The gold price didn't do much of anything in Far East trading on Wednesday. But starting at 10:00 a.m. in London [5:00 a.m. in New York] the gold price got sold off for five bucks. This tiny sell-off lasted until noon [7:00 a.m. Eastern]...and from there, the price began to rally until it hit its high of the day shortly before noon in New York.

From that high, gold then got sold back to virtually unchanged on the day. Volume was pretty decent.

Silver's price path was very similar to gold's...with the low coming at the London silver fix around noon local time. Silver's high of the day came much later than gold's...around 2:30 p.m. Eastern in the electronic New York Access Market.

From that high, some not-for-profit seller showed up and sold the price down a hair over forty cents in less than thirty minutes...and from there, the silver price basically traded sideways to down until the close of New York trading at 5:15 p.m. Eastern time...finishing the trading day below Tuesday's closing price. Volume was light again yesterday, but a bit higher than Monday or Tuesday.

The dollar bounced off the 74.5/74.6 price level a couple of times until its absolute low at precisely 10:30 a.m. in New York. From that low, the dollar rose about 35 basis points into the close of New York trading at 5:15 p.m. Eastern...and that rally is ongoing as I write this column.

From start to finish on Wednesday, the dollar was about 25 basis points.

The gold and silver prices didn't turn down when the dollar turned up...so it's my guess that they both got pushed in that direction...and the above charts show signs of that. You mustn't have gold and silver prices rising alongside the almighty dollar while Ben Bernanke is talking his usual b.s. You'll also note on this graph that the dollar rally really began to accelerate to the upside at the precise same moment as the the precious metal prices got hit.

The precious metal stocks hung in there real well...and were actually making new highs around 2:30 p.m. Eastern time. That's the precise moment that both metals got it the neck...and over half the days gains in the HUI evaporated by the time the equity markets closed ninety minutes later. The HUI closed up 1.01%.

Needless to say, the silver equities suffered the same fate for the very same reason...and Nick Laird's Silver Sentiment Index finished down a tiny 0.19% on the day.

The CME's Daily Delivery Report showed that only 39 gold contracts, along with 5 silver contracts, were posted for delivery on Friday. In gold, the Bank of Nova Scotia issued all 39 contracts...and JPMorgan stopped/received 35 contracts in its proprietary [house] account.

That's not a large number of contracts, but what these numbers show day after day, week after week...and month after month is the fact that JPMorgan, the Bank of Nova Scotia...and HSBC USA are the big players in the physical gold market...and the same can be said for silver.

There were no reported changes in GLD again, but there was a small amount added to SLV...and that was reported as 779,947 troy ounces.

Reader Scott Pluschau sent me an interesting e-mail about Sprott's Gold Trust...and IAU the iShares Gold Trust. He pointed out that between the two of them, they have added just over 750,000 ounces of physical gold in the past few months. This is despite the fact that SLV has been in steady decline. So it appears that GLD is losing its appeal to some of the biggest investors in physical gold bullion.

The U.S. Mint had a small sales report yesterday. The sold 2,500 ounces of gold eagles...along with 1,000 one-ounce 24K gold buffaloes...and 75,000 silver eagles.

Over at the Comex-approved depositories on Tuesday, they didn't receive any silver...and shipped 330,618 ounces out the door.

I told silver analyst Ted Butler on the phone yesterday that I was going to steal everything out of his Wednesday column that had to do with the retail gold and silver trading ban on many leveraged transactions [in the OTC market] that's due to go into effect on July 15th.

When I first received reader's e-mails about this, I sent them off to Ted...and this is what he had to say about it in his mid-week commentary yesterday...

"A good number of subscribers have asked me about the retail gold and silver trading ban on many leveraged transactions, effective July 15. The ban was built into the Dodd-Frank Act, signed into law last year by President Obama. It seems some misperceptions about the intent and potential impact of the ban were spread by early Internet blog posts. Other commentators have attempted to set the record straight and are to be commended for their efforts. In terms of any harm to the public or negative impact on the silver market, this trading ban was all much ado about nothing.

"Briefly described, these transactions are highly leveraged (as much as 100 to 1) and usually very short term bets on the direction of gold and silver by individuals operating through foreign exchange trading companies. They don’t involve the actual metal, but are quick bets in a trading environment separate from any exchange or wholesale OTC (Over the Counter) market. With such low margin requirements, this trading was almost exclusively reduced to day trading, where few overnight positions were held. These transactions are as far removed from long-term investment as is possible. No one invests long term on a one percent deposit. About the closest example I can give you about this highly leveraged day trading is the infamous “bucket shops” that existed before the great stock market crash of 1929. These bucket shops involved stock market bets that never found their way to any stock exchange or actual security, but were strictly trading bets between customers or the house.

