From Ed Steer:


As per usual these last few days, gold did nothing in Far East or European trading. However, about an hour before the Comex opened in New York, the gold price headed lower in a very similar pattern to what happened on Monday. See the graph. This decline lasted until 9:15 Eastern time when a rally commenced. But it was all for naught once the London p.m. fix was in. The bids disappeared, and the price dropped $12 in just a few minutes...and that was it for the day...as the tiny rally that followed was negated by the end of Comex trading. The boyz just aren't letting the gold price show any signs of life when the Dow is under this kind of pressure. The US$ was not a factor yesterday.

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The silver price followed the same pattern as gold...although its price recovered slightly by the close of trading on the Comex.

Not a lot of changes in open interest in gold on Tuesday. It contracted only 163 contracts to 318,185. Silver's o.i. was down a more substantial 1,277 contracts to 85,916...so there was probably some late reporting from Monday in those numbers.

It was a quiet day for precious metals news. Ted Butler pointed out that the GLD ETF added 98,000 ounces, and SLV added 2.6 million ounces yesterday...bringing their total up to 299.6 million ozs. Both funds are at new record highs again. Ted feels that the SLV is still owed a couple of million more ounces. Volume cooled in both funds yesterday, so the index funds are maybe done buying...or close to done.

The 'other news' is so dire I feel distressed writing about it. Reuters...Moody's sees 12% of junk bond issuers defaulting by year-end. [Only 12%??? – Ed] Reuters (Washington)..."U.S. Retail Sales Slumped 2.7% in December" Yesterday Citigroup announced that they (along with JPMorgan) will move their earnings release date to today from next week. How bad must their numbers be? Citigroup's shares got crushed yesterday and the cost of insuring their debt soared into the stratosphere. The New York Times (Washington) "Banks in Need of Even More Bailout Money"..."In all likelihood, a lot more money. Mr. Obama seems to know it; a week before his swearing-in, he is lobbying Congress to release the other half of the financial industry bailout fund." In a story out of the Financial Times in London..."Bank of America is counting on a new multibillion-dollar capital injection from the government. Several people close to BofA said that it had told the government that it wanted to scrap its takeover of Merrill Lynch last month after realising the depth of the investment bank’s losses in the fourth quarter." And in another FT story I see that "Investors pulled close to a net $150bn from hedge funds last month in spite of moves by dozens of funds to halt or suspend redemptions. The record December figure, is equivalent to about 10 per cent of industry assets." Bloomberg (San Francisco)..."U.S. foreclosure filings jumped 81 percent last year. More than 2.3 million properties got a default or auction notice, or were seized by lenders." And lastly, the good news was that Bernie Madoff didn't have to check in at the Crowbar Hilton.

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Today's first story is from from the January 11th issue of New York Magazine. It's entitled "The New Paranoia: Hedge Funders are Bullish on Gold, Guns, and Inflatable Lifeboats" and the link is here.

The second story is a GATA dispatch with the headline "Another analyst predicts a big official revaluation of gold". The dispatch also carries the latest Treasury Department comments about gold confiscation. This is worth looking over...and the link is here.

Today's last story is the monthly "Markets at a Glance" commentary from Eric Sprott over at Sprott Asset Managment in Toronto. There aren't too many shades of gray in this one which is titled "Surviving the Depression" and the link to the pdf file is here.

The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009. In terms of our sector, we expect consumer loans and credit cards to continue to get worse. - Jamie Dimon, CEO, JPMorgan, 14 January 2009

It looks very dangerous out there right now. I've been expecting the roof to cave in for months. The President's Working Group will have their hands full today. With Obama's confirmation right around the corner, one would have expected that any 'feel good' rally should be well underway by now. I think you can safely forget about that.

All of us at Casey's Daily Resource Plus look forward to seeing you here bright and early Friday morning. Enjoy the rest of your day...and we'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.