they can call it market intervention instead of manipulation, but no matter how you slice it, the physical market has become divorced from the futures market. the government won't sell gold eagles, and no one will silver at these prices.

http://caseyresearch.com/displayDrp....

Peter Spina, of Goldforecaster.com, who is nearly always clearheaded about these things, wrote: “The short-covering rally in the dollar is a prime driver for the pullback in gold prices and that was aided by free market intervention by Central Banks. All this has done is provided additional time before the serious nature of the financial crises has to be once again confronted … The ingredients are in place for a significantly higher gold price and this short-term anomaly only means that gold can still be accumulated sub $1,000 an ounce. The rapid rate at which dollars are being created (according to shadow stats the no longer published M3 is expanding at double digit rates) remains the primary driving force in the gold market, this cheap monetary policy will continue to debase the value, integrity and confidence in the faith-backed Dollar. Competitive paper money devaluations will enhance gold’s luster going forward as hundreds of billions of fictitiously created paper currency is used to continue these monstrous bailouts with government deficits rapidly growing.”

And Jim Sinclair, writing on jsmineset.com, added: “Certain hedge funds went broke on other items. They were holding gold and the last of that was thrown into the market to sell after cash gold broke $800. Margined gold holders went in mass into negative cash positions which resulted in them being sold out last US evening … As gold hit its lows … over $40 off I am told the Chinese entered the cash market to take the layoff in cash gold off the bankrupt hedge funds and negative value sellouts in the paper market. You have seen massive involuntary liquidation last US evening.”

and from ed steer:

In gold news, I see that everyone's 'friend', Goldman Sachs, has slashed its forecast on gold prices. This is the second time they've changed their forecast this year. How long will it be before they have to revise it upwards again? Not that long I would think. The US Mint announced that it has suspended production of gold eagles until further notice, and is not accepting new orders from dealers. August is only half over and gold eagle sales have exceeded all other months by a wide margin. As I reported on Thursday night, everything was fine with my bullion supplier. Then yesterday (Friday) he told me that despite record orders again...every one of his Canadian and US suppliers had no product for him. He can get some gold, but he's basically out of business in silver. He said that by early next week, virtually all North American bullion sales will have ground to a halt, as nobody has anything to sell. I hope you have your bullion, because now that the pipeline is empty, it will be virtually impossible to refill.