The gold price spent most of Far East and early London trading within fifteen bucks of the $1,750 mark. Two hours after London opened, the gold price rolled over and hit its low of the day around $1,700 the ounce.

After rallying about forty bucks by 8:45 a.m. in New York, the gold price revisited that low about an hour later. From there, a rally of some substance developed...and by 12:50 p.m. Eastern, gold was up almost $70 bucks from its earlier Comex low.

It basically traded sideways from there until the close of the New York Access Market at 5:15 p.m. Eastern time. Volume was monstrous once again, but not quite as high as Wednesday's record.

The silver price followed basically the same pattern as the gold price. It wasn't an exact match, but it was close enough that it deserves no further comment from me. Note the low price tick of the day that occurred shortly after 10:00 a.m. in London. I commented on that last night in 'The Wrap'...but didn't know at the time that it was the absolute low. Silver closed up $1.43 from Wednesday. Net volume was pretty chunky.

Once again, for entertainment purposes only, is the U.S. dollar chart courtesy of ino.com. The dollar spiked about 35 basis points in less than an hour starting at midnight Eastern time on Thursday morning...and one would think that it would be reflected somewhere on yesterday's gold chart...but that wasn't the case.

The gold stocks spent most of the day in the black...and rallied a bit into the close. The HUI and the Dow turned in exactly opposite performances, as the Dow sold off into the close. It was a bifurcated market yesterday, with the Dow closing down 1.51%...and the HUI closing up 1.97%.

The silver stocks were pretty much all winners across the board as well...but Nick Laird's Silver Sentiment Index was up only 0.93%.

(Click on image to enlarge)

The CME Daily Delivery Report showed that 223 gold and zero silver contracts were posted for delivery on Tuesday. The big short/issuer was JPMorgan [206 contracts] in their proprietary trading account...and the big long/stopper was JPMorgan [179 contracts] in its client account. This is another example of JPMorgan betting against its own clients. JPMorgan said they were going to end this practice over a year ago but, as these report shows, they're still at it. The link to the action is here.

There were no reported changes in GLD yesterday...but over at SLV, they had a huge withdrawal of 4,188,596 troy ounces.

There was another report from the U.S. Mint. They sold another 2,500 ounce of gold eagles...1,000 one-ounce 24K gold buffaloes...and 100,000 silver eagles.

The Comex-approved depositories reported receiving no silver on Wednesday, but shipped 396,033 ounces of the stuff out the door.

Here are a couple of more charts that Nick Laird sent me last night. These are the 95% confidence charts for both gold and silver. This means that 95% of the time, the price of these two precious metals will be found within these green bands. You'll to use the 'click to enlarge' feature to see it clearly.

Here's gold's...

(Click on image to enlarge)

The one for silver is below...and you'll notice that the 95% range is very wide. You can see that silver wants to break free from this band...and the rally that began in August last year was the beginning of that breakout, as JPMorgan began to cover their massive short position. The drive-by shooting on May 1st of this year prevented that situation from getting totally out of hand, but they can't hold back the tide forever. I would suspect that long before Christmas, silver will find a home permanently above the 95% line...and a new 95% line will have to be established.

(Click on image to enlarge)

¤ Critical Reads

Market crash 'could hit within weeks', warn bankers

Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during financial crisis caused by the US financial group's implosion nearly three years ago.

Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday.

"The problem is a shortage of liquidity – that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive.

"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.

This story was filed in The Telegraph in London very late last night...and I stole it from today's King Report. This is a must read...and the link is here.

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Professor Mundell, euro, and 'pessimal currency areas'

Here's a rather heavy duty interview with Robert Mundell, the godfather of the euro. Ambrose Evans Pritchard over at The Telegraph does the honours.

I get the impression that Mundell is trying to 'whistle past the graveyard' with some aspects of his 'legacy'...such as it is...but Ambrose is quick to poke holes in it.

