From Ed Steer:

What a day it was!

Shortly after Sydney opened, and for no reason that most people would understand, the bids just disappeared in gold and silver. Gold got off relatively scot-free...but silver took it right in the neck. In less than an hour it had fallen $1.40...and three hours later it was down about a $1.70 in total. This is only the second time that the precious metals have been hammered in the Far East markets. Both happened this week. Although things improved during London trading...shortly after the Comex opened, both metals hit their highs of the day and it was downhill from there right into the Globex close.

In Thursday's trading, gold open interest rose 2,381 contracts...and silver open interest rose as well...up 1,445 contracts. On Thursday, gold was down about $20 and silver was down about 60 cents. Open interest should have been down again, but wasn't.

As far as the Commitment of Traders went, it wasn't anything like I expected, as almost nothing happened in silver. Despite the massacre in the silver price, the tech funds only sold 908 long contracts and added 266 contracts to their short positions...so they improved by an underwhelming 1,174 contracts. That's nothing at all! The bullion banks/'8 or less' traders in the Commercial category improved their position by adding 6,342 longs, but also increasing their short position by 1,531 contracts, for a net improvement of 4,811 contracts. A lot of the action was in the small traders category where they shed 1,599 long positions and added 2,038 contracts to their short position. The big surprise was the lack of movement in the Non-Commercial long position. This is the category that the bullion banks were definitely gunning for, and almost nothing happened. Normally this is the first category to cave in. Not this time. The current COT report is linked here.

In gold, everything turned out almost exactly as Ted Butler thought it would. The Non-Commercial category coughed up 33,215 longs and the bullion banks covered 44,004 shorts. The small traders pitched 6,179 longs and went short an additional 3,857 contracts.

So, was there anything withheld from this report? In gold, everything seemed fine. But in silver, it stinks to high heaven. The numbers should have been much better than this. Once more we'll have to wait another week until the COT next Friday.

In gold news, I see that everyone's 'friend', Goldman Sachs, has slashed its forecast on gold prices. This is the second time they've changed their forecast this year. How long will it be before they have to revise it upwards again? Not that long I would think. The US Mint announced that it has suspended production of gold eagles until further notice, and is not accepting new orders from dealers. August is only half over and gold eagle sales have exceeded all other months by a wide margin. As I reported on Thursday night, everything was fine with my bullion supplier. Then yesterday (Friday) he told me that despite record orders again...every one of his Canadian and US suppliers had no product for him. He can get some gold, but he's basically out of business in silver. He said that by early next week, virtually all North American bullion sales will have ground to a halt, as nobody has anything to sell. I hope you have your bullion, because now that the pipeline is empty, it will be virtually impossible to refill.

My first story of the day is about exactly that. Here's an article by the legendary Franklin Sanders. It's entitled "Either This is the Greatest Silver and Gold Buying Opportunity of All Time, or the End of a Bull Market". The link is here.

The next two stories are a double header from spiegel.de in Germany. Both of them are about the war, pipelines and oil in Georgia and South Ossetia...and both are mercifully short. The first is entitled "Russian Army Clears Out Georgian Army Bases". The link is here.

The second bears the title of "Georgia--A Blow to US Energy". The link is here.

My 'blast from the past' today coincides nicely with a video that's all the rage right now. Conan O'Brien had a group called Pilobolus on his show late last year, and the video is making the rounds. I thank M. Cheverton who was the first one to send it to me. Turn up your speakers and click here.

So...here we sit. The number of people lining up to buy silver bullion of any kind has now swamped all available supply. There is virtually none to be had...and the price has just cratered by $7 in the last month. The dichotomy that exists between supply, demand...and the price...screams of price management! I cannot tell you how desperate the bullion banks are to get out of their precious metals short positions...especially in silver...before this whole thing blows sky high. You don't have to look any further than the collusive acts of these '8 or less' traders to find the culprits. They are shaking the Comex silver tree as hard as they can. The results from the current COT (if they are to be believed) shows that they made almost no progress in the last week. Whatever the powers that be have in store for the silver (and gold) market...we are only a few short weeks away from finding out, as they are quickly running out of time. Options expiry for silver is on the 26th. Can they hold on that long?

Enjoy the rest of your weekend...and all of us at Casey's Daily Resource Plus will see you here bright and early on Tuesday morning.

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