From Ed Steer:

The top was in for gold and silver at 3:00 a.m. New York time yesterday morning...and the bottom came with a mini waterfall decline at the London p.m. fix. From there, they both gradually recovered until regular Comex trading ended. In after-hours Globex trading, both metals were flat.

Below is the Kitco silver chart for the last three trading days. The cut-off for this week's COT report was at the end of trading on Tuesday at 5:15 p.m. Eastern time, so there's about seven hours of Tuesday's trading data in New York that's not shown here. You can see from this chart, that the '1 or 2' US banks that are the big shorts in the silver market, started the sell-off between 3:00 a.m. Eastern time and the open in London. Almost without exception, the high of the day was at the point where the interventions began. In three trading days, silver got hammered for two bucks...virtually all of it in New York trading on the Comex. None of this data was in yesterday's COT report. Now we have to wait until next Friday to see what they did immediately after Tuesday's cut-off. This is deliberate. They did it exactly the same way the previous week. Gordon Gecko from the movie Wall Street has got nothing on the criminals that are beating the living crap out of the precious metals right now.

click to enlarge

In the bizarro world of open interest we live in these days, the huge smash-down in gold and silver on Thursday produced an increase in gold open interest of 8,016 contracts! So what's all this nonsense in the press about gold falling because of "fund liquidation" on Thursday? This is the sort of drivel that passes for intelligent gold commentary these days...and it's pure BS! Silver o.i. was up 81 contracts on its big losing day. There are only three reasons why open interest rises: 1) a long position being placed, 2) a short position being placed, or 3) a spread trade put on...long one month, short another month. (A spread trade means nothing in a COT report, as the trade is by the same entity...and this entity holds both sides of it.)

Now for the latest Commitment of Traders report. Despite the best efforts of the '1 or 2' US banks in bashing silver, they were only able to improve their position by 2,658 contracts...and this they did by covering 2,451 short contracts and going long another 207 contracts. And after the great thrashing laid on the metal since the Tuesday cut-off (see graph above), one would think that the big Comex shorts have improved their positions even more. It's been many years since I've seen a silver COT report that looked like this. It's absolutely amazing. These have to be pretty close to the lowest numbers on record. I hate to say it, but I hope the boyz can keep a lid on the silver price until after this Tuesday's cut-off, because next Friday's COT will be another sight to see.

As for gold, the '2 or 3' US bullion banks (probably just one...JPMorgan) improved their position by 5,564 contracts. They covered 5,282 short positions and went long an additional 282 contracts. And one would think it has improved even more since Tuesday, because the gold price was clocked for about $80 since then. The link to the CFTC's COT report is here.

In gold news yesterday, the following report came in from UBS...which was "remarking that mindless liquidation characterized many commodity markets" on Thursday...to which they added the following comments on gold. "Safe haven buying of gold continues with our own sales desk reporting buy/sell ratios of about 85/15 yesterday. Yet gold was sold aggressively on the electronic futures markets, with two clips of about 6,000 lots swept lower. Gold sold off...down from about $835 to $820...and then took another leg lower as the second load was dumped." And lastly...both the GLD and SLV were unchanged...COMEX silver warehouse stocks were down 211,000 ounces...and the Comex also raised the margin requirement on a silver contract by $540...now up to $8,640.

It was another wild day on the stock markets yesterday. Consumer confidence fell the most on record and housing starts (not surprisingly) declined a bunch. And, in a Bloomberg story, I see that Lehman is the subject of three grand jury probes. The cartoon pretty well sums up the equity markets these days.

Today's first story is from the mineweb.com and is headlined "Why the fall in the gold price when physical gold remains in huge demand?" I have some personal doubts about some of this, but if true, it could explain a lot about what's been happening . The link is here.

My second offering is from Bloomberg. With a story such as this, one has to wonder whether the building boom in Dubai has come to an end or not. It seems like ample credit (even for the ultra rich) has now become a problem. The story is entitled "Dubai May Need Help from Abu Dhabi to Fund Borrowing", and the link is here.

The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. - Winston Churchill

Today's musical selection is a piece entitled Guitar Boogie. David Galland highlighted this piece a couple of weeks ago in his "The Room" commentary, and I thought it was worth sharing. It's played by a soft-spoken mild-mannered Australian named Tommy Emmanuel. It's quite a shock to watch the change that takes place in his physical demeanour when he plays. He reminds me of Yo-Yo Ma, one of the world's greatest cellists. Ma is a lot of fun and a party animal extraordinaire off stage (I know from personal experience)...but when he's on stage...he's someone else. This is another video (like violinist Sarah Chang) that has to be watched as well as listened to. A short commentary by Emmanuel is followed by the piece itself. So turn up your speakers, click here, and try to keep up.

Well, it was another Mad Max week. How long the powers that be can keep all these balls in the air remains to be seen. I'm sure that next week will be another one where black is white...and up is down...and neither the red or blue pill works.

See you on Tuesday.

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