From Ed Steer:

After the out-of-the-blue gold price take-down in Globex trading late Monday afternoon, it was a sure bet that it was harbinger of things to come...and it was. Right from the Sydney close on Tuesday afternoon, gold was under heavy selling pressure through the balance of Hong Kong trading and the London open on Tuesday morning. Gold was promptly dropped another $12 the moment that Comex trading began in New York...and that was the low of the day. In 30 hours, starting at the London open on Monday morning, until the 9:00 a.m. Tuesday morning in New York...gold was nailed for almost $40. Every serious rally attempt got sold. By whom...and why? And you wonder why I keep repeating the expression that "no profit-maximizing seller ever sells like this...ever!"

The usual N.Y. commentator had the following to say about yesterday's gold action..."On the opening, Comex saw an immense selling surge. By 9 a.m., estimated volume was 100,261 lots--52.5% of the day's entire volume--almost enough for a full day in recent times. Gold did fall--down $34 on the day at its extreme--but subsequently struggled back to close $28.70 down from the previous close. Estimated volume was a very substantial 192,971 contracts, with a switch effect of 32,224."

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Silver got dinged for over 60 cents in the same 30-hour time period. The silver graph makes the not-for-profit selling even more obvious. You can tell that silver wanted to rally, but every time it did, someone showed up to sell it off.

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As I said yesterday, options expiry for gold for April [it's not a delivery month for silver] is Thursday at the close of trading in New York. At present, there are 13,287 call options in gold that are still open between $900 and $925, and it would be my bet that the bullion banks would like to see the vast majority of these finish out of the money. By the time you read this rant, the boyz will have about 30 hours left to do what they can to the downside...if that's their objective.

As far as open interest changes for Monday, and that big down day...I said yesterday that I expected o.i. to drop in both metals...but not a lot. How wrong I was! Gold open interest rose 4,504 contracts. Was gold's big price drop caused by someone putting on a large short position? Maybe the COT on Friday will tell us. In silver, o.i. also rose, by 356 contracts. Is someone shorting silver too? Beats me. Tuesday's price declines were even more extreme than Monday's...and after my lousy prediction yesterday, I shan't hazard a guess as to what the o.i. numbers will show when they become available around noon Eastern time today.

There were no Comex deliveries in either gold or silver that were worth mentioning yesterday. There are still 301 silver contracts to be delivered before the end of the week for March delivery...and Ted Butler was saying that there were over 1,400 contracts traded yesterday in March gold. That's very strange. Why couldn't they wait until next Tuesday [March 31st] which is first day notice for delivery into the April contract? Obviously someone didn't want to wait until then. The Comex delivery pattern in gold will be interesting to watch for the rest of the week. Another 300,889 ounces of silver were withdrawn from the Comex-approved warehouses yesterday. After Monday's big update, it's no surprise that the U.S. Mint showed no changes. GLD was up 10.7 tonnes...344,000 ounces...and the SLV was unchanged.

From the usual N.Y. commentator comes the following..."Today's European Central Bank weekly statement of condition disclosed a €13 million decrease in 'gold and gold receivables' which 'reflected the sale of gold by two Eurosystem central banks.' This is only 0.65 tonnes - 20,900 ozs - and compares with a 5.25 tonne drop last week. Unlike the last two weeks, there is no mention of a 'Eurosystem' CB buyer. The fact that two captive CBs are involved in this absurdly small transaction implies option sales being called away."

And one final note on the precious metals. Considering the price action in both gold and silver over the last couple of days, the shares have held up extremely well. One might ponder why this is so...but in the same thought...pray that this trend continues.

So many stories...and so little space. I've got four today. The first is a Bloomberg story filed from Tokyo. The headline reads "Japanese Young Boost Gold Buying Amid Recession, Retailer Says". It appears that "young Japanese retail investors are turning to gold purchasing plans at an unprecedented rate as they seek to protect their finances amid a deepening recession." The link is here.

The second story is a GATA release from secretary treasurer, Chris Powell. It's entitled "More documentation of central bank gold rigging--buried". A "long MarketWatch.com story published today about the decline in central bank gold sales may be most notable for coming upon without recognizing it, and thus burying, what appears to be more documentation of the central bank gold price suppression scheme. The new documentation of the gold price suppression scheme comes in a report by the London precious metals consultancy VM Group." The link is here.

Posted at the Financial Times in London is a rather disturbing story that doesn't warm the cockles of my heart in the slightest. The thought that Goldman Sachs may end up owning Barclays iShares management business...including the SLV...is a very depressing thought. Picture this if you can...two of the biggest crooks in the U.S. financial industry...one as manager...the other [the biggest silver short on the Comex...JPMorgan] as custodian...running SLV together! If that doesn't make you want to sell SLV and buy physical in hand, I don't know what would. The story is headlined "Goldman working on iShares bid" and the link is here.

And lastly comes this story from Canada's Financial Post. It's entitled "Goldman Sachs, Welfare Queen: Wall Street's most storied firm is surviving on taxpayer dollars". A good chunk of the money taxpayers gave to AIG as part of the bailout found its way into financial institutions such as Goldman Sachs. And "as Eliot Spitzer pointed out, because the government didn't let AIG formally file for bankruptcy, Goldman, and so many others, have instead been made whole." [That's the entire reason why AIG was kept alive. - Ed] I thank P.S. for sending this story along. The link is here.

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The Fed said it will start monetizing Treasuries today – notes with maturities from 2/16 to 2/19. Ya think China will sell some? We'd hit the bid if we held what China holds. - Bill King, the King Report, March 25, 2009

Monday's big rally was all smoke and mirrors...despite what "Little Timmy" Geithner had to say. In a Bloomberg story filed shortly before midnight last night, Japan reported exports plunging 49.4% in February, shipments to the U.S. down 58.4% and automobile exports crashed 70.9% in February. This is a world-wide economic collapse on a biblical scale. Nothing can stop it now...not the PPT, the Fed, the U.S. Treasury...or the upcoming G20 meeting in April. And as the Mogambo Guru keeps saying..."We're all freakin' doomed!"

See you tomorrow morning.

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