As I mentioned in 'The Wrap' yesterday, the gold price was really starting to sail in London...and I must admit that I was expecting some fireworks during the New York trading session, but nothing much happened.

The top in the gold price on Friday came shortly before lunch in London...and it was, as they say, all down hill from there. There was a smallish rally that began at precisely 8:30 a.m. shortly after Comex trading began in New York, but that rally ran into a determined seller just minutes after the equity markets opened at 9:30 a.m. Eastern time. That's not the first time I've seen the gold price get sold off at that particular time of day.

Anyway, after that tiny rally was put in its place, the gold price basically traded sideways for the rest of the day. Gold finished up $28.20 spot on the day...but at its high in London trading, it punched through $1,880 spot for a brief moment. Volume was immense.

The silver chart looks so much different than the gold price chart, it's hard to believe that this price activity occurred on the same day.

The silver price had a big spike up going into the London silver fix that occurred at noon British Summer Time...but then [thanks to the same not-for-profit seller] it followed an almost identical price pattern to gold right up until 10:50 a.m. in New York.

From that 10:50 a.m. low, silver began to move steadily higher right through the balance of the Comex session...and then on into the New York Access Market that began at 1:30 p.m. Eastern time. Silver closed nearly on its high of the day...and up $2.26 spot over Thursday's close. Despite the big gain in price, net volume was almost the same on Friday as it was on Thursday.

The U.S. dollar, which closed down about 25 basis points on Friday, was not a factor in the gold and silver price market yesterday. You may have noticed that it's been a very long time since anything the dollar has done, has had any impact on the price of gold. I don't expect that situation to change any time soon.

The good folks over at ino.com have been having problems with their U.S.$ index chart for the last little while...and it's not available today. But as I said, chart or no chart, it really doesn't matter any more...as the dollar and the precious metals are going their separate ways.

The gold stocks gapped up at the open...and basically held onto most of their gains while the general equity markets headed south from about 10:45 a.m. New York time onwards. The HUI finished up 2.32% on the day...and about 3.5% on the week. Here's the chart for the week that was.

Just looking at the silver equity prices in isolation, there's no way of telling from their performance yesterday that silver had one of its biggest one-day price gains in history, as most of the silver equities did only so-so at best. Nick Laird's Silver Sentiment Index was only up 2.28% on the day...and was actually down on the week, despite the fact that silver was up about four bucks since last Friday's close.

(Click on image to enlarge)

However, gold and silver equities are being treated just about like every other stock at the moment...and the good have been sold along with the bad during the sell-off in the general equity markets that occurred during this past week. There were no sacred cows earlier this week. But this will certainly change as the bull markets in gold and silver continue...and we finally saw signs of that yesterday.

But if you compare the performance of the HUI to the Dow this past week, then we shouldn't complain. Bull markets make every attempt to shake off the weak hands...and this point in time is one of those moments that comes along to try our patience. This, too, shall pass.

The CME's Daily Delivery Report showed that 42 gold and one silver contract were posted for delivery on Monday...and the activity isn't worth linking.

The GLD ETF showed another increase yesterday, as 126,584 troy ounces were added...and despite the big rise in the silver price, SLV had no report. But I'm sure that the fund has to be owed a monster amount of silver that they have to dig up from somewhere. It's just a matter of how long it takes them to get any or all of it delivered.

And, for the second day in a row, the U.S. Mint did not have a sales report.

Over at the Comex-approved depositories on Thursday, they reported receiving 6,030 ounces...and shipped out a very chunky 814,916 ounces, most of it out of Brink's, Inc. The link to the action is here.

I must admit that I was really disappointed in the Commitment of Traders Report in silver. I had expected a further improvement in the Commercial net short position, but got pretty big deterioration instead...so all these positive-looking open interest numbers that I've been reporting in silver since the cut-off on Tuesday, August 9th have meant nothing.

