Gold didn't do much during the Thursday trading day until shortly after the London a.m. gold fix, which occurred around 5:30 a.m. Eastern time yesterday morning. Then away it went to the up-side. This wonderful state of affairs lasted until shortly after 10:00 a.m. Eastern...and that was basically it for the rest of the trading day on both the Comex...and the thinly-traded New York Access Market that followed. Gold finished up $35.90 spot...and also set a new record-high price in nominal dollar terms. Volume was huge.

The silver price more or less followed the gold price yesterday...but its advance was much more subdued. Silver's high tick of the day came at 9:30 a.m. Eastern...and that was pretty much it for the rest of the New York trading session. Despite the lack of price activity, volume was pretty heavy, even when the roll-overs out of the September delivery month were subtracted.

The dollar traded in a 25 basis point range around the 74.00 mark yesterday...and closed virtually on its high...up about 50 basis points on the day. There was an obvious 'flight to safety' during the European trading day. Both the dollar and the gold price rose together from around 4:00 a.m. to 10:00 a.m. Eastern time yesterday. The world's reserve fiat currency is now in competition with real money. I expect that trend to continue...and accelerate.

The gold stocks got hit right at the open of equity trading yesterday, but that didn't last long, as the HUI recovered to the unchanged mark during the New York lunch hour. Then someone came along and sold the gold stocks off almost 2.5%...although there was a tiny rally into the close that cut that loss a bit...and the HUI finished down 1.73% on the day.

The silver stocks did much worse...as CDE really got creamed. That was one of the big reasons that Nick Laird's Silver Sentiment Index got smoked for 3.18%

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The Comex Daily Delivery Report showed that 111 gold, along with one silver contract, were posted for delivery on Monday. In gold, the big short/issuer was the Bank of Nova Scotia...and the largest long/stoppers that took delivery of these contracts were JPMorgan, HSBC and Goldman Sachs. Here's the link to this action.

For the second day running both GLD and SLV showed additions. GLD took in 477,126 ounces...and SLV added 584,505 troy ounces.

For a change, there was no sales report from the U.S Mint.

On Wednesday, the Comex-approved depositories added 630,512 troy ounces...and shipped a smallish 29,973 ounces out the door. The link to that action is here.

Since today is the 19th of the month, the Central Bank of the Russian Federation should report it's gold purchases for July...and if they do, I'll have the number [and Nick Laird's updated graph] in this column on Saturday.

Here's a photo that I've had sitting on my desktop for a couple of days...and I've had so much stuff to post at this point in my column, that I've never had room for it until now.

This is a photo that was taken from the International Space Station earlier this week. We've all seen meteors from the ground. Here's a one-in-a-million shot of one taken from above, rather than from below. This spectacular fireball picture was taken by astronaut Ron Garan at the height of the Perseid meteor shower that peaked on August 12th and 13th...and I 'borrowed' the photo from spaceweather.com.

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¤ Critical Reads

Swiss Swap Rates Turn Negative Amid Swiss National Bank's Franc Struggle

“What the market is doing is making the move to negative interest rates for the SNB,” said Douglas Borthwick, head of foreign-exchange trading at Stamford, Connecticut-based Faros Trading. Even with the decline in rates, “people still are buying Swiss securities out of fear and wealth preservation anxiety. Investors continue to purchase Swiss assets as well as gold.”

I stole this Bloomberg story from yesterday's edition of the King Report...and the link is here.

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Part-time Britain hits record high as unemployment soars

Britain's economic recovery hopes were dashed today as official figures showed unemployment rose by 38,000 in the three months to June to 2.49m and the number of people working part-time because they could not find full-time jobs surged to a new record high.

The statistics also point to further misery for Britain's young people: youth unemployment rose by 15,000 over the quarter to reach 949,000, or 20.2pc of 16-24 year olds. The "worrying" figures come on the eve of thousands of young people receiving their A-level results and entering the jobs market for the first time.

This is another story that I stole from yesterday's King Report...this one is from The Telegraph...and the link is here.

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The Greatest Trade of All Time

Here's Sprott Asset Management's latest Markets at a Glance commentary...and here's a snippet..."We are of the view that the appetite for sovereign paper promises will continue to decline, and such promises will continue to lose their value relative to real assets, like gold. What needs to be understood is that paper promises (sovereign debt and fiat currencies) are ‘faith-based assets’. They have no inherent value. They have perceived value in that they have historically been convertible into real assets. With their value decreasing against real assets, however, we are of the view that holders of faith-based assets will be increasingly unwilling to store their wealth in them. This will drive up the prices of real assets versus faith-based assets, a process which we have already begun to see en masse."

