From Ed Steer:

Gold didn't do much in the Far East or Europe on Wednesday...but the bottom, if you want to call it that, occurred shortly after the start of floor trading on the Comex yesterday morning in New York. From that low, gold rose steadily...gaining a little over $20 between then and the close of electronic trading at 5:15 yesterday afternoon. In the process, it set another new high for this move.

For the most part, silver's action mirrored gold. The low of the day was at the London silver fix (noon London...7 a.m. New York). From there it rose, just like gold...closing at a new high for this leg up. And, for the second day in a row, I was underwhelmed by the performance of the HUI.

In the last three days, I've noticed that there has been a change in pattern during Far East trading. It's not a lot, but it's something I haven't seen since I started watching the Kitco gold charts about ten years ago. A buyer [either going long, or covering short positions] is active in Hong Kong trading [in both gold and silver] that I've never seen there before. Is it something...or is it nothing? I know that three days activity can hardly be considered a trend...but I can absolutely guarantee you that this Far East activity [before midnight N.Y. time] that you see on the chart below [whether it's local buying...or from New York] has never occurred before. At least not on my watch.

click to enlarge

Open interest on Tuesday's big move in the gold price showed an increase of 6,242 contracts...which is not a lot, considering...with total gold o.i. now at 361,619. Yes, that's getting up there, and tomorrow's COT won't be happy reading...but we're still about 190,000 contracts below the all-time high of last year...so there's lots of room for the gold price to go higher if the boyz allow it. In silver, o.i. only rose 970 contracts...which is not a lot for such a big move in the silver price. The total open interest in silver is now up to 99,325 contracts. High, yes...but light years away from its highs of last year.

Yesterday there were more gold deliveries on the Comex. This time it was 486 contracts. The biggest issuer by far was JPMorgan...and the biggest stopper was Goldman Sachs. There are 1,500 contracts still outstanding for delivery in February. Over 90% of all deliveries in February should have occurred within three or four days of first day notice at the end of January. Why they are being so pokey slow about this is a mystery to Ted...and to me. None of this gold was 'delivered' off the exchange...only the ownership changed. The bars never left the racks...they just went from one bullion bank’s account to another. And on another Comex-related note...silver stocks rose by 950,000 ounces on Wednesday. By the way, if you want to keep up with daily changes in open interest, gold and silver deliveries on the Comex...and Comex warehouse stocks in all the precious metals...you can bookmark the URL you find at the link when you click here.

Yesterday's increase in the GLD ETF was 491,700 troy ounces...15.29 tonnes. The new record high for the GLD is now 1,024.09 tonnes. In silver, the SLV ETF finally got some of the gargantuan amount of silver that it's owed...6.9 million ounces...give or take. That's 214.6 tonnes. Ted Butler said that based on Wednesday's activity in the SLV...and even with this delivery...the SLV ETF is still owed between 25-30 million ounces. As of yesterday, the SLV held about 7,800 tonnes of the stuff. And the question is still out there...do the custodians, Barclays and JPMorgan, really have all the gold and silver they say they do? Call me a "doubting Thomas" if you wish...but I gotta see those nail holes before I'll believe...or personally own either fund. And, as always, I thank Gene Arensberg for the graph below.

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Not much in the way of gold-related news yesterday, although CR's editor of 'Big Gold'...Jeff "Hawkeye" Clark...sent me another offering...this one from the Financial Times in London. It's now getting to the stage where seeing a positive gold-related article in the main-stream media is a common occurrence. The piece is entitled “Insight: Gold primed to be 'mania asset'.” From his lips to God's ears! The link is here.

In other news, I noted the following in several Reuters stories that I saw on the net....U.S. housing starts were at a record low in January...the worst since 1959 when they started keeping records. And U.S. industrial production dropped by a bigger-than-expected 1.8% in January. Even more worrying is this next Reuters story..."The cost to insure U.S. Treasury debt with credit default swaps jumped to a record high on Wednesday. Credit default swaps on U.S. government debt widened 8.5 basis points to 90 basis points...or $90,000 per year for five years to insure $10 million in debt...according to Markit. These swaps had traded at less than 10 basis points a year ago....Swaps protecting the sovereign debt of Germany also rose 12 basis points to 85 basis points on Wednesday, while swaps on Britain's fell 4.5 basis points to 164.5 basis points, Markit data showed."

Five stories again today. A couple of them are hold-overs from Wednesday, as I just didn't have the space. The first is from Peter Brimelow over at marketwatch.com. The story is entitled "Something still stirring in the precious-metals pond" and the link is here.

In a story out of The Independent in Britain, comes this headline..."A 'fraud' bigger than Madoff". It appears that "senior U.S. soldiers are being investigated over missing Iraq reconstruction billions." [I'm sure Dick Cheney could tell us where some of that money went...but I digress. - Ed] The link is here.

In my next offering, I see that The Wall Street Journal has seen fit to publish something by Marc Faber. I'm always interested what Mr. Faber has got to say...and I hope you are too. The story is entitled "Synchronized Boom, Synchronized Bust"...and the link is here.

Well, Britain has finally arrived at the time when they must hit the 'On' button for the printing presses. The story out of The Telegraph in London yesterday had this headline...."Bank of England seeks power to inject more money into economy to fight recession". "The Bank of England's Monetary Policy Committee has voted unanimously to seek Government permission to increase the amount of money in the economy as interest rate cuts lose their power to fight recession." The link is here.

And lastly, here's another positive gold story in The Wall Street Journal. This one arrived by e-mail from none other than Jim Sinclair over at jsmineset.com. The story is headlined "The New Currency Trade: Gold vs. All Else". That certainly sums it all up in one neat sentence...and the link is here.

The state is not an organism capable of bringing either moral or material improvements to the populace...but merely a vehicle of power for the men and party in power. - Niccolo Machiavelli

The Dow is hanging by a thread. Yesterday it came very close to penetrating its low close of last November. Once it breaks through, there's nothing below that for thousands of points. And as I put this to bed, I see that the US$ is down about 64 ticks...and both gold and silver are being sold off...which makes no sense at all. The next couple of days are going to be interesting.

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.