The Commercial traders, which includes the bullion banks, increased their net short position by 5,340 contracts, or 26.7 million ounces of silver. They did this by reducing their long position by 1,839 contracts...and added 3,501 short positions. I wasn't able to contact Ted Butler after the report came out, so I'm not sure what the disaggregated COT report showed, as it gives far more detail than the report I follow. Maybe Ted sees a silver lining in the numbers that I don't, as the price action during that time period certainly gave no hint of this sort of deterioration.

When his weekend market commentary comes out later today, I'll steal what I can on what happened in silver...and stick it in my Tuesday column.

In gold, it was a different story entirely, as the Commercial net short position rose only a tiny 359 contracts...which is a rounding error. This jibes with the price action over that time period.

Well, the Central Bank of the Russian Federation updated their website yesterday as I expected they would. The update showed that they only purchased 100,000 ounces of gold during the month of July.

So far in 2011, they have only reported purchasing 1.6 million ounces of gold for their reserves. By this time in 2010, they had reported purchasing 3.6 million ounces...so they've really backed off so far this year. Here's Nick Laird's most excellent graph that shows all.

(Click on image to enlarge)

Here are two more charts for your viewing pleasure. Both are courtesy of Washington state reader S.A. and need no further explanation from me.

(Click on image to enlarge)

(Click on image to enlarge)

Reader T.K. in the U.K. send me this information yesterday about his bullion dealer running out of silver coins.

"Just got off the phone with my coin dealer. It was hard to get him on the phone in the first place this morning, since every time I called, all his lines were busy. I wanted to get more silver coins based on "if it is good enough for Eric Sprott, it is good enough for me." The dealer has apparently run out of 1-ounce coins. There is manic buying of these coins in the UK despite the fact that there is 20% VAT on top of the spot price...plus his premium of 10%. I closed my eyes and placed an order for some Maples but will have to wait two weeks for them to be delivered. The dealer says that these are very cheap at these prices because he thinks that by the end of the day it will cost him what he is charging me now just to replace them, that is, if he can get them at all. It could of course be a sales pitch but he has been in this business for 25 years and I have done a huge amount of business with him in the last 18 months. So I doubt very much that he will try to sell me a story. This is the first time I personally have had to experience waiting for my metal to be delivered. I don't know whether we are entering the manic stage as yet, but it sure feels like it."

¤ Critical Reads

David Rosenberg's 12 Bullet Points Confirming The Double Dip Is Here

Oddly enough there are still those who believe that a double dip [or, more accurately, a waterfall in the current great depressionary collapse accompanied by violent bear market rallies] is avoidable. Well, here, in 12 bullet points is Rosie doing the closest we have seen him come to gloating...and proving the double dip or whatever you want to call it, is here.

I consider this zerohedge.com piece a must read...and I thank Nitin Agrawal for sending it along. The link is here.

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Moody's Analyst Breaks Silence: Says Ratings Agency Rotten to the Core

A former senior analyst at Moody's has gone public with his story of how one of the country's most important rating agencies is corrupted to the core.

The analyst, William J. Harrington, worked for Moody's for 11 years, from 1999 until his resignation last year.

Harrington has made his story public in the form of a 78-page "comment" to the SEC's proposed rules about rating agency reform, which he submitted to the agency on August 8th. The comment is a scathing indictment of Moody's processes, conflicts of interests, and management, and it will likely make Harrington a star witness at any future litigation or hearings on this topic.

This businessinsider.com story from yesterday was sent to me by reader 'David in California...and it's definitely worth your time. The link is here.

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The New Abnormal: Permanently Engineered Market Volatility

Here's an interesting story that was posted over at the moneymorning.com website yesterday. The author is Shah Gilani of Capital Waves Strategist.

If the gut-wrenching market volatility of the past few weeks has made you sick to your stomach , I have some bad news for you: violent volatility is the new normal - or more precisely, the new ab-normal.

After massive market moves last week, the Dow Jones Industrial Average tumbled 419.63 points yesterday [Thursday]. And, while that may be bad news for average investors, it's something Wall Street wants.

If you're not a day-trader, high-frequency trader, hedge-fund manager, or institutional desk trader, reading this is going to make you mad as hell. But it's something you have to know, understand, and accept if you're going to be a successful investor going forward.

