“Think of gold as an irredeemable bond that pays no interest, but has no credit risk, where the issuer is God or the universe itself.”

Charlie Morris, formerly of HSBC Global Asset Management

The economic news came in badly this morning, with the ISM Index coming in much lower than expected, following the path of the Chicago PMI.

The big tickle this month is the much anticipated Fed meeting at which they are expected to raise rates 25 basis points off zero. There is no real economy reason for them to do this, with the US recovery wavering and parts of the world slipping into recessions with high unemployment. 

But as we know, the Fed would like to get their rates off zero, so they can cut them again when their latest asset bubble collapses and we have another financial crisis.

Gold and silver had a bit of a relief rally today, as the US Dollar was off a bit. It is still grossly overvalued to support a real economic recovery.

And, at long last, we are in the precious metals active month of December!

We saw that rare animal, a ‘delivery’ of gold at The Bucket Shop warehouses, with Nova Scotia tossing up 36 contracts from their house account, to be taken mostly by the house accounts at HSBC and JPM.

Do you notice how the bullion banks seem to be shepherding the scarce deliverable bullion amongst their own house accounts?

And that is a far cry from silver, which saw one of the biggest one day deliveries last Friday, in case you did not notice from the delivery report posted here last night.

And we followed that up yesterday with some customers from ABN Amro, Goldman, and Merrill puking up their bullion, to be snatched up by the house accounts of HSBC, JPM, and Nova Scotia.

The deliverable gold in the warehouses continues on the low side at about 121,000 ounces available to be delivered at these prices.

This does not mean the Comex will default. This does not pose any particular conundrums either. It just fits the pattern of Comex as The Bucket Shop, with its gold trading being mostly paper trades settled in cash with little actual bullion involved, in sharp contrast to silver.