From Ed Steer:

Gold was under pressure right from the open of Globex trading in the Far East on Friday morning. The 'bottom' came shortly after 1:00 p.m. in Hong Kong. From there, the gold price rose more or less steadily through the London open...but really started to accelerate to the upside after the London a.m. fix. This pleasant state of affairs obviously wasn't going to survive the bullion banks' floor traders on the Comex when it opened...and it didn't...plus the boyz pulled their bids the moment that London closed for the weekend. Gold cratered more than $20 in less than an hour. But precisely at noon in New York, a buyer showed up [short covering?] and the day's losses were minimized.

The gold price has finished lower for the last five days in a row...but if you look at the Kitco gold chart [the silver chart is similar] you'll notice the obvious...and that is this...if the bullion banks weren't there to beat the living crap out of the price in New York every day, gold would have been much much higher than it is now. But despite that, the HUI managed to close with another small gain even in the face of a down day in the metal itself...and a stock market rout at the end of trading yesterday.

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Silver, the centre of the universe for the '4 or less' traders, had a very similar day...with lows and highs a mirror image of what was going on in gold. Those people that say silver is 'just an industrial metal' are full of it. Kindly compare the Kitco silver chart below to the gold chart above.

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Gold open interest numbers are still arriving via the Twighlight Zone. Thursday's o.i. numbers showed an increase once again...this time 3,143 contracts. Total gold o.i. is now 376,482 contracts. I just can't figure out what's going on, as I've never seen anything like this in all the years I've been watching these numbers. Gold is down the better part of $60 since Tuesday, and gold o.i. has been up every single day since. But as I said earlier this week...next week's COT will tell all...and I'll bite my tongue until then. As for silver...another big decline...this time by 3,218 contracts to 95,246. At least one metal is doing what it's supposed to.

The Commitment of Traders report in silver showed that the tech funds and the small traders went net long 2,180 contracts between them...and the bullion banks went short against them all. Same old same old. In gold...well...where do I start? The numbers are the equivalent of waking up in the morning to find the sun rising in the west. Don't forget, this COT report is for positions held at the end of trading on Tuesday...up until then, prices were mostly rising...and the gold COT should reflect that...just like the above silver numbers do. But they didn't. This time the tech funds and the small traders [Non-Commercial and Nonreportable] both went short 5,424 contracts and the bullion banks [Commercials] went long against them by the same amount. I flat out don't believe it. If these numbers were true, that would mean that gold declined substantially in price from February 18-24...which it didn't do. Here are the 'full colour graphics-intensive' representations of the long-term COT for both gold and silver. I urge you to stop here, and check them out. They say that a picture is worth a thousand words. In this case, it certainly is. The gold COT graph is linked here...and the silver COT graph is linked here.

In other gold news, I see in various stories around the Internet, that India imported no gold in February of this year vs. 23 tonnes last year. That should be no surprise, as the rupee gold price is sky high...just like it is against virtually every world currency... including our local fiat scrip...the Canadian dollar. Here's something on this issue from the usual New York commentator..."Negative news from the physical front abounds. Dow Jones: European gold refiners are being overwhelmed by scrap sales from Asian and Middle Eastern jewelry owners, who are cashing in on the surge in gold prices. Scrap gold sales of jewelry and old gold bars now outweigh demand for coins, new gold bars, and gold exchange-traded funds… Michael Kempinski, a trader at Commerzbank, which has a 35% stake in Argor Heraeus SA, another large European gold refiner, said the amount of scrap the refiner is taking in is "huge." Medium-sized gold dealers and fabricators who normally buy 10,000 to 20,000 ounces a week are now delivering one to two tons of scrap gold to Argor Heraeus, Kempinski said. Even in Europe there are some signs that investment demand for gold bars and coins has slowed, Heraeus said in a report this week. Once gold rose above $980/oz, demand in Germany slowed down. Precious metals dealers in Germany are reporting investors are selling old Krugerrand gold coins."

