i think that is part of the story, but ed steer thought it was short covering as indicated below. the institutions still move into treasuries when they want safety, to such an extent that they have driven the t-bill yield down to none percent. but i don't think anyone will be happy with that yield for long even with the stated inflation rate of 5%, let alone the 15-20% shadowstats figures. i still think they will be able to hold this mess together until the november election.

However, the most interesting aspect of the huge run-up in prices on Wednesday was the fact that gold o.i. only rose 809 contracts! The biggest one day price move in gold in history and that's all? Even more incredible...silver o.i. fell a stunning 4,432 contracts on a $1.50 price move to the upside! If these numbers are true, then this could have been a short covering rally on a massive scale in both metals.

There could also have been spreads lifted as well, but it's a strange time of month to be doing that. I wonder if it was the bullion banks themselves covering their shorts...shorts they couldn't cover on the way down, they're covering now...and that's why the price rallied. It could have been...and that's why nobody showed up to stop them. They were the buyers! Is this a fact? No, but it jibes with the open interest numbers. If this is true, it's hugely bullish. I'll report Thursday's o.i. on Saturday. Too bad this info won't be in the COT until the 26th.

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