Both gold and silver rose and fell together in fits and starts all through Far East and early London trading on Wednesday. Both metals went vertical the moment [or very shortly after] the London silver fix at 12:00 noon in London…7:00 a.m. in New York. Someone obviously didn’t like that, and both metals were under serious selling pressure immediately.

This continued through the Comex open…with the bottom coming at the close of London trading at 4:00 p.m. in their afternoon…11:00 a.m. in New York. Both metals rallied a bit after that, but both finished a bit below their Tuesday closes at the end of electronic trading at 5:15 p.m. on Wednesday afternoon. Both metals put in what [in technical terms] is called in a ‘key reversal to the downside’. This is not normally a positive development.

Open interest changes for Tuesday’s trading were as follows. Gold o.i. finally fell…this time by 7,719 contracts to 387,181…on total trading volume of 100,535 contracts. This is the drop in o.i. that we [Ted and I] were expecting on Monday, but didn’t get. But silver o.i. didn’t drop. It rose by 222 contracts to 106,447…on total volume of 33,819 contracts.

Wednesday’s Comex Delivery Report showed that 314 gold contracts were delivered along with two silver contracts. There were no changes in either GLD or SLV…and over at the Comex-approved warehouses, their silver inventory fell 266,804 ounces. For the second day in a row, the U.S. Mint has updated its eagles production. One ounce gold eagles rose 5,500 to 36,000 and silver eagle mintings are up by another 80,000 to 857,000.

Yesterday I posted a story out of South Africa that stated…”In the first quarter of this year, South Africa produced 49,710 tons of gold…4,8% less than in the same quarter last year.” Most North Americans use a period when separating numbers. In other countries they use commas. I saw this, but decided to report both numbers as they appeared in the Reuters story…commas and all. This was a semi-terrific idea…as most North Americans did not recognize this subtlety…and several quickly pointed out that “49,710 tonnes was more than all the gold that central banks had.” We shan’t make this mistake again!

The usual N.Y. commentator had the following yesterday…”the Bombay Bullion Dealers Association has reported that India imported 17.8 tonnes of gold in May. The BBDA says this is 39% below May of last year [which is a fairly normal month]. It brings the total for 2009 to 51.8 tonnes compared to 115 tonnes in 2008. Virtually all of this has been imported in the last two months…Vietnam local gold this morning stood at a $3.77 premium to world gold of $964.47…Presumably the gold market will soon have to deal with the fanfare announcing IMF gold sales, permission for which is currently being smuggled through Congress.”

And lastly in gold news, comes this story, where the headline reads…”Gold dehedging falls to lowest since 2003-GFMS”. London, June 10 (Reuters) – “The rate at which gold miners cut their hedging positions slowed in the first quarter of 2009 to 110,000 ounces, the lowest level of net de-hedging seen since 2003, metals consultancy GFMS said in a report on Wednesday. The company reiterated its expectation for a much reduced level of de-hedging in 2009 as a whole.”

Today’s first story is a repeat of one that was posted here yesterday. It came to my attention, through many readers, that the link to silver analyst Ted Butler’s latest commentary did not work. I have since discovered that his website is down. But here it is once again…as posted over at investmentrarities.com. It’s entitled “Bad News, Good News”…and as I mentioned yesterday, you should read it very carefully…twice. The link [fingers crossed] is here.

In the next story, I see that there are some problems over at Canada’s beloved Royal Canadian Mint. It appears that “tens of millions of dollars” worth of precious metals may have vanished into thin air. Canada’s famed RCMP have been called in to investigate. I stole this story from Bill Murphy’s lemetropolecafe.com. Thanks, Bill. The story is entitled “Tories call in Mounties over mint’s missing millions”…and the link is here.

And lastly is this Bloomberg story courtesy of Craig McCarty. It appears that “Russia may switch some of its reserves from U.S. Treasuries to International Monetary Fund [IMF] bonds, the central bank said today.” The headline says basically the same thing, and the link to the story is here.

The African Hoopoe bird comes in a couple of different sub-species…and is very common throughout Africa and Eurasia. I have a few photos of these beautiful birds in my slide collection somewhere. However, to capture a photo of one like shown below, means you have to be in the right place, at the right time…and definitely with the right equipment. I thank Dave Delve for the photo.

Trying to get government to be as efficient as business, is as hopeless as trying to teach cats to bark and dogs to meow. – Walter Williams

So, what do I think will happen today…or in the near future? I hate to be a short-term bear, but…as you already know…I am one. I know perfectly well [based on past history] what an ugly COT report means…combined with an even uglier Bank Participation Report…as I’ve seen the inevitable outcome many times in the past. Could the bullion banks still get blown out of the water? Sure, but I see nothing out there right now that indicates that this will happen at this juncture. We’ll just have to wait and see how this situation resolves itself…but I’m not optimistic.

Tomorrow is Friday already! See you then.

Source: And Then There’s This…Thursday, June 11th, 2009

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