From Ed Steer:


Gold was under pressure right from the open of Globex trading in the Far East on Wednesday morning. It bottomed in Hong Kong and clawed its way back to unchanged by the time the Comex opened...but there was always someone there to make sure that the price didn't get over $965 all through London trading. Every time it tried, it got shoved down. Its attempt to break through that price shortly after the Comex opened, met with a wall of selling that dropped the price by $25 in less than 90 minutes...and all of Tuesday's gain of the same amount, disappeared. A rally attempt at the London close ran into big resistance at precisely 1:00 p.m. New York time yesterday. And as you might have expected...volume was huge as well...128,000 contracts, net of switches. The shares got creamed.

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It was the same routine for silver. Silver actually had a big 20-cent price spike on the Comex open, but it also suffered the same fate as gold...losing 70 cents in the same time period...and its subsequent rally also ran into the same brick wall at 1:00 p.m. Eastern.

What we saw yesterday was pure market management by the Fed through their agent JPMorgan. As I've said many times before...no profit-maximizing seller ever sells like this...ever! With the dollar down a full cent...and the financial news over the previous few hours beyond horrific...the equity markets were toast, and there was no way that the boyz were going to let gold, silver, platinum and palladium prices go vertical...which they were all in the process of doing about 8:30 Eastern time yesterday morning. And if you'll pardon my French...every other reason given by the media as to why gold did poorly was pure crap.

Tuesday's big run-up in both gold and silver prices saw a sharp increase in gold open interest once again. This time o.i. was up 8,227 contracts to 320,391. That's a lot! Silver open interest was up 700 contracts on Tuesday, to 86,788.

The usual N.Y. gold commentator had these remarks..."Gold and gold receivables, as reported by the European Central Bank, showed a decline of €19Mm...0.95 tonnes. This compares with 5.8 tonnes last week...A Reuters report notes that so far, this Second Washington Agreement on Gold (which began 9/27/08), only 58 tonnes of CB gold has been reported sold. Were the quota of 500 tonnes to be sold evenly, the aggregate would have been 125 tonnes (to date)...Since Comex gold's recent low of $837 on 12/19, open interest has risen 29,660 lots (92.3 tonnes, or 10.2% - about a third of it yesterday (Tuesday)) while gold has risen (only) $29 or 3.5%...With yesterday’s (Tuesday's) open interest gain loudly proclaiming that gold is capped, the way is open for a serious bear raid. Given India’s stance [not a buyer at the moment – Ed], the recent NY buyers are in an awkward position."

As I mentioned earlier, the news yesterday was just awful...Bloomberg: Intel Fourth-Quarter Sales Drop 23%, Missing Forecast...New York Unemployment Claim Systems Overwhelmed as 10,000 people/hour try to log on the claims system, system crashes; no timeline for their return. Reuters: U.S. consumer loan late payments at 28-year high...Delinquencies on home equity lines of credit (HELOCs) and on indirect auto loans, which are made through dealerships, rose to the highest level on record." Reuters: U.S. economy seen shrinking 2.2% in 2009 according to the Congressional Budget Office (CBO). Marketwatch.com: CBO say 2009 budget deficit will be 1.2 Trillion (8.3% of GDP!)...not including Obama's economic stimulus package. CNNMoney.com: Alcoa to cut global work force by 13%...13,500 jobs. Marketwatch.com (Mumbai, India): Shares of Satyam Computer Services crash after overstatement...Chairman resigns saying the company had inflated its cash and bank balances on the balance sheet by more than $1 billion. And lastly, Bloomberg (London): Record U.K. Gilt Sales Raise Risk of Auction Failure" (Gilts are the British term for bonds. Britain, too, will find few buyers for all its paper and will be forced to monetize its debt as well. Soon the printing presses will be running flat out in all countries...not just the U.S.A. - Ed)

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Today's first story is from Bloomberg. The headline reads "Oil Traders Seek Another 10 Supertankers for Storage". This is arbitrage on a grand scale with the real commodity...not some paper futures contract. Not much is written about this subject, and I hope you find it of interest. The link is here.

The next story is from The People's Daily in China. This is China's "official" newspaper, and the government uses it as a conduit for communicating its thoughts on many subjects. This article...entitled "U.S. blame game cannot change facts of financial crisis"...would be one of them. The link is here.

The last story is once again a GATA dispatch. It bears the title "From Australian TV, a devastating parody of central banking". It's a youtube.com video...and make sure you watch it to the very end. The link is here.

I want to warn people from Nigeria who might be watching our show...if you get any emails from Washington asking for money, it's a scam. Don't fall for it. - Jay Leno

Since Jay brought it up, I would agree. The entire world-wide economic, financial and monetary system is a scam...so get the hell out while the getting's good! This most excellent Casey Research graph linked here, shows you exactly where you should put your money...or if it's already there...keep it there!

All of us here at Casey's Daily Resource Plus will see you here bright and early on Friday morning.

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