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Be sure and read Ranting Andy Hoffman’s rant today. It is a strong piece. His recent rants are powerful.

I have inserted part 2 of a series of articles on investing in mining shares for our readers who are interested in learning more about them. Eric Angeli is a personal friend and the broker of choice for myself, my son Andy and for my wife Susan. Global Resources, Rick Rule’s firm, is a fine company and Eric is a great broker. Personally, I am lightening my mining share portfolio and moving the proceeds into physical gold and silver, but if you are into the shares, read Eric’s article. Very informative.
Worst Month
Gold in September had its worst month since October 2008 as the dollar rose and some investors cut their holdings to raise cash amid falling equities. That month saw gold prices tumble 11 percent as the dollar rallied 6 percent against a six-currency basket and the MSCI All-Country World Index slid 9.7 percent.
“This is a restoration of a more normal relationship with the U.S. dollar,” said Richardson. Even in a flight to the U.S. dollar as a haven, there is a “reservoir of potential demand that could come in very quickly” if things start to really deteriorate, he said.
Holdings of the metal in exchange-traded products increased 3.4 percent since Sept. 30 to 2,323.5 tons and are within 7 tons of the record 2,330 tons on Aug. 18, Bloomberg data show.
While Paulson cut his stake in the SPDR Trust by 36 percent in the three months to Sept. 30, investors George Soros, Paul Touradji and Paul Tudor Jones bought shares, Securities and Exchange Commission filings show.
Richard Russell on gold yesterday:
Day after day, everyone asks whether gold has topped out. Nobody ever asks whether the market has topped out. Think about it, we’re in a low inflation, low investor fear environment, a dollar that appears to have bottomed and is now firming, and still gold holds above 1700 an ounce. This is a remarkable performance aided by heavy buying of gold in China, India, and Asian nations. But what happens when we hit the inevitable inflation; when investor’s fears are on the rise. To conclude, gold is holding well in an environment that is not bullish for gold, but in due time, the environment will turn highly bullish for the yellow metal. Do not time your gold purchases. Simply continue to accumulate gold. The skyrocketing phase lies ahead. Maybe 1-3 years ahead.
I don’t know about you, but I am speechless to see gold and silver fall while Europe burns. I heard that there were riots in the streets yesterday in Rome and Athens. This is exactly the time that precious metals should be flying. We can thank our friends, the Gold Cartel for the latest raid. This comes as no surprise to Miles Franklin or our friend Ed Steer. It should be very short lived.

The national debt topped $15 trillion on Tuesday. It stood at “just” $5.7 trillion in 2001, when George W. Bush took office. Federal debt has increased $4.407 trillion since President Obama took office. The result is a “real” inflation rate that is over 12%, according to John Williams (Shadowstats).

Why would anyone with half a brain own bonds that pay a few percent when inflation is running 12%? Gold, on the other hand, has increased on average some 20% per year, for the past decade. Gold has more than held its own.

Our friend Trader David R emailed me today and said, “If you believe there’ll be a global coordinated effort by CBs to print / QE, or at least be more dovish (choosing growth over inflation, keeping rates unchanged), then Silver is the best bet.” I have a substantial position in gold but have a much larger position in silver.

According to my friends in the business, Industry wide, sales of gold and silver are down – dramatically. I guess people are sitting on the sidelines in a state of confusion. The last few months have been unsettling to gold bugs. Should I or should I not be buying? Andy Hoffman rants about the “top callers,” and warns our readers not to listen to what they have to say. I agree. I hope you are reading Andy’s afternoon rants. I don’t miss a single one.

Next Tuesday is the December options expiry date and as usual, gold and silver are falling as we approach the expiry date. I expect December to be a strong month for gold and silver and the latest pull back is your Christmas gift – gold on sale, pre-Christmas. Christmas sales usually begin AFTER Thanksgiving, but when it comes to gold and silver, the sale is starting a bit early. I have increased my gold holdings by roughly 25% this month. It won’t be long before gold passes $2,000, never to return to these levels ever again. Jim Sinclair says, “QE to infinity, as there is no other tool to stop a run. Gold is getting ready for a trip into the $2,000s.” Trader Roger Weigand says, “Gold will soon hit $2,050 and silver $50.” Yes, indeed!

