From Ed Steer:

From the beginning of trading on the Globex in the Far East on Thursday morning, gold managed to work its way to a gain of slightly more than $20 shortly after London opened for trading. And that was it from that point on. Gold got taken down right through to the London close...and once New York was the only show in town, the price was really smacked. Gold closed on its lows of the day. In the last 36 hours, gold has given back all its gains, and more, that resulted from the 4 cent drop in the US$ and the Fed's interest rate cut. So much for the price of gold tracking the dollar.

Silver peaked the same time as gold...at precisely 4:00 a.m. New York time...9:00 a.m. in London, before it too was whacked by the usual not-for-profit seller. However, the decline in the silver price was even worse than gold...down about 10% at one point.

Thursday's open interest in gold showed a whopping big drop of 10,491 contracts to 303,218. I'm guessing that most of this was spreads being lifted, because there was nothing in the price activity yesterday to suggest anything else. But, now that we're past the cut-off for this week's COT, this info won't show up until the COT on November 7th. Open interest in silver continues its unprecedented decline...down another 933 contracts to 94,783.

In a follow-up to Ted Butler's comments about backwardation, here's the e-mail update I got from him yesterday..."spreads tightened again in silver and gold. In silver, Dec/March tightened to 0.5 cents from 1.4 cents, while Dec/May came in from 2.7 cents to 1.6 cents. Gold tightened as well. Not sure why this is happening. Is it real, or is it a fake out?"

In other gold news, the CEO of AngloGold Ashanti had the following comments in a story filed at miningweekly.com..."Gold production was ‘in crisis’ and a gold price of $900 to $1,000/oz was needed to arrest the downward trend. He also said that the world had seen a decline in the production of gold across the globe in the past seven years, and that the industry could experience another decline of production at up to 5% a year for the next five years." And, of some importance, is that the IMF has now officially denied that they are selling or leasing gold this year..."Today, in response to an inquiry from GATA, the IMF told the office of U.S. Rep. John B. Larson, D-Connecticut, that it has not sold, leased, or lent gold this year and, indeed, has not done so since 1999." Should we believe them? And lastly...there were no changes in either the GLD nor the SLV yesterday.

In other news, Motorola is going to slash 3,000 jobs...and American Express is going to toss 7,000 employees. I see that the U.S. economy shrank at a 0.3% annual rate in the third quarter. I wonder what the real number is? In a NY Times article, questions are being asked about where AIG is putting the "$123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October." And in a Reuters story, AIG may issue $21 billion in commercial paper under the Fed's new program. That's not too shabby for a company with a market cap in the $4 billion range! In a Bloomberg story yesterday was this item..."In the third quarter of 2007, Volvo booked 41,970 European orders for new trucks. In the third quarter of 2008, their European order book totaled just 155 vehicles." And on a final related note, it was reported that Aston Martin only sold ONE car in the third quarter!

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Three stories again today. The first is from Bloomberg where Fed president Janet Yellen said that U.S. interest rates could be cut close to zero. (Note to Janet: They're already there - Ed). The link is here.

First it was the USA...now it's happening in Japan as well...free money to all Japanese families. The piece is by Ambrose Evans-Pritchard from The Telegraph in London and is headlined "Japan's desperate $260 billion bid to kick-start economy" and the link is here.

And lastly, here's a topic that's sort of disappeared off the world's radar screen now that the price of oil is below $70/barrel. Peak oil is still bearing down on us, as this Financial Times story points out. The headline reads "World Will Struggle to Meet Oil Demand" and the link is here.

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This is worse than a divorce...I've lost half my assets and I still have my wife. - Wall Street quote of the week

I was encouraged to see the HUI finish in positive territory yesterday, especially in the face of the huge decline in the gold price. As I said yesterday, I'd like to think that the insiders are buying because they know what's coming. That may be wishful thinking on my part...and only time will tell. Today's Friday and month end. The election is on Tuesday. I fully expect everything to mark time until after these dates are behind us.

Happy Hallowe'en...and watch out for the little "trick and/or treaters" on your way home from work tonight. I'll see you here tomorrow.

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