comments form GATA:

From Ed Steer:

As soon as the Globex opened in the Far East on Tuesday morning, both gold and silver were under pressure. This lasted until shortly after the Sydney market closed. Both metals really took off once the London silver fix was in at 7:00 a.m. NY time. However the usual not-for-profit seller(s) showed up at the Comex open and walloped their prices...and that, as they say, was that.

It was nice to see the shares recover a bit, but that had more to do with the 'gentle hands' that showed up in the Dow at that precise moment (2:30 p.m. NY time), than anything else. The Dow had rolled over big time and if the PPT hadn't intervened, it could have been ugly.

The usual NY gold commentator pointed out yesterday that gold's $40+ rise on Friday and Monday was also accompanied by a total increase in open interest of 15,915 contracts. That's a lot. Who was taking the short side? My bet is that it was whoever showed up at the Comex open yesterday.

My bullion dealer had another outstanding day on Tuesday. The buyers just keep coming out of the woodwork. The physical market must be eating the bullion banks alive. How long can they keep up these burn rates? I see that the SLV added another 3+ million ounces yesterday, while the GLD was flat.

If Monday was incredible...Tuesday was astounding. On Monday morning Paulson said that there would be no help for AIG, but less than 36 hours later, the Fed became 80% owner. I would suspect that former CEO "Moe" (Hank) Greenberg had a say in that. From now on, every trade by AIG is a trade by the government. I see that Reserve Primary Fund, the oldest money fund in the US, became the first money market fund in 14 years to expose investors to losses after writing off $785 million of debt issued by bankrupt Lehman Brothers. The decision hasn't yet been made if the fund will be wound up or not. Russia stock exchanges halted trading yesterday after a 17% share price fall. Pakistan's military has ordered its forces to open fire if U.S. troops launch another air or ground raid across the Afghan border, an army spokesman said Tuesday. And LIBOR (the London inter-bank offered rate) that financial institutions charge each other to borrow, soared 3.33 percent points to 6.44 on Monday!

Here's another story from The Twilight Zone...via Bloomberg this time. "Lehman Brothers, the securities firm that filed the biggest bankruptcy in history on Monday, was advanced $138 billion this week shortly after the pre-dawn filing by JPMorgan to settle Lehman trades and keep financial markets stable, according to a court filing. The first advance was repaid by the Federal Reserve Bank of New York, Lehman said. The bank didn't say if the second amount was repaid. Both advances were ``guaranteed by Lehman through collateral of the firm's holding company, the filing said. The advances were made at the request of Lehman and the Federal Reserve, according to the filing." Unbelievable!

The first story today is from Reuters filed out of Beijing. The headline reads "China paper urges new currency order after "financial tsunami". They would like the currency order to be "no longer dependent on the USA." The story is linked here.

The next story is the latest offering by silver analyst Ted Butler. In this essay, Butler points out that "the 'raptors' (the commercials other than the eight largest traders) have not only built up a record or near record net long position in both gold and silver futures, they have established a record long position in call options for the first time in memory." His conclusion is, that "not only are the near-always-correct raptors positioned for an upside move in gold and silver, they are positioned for it to occur soon." Let us all fervently pray that he is correct. The story, entitled "Welcome to the Jungle", is linked here.

All we can do is sit here and watch with a combination of amazement and disbelief at the speed of what's happening around us...as all the power and all the money in the world go at it hammer and tong. You couldn't make this stuff up. The whole world has become a fool's paradise...as sooner rather than later it's all going to end very badly...and it's only just begun.

See you on Thursday.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.