From Ed Steer:


Gold started off early morning Far East trading on Wednesday as it usually does lately...going into a slow decline. And, as usual, at 3:00 a.m...shortly before the London open...the price began to rise, this time sharply. But it was all for naught once again, as someone was there to sell gold hard the moment that the London a.m. fix was in. The decline lasted for the rest of the London session...through the Comex open...and only reversed at the close of London trading at 4:00 p.m....11:00 a.m. New York time. However, this attempted rally was not allowed to amount to much, but gold did close the Globex session about eight dollars above its lows.

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Silver was far more volatile. The price rise at the London open was impressive until it, too, ran into the same seller at the London a.m. fix. This time the decline was aborted at the Comex open, and the price rose once again. But every rally attempt was crushed, with the bottom...like gold...coming at the close of London trading. Silver finished up on the day, but it was never allowed to seriously challenge its highs of the London a.m. fix. As I've said so many times in the past...no profit-maximizing seller ever sells like this in either gold or silver...ever!!!

Tuesday's huge rally in the gold price...that was stopped dead in its tracks shortly after London closed...had a disturbingly large increase in open interest to go with it...up 13,772 contracts to 331,507. That's a lot! Was this the '4 or less' bullion banks increasing their shorts...or the '9+ traders' (Ted Butler's raptors) taking profits on their long positions? Maybe it was a combination of both. Friday's Commitment of Traders should tell us more...and I doubt I'll be thrilled with what's in it. In silver, o.i actually fell 674 contracts to 86,340...so Tuesday's attempted rally in that metal had all the signs of short covering.

In gold news, I see in a story at ninemsn.com.au that Newcrest Mining in Australia reported a 21% fall in gold production in the three months to 31 December. Newcrest said it mined 382,584 ounces in the second quarter versus 456,618 ounces reported a year ago. And in a story at indiatimes.com, I note that there is yet another report as to how much gold was imported by India in 2008. This is the fifth number I've seen in the last three weeks on what gold imports into India were...all were different. This story says that "gold imports in India for 2008 dipped by almost 47% to 402 tonnes." Maybe we'll get another number next week. Watch this space! And in a story in the Globe and Mail (Toronto)...Kinross "unveiled a bought deal financing Wednesday that could raise as much as US$414.6-million." Looks like they're on the hunt for a cheap acquisition. And lastly, I see that the gold ETF, GLD, has added another 7.65 tonnes to bring it up to another new record of 803 tonnes. There was no change in the silver ETF, SLV...but Ted Butler feels that based on volume, the fund is still owed between 2-4 million ounces.

In 'other news' I noted that along with Britain and the United States, Japan is about to fire up their printing presses. In a Bloomberg story just filed..."The Bank of Japan may today offer to expand corporate debt purchases to prevent a credit shortage from deepening the recession." The new meaning of this is "quantative easing." Debt monetization is just money printing by another name.

Like yesterday, I have four stories again today. The news from across the Atlantic is simply unbelievable. You couldn't make up stuff like this! The entire banking system is done for over there. Many nations are on the brink...and some have already gone over the edge. Iceland and Ireland come to mind. You need a program just to keep up. I urge you to read all these stories when you have the time.

The first story is from The Telegraph in London. As usual, it's from their international business editor, Ambrose Evans-Pritchard. The headline says it all..."Monetary union has left half of Europe trapped in depression". The link is here.

The next story is from timesonline.co.uk. The essay is headlined "World Agenda: riots in Iceland, Latvia and Bulgaria are a sign of things to come". [One can only hope that all citizens of all nations finally wake up to what's happening to them. – Ed] The link is here.

In this story, another from The Telegraph in London, the headline reads "Gordon Brown brings Britain to the edge of bankruptcy". On Wednesday, investment guru Jim Rogers said: "Sell any sterling you might have. It's finished." The story, which is well worth the read, is linked here.

And lastly, another story from The Telegraph, and once again it's an Ambrose Evans-Pritchard piece. This looks at the British banking crisis from another perspective, and it shows the untenable position that the British government finds itself in. No matter what option they choose...they’re screwed. The headline reads "U.K. cannot take Iceland's soft option" and the link is here.

The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames, and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic. - Iain Martin, The Telegraph, January 21, 2009

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In case you haven't got the message...the current world financial and monetary system is done for. That's why the U.S. government is sitting on the precious metals prices at the moment. But it's still the only game in town as far as wealth preservation is concerned...and you can't own too much gold or silver bullion. They will be just about the only things left standing when the current system finally passes into history...however long that takes. And it won't be much longer at the rate it's going now.
All of us at Casey's Daily Resource Plus look forward to seeing you here 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.