From Ed Steer:

Gold tacked on about five bucks in early Far East trading before moving sideways through most of European trading. A small sell-off, starting just before the Comex open, ended with a bang at exactly 9:00 a.m. New York time. Within an hour, gold was up over $20 before a not-for-profit seller put an end to the festivities. The graph then took its usual turn to the right...and that was it for the rest of the trading day. Total estimated volume was 128,629 contracts, with a switch effect of 9,634.

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Silver, as usual, was more volatile. It lost about 20 cents from the opening of trading in Sydney until the Hong Kong close...and then rose until shortly after the London silver fix [12:00 noon in London]. From there it came under fairly substantial selling pressure. It dropped 25 cents in two hours, but was off like a rocket [along with gold] at 9:00 a.m. Its peak price of the day came a little later than gold's...before its price was capped as well.

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Open interest for Wednesday showed that gold o.i. dropped another 1,558 contracts to 369,763. In silver, o.i. shrank a smallish 379 contracts to 91,881. These aren't big numbers, but as Ted has pointed out to me on several occasions, the true decline in the bullion banks’ short positions can be masked by spreads and the purchase of long contracts instead of covering their short positions. The COT report at 1:30 Eastern will tell us a lot. Ted Butler also pointed out to me yesterday, that Thursday was the third or fourth day in a row where March silver has been in slight backwardation to the May contract. It was two cents the ounce on Tuesday...but has narrowed to a penny and a half since then. It's something that both he and I will be keeping an eye on as the month progresses.

In March Comex deliveries, there were only 89 gold contracts delivered and none at all for silver. Currently there are 135 contracts in gold still to be delivered in March...plus a rather healthy 827 contracts to be delivered in silver. This precludes any other deliveries in either metal that may be added between now and the end of the month. Over at the U.S. Mint, another 8,500 one troy ounce gold eagles were stamped out, bringing the March total so far to 55,500. There was no reported change in silver eagles. Silver inventories at Comex-approved depositories rose a smallish 116,887 ounces yesterday. The GLD ETF added 108,000 ounces yesterday to a new record high of 1,041.53 tonnes. The SLV ETF was unchanged. And the precious metals stocks put in a respectable performance yesterday.

The usual N.Y. commentator had the following things worth sharing yesterday..."An ongoing oddity in the world of gold recurred today with a Chinese announcement carried by Reuters that the country produced 60.461 tonnes of gold in February...up 107.6% from January. The Chinese Statistics Bureau said Jan/Feb '09 output was 14.3% above '08." Then there was this..."This morning in a curious remark, The Gartman Letter, which is currently out of gold [Dennis dumped his remaining long positions on Tuesday. - Ed], said: 'We are flat and we are nervous. We are nervous in that we fear always that gold shall simply choose to stand up and rush higher, leaving us behind. Why we are that nervous is another question for another time, but suffice it to be said that we are...and we give voice to that concern here this morning.'...which casts an interesting light on this morning's sudden $24+ jump."

Yesterday was the second day in a row that gold pulled a little further away from the 50-day moving average. Is the bottom in? I wish I knew. Ted and I have had some rather lengthy discussions about this during the last couple of days. The big drops in gold and silver prices over the last two weeks have made no appreciable impact on the huge short positions carried by the '4 or less' bullion banks in the Commercial category of the COT...so obviously there was no massive liquidation of long positions by the tech funds/small traders either. We don't know if the bullion banks either can't do it...or aren't putting a lot of effort into the attempt. Maybe they've painted themselves into that proverbial corner and are really trapped this time. Ted postulates that maybe the players have changed in the Non-Commercial category...and these new players, instead of being 'black box' types that sell on moving averages, have been replaced by other participants with longer-term investment horizons. We shall see, as they say, in the fullness of time.

