In a serious attempt to service its clients better, Casey Research is in the process of changing servers...and if today's column arrived in your in-box a little on the late side...that's the reason. The good folks at CR [including me] are hoping/praying that any switch-over problems are confined to today...and as I've said before, if you want to avoid server delays completely, just bookmark the GSD home page...as it's posted there long before it gets into your in-box. Ed

Just about everything that happened in the gold and silver market last week got trumped by the U.S. credit rating downgrade by Standard and Poor's last Friday afternoon, so I'm not going to spend any time discussing it.

From that point on, it was a totally new ball game, as everyone [including this writer] watched the antics of the world's governments over the weekend just past...and waited for the Far East open on Sunday night in New York.

In gold, the price jumped over twenty bucks at the open before settling down a bit. But around mid-morning Hong Kong time, gold resumed it's ascent, reaching its peak Far East price shortly before the London open at 3:00 a.m. Eastern time.

From there, it got sold off...and the decline accelerated a bit the moment that Comex trading began. But once the London p.m. gold fix was in at 10:00 a.m. Eastern [3:00 p.m. in London], the gold price was off and running to the upside once again...hitting it's high shortly after the Comex close...and shortly after trading began in the New York Access Market at 1:30 p.m. Eastern time. From that point, it basically traded sideways until the Globex close at 5:15 p.m.

Gold was up $53.80 on Monday and, for a change, gold traded up more than 2% on the day...a phenomena that I haven't witnessed in many years...as this 10-year price run-up has been a controlled retreat by the bullion banks. Volume was beyond monstrous...and I'll have more to say about this when I discuss the preliminary open interest numbers in 'The Wrap' section at the bottom of this column.

Once silver was up two bucks in mid-morning Far East trading on Monday, the big shorts showed up to cap the price, because if they hadn't, the silver price would have certainly run away on them.

Ted Butler mentioned the fact that the big price run-up from the open on Sunday night could just as easily been caused by panic short covering, but that won't be known for certain until this Friday's Commitment of Traders Report...although their might be a hint of it in Monday's preliminary report...and I'll mention it in 'The Wrap'...but the release of that report is at least seven hours away from the time I'm writing this particular paragraph.

Anyway, the high of the day was in about 10:45 a.m. Hong Kong time...and it was, as they say, all down hill from there. The slide in the silver price really picked up a head of steam minutes before the Comex open in New York but, just like in gold, that all ended abruptly at the London p.m. fix...but the subsequent rally in silver got pounded flat within thirty minutes...and by 11:00 a.m. Eastern, the low of the day [$38.41 spot] was in.

Silver wasn't allowed over $39.50 spot for the rest of the Comex session...and the bullion banks peeled another fifty cents off the price in the thinly-traded electronic market that followed. Volume was very heavy.

The dollar got sold off over 45 basis points the moment that trading began at 5:00 p.m. on Sunday evening. Most of those loses were recovered in short order...but the dollar continued to work lower until the exact moment London opened at 3:00 a.m. Eastern...which was the point that the greenback was on the verge of breaking down below the 74.0 mark.

From there, a rather spirited 'rally' began that ended at precisely 10:30 p.m. Eastern. The dollar headed sharply lower from there, with another 'rally' appearing out of the blue just moments before 12 noon in New York. The dollar worked its way slowly higher from that point, closing the day around 74.88...up about 40 basis points from Friday's close.

I would bet a serious amount of money that the dollar would have crashed and burned if a mysterious not-for-profit buyer hadn't shown up at the London open...and at noon in New York. Here's the chart that shows the Sunday night open in New York...plus all the action from Monday.

The gold stocks got sold off into slightly negative territory on the open...but once the London p.m. gold fix was in at 10:00 a.m. Eastern...the gold price turned on a dime...and the gold stocks moved sharply higher in sympathy.

This happy state of affairs lasted until shortly after lunch in New York...and by 1:15 p.m. Eastern had begun to sell off sharply as the Dow plunged to new lows. The HUI closed the day down a smallish 0.16%...which you have to describe as a big win when you consider what happened to the general equity markets.

Although I'm tempted to read more into the gold share price plunge, I'll settle for what Dan Norcini had to say about it on his website yesterday...and I thank reader U.D. for sending me that link.

