From Ed Steer:


After the big day that gold and silver had on Wednesday, I wasn't surprised to see them get taken down the moment that Globex trading started in the Far East on Thursday morning. That only lasted until 1:00 p.m. yesterday afternoon in Hong Kong, as the dollar began a serious decline. With that, gold and silver began a steady rise that lasted until moments before the Comex opened. Then they both ran into brick walls...and the highs for the day were in. After that, it made no difference how much the dollar fell, the boyz made sure that the prices went nowhere from that point on.

Then mysteriously, and in unison, the Dow, gold, silver...and their respective shares...headed south while the dollar had a smallish rally. I was speaking with John Embry yesterday while this was going on, and there was no doubt in his mind that the boyz were out and about...and I agreed totally. Volume in gold was decent yesterday...about 96,000 contracts net of switches. Volume in silver was pretty low.

Tuesday's big rally in gold and silver produced an increase in gold open interest of 5,553 contracts...up to 266,554. That's not a lot for such a large price increase. In silver, o.i. only increased 636 contracts to 84,112...not a big number either. Ted said that there certainly has been deterioration in the COT during the rally of the last couple of days, but he won't know how serious it is until next Friday's COT is out...not the one due later today. As I've mentioned in my last two rants (and the Kitco chart of the last couple of days indicates) this rally is not going unopposed...particularly during the New York trading session.

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In other news, I see that the Fed has told Bloomberg to go pound salt re their FOIA request to disclose the recipients of the $2 Trillion in lending. "The Fed responded Dec. 8, saying it's allowed to withhold internal memos as well as information about trade secrets and commercial information." This sounds suspiciously like the answer that GATA got when we asked the Fed and the Treasury about U.S. gold. In a Reuters story, I note that Bank of America could cut up to 35,000 jobs over the next three years as a result of the Merrill Lynch purchase and weaker business activity. In another Reuters story I see that Jim Rogers says that most big U.S. banks are "bankrupt". And in a story out of the Financial Times in London, "Germany's finance minister has launched a stinging attack on the ‘crass Keynesianism’ pursued by Gordon Brown, the British prime minister, fuelling tensions on the eve of European economic crisis talks in Brussels. Peer Steinbrück accused Mr. Brown in a magazine interview of ‘tossing around billions’ and saddling a whole generation with a bill for paying off British debt.". And lastly, in a bulletin from The King Report in the wee hours of this morning, it appears that the "Fed funds traded at zero last night...Now that the Fed is paying interest to banks, why did the Fed allow funds to trade at zero? Yep, they are terrified by something."

Today's first story is from....wait for it....Ambrose Evans-Pritchard at The Telegraph in London. The shocking headline reads "Switzerland may have to print money to stave off deflation". "The Swiss National Bank has cut interest rates to 0.5% and opened the door for emergency stimulus..." My how the Swiss banks have fallen from grace! The link is here.

The second story is also from The Telegraph and...for a change...the reporter is Paul Farrow. The headline reads "Gold price hits record high for British investors" and the link is here.

And lastly, in a story from The Times in London...but filed from Paris...is this breathtaking headline..."European bank chief says £4.5 Trillion world injection has not been enough". "The £4.5 trillion pledged by governments to the world's bankers has failed to end the threat of meltdown at the heart of the global financial system, Jean-Claude Trichet, the President of the European Central Bank, said yesterday. In a stark warning that the worst of the crisis could lie ahead, Mr Trichet urged global leaders to act quickly to pump the oxygen of credit into asphyxiating economies." (Buy gold!!! - Ed) The link is here.

The gold price had been hijacked by between three and five banks taking major short positions on (the) Comex, which forced gold futures down. I don't think they can hold out for much longer. - David Davis, analyst, Credit Suisse Standard Securities

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Today is Friday. Really bad things can happen on Fridays. Japan cratered last night. Europe is down big at the open...and the US futures ain't lookin' that great as I put this rant to bed. Not that any of this matters, as there is no way out of what's coming...unless they reprice gold. Buy some more today!

All of us at Casey's Daily Resource Plus look forward to seeing you on Saturday.

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