JP Morgan et al head for the Silver Exits

Silver’s price pattern was very similar to gold’s… but was more ‘volatile’. In my brief conversation with Ted Butler yesterday, he felt that most of silver’s price action after the Comex open was JPMorgan covering short positions. Silver managed to slice through $18 to the upside… but wasn’t allowed to close above that price, as it got capped even before the close of Comex trading… and traded sideways from there.

The world’s reserve currency gained… and then lost… 45 basis points between 3:00 a.m. and 12:00 noon Eastern time. Of course, none of this made any difference to the price of the precious metals yesterday.

The share prices hit their nadir at 10:00 a.m… gold’s New York low at the London p.m. gold fix. From there the precious metals stocks went up… and stayed up for the rest of the trading session.. with the HUI finishing almost on its highs, despite what was happening in the general equity markets. The HUI finished up 1.57% on the day… but down on the week. This should be no surprise considering what happened on Tuesday. Here’s the 5-day chart to put ‘the week that was’ in perspective.

The CME’s Daily Delivery Report on Friday showed that 681 gold and 4 silver contracts were posted for delivery on Tuesday, August 3rd. There were a couple of dozen issuers… and the two biggest stoppers by far were HSBC USA and JPMorgan. The link to the action is here.

Neither GLD or SLV had anything to say for themselves… but the U.S. Mint had one last sales report for the month. They showed that another 6,000 ounces of gold were sold in the gold eagle program, along with another 1,000 24-K gold buffaloes and 329,000 silver eagles. Totals for the month of July indicate that 152,500 ounces worth of gold eagles were sold… along with 23,000 24-K gold buffaloes and 2,983,000 silver eagles. Silver eagle sales year to date are 21,149,500.

Over at the Comex-approved depositories, their Friday report showed that another 455,524 troy ounces of silver were withdrawn from their inventories on Thursday… almost all of it from the Bank of Nova Scotia. The link to all that action is here.

The latest COT report that came out yesterday confirmed my fears [as well as Ted’s] that none of the volume numbers from Tuesday’s big sell-off were included in this report… even though it occurred before the cut-off. As I’ve mentioned many times, the bullion banks can be very good at selective reporting… and Tuesday’s action was definitely one of those times when they dragged their feet… so we won’t know what really happened until next week’s report.

What yesterday’s report did show was that the bullion banks reduced their net short position in silver by 1,192 contracts… which is a hair under 6 million ounces. It would have been a much bigger number than this if Tuesday’s huge price decline was included in this report. The bullion banks’ net short position is now down to 233.8 million ounces [as of this report]… of which the ‘4 or less’ bullion banks are short 222.4 million of that. If you factor in everything that happened since Monday… these last two numbers have actually dropped significantly… meaning that this COT report doesn’t really show the true silver picture at all.

In gold, the bullion banks actually increased their net short position by a chunky 11,891 contracts… or 1.2 million ounces. I wasn’t a happy camper about these numbers until Ted explained that the ‘raptors’… as Ted calls them… reduced their long positions substantially, which shows up in the COT numbers as an increase in the net short position. And don’t forget that none of Tuesday’s big price drop in gold is in yesterday’s report… and that skews the numbers negatively as well. But, like silver, yesterday’s COT report was wildly out of date before it was even posted.

I know that Ted Butler will do a better job explaining the COT report than I just did. His Friday afternoon interview with Eric King over at King World News is a must listen from one end to the other… and I urge you to stop reading at this point… and give it your undivided attention. The link is here.

Here’s the link to yesterday’s COT report if you want to follow along with Ted’s commentary.

I have a lot of stories for you today… most of which were sent to me yesterday… but a couple that I’ve been saving for the weekend because of their length. I hope you can find the time over the next couple of days to wade through them.

The first one is a GATA release that somehow ended up in my ‘junk mail’ folder rather than my in-box. It’s an Ambrose Evans-Pritchard offering headlined “India warned of stagflation risk as price of food soars“… A panel of Indian government advisers have called for immediate interest rate rises to prevent double-digit inflation spinning out of control. “Further tightening is required. Inflation is more than twice the comfort zone,” the Economic Advisory Council said. Food prices are sneaking up everywhere… even here in Edmonton, dear reader. The story from last Sunday’s edition of The Telegraph is only a handful of paragraphs… and is definitely worth your time… and is linked here.

Today’s first gold-related story is one that appeared in the Financial Times of London the day before yesterday. It is, once again, about the BIS gold swaps. And as I mentioned yesterday when James Turk posted commentary regarding these swaps… this is an issue that just won’t go away. The FT headline reads “BIS Gold Swaps Mystery Is Unraveled“… and the GATA headline reads “Gold in BIS swaps said to have come from looted bank customers’ deposits“. The story, along with a lengthy preamble by GATA’s secretary treasurer, Chris Powell, is a must read… and the link to the GATA release is here.

My next gold-related offering is courtesy of ‘vern in ventura’… and appeared in the July 30th edition of the Los Angeles Times. Southern California authorities are probing the sales tactics of Santa Monica’s Goldline International, a key sponsor of Fox Newshost Glenn Beck. The headline reads “Is gold dealer using fear to steer buyers into more expensive purchases?” Considering both who and what is involved here, dear reader… I highly recommend that you read this rather longish piece… and the link is here.

I have four international stories that are worth browsing through. The first is commentary over at the Swiss website thedailybell.com. Emigration from Ireland is soaring, as an estimated 40,000 people left the country last year… a rate almost twice as high as that of Lithuania… the next most affected country. A research institute has warned that 200,000 people, in a country of 4.5 million, may be forced to emigrate by 2015 if job opportunities do not improve. The link to the story headlined “The Irish Leave the EU” is here.

