From Ed Steer:

There wasn't a lot of excitement in either gold or silver on Wednesday...at least nothing compared to what we've seen in the last month or so. This selloff we've had since Monday was a huge surprise for everyone. One would think that we would be at a bottom here, as there should be very few leveraged tech funds left to be flushed out of the long side. Their selling is what drives the price down. No doubt, there is more shorting going on...but all in all, I'd say we're done to the downside. But I thought the same thing in the middle of August...and look what happened.

India was closed yesterday, but the premiums indicate that huge imports are still taking place. The usual NY commentator had this to say..."Indian demand is particularly important at present, because Ramadan has started. Commercial activity in Muslim countries slows at this time.

"Yesterday's (Tuesday) $24.70 Comex slump had remarkably little effect on open interest. A decline of only 2,670 contracts (8.3 tonnes or 0.69%) is trivial compared with the 2.96% fall in gold itself. A good deal of short selling must have occurred, or perhaps selling against purchases from an exogenous seller of physical - possibly both.

"According to MKS this morning (Wednesday), there was ‘huge selling’ on the London open: gold was driven down $17 by noon UK time. Buying then emerged and carried through much of the Comex session. At the high, gold was up $18 intra-day, and closed down only $2.30 on estimated volume of 131,598...with a switch effect of some 11,000 lots.

"A serious and violent seller is about: but today (Wednesday), buying interest blocked further downside momentum."

I see that Ospraie Management LP is shutting its flagship commodity hedge fund after it lost almost 40% this year, according to a letter the firm sent to investors on Tuesday. Ospraie Managment was a stock fund, with a large portion of its holdings in natural gas companies. It had little, if any, direct exposure to futures and options either on the Comex or in the OTC. market. Ford & GM's vehicle sales were down huge...20% or more across the board. ResCap and GMAC plan to dismiss 5,000 employees and close all 200 GMAC Mortgage retail offices. And as I fire this off to my editor, I hear rumblings of big political problems that have just flared up in the Ukraine. I'll have something more concrete on this tomorrow.

The first story today is from Korea where the problems of Fannie and Freddie in the USA may be the cause of an unfolding currency crisis over there. The story, from The Times in London, is entitled "South Korea heads for black September with won problems". The link is here.

The second item is from my good friend James Turk over at goldmoney.com. James has some rays of sunshine for all of us in these dark times. It's accompanied by the usual excellent charts and is entitled "The 'Hamburger Theory'" and the link is here.

Once a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear. - Harry S. Truman, 33rd US President (1884-1972)

I see that the U.S. Mint has already stamped out 400,000 US silver eagles for the month of September. With vanishingly small amounts of 'cash and carry' investment silver (and gold) to be found just about anywhere on this planet, it's a good bet that silver and gold prices won't remain this low for very long. The physical off-take is certainly something of deep concern to the bullion banks...especially in silver. I just don't see how they can win the physical game in the end...because the lower prices go, the more people want to buy it...and the higher the prices go, the more people want to buy it. If the boyz can figure a way out of this mess without driving prices to the moon...I'd love to hear what it is.

See you on Friday.

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