What you see in these two charts, explains Ed Steer, “was collusion by the bullion banks to rig the prices down to the pertinent moving averages in both metals, starting at the Far East open on Tuesday morning, and ending with the spike down at 8:30 a.m. in New York…. The price spike was most likely JPMorgan covering short positions in all these metals.  Platinum and palladium, too.”

Steer reprints what Ted Butler wrote in a letter to his subscribers: “What was special about silver was that it first plunged below the last remaining big moving average, the 200 day, before reversing dramatically higher to trade above all the moving averages. I’m not a technical trader, but the specific term for this abrupt move from below all the moving averages to above is, I believe, a ‘golden cross.’ I’m not sure of the significance of this price reversal, but to my knowledge I don’t think it has occurred in silver in such a short time frame, namely, within a couple of hours.”

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Zero Hedge:  World Gold Council says gold demand surges 36% In Q2

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Mineweb:  Interview with World Gold Council’s managing director

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Tim Iacono:  Mainstream media grapples with home sales plunge

MarketWatch:  Bernanke’s helicopter could move to new altitude

Reuters:  U.S. millionaire index turns sharply bearish

Hinde Capital received a great deal of attention last week for its report on “Precious Metals ETF Alchemy,” which Hinde’s CEO Ben Davies discussed in an interview with King World News.  In its August letter to investors, Hinde looks at “Silver Velocity- the Coming Bullet,” concluding that “The coming silver bullet just may be approaching faster than we could imagine.”

From the letter:

“Although the current gold/silver ratio at 65 looks to be the mean of a severe financial crisis and boom time, we believe this will become the upper band (cheaper end) of the spread. At this point in the monetary cycle we envisage the silver spread narrowing to nearer 50 or tighter this fall…. Should we see more monetisation of silver then this spread will narrow dramatically and sooner.

We believe the near term catalysts for an outperformance of silver are a pick up in monetary velocity (notably Asia), a potential cessation to excessive ‘manipulative’ silver Comex shorts by a very concentrated number of bullion banks (namely two), positive seasonals, and a trend ready silver bullion market. We believe the narrowing in the gold silver spread will be based on a superlative break out to nominal new highs.”

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Fortune:  100 fastest-growing companies (#1- Eldorado Gold)

Forbes:  America’s most stressful cities 2010

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James West, publisher of the Midas Letter, is asked by The Gold Report, “Are there any circumstances under which gold is not a good investment?“

“Oh, absolutely,” says West.  “Let’s say we have a world full of economies that shepherd their currencies responsibly and circulate only money that is essentially the equivalent of their GDP and their asset base divided by their population. There would be no reason to own gold. The systems that issue money should own the gold. If we lived in a world where our governments and our financial institutions and systems were trustworthy, there would be no reason to own gold and invest in gold.”

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Click to enlarge the above graph that illustrates the concentration of short contracts from the latest COT report for the four and eight largest traders, vs. the days of world production to cover those contracts. The number of days for silver and gold is about 90 to 165, compared to only 30 to 50 for the next closest commodities.

Ed Steer explains that “the Commercial net short position in silver sat at 262.7 million ounces. The ‘8 or less’ bullion banks that ‘do the dirty’ inside this category were short 359.3 million ounces… and hold 71% of the entire silver short position in the Commercial category. Guess who controls the price? Preposterous, isn’t it?”

He describes a similar situation in gold, “Which, in a nutshell, means that if these eight bullion banks weren’t there, the rest of the traders in the Commercial category are net long, so these bullion banks are the only thing standing in the way of much higher gold prices. And that, dear reader, is exactly why the are there. Ditto for silver… except in silver, the situation is beyond grotesque.”

Exploring a related theme, Patrick Heller asks:  “Why did the price of almost everything rise against the US dollar in the past month or so, except for gold and silver?“

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Barron’s delivers an upbeat assessment of silver in “Next Belle of the Ball?,” which quotes Robert Quartermain as pointing out that “unlike gold, in which central banks hold a sizable position and can cap price increases by selling [ or swapping ] into the market, the only identifiable supplies of silver are with exchange-traded funds and metals exchanges like the Comex, Quartermain says. With only 889 million ounces produced last year, ‘if there’s some escalation in price, there’s nothing there to slow it down,’ he says.”

The article identifies Quartermain as simply “a precious-metals investor,” but he has been a major figure in the silver mining industry, as the CEO of Silver Standard for 25 years, before retiring last January. And in a 2009 interview, The Daily Bell described him as “legendary in the field of silver mining.”

Additional Links:

Got Cold Report:  LCNS for gold falls over 73,000 contracts past 3 weeks

Zero Hedge:  LBMA closes of public access to key bullion bank trading data

Mineweb:  Gold moving towards global reserve status – Gartman

Telegraph:  The death of paper money

Fortune:  The dollar alternatives

Commodity Surge:  Bernanke’s misguided policies drive gold prices up

Reuters:  Gold rally to extend into 2011, macro fear persists

Seeking Alpha:  10 charts, 10 stories of the ‘real’ gold price

Interactive Investor:  Analysts still believe in gold

Mineweb:  Time to accumulate metals and mining stocks – UBS

MarketWatch:  Bullion buyers bank on gold coins

SilverSeek:  How to pull cash out of your silver holdings without losing ounces

Bloomberg:  Tax ‘shenanigans’ turn U.S. sales to foreign income

Wall Street Journal:  Goldman, the Movie. By Goldman

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