From Ed Steer:

Gold didn't do a lot in Far East trading on Thursday. A tiny rally occurred...beginning at the usual 3:00 a.m. time slot...but it was sent packing shortly after London opened. This time the boyz didn't even wait for the London a.m. fix. Gold caught another bid as soon as the Comex opened, but for the third day in a row, all efforts to penetrate $860 were rebuffed. Silver was similar...with all attempts to break through $11.50 turned back. Volume in gold today was 129,143 contracts...with a largish 30,812 switches...as January contract holders switched into future months.
Option expiry for the February contract is January 28th...next Wednesday. February is not a big delivery month for silver, but it is for gold. If we're going to have any fireworks to the downside, it would likely happen before then. The point and figure chart for gold still has a downward price target of $790...and it would take a close about $865 to change that...but to indicate a really major rally is underway would require a close above $895.

Wednesday's price activity in gold produced another big increase in open interest. This time it rose by 8,540 contracts to 340,047. Gold o.i. has deteriorated by about 22,000 contracts in the last two days. We are starting to get into the danger zone where another cartel-initiated waterfall decline in the gold price might be in the cards. Will they do it? Can the do it? If they can...when will it happen and how bad might it be? Don't know...but note my comment in the prior paragraph. In silver, just the opposite occurred, as silver o.i. fell again...this time by 136 contracts to 86,123. The dichotomy between massive increases in gold open interest, vs. flat or declining silver open interest is very interesting. How this resolves itself in the future will be worth watching.

In gold news yesterday, there were some more positive developments regarding gold going into the GLD ETF. Yesterday I said that GLD was up to 803 tonnes. That was only a part of the truth. Here's the complete story. On Tuesday, GLD was up to 803 tonnes...Wednesday it was up to 806 tonnes...and yesterday it jumped up to a fairly healthy 819 tonnes. This is impressive...and it would be even more impressive if I was totally convinced that all the gold they say they have in the GLD is actually there. Ditto for silver in the SLV. James Turk at goldmoney.com and I stand cheek to jowl on this issue.

In 'other news' it was a busy day...more debt monetizing by the Fed as they purchased another $19 billion in agency mortgage-backed securities to provide liquidity for housing. Wednesday night it was the Japanese banks saying they were going to monetize debt...Thursday it was the Swiss National Bank's Vice-Chairman Hildebrand saying that they were going to devalue the Swiss Franc rather than accept economic contraction. [My, how the mighty Swiss banks have fallen in the last ten years. – Ed]. In a Bloomberg story, newly minted Treasury Secretary, Timothy Geithner, said that "the new U.S. administration believes China is ‘manipulating’ its currency." [How about the U.S.A. "manipulating" the gold and silver markets, Tim? – Ed] And in a story out Germany posted at spiegel.de, the headline read..."Berlin Sees No Limits to Economic Intervention". [That's strange...because two weeks ago, Chancellor Angela Merkel spoke out against this very thing. – Ed] Bloomberg..."Microsoft Cuts 5,000 Jobs as Recession Curbs Growth". And in two separate Reuters headlines... "U.S. jobless claims increased sharply last week" and "U.S. housing starts, permits hit record lows in December". [What I said about real estate in 2007 still stands...call me in 2013 and we'll talk about a bottom. – Ed] And lastly...Reuters (Seoul) -- South Korean prosecutors indicted a blogger on Thursday who had warned of financial doom for the country...with critics saying he was targeted because his gloomy forecasts upset the government battling an economic downturn. You say you don't believe it? The story is here.

The graph below is a beauty. Designed by someone at J.P. Morgan and posted at Bloomberg on January 20th...it tells all. Please note in particular...Royal Bank of Scotland (RBS), Deutsche Bank, Barclays and Citigroup. I thank Craig McCarty for sending it along.

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Three stories today. The first is from daijiworld.com out of India. Its dateline says January 14th...but that matters little. The headline says it all..."Indians flee Dubai as dreams crash"..."Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight." This is a must read and the link is here.

The next story is by Peter Brimelow from marketwatch.com. It's entitled "Gold Bounces Back: and the radical gold bugs are more confident than ever." This is well worth the read, too...and the link is here.

And finally, coin market analyst Michael Zielinski, editor of the Mint News Blog, has analyzed the actions of the U.S. Mint over the last six months and gotten awfully suspicious. His commentary entitled "Actions of the U.S. Mint Discourage Gold Ownership" is posted at goldandsilverblog.com and is linked here.

We were poor when I was young, but the difference then was that the government didn't come around telling you you were poor. - Ronald Reagan

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Inflate...or die! Richard Russell was right. That's exactly what the international banking system is going to do. Once the VP of the SNB said those magic words yesterday, it only confirms that the precious metals are the only game in town...and you should use every effort to acquire as much physical metal as you can afford. The record amount of big money pouring into the GLD and SLV should tell you all you need to know.

Have a good weekend and I'll see 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.