according to ed steer, the recent plunge in the price of silver and gold had nothing to do with the us dollar; it was entirely due to the usual shorting of paper metal on the comex:

From Ed Steer:

From the close of trading in New York on Wednesday afternoon at 5:15 Eastern Time...and the close of trading 24 hours later on Thursday at the same time...the U.S. dollar lost about 90 basis points. That's a big drop. Gold's response? Up three bucks...and silver was actually down on the day.

Yesterday's low tick on the U.S. dollar occurred around 2 p.m. in New York at 79.72 cents...plus or minus a couple of ticks. Gold's peak price in the first few days of June was around $990...when the dollar printed a low of about 78.70 cents. In five weeks, the U.S. dollar has gained a full cent [one percent and change], while the US$ gold price has been hit for 77 big ones. That's a drop of 7.8%.

The point I'm making here is that this decline in the gold and silver price over the last five weeks has had nothing to do with the dollar. It has been entirely dependent on who is buying or selling contracts on the Comex...and how many. Of course large and long-term moves in the US$ make a difference...especially if you look back ten years.

But right now, the dollar has been trying mightily to rise since its low in the early days of June...and this is the best it could do...so far. In order for gold to get sold off heavily from here, we will have to see a real [or manufactured] rally in the US$. It's so much easier for 'da boyz' to hit the precious metals when the dollar is rising. This week the U.S. Treasury has been busy selling oodles of paper products [about $125 billion worth]. Eager to buy them are other central banks, not because they want them, but because if they didn't, the world's financial system would disintegrate right on the spot.

So, regardless of what the dollar does, both gold and silver could explode to the moon tomorrow if the four bullion banks that are sitting on their respective prices would either start covering their grotesque short positions, or fold their arms and do nothing...i.e. don't go short against virtually every long that's being placed...which is what they've been doing now for the last 10+ years.

The changes in open interest for Wednesday's price action [as reported by the NYMEX] were a joke. Wednesday was a huge down day in both gold and silver and there was big liquidation...but the numbers, once again, did not show any sign of that. Gold o.i. actually rose 1,058 contracts to 374,043...on monstrous volume of 145,432 contracts. Silver o.i. was also reported as being up...515 contracts to 100,891...on 26,823 contracts traded. There are only two explanations for this dichotomy...the numbers were either not reported in a timely manner, or someone is lying big time. Ted Butler figured that there were about 15,000 gold contracts and maybe 3,500 silver contracts liquidated on Wednesday. So...where are they? Hopefully they will show up in today's report when it’s released later this morning.

Today's Commitment of Traders report will be issued at 3:30 Eastern time today, and I will report on it on in my Saturday commentary. For those of you who can't wait...and want to see the report the moment it's posted...the link is here.

The Comex Delivery Report yesterday showed that 30 gold contracts and 61 silver contracts were delivered. There were no changes in the alleged holdings of either GLD or SLV...and the Comex-approved warehouses reported that a further 563,172 ounces of silver were withdrawn from their inventories.

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