From Ed Steer:

It came as no surprise to me that both gold got sold off a bit the moment that the gold market opened in the Far East on Monday morning. But it didn't amount to much, because shortly after 2 p.m. in Hong Kong...1:00 a.m. Monday morning N.Y. time...gold began a slow rise that continued right through the London open. This lasted until the silver fix in London (noon) before selling off about ten bucks. But as soon as floor trading opened on the Comex in New York, the price rose...then spiked to its high of the day...before it was gently capped and then got slowly sold off until the end of Globex trading at 5:15 p.m. Eastern time.

Silver followed a similar route, but it got sold off shortly before the Comex opened...with the selloff continuing until about 8:30 a.m. in New York. From there it rose in fits and starts to its peak of the day around 12:30 p.m....where it, too, got sold off quietly into the Globex close.

It should not be a surprise to anyone that gold and silver open interest soared on Friday on such spectacular price moves. In gold, o.i. rose a huge 17,817 contracts to 359,905...as the spec funds in the Non-Commercial category of the COT started to pour into this market. In silver, o.i. rose 1,343 contracts to 88,599...not really a big number of contracts, considering. It would be a good bet that JPMorgan and HSBC USA would have taken the majority of the short positions against all these new longs in both metals. This has been their SOP for the last ten years at least...so why should they change their game plan now?

Options expiry is tomorrow. I'm sure there's a tonne of call options that would expire in the money on any gold price close over $900 at the end of Comex trading on Wednesday. It will be interesting to watch the price action over the next 36 hours. I would suggest the same thing for silver over $12.00. I don't think that the boyz want to part with all the premiums on these call options that they've written...plus I'm sure that they don't want to risk that someone is laying in the bushes waiting for their $900 call options to finish in the money so they can convert to futures and stand for delivery on the Comex. That's another big no-no. I also note that despite Monday's decent price action, the share action did not match that...and the major gold indexes all finished down a little on the day.

Here's a graph of what's been going on in the gold ETF...GLD...lately. It is current as of last Friday. I thank Gene Arensberg for this.

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In gold news, there were no new additions to the GLD...and SLV finally added about 6 million ounces...up to 236 million ounces. After Friday's activity, I would think that the SLV is due even more silver than that. Over in Switzerland, the Swiss gold ETF added about 125,000 ounces, which brings their total up 3.388 million ounces. Their silver ETF added a healthy 2.1 million ounces. They now have 35,926,000 ounces stashed away for their investors. At this rate, it won't be long before this ETF has more silver than the Central Fund of Canada. And speaking of CEF, I see that their underwriter, CIBC, has an offering on the table as I write this. This closes at 8:00 a.m. this morning. The numbers should be interesting when they get around to reporting them later today. Over at the U.S. Mint, the good folks have stamped out 87,000 gold eagles and 1,769,000 silver eagles (for the month of January) as of yesterday. One would think that they will be able to add to these totals before the end of the month. We'll see. And lastly is this story from Business Intelligence from the UAE..."There is an acute shortage of gold coins at the annual Dubai Shopping Festival taking place this year from 15 January-15 February. The main reason for the short supply of gold coins is primarily due to their heavy demand in Dubai, the main regional source for gold in Middle East."

In other news, Bloomberg...Fannie May to Tap U.S. for as much as $16 billion in aid, following Freddie's request for $35 billion last week. According to a story in the N.Y. Times, nationalization of U.S. banks is getting a new, and apparently serious, look. In another Bloomberg story, I note that Caterpillar, Sprint Nextel and Home Depot led companies announcing plans to cut at least 61,000 jobs as sales withered and construction slowed. In a story in the Jerusalem Post, it appears that the U.S. Navy (in a covert operation) intercepted an Iranian arms ship in the Red Sea. Not a thing about that in the U.S. press. In a late-breaking story out of the International Herald Tribune New York), "U.S. authorities said that they arrested the chief executive of private financing firm Agape World on suspicion of running an alleged Ponzi scheme that attracted $400 million in investments." According to an AP story filed from Harare..."City workers in Zimbabwe's capital began an indefinite strike Friday, demanding to be paid in foreign currency...'We can't afford to continue to receive our salaries in Zimbabwe currency, which is not buying anything,' said the head of the municipal workers."

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Three stories today. Prompted by gold's ascent through $850, GoldMoney founder and GATA consultant James Turk plots the metal's price in the major currencies and concludes that all are losing value against gold and that gold is proving the only safe haven financially. Turk's analysis is headlined "Gold Breaks Above $850" and you can find it linked here.

The second story is the latest commentary from silver analyst Ted Butler. Butler states that the concentration of the short position in silver on the New York Commodities Exchange has intensified, and he proposes that the U.S. Commodity Futures Trading Commission conduct its investigation of the silver market in public. Butler's new commentary is headlined "Madman Across the Water" and is linked here.

And lastly, another commentary from James Turk. To quote the first paragraph..."There is a determined grassroots movement in the United States seeking the restoration of sound money. There are many different groups comprising this movement, but all share the same aim. It is to restore gold and silver to its rightful role as the money of the United States, as mandated by the Constitution." The essay is entitled "Restoring Sound Money in America" and the link is here.

When people fear their government, there is tyranny. When governments fear the people, there is liberty. - Thomas Jefferson

The next thirty-six hours in the gold market should tell us a lot. If the gold price can hold up for another couple of days...until we get past options expiry....we could see prices move up...and in a hurry. However, the boyz can pull the pin any time they wish...so I'm always on the lookout for "in your ear." But maybe they want the price to rise...or maybe they are now in no position to stop it. We will, as they say, find out in the fullness of time.

See you tomorrow.

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