The past three days depicted on this Kitco chart show a precipitous drop in gold prices, from about $1815 opening on Wednesday to a $1657 close today - and that price was after gaining some ground back from an intra-day low of about $1630. Silver didn't escape, either, going from over $40 to an intra-day low of nearly $30/oz:
To some degree, it's a "perfect storm" of the market pressures from the impending European collapse, the reaction of worldwide stock markets to the Federal Reserve's "Twist" (bond swap) announced a couple of days ago, and a repeat of something which happened a few months ago and brought silver down from about $50/oz to closer to $40: an increase in margin requirements.
According to Zerohedge, CME announced large increases in margins required. The document from CME is there.
And there you have it: CME just hiked gold margins by 21%, silver by 16% and copper by 18%. Mystery solved.from a slightly more recent update:
Everyone knew they (ed. - the margin hikes) were coming... Just not when. Now that the gold liquidation frenzy has struck we still don't know much if anything: who was it, why, and where did the money go? Some rumors have it as a bank in Central, Eastern Europe unwinding massive PM positions, which if true is paradoxically bullish for gold and silver as reported previously, as it means the already tight liquidity situation in Europe is about to come to a head, possibly as soon as this weekend. Others speculate it was a plain vanilla satisfaction of collateral requirements by a big funds who may or may not be liquidating and who have sizable gold positions. Or, the simplest explanation, was it simply an expectation (and leak) of a gold margin hike?Interestingly, this writer put out a newsletter 10 days ago predicting gold would go back to "the 1650s". In other words, he felt this would be the price level just on his technical analysis and without considering changes in margin rates.
While it can be argued that the Fed's recent actions really can be interpreted as more money dumping (QE666), the stock markets really didn't take it that way. I've heard two different explanations for the stock market crashes, both of which make sense. First, there's no doubt that the EU is in deep crisis, and the commitment of Germany to not let Greece - and the EU - fail, just might pull them all into the abyss, and markets are scared of that. Second, the US stock market in particular (Europe to a lesser extent) was expecting a real QE from the Bernank and are throwing a temper tantrum over not getting their free money. Yeah, it's the behavior of two year old spoiled child, but that pretty much describes Wall Street most of the time.
For longer than I can remember a distinct starting point, the rule of thumb on commodities was "buy the dip" (or BTFD as they say on Zerohedge - and you can figure out the F all by yourself). This is definitely a dip. I've already heard of local coin shops saying they will not sell their silver coins at less than a $38 or $39 spot price today, not believing for an instant the price is going to stay down.