This guy sounds like he knows what he's talking about...and it's worth the read if you have the time. I thank Australian reader Wesley Legrand for sharing it with us...and the link is here.

View full GSD edition

Shredded Justice: Is the SEC Covering Up Wall Street Crimes?

Earlier this week I ran a Bloomberg piece that gave a brief account of what was in the new Matt Taibbi essay over at Rolling Stone magazine. The story also linked the Taibbi piece...but it was much too long to post for week-day reading, so here it is now.

A whistle blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals.

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed.

This is your long read of the day, but it's well worth it...and none of what you read in Matt's essay should come as a shock to you. As I've said all along...Wall Street and all its associated infrastructure...are basically an organized crime syndicate. The link is here.

View full GSD edition

Document Shredding: Why SEC's Defense Won't Fly

Two days after his above essay hit the streets, Matt Taibbi posted this short piece to clarify some of what he said. It's only a couple of paragraphs long...and if you've read Matt's essay posted above, then you should give this one minute of your time as well.

I thank Roy Stephens for sending me this rollingstone.com blog...and the link is here.

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Interactive Brokers Warns Gold Margin Hike Imminent, CME Next?

The first shot was just fired in today's battle with daily record gold prices. I.B. always tends to be a few minutes ahead of the CME. And following last week's 22% margin hike in gold, we are confident the CME will do everything in its power to pull a "silver" on gold. Are we about to experience a barrage of margin hikes in gold? Stay tuned and find out.

Increased margin requirements in a bull market in any commodity is perfectly normal...and the CME would be derelict in its duties if it didn't do that...but the above comment about "pulling a 'silver' on gold" should be duly note.

This 1-minute read [which is well worth your time] is posted over at zerohedge.com...and I thank reader Charley Orr for sharing it with us. The link is here.

View full GSD edition

Nervous investors go for gold as panic grips stock markets

Fresh turmoil on the world's financial markets on Friday saw gold rise to record levels, the dollar sink to its lowest-ever level against the Japanese yen, and share prices gyrate wildly in Europe and North America.

The jittery atmosphere sent investors heading once again to the safe havens of the Swiss franc, the Japanese yen and gold. Bullion rose as high as $1,881 an ounce, with some dealers expecting it to test the $2,000 an ounce level over the coming weeks.

This story was posted yesterday evening in The Guardian...and I thank Roy Stephens for sending it along. The link is here. The picture of gold bars that accompanies the article is worth the trip all by itself.

View full GSD edition

Silver About to Roar Through $50 All-Time High: John Embry

Eric King over at King World News interviewed John Embry yesterday about the future price of silver. The link to the blog is here.

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Silver Producers Soar As Precious Metals Go Vertical

I think the headline is overdoing it a bit considering the recent action of the silver shares, but at least the word is getting out there.

Silver isn't gold, but it's the next best thing, even if it is more volatile, metal watchers say.

With silver prices more than doubling from a year ago, silver producers like Coeur D'Alene are enjoying triple-digit profit growth.

"They're making free cash hand over fist," said Adam Graf, analyst with Dahlman Rose & Co. "The returns have never looked more attractive."

This short story is posted over at Investor's Business Daily...and I thank Washington state reader S.A. for sharing it with us. The link is here.

View full GSD edition

Eric Sprott Interview: King World News

In my Friday column I ran a KWN blog featuring Eric Sprott. The audio interview was not available at that time, but Eric just sent it to me at 3:23 a.m. Eastern this morning...and the link is here.

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Expect Mass Entry Into Gold By Retail Public: Richard Russell

With gold hitting new all-time highs and silver surging to $43, the Godfather of newsletter writers, Richard Russell, had this to say in his latest commentary, “Gold -- I've been receiving many calls to the effect, ‘Should I sell my gold now?’ My answer is that I don't have the ultimate answer to that question. My thinking is that gold has been in a decade-long [bull] market. Most extended bull markets end with a third-phase period of torrid speculation and a mass entrance by the retail public. So far, we have seen neither."

Eric King sent me this KWN blog yesterday. Needless to say it's an absolute must read...and the link is here.

