From Ed Steer:

Gold added about $20 to its price in Sydney trading first thing on Monday morning. This lasted right up until Hong Kong trading started a few hours later, and then went into a slow decline from there. This decline lasted through London...and then Comex trading in New York. Gold added to its gains in after-hours Globex trading.

Silver followed a similar path until New York opened. The price spike that ensued quickly got extinguished...and silver got sold off for about 50 cents right into the Comex close. From there the price recovered somewhat.

Volume in gold trading on Monday was still pretty light...but three times heavier than Friday's volume. The HUI tacked on another 3% to the upside. Considering that the U.S. dollar came within an eyelash of gaining two full cents yesterday, I guess we should be thankful that both metals did as well as they did.

As far as changes in open interest go, Friday's price spike in gold resulted in an increase of 4,300 contracts...up to 295,065. In silver, open interest actually fell 107 contracts...to 85,554.

The Commitment of Traders report came out yesterday. For whatever reason, the boyz at the CFTC used last Monday as a cut-off date, rather than the usual Tuesday at the close of trading at 5:15 Eastern, so the changes in open interest only tell a four-day story. As was expected, there was further deterioration in the Commercial position in both gold and silver once again, as JPMorgan et al sold longs and added to their short positions in both metals. In a nutshell, their positions deteriorated by 1,500 contracts in silver and about 9,700 contracts in gold. As I said last week, and it applies even more this week...this is a "same old, same old" type of rally...as JPMorgan takes the short side of every long trade.

What it means is that unless JPMorgan gets overrun...or stops going short against everyone...this rally will end in the same way as they all have. They will get as many mice in the trap as they think they can...and then they'll pull their bids, and we'll have another waterfall decline in prices in both gold and silver. They could do it now (to paint the tape for year-end...or the beginning of 2009). Or they could wait for many more months....as we are nowhere near the old record highs in total open interest in either metal.

In silver and gold news, I note that the U.S. Mint has released its figures for December production in both gold eagles (161,500 one oz. bullion coins) and silver eagles (2,085,000). The mint used 846,000 troy ounces of gold in its gold eagle program in 2008. It's been a lot of years since the mint went through that much gold in a twelve-month period. Of course for silver, the 19,510,000 one ounce silver eagles produced is almost double whatever the previous record year was.

I see that the silver ETF, SLV, added 987,000 ounces to its stash...and the Swiss silver ETF added another 300,000 ounces as well. There are also rumblings about the Central Fund of Canada adding to its position as well. We'll find out soon enough if there's any truth to that.

Over the weekend I see in a yahoo.com news story that Chavez in Venezuela is making more noises about seizing gold concessions "that previous governments granted private operators, in a bid to supplement fall in oil prices with proceeds from state-controlled gold." And in a similar vein, I noted in a story in aljazeera.net on Sunday that after the military coup in Guinea "Guinea's coup leader has frozen the country's numerous mining contracts and gold extractions as part of what he called an anti-corruption drive. In a speech on Saturday, Moussa Dadis Camara said he would execute anyone who embezzles state funds. ‘We have blocked the mining sector. There will be a renegotiation of contracts,’ he said. ‘In gold mining areas, the decision has already been taken: no more extraction until further notice’." (On Monday...less than 24 hours later...he recanted and said that mining could continue until a final decision was made. - Ed)

In the 'terrible news' department came the following. Firstly, a Barclay's comment posted at Bloomberg saying that "Japan's economy may shrink 12.1% this quarter." And in another Bloomberg story the headline read..."Holiday Sales Drop to Force Bankruptcies, Closings". The first paragraph said..."U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years. Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers." In a story out of Charleston, S.C., it appears that the "giant ocean shipping company Maersk will begin pulling business out of the state starting in January and will be gone entirely out of the port by 2010. The shipping company accounts for 20% of all container volume in the port, and if lost would be an estimated $1 billion impact statewide, and thousands of jobs will be cut in Charleston." And lastly, on the west coast, I read in a commentary on the Internet that "ship bookings for the Marine Exchange...which covers our two busiest ports in Los Angeles and Long Beach...are reporting a 30% fall in ship bookings for the first 6 months of 2009 compared to 2008. If that holds, kiss your ass good bye." (Maybe that's an indication of the 12.1% drop in Japan's economy...plus the drop in Chinese exports. - Ed)

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On Friday I mentioned a story about Russia's Gazprom cutting off gas supplies to the Ukraine on January 1st over an unpaid $2.1 billion gas bill. Putin has decided to weigh into the fray in this Bloomberg story entitled "Russia's Putin, Ukraine's Timoshenko, Discuss Energy" and the link is here.

In an essay excerpted from the latest issue of the Freemarket Gold & Money Report, of which he is editor, GoldMoney founder and GATA consultant James Turk offers his predictions for the precious metals markets for 2009. Turk's essay is headlined "Gold and Silver in 2009" and you can find it linked here.

In another life, your humble editor spent a considerable number of years in atmospheric research in the high Canadian Arctic. I know more than a thing or two about both meteorology and climate...and still have many close contacts working in that field. I saw Al Gore's little documentary "An Inconvenient Truth" and was aghast at how it played to the emotions of the audience with both half-truths and obviously skewed data. Most people I knew in the industry felt exactly the same way...and since then, I've seen more and more stories coming out that have debunked the so-called "scientific consensus". Here's the latest one that's shown up...this one's from The Telegraph out of London, and is entitled “2008 was the year man-made global warming was disproved”...and the link is here.

I see that I've carried on quite enough for one day, so I'll end it here.
My last report of 2008 will be tomorrow morning and I'll see you then.

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