now read it 3 or 4 times from top to bottom and maybe that will give you some clues.

From Ed Steer:

Gold started making an upwards move at precisely midnight on Thursday night. It, and silver, rose until shortly before 6:00 a.m. New York time, when both mysteriously started to sell off. Gold popped a bit on the New York open, but about an hour after that, a not-for-profit seller showed up and escorted the gold price into the same down-trend that silver was experiencing.

Without doubt, if the upward price trends had continued in New York trading, the 20-day moving averages in both gold and silver would have been broken decisively, and the black boxes that the tech funds hold near and dear, would have generated a buy signal. If that had happened, then we would have had serious moves to the upside in both metals...similar to what platinum and palladium had. But with the US$ heading lower and oil screaming higher...and the futures market showing a lousy opening for New York equity markets...it wasn't allowed to happen.

Both silver and gold recovered most of their "losses", but the damage had already been done.

Thursday's open interest numbers were textbook. With strong gains in both metals....gold o.i. rose 5,483 contracts, and silver o.i was up 833. A lot of those long contracts that were put on on Thursday, got stopped out yesterday, and that was one of the reasons that the prices fell as quickly as they did. Once the boys get the avalanche started and the sell stops are hit, it just builds on itself.

And now for the Commitment of Traders report. Surprisingly, silver was almost a yawner. The Non-Commercial/tech funds pitched longs and put on short positions to the tune of about 1,400 contracts. The Commercial/bullion banks reduced their short position by the same amount...give or take. A lot of the drop in open interest for the week (5,447 contracts) was spreads and deliveries. The '8 or less' in the Commercial category of traders now hold 79% of the entire silver short position on the Comex, down from 83% last week. Hey...we almost have a free market in silver now!

But gold was different. The Non-Commercial/tech funds sold longs and went short to the tune of 4,700 contracts...and the Commercial/bullion banks added 7,035 longs, but went another 4,281 contracts further short. In a longish telephone conversation with Ted Butler, he pointed out three things; 1) The net Commercial short position sits at 182,700 contracts. 2) The '4 or less' traders are short 180,600 contracts...about 99% of that amount. 3) This is the first time ever...ever...that the '8 or less' traders have increased their short position on a price decline. There is absolutely no precedent for this and he has no idea what to make of it. Normally, the '8 or less' traders in the Commercial category are covering their shorts as the tech funds in the Non-Commercial category pitch their longs...or go short. Well, not this time! Oh, by the way, the '8 or less' traders in gold now hold 79% of the entire Comex short position in this metal...exactly the same amount as in silver.

I would bet some serious money that the 79% that these bullion banks hold short in both gold and silver, are held by exactly the same institutions. Neither the CFTC/COMEX will enforce the existing commodity laws against them, and the mining companies won't do a thing on your behalf either. As Ted Butler has said countless times, and I totally agree...until this situation is resolved...nothing else matters in the precious metals world. A serious analysis of the price structure of both metals is meaningless unless it takes this 'elephant in the living room' into account...which the vast majority never do.

Let me put this another way. If you or I (plus 7 friends) held a 79% position in any commodity, long or short, against thousands of other traders...would you have to even ask who would be in total control of the price?

And an even bigger question is this one. When the prices of gold and silver finally make it to that magic place where it generates a 'buy' signal for the tech funds, who is going to be going short against their long positions...because somebody has to. Will it be the '8 or less traders' who already hold 79% of the entire Comex short position in both metals? How big will the CFTC/COMEX let it get...85%, 89%, 94%...100%? Because if they don't go short...who will? And another equally important question at that time will not only be who...but at what price?

I have two commentaries today. The first one is a GATA release of a Financial Times article entitled "The Dollar Danger is Not Over Yet." The link is here.

The second essay is by Doug Noland over at David Tice's site...prudentbear.com. This is his latest commentary from last night entitled "A New Inflationary Epoch". Scroll down about three quarters of the way to find it. This is not only a 'must read', but I would give it wide distribution as well. The link is here.

Today's 'fun' video is courtesy of a kind reader of my daily rant. I'd like to thank Ron S. a whole bunch for sending this along. It's a goody! This is one of those "truth is stranger than fiction" stories. Enjoy. The link is here.

The action begins again on Sunday night when the precious metals market open in the Far East. I'll be sitting in front of my computer screen, beer in hand, and I...and the rest of the CDR+ gang...will be here on Tuesday to report on it.

Enjoy the rest of your weekend.

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