"The early Internet reports on the retail OTC precious metals trading ban concluded, among other things, that the trading ban was an example of the government intruding on our basic rights or as a precursor to a ban on actual purchases of precious metals. I would disagree. Others suggested that the ban would result in a price smash for silver, as traders rushed to unload positions. That seems unlikely as little real metal was ever purchased. Instead, this was clearly an instance of the government doing the right thing. The only thing wrong was that it took so long for the ban to come into effect. This retail OTC gold and silver trading is strictly gambling; nothing more, nothing less. I am not opposed to it on moral grounds...nor am I happy if some are deprived of trading income...but society has come to demand that any type of gambling be licensed and regulated (and taxed) by a government entity. You can’t open a casino or a horse track or a betting parlor in the US without some type of government approval and regulation, usually at the state level. There was no government approval process for these retail OTC precious metals trading arrangement; they just sprung up.

"What about the CFTC regulating these modern day bucket shops? The problem here is that there is an underlying economic justification to commodities futures trading, namely, to allow real producers and consumers the opportunity to hedge price risk. Our commodity futures markets were not created so that speculators could gamble. Speculators are certainly needed for our futures markets to work, but it is the hedging function that gives our markets their legitimacy. To my knowledge, there was no real hedging that occurred in retail OTC gold and silver trading. That makes it pure gambling, no different than a sudden Three Card Monte game set up on a city street. I know those trading these markets successfully (including subscribers) will mourn the ban and I can empathize with them. But in the bigger picture, this was a market devoid of economic legitimacy."

I have two graphs for you today...both courtesy of Washington state reader S.A...and neither of them require any further embellishment from me.

I also received the graph below from Peter Degraaf in Sarnia, Ontario. It shows a comparison between gold and the long bond. Peter says that whenever gold breaks out from beneath resistance [as it did yesterday], the result is usually a nice rally for gold as people cash in their bonds and buy gold. Let's hope he's right!

The stories worthy of your attention never seem to stop coming...and I have lots more today.

¤ Critical Reads

Federal Reserve admits US economy is struggling

The Federal Reserve has again cut its growth forecasts for the US economy and admitted that "longer-lasting" factors may help explain the current slowing in the recovery.

The latest evidence from manufacturing, the housing market and the consumer – still the engine of the economy – all suggest the deterioration that started in the first quarter of this year has extended into the second.

"Part of the slowdown is temporary, part of it may be longer lasting," said Fed chairman Ben Bernanke. "We don't have a precise reading on why this slower pace of growth is persisting."

You can't make this stuff up. Roy Stephens sent me this article out of The Telegraph late last night...and the link is here.

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Jim Grant Says All The Things That Ben Bernanke Avoided During His Press Conference, And Much More

Here's a zerohedge.com piece that reader U.D. sent me yesterday. Imbedded in it is a Bloomberg interview with James Grant. The preamble has already been written by Tyler Durden, so it saves me the trouble...and the time. The clip runs for 13:15...and there's another CSPAN interview below that one. The Bloomberg interview is well worth your time and, although I haven't viewed the CSPAN interview, it's probably worth watching as well. The link to 'all of the above' is here.

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CBO Releases Daunting Long-Term Outlook

In the annual Long-Term Budget Outlook, the legislature’s budget scorekeepers said that the ratio of debt to GDP this year will be 69 percent, 7 percentage points higher than last year. In 2021, the Congressional Budget Office predicts debt will reach 76 percent of GDP, but under a more dire—and more likely—scenario, the public debt will be 101 percent of GDP 10 years from now, well into the economic danger zone of 90 percent or more.

Of course this debt ratio is understated by quite a bit, because I'm sure that it doesn't take into consideration any of the off-balance sheet spending items.

I thank reader Scott Pluschau for this story that's posted over at the National Journal website...and the link is here.

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U.S. Postal Service to Stop Paying Into Worker Pension Fund

The U.S. Postal Service, facing insolvency without approval to delay a $5.5 billion payment for worker health benefits, will suspend contributions to an employee retirement account to save $800 million this year.

The Postal Service will stop paying employer contributions to the defined-benefit Federal Employees Retirement System, which covers about 85 percent of career postal workers, it said today in an e-mailed statement. The $115 million payment, made every other week, will stop on June 24, the statement said. Suspending payments to the retirement account will help “conserve cash and preserve liquidity.”

I thank Washington state reader S.A. for this Bloomberg story...and the link is here.

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$1400 Tax Hike Needed to Fund US Pensions: Study

U.S. state and local governments will need to raise taxes by $1,398 per household every year for the next 30 years if they are to fully fund their pension systems, a study released on Wednesday said.

Pension funding in U.S. cities and states has deteriorated in the wake of the 2007-2009 economic recession as investment earnings dropped, and some states, such as New Jersey and Illinois, skipped or reduced required payments.

This cnbc.com article from yesterday is another contribution by reader Scott Pluschau...and the link is here.

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Geithner: Big Banks Spend ‘Huge Amount to Erode’ Dodd-Frank Law

Treasury Secretary Timothy Geithner said Wednesday that Wall Street and large banks are spending “a huge amount of money to erode, weaken, walk back” the Dodd-Frank financial overhaul law that was enacted last year. He called on Congress not to weaken or delay the new rules.

This blog, from yesterday's edition of The Wall Street Journal, is also courtesy of Washington state reader S.A...and the link is here.

