This whipsaw action in gold this week is directly related to the latest treasury auction. For example, the recovery yesterday for gold occurred immediately after the auction closed for that series of treasuries. The dollar was slightly weaker and yet gold was taken down early and then allowed to recover late in the session, probably as the shorts that were put on to slam it were subsequently covered.

Today we got another series of treasuries auctioned and I could see it almost tick for tick as gold and silver were walked lower at the open. The HUI stocks were down from the get-go, even though the metals were higher to start the session, so obviously some parties were well-aware of what was going on and decided to short the metals stocks ahead of the game.

As I write this, the metals are regaining most of the losses from earlier in the day, a repeat of the late day action yesterday. I chose to buy AEM today for a quick trade, just to make some money off this manipuation. I am going out for the afternoon but I believe when I get home, the metals will be higher and the HUI will be in the green, so my little trade on AEM will probably earn me a profit.

There is no treasury offering tomorrow, and the weakness in the dollar from the latest round of QE should allow gold and silver to rise with less direct intervention to paint the tape. An epic battle between longs and shorts is going on in the gold pits for sure, but the intraday action is purely driven by the efforts to unload massive bond offerings and the need to cap the metals during these auctions. None of this is going to be reported in the media, but you have to be pretty blind not to see it going on real time.

cheers!

mike