ed steer comments on yesterday's sharp rally in gold and silver, and the games being played with the silver etf:

Open interest in gold for Tuesday, September 1st, showed that o.i. rose 2,320 contracts to 384,703... on pretty big volume of 104,075 contracts. Silver o.i. also showed a healthy increase, up 1,614 contracts to 106,671... on decent volume of 30,006 contracts. I'm already cringing at what Wednesday's open interest numbers will be when they come out later this morning because, without a doubt, they will be u-g-l-y! The thing that concerns Ted Butler is whether or not the 'big four' shorts in both silver and gold were actively going short in the market yesterday... or was it other bullion banks carrying the 'short' load. Unfortunately, or deliberately, depending on your point of view... we won't find out until the Commitment of Traders report next Friday... September 11th... because all this action happened on Wednesday...the day after the cut-off for tomorrow's COT report. As I've pointed out many times in the past, this is S.O.P. for the bullion banks when they want to cover their tracks when something big is afoot.

Yesterday's Comex Delivery Report showed that only 9 gold contracts were delivered... but, once again, there was another big number for silver deliveries... 1,010 contracts... 5 million ounces. The big issuers were the 'usual suspects'... Deutsche Bank, Bank of Nova Scotia and JPMorgan... with Bank of Nova Scotia taking virtually the entire delivery yesterday by themselves... 951 contracts.

Over at the usual ETFs, there was a small increase of 49,058 ounces at GLD... but over at SLV, for the second time in less than a week, there was a big draw-down. This time it was 2,477,429 ounces. So, in the last week, over 5 million ounces of silver have been withdrawn from the SLV ETF... and since June 13th, the price of silver has increased from $12.40 to 15.49. That's a hair over three bucks. Silver should be pouring into the SLV ETF... but inventories have been drawn down instead. You would be quite right in asking yourself... "What the hell is going on?"... but it's obvious that the entity that owned that silver needed it for something else. If there's lots of silver laying around... why did they have to pull it out of the ETF to get it? Just asking.

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