ed steer of casey research comments on yesterday's wild trading in precious metals.:

Gold did virtually nothing from the Globex open in New York on Tuesday evening...right through until the Comex open in New York on Wednesday morning. Then the selling pressure began in earnest. From the small vertical drops in price, it appeared that one or more not-for-profit sellers were pulling their bids...and each time they did...the price dropped vertically. These small waterfall declines are typical of the bullion banks. The bottom was in shortly before lunch in N.Y. From there the price rose slowly. Then at 2:15 the FOMC came forth with their two stone tablets and all hell broke loose. There was a gold price melt-up...as there were bids, but no ask...exactly the reverse of what happened earlier in the day. It made for a few exciting moments...and a great gold graph.

In silver, the selloff was much more pronounced...with the bids being pulled three distinct times...and a stair-step decline ensued, with the bottom at the close of floor trading on the Comex. As Ted Butler says, this is the metal that's at the center of the universe for the N.Y. bullion banks.

If I sound underwhelmed, it's because the price of both metals are only back to where they were a few days ago...if that. Yesterday was a flash in the pan. It's what happens from here on in that counts. Yesterday I said that I would be happy if the bullion banks would take both gold and silver below their respective 50-day moving average just to clean out the last of the tech longs. Well... they obliged me...big time! Now, from a technical point of view, the decks should be clear for a major rise in the price of both metals. It just remains to be seen how much opposition this rally will run into. Will the bullion banks [mostly JPMorgan] take the short side of every trade on the way back up...i.e. the 'same old, same old'...or will they let the metal run a bit before they step in? The price action and the Commitment of Traders report will tell all.

Tuesday's price action [such as it was] brought an increase in gold open interest of 1,147 contracts...and in silver, o.i. fell a smallish 201 contracts. And it nearly goes without saying that yesterday's open interest numbers will be something to behold when they're released shortly after twelve noon New York time today.

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