I note in a Dow Jones story [posted at Kitco] that January gold production in South Africa was down 8.7% from the same month in 2008. In a story about fourth quarter gold dehedging posted at miningweekly.com..."the value of the global hedge book fell by 2.13 million ounces, according to GFMS. Dehedging was concentrated among four main companies, led by AngloGold Ashanti and Barrick Gold. For the year as a whole, 11.52 million (delta adjusted) ounces were removed from the global hedgebook in 2008...leaving 15.52 million ounces left at the end of 2008...of which AngloGold Ashanti and Barrick hold two thirds of the remaining total." GFMS went on to add that "Gold dehedging will slow in 2009, and a return to hedging is unlikely." [Note to GFMS: "Unlikely"...ya figure? You guys certainly have a keen grasp of the obvious, as hedging was the stupidest idea ever invented. - Ed] And lastly, in a Bloomberg story headlined "Geithner Seeks 'Forceful' G-20 Action, More IMF Funds"...comes this old canard..."The Obama administration soon will also push Congress for legislation that allows the IMF to ‘mobilize’ its stockpile of gold, Geithner said yesterday."

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Because my Thursday rant disappeared into cyberspace yesterday [mostly my own doing] I have quite a few stories today. On Wednesday, the Bank of England announced that it was buying 'gilts'...British government bonds...so monetization is on in earnest in Britain. Today's first story is from the Financial Times in London and was posted after the New York market closed yesterday. The headline reads "Swiss action sparks talk of 'currency war'." It appears that, in beggar-they-neighbour fashion, the Swiss National Bank has moved to weaken the Swiss franc by monetizing SFr corporate bonds. I thank Craig McCarty for the story. The link is here.

In a Bloomberg story from yesterday comes this headline..."China New Yuan Loans More Than Quadruple on Stimulus". "M2, the broadest measure of money supply, climbed 20.5 percent from a year earlier, the fastest pace in more than five years, after growing 18.8 percent in January." This is hugely inflationary. Once again I thank Craig McCarty for this story...and also the next one as well. The link is here.

And in yet another Bloomberg story comes this headline..."ECB Approaches Zero Rates by Stealth With New Weapon" "Trichet is allowing the ECB’s deposit rate, which lenders earn on overnight deposits with the central bank, to usurp the benchmark refinancing rate and become the main driver of short-term borrowing costs. At just 0.5% percent, the deposit rate matches the Bank of England's key setting and is only a step away from the zero-to-0.25% range the Federal Reserve uses." The link is here.

The last two stories are ones that disappeared into cyberspace in the wee hours of Thursday morning. The first is a Reuters story filed from Zurich. The headline read..."Swiss investors pile in on money markets, gold"..."data also shows that the fund with the highest inflows was the Zuercher Kantonalbank gold ETF which pulled in 523 million francs. The next major beneficiaries of inflows were individual money market funds. Julius Baer physical gold funds, ZKB silver and ZKB platinum also saw strong inflows. [These Swiss ZKB funds are the ones that I report the changes on every week on Monday or Tuesday. - Ed] The link is here.

In a story posted at platts.com is this headline..."Central banks were January net buyers of 1.1 million oz of gold: CPM". It's only five short paragraphs. The last paragraph is of interest, where the CPM spokesperson says "It seems highly unlikely that such large net purchases of gold by central banks will continue..." and then in the next sentence he goes on to say "Others are buying small volumes and considering larger purchases..." So is CPM bearish or bullish? [Note to CPM Group: So, Jeff...which is it? - Ed]. The link is here.

When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see money flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that your society is doomed. - Ayn Rand, Atlas Shrugged (1957)

So...here we are. The die is cast. First the British, now the Swiss of all people...and soon all central banks...will be monetizing debt. The printing presses [or their electronic equivalent] will be running white hot. Save yourself while there's still time. Buy all the physical gold and silver you can find...and afford. The hyperinflation of Zimbabwe is in our future somewhere.

All of us at Casey's Daily Resource Plus look forward to seeing 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.