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Silver-Coin Sales Booming at Perth Mint on Demand for [Safe] Haven

The mint sold 10.7 million 1-ounce silver coins since July 1 last year, according to Sales and Marketing Director Ron Currie. That’s 66 percent higher than the previous full fiscal year and about 10-fold more than five years earlier. Sales of 1- ounce gold coins will be close to a record, he said.

The soaring demand adds to signs investors are stepping up precious-metal purchases as Europe’s governments tackle a sovereign-debt crisis and central banks led by the U.S. Federal Reserve print cash to stimulate their economies, potentially devaluing paper currencies. Silver, the second-best performing commodity over the past year, rallied to a record in April.

This Bloomberg story filed from Perth yesterday is a must read...and I thank Nitin Agrawal for sharing it with us...and the link is here.

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If your interest is really piqued, try questioning central banks yourself

This is a GATA release of a portion of yesterday's edition of The Gartman Letter. Dennis has a few things to say that I feel should be of great interest to all readers...and since Chris Powell has already wordsmithed the preamble, I won't bother. This is an absolute must read...and the link is here.

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Fed could buy gold to devalue dollar, ease debt, Rickards tells CNBC

Here's another GATA release that's well worth your time...as I'm a huge fan of anything that Jim Rickards has to say...and he will be speaking a GATA Gold Rush 2001 conference in London in August. I'm looking forward to meeting him.

The imbedded cnbc.com is just under 7-minutes long...and the link to the GATA release is here.

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US Set to Default, Silver Headed to $200 - Peter Schiff

Here's a short King World News blog that Eric sent me yesterday...and the link is here.

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Dodd-Frank claims niche form of gold trading

A little-known form of gold investing used by some retail currency traders is disappearing, ahead of tighter regulations scheduled to go into effect next month.

Forex.com, a large retail foreign-exchange operation, on Friday told clients it will discontinue its gold and silver over-the-counter products marketed to retail investors who are U.S. residents. It asked investors to close their positions by July 15.

Trading gold and silver over the counter -- bypassing a futures exchange -- offered investors a chance to enter a highly speculative, leveraged market that also left many investors at risk of fraud, according to one trade group.

This is the Over the Counter trading that Ted Butler spoke of earlier in this column...which follows in the footsteps of the two zerohedge.com pieces that I ran in this blog yesterday.

For those of you who may be affected by this change, I consider this a must read as well. I thank Florida reader Donna Badach for sending this marketwatch.com story along...and the link is here.

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Western Central Banks Don't Have 30,000 Tons of Gold: John Embry

Your last read of the day is also a must read. John Embry, chief investment strategist at Sprott Asset Management in Toronto lets it all hang out in this King World News blog. I just love it when he's angry...and the audio interview [when it becomes available] will certainly be worth listening to as well. The link to the blog is here.

View full GSD edition

Yesterday's gold volume, net of all roll-overs was around 131,000 contracts...which is about 30% higher than Tuesday's volume number. The preliminary open interest number showed a very chunky increase of 15,082 contracts...so the buyers were out in force yesterday. This number will be reduced later this morning, but will still be a huge increase in o.i. nonetheless. The final open interest number for Tuesday's trading day got whittled down to a tiny increase of only 1,416 contracts.

Silver's net volume yesterday was in the neighbourhood of 42,000 contracts...and the preliminary open interest number was a very small 1,249 contracts. This suggests a decline in open interest when the CME reports the final number later this morning. The final open interest in silver for Tuesday showed a fairly large increase of 2,735 contracts, but I seem to remember Ted Butler telling me that this may have been spread related.

I'm speculating here, but yesterday's sell-off in both metals around 2:30 p.m. Eastern time was probably related to Bernanke's press conference...and that wouldn't be the first time that sort of thing has happened. This sort of price 'action' has been fairly common over the last ten years or so when one of 'the powers that be' has something to say that may move the markets.

Like I said, it would be my guess that the bullion banks didn't want to see the dollar rallying in tandem with both gold and silver while Bernanke was conducting 'open mouth' policy, so they hit the price of both metals.

Nick Laird over at sharelynx.com slid this "Total PMs Pool" graph into my in-box in the wee hours of this morning. The total value of all precious metal ETFs is on the rise again, even though the total amount of metal in these ETFs has declined precipitously. Nick guesses that the divergence on the chart below is because silver was sold off the most...and I would agree with that assessment entirely.

The price action in both metals was pretty muted in Far East trading during their Thursday...but came under a bit of selling pressure the moment that London opened at 3:00 a.m. Eastern time. The dollar, which had been in rally mode almost all of yesterday evening, flat-lined briefly at its high early this morning...and is now on the rise again. It's up 44 basis points as of 4:31 a.m. Eastern time.

As is nearly always the case, the real action will occur the moment that Comex trading begins in New York at 8:20 a.m. Eastern...and it might prove to be interesting. Whether the price action is to the upside or the downside, remains to be seen.

Before I slide off into the sunset, Casey's Extraordinary Technology newsletter has a new promotion that the gals at CR HQ sent me yesterday. Tech stocks are not my bailiwick at all...but if they float your boat, this offer may be of interest to you. To find out more about this promotion, please click here.

I hope your Thursday goes well...and I'll see you tomorrow.