped sector is set to go on a record-breaking layoff binge when the new fiscal year starts on July 1st.

State and local governments are forecast to shed up to 110,000 jobs in the third quarter, the first time the blood-letting has risen into the triple digits, according to IHS Global Insight.

I 'borrowed' this money.cnn.com story from yesterday's King Report...and the link is here.

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China currency regulator warns that U.S. could pursue weak dollar policy

Here's a Reuters piece that I lifted from a GATA release yesterday.

China should guard against risks from "excessive" holdings of U.S. assets as Washington could pursue a policy to weaken the dollar, a senior currency regulator said in comments published on a website that briefly pushed the dollar lower.

However, the comments by Guan Tao of the State Administration of Foreign Exchange were quickly removed from the website at his request. He told Reuters the comments had been made in private academic discussions and represented his personal view only.

The man has a keen grasp of the obvious...and the link is here.

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Desperate Bid to Cut Deficit: Greek Privatization Plan Faces Massive Domestic Resistance

Greece is scrimping and saving, but still failing to get its debt crisis under control. The government plans to raise 50 billion euros through a privatization program, but faces massive resistance from Greeks worried about selling off the nation's assets. Experts also doubt whether the strategy will work.

This eye-opener of a story was posted on the German website spiegel.de yesterday...and is courtesy of reader Roy Stephens. The link to this worthwhile read is here.

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The Rage of the 'Indignants': A European Generation Takes to the Streets

Here is another Roy Stephens offering...also from the same website yesterday.

For weeks, hundreds of young people have been camping out in central Madrid. And others across Europe have now begun following their example. Protests in Lisbon, Paris, Athens and elsewhere show that Europe's lost generation has finally found its voice.

Any real revolution in Paris has to include the storming of the Bastille. Which explains why 200 young demonstrators are sitting in the shade of the trees at Place de la Bastille on this Thursday evening, wondering how to go about staging such a revolution.

This story is very much worth the read as well...and the link is here.

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This Syrian tinderbox could set fire to the region

Carnage in Jisr al-Shughour has taken the Syrian crisis to a new level, even as Bashar al-Assad's regime descends to new depths. Three risks now stand out. The first and most obvious is vicious regime retaliation against residents of the north-western town where 120 army and security personnel are said to have been killed. The second is the very real spectre of civil war raised by this escalation. Third, and most dangerous for Israel and the west, are growing, linked attempts by the regime and its ally Iran to externalise the conflict.

This is a story from Washington state reader S.A. that was posted over at The Guardian...and it, too, is a worthwhile read. The link is here.

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How to Steal a Russian Airport

The decision to pull the initial public offering was announced on the last Sunday in May, late at night. The company that had been planning to sell its shares to the public — hoping to raise somewhere between $700 million and $1 billion — was the Domodedovo airport, the biggest and best-run of Moscow’s three airports, and the only one not owned by the state.

The airport’s investment bankers blamed the problem on the usual suspect: “market conditions” — meaning that they weren’t going to get the price that they had hoped for. And I suppose, in some literal sense, that was true. But it didn’t begin to capture the real story.

This fascinating op-ed piece in Monday's edition of The New York Times was sent to me by reader Phil Barlett...and is certainly worth your time if you have it. The link is here.

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John Perkins: Confessions of an Economic Hit Man

This book, which I've read twice, spent more than 65 weeks on the New York Times best seller list...and has been translated into more than 30 languages. If you want the intimate details of how the American Empire works...this book is a stunner.

John Perkins is interviewed by Dr. Dave Janda over at WAAM 1600 Talk Radio out of Ann Arbor, Michigan...and is a must listen. The link is here.

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Gold to Exceed $12,500 to Balance US Debt: Jim Sinclair

Here's an interview that Eric King slid into my in-box early yesterday afternoon. There's nothing in here that's a surprise to me, as I've been calling for a re-pricing of central banks' gold in order recapitalize the world's financial system for many years. Jim has just put a price on it...and $12,500 the ounce is a good start. The blog is a must read...and the link is here.