GLD remained unchanged on Friday, whereas the SLV actually declined 4.0 million ounces. In a conversation with Ted Butler on this issue, he said that the managers of the SLV, when they don't have the metal to deposit that they have shares issued for, have to short the shares until the metal arrives...or until there is enough selling of the fund by shareholders to allow them to cover their paper shorts against the SLV, and therefore they don't have to come up with the 20 million ounces that Ted said they were owed. This little JPMorgan-inspired sell-off in silver accomplished that very thing. By driving the silver price down, no physical silver had to be transferred to the SLV...in fact the SLV manager not only covered all their SLV shorts as investors sold...but there was enough additional selling to allow 4.0 million ounces to be sold out of the fund.

Also yesterday was first day notice for delivery into the February contract...as March is a big delivery month in silver...but not large in gold. On the first day, 383 gold contracts were delivered. The two biggest issuers were Bank of Nova Scotia and Prudential Bache. The biggest stopper was Fortis Clearing who took 334 of them. In silver, JPMorgan issued 782 of the 783 contracts delivered. Goldman Sachs and Bank of Nova Scotia were the big stoppers...receiving 548 of these contracts. And lastly...another 1.0 million ounces of silver disappeared out of the Comex warehouse stocks yesterday.

In 'other news' there's only one item that I want to mention and that's this story from marketwatch.com headlined "U.S. GDP revised to decline of 6.2% in fourth quarterter" - "The U.S. economy was hitting on almost no cylinders in the fourth quarter, as gross domestic product fell at the fastest pace since 1982 on sharp declines in consumer spending, investment and exports, the government said Friday. GDP fell at a 6.2% seasonally adjusted annualized pace in the final three months of 2008, revised from the initial estimate of a 3.8% drop, the Commerce Department reported." I mentioned in my closing comments in Friday's rant that some economist had said GDP will fall 10% in the first quarter of 2009. That's not a stretch after this revision. The economy in the USA is imploding at warp speed...just like every other country.

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Today's first story is from Bloomberg. I've known for a while that the water situation in Las Vegas [and elsewhere in that area of the USA] was getting desperate. I discovered this story yesterday and thought it worth sharing. It's entitled "Las Vegas Running Out of Water Means Dimming Los Angeles Lights" and the link is here.

The next story is from Reuters. The article is headlined "Argentina calls CIA comment "irresponsible". "Argentina on Thursday blasted the head of the U.S. Central Intelligence Agency for saying the country, along with Ecuador and Venezuela, could be pushed into instability by the global economic crisis." The USA, through the CIA et al, has a long [and very ugly] history of meddling in the affairs of countries in that region. If you are not up to date on this issue, you would be well served by reading John Perkins' book Confessions of an Economic Hit Man. I thank Craig McCarty for the story. The link to this very short Reuters article is here.

And lastly is this GATA release. Just the other day, former Assistand U.S. Treasury Secretary Paul Craig Roberts admitted that the government was rigging the gold market...and in answer to a reader's question on this, GATA's secretary treasurer, Chris Powell, gave a short version of 'Gold Market Management 101'. The title to the commentary is "Central banks don't want their leased gold back." It's certainly worth the read, and the link is here.

With their relatively large stocks of physical gold, and the complicity of institutional agents such as JP Morgan to help suppress “paper gold” in futures markets, the bankers still have enough influence over bullion’s price to temporarily suspend the laws of supply and demand. - Rick Ackerman

Today's 'blast from the past' is a gathering of eagles...giants of the music world...all together for one session. Let's see...on piano is Ray Charles, Jerry Lee Lewis and Fats Domino...all playing at the same time. Ron Woods of the Rolling Stones, Carl Perkins (Blue Suede Shoes) are playing back-up. Even Rod Steward shows up briefly. All of the above directed by Paul Schaeffer. I thank Brian Clark for sending this along way back in October of last year. So turn up your speakers and click here.

Every Friday evening, without fail, I read what Doug Noland has to say over at prudentbear.com. There's nobody out there that's been closer to the U.S. credit markets during the 'bubble years.' Here's a short comment from his latest Credit Bubble Bulletin last night..."Year after year of reckless lending has quickly come home to roost. Our federal government has [now] commenced the process of trying to fill holes by inflating government Credit and obligations [by the Trillions]. Depending on the reader’s perspective, I risk appearing either the master of the obvious or a rabid sensationalist. Yet the stakes associated with the current course of fiscal and monetary policy are absolutely momentous. And I am compelled to write that “if you’re not confused...you don’t understand the nature of the problem.”

Take one red pill every day until I see you on Tuesday morning.