The next international story is from Greece… and it’s courtesy of reader ‘David’. It’s headlined “A Greek City Just Defaulted On $275 Million Of Debt — Can The State Be Far Behind?” That’s a very good question, isn’t it, dear reader… with most major cities and countries in exactly the same situation… regardless of all these wonderful bank ‘stress tests’ we’ve read about recently. The story is posted at the businessinsider.com website… and the link is here.

Today’s next international offering was posted in yesterday’s on-line edition of The Wall Street Journal… and was sent to me by Washington state reader S.A. The story was no surprise, as I’d heard whispers of this over the last couple of years… but to see it show up in the clear at the WSJ of all places, was a bit of a shock. It’s a well-known fact in certain circles that the high-denomination euro-notes were specifically designed by the European Central Bank for illegal activities. Gangsters, drug dealers and money launderers appear to be playing their part in helping shore up the financial stability of the euro zone. This is the ECB’s attempt to take away some of the lucrative drug trafficking money that the U.S.-based banks have had a virtual monopoly on for the last 30 years or so. The headline reads “How Gangsters Are Saving Euro Zone“. Needless to say, this a must read article that will really open your eyes… and the link is here.

My last story from Europe is actually from England. This is one that I ‘borrowed’ from yesterday’s King Report. This story was, in some ways, even more shocking that the previous story about the high-denomination Euro notes. It appears that there are now so many fake £1 coins in circulation in Britain, that the Royal Mint could be forced to scrap all of the coins and reissue the entire denomination. The story is from the July 27th edition ofThe Telegraph… and is headlined “Record number of fake £1 coins could force reissue“. It, too, is a must read… and the link is here. Niall Ferguson was in Australia recently and wrote a very interesting essay that appeared in the Thursday edition of The Australian. The headline reads “Sun could set suddenly on superpower as debt bites“. This is highly recommended reading… and I thank reader Asim Raja for sharing it with us… and the link to this 10-minute read is here.

Shortly after I began my crusade with my fellow members of the Gold Anti-Trust Action Committee, Inc… I decided to read a book which a lot of people on the Internet had suggested was required reading. I can say without a word of a lie that this book changed my life forever… as my wife will attest to. The book was entitled “The Creature From Jekyll Island: A Second Look at the Federal Reserve“… written by author G. Edward Griffin. Part of what was contained in that book came from the following 50-minute long video interview with Norman Dodd, Congressional Investigator of Tax-Exempt Foundations. The investigation took place back in the early 1950s. And this interview was given in 1982… almost 30 years ago… and almost 60 years since the investigation was done. Ed Griffin conducted the interview, plus he provides an introduction to the interview itself. I absolutely guarantee that you won’t like what you hear… but if you want to understand why the current world is the way it is… then this is a must listen… and the link is here. Let’s hope that what he speaks of never reaches fruition. I thank reader Dave Delve for sending it along earlier this week.

Today’s last offering is the July commentary from John Hathaway over at Tocqueville Asset Management L.P. It’s a 6-page essay in which John carefully lays out the case for gold bullion and gold-related equities in a world snowed under by a blizzard of fiat currencies… along with the threats of a deflationary implosion… and a hyperinflationary explosion. This is an excellent essay… and I highly recommend that you read it. The title reads “The Committee to Save the World“… and the link is here.

Today’s musical selection is not exactly a ‘blast from the past’… but it’s certainly worth listening to. I’m not sure how many of my readers have never heard of Susan Boyle, but if you haven’t… click

before proceeding. Anyway, one of Susan’s dreams was to be a professional singer like her idol… British singer Elaine Page. Well…she more than got her wish. Here are Susan and Elaine singing together… and it’s just stunning! So turn up your speakers and click

.

Well, with July 2010 in the history books, I’m really interested in what Monday morning will bring. From Ted’s commentary, it appears that JPMorgan et al are heading for the silver exits as fast as their bandy little legs will carry them. And as he also said, this is a time to be long and strong the silver market… which I already am, dear reader. How are you doing?

Although one can’t be sure that the end is nigh… the COT facts speak for themselves… and may be one of the reasons why Tuesday’s numbers were not allowed to make the COT report… as that would have given away the game entirely. What we still don’t know about, and that hasn’t been reported yet, is the activity from Tuesday through Friday. Ted figured that silver’s big pop on Friday was all JPMorgan… and I’m not going to argue with that fact, either… and we’ll find out soon enough.

Based on what Mr. Butler had to say, I feel that the window of opportunity in silver may be closing real fast… and once this train leaves the station, there won’t be much of a chance to get on board… as pull-backs will be few and far between.

I suggest, dear reader, that if you still have any investment dollars lying around… this might be the time to put them to work. Some of the best silver investments around can be found in two of Casey Research‘s publications. The first is Casey’ Gold and Resource Report… which can be had for a yearly subscription fee of US$39… which is a pittance. However, Casey Research’s flagship publication… the International Speculator [which includesCasey’s Gold and Resource Report] is a somewhat larger investment… but, like everything in life, you get what you pay for. I strongly urge you to click on the links and check them out. It costs nothing to read what they have to say at these links… and your subscription satisfaction is 100% guaranteed, or your money is refunded.

Every nickel of my wife’s, my kids, and my net worth is 100% in the precious metals market… 60% silver and 40% gold. We put our kids through college and university on the profits that we have made over the last ten years… with money to spare. But the really big money has yet to be made… and I’ll stay fully invested until I feel that day has arrived.

I will spend a good portion of Saturday tracking down whatever physical silver Edmonton still has for sale… and that might be a pastime for you to consider as well, dear reader.

Enjoy the rest of your weekend… and it’s a long weekend for us here in Canada… and I’ll see you here on Tuesday morning.