This is well worth the read...and was posted over at the sprott.com website yesterday. The link is here.

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A Block Abuzz With the Business of Gold

As pedestrian traffic in the diamond district of Manhattan increases with the price of gold, hawkers representing buyers are stationed on West 47th Street.

“This is a gold rush,” said Ernie Velez, 48, a jeweler and an owner of Universal Refinery, a glass-counter booth in one of the many mini-mall exchanges on the block where jewelry is bought and sold. Mr. Velez, an immigrant from Ecuador, said things could get even busier.

The diamond district in New York does not particularly need a gold rush to invigorate its sidewalks. The block always percolates with business and energy.

This is a very interesting story from yesterday's edition of The New York Times. It was sent to me by reader Phil Barlett...and the link is here.

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Gold's Newest Believers

Los Angeles couple Chantay and Conrad Bridges have been on the fence about buying gold for years -- even as the shiny metal was notching new highs. Their reason was Investing 101: They didn't want to buy high and sell low. But recently they've changed their minds, deciding like many investors that gold still has plenty of upside. "The dollar is losing its value and if we're going to do it we might as well do it now," says Chantay, a real estate specialist. "Even though gold is high it will get even higher."

Call them gold's newest converts. Last week's market upheaval following the unprecedented downgrade of United States debt has convinced some of gold's most-skeptical bears to suddenly switch teams. Indeed, they helped drive some $2 billion into precious metals exchange-traded funds in the week ending August 10, marking five straight weeks of inflows, a turnaround from the outflows seen in May and June, according to fund researcher Lipper. Scott Carter, chief executive officer of Goldline International, a gold retailer in Santa Monica, Calif., says gold purchases at his shop have increased by 20% since the S&P downgrade. "We're seeing the average guy go into the gold market," says Phil Streible, a senior market strategist for MF Global.

I thank reader Richard Sypher for sending me this smartmoney.com story. The usual nay-sayers...and doom-and-gloomers show up towards the end of the article...but it's worth the read anyway...and the link is here.

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Think gold may lose some lustre? Eric Sprott sees a silver lining

Here's a story that was in yesterday's edition of The Globe and Mail in Toronto. It talks about him selling part of his gold holdings and buying silver...a story that I ran in this column yesterday. But there's much more to this article than that, so I urge you to read it.

Eric Sprott doesn't apologize for shifting more of his attention to silver, and is still touting his gold trust to retail investors who think economic turmoil will send bullion prices higher. "I think silver will outperform gold this decade, so why wouldn't I position myself, position our accounts, that way?"

The link to the story, which I extracted from a GATA release yesterday, is here.

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Evy Hambro keen on gold equities while off-loading producers

You just know that this bull market in precious metals is getting some legs when Fidelity International out of the U.K. starts writing about in glowing terms.

BlackRock Gold & General manager Evy Hambro is eyeing further opportunities to buy gold miners as the discrepancy between the gold price and gold equities has widened again in the market sell-off.

Hambro has more than 78% of his £2.8 billion fund in gold equities, and has seen the gold price continue to soar amid the market chaos as it has thrived on its relative safe haven status.

The first two pages of this 4-page pdf file posted over at fidelity.co.uk are a must read...and I thank British reader Ian Strange for sharing it with us...and the link is here.

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Gold to hit $2,100 by year-end but silver is better trade, Davies tells KWN

Hinde Capital CEO Ben Davies, who spoke at GATA's Gold Rush 2011 conference in London, told King World News yesterday that it's "obvious to me that someone is trying to hold the price of silver down." Davies thinks silver is a better trade than gold now, but still expects gold to reach $2,100 by the end of the year.

I stole this blog...and the preamble...from Chris Powell's GATA dispatch yesterday...and the link is here.

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Is Gold the Only 'Safe-Haven' Investment Left?

Well, it's finally starting to sink in with some of the main stream media...and this story certainly reflects the new reality.

“Gold has a new class of investor,” said Steve Grasso, director of institutional sales trading at Stuart Frankel & Co. “The people buying gold this time around are buying it to hold it long term for their kids, for their retirement and not just a market timing trade. Coming out of the housing implosion and Eurozone stress, there is a real perception, right or wrong, that gold is the only investment that's not built on sand.”

This cnbc.com story was sent to me by West Virginia reader, Elliot Simon...and it's well worth your time. The link is here.

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Comprehensive interview with Eric Sprott at King World News

Yesterday, King World News posted what may be the most comprehensive interview ever with Sprott Asset Management CEO Eric Sprott, whose comments cover GATA's Gold Rush 2011 conference in London, the regard shown there for fellow speaker, mining entrepreneur, and veteran gold trader Jim Sinclair, the burgeoning demand for gold and silver, and their possible return as official money.

