"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K."
Eddie George, Bank of England, From Reg Howe v. BIS, JPM et al.
"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."
Alan Greenspan, Congressional Testimony, July 24, 1998
Stocks managed to stage a relief rally and hold the gains into the close.
The Dollar chopped sideways around the high 106 handle.
Gold and silver managed a bounce off the deep low of yesterday.
Non-Farm Payrolls tomorrow morning can move the markets based on perceptions of the performance of the economy and its effect on the Fed's decisions.
As we can see from the Comptroller of the Currency chart below, derivative bets on precious metals held by US banks exploded in notional value.
What could go wrong?
Have a pleasant evening.
