By David Forest, Posted Tuesday, May 11, 2010

Chart of the week: gold's standout performance on the NYMEX.

Open interest in gold futures climbed all five trading days last week, with total contracts up 35,000. Trading volumes on Thursday and Friday were some of heaviest seen this year.

Total open interest now stands at over 570,000 contracts. By far the highest in 2010, and up 9.6% since early April.

Gold's performance stands in sharp contrast to the other metals. Open interest in silver fell 5.3% last week, while platinum dropped 4.8%.

The precious metals faired better than the base metals, however. Outstanding NYMEX copper interest plunged 10.5% on the week.

Overseas, the story was a little different.

Outstanding interest in gold on Japan's TOCOM exchange fell 5% on Thursday, triggering a rare alert on this series. Buying on Friday lifted open interest slightly, but gold still finished the week down 3.8%.

Platinum was the big winner on TOCOM, with open interest jumping 9.6% on the week. Since April 26, TOCOM platinum interest has risen a staggering 21%.

Looks like West and East have different "weapons of choice" when it comes to the investment metals.

Federal Reserve

The Fed statistics continue showing a nation trying to spend its way back to health.

Public U.S. debt jumped $95 billion on April 30, triggering the first alert on this series since late March. Large jumps in debt outstanding appear to be growing more common, although more data is needed to set the trend.

Total outstanding debt stood at $12.94 trillion for the week ended May 6.

Even as debt climbs, the monetary base is on the downswing. In the week ended May 5, the monetary base fell for the fifth week in a row. Since late February the Mbase is down over $170 billion, or 8%. Cooling time for inflation?

Treasuries

Speaking of inflation, investors still seem worried.

Yields on inflation-protected Treasuries plunged last week, as buyers piled into these securities.

Shorter-dated yields fell the most, with the 5-year inflation-protected security down as much as 28% on the week. But even longer-dated instruments were active, with the 30-year inflation-protected bond yield falling 6.4%.

Across the spread, inflation-protected yields are down 25 to 50% since the beginning of April. Investors haven't given up the fear of rising prices yet.

What's Ahead?

Keep an eye on U.S. commercial paper yields this week.

The com-paper market has been signaling troubles for several weeks, with yields rising. Rising yields were one of the first signs of trouble back when the financial crisis broke in 2008.

Last week finished in dramatic fashion, with yields on 90-day asset backed paper rising over 25%. These are the highest yields seen in this market since mid-2009, and signal that investors are jumping ship.

Most critically, yields were rising on shorter-dated paper last week. Both 7-day and 15-day financial paper triggered alerts on Thursday, with yields jumping 25% and 45%, respectively.

These markets were fairly quiet up until last week. Are they signaling a new panic emerging?