View full GSD edition

Waiting for De Gaulle: The New York Sun

My last item of the day is this GATA release of an editorial out of yesterday's edition of The New York Sun. I'll let Chris Powell do the introductory honours...and the link to this must read piece is here. And may I suggest that you forward this to as many people as you can, as it's one of the most profound editorials I've read in many years, as it spells out the ugly truth with absolute clarity.

View full GSD edition

Up until August 15, 1971, there has never in history been an era when no paper currency was linked to Gold. The history of money is replete with instances of coin clipping, printing, debt defaults, and the other attendant ills of currency debasement. In all other eras of history, people could always escape to other currencies, whose Gold backing remained intact. But since 1971, there is no escape because no paper currency has any link to Gold.

All of the economic, monetary, and financial upheaval of the past 40 years is a direct result of this fact.

The global paper currency system is very young. It depends for its continued functioning on the belief that the debt upon which it is based will, someday, be repaid. The one thing, above all others, that could shake that faith, and therefore the foundations of the modern financial system itself, is a rise (especially a sharp rise) in the U.S. Dollar price of Gold. - Bill Buckler, The Privateer

Today's 'blast from the past' is a short piece that just about everyone on earth knows...and it seems more than appropriate for the times. So turn up your speakers and then click here.

As I mentioned at the top of this column, volume in gold was extremely heavy yesterday. Net of what few roll-overs there were, gold traded about 297,000 contracts...but the preliminary open interest number was a surprisingly small 14,608 contracts. I was expecting worse...much worse.

Silver's net volume was virtually the same as it was on Thursday...around 46,000 contracts, which isn't a heck of a lot considering the big price move we had. The open interest number in silver was up a knee-wobbling 6,166 contracts.

Without doubt these preliminary open interest numbers in both gold and silver will be much reduced when the CME puts out its final o.i. report on Monday morning.

The final open interest numbers for Thursday's trading day showed that gold o.i. rose 6,633 contracts...and silver's open interest actually showed a decline of 1,130 contracts. After the big negative surprise in silver that came out of yesterday's Commitment of Traders report, I'm not going to speculate on what next Friday's COT report may look like. I'm also starting to question whether providing this daily o.i. data is even worthwhile.

Here's the 3-year gold chart...and I have nothing to add to what I've already said [both negative and positive] over the last couple of weeks. The RSI is still ugly...and the MACD line is off the charts.

(Click on image to enlarge)

The 3-year silver chart is a totally different animal...and has lots of room to run to the upside before it gets into seriously overbought territory. But, like gold, all we can do is sit back and watch.

(Click on image to enlarge)

Nothing much has changed. This is still a 'Star Trek' precious metals market...and I wouldn't want to bet on the day-to-day or week-to-week changes in prices, either up or down.

I'm not exactly sure how much control the bullion banks now have over the precious metals prices at this point. We sure are overbought in gold, but does it mean anything anymore? Beats me. And as for silver, I'd love to be a fly on the wall over at JPMorgan, as they're still sitting on a 20,000 contract short position in the Comex silver futures market that they can't get out of.

I, like every other precious metals analyst, is sort of making this up as we go along at this point. The long term is not in doubt...and as Richard Russell said in his blog further up in this column..."Most extended bull markets end with a third-phase period of torrid speculation and a mass entrance by the retail public. So far, we have seen neither."

But that's the part I'm waiting for, so I'm hanging on for dear life...and I'm still 'all in'.

I'll be looking forward to the action in gold and silver when trading begins in New York on Sunday night at 6:00 p.m. Eastern time.

Before I head out the door for the day...and the week...I'd like to remind you one more time of this FREE on-line Casey Research sponsored event happening on September 14th at 2:00 p.m. Eastern time. It's entitled "The American Debt Crisis"...and it's posted over at the americandebtcrisis.com website. The introductory trailer runs 8:33...and if you want to register for this FREE webinar, you can just type in your e-mail address in the spot indicated in the right sidebar. The link to all of the above, is here.

Enjoy what's left of your weekend...and I'll see you here on Tuesday.