From Ed Steer:

Tuesday's low in both gold and silver came at the close of trading in Sydney. From there, a rally began that lasted right until the London p.m. fix. Shortly after the 'fix' was in, gold popped up another $20 and silver another 40 cents. That $20 rally in the gold price looked like short covering to me. The party ended for gold at a very familiar time...the close of trading in London...and silver about 15 minutes after that. From that point on, someone made sure that gold only traded sideways and that silver gave up all its gains from its London p.m. fix rally.

The HUI was up a wonderful 15%...and some of the precious metal stocks turned in some rather spectacular performances yesterday...but we've got a long way to go to the up-side before we can break out the party hats.

Open interest changes for Monday were as follows....gold o.i. fell a smallish 507 contracts to 304,944...and silver o.i. contracted by 509 contracts, down to 93,270. That's not a lot, but there wasn't very much volume on Monday either...just like there was very little volume yesterday as well. It doesn't take a lot of activity to move prices around when the volume is this thin. If the volume had been extremely heavy yesterday, then I would have been really disappointed in the price action...so we should all be encouraged by the fact that gold and silver prices are rising on exceedingly thin volume. Yesterday (at the close of Comex trading) was the cut-off for this Friday's Commitment of Traders report.

The usual NY commentator had the following yesterday..."The ECB (European Central Bank) weekly statement of condition indicated an E2 million reduction in ‘gold and gold receivables’, 0.099 tonnes at the current book value. This is said to have ‘corresponded’ to a sale by one captive CB and a ‘net sale’ of gold coin by another. Last week the quantity cited was 0.05 tonnes. The ECB central banks have no taste for being seen in the gold market at present. This of course raises the question of where all the Central Bank-type bars said to be turning up at refineries are coming from. Today, the pattern changed. World gold only started climbing when Europe opened, eradicated the usual Comex opening sell-off, surged to an up $30.50 close and went further in the after market. A remarkable day. Although estimated volume was only 101,992 with a largish switch effect of 17,110: so 84,882 contracts net. A good deal of short covering probably took place. The GLD ETF, in its curious way, turned in its 7th consecutive day with gold holdings at precisely 749.21 tonnes." (The SLV was down 100,000 ounces yesterday - Ed)

Some worse-than-awful headlines yesterday...Reuters: New US factory orders tumble sharply for third straight month. Reuters: "Facing the need to borrow up to a staggering $2.1 trillion in the current fiscal year to fund economic rescue programs, the U.S. Treasury is expected to significantly expand its debt securities arsenal." ($2.1 TRILLION!!! Who's going to lend it to them???). The Telegraph (London): The headline read "France threatens to seize banks, German bail-outs escalate....Austria's banks have heavy exposure to the debt crisis in Ukraine, Hungary and the Balkans...Europe's banks are almost twice as leveraged as those in the US, according to the IMF...and will need to raise $400 billion in fresh capital in a hostile global climate." Bloomberg: "Credit-default swaps totalling $33.6 trillion are outstanding on governments, companies, and asset- backed securities world-wide, the Depository Trust & Clearing Corp. said in a report that gives the broadest data yet on the unregulated market."

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Today's first story is a day old. It should have been in my rant yesterday, but I just don't have the space to put everything up that I think is worth reading every day. This piece is by Ambrose Evans-Pritchard from The Telegraph in London and was obviously filed before the poles opened yesterday. It's entitled "Revenge of the Left across the world" and the link is here.

Today's second offering is from silver analyst Ted Butler and his mentor, Israel Friedman. As always, I consider any offering from Ted to be well worth the read. This week's commentary is obviously no exception and is entitled "More Signs of a Silver Shortage". The link is here.

And lastly, in a letter to clients yesterday, Murray Pollitt of Pollitt & Co. in Toronto reflects on what a "new Bretton Woods" agreement would mean...very possibly the formal remonetization of gold among the nations. Pollitt's letter, which is in a pdf format, is linked here.

Yes, we did produce a near perfect republic, but will they keep it? Or will they in their enjoyment of plenty, lose the memory of their freedom? Material abundance without character is the surest way to destruction. Indeed, I tremble for my country when I reflect that God is just. - Thomas Jefferson

My congratulations to the new President elect...Mr. Obama. And at the same time I offer my condolences. I hate to say it, but this poor schmuck has "fall guy" written all over him. However, I wish him the best anyway...not that it will do him any good.

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.