It's a bit long...and rather heavy going...but it's not the parts that you don't understand that will bother you, so please persevere. I thank Roy Stephens for this story...and the link is here.

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Since ECB won't, maybe Fed will buy European government bonds

"Ben Bernanke knows his pistol is close to blanks. He is trying to weaken the dollar but it is only so long before Japan, Switzerland and others figure out how to retaliate, and if there is QE3 they will start arming themselves," he told The Telegraph.

"The question is how unconventional will Bernanke be. Will he buy equities, or real estate, until the Fed owns everything? The more illiquid assets they buy, the more difficult it will be to unwind.

"I wonder whether Bernanke might not say that 'the Europeans are our friends, and we know that the European Central Bank can't print money to buy bonds because the Germans won't let them. And since the ECB will soon run out of money, we will step in and start buying European government bonds for them.' It is something to think about," he [Myron Scholes] said.

I stole this second Ambrose Evans Pritchard offering from a GATA release yesterday...and the real title to this article from The Telegraph is "Nobel gurus warn Britain on fiscal overkill and Fed on monetary overkill". This is well worth the read...and the link is here.

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Greece forced to tap emergency fund

Greece has been forced to activate an obscure emergency fund for its banks because they are running short of collateral that is acceptable to the European Central Bank.

In a move described as the "last stand for Greek banks", the embattled country's central bank activated Emergency Liquidity Assistance (ELA) for the first time on Wednesday night.

Raoul Ruparel of Open Europe told The Telegraph: "The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding."

He added: "This kicks off another huge round of nearly worthless assets being shifted from the books of private banks onto books backed by taxpayers. Combined with the purchases of Spanish and Italian bonds, the already questionable balance sheet of the euro system is looking increasingly risky."

This is another story from The Telegraph that was filed late last night. This one is courtesy of Roy Stephens once again...and is a must read as well. The link is here.

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Chancellor George Osborne launches £5bn tax raid on Swiss bank accounts

George Osborne announced an agreement with the Swiss authorities to attempt to recover tax on an estimated £125bn kept in the famously discreet banking system.

Announcing the deal, Mr. Osborne launched a strong attack on wealthy tax evaders, likening them to benefits cheats.

Under the agreement, UK accounts held in Switzerland in May 2013 will be subject to a one-off levy that could be worth as much as 34pc of the account's contents.

Switzerland's not the 'safe haven' it used to be. This story, also from The Telegraph, is Roy Stephens last offering of the day...and the link is here.

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Interview with Doug Casey on the 'Financial Survival Network'

Here's an audio interview with Doug, by Kerry Lutz over at 1490 WGCH in Greenwich, Connecticut. I haven't listened to all of it, but I can assure that it's a must listen. It's posted over at the podbean.com website...and the link is here.

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The Central Banks and Gold

In yesterday's edition of Casey's Daily Dispatch, there's a very interesting piece written by Casey Research's own Doug Horning that is well worth your time. Here's a snippet...

"While the Central Bank Gold Agreement central banks were selling, others were buying. Now, virtually everyone has climbed aboard the train. So far for 2011, official government purchases have totaled over 200 tonnes. And the actual number is probably a good bit higher."

"Historically, the reasons for why and when central banks bought or sold gold could be complex. But the current situation is pretty clear-cut. The desire to hold the metal is strong, and even the most auriphobic central banks have gone from trailing the trend to leading the charge."

It's a short "must read"...and the link is here. You have to scroll down a bit to get to it.

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"Gold to Attack $2,000 in September" - Pierre Lassonde

Precious metal stories were pretty scarce yesterday. This King World News blog...and the one that follows below...are all I could find that I considered worth posting. This one is very short...and well worth reading. The link is here.

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Mining Shares to Outperform Gold Going Forward - Pierre Lassonde

Eric sent me the previous blog around noon yesterday, but questions kept coming in to the King World News website about mining shares, so he released a second text from Pierre Lassonde to address that particular topic. This blog is definitely a must read...and the link is here.

