From Ed Steer:

Gold hugged the $875 mark all through Far East trading yesterday...and as I mentioned in my rant yesterday...gold got sold off a quick five-spot shortly after London opened. From there, it wandered around the $870 mark until the London p.m. fix [3:00 p.m. London/10:00 a.m. New York], where another eight bucks got shaved off the price. This turned out to be the low of the day...and from there, gold recovered almost all it lost in the prior twelve hours.

I note that, despite the despair in the gold market, the price didn't go down much yesterday...although the shares got hit pretty good. It wouldn't surprise me if there has been some serious short selling going on during the last couple of trading sessions. The sentiment is very bearish...which is what you almost always find when you’re approaching a major market bottom. And despite all the wailing and gnashing of teeth in the