My apologies to the Danes, because the real rot and stench seems to have its origin here in the good old USA.

Monday was an oddly mixed day for the precious metals, with silver up, gold down, and platinum flat. Gold fanciers had to be a bit disappointed, as the usual suspects moved in its favor, with oil rising and the dollar slipping vs. the euro.

However, gold was competing with the greenback for investors’ interest, as those who have been sitting on cash went stampeding back into equities. As I write this the stock market is again retreating despite the US government's plan to spend a quarter of a trillion dollars to buy bank stocks.

“The price movement of gold demonstrates how quickly demand for a safe haven could fade,” said Peter Fertig, analyst at Dresdner Kleinwort. And vice versa, we might add.

The steps being taken to avert a world financial crisis seem to have reassured stock markets. But in the long run, are they gold positive or negative? In its Monday Gold Report, USAGold.com writes:

“According to this morning's [G7] press release, ‘swap lines between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded. The Bank of Japan will be considering the introduction of similar measures.’

“These latest measures come on the heels of last week's announcement by the ECB that they would provide unlimited euro funds to financial institutions …” And, “The UK has already announced a £500 billion bailout of their banking sector …

“Unlimited dollars. Unlimited euros. All but unlimited sterling. We are talking about a global re-inflation on a massive scale … We've recently seen gold set new all-time highs against euro and sterling. Gold nearly set a new record high against the Swiss franc.

"Given ongoing strong demand for physical gold and incredibly tight supplies, one has to wonder how long the dollar gold charade can be maintained.”  A very good question indeed.

Memories of gold's and silver's collapse last Friday are alreay beginning to fade. Monday and Tuesday so far have seen both gold and silver have decent up-days with demand beginning to pick up.  Speaking of last Friday's curious reversal:

 Peter Spina, president of GoldSeek.com had the following comment. “The true gold market price is nothing close to the current paper gold price.” Spina added that, “The disconnect between paper gold price and the physical gold price will not last.” 

There's a weird contradictiion between the price of the Gold ETF (NYSE:GLD), the silver ETF (AMEX:SLV) and the scarcity of the physical metals and coins.