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GoldMoney's Turk interviews Matterhorn's Egon von Greyerz

I stole this video clip...and the introduction...from a GATA release late last night.

Egon von Greyerz of Matterhorn Asset Management in Zurich was interviewed at GATA's Gold Rush 2011 conference in London by GoldMoney founder James Turk. They discussed the weakening of Switzerland's banking and monetary systems, the country's diminishing understanding of gold, and the need for investors to own gold outside the banking system. The interview is 16 minutes long...and the link is here.

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They say the price of gas could soon be under $3 a gallon. Do you know what that means? You can now afford to drive by the house you used to live in, go by the job you used to have...and go see the bank where you used to have money. - Jay Leno

As I mentioned at the top of this column, it was another huge volume day in gold on Thursday...the second 400,000+ contract trading day in a row. But it wasn't as high as Wednesday's record, as 'only' 412,000 contracts were traded...and it's really too bad that this data won't be in today's Commitment of Traders report, so we'll just have to wait until next Friday.

Over the last four business day, over 1.5 million gold contracts have traded...and I would think that this record 4-day volume will stand the test of time for a while.

Silver's net volume yesterday was pretty chunky as well. Once the substantial roll-overs out of the September delivery month were removed, the volume number was in the 45,000 contract range...down from Wednesday's 52,000 contracts traded.

Here's the 6-month gold chart. The strong rally that followed the low price tick in early Comex yesterday morning, painted a very positive looking hammer on this chart. Ted Butler and I were speculating about whether we'd seen the bottom in gold and silver or not, as there has been massive speculative long liquidation this week. But, as always, I'm choked with caution...as I'm always on the lookout for 'in your ear'.

(Click on image to enlarge)

Silver, which was not even close to being overbought when JPMorgan et al lowered the boom on Monday, could be all cleaned out to the downside...as the low in London yesterday morning certainly looked like a bottom to Ted...especially considering the huge rally that took silver from pennies above its 50-day moving average, to almost three bucks above it, in just a few hours.

(Click on image to enlarge)

To add to this [hopefully] positive scenario, is the action of the precious metal shares during this price decline in the metals themselves. On Wednesday, the shares recovered most of their loses by the close of trading, even though the gold and silver prices continued to plunge...and then again yesterday when the Dow got creamed...and the precious metal stocks finished well into positive territory. If you read Pierre Lassonde's second blog, he mentioned that as well.

Here's the HUI for the last five days...

From its high on Monday, to its low tick yesterday, gold declined by about $225 bucks...but the HUI is only down 4.4% from its high...and from last Friday's close, the shares are flat. Maybe there are new lows in both metals still in the cards, but the bullion banks have got their work cut out for them to get the prices back down there...and lower. The 'catch a falling knife' buyers that showed up purchasing gold and silver shares on Wednesday afternoon [and yesterday] obviously know something that we don't. We'll find out if what they know is true in pretty short order I would think.

The gold price didn't do a whole heck of a lot in the thinly-traded Far East market earlier today...but is now showing signs of life in early London trading...and is up about fourteen bucks as of this writing at 5:22 a.m. Eastern time. Volume is high, but only half of what it was this time on Thursday.

Silver spent most of its time earlier on Friday well below its Thursday closing high in New York...with the low there coming just a few minutes before the London open at 8:00 a.m. BST. It's now enjoying a bit of a rally, but still not in positive territory. Volume is decent, but two-thirds of it is roll-overs out of the September delivery month.

Whether or not the bottom is in for either gold or silver, now is the time to either re-adjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Since today is Friday, I'll be amazed if it's a quiet trading day in the gold and silver pits in New York. Nothing would surprise me either up or down...however wild volatility is now the name of the game, so I hope you're ready for it.

I hope you have a terrific weekend...and I'll see you here on Saturday.