From Ed Steer:

Gold was under pressure right from the open in Sydney on Wednesday morning. This pressure accelerated once London was open for business. The bottom was in about fifteen minutes after Comex floor trading began in New York. A rally began that was highlighted by a big spike in the price around the time of the London p.m. fix. Was it that...or Geithner's lips moving? The top price of the day arrived shortly after Comex trading ended and electronic trading commenced. All in all, a very interesting 24 hours.

The usual N.Y. commentator had this to say about yesterday's activities..."Wednesday's dramatic Comex session was notable for huge volume--particularly before the Geithner "Open Mouth/Insert Foot" incident. By 10 a.m., 117,039 lots were estimated to have traded, with gold being successfully contained. A spike after the Geithner report carried April gold to up $18.20 on the day...although this was partially eroded on very heavy volume...the contract managed to close up $12 on the day. Estimated volume was 216,770 with a switch effect of 29,736 contracts. There seem to be very powerful forces active in gold at present."

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Silver, as usual, followed a similar path, but had an equally impressive down-spike in price just before, and during, the New York open. This had all the tell-tale signs of bullion banks pulling their bids. The price spike at the London p.m. gold fix was even more impressive to the upside. All in all, it was a wild and woolly Comex session for silver.

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Through all of that, one has to be singularly impressed with the way that the precious metals shares acted again yesterday...especially the strength into the N.Y. close. It certainly does appear that "powerful forces" are active in the gold market right now...and with options expiry today, it could be another interesting frolic in the Comex gold pits. We'll find out soon enough.

Tuesday's changes in open interest were as follows. Gold o.i. fell 4,703 contracts...which more than negates the surprise increase of approximately the same amount on Monday. Hopefully all of this will be in the COT tomorrow afternoon when it becomes available at 3:30 Eastern time. In silver, o.i. rose 541 contracts...which is a bit of a surprise considering the price action. These changes should be in the COT as well.

In other gold news, the March gold activity I spoke of on Tuesday came to fruition yesterday morning. There were 1,154 contracts delivered. The big issuer was Goldman Sachs [1,084 contracts] and the big stopper was the Bank of Nova Scotia [1,151 contracts]. So far in March, 414,100 ounces of gold have been delivered...which is noteworthy in the fact that March is a non-delivery month for gold. In silver, only 19 contracts were delivered....with about 300 March silver contracts still to go. There were no changes in either gold or silver eagles at the U.S. Mint yesterday...and no changes in GLD or SLV either. The Comex-approved silver warehouses added a respectable 1.26 million ounces. Could that addition have been moved in to partly cover the delivery of those 300 March contracts previously mentioned? Just asking.

In other news, I see in an AP story that the Postmaster General told Congress yesterday that the post office will run out of money this year unless it gets help. "We are facing losses of historic proportions. Our situation is critical." In a Reuters story, the headline read "IBM to cut 5,000 jobs in U.S." In a Bloomberg story, "California home prices dropped 41% last month from a year earlier, more than double the U.S. decline, as surging foreclosures drove down values, the state Association of Realtors said today." And lastly, in a UPI story...apparently the demand for milk "really dropped off the cliff in the last quarter of 2008." Most producers only get $11.50 per 100 lbs of milk...50% less than a year ago...and the National Milk Producers Federation has warned that "farm bankruptcies are looming" because a lot of producers can't come close to covering their costs.

A lot of stories today...most of them from Europe. The first one is from The Telegraph in London. The headline reads "City alarm as Treasury fails to sell Government gilts"...The British government admitted yesterday that, for the firs time since 1995, investors were unwilling to buy all the bonds that were on offer. As the shadow Chancellor said: "It is too early to say, but the risk is that at some point the Government will not be able to fund its huge debts." [Note to Geithner: Timmy, how soon will it be before this happens at a U.S. Treasury auction? - Ed] This is a 'must read' story and the link is here.

The next story is also from The Telegraph and is headlined "Czech Republic joins east Europe's falling dominoes". "The Czech government lost a vote of no confidence on Tuesday night in a drama that risks setting off a fresh round of investor flight from the region." This is another 'must read' article and the link is here.

Here's the third 'must read' article in a row. This one is from the Financial Times in London. "Barely a week before Barack Obama is due to arrive in Europe on his first official visit as US president, Mirek Topolanek, the Czech Republic’s prime minister, put the 27-nation EU on a collision course with Washington." The headline reads "EU leader condemns US 'road to hell'." I thank P.S. for this story...and the link is here.

And lastly, is this letter of resignation from the Jake DeSantis, Executive Vice President, A.I.G. Financial Products to Edward Liddy, Chairman and CEO of A.I.G. The letter showed up in the pages of the New York Times with a headline that reads..."Dear A.I.G., I Quit!" This is a very interesting and educational letter from inside the company and is certainly worth the read. I thank Casey Research's own John Grandits for the story...and the link is here.

Against stupidity, the gods themselves are powerless. - Friedrich Schiller, 1801

Anyone care to ponder on why the durable goods order number was so great...or how the Dow managed another positive close when it was obviously heading for the nether reaches of the earth...despite the 'wonderful' durable goods number? The comments over at the King Report this morning about the DGO report were not flattering...and nobody believes them. John Williams over at shadowstats.com knows they're lying. Bill King thinks that the PPT showed up at 3:00 p.m. yesterday. So do I. We are dangerously close to a world-wide collapse in everything. It's just a matter of how soon and how fast.

See you on Friday.

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