From Ed Steer:

Both gold and silver both began a slow rise at the opening in Far East trading early Monday morning. The rally in gold was capped just before London opened...and the price declined just as slowly until shortly before the Comex open. Then a spirited rally began which got smacked the moment the price got over $780...and that was it for the day, as all subsequent rally attempts were capped.

Silver's rally made it to mid-morning in London before its price began to turn south. The rally before the Comex opened was much more ferocious than gold's, but someone (probably JPMorgan) put up a "Do not pass $10.30" sign...and despite a couple of valiant attempts...everything was capped from thereon in. Silver did manage to trade above its 50-day moving average inter-day...the first time it's done so in five long months. Ted Butler says that this is probably a record for silver being below its 50-day moving average. I would agree.

Volume on Monday wasn't particularly heavy in gold. The usual N.Y. commentator said that Monday's volume was around 73,200 contracts...net of switches. All in all, it's pretty safe to say that the boyz did not want gold and silver prices to reflect the huge drop in the US$ yesterday...and they got their wish.

Friday's open interest numbers for gold showed a decline of 1,143 contracts, down to 262,192. In silver, o.i. rose 373 contracts to 83,669.

There's lots of talk out there about backwardation and Comex delivery default in December...or maybe into early 2009. Ted and I spent a lot of time talking about it yesterday. His opinion (and he's an expert on this) is that based on what he's seen to date, default is not going to happen. It still can happen, but only if new (and very large) previously unknown buyers show up asking for delivery as December goes along. But for the moment, this belongs in the "maybe" category. Time...as they always say...will tell.

There wasn't a lot of gold news over the weekend. I noted an article in The Sunday Telegraph out of the U.K. that "mining company Anglo American will slash billions of pounds from its 2009 capital spending plan in response to global economic problems." In a CNNMoney.com piece yesterday, Dow Chemical said it would...cut about 5,000 jobs world wide, close 20 facilities, idle 180 plants and cut 6,000 global contractors...and in the same story, "German chemical giant BASF SE announced in November it was shutting down about 80 plants globally and reducing production at nearly 100 plants, citing a sharp decline in demand." In an F.T. story, German manufacturing orders plunged 6.1% in October. In a Reuters story out of Beijing..."One of the top managers of China Investment Corp., the country's $200 billion sovereign wealth fund, reckons current dollar strength is temporary and he would like to bet that the U.S. currency is headed lower." (Note to CIC President Gao Xiqing: I'd call that a pretty safe trade. - Ed) And lastly...and for what it's worth...Frank Veneroso says it's time to buy gold stocks again.

>From The King Report yesterday..."There have been 14,285 trading days since January 1, 1950. On 33 of those days, the market fell 4% or more. On 35 of those days, the market rallied 4% or more. So there have been 68 four%+ moves out of 14,285 sessions...just 0.4% of the time. Twenty-eight of those 68 rare events occurred over the last three months. That's a whopping 41% of all these very rare events since September." (With the PPT lurking in every market...there's probably lots more to come. - Ed)

Three stories again today. The first one is very interesting. Once again, Malaysia wants the Organization of the Islamic Conference to reconsider the gold Dinar for trade. This idea was originally floated about five years ago by former Malaysian Prime Minister Dr. Mahathir Mohamad. The link is here.

The second article is by Ambrose Evans-Pritchard, the International Business Editor of the The Telegraph in London. The headline reads..."Deflation virus is moving the policy test beyond the 1930s" It's not cheerful reading...and the link is here.

And lastly comes silver analyst Ted Butler's latest commentary. In it, Butler writes that, contrary to the implication of its form letters sent to people who have complained about manipulation of the silver market, the CFTC doesn't need any more evidence. The CFTC, Butler argues, needs only to explain its own data about grotesque concentration of the short position in silver. One thing Ted Butler makes crystal clear is that "2 or less" U.S. bullion banks (Ted and I think it's only one...JPMorgan) are short 40% of the entire Comex silver futures market. This is beyond outrageous!!! That's all the proof the CFTC needs, and it's located right in their own numbers. Butler's essay is headlined "Delaying Tactics and Interview" and the link is here.

The simple truth today is that your economy (U.S.A.) is built on the global economy. And it's built on the support, the gratuitous support, of a lot of countries. So why don't you come over and...I won't say kow-tow [with a laugh], but at least, be nice to the countries that lend you money. - Gao Xiqing, President of the China Investment Corporation, 08 December 2008

I'd like to think that I know what's coming down the pipe in the next month or so, but I don't. But I do have the nagging feeling that this Christmas shopping season will be the 'last hurrah' for a huge number of small, medium and large retailers all across the western world. By mid January, once all the sales are over, we'll soon find out who the fallen are. I expect the casualties to be in the thousands...and some of the larger chains aren't even waiting until Christmas is over to announce huge cutback in stores and staff. All I have to do is walk around a couple of the malls close to my home here in Edmonton, and see the brown paper already up in some of the windows...with signs that say "This Valuable Retail Space for Lease". There will be a lot more brown paper in a lot more mall windows six weeks from now.

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