ed steer of casey research explains the decline in precious metals:

Monday's [and this year's] gold price action [and the media comments about it] were nicely summed up by Bill Murphy over at lemetropolecafe.com yesterday. Here's what he had to say..."Today, [the press] are all reporting again that ‘gold is down on strong dollar’, even though from the time gold hit $990 two weeks ago the dollar has done nothing more than rise from 79.5 to 80.5, a whopping 1% change compared to the $70 decline in gold and $2.50 drop in silver thanks to massive COMEX shorting. Apparently, the deflation scapegoat is back in fashion for describing gold's decline.

"Even more comical is realizing that when gold hit $1,007 in February, just four months ago, the dollar was 87.5, or seven points HIGHER than today, and the Dow was 7,200, or 1,500 points LOWER than today. Back then, 10-year Treasury yields were below 3%, compared to closer to 3.75% today, and ‘Dr. Copper’ was $1.50 compared to $2.20 today! Thus, that gold SURGE clearly coincided with real ‘deflation fears’, as opposed to today when the press reports that gold is now plunging due to ‘deflation fears.’

"Not only that, when gold hit $1,030 in March 2008, the dollar was 77, or three points LOWER than today, while the Dow was 12,500, or 4,000 points higher today."

If you're confused...you shouldn't be. The gold price is not joined at the hip with the US$ or the Dow...it goes up or down depending on who is long or short on the Comex...nothing else. Did the gold or silver price go down because of the US$ on Monday? No it didn't. It [and silver] only declined because the price was engineered lower. Does the gold chart above look like normal market action...moving with the US$ tick for tick...or does it look like someone's dicking with it? You have to be deaf, dumb, blind and/or stupid not to recognize price management staring you in the face yesterday.”

Changes in open interest for Friday's trading made no sense to either Ted Butler or myself. Gold open interest fell 3,372 contracts to 373,641...on volume of 64,694 contracts. Silver o.i. went the other way...up a whopping 3,640 contracts to 111,380...on volume of 32,130 contracts. Ted said [and I totally agreed] that this big o.i. increase in silver must have been spread related. Monday's trading activity in gold wasn't very busy either...about 87,800 contracts...a quiet day. Friday was quiet as well [64,694]...so it must be the summer doldrums setting in.

In other gold news, I note [with some surprise] that the Comex Delivery Report stated that there were no deliveries in either gold or silver yesterday. That's the first time that's happened since I've started reporting these numbers. There were no changes over at SLV...and GLD holdings slipped a very minor 29,260 ounces. And over in Switzerland at Zürcher Kantonalbank, I see that their gold ETF reported a tiny increase of 1,534 ounces...while their silver ETF added a more respectable 176,273 ounces. I thank Carl Loeb for those numbers. The U.S. Mint was kind enough to update their eagle production numbers yesterday. Since they reported last week, they have minted another 15,000 one ounce gold eagles...bringing June production up to 93,000. In silver eagles, they minted another 325,000...now up to 1,770,000 for the month. And over at the Comex-approved warehouses...another 262,325 ounces of silver were withdrawn.

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