We Saw Silver Slide, Palladium Plunge, Platinum Plummet and Gold Go Down - Why?

Three days ago we saw silver slide, palladium plunge, platinum plummet and gold go down. Some of this alliteration is a bit drastic, but the point is that we saw all metals, not just precious, fall.

Gold bullion prices dropped to $1,386.50 from $1,398.50. London’s immediate delivery fell 1.5%. This is a notable drop from the November 9 intraday high of $1,424.60. Silver hit $29.34 on November 9. This was the highest it has been since 1980 (nominally). Palladium futures dropped 1.2%, with a nine year high of $743.50 on November 9 and Platinum futures dipped 1.7% to $1,715.90 an ounce. On November 9 prices reached $1,811.80. I am wishing I sold on Nov 9 and bought back…but hindsight is a killer!

Why did all this happen as consumers are still hedging inflation and running from the dollar? Much how China crashed the REMX party, it greatly affected the greater commodities market. By manipulating their lending and deposit rate, it temporarily stifled the demand for the metals. China, after all, is the largest buyer. China’s one-year lending rate to would change to 5.81% by the end of 2010. This is up 0.25%. The deposit rate would also climb 0.25% to 2.75%.

This makes the Yuan stronger and hence makes metals cheaper. Americans are vain to think the price of everything, or anything, is based solely on the US dollar. This is a strong currency, but with China being the largest buyer, we are beholden to there actions.