Gold didn't spend much time below $1,900 the ounce in Far East trading on Tuesday morning...and by the time London opened for business at 8:00 a.m. BST, gold was up about twenty dollars from Friday's New York close....a new record high price tick.

Then the selling began...and the bids got pulled at 9:00 a.m. in London...and gold was down $50 in just minutes, but rallied back to just about unchanged almost immediately. The gold price continued to get sold off until shortly after 12 o'clock noon in London...7:00 a.m. in New York...but from there a rally began that took gold back over its Friday closing price.

The New York high was at the London p.m. gold fix at 10:00 a.m. Eastern time...and gold hung onto the $1,900 spot price level until London closed for the day at 11:00 a.m. Eastern. Then a not-for-profit seller showed up at precisely 11:00 a.m...and the gold price got hit for around $35 during the next hour. Gold didn't do much after that...closing the trading day down $26.70 from last Friday's close. Volume was huge.

Silver pretty much followed the same price path as gold...but the price was more 'volatile'...with silver's absolute low of the day coming shortly before 2:30 p.m. Eastern time in the thinly-traded New York Access Market, where only the New York bullion banks can play.

From its high shortly before the London open, to it's low in New York, silver got hit for about $1.75...but only finished down 91 cents from Friday's close. Volume was very heavy as well.

All the precious metals got hit pretty hard. Gold was down 1.41%...platinum down 1.75%...palladium down 1.45%...and silver down 2.12%. Silver had the biggest intra-day price swings of all the precious metals by a country mile.

I'm including Tuesday's dollar chart. It had its low at 9:00 a.m. London time...and then climbed pretty steadily from there. By the time trading closed the dollar was up about 100 basis points. If you check the dollar chart against the gold chart, it's a real stretch to say that there was much co-relation.

The high for the gold stocks was the London p.m. gold fix...and even though gold got hit really hard from that point on, the gold stocks spent virtually the entire day in the black. The HUI finished up 0.61% despite the pounding gold took...and despite the fact that the general U.S. equity markets got smoked. I'm super impressed by the performance of the gold stocks in the face of the multiple headwinds they faced yesterday. This positive price action has been going on for a couple of weeks now. As I keep saying, what do these deep-pocketed buyers of precious metal mining shares know that we don't know...yet? I'll have more on this in 'The Wrap'.

And despite the fact that silver got it in the neck yesterday, Nick Laird's Silver Sentiment Index only finished down 1.04%.

(Click on image to enlarge)

The CME Daily Delivery Report showed that 69 gold and 10 silver contracts were posted for delivery tomorrow. Nothing to see here, folks...please move along.

There were no reported changes in GLD or SLV yesterday.

The U.S. Mint had a smallish sales report yesterday, selling another 81,000 silver eagles.

And, for the first time in a very long time, the Comex-approved depositories didn't receive or ship a single ounce of silver last Friday...so they made a four day long weekend out of it.

My bullion dealer did a roaring business in silver yesterday, as there were lots of dip-buyers out there just waiting for a day like yesterday.

I had an interesting e-mail from one of my readers yesterday that I felt was worth sharing...and here it is...

Hi Ed,

"I bought gold on the Australian market on Monday [by phone] and I had trouble getting a trader they were so busy."

"We didn't buy coins in Edmonton after all because we found out just in time how difficult the search by customs is on the way back. And indeed on the border of Vancouver Island and Washington State, on getting off the ferry in our car, we were quizzed at length about whether we had bought more that $10,000 worth of goods while we were in Canada. We were glad we could answer no, or I suspect we would have been slammed with a customs duty bill. Or worse. I wonder if anyone knows what they would have done about gold coins in excess of $10,000."

Here's a graph the Nick Laird over at sharelynx.com just whipped for us. It shows that the intervention in the gold market started about 4 minutes before the Swiss broke the news on the devaluation yesterday.

(Click on image to enlarge)

It should be obvious to just about anyone that the intervention in the gold market and the revaluation of the Swiss franc was a co-ordinated move by the central banks of the world. You'll read more about it in a King World News story where Eric interviews Ben Davies.

I'm sure glad that I decided to post a column on Tuesday, as I have just as many stories today as I had yesterday. The really big news yesterday was the surprise devaluation of the Swiss franc by pegging it to the euro...and I have quite a few stories about that.

¤ Critical Reads

When it comes to the crunch with the euro, economics will trump law

As the euro crisis has intensified, so the previously unthinkable has become the subject of widespread discussion. People have woken up to the idea that the euro could break up.

