From Ed Steer:

The usual not-for-profit New York bullion banks went after both gold and silver right from the Globex open on Sunday night. In the thinly traded Far East market, any selling [or buying] of consequence has a huge impact on the price. This time it was down...big time. I don't remember gold ever being down $20 by lunch time in Hong Kong...ever. Silver was down 35 cents. It was savage. From there, both metals traded sideways until the Comex open in New York at 8:00 a.m....where the boyz peeled another $15 off gold and 40 cents off silver. The bottom was in for gold at the London p.m. fix...10:00 a.m. in New York. Silver's bottom was at 10:45. Estimated gold volume yesterday was 119,802 contracts with a switch effect of 2,840.

This is price management at its most flagrant. It's illegal as hell, but neither the CFTC nor the SEC will do a thing about it. They are there to protect JPMorgan and HSBC USA et al, so they can go about their business of managing the gold and silver price. The CFTC pretends that everything is fine, even though anyone with more than a room temperature I.Q. [in degrees Fahrenheit, mind you] can see exactly what's happening.

As I said in my Saturday commentary...I am short-term bearish on both gold and silver. The reason given was latest COT report on Friday...and the gargantuan gold short position of the '8 or less' bullion banks...almost a record. I said that gold's 200-day moving average was in their sights...and that they would kill the silver price at the same time. Well, they killed silver...and stopped just a couple of bucks shy of the 200-day m.a. on gold. This selloff was engineered to do maximum psychological damage to the precious metal investor. Here is the 2-year gold chart.

click to enlarge

You will note how close we came to the 200-day m.a...less than four bucks. They could have sliced right through it if that was their plan...but I think they pulled their punches. Ted feels [after yesterday's action] that there are still between 50-60,000 Comex long gold contracts that the bullion banks could harvest...if they want to...and if they can. Ted figures that the bullion banks are net short about 15 million ounces of gold as of Monday's Globex close. When the bullion banks were at rock bottom in the COT...December 9/08...they held a net short position of only 9.5 million ounces. How low could the gold price go if they really got serious? Don't know.

And now for silver...here's the 2-year chart.

click to enlarge

After yesterday's brutal beating in silver, it's Ted's feeling [and I agree] that we are within a few thousand contracts [if that!] of the absolute lows that we also experienced in the December 9/08 COT, when JPMorgan and HSBC were short only 123.7 million ounces of silver. The bottom is basically in for silver right now...but we've got miles to go in gold. As I said on Saturday...the dichotomy between the two metals is incredible.

Not that I want to get too technical about it, but Ted pointed out to me that there is one silver moving average that still hasn't been penetrated on this down move...and that's the 100-day m.a....which is shown on the above silver chart. Is it a target? Don't know...but thought I'd point it out. The 100-day moving average in gold was penetrated yesterday. Also, when looking at both charts, you will note that the RSI for both metals is in the mid 30s. On a real clean-out they can be 10-15 points lower than that...so if JPMorgan and HSBC are going to do the 'full monty' on this...we've got a bit to go yet.

The usual N.Y. commentator mentions that...for the first time in months...India is now an importer, as is Vietnam. He also had this to say about the beating that gold took in the Hong Kong/Tokyo markets on Monday morning..."TOCOM opened to find world gold some $12 lower than last seen and the yen rather weaker...and world gold had lost another $15 by the close. The cause of this was identified by Mitsui, Hong Kong: '...a major bank was seen as an aggressive seller near $881 in [the] OTC market...The selling did not subside until noon after gold had seen $874...' Gold, in other words, was pushed."

Gold open interest on Friday declined a fairly decent 6,486 contracts. Silver o.i. rose 24 contracts. I expect Monday's numbers to show quite an improvement in both metals, but as I've said before, the bullion banks can hide their daily open interest tracks quite well...and only the COT report on Friday will tell all. The cut-off for Friday's report is at the end of trading today. Hopefully it will all be reported.

There was a fair amount of gold and silver news yesterday. I was surprised to see that there were no Comex gold deliveries. There are still [for the moment] about 2,400 contracts left to deliver in April. What are they waiting for? In silver, a handful of contracts were delivered. Over in Switzerland, the Zürcher Kantonalbank has updated their gold and silver inventories for their ETFs. As of last Friday, a smallish 30,897 ounces of gold were added for the week that was...but their silver ETF added an impressive 887,785 ounces. I thank Carl Loeb for that data. Nothing was added to either the GLD or SLV on Monday. Over at the U.S. Mint the new eagles numbers are in for the prior week. In gold eagle mintings, the number of one ounce gold eagles rose 29,500 last week to a total of 32,000 for the month of April so far. In silver, another 634,500 were added, bringing the monthly total to 677,500. In the Comex-approved silver depositories, there was big activity in three of the four warehouses. Only the Delaware Depository showed no action. By the time the smoke cleared, another 1,696,000 ounces of silver had been taken from Comex warehouse stocks. In the last four business days, almost 7.7 million ounces have been removed. That's a lot!

Four stories today...the first is a story that was posted at Kitco. It's from the Sunday Times in London and is entitled "New gold rush sweeps across America". The first paragraph reads..."GOLD FEVER is gripping America again with record numbers of people taking to the hills and streams of California and other states hoping to strike it rich." The article is not overly long...and the link is here.

The next article is from Ambrose Evans-Pritchard...so it's obviously from The Telegraph in London. Evans-Pritchard says..."Watch Switzerland closely. It is tipping into deflation, the first Western country to succumb to Japan's disease." The piece is entitled "Swiss slide into deflation signals the next chapter of this global crisis" and the link is here.

Here's another story saying that gold prices will not be much affected by IMF sales. This time it's from the hallowed pages of The Wall Street Journal. It's contained in a GATA release, as the WSJ URL indicates that the story is for 'subscribers only'. The link is here.

The last story today is by F. William Engdahl...as posted at Asia Times out of Hong Kong. It appears the Mr. Engdahl has made the connection between AIG and the five largest derivative-holding U.S. banks...as reported by the Office of the Comptroller of the Currency. I thank Craig McCarty for the story. The essay is entitled "Geithner's dirty little secret"...and the link is here.

President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days. - 03 August 1930, Washington Dispatch

Now that we know that they're serious...it's my guess that JPMorgan and HSBC USA are still not done to the downside as far as the gold price is concerned. I don't know how long they will take to get to whatever price they need to, to cover their huge short positions. Will it be death by a thousand cuts, and it drags on for months...or a couple of swift thrusts, and it's over by the end of this week? Hopefully the latter...and we'll find out soon enough.

I hope your Tuesday goes well...and I'll see you here tomorrow morning.

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