From Ed Steer:

In gold trading on Tuesday, it was all downhill right from the Sydney open...with the real price drop occurring shortly after the Comex open...same as most other days. The bottom for the day occurred shortly after electronic trading began in the New York afternoon. As a matter of fact, the gold chart from Tuesday looks suspiciously like the gold chart from Monday. The volume yesterday [according to the usual N.Y. commentator] was "151,010 lots with a switch effect of 21,766...quite large."

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Silver's day was identical to gold's...a gentle sawtooth decline right from the Sydney open...with the bottom coming the same time as gold's.

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With the big decline in gold and silver prices on Monday...check the graphs above...one would have thought a decline in open interest would have been the order of the day. One would be wrong...again. Gold open interest rose 2,476 contracts to 375,875...and silver o.i. rose as well...605 contracts to 92,714. Ted says that I shouldn't read a lot into this because, he said something to the effect that we're big into the rollover for April gold, and there are probably a lot of spreads and switches masking the true open interest figures in both metals.

That may be true, but I must admit that these counterintuitive o.i. numbers are starting to make me nervous. I hope something more believable [and substantial] shows up in yesterday's open interest numbers when they become available later this morning. Hopefully these numbers [whatever they turn out to be] will be in this Friday's COT report.

In other gold news, the usual N.Y. commentator had the following..."The ECB weekly statement of condition indicated a €37 million fall in 'gold and gold receivables' -- 1.85 tonnes at the present book value. This is attributed to a sale by one captive Central Bank and purchase of gold by another. The Gartman Letter, which is happily short the yen against various currencies, announced the elimination of its last gold unit today, citing poor momentum." I see in a Bloomberg story that "European central bankers may extend their so-called Washington Agreement, capping gold sales, with an announcement as early as this month, according to UBS AG. A new agreement would most likely keep that 500-ton limit, according to John Reade, UBS analyst. ‘If it doesn’t happen this month it could lead to a bit of uncertainty’ in the gold market, Reade said by phone today." [Note to John: the gold world doesn't need/want a third Washington Agreement from the central banks! The producers and investors want all of them to stay the hell of the gold market entirely! - Ed]

A surprise in gold deliveries yesterday...803 contracts were added to the March delivery...of which 538 were delivered. The issuers were JPMorgan [473 contracts] and Prudential Bache [65 contracts]...and the big stoppers were JPMorgan [354] and Goldman Sachs [165]. Gold deliveries for March are now up to 1,921 contracts...not bad for a non-delivery month...and with more to come. The deliveries in silver yesterday were not worth mentioning...however, another 857 contracts were added to March delivery. That delivery should show up quickly...maybe even today. There's obviously big physical demand for both metals. On Monday, Ted Butler had said that the "March [contract in silver] had closed a penny premium to May." Ted told me yesterday that the premium to May had now gone to two cents. There were no changes in either GLD or SLV.

It's with grim satisfaction that I see in a couple of stories posted at Kitco, that Apex Silver Mines is selling its bankrupt remains to Sumitomo Corporation. That's what happens when you hedge and the market goes against you. Couldn't have happened to a more deserving bunch. And lastly, I see in a Reuters story that "the Government of Singapore Investment Corp (GIC) said they expect more weakness in financial markets in the next 12-18 months, and recommend investors hold gold and other safe assets..."

I have three stories today. The first one was sent to me this past weekend by P.S...for which I thank him. It's from Canada's Financial Post and bears the headline "Huge cargoes of crude are anchored, awaiting a price hike". The article goes on to say that..."Oil companies desperate to avoid selling at current depressed prices are mothballing huge quantities of crude in ships as part of a bet that markets will improve if they wait long enough." The story is not just about oil but "an impending 'disaster' as the [shipping] industry tries to cope, over the next three years, with the arrival of 3,000 new bulk carriers ordered by 479 ship owners." The link is here.

And in a story posted late yesterday over at Kitco, comes this piece from money.ninemsn.com headlined "UBS recommendation fails to lift gold". In it, "UBS told investors on Tuesday to increase the weight of gold in their portfolios, warning that bullion prices could soar because the prospects of either deflation or inflation were ‘becoming more extreme’. The Swiss bank, one of the most active gold dealers, warned [??? - Ed] of ‘a potential upside of $2,500 an ounce’." [Note to UBS: If I were you, I'd run this price past JPMorgan to see what chance it’s got. - Ed] The link is here.

And lastly is silver analyst Ted Butler's latest commentary posted at investmentrarities.com. Butler reports that the short position in silver on the U.S. commodities exchanges has reached another record in concentration. He again appeals for people to contact the U.S. Commodity Futures Trading Commission and their members of Congress about it. His new commentary is headlined "Regulators Who Won't Regulate"...and the link is here.

This is manipulation, pure and simple. If the price of silver were at a fair and free level, there would be many different participants competing to sell contracts, not just one to four. As it stands, there are very many traders buying and looking to buy, while the sell side is populated primarily by one big U.S. bank...JPMorgan Chase. - Ted Butler, 10 March 2009

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Well, the Dow caught a bid yesterday on Citigroup's fairy tale...and stock markets around the world rejoiced in an orgy of ecstasy and short covering. How long it will last is anyone's guess, but when it comes to an end, I'll be standing there ready to go short. This is but a brief pause on the road to perdition...and Doug Casey's "greater depression".

See you on Thursday.

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