May 22 – Gold $658.80 down $3.80 - Silver $12.89 down 14 cents
The Jury Is Still Out
"It has long been an axiom of mine that the little things are infinitely the most important." --- Sir Arthur Conan Doyle
GO GATA!
The AM Fix came in at $663.50, up 90 cents over the prior Comex close, indicating that despite the flood of central bank/GLD gold hitting the market, the cash market remains firm.
However, The Gold Cartel has no intention of letting gold move right back up if they have their say. To help their "say" they go to the Comex in a continuing effort to turn funds and specs into sellers via their derivatives operations. 
It’s not working to the degree they are used to. While certain funds are dumping, other specs are jumping in on the buy side. Perhaps they are being joined by others who want to price gold on the long side, taking advantage of this cabal-induced sell off. The gold open interest went UP 2727 contracts to 408,718 on yesterday’s modest rally.
Nonetheless, the sellers leaned on gold all session long in very quiet trading conditions. In the end it was enough to make gold close on its lows late in the day. The onus is back in the bulls' hands to turn the market around. Should The Gold Cartel be able to take out $655 and close gold below there, we are in trouble. 
All one has to do is make mention that silver has a chance to pop to the upside and it acts crummy soon thereafter. While gold made new lows on the close, silver closed on its lows.
The silver open interest rose 274 contracts to 109,364.
GATA’s James Turk (http://www.goldmoney.com.) is as sharp as they come. He took some time from his busy schedule in the Middle East to send his thoughts re the latest GLD activity:
Bill
I'm in Dubai, so with the time change and my meeting schedule, I'm not able to call, but I wanted to relay to you my thoughts about the big GLD drawdown, which is being taken as bearish news by some. The big GLD drawdown also has a bullish side to it. It all depends upon how one views GLD.
If one views GLD as I do (that it's another tool of the gold cartel to manage the gold price), ......this big drawdown may mean that the gold price is getting ready for a big upside move. Friday's Commitment of Traders report (which was extraordinary because of the commercials adding to their longs while also covering shorts) is saying basically the same thing. In fact, I think the unusual trading activity in futures reported by the COT and the big gold drawdown within GLD are interrelated.
The demand for physical metal has been surging, so as I see it, available metal in GLD was tapped over the past few weeks to meet this demand because not enough physical gold was available to the gold cartel from other sources, including central banks. In other words, in order to keep the gold price under pressure (and below the key $700 level) the gold cartel had to pull some of its own metal out of GLD to do it.
This conclusion is built upon an important premise. The gold cartel carries an inventory of physical metal for its trading needs. When GLD came along, I believe the gold cartel put most if not all of its working inventory of metal into GLD enabling this weight of metal to do double duty by enabling the cartel to trade both its traditional physical side and the new GLD.
In other words, to make use of GLD as a gold-price capping tool, the cartel has to trade GLD and own GLD shares. So over the past few weeks it turned in those shares and redeemed metal. This metal represents a large portion of the gold cartel's working inventory of physical metal, which they now have to re-build. That's very bullish because now the gold cartel is competing with other buyers of physical metal. So unless the central banks step up to the plate by putting more physical metal into the market, we're headed over $700 in my view, notwithstanding the usual seasonal factors which often cause the gold price to be weak at this time of the year.
The GLD drawdown also explains the highly unusual COT report on Friday showing that dealers not only decreased their shorts, but increased their longs by 35 tonnes. The rule of thumb is that the forward market in gold is ten times bigger than the futures market. So assume that the cartel also added 350 tonnes of forwards as well. These numbers then start to get fairly close to the 469 tonnes taken out of GLD.
In other words, the gold cartel went long in the paper market, thereby enabling them to make sure they at least still had claims to the same weight of gold they need for inventory, even if they didn't have the metal in hand. In this way, they are protected. They can call for deliveries as those contracts mature in case they cannot in the meantime re-build their inventory of physical metal from other sources before those contracts mature. Also, losing that much metal from inventory may have left the cartel with less upside price exposure than they wanted, having now flushed out the big trend-following tech funds. So to re-gain that price exposure, the gold cartel added longs in futures (and presumably forwards too, although we don't know for certain about the forwards because there is no reporting of forward activity like there is with futures through the COT report).
The gold cartel cannot just rely on its shorts in the paper market (forwards, futures, options etc) to cap the gold price. They also have to continue feeding physical metal into the market to meet the demand for physical metal at these price levels because that demand is greater than the 205 tonnes of gold that mines are putting into the market each month.
The physical demand for gold is higher than it would be if the gold price were not capped by the gold cartel. Therefore, the market is not in balance -- the gold price is too low for that to happen. So the demand for physical metal is higher at these levels than it would be if gold were trading at a higher (and market balancing) price. As a consequence of this imbalance, a big drawdown in GLD stocks at a time of high physical demand is to be expected if GLD is being used by the gold cartel as another price-capping tool.
Remember, when it comes to markets, the obvious is not necessarily the right answer, particularly in a market as opaque as gold. So the big drawdown in the GLD gold stock is not necessarily bearish, even though at first blush a bearish view would seem to be the obvious conclusion.
In the end, it comes down to one's own subjective judgement. What are you going believe and rely upon? The reported GLD stats, or an ounce of gold in your hand. 
Regards
James