One should keep in mind that DG writes his copy in the very early morning hours to enable his letters to reach his 'subs' well before the markets open.

"Gold and the other precious metals are all sharply lower and that is as one would expect given the stronger US dollar, weaker oil prices and manifestly lower grain prices. Under those sorts of pressures, gold could not possible rally, and it has not, so logic does still prevail in the commodities markets despite suspicions otherwise at times. Further, although some view yesterday’s action in gold as overtly bearish, we view it as overtly neutral, for gold remains caught within a rather large trading range, bounded on the “north” by a massive seller who makes his/her presence known at $980, and bounded on the “south” by $880, where support has been evident several times in the past year. Within that range, our propensity to trade is limited indeed and so we stand still upon the sidelines, with discretion being the far better part of trading valor.

We do note that the gold bullion held by euro zone central banks fell by 96 million EURs (approximately $136 million) to 240.629 billion EURs in the week ending June 26 according to the ECB’s latest weekly report. This is approximately 4.3 tonnes of gold and compares to last week’s 0.9 tonnes sold. The gold bullion position fell because one legacy central bank was a seller of gold bullion itself and two other central banks were sellers of gold coins. The selling, however, was not unusual and was well within the levels “allowed” under the Central Bank Gold Agreement of ’04. Remember, under the Agreement, these legacy central banks could sell just a bit more than 9 tonnes each week and remain under the agreed upon limit. Even to those of us at NC State, 4.3 and 0.9 tonnes are less than 9.0.

Finally, the gold bulls always look to India for support, for India has been, is and shall for years into the future be the world’s largest “user” of gold. Thus, when the Bombay Bullion Association reports that India imported only 10 tonnes of gold this May compared to 18 tonnes last May the bulls have something material to worry about. Apparently, well they should."