Thursday's trading activity was another one of those days that made no sense whatsoever...at least no sense in free-market terms.

For the second day in a row there was a big decline in the dollar. On Thursday, that decline began at 2:00 a.m. Eastern right on the button...and really began to accelerated to the downside shortly before 7:00 a.m. in New York...with the bottom coming at half past lunchtime on the East Coast. The drop was an eye-watering 120 basis point in the world's reserve currency from high to low. That's 1.5%.

Since Monday, the dollar has lost about 2.75% of its 'value'. This is a monstrous decline for any currency...but for the world's reserve currency, it's almost a crash.

Since their Monday lows to their closes yesterday, the CRB is up roughly 3.2% and the CCI is up 2.8%.

What has gold done since its Monday low to its Thursday close at 5:15 p.m. Eastern? It has risen a net $8.70...and silver is up a whole four cents.

If you think that something does not compute here...you would be right about that.

Both metals should have been screaming to the upside...but they were not...and the sell-offs at 9:00 a.m...plus the ones in electronic trading the moment that Comex trading ended at 1:30 p.m. Eastern time yesterday afternoon, reeked of price management by the 'usual suspects'.

The gold price was under selling pressure right from the Far East open on Thursday morning...and that decline began to accelerate as the dollar decline began at 2:00 a.m. Eastern time. However, at 7:00 a.m...when the dollar really fell of a cliff...gold began to rise quickly and went parabolic once trading began on the Comex yesterday morning. That rally got hammered at 9:00 a.m. sharp...and gold got sold off until about 10:30 a.m. From that low, it was a struggle for it to get back to Wednesday's closing price...and it didn't quite make it. Then, the moment the Comex closed at 1:30 p.m...someone pulled the pin...and that, as they say, was that.

Gold's high at the 9:00 a.m. peak was $1,394.10 spot...and the low, around 3:40 p.m. Eastern time, was $1,368.60 spot.

As is always the case, the silver price was more 'volatile'. It, too, got sold off starting shortly after trading began in the Far East yesterday morning...and was down over 50 cents at noon in London...which is 7:00 a.m. in New York. Silver, too, began to rally...just like gold...but ran into a JPMorgan-constructed wall at precisely 9:00 a.m. Eastern time. After that, the silver price never had a ghost of a chance to recover...and when the Comex closed at 1:30 p.m. Eastern time...it was lights out. Silver's high was $29.81...and it's low was $28.51...a $1.30 spread.

Here's the New York spot silver market on its own. Just look at the precision of the JPMorgan-led bear raids at 9:00 a.m. and 1:30 p.m. The NY spot gold chart looks similar...but the silver chart is more spectacular. There's nothing free-market to be seen here. And don't forget that the dollar was down 1.5% yesterday as well.

Platinum and palladium also got smacked at the same 9:00 a.m. time as gold and silver...but did not get hit after the Comex close. That travesty was only visited upon silver and gold.

I've already said everything about the dollar's Thursday performance that I'm going to. Here's the graph.

Here's the 1-year dollar chart to put this week's dollar price action in some sort of perspective...and it ain't pretty.

The CME's Thursday delivery report showed that 32 gold contracts were posted for delivery on Monday. JPMorgan was the only issuer out of its client account...and the Bank of Nova Scotia was the only stopper.

The GLD ETF showed another decline...this one was reported as 204,951 ounces. SLV showed no change. The U.S. Mint had no sales report on Thursday.

Over at the Comex-approved depositories, they reported receiving a net 530,040 troy ounces of silver on Wednesday. The link to that action is here.

¤ Critical Reads

Europe fears motives of Chinese super-creditor

Today's first story comes from Europe. I mentioned yesterday that Portugal dodged a bullet with their 'successful' bond auction...and that China was one of the big buyers. That fact didn't get past Ambrose Evans-Pritchard over at The Telegraph...and here's a story that he posted late last night that's headlined "Europe fears motives of Chinese super-creditor". This is a long piece for Ambrose...but it's worth the read. I thank Roy Stephens for sharing it with us...and the link is here.