There is no provision in any European Treaty for a country to leave the eurozone. That was deliberate. It was intended to make it clear that the eurozone was forever – like the Soviet Union and the Holy Roman Empire. But in fact you cannot legislate for changing economic conditions or changes in peoples' attitudes.

Countries have left monetary unions before. When the Soviet Union broke up in 1991, several new currencies had to be invented out of nowhere. Yes, there was chaos – and there would surely be chaos for a time in the eurozone. But it could be done. When it comes to the crunch, what is and is not in the European Treaties will become irrelevant. Economics will trump law.

Roy Stephens sent me this story from The Telegraph late last night...and the link is here.

View full GSD edition

Swiss bid to peg 'safe haven' franc to the euro stuns currency traders

The Swiss National Bank in effect devalued the franc, pledging to buy "unlimited quantities" of foreign currencies to force down its value. The SNB warned that it would no longer allow one Swiss franc to be worth more than €0.83 – equivalent to SFr1.20 to the euro – having watched the two currencies move closer to parity as Switzerland became a "safe haven" from the ravages of the eurozone crisis.

The move stunned currency traders, and sent the Swiss franc tumbling against other currencies. Jeremy Cook, chief economist at currency brokers World First, said it was "intervention on a grand scale", and the start of a "new battle in the currency wars".

This story was in yesterday afternoon's edition of The Guardian...and I thank Swiss reader G.B. for sending this along...and the link is here.

View full GSD edition

Yesterday's intervention against gold was as brazen as the intervention against the Swiss franc

But no central bank acknowledged the intervention against gold. It is still a covert action in the currency war. At least the currency war itself is starting to be acknowledged.

The Swiss National Bank shocked markets on Tuesday by setting an exchange rate cap on the soaring franc to stave off a recession, discouraging investors anxious about flagging global growth from using the currency as a safe haven.

Using some of the strongest language from a central bank in the modern era, the SNB said it would no longer tolerate an exchange rate below 1.20 francs to the euro and would defend the target by buying other currencies in unlimited quantities.

I borrowed the title, the first paragraph...and the Reuters story from a GATA release yesterday. The Reuters headline reads "Swiss draw line in the sand to cap runaway franc"..and the link is here.

View full GSD edition

Another Reason to Buy Gold: Franc Losing Safety Status

Just as talk had begun to intensify about a gold bubble building, the metal got another boost today when the Swiss National Bank announced measures to decrease the value of the franc.

The SNB's move was widely viewed as positive for gold because the metal will gain even more popularity as a safe-haven investment of choice.

"With Japan massively intervening in the (currency) market and the Swiss effectively curbing the safe-haven status of the Swiss franc today, we only really have gold as the last-standing safe-haven currency around," David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto, wrote in his daily note. "While the US dollar has liquidity, it unfortunately has a debt burden alongside it that gold does not."

This must read cnbc.com story came from another GATA release...and the link is here.

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Central banks smashed gold ahead of Swiss devaluation, Davies says

Hinde Capital CEO Ben Davies remarked to King World News yesterday about the suspicious pounding of gold in the minutes just prior to the announcement of the Swiss franc's devaluation, which would have seemed hugely supportive of gold as the only remaining safe-haven currency.

In regard to gold, Davies says: "Why was it selling off just ahead of a really bullish announcement? You have to believe that there was some coordinated action. The central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn't want the price of gold to skyrocket on what is incredibly bullish news for gold."

I borrowed the preamble from another GATA release...and the link to this must read KWN blog is here. The KWN title is "Silver headed to $65 and gold to soar".

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Gold is leaving other markets behind, Naylor-Leyland tells CNBC Europe

Ned Naylor-Leyland, investment director of Cheviot Asset Management in London, was interviewed on CNBC Europe this morning. Naylor-Leyland emphasized that gold is dissociating itself from other markets, going higher when other markets are going lower.

Chris Powell has more to say in his introduction to this video...and the link to the GATA release is here.

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Swiss franc's devaluation, impending disaster make gold look good, Faber says

Financial letter writer Marc Faber told King World News last night that gold is a good hedge against financial assets and will start to look better still now that the Swiss franc has been pegged to the euro. An excerpt from the interview is headlined "This Will End in Disaster and You Must Own Gold"....and I once again I thank Chris Powell for providing the introduction. The link to the KWN blog is here.

View full GSD edition

Asian exchange will kill London shorts, Andrew Maguire tells King World News

Silver market manipulation whistleblower Andrew Maguire told Eric King how the new Pan Asia Gold Exchange is likely to demolish the bullion bank gold and silver shorts in London. The blog is posted at the KWN website...and is headlined " LBMA Shorts Will be Forced to Take Losses"...and the link is here.

