From Ed Steer:

Gold didn't...or wasn't allowed... to do much of anything all through Far East and European trading on Wednesday. Gold managed to tack on about $20 in Comex trading in New York, only to have the usual not-for-profit seller show up for the second day in a row to take away all that gain...and a little more.

Silver took off in Comex trading in New York as well. The price was up about 90 cents before the market managers showed up there too. By the time the boyz were through, both metals closed lower than their Tuesday closing prices...and an excellent rally in the HUI crashed and burned. Volume on the Comex was extremely light in both metals.

Open interest for gold on Wednesday showed a sharp decline of 21,153 contracts. However...9,134 contracts were delivery related, which automatically decreases open interest. But the 12,000 or so net difference is nothing to sneeze at. Much to my surprise, open interest in silver was up 1,936 contracts. I was expecting a decline of at least that much on such a huge drop in price. Ted Butler said it may be new shorts being placed by tech funds. Since it happened on Wednesday, these numbers won't be in the COT until October 10th.

In gold news, my usually reliable source had the following goodies for me: The Royal Canadian Mint will not be making any more investment-sized gold bars for the rest of this year. And, until further notice, they are not taking any new orders for silver or gold Maple Leafs either. In other news, the word is out that A-Mark has virtually nothing left in its inventory to sell. They're probably not alone, as I would think that that condition exists just about everywhere in the world right now. There was no change in GLD yesterday after that 30 tonne increase over the previous two days. And no change either in the SLV, after a decline of 1.6 million ounces two days ago.

I see that the new $700 billion dollar package passed by the Senate last night now has a clause in it about suspending the "mark-to-market" accounting provision. (That still won't make them solvent - Ed) In a Financial Times story "The $54 Trillion credit derivatives market faces its biggest test in October as billions of dollars worth of contracts on now-defaulted derivatives on Fannie Mae, Freddie Mac, Lehman Brothers and Washington Mutual are settled." (Some big losses/profits coming...if the counterparties can afford to settle! - Ed) The ISM manufacturing index got crushed yesterday...down to 43.5! The new orders sub-component tanked to 38.8 in September from 48.3 in August! The other numbers in the report were just as bad. (These numbers are way below plain vanilla recession levels. - Ed)

Today, I can only whittle it down to three stories. The first two are about the unbelievable goings-on in the European financial system, as governments over there are in a panic to back their banks. It's beyond belief how bad it is...and the whole thing has fallen apart in just the last three or four days.

The first story is from Ambrose Evans-Pritchard at The Telegraph in London. Ambrose says it's ironic that European banks have turned out to be deeper in debt than their US counterparts. The story is entitled "Financial Crisis: So much for tirades against American greed". A 'must read' and the link is here.

The second story is from The Times of London. The headline reads "France seeks US$300 billion rescue fund for Europe." His proposal was greeted with skepticism in Britain and outright hostility in Germany. Will the euro or the European Union survive this? (I doubt it . - Ed) The link is here.

And to finish on a more 'positive' note, here's the latest from James Turk over at goldmoney.com. It's entitled "We are in the Sixth Inning" and the link is here.

Fiat money, in extremis, is accepted by nobody. Gold is always accepted. - Alan Greenspan

With the House to vote on Paulson's $700 billion on Friday, I wonder if the PPT will throw a scare into them by letting the markets have another big down day (or two) between now and then? I'm sure that would convince a lot of politicians to vote the 'right' way this time. We'll find out soon enough.

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.