Some, but not all, of the silver stocks were lower yesterday. I'm sure a lot of that had to do with the JPMorgan-led 'weakness' in the price of silver vs. its golden cousin...along with the late-day sell-off in the general equity markets...so I wouldn't read a lot into this, either. Nick Laird's Silver Sentiment Index got creamed for 5.75% on the day.

(Click on image to enlarge)

Ted mentioned to me yesterday that the '8 or less' traders in the Commercial category of the COT report had to put up about $1.5 billion in margin in their gold accounts yesterday. That's serious money.

The CME's Daily Delivery Report for the Monday trading day showed that 77 gold and zero silver contracts were posted for delivery tomorrow. Jefferies and ABN Amro delivered 76 of these contracts...and Barclays, the Bank of Nova Scotia and JPMorgan were the biggest receivers/stoppers. So far in the August delivery month...5,789 gold contracts have been delivered. That translates into 578,900 ounces of gold.

Since the beginning of August...all the time that I was away in London...the GLD ETF had a whopping 1,489,964 ounces of gold deposited...and is now up to 42,115,309 troy ounces...less than 350,000 ounces away from its absolute high back in June of 2010.

On the other hand, during the week that was, the SLV ETF had a net withdrawal of 807,455 troy ounces. It's obvious that the bullion banks' attempts to keep excitement out of all things silver has been successful...at least for the time being.

But that hasn't slowed things down one bit over at the U.S Mint. For the first week of August, the mint has reported sales of 23,500 ounces of gold eagles...6,000 one-ounce 24K gold buffaloes...and a very chunky 1,039,000 silver eagles. Compared to July sales, August is really flying...and I hope, dear reader, that you are getting your share, as time is most certainly running out.

There was no in/out activity in silver over at the Comex-approved depositories on Friday that's worth talking about in this column...and I can tell from the Friday total figure...10,294,751 troy ounces...that the net activity for the week that was, didn't show a lot of change.

Here's what silver analyst Ted Butler had to say about all this in his Saturday column... "Not that silver investors are showing signs of collective selling; the evidence suggests the opposite. Yesterday [Thursday], the COMEX reported a rare lack of turnover in their daily warehouse inventory report, but through Thursday turnover continued frantic, as COMEX total silver stocks rose to over 105 million ounces. There was also a very large 5 million oz deposit into the big silver ETF, SLV, raising the amount of net deposits over the past month to more than 16 million oz. I suspect there may be some liquidation shortly [there was - Ed], as a result of the high-volume price decline on Thursday and Friday."

The Commitment of Traders Report for the week that was, is something else that I'm stealing from Ted's Saturday's commentary to clients...and I'm 'borrowing' it because I didn't have a Saturday column...and couldn't write it myself. I just don't have the time to spend wordsmithing this in today's column, so here's what Ted had to say about silver.

"The latest Commitment of Traders Report indicated a slight further deterioration in gold and silver, as the total commercial net short position grew in each market. I am assuming the data are up to date and fully reflect the big up move in gold and silver on Tuesday, the cut-off day for the report. In silver, the total commercial net short position grew by 1,800 contracts to 44,600 contracts, the highest level since April. The raptors (the smaller commercials apart from the 8 largest traders) accounted for 1,600 contracts of the increase, as they reduced their net long position to 1,500 contracts. The raptors have been the main sellers over the past 5 weeks or so, being responsible for 11,000 of the 15,000 contract net increase in the total COMEX commercial net short position."

I'm also going to steal Ted's comments about the latest Bank Participation report which came out of the same COT data for positions held at the close of trading on Tuesday, August 2nd.

"The monthly Bank Participation Report, also as of Tuesday and published on Friday, confirmed that JPMorgan had increased its net short position in COMEX silver futures by roughly 3,000 contracts over the past month. I would estimate that JPM is now net short 20,000 to 21,000 contracts (100 to 105 million ounces). JPMorgan’s net silver short position on the COMEX is significantly lower than peak levels over the past few years, although it has grown very recently. There is no question that the overall reduction in JPMorgan’s concentrated short position coincides with and, to a large extent, explains the dramatic increase in the price of silver over the past few years. It is clear to me that JPM wants out of its concentrated silver short position and is staging a strategic retreat. Like an army retreating from a losing battle, there is no practical option of sudden disengagement for JPMorgan in silver. Just as a retreating army would be mowed down if it tried to haphazardly run away from the battlefield, if JPMorgan rushed to buy back its remaining silver short position, the price would explode. I would contend that this is further proof that JPMorgan has manipulated the price of silver. That JPM short covering to date has resulted in silver doubling and tripling in price is obvious; that they must still sell additional amounts from time to time to keep from having the price of silver explode is also obvious."