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France and Germany veto increase in EU rescue fund

Also in this column yesterday, I posted a story about a hoped-for increase in the European Union rescue fund. Well, Germany and France shot that idea down in flames. Here's another Ambrose Evans-Pritchard offering [courtesy of Roy Stephens] on this subject that's headlined "France and Germany veto increase in EU rescue fund". This rejection once again exposes serious differences at the heart of the monetary union. It's a slightly shorter piece than the first story of the day...and I think it's worth skimming...and the link is here.

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The World from Berlin: 'Europe Has to Stop Appearing Like a Headless Chicken'

Here's another story about the EU rescue fund...but this one is seen through Germany's eyes. Roy Stephens dug this one up over at speigel.de yesterday...and the headline reads The World from Berlin: 'Europe Has to Stop Appearing Like a Headless Chicken'. Being a farm boy back in my youth, I have first-hand experience with headless chickens...and understand this story all too well. The link is here.

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Banks repossessed 1 million homes last year — and 2011 will be worse

Next is a story about U.S. real estate foreclosures that is posted over at msnbc.com...and it's courtesy of reader Phil Barlett. The headline reads "Banks repossessed 1 million homes last year — and 2011 will be worse". Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages...and more will miss payments as they struggle with job losses and loans worth more than their home's value, industry analysts forecast. The link is here.

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2 dead, 4 injured in Chile gas hike protests

Next is an AP story posted at businessweek.com that I stole from yesterday's King Report. Earlier this week I reported about food price riots in Tunisia and Algeria. Now it's gas price riots in southern Chile. The headline reads "2 dead, 4 injured in Chile gas hike protests". The link is here.

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Brent Crude oil hits two-year high of $98

The price of oil has been rising steadily since last June...and the problems with the Alaska pipeline have certainly exacerbated the current situation. Here's Roy Stephens last offering for today's column. It's a piece out of Tuesday's edition of The Telegraph...and the headline reads "Brent Crude oil hits two-year high of $98". “There are quite a few good reasons that could explain and verify the current high oil prices,” says Myrto Sokou, analyst at Sucden Financial. “The recent shut in the key Trans Alaska pipeline, forecasts about heavy winter conditions in the US North East, as well as strong equity markets, could provide further support to crude oil prices. It might be fairly soon that we can see the oil prices back to the $100 level." The link to the story is here.

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James Turk: Momentum Toward Hyperinflation Is Accelerating

My first gold-related story of the day is a blog posted over at King World News. I'm just going to steal Chris Powell's intro from his GATA release...and post the link. Interviewed by King World News, GoldMoney founder and GATA consultant James Turk remarks that soaring inflation with commodities soon will prompt more increases in gold and silver prices. Excerpts from the interview are headlined "James Turk: Momentum Toward Hyperinflation Is Accelerating"...and the link is here.

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US Mint Reports Unprecedented Buying Spree Of Physical Silver

The next story has to do with the huge number of silver eagle sales that have occurred so far in January. Reader 'David in California' sent me the following story headlined "US Mint Reports Unprecedented Buying Spree Of Physical Silver" that's posted over at zerohedge.com. I am of the opinion [and I stated so in my January 4th column] that the U.S. Mint's reported sale of 1,696,000 silver eagles on January 3rd...the first working day of January...were actually sales that should have been reported in December. December sales are normally the largest of the year...and the 1,772,000 that were 'officially' reported in December, were way below what they should have been...and these additional sales weren't reported in a 'timely manner'. The 3,407,000 silver eagles reported 'sold' in January is way above the mint's capacity to produce them during this short time period. But even if you take that January 3rd sales number out, what's left is still pretty impressive. The link to the story is here.

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House Joint Resolution No. 557

Last week I ran a short story about the Virginia legislature "Establishing a joint subcommittee to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System." Here is the actual document itself entitled "House Joint Resolution No. 557". I thank reader Deborah...from cold, snowy Ohio, as she puts it...for sending it along. It's posted over at the virginia.gov website...and the link is here.