In this blog, Eric states that silver should already be priced in the $110 to $120 per ounce range...and the link to this longish absolute must read blog is here. As soon as I have the full interview I will post it in this column. But in the wee hours of this morning, Eric informed me that it still wasn't available.

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We Are Exiting the Eye of the Storm: Doug Casey

The first time I heard Doug Casey speak was at a gold conference in Calgary, Alberta about ten years ago. I'd heard a lot about the guy on the Internet...and what a great speaker he was...and this turned out to be the understatement of that, or any other, year.

Doug laid out the upcoming "Greater Depression" in no uncertain terms...and it was electrifying...a speech I will never forget. This week's edition of "Conversations with Casey" reminded me of that speech in Calgary. The difference being then and now is that we are well into the depression that he so accurately predicted.

Doug is interview by International Speculator editor, Louis James...and, for me, it was like "déjà vu all over again"...as Yogi Berra was quoted as saying.

In my opinion this a must read...and the link is here.

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As I mentioned in my gold comments at the top of this column, the volume yesterday was very heavy. Net of what few roll-overs there were, gold volume was a very chunky 264,000 contracts. The preliminary open interest number showed an eye-watering increase of 15,039 contracts...which shouldn't be too surprising considering the price action.

The one thing I don't know is how much of yesterday's big rally in the gold price was short-covering/long buying by the bullion banks...and how much of it was new speculative longs being placed by the tech funds. I doubt that the final o.i. number that comes out later this morning will shed much light on that.

Silver's net volume yesterday was just about double what it was on Wednesday...and more than double what it was late last week and early this week...as around 47,000 contracts were traded. The open interest was only up a tiny 567 contracts...and I would guess that there was considerable short covering going on...and it's possible that the final open interest number from the CME this morning will be more helpful.

But it should be obvious that the internal dynamics of the Comex futures market in gold is diametrically opposite of what's happening in the Comex futures market in silver. This is by design...not by free-market activity.

I was delighted to see that Wednesday's final open interest number in gold showed a very tiny increase of only 506 contracts...but silver's final o.i. number was up 1,276 contracts. Unfortunately, all of this price action from Wednesday onwards...up until the close of Comex trading next Tuesday...will be in next Friday's [August 26] Commitment of Traders Report.

Having said that, both Ted Butler and I are awaiting today's COT report [for positions held at the close of trading on Tuesday, August 16th] with great anticipation...and I'll comment on that in this column on Saturday.

Here's the 6-month gold chart. I'm still nervous about it, but considering the decades-long distortions that the CFTC and the SEC have allowed to be built up in both the gold and silver markets, we could stay overbought for a very long time as the shorts panic and cover.

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Here's the 6-month silver chart once again. As I mentioned yesterday, we were probably at the very bottom of the silver price barrel earlier this week...and a lot of what you're seeing here in this quiet rally, is the slow creep of the Commercial traders covering their short positions as best they can. Hopefully, that's what today's COT will tell us.

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But it's what's going on in Far East and early London trading today that has been a distraction all night long as I've been steaming away on this column. As North America slept, the gold price has been moving steadily higher...and has really taken flight since the London open at 8:00 a.m. BST...which is 3:00 a.m. Eastern. As of 4:12 a.m. Eastern time, the gold price was up about $40 the ounce...and volume was huge.

Silver was kept in check up until about noon Hong Kong time before it, too, joined the rally...and is up 70 cents as of this writing. Surprisingly, volume is not overly heavy.

How long this wonderful state of affairs will be allowed to continue today, remains to be seen...but it should be obvious to any experienced market observer, that these are two metals want to blow sky-high if they were allowed to trade freely.

One thing that I can say for sure is that all these underpriced gold and silver stocks won't remain that way forever...as there are literally hundreds of billions of dollars looking for a big return...and this is the market they will land in once the real gold rush begins.

With virtually every gold analyst of note beating the drum for sharply higher share prices in both gold and silver, there's still time left to either re-adjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

With today being the last trading day of the week, it could get real interesting in New York...and it's pretty much a given that it will be wild and wooly in the Comex gold and silver pits when the fun begins there at 8:20 a.m. Eastern time.

In fact, almost all the trading that occurred in the Far East and in London so far today are the proxies for the New York bullion banks, as they have access to the Globex trading system 24/7...and their branch offices in different time zones are constantly active. But, having said that, ground zero is still in the New York trading session...so top up your coffee, fasten your seatbelt, take the red pill and enjoy the show.

Have a great weekend...and I'll see you here tomorrow.