GLD up… Again. SVL down… Again.

Volume was incredibly light… well under 90,000 contracts net of all spreads and roll-overs. This was far lighter than the volume on Thursday… which was no great shakes, either.

Silver followed a very similar price path to gold.  The only big difference was that silver’s price rally came to an end with a 20 cent price spike just before lunch in New York… and basically traded sideways for the rest of the New York session.  The absolute high of the day [$19.17 spot] occurred at 1:28 p.m. Eastern time… moments before the end of Comex trading.  The silver price flat-lined during electronic trading from there.  Volume, from 12:00 p.m. onwards in New York, was mostly vapour.  The low of the day [around $18.61 spot] was shortly before 11:00 a.m. in London… 6:00 a.m. in New York.

For once, the dollar fell while gold and silver prices rose.  The top for the dollar was minutes after 6:00 a.m. Eastern time [11:00 a.m. in London]… and the bottom was basically in at 1:30 p.m. Eastern time… which was the Comex close in New York.  The dollar fell 82 basis points during that time period.  And, like the precious metals, flat-lined from there into the close of trading at 5:15 p.m. Eastern time.

The HUI put in a solid performance on Friday… as the precious metals shares pretty much acted independently of what was happening in the general equity markets.  The HUI gave back a little during the last hour of trading… but was still up 3.49% on the day.  This was quite a bit, considering the fact that gold was up only about one percent.  However, before we get too smug about things, here’s the 5-day HUI graph.  You can see that we are basically back to where we were this time last week… just before the bullion banks punched the lights out of the gold and silver price on Monday.

Friday’s CME Delivery Report Showed that 202 gold and zero silver contracts were put up for delivery on Tuesday.  The big issuer was the Bank of Nova Scotia… and the big stoppers were JPMorgan and Deutsche Bank… three of the four, ‘four or less’ traders on the Comex.  The link to all the action is here.

There was action reported in both GLD and SLV yesterday.  GLD reported taking in another 97,806 ounces of gold.  But the SLV reported that 1,028,559 ounces of silver were withdrawn from their holdings.  SLV’s inventories have declinedby 2.6 million ounces since May 28th… and GLD has increased their holdings by 2.5 million ounces during that same period.

If you think that something is not quite right about all this… you would be right about that.

To top that off, the Comex-approved depositories showed that a further decline on Thursday.  This time it was 565,387 ounces of silver that were reported withdrawn… all of it from HSBC, USA.  The link to that is here.  Friday’s activity won’t be reported until Monday afternoon.

The only activity reported by the U.S. Mint was a further sale of 2,000 ounces of gold into their gold eagle program.

The Commitment of Traders report that came out yesterday showed further deterioration in the bullion banks’ net short position in both silver and gold… but the numbers weren’t quite as bad as Ted Butler and I had expected.  In silver, the bullion banks added 1,795 contracts to their short position.  The net short position in the Commercial category [where the bullion banks hang out] was reported as 277.9 million ounces.  As of the Tuesday cut-off, the ‘4 or less’ bullion banks were short 262.7 million ounces of that… and the ‘8 or less’ traders held 329.4 million ounces short.  This 329.4 million ounces represents 118% of the entire net short position  The other 31 silver traders holding short positions in the Commercial category held an average of 409,000 ounces of silver apiece.  This is a textbook definition of a concentrated short position… the very thing that the COT report was designed to highlight… and prevent.

The net short position in the Commercial category in gold right now is 28.9 million ounces… as they added another 9,972 contracts to their short position during the prior week.  Of that, the ‘4 or less’ traders are short 23.0 million ounces [a record high amount according to Ted]… and the ‘8 or less’ traders hold 29.7 million ounces short… which is more than 100% of the net short position in the Commercial category.

The link to yesterday’s COT report is here.

Another report that came out yesterday was the Comptroller of the Currency‘s Q1/2010 Report on Bank Trading and Derivatives Activities.  I don’t want your eyes to glaze over here, but the bottom-line numbers show that two U.S. banks… JPMorgan and HSBC, USA hold between 97% and 99% of all the gold and silver derivatives held by all U.S. banks.

I want to qualify those percentages a bit, by saying that if a bank has a holding company [like Goldman Sachs does] any gold or silver derivatives held by them do not have to be reported to the OCC… and will not show up in this report.  Right now the OCC reports that GS holds no derivatives in either gold or silver… but their  bank holding company might… and there’s no way of finding that out.

The other bottom-line number of interest is that the six largest U.S. banks report holding 99.5% of all the precious metals derivatives in the U.S. banking system… and it’s probably higher than that we if could have a peek inside all these bank holding companies.  Maybe this new financial reform bill that just made it through the Senate this week will change the reporting requirements.  We can only hope… and we won’t have long to wait.

If you’re really interested in this, the report is linked here… and the precious metals data I used is in Table 9 on page 31.

Ted Butler had his usual weekly commentary with Eric King over at King World News… and I urge you to stop reading at this point and listen to what he has to say.  The link is here.

