From Ed Steer:


Thursday's price activity in both gold and silver aren't worth spending a lot of time on. Gold did poke its nose above $950 a couple of times, but that was all. Somebody sold silver off at 11:00 a.m. in London...with the bottom coming at the London silver fix at noon. From there, it worked its way back to almost unchanged on the day. The precious metal shares cut their losses substantially with the usual 'miracle' recovery in the Dow that started at 3:00 p.m. in New York.

Open interest on Wednesday's big gains in both gold and silver held more surprises. For a $28 gain in gold, an open interest increase of only 5,859 contracts [to 356,717 contracts] is not a lot. Silver had an even bigger surprise in store, as o.i. fell 123 contracts to 95,896. The rallies in both metals on both Tuesday and Wednesday smell of bullion bank short covering...with those that were short covering, going long as well, to hide their tracks. Wednesday's o.i. numbers won't be in the COT until Friday, February 20th. It's reassuring to see open interest not doing a lot while the price climbs. We're a long way from the past record highs in open interest before we had a 'correction' in the price. Let's hope that holds true this time. Gold volume yesterday was around 112,000 contracts...net of switches.

The following commentary [and graph] is courtesy of Bill Murphy, the proprietor at LeMetropoleCafe.com..."Love the following charts of the price of gold versus gold open interest. Gold has broken its downtrend line, but the gold OI has not yet, perched right on it. What is so fascinating and confirming recent analysis in this column, notice how far the gold open interest is off its high. It is astounding, which means there is room for hundreds of thousands of specs to pile in and take gold hundreds of dollars higher, well past $1,200 per ounce."

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"In gold news, there wasn't a lot to report on yesterday. But I did note a Reuters story posted at kitco.com...where the headline read..."South Africa gold output falls 17.6% yr/yr in December". I see that the GLD ETF added another 1.4 million troy ounces [35.48 tonnes] yesterday. Volume in the GLD was huge again yesterday and Ted Butler feels that GLD is still light about 2-3 million ounces. If that's the case, GLD will be over 32.15 million ounces [1,000 tonnes] in short order. Volume in the silver ETF, SLV, was pretty decent as well. No silver was added yesterday either. Ted feels that SLV is owed something north of 20 million ounces. Another 145 gold contracts were delivered on the Comex yesterday...still leaving about 2,400 contracts to go. And lastly...905,000 ounces of silver was taken out of Comex registered warehouses yesterday. Gene Arensberg's updated graph of the GLD is below.

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I have three stories today. The first is a story from marketwatch.com...with the headline "Vegas slump getting wider, deeper". I thank Dr. Jim Willie for passing it along. The link is here.

It's been a while since we've had a story out of the main-stream press about a return to the gold standard. Well, one just showed up in The Wall Street Journal. The author, Judy Shelton, is an economist and author of "Money Meltdown: Restoring Order to the Global Currency System". The headline reads "Capitalism Needs a Sound-Money Foundation" and the link is here.

In what appears to be another Ponzi scheme in the making, here's a story that appeared in Business Week. The title of the article..."Is Stanford Financial's Offer Too Good to be True?". It appears that a number of regulatory bodies, including the SEC, have been investigating them since the middle of 2008. It shouldn't be too long before this story shows up on major TV networks in the USA. I thank Ted Butler for passing the story along. The link is here.

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Over every mountain there is a path...although it may not be seen from the valley. - Theodore Roethke

It was obvious [at least to me] that the Dow wanted to lay down and die a couple of times again yesterday...but 'gentle hands' rescued it early in the morning...and then again at 3:00 p.m. What should also be obvious is that the really big money, high-net-worth-in-the-know money, is piling into the GLD ETF at a parabolic rate. They have jumped the fiat currency ship into the only monetary lifeboat that they know won't sink when the rest of the world slides into the economic, financial and monetary abyss. And you, dear reader, should be doing exactly the same thing.

All of us at Casey's Daily Resource Plus hope our American readers have a great long weekend...if you're one of the fortunate souls that gets one. We'll see you here on Saturday.

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