"In gold, the total commercial net short position grew by 4,700 contracts to 287,600 contracts, another new high level since last November. However, there was a potential twist to this week’s report. Whereas the gold raptors added 4,300 contracts to their net short position (now at 39,300) and the 5 thru 8 largest traders added almost 7,000 contracts to their net short position, the big 4 shorts in gold bought back almost 6,500 contracts of their net short position. While rare in gold (and even rarer in silver), this potential breaking of ranks by the gold commercial shorts may be significant."

I visited a couple of bullion dealers when I was in London...and they both reported the same thing...big difficulty in getting smaller sized gold rounds and bars...right up to the 1 kilogram size. This is not just a British problem, but extends to all of Europe. I would guess that a lot of what the U.S. Mint is producing these days, is ending up overseas.

Silver sales in England are not as robust as they are in the U.S. and elsewhere, as there is 20% tax on all physical silver purchased for personal delivery. However, this tax does not extend to silver purchased in an ETF-type instrument, such as ZKB out of Zurich...or physical silver purchased overseas in bar form.

¤ Critical Reads

Gold Coins Sell Out in Lisbon as Biggest Bet Sees 22% Gain

It pretty much goes without saying that I have a whole pile of stories for you today. Most from last week have been discarded...or won't be posted until my Saturday column. But even having said all that, the events of the last four days have produced an avalanche of stories, videos and interviews that are more than worth your time.

In order to save time, all my stories are just posted as linked headlines...and, with few exceptions, virtually all of them are must reads or must watches. I regret that I'm not able to give attribution to those who were kind enough to send me the material that appear in today's column but, considering the fact that I was away for a week, I hope that all concerned will understand.

1] Gold Coins Sell Out in Lisbon as Biggest Bet Sees 22% Gain, Bloomberg

2] South Korea buys gold for first time in 13 years, WSJ

3] Putin calls U.S. 'a parasite' on world, denounces dollar dominance, Reuters

4] Paul proposes bill to cancel $1.6 trillion in U.S. debt to Federal Reserve, The Hill

5] Emerging world buys $10 billion in gold as West wobbles, Reuters

6] The Real Banking Crisis: Eric Sprott, Sprott Asset Management

7] After buying most of it, China gets mad at U.S. for issuing so much debt, Bloomberg

8] Short-Term Yields Going Negative at Bank of New York, Zero Hedge

9] Hoarding gold beats charts over 25 years: Technical Analysis, Bloomberg

10] As many as 20 owners for each bullion bank gold bar: Jim Rickards, KWN

11] Jim Sinclair is interviewed by GoldMoney's James Turk, GATA

12] Silver is 'investment of the next decade,' Sprott says in GoldMoney interview, GATA

13] MineWeb's Lawrence Williams reports on GATA's London conference, GATA

14] US Can Pay Any Debt It Has Because It Can Print Money To Pay It: Greenspan

15] U.S. could run off with other nations' gold, Rickards tells CNBC

16] Ron Paul Slams Obama's "Monstrous Creature," the Super Congress

17] Eurogeddon postponed again as ECB gains three weeks, The Telegraph

18] Walker's World: The Unseen Punch, UPI

19] Debt Crises and Market Turmoil: Is The World Going Bankrupt? Der Spiegel

20] The world runs out of options, Ambrose Evans-Pritchard, The Telegraph

21] The bull case for gold, The Telegraph

22] You'll Be Buying Gold at $2,000/oz - And Higher, Casey Research

23] Fed May Announce QE3 Now Creating Gold Explosion: James Turk, KWN

24] Gold & Markets Signal More "Great Recession" - Richard Russell, KWN

25] Doug Casey Interview, King World News

26] Jim Rickards Interview: All About Gold, King World News

27] JPMorgan analyst sees gold at $2,500 by year-end, WSJ/GATA

View full GSD edition

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force. - Ayn Rand

Monday's volume in gold was over 300,000 contracts net of all roll-overs...and the gross volume was 316,478 contracts. On such a big move, the preliminary open interest was up only 12,484 contracts, which is a surprisingly small amount considering the volume and the price action. I will be more than interested in what the final number is when it's posted later this a.m...as it should be quite a bit smaller than the preliminary number. I'm speculating here, but based on the above, it's a good bet that a lot of yesterday's trading action was short covering.