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Romania wants to double gold reserves, maybe by buying domestic production

Here's a Bloomberg story filed form Bucharest, Romania on Monday that came to my attention via another GATA release yesterday.

Romania's central bank will analyze the future structure of the country's international reserves and a possible increase of the gold reserve, Mediafax reported, citing Governor Mugur Isarescu.

The bank's policy board will discuss a proposal made by President Traian Basescu to double the country's gold reserves to almost 200 tons in the following period, after developing the Rosia Montana gold mine, together with Gabriel Resources Ltd. (GBU), Isarescu said in a speech in the southeastern city of Constanta, according to Mediafax.

There were only two paragraphs in the entire article...and you just read them. The link to the original story is here.

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The death of liquidity: Ted Butler

Volatility in gold and silver futures prices reflects a worsening decline in liquidity in those highly manipulated markets, silver market analyst Ted Butler writes. That decline in liquidity, Butler believes, shows that the manipulation is coming to a close.

This is Ted's commentary from a week ago. I urged him to post this in the public domain...and here it is. This is about a clear a picture as you'll ever get as to what may be going on under the hood over in the Comex futures market in both gold and silver.

The story is posted over at silverseek.com...and the link to this absolute must read essay, is here.

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To ask for actual “collateral” in return for lending to governments is to explode the facade of the sanctity of government borrowing. It asks an unanswerable question about the real backing of modern “money”. In reality, there isn’t any - for the very simple reason that no government can create wealth. They can only confiscate it from those who do. This demand for collateral is the “end game” for ALL fiat moneys. - Bill Buckler, The Privateer, 04 September 2011

Yesterday's net volume in gold, once you take out Monday's trading volume, came in around the 325,000 contract mark...and silver's volume [net of Monday's volume] was 'only' 52,000 contracts.

I've already said everything about yesterday's gold and silver price action that's necessary, as Nick Laird's graphs tell all.

The central bank intervention yesterday has now been trumped by what happened in the thinly-traded Far East market during the lunch hour in Hong Kong earlier today...and about half past midnight New York time...where an obvious massive bear raid took place against both metals.

I got these incredible 1-minute tick charts of both silver and gold from Nick Laird over at sharelynx.com in the wee hours of this morning...and this is what Nick had to say about the gold chart..."something very rare to see - a massive $15.61 gap down in gold when shown in 1-minute ticks. I watch these charts all day and you never see a gap like this, ever...and it stands out like the proverbial dog's balls. Within 2 minutes gold fell from $1,866 down to $1,816. This seems a direct attack, as other currencies are not showing any radical moves."

Mr. Laird states the obvious...a direct attack it was. I urge you to use the 'click to enlarge' feature to bring it up to full size on your screen so you can examine it closely. All times are local times in Cairns, Australia...Eastern Australian Standard Time...which is GMT+10 hours.

(Click on image to enlarge)

If you note the platinum and palladium charts for the same time period, they barely moved...so this attack was obviously gold and silver specific...and as Nick stated, there were no currency movement associated with them.

I thanked Nick profusely for the effort he put into preparing these charts on our behalf.

Volume in gold is about three times what it normally is this time of day...and silver is about double. Hopefully all of yesterday's price and volume action will be reported in a timely manner in this Friday's Commitment of Traders Report...as Tuesday was the cut-off.

I'm not sure whether this is the last act of desperation by the JPMorgan et al or not...or whether it's the start of something more serious. Whatever it is, there's nothing free-market about it. Ted Butler warned about wild volatility and liquidity [or lack thereof] in his essay...but this is something entirely different. Terra incognita it is.

And as I've pointed out many times during the past two weeks, there has been massive accumulation of precious metal shares by someone with monstrously deep pockets. As I stated further up in this column..."What do they know that we don't...yet?"

Are they buying for potential profit when gold and silver prices explode...or are they buying to smash the gold and silver indexes in a general equity sell-off like we had in 2008? Don't know...but both possibilities are floating around in my head. I'm always looking out for 'in your ear'. We'll find out soon enough which scenario is the right one.

One thing you can take to the bank is the fact that the SEC, CFTC...and your gold and silver companies that you own shares in, will do precisely nothing to help us...let alone admit publicly that there's anything amiss. We are truly on our own, so we're just going to have to gut it out.

I haven't the faintest idea of what's in store for the precious metals going forward from here...but at the moment, the dynamics of the market have changed in the last twenty-four hours...and it's impossible to read. And, as I said yesterday, I'm making this up as I go along.

See you tomorrow.