From Ed Steer:

Well, with the US$ down a half a cent, and decent gains in both platinum and palladium, you have to be pretty much brain dead not to have seen the footprints of the Gold Cartel in the gold and silver markets yesterday.

It all started the moment that Sydney closed on Monday afternoon...1:00 a.m. Monday in New York. From that point on, only Hong Kong [and the New York Bullion Banks] is a player. As I've said before, the New York banks [or their agents] can, and do, enter the markets whenever they want.

Gold sold off about five bucks with a smallish rally starting shortly after 12:00 noon in London. That lasted until the equity markets opened at 9:30 in New York...and then it was lights out...as gold got hit for $11 bucks. Once London closed for the day, the pressure was on again [both in Globex trading and electronic trading after], and gold closed nearly on its low of the day. June gold finished the floor session at $921.70, down $9.60. Estimated volume was a heavy 130,095 lots. And all things considered...the precious metals equities did surprisingly well. I find that encouraging...fingers crossed!

As egregious as the activity was in the gold market...silver really got it in the neck. As with gold, silver also began selling off at the same time. In the five obvious bouts of selling yesterday, silver lost 30 cents. The first was in the Hong Kong market shortly after Sydney closed, the next at the London open, thirdly...after the London silver fix around noon in London, fourthly...at the opening of the New York stock market...and lastly, in electronic trading on the Globex starting shortly before the equity markets closed. Here's the Kitco graph...

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The usual N.Y. commentator had the following observations..."UBS notes this morning that they have been surprised by jewelry demand in the past six weeks, observing that 'this is the first time we have seen any noticeable jewellery demand above $900/oz and in particular, the buying from India suggests that demand later in the year should increase a lot ahead of the Diwali festival...'. Vietnam gold stood at a $26.21 discount to world gold this morning. The unofficial Dong rate continues soft. This level, if sustained, will probably mean exports.

"Friday's modest $2.90 Comex again saw a substantial increase in open interest. ScotiaMocatta described gold as being 'well offered' at $930, which was clearly true. Gold's friends in the West have once again been reminded that breakouts attract opposition. An interesting account of the Paulson firm's gold involvement is linked here."

The breakout to which the N.Y. commentator refers, is the reverse head and shoulders technical pattern that has been building for the last while. The graph below [stolen shamelessly from James Turk over at goldmoney.com] indicates the current situation. It's obvious the crooks at JPMorgan et al can read a chart as well as anyone. They would love to break this chart pattern.

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In other gold news, gold open interest rose once again last Friday. It was up another 4,507 contracts to 367,232...on volume of 116,949 contracts. Silver o.i. went the other way, with o.i. down 1,664 contracts to 94,496 on smallish volume of 17,525 contracts. As was mentioned in the first paragraph, volume in both gold and silver yesterday was pretty big...and it will be fascinating to see what happened to the open interest numbers when they become available later this morning.

It was a slow day for Comex deliveries yesterday...only five gold [and four silver] contracts were delivered. Over at the Comex-approved warehouses yesterday, another 479,227 ounces were added. As far as I can tell, there was no action in the GLD or SLV either. It was also a slow week at the ETFs in Zurich, Switzerland...as the Zürcher Kantonalbank reported that during the last week, their gold ETF only added 6,780 troy ounces...and their silver ETF added a smallish 175,543 ounces. Things were a littler busier over at the U.S. Mint, as they added to their update from Friday. One ounce gold eagle mintings increased another 3,500 to 53,500...while silver eagles tacked on a substantial 512,500 to bring May's total up to 1,602,000.

And lastly in precious metals news, is this story from Peñoles in Mexico. Last week I mentioned that even though the strike was over at their precious metals smelter, the declaration of force majeure had not been lifted. Well, a Reuters story posted yesterday, made it official that it now has. I thank Ted Butler for sending me the piece entitled "Mexico Peñoles lifts force majeure at MetMex plant" and the link is here.