I only have a couple of gold-related stories today.  The first one is about that five nines fine 100-kg $1 million Canadian maple leaf coin.  Well, it was sold today for melt value.  All the details are contained in this Reuters piece headlined “World’s biggest gold coin fetches over 3 million euros“… and the link ishere.  Too bad that they didn’t show the reverse side of the coin, as it’s really beautiful.

The next gold-related story is an item posted at marketwatch.com and filed from Tokyo.  The headline reads “Gold investment opportunities abound“… and I thank reader Scott Pluschau for sharing it with us… and the link is here.

Here’s an interesting chart that Nick Laird over at sharelynx.com provided in the wee hours of this morning.  It shows how the precious metals slowly disappeared out of the coinage of the Roman Empire as it crumbled into ruin.  If this sounds familiar… it has happened many times over the last several thousand years… and is happening again right now.

Well, the financial reform bill is now done… and just waiting for Obama’s signature.  I am in no position to say whether it’s got any teeth in it or not.  But I still have both feet firmly planted in Missouri on this one.  But I note that CFTC chairman Gary Gensler is wildly enthusiastic about it, so maybe there’s some good stuff in there that he can use to end this grotesque concentrated short position in both gold and silver.  We’ll find out soon enough.

I have two rather short stories on this… both courtesy of Washington state reader S.A.  The first is posted over at businessweek.com and bears the headline “Biggest Wall Street Revamp Since 1930s Approved“… and the link is here.  The second is a Reuters piece headlined “Compromise on Lincoln swaps desk bill seals deal“… and the link to that story is here.

I also have a longer [and far less positive] story on this new financial reform bill that’s posted over at Bloomberg.  This piece basically says that the reform package is a big win for the major banks and Wall Street… and that nothing has changed.  The headline reads “Banks “Dodged a Bullet’ as Congress Dilutes Rules“… and the link is here.

Here’s another story courtesy of reader Scott Pluschau.  It’s also a Bloombergoffering.  It appears that forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution.  That, dear reader, is a lot of money.  The headline reads “States of Crisis for 46 State Governments Facing Greek-Style Deficits”… and the link is here.

Scott’s last offering for this column today is a posting over at news.bbc.co.uk in Britain.  On the eve of the G-20 meeting in Canada, little Timmy Geithner told aBBC reporter that “the world “cannot depend as much on the US as it did in the past”.  He also said that other major economies would have to grow more for the global economy to prosper.  What he’s basically saying is that the American goose is totally and thoroughly cooked.  The headline reads “Geithner says US can ‘no longer drive global growth’“… and the link is here.

Here’s a story courtesy of reader Roy Stephens.  It’s a little something posted over at The Telegraph in London… and it’s about Russia’s latest move in the 21st century version of the “Great Game”.  The headline reads “Russia plans second military base in Kyrgyzstan“… and the link is here.

For those of you who wish to learn more about the “Great Game”… may I suggest Zbigniew Brzezinski’s book “The Grand Chessboard:  American Primacy and Its Geostrategic Imperatives“.  The Reader’s Digest version of the highlights can be found linked here.

Here’s a disturbing UPI story that was filed from Jerusalem on Thursday.  The headline reads “Special Reports: Israelis prepping for Iran attack?”  It appears that the Iranian media is claiming that Israeli air force helicopters landed at a Saudi Arabian airport to offload equipment meant to target a ‘regional state’.  There have certainly been a lot of stories to that effect lately… and the link to this one is here.  I thank reader Roy Stephens for sending it along.

Lastly today is a King World News interview with GoldMoney founder, James Turk.  This is certainly a must listen… and the link is here.

I haven’t been down the classical highway in my ‘blast from the past’ recently… so here goes.  This is the third movement of Beethoven’s piano sonata in F minor, Opus 57… “Appassionata”.  The pianist is Valentina Lisitisa… and can she play!  Her technique is flawless.  So turn up your speakers and click here.  If you want to listen to the first and second movements… they’re in the right sidebar and are definitely worth your time as well.

Friday was a great day for us precious metals bugs.  And as Ted Butler pointed out in his interview, although the COT report shows that the bullion banks are almost back at record short positions in both gold and silver… there are other things that appear to be going on behind the scenes that could change things very quickly.  Firstly, gold is being added to GLD… and silver is disappearing out of the SLV and the Comex-approved depositories.  Then there’s this new financial reform package that’s about to be signed into law… plus the goings-on in the Middle East.  And there are murmurings of a lawsuit somewhere in the CFTC’s and Comex’s near future as well.

I would not be out of this market… or, heaven forbid, short this market… for all the tea in China.

I don’t know when this whole thing will blow up, but if you’re still sitting on the fence, I urge you to seriously consider getting invested… and the sooner the better.  Two great places to start are Casey Research’s flagship publication… the International Speculator… and Casey’s Gold and Resource Report.  It costs nothing to check them out by clicking on the links… and don’t forget that if you’re not 100% satisfied, your money will be refunded.

Next week will certainly be interesting.  The last day of trading for the June contract… and first day notice for delivery into the July contract… are a couple of the things that I’m watching with great interest.  The Far East opening on Monday morning [Sunday evening here in North America] will be worth keeping an eye on as well.

Enjoy the rest of your weekend… and I’ll see you here on Tuesday.