From Ed Steer:


Despite gold's best attempts to rally in the Sydney market, a determined seller took the price down once Hong Kong opened. It rallied a bit until 1:00 p.m. in Hong Kong (midnight in New York) and then got sold off again until shortly after London opened. A rally commenced until shortly after the Comex opened...and that was it for the day...as gold was capped every time it tried to rally over $980. Estimated volume was 121,349 contracts, with a switch effect of 8,040.

Silver was similar...with its top price coming at 1:00 p.m. in Hong Kong. A small rally in London was crushed...as silver came under selling pressure about an hour before the Comex opened. After the Comex close, silver did manage to gain a bit in electronic trading on the Globex.

The precious metals trading pattern sure looked like prices wanted to rise, but were beaten into submission by one or more not-for-profit sellers on every minor rally attempt. It's too soon to say whether one should be alarmed with today's action. I'm not. No price ever went straight up...and if we 'back and fill' here for a bit...that's perfectly all right by me. But having said all that, the 50-day moving average is $100 below the current price.

Wednesday's open interest showed another increase for gold...up 4,496 contracts to 366,115 contracts. Silver o.i. rose a smallish 367 contracts to 99,692. Considering the size of the price rise in both metals on Wednesday, these aren't overly large numbers...especially for silver. On the Comex, another 353 gold contracts were delivered...with JPMorgan and Prudential Bache being the big issuers [345 contracts]...and Goldman Sachs was the big stopper [332 contracts]. As these contracts were delivered into, the open interest declined accordingly, as 353 longs [and their associated shorts] were extinguished simultaneously upon delivery. It's interesting to note that a new bunch of longs [over 400 contracts] were added yesterday, and are now standing for delivery. Demand is not slowing down any. And lastly, Comex silver warehouse stocks were virtually unchanged on Thursday.

In other gold news, I see in a story posted at Kitco that "Gold demand rose 26% in the fourth quarter as investors bought the precious metal as a store of value amid a worsening global economy, the producer-funded World Gold Council said. Demand rose to 1,036.5 metric tonnes from 821.8 tonnes a year earlier, the London-based council said in a report." The usual N.Y. commentator stated..."The WGC 'Gold Demand Trends' also reported that China's gold consumption rose by 31.8% last year to 432.1 tonnes...while India's fell 14% to 660 tonnes"...on Tuesday and Wednesday "the GLD ETF added 22.94 and 15.29 tonnes respectively. Even if there is some double counting, the pace of alleged gold accumulation is startling..."

In other news, I see in a Bloomberg story that the Bank of Japan will buy $11 billion in corporate bonds to ease the credit squeeze. The printing presses are now running there, too. And in a story that was posted at businessinsider.com [which I shamelessly stole from lemetropolecafé.com] is this headline..."Stanford Employees Yelled "Ponzi Scheme!" 3 Years Ago". You don't believe it, you say? Well then...click here.

And from Casey Research's own John Grandits is this absolutely disgusting story of another Ponzi scheme that the SEC just put an end to. The headline reads "SEC Uncovers Ponzi Scheme Targeting Deaf Investors". You just can't make this stuff up! The story is linked here.

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Today's first story is about the banking crisis in Europe. One of the countries that's up the creek without a paddle is Switzerland. It appears that Swiss banks have lent out many times Switzerland's GDP to Eastern Europe. "Switzerland, like Iceland, is threatened with a potential national bankruptcy. One consequence would be that the Swiss currency could fall massively in value...possibly even crash." The story is from creditwritedowns.com and is headlined "Switzerland threatened with bankruptcy"...and the link is here.

The next two stories are actually videos...both courtesy of Craig McCarty. The first is from Tech Ticker at yahoo.com. It's an interview with retail consultant Howard Davidowitz. He paints a picture of a 'retail Armageddon' coming to America...with over 220,000 stores closing in the USA this year. It's headlined "Get Ready for Mass Retail Closings"...and the link is here.

This next video is from CNBC which is posted at dailyfinance.com. In it, CNBC's Rick Santelli incited the traders on the Chicago trading floor this morning, calling for a referendum to see if we want to "subsidize losers' mortgages" or buy cars and houses in foreclosure and "give them to people who might actually prosper down the road." There was obvious consternation at the broadcast center as Santelli mentioned The Constitution, Benjamin Franklin and Thomas Jefferson...and called for another "tea party" in Chicago in July. It's amazing to watch and the link is here.

And lastly, is this report from the GlobalEurope Anticipation Bulletin. It's entitled "4th quarter 2009 - Beginning of Phase 5 of the global systemic crisis: global geopolitical dislocation". It's a 'must read' and the link is here.

We are spending more money than we have ever spent before, and it does not work. After eight years we have just as much unemployment as when we started, and an enormous debt to boot. - U.S. Treasury Secretary Henry Morgenthau...May 1939

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To quote Enrico Orlandini..."as of the close yesterday, the Dow has now given up slightly more than 50% of its gain of the entire bull market that started in 1982 at 776.92 and ran until the October 2007 all-time closing high of 14,164.53...the Dow has [now] undone 50% of twenty-five years of gains in just 15 months. That's one nasty bear! Why is the 50% retracement so important? Simply put, the close below this support level at 7,470.72 means that, technically, the door is open for a retest of the 1982 bull market low....If you have any doubt that the U.S. is headed for a depression, the Banking Index should dispel that notion....These new lows confirm the new closing low in the Transportation Index as well, so we have a MAJOR bear market signal. I believe this is signaling the worst financial crisis since the 1907 crash..."

The President's Working Group has been trying to avoid this day for a while now. It finally failed yesterday. We are now in totally uncharted waters. A crash in just about everything is not out of the question. It's just a matter of when. Buy gold and silver bullion, take delivery, and hope for the best.

All of us at Casey's Daily Resource Plus hope you have a great weekend and we'll see you here again on Saturday morning.

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