Ed Steer comments on Thursday’s takedown:
Well, JPMorgan et al certainly engineered an incredible decline in all the precious metals yesterday. Volume in both gold and silver [and presumably in platinum and palladium as well] was enormous, so I would assume that they were able to get massive technical fund long liquidation…along with all the leveraged longs in the Nonreportable [small trader] category as well. And, with no adult supervision anywhere in sight, there’s was nobody there to raise a finger in the public’s defence.
As I mentioned yesterday, I would suspect that all of this was related to options and futures expiry for the December delivery month coming up next week. I get the impression that this had little to do with the woes over in Europe. However, having said that, there’s no doubt in my mind that if the big commercial traders weren’t riding shotgun over this market, we would be enjoying spectacularly higher precious metal prices.
The preliminary open interest numbers for yesterday’s trading day showed rather large increases in open interest in both metals. It should have shown exactly the opposite if there had been massive liquidation of long positions, but ‘da boyz’ are really good at hiding their tracks when they have to…and the unfortunate thing is that we won’t know the extent of the liquidation until next Friday’s Commitment of Traders report, as the cut-off for today’s COT report was three days ago.
There are still huge open interest positions left for the December delivery month in both metals, but they always melt away as we approached First Day Notice…November 30th…and I don’t expect this month to be any different. Nobody on the Internet is talking about delivery defaults any more…as many commentators that have been doing so, have been “crying wolf” for so long on this issue, that they’ve lost all credibility. And nobody is mentioning the silver backwardation issue, either. Ted Butler was right all along…it meant nothing…which was why I stopped talking about it a long time ago.
I’m not expecting big change in the Commercial net short position in gold when the COT report comes out at 3:30 p.m. this afternoon…but, based on the price activity in silver during the reporting week, there might be a slight decline there. But I wouldn’t bet the farm on that.
All the really big declines have occurred since the Tuesday cut-off…and it’s one of the bullion bank’s favourite tricks, as they can hide what they’re doing for another week or so.
Here’s the 6-month gold chart. As you can see, JPMorgan et al were able to get enough long liquidation to penetrate the 50-day moving average to the down-side yesterday, but did not close below it, so there may be more selling pressure from them in the days ahead, just to make sure that they have gold all cleaned out once again. We’ll have to wait and see how this plays out.

Here’s silver’s 6-month chart. I’ve been warning for the last week that JPMorgan was painting this chart to ensure that the 50-day moving average was not broken to the upside…and now we’ve had a ‘failure’ at that moving average. After silver’s two dollar decline yesterday, I’m guessing that we’re back at the bottom of the barrel for silver…and back to ‘wildly bullish’ from a COT perspective.

Ted Butler was speculating yesterday that the bullion banks were using the gold price as a hammer to smash silver. Well, they were spectacularly successful in that regard. It’s impossible to tell how low they can get the price from here, because the number of speculative longs left to flush out are very few…and very far between. So if they can engineer a lower price, it’s not going to improve their short position by very much.
All I see here is another buying opportunity for the physical metal…and the shares are on sale as well.
I’ve been involved in this marked back when gold was well under $300 the ounce…and silver was under $6…and it has taken twelve years to get to where we are today…and it has not been an easy trip. It’s been an emotional rollercoaster from the beginning…ranging from elation to outright despair. Investors have to stop looking at the day-to-day fluctuations…and concentrate on the big long-term picture, as this current sell-off will also pass…just like the rest of them have.
Don’t forget that this is a controlled retreat by the bullion banks. They know that prices have been way too low for way too long, they just don’t want a runaway market. The problem is that with world financial and monetary events being what they are, I wouldn’t be surprised if it all ended badly for ‘da boyz’…and it couldn’t happen to a nicer bunch of crooks.