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In truth, there is no "alternative" reserve currency to the US Dollar. For almost 40 years, there has been no circulating currency in the world worthy of the name because ALL are paper and ALL are backed by nothing more than the future promises of governments to make good on their debts.. That simply isn't going to happen. It never has in past history. And for most of past history, currencies were either gold itself or paper that was lawfully redeemable in Gold. - Bill Buckler...Gold This Week...Saturday, June 4, 2011

Gold's volume yesterday was close to 100,000 contracts net of all roll-overs, which was a tad higher than Monday's volume...and the preliminary open interest number showed a decline of 901 contracts...which bodes well for the final number later this morning. This final number, because of the Tuesday cut-off, will be in Friday's Commitment of Traders report.

Monday's final open interest number in gold showed an increase of only 1,005 contracts...which was a sharp decline from the preliminary o.i. number of 6,233 contracts.

Silver's net volume was close to 50,000 contracts...and the preliminary open interest number showed an increase of 4,113 contracts...which is a heck of a lot considering the price action. Maybe there were some shorts being placed that caused that big drop in price yesterday...but we really won't know until Friday's COT report...and the final silver o.i. number, when it's published this a.m., will be in it.

Silver's final open interest number on Monday showed a smallish decline of 529 contracts...and a pleasant surprise after the preliminary number showed an increase of 2,578 contracts. This number will also be in Friday's COT report.

Here's the 1-year silver chart. The price is still in no-man's-land between the 50 and 200-day moving averages...so the tech funds are not buyers on the long side at the moment. The 200-day moving average is now above the $30 level...and I'll be very surprised if the bullion banks can get enough long liquidation to get the price down that low...as there is little if any tech fund long blood left to squeeze out of this proverbial stone.

Here's the 1-year gold chart for comparison. As I've stated many times over the last month, the 50-day moving average to the downside in gold is still unbroken...and there's always the risk that JPMorgan et al will go gunning for it...and it's about fifty bucks below yesterday's closing price, which isn't a whole heck of a lot.

As Ted Butler pointed out in his commentary to clients on the weekend, there's been a 33,000 contract increase in the bullion bank's net short position since May 17th, so they do have the firepower to hit gold hard if they chose to...and they probably will. Don't forget that we're in the 'summer doldrums'...and I would be surprised if they leave this tempting-looking stone unturned.

And they would use that opportunity to hit the silver price one more time. But if you look at the silver chart above, they would have to get the price below the $33.80 level to get any further new long liquidation...and even if they do make it down to that price level one more time, will there be enough contracts flushed out to make it worthwhile? I don't know...but I'm guessing we might find out.

And as painful as it might be to watch and live through...all of this will strengthen the Commitment of Traders Report in both metals...particularly silver, which is already in a spectacularly bullish configuration at the moment.

I note that both gold and silver were under selling pressure almost from the start of Far East trading earlier today...and that has intensified since London opened at 3:00 a.m. Eastern time. Gold is down about ten bucks from yesterday's New York close...and at one point, silver was down close to a buck. Trading volume is nothing worth writing home about.

Yesterday I announced this 'unbelievable' promotion that Casey Research was having...and even though I cut and pasted the offer from their e-mail virtually verbatim...what was said in that e-mail wasn't what was meant.

I note that the staff at Casey Research sent out a correction to all readers of this daily column explaining that fact...and, one more time, here is the 'correct' version of this offer cut and paste below.

Before I sign off here, the girls over at Casey Research informed me of a 1-week special offer that they are promoting.

The offer???

Buy The Next Few Years: A Casey Summit CDs for $395 (23 CDs, with more than 20 hours of presentations, stock picks, Q&A sessions and a data disc with all the summit presentation slides and handouts), and get a one-year subscription to The Casey Report... for the unbelievable cheap price of $100...and yes, you read the price right!

The deadline for this incredible offer [and it is an incredible offer] is next Tuesday, June 14th...or whenever the CDs sell out...whichever come first. I urge you to check it out at the link, which is here.

Well, after the shenanigans at the London open, I'm ready for anything when the New York bullion banks start trading on the Comex this morning.

I'll see you on Thursday.