¤ The WrapWhen the goals conflict and it comes to calling for tough trade-offs, to me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target. - Janet Yellen, 1995 -- as quoted on CNBC yesterday evening. It was just another day off the calendar where neither gold nor silver were allowed to get far, and there was no follow-through allowed from Monday's jump in prices during the morning trading session in New York. The "Do Not Pass Go" line was the London p.m. gold fix once again. There were decent increases in the CME's preliminary open interest numbers for the Tuesday trading session, as it was obvious from the volume figures that the rally in gold was met by a short seller of last resort once again. But the gold and silver import figures, both current and future, for China and India should offer some comfort in the face of these artificially low prices. I would guess that this situation is being allowed to persist until China has all the gold they want/need. At that point, whenever it comes, we'll get that radical revaluation in all precious metals. Only the time line is unknown. If you read the above story about the "production cliff" for gold and silver, it's obvious this current situation can't, or won't, exist indefinitely, as it's a sure path to bankruptcy for a lot of precious metal companies at these prices, particularly in silver. And as I said further up in today's column; "One can only fantasize about the true economic impact of both gold and silver mining on the world's economy if these metals were allowed to trade at their free-market prices, instead of their current " Made in the U.S.A. by JPMorgan Chase et al" prices they're selling for right now. Gold would be priced out of reach of all but the super rich, and silver would be the new gold. Not much happened in all four precious metals in Far East trading on their Wednesday, and the same can be said now that London has been open for about 45 minutes. Volumes are pretty light, at least compared to yesterday at this time. The dollar index is in rally mode, as it's up 28 basis points at the moment. And as I hit the send button on today's column at 5:25 a.m., I see that all four precious metals got smacked at 10 a.m. in London trading. Gold and silver volumes have really blown out, and are now much higher than they were this time yesterday, and it's all of the HFT variety. The dollar index is now up 38 basis points.
The rest of the Wednesday trading session could prove to be interesting, and nothing will surprise me when I power up my computer later this morning. That's everything for today, and I'll see you here tomorrow.