In the 'other news' category, I see that Moody's has lowered Japan's AAA Foreign Currency Credit Rating to Aa2. [Can a downgrade of U.S. paper be far behind? - Ed] In a piece from the Sydney Morning Herald in Australia, I note that "China is pumping more money into US Treasury bonds, recent data show, despite concerns expressed in Beijing in recent months over the safety of dollar-linked assets." In a Bloomberg piece filed from Bejing comes this headline..."China's stockpiles seen as new sovereign wealth strategy"..."China is stockpiling commodities such as copper and iron ore as part of a reallocation of its sovereign wealth amid concern that the value of its dollar assets may decline, according to the Royal Bank of Canada." And in another Bloomberg story, it is reported that both LIBOR and the TED Spread are now almost back down to levels they were at when the financial crisis first erupted in August 2007..."People have become a bit more relaxed now because we haven’t had any bad news recently" said a Germany-based financial commentator. [If that isn't a sign that the next down-leg is imminent, I don't know what is. - Ed] And lastly [with my thanks to Bill King over at the King Report] comes this story from The Times of London [Jerusalem]..."America’s spy chief was sent on a secret mission to Israel to warn its leaders not to launch a surprise attack on Iran without notifying the US Administration. As Binyamin Netanyahu, the Israeli Prime Minister, prepares to visit Washington, it emerged yesterday that Leon Panetta, the head of the CIA, went to Israel two weeks ago. He sought assurances from Mr. Netanyahu and Ehud Barak, the Defence Minister, that their hawkish new Government would not attack Iran without alerting Washington." [Excuse me for thinking otherwise, but this seems like Israel has basically been give then green light for "bombs away!"..."It's OK to bomb the hell out of Iran, but please let the U.S. in on it before the first one hits the ground."...or am I missing something here? - Ed] For inquiring minds, the article is linked here.

Besides the two stories already embedded in this rant, I've got five more...and I'll use the fact that it was a weekend as my excuse for having so many. The first is from Zimbabwe, where Robert Mugabe's rule has produced a hyperinflation that has destroyed the currency...and the country. Here is a brief report on daily life in that strife-torn country. The piece is entitled "Dust & Rust"...and I thank P.S. for sending it along. The 'must read' link is here.

It is with a certain amount of fear and trepidation that I follow the Zimbabwe story with one about California. It may be an outrageous comparison, but I see some similarities. We'll find out about that in the fullness of time...and not too much of it either...if any of these similarities are realized. The article is from The Economist and I thank Craig McCarty for sending it along. It's entitled "California: The ungovernable state" and the link is here.

Next comes the latest commentary from Texas Congressman Ron Paul. In his weekly column the heading reads "Audit the Fed, Then End It!" I could not agree more...and the sooner the better! I [once again] thank P.S. for sending me the story and the link is here.

The following is a story in from the businessinsider.com about the Federal Reserve. If further proof of Fed incompetence is needed...it's right here. All you have to do is listen to "Elizabeth Coleman Inspector General" speak. As the story says..."It's pretty much a trainwreck." I thank Casey Research's own John Grandits for sending it along. The headline reads "Rick Santelli Says: Watch This Video Of A Clueless Fed Inspector General" and the link is here.

And lastly is silver analyst Ted Butler's latest commentary. In this week's essay, Ted speaks of the current condition of the Commitment of Traders report and then delves into the bowels of the Silver Institute's Annual World Survey. Needless to say, he finds it deficient in many respects...and he really pulls his punches in his comments about the Silver Institute, GFMS and CPM...as I have said far worse in my own commentaries regarding these morons. Anyway, the article is entitled "Silver Surplus?" and the link is here.

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Inflation is a disease, a dangerous and sometimes fatal disease that, if not checked in time, can destroy a society. - Milton Friedman

Inflation in one form or another is almost upon us. The downgrade that Moody's just gave Japan was another shot across the bow for that country...as they are about to monetize their debt on an even larger scale as their economy's death spiral worsens. Soon, all countries will be forced to face that fact. Then what of their currencies, as they inflate...or die? Friedman also said that "The fate of a country is inseparable from the fate of its currency." That theory is about to be put to the test...and that's why you should own all the physical gold and silver you can afford.

See you on Wednesday.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.