China first delegated the management of gold policy to the Peoples Bank by regulations in 1983. This development was central to China’s emergence as a free-market economy following the post-Mao reforms in 1979/82.

Trading in precious metals was quiet until Wednesday morning, when prices began to soften.

For gold and silver it has been a week of two halves: first prices rallied to a peak on Tuesday, then declined to show net losses for the week on Wednesday for silver and Thursday for gold.

After a prolonged period of low volatility as funds invested in ever-greater risk, markets have snapped and volatility has jumped.

This week has seen highly volatile equities (mostly down), bond yields sharply lower, the oil price hard down, and gold side-lined but recovering after a miserable month or two.

Precious metals have faced adverse weather as evidence mounts that major economies may be sliding into recession.

This week saw gold rally $15 to $1233 on Tuesday before sliding to $1207 yesterday morning, then rallying in the afternoon.

Today’s financial markets are built on the sand of unsound currencies.

Last year markets behaved nervously on rumours that QE3 would be tapered; this year we have lived with the fact.

So far this has been mainly a race to the bottom, with the dollar on the side-lines.

In a radio interview recently I was asked a question to which I could not easily give a satisfactory reply: "If the gold market is rigged, why does it matter?"

Short-sellers driving prices