From Ed Steer:

The gold bottom for the day was in shortly after London opened yesterday morning. Any attempt by the gold price to go parabolic was snuffed out by the not-for-profit seller(s). Gold only gained $10 by the time the Comex closed for the day. However, in after hours trading, it was a whole new ball game. Gold tacked on $35 in two hours...and at that point the bullion bank(s) pulled the pin and the gold price dropped $20 in just a few minutes. The rally attempt during the Sydney open this morning also ran into 'resistance'...and gold is down about $11 as I fire this off to my editor (4:20 a.m. NY time).

Silver was a whole different story. There wasn't a lot of volume in silver yesterday, so it was easy to push the price around in either direction. I got a couple of e-mails yesterday from people asking why silver was doing so poorly relative to gold. It could be a couple of things...firstly, silver is perceived to be an industrial commodity, and most commodities got sold off yesterday...and silver was one of the babies that got thrown out with the bath water. The US bullion bank(s) that are the big short(s) in Comex silver, were there to gobble up all these longs. Secondly, yesterday's action around the London p.m. gold fix when silver spiked from $12.65 to $13.40 had all the earmarks of the silver short(s) trying to get the 'raptors' to pitch more longs. This has been their SOP for the last week at that particular time of day. Yesterday was a carbon copy of what they did all last week. I expect the open interest numbers in silver to show a serious decline again when they're reported later this morning.

Don't forget that the tech funds will show up in spades once the 50-day m.a. is broken to the upside. Although the 20-day m.a. has been pierced...the boyz have turned the silver price down again. My guess is that the tech funds are sitting on the fence waiting to see how things shake out before they lay on any significant new long positions on the Comex again. This suits the US bullion bank(s) just fine, as this leaves them free to fleece the 'Raptors'...the only remaining longs they can possibly harvest...see Ted Butler's latest below. Gold has done much better than silver lately for precisely that reason. The 50-day m.a. has been pierced and now the tech funds are in a fight with the bullion banks. I must admit that I'm not overly impressed with the price action of either metal in the last week...but this is to be expected as the US bullion bank(s) manoeuvre the price to cover their shorts. However, the COT is as wildly bullish as it can be...and we could explode to the upside at any time. That will happen the moment that the US bullion bank(s) have covered every last short they can...but as of this writing...they're still at it.

Friday's open interest numbers were another positive surprise, as the US bullion bank(s) managed to cover more of their short positions in both metals. Open interest in gold fell 431 contracts...and silver o.i. dropped 675 contracts. As I said before, Monday's open interest numbers will be interesting...especially for silver. Before we leave the field of open interest, in trading on the TOCOM last night, Goldman Sachs finally extricated themselves from a huge gold short position that they've been whittling down for the last three and a half years. They are now officially net long a handful of contracts. You just have to know that when the criminals are going long after being short for that length of time, the end of this market rig must be in sight.

There was lots of gold news today...all of it wildly bullish. Both Germany and Switzerland announced that they would sell no more gold in the Central Bank Agreement on Gold. This was absolutely no surprise to me. I expect virtually all the signatories to follow the lead of these two countries. I consider central bank gold sales to be a thing of the past. In a story from platts.com, I see that Jeremy Charles, Chairman of the LBMA, said that due to chaotic market conditions over the past two weeks, investors are returning to gold "in a major way." (No! Really? Now there's a man with a keen grasp of the obvious...thanks for that, Charles. - Ed) And lastly, this comment was in a Reuters story out of Kyoto, Japan yesterday..."Private banks could be the next big buyers in the global gold market, helping drive prices higher as they consider restocking bullion bars that were sold off in calmer times, the top HSBC gold trader said on Monday."

I'm not even going to talk about the debacle in Washington yesterday, as I'm sure there was plenty of it on the news last night. However, if you remember my closing comment on Saturday about James Grant saying "where's the outrage?"...it's obvious that “WE, THE PEOPLE”... finally woke up. God bless every one of them! Along with Ron Paul, there were many others that stood up in the House and called it the way it was. This two minute youtube.com video of Representative Marcy Kaptur from Ohio will turn out to be a classic. It warmed the cockles of my heart no end! And watch the whole video...not just her speech! Click here.

Since we're on the subject of "outrage"...here's a photo from Wall Street on Friday that I'm sure never made any of the mainstream media outlets.

click to enlarge

Only one item today, as this rant has gone on long enough. It's silver analyst Ted Butler's latest commentary. As usual, I consider it be be a 'must read'. Today's epistle is entitled "Meet The New Boss, Same as the Old Boss?"...and the link is here.

The Lehman collapse marked the end of Wall Street risk intermediation as a significant component of system financial intermediation. Going forward, credit growth will be chiefly generated by the banking system, supported by various forms of government backing...Importantly, this new financial structure will ensure minimal risky lending as well as significantly reduced risk taking. And from a global perspective, I believe new-found fears of lending to the American financial sector marks the beginning of the end of our economy's capacity for trading new financial claims for imports of energy and goods. - Doug Noland, prudentbear.com - 26 September '08

Another $630 billion was tossed into the financial system yesterday. Fortis, and five other European and UK lending institutions were either nationalized or bailed out in the last three days. And a top Chinese banker said that other countries are unlikely to buy US bailout bonds. (Wow! Who would have thought that? - Ed) Now a world-wide interest rate cut is supposedly in the cards. As the Mogambo Guru would say..."We're all freakin' doomed!!!"

See you tomorrow.

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