The fundamentals for gold and silver are, if anything, better than they were a week ago, before Bear Stearns collapsed. A major broker-dealer goes bust, the Fed cuts interest rates by 75 basis points, and the precious metals go down?? That might be perfectly normal in some Bizarro world, but it doesn't make sense to me.
This is what I believe really happened. Bear Stearns had a large position in gold, and a huge short position in 10-year Treasuries. The Fed/JP Morgan liquidated both positions, driving gold (and silver) down, and the U.S. up, at least a little, when it should have been down sharply.
The proof of the pudding is in the price of silver. It closed at $17.21 on Friday. Yet coin and bullion dealers all across the country are reporting shortages of physical silver. It's not that they don't want to sell silver, they just won't sell it for $17.21. They know about the games being played on the COMEX, and that $17.21 price is pure BS. On Friday I searched through several dozen transactions on eBay and the lowest price I could find in a completed auction was about $21/oz. Most auctions went for $22-23, and some were even higher. This morning I received an e-mail from J. Daniel Rare Coins offering $20 to BUY silver eagles. Heaven only knows what they plan to sell them for. I would guess it won't be $17.21.
A lady walks into a butcher shop to buy hamburger, and the butcher says it's $1.75/lb. The lady complains that the butcher down the block sells it for $1.50/lb. So he asks her, then why don't you buy it from him, and she says because he's out of it. So the butcher says, "Lady, when I'm out of hamburger, I sell it for $1.25!"
Hang on to your silver and silver shares. This too shall pass.
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