Both gold and silver began selling off in London at 5:00 a.m. New York time. Then at precisely 9:00 a.m. Eastern time, a not-for-profit seller showed up, and gold and silver got smacked at exactly the same time as the dollar skyrocketed.

Gold got hit for about $17…and silver for 27 cents. No profit-maximizing seller ever sells like this…ever! As one experienced gold commentator over at Bill Murphy’s LeMetropoleCafe.com put it yesterday…”(It’s) not the action of a price-motivated long…or profit-motivated short.”

I give the cartel a 9.6/10 for this. The Kitco graph is a beauty, don’t you think? They did the dirty in 15 minutes and that’s about as vertical a line as you’re going to see..and not a stop along the way! I would have awarded a few extra marks if they had dropped the price more than $25. Maybe some other time. Too bad we don’t see many days like that when prices are rising. It appears that it only happens when they’re ‘falling’.

Gold didn’t recover a lot of ground as the day wore on, but silver almost made it back to unchanged.

Monday’s open interest numbers are interesting. Even though both metals had up days that day, open interest in gold fell another 4,929 contracts and silver was down 1,575 contracts. There are probably some June deliveries in that gold number, but nevertheless, o.i. normally increases on days that the price rises, so these are probably numbers that were from last week’s hammering that weren’t reported in a timely manner. As I’ve said many times, the bullion banks love to manage the Commitment of Traders report.

In gold news…and for the second day in a row…a major gold producing country announced that first quarter production was down. On Monday, it was Australia. Tuesday, it was South Africa announcing Q1/08 production down 15.6% from Q4/07…and down 16.8% from Q1/07. This news was not unexpected, as the power issues in South Africa have got years to run. Of course, this sort of news no longer impacts the price, since the bullion banks have a short-side corner on the gold market. Hell…production could have fallen 100% and yesterday’s price would have probably been driven down even further!

I’ve got a couple of stories today that are worth spending some time on. The first is the usual monthly epistle that comes from Eric Sprott and Sasha Solunac over at Sprott Asset Management in Toronto. The timing couldn’t be better for this piece. It’s entitled “They’re Getting Worse”…and the pdf file is linked here.

The second story is from silver analyst Ted Butler. His weekly commentary is entitled “Bubble Mania” and it’s linked here.

Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all. - Dale Carnegie

Well…the Dow got saved again yesterday. The falling knife experts swung into action around 2:30 p.m. Eastern time…just as the market looked like it was doomed for the umpteenth time this year. Their efforts were only partially successful. I wonder how they’ll make out today?

We’ll know soon enough…and I’ll be here tomorrow to talk about it. I hope your Wednesday goes well.

Source: And Then There’s This…Wednesday, June 4th, 2008