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The golden wall of worry: The average gold timer is cautious...a good sign

My last offering of the day is courtesy of reader Scott Pluschau. It's a piece from Wednesday that's posted over at the marketwatch.com website. It's commentary by Mark Hulbert that's headlined "The golden wall of worry: The average gold timer is cautious...a good sign". It might appear that way to the casual viewer of the gold market’s gyrations over the last six weeks. But, below the surface, gold’s bull market has been strengthening. In times like these, a story such as this is a must read...and the link is here. The 2:27 minute imbedded WSJ video interview with Mark is worth watching as well.

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The true danger is when liberty is nibbled away, for expedients, and by parts ... the only thing necessary for evil to triumph is for good men to do nothing.- Edmund Burke

Yesterday was not a great day. To watch 'da boyz'...or whoever it was...butcher silver and gold prices during thin electronic trading after the Comex close...was not a happy experience for any of us. But this is not the first time that this has happened. If you remember 'the day of infamy' on December 7, 2010...it happened then for the very first time. I bitched and screamed about it then...but we went on to set new highs by the year end, so we have to keep things in some sort of longer-term perspective here.

Volume in both metals yesterday turned out to be very heavy...at least according to the preliminary report from the CME's website. Volume, net of roll-overs in gold, was just north of 200,000 contracts...and in silver it was close to 70,000 contracts. Open interest changes for Wednesday showed that gold o.i. was up a smallish 1,189 contracts...and silver's o.i. was up an equally smallish 728 contracts. I wasn't expecting big changes...and there weren't any.

Needless to say, I'm looking forward to seeing what the open interest changes are for Thursday's trading action when they're posted on the CME's website later this morning. But, knowing these crooks the way we do, they probably hid their tracks well...and we'll have to wait until next week's COT to find out what really happened.

As painful as it is to live through, the only saving grace is that the internal market structure of both metals is considerably strengthened...even though the bullion banks are using highly illegal means to do it. On engineered sell-offs like this one, they are covering shorts as fast as they can...or going long. All the new Comex longs in the futures market that were placed earlier this week, were blown out of the water yesterday.

As you are aware, this big sell-off began from the moment that trading began in the New Year...and I'm wondering if all these European bond auctions this week are the reason that both metals are being held so closely in check...despite the precipitous drop in the dollar. I must admit that I'm only guessing here...but it's one possible explanation.

Having said that, except for yesterday, volumes have not been particularly heavy this week...as there has been no headlong rush into either metal. If there was, the price action [both up and down] would have been far more violent as the longs poured in...and as the bullion banks went short against all comers. As I said, except for yesterday's big 9:00 a.m. hammering...and the 1:30 p.m. take-down...it's been a low volume week.

Don't forget that JPMorgan is still on a mission to get out of their short positions...primarily in silver, but gold as well, as the last Bank Participation report showed...and today's Commitment of Traders will show when it's released at 3:30 p.m. Eastern time this afternoon. The link to that report, when it's released, is here.

I note that both gold and silver worked their way slightly higher until early Friday afternoon Hong Kong time, then immediately headed south from there. So far there's not much in the way of change from yesterday's closes...but I would not be surprised to see the silver price forced down further in order to break it below its 50-day moving average. 'Da Boyz' came close yesterday...and it remains to be seen if the can/will finish the job during trading in New York today. Silver's 50-day moving average is sitting at $28.37...which is less than fifty cents below its current price. As of 4:55 a.m. Eastern time, volume is already pretty decent in both metals.

I know it's hard to think of precious metals investment opportunities at a time like this, but as I've mentioned before, the time to buy is when blood is running in the streets...and there's certainly been a lot of that this week and last. There's still time to either readjust your portfolio...or get fully invested in the continuing major up-leg of this bull market in both silver and gold...and I respectfully suggest that you take a trial subscription to either Casey Research's International Speculator [junior gold and silver exploration companies], or BIG GOLD [large producers], with all our best [and current] recommendations...as well as the archives. A subscription to the International Speculator also includes a free subscription to BIG GOLD as well. And don't forget that our 90-day guarantee of satisfaction is in effect for both publications.

Have a good weekend...and I'll see you on Saturday.