Silver's net volume figure for yesterday was also pretty big...around 55,000 contracts...and the preliminary open interest number showed a very small increase of 1,478 contracts. It appears that there was more short covering in silver as well, but only the final o.i. number will indicate anything.

Even with the final open interest numbers for Monday's trading day in hand later this morning, I'll wait until Friday's Commitment of Traders Report before passing judgment on what happened yesterday...as all this data will be in it.

The final open interest number for Friday's trading day showed an open interest decline of 3,873 contracts in gold...along with a large 3,517 contract decline in silver. This, too, will be in this Friday's COT report.

Just as a matter of curiosity, I thought I'd check out the 'backwardation' issue in silver as of the end of trading yesterday. The premiums on silver are as high as six cents going out to the March 2012 delivery month, before falling back into backwardation by the December 2012 delivery month.

Silver has been in 'backwardation' for almost a year now...and nothing has happened. So Ted Butler's comments about the backwardation in silver meaning nothing, has stood the test of time so far.

Here's the 3-year gold chart. We are hugely overbought...and about $155 above the 50-day moving average and $270 above the ruler-flat 200-day moving average. Both the RSI and MACD lines are back in record high territory Using the past as prologue...this is well into the danger zone...and it wouldn't surprise me in the slightest to see a bullion bank-engineered sell-off at this point. If it does occur, it should come as no surprise to anyone. But how far down in price...and how quickly we get there from here, is a big unknown. We'll see.

(Click on image to enlarge)

Here's the 3-year silver chart...and it hardly resembles the gold chart at all. Every since the 'drive by shooting' that was engineered by JPMorgan et al at 6:00 p.m. on Sunday, May 1st...the bullion banks have kept the silver price pretty much in check...with yesterday's action being a case in point.

If the bullion banks go after the gold price, they will certainly take that opportunity to kick the living snot out of the silver price at the same time.

(Click on image to enlarge)

But, can we power higher from here? Absolutely. Is there a chance that the bullion banks will get over-run. Sure. But there's no way of knowing which of all these possible scenarios may end up coming to pass, except to wait it out.

However, I would guess that the bullion banks are running out of time. This is still the 'summer doldrums' don't forget...and nothing is supposed to be happening at this time of year. But once summer ends in the northern hemisphere...and everyone comes back from holidays, things will change pretty quick.

The FOMC meeting begins today. I have no idea what will come out of that. But, as James Turk correctly points out in one of the stories that I've got posted above, if QE3 is announced...or even hinted at...that will be a game-changer as well.

The gold price climbed steadily...and pretty quickly...during early trading in the Far East, but that was before a not-for-profit seller showed up about 12:30 p.m. Hong Kong time and ended it. The gold price got taken down again right at the London open, but has since recovered all that loss, plus a lot more...as the bulls and bears duke it out as of 5:45 a.m. Eastern.

Silver is 'acting poorly' for reasons that I stated above...and is actually declining in price as the gold price rises in London. This is, of course, the work of JPMorgan and friends...but without silver confirming gold, at least from a technical analysis perspective, that may be all the justification that's needed for gold's rally to end. We'll find out very quickly I would think.

But this will all be short-term price action. I'm a 'buy and hold' investor...and I've come too far to try and time this market now. As I've said many times over the years, the moment that the powers-that-be stop propping up everything that wants to crash and burn...and stop suppressing the price of everything that wants to blast off to the moon and the stars...the world's economic, financial and monetary system will be a smouldering ruin within five business days.

We've almost arrived at that point now, because if they don't do something drastic, it will be all over by Christmas...or sooner.

I'm still 'all in'.

See you on Wednesday.

P.S. The GATA conference in London was a success beyond my wildest expectations...and everyone else's as well. I was humbled by the huge numbers of readers that introduced themselves to me over the course of the conference. I thank you all...and I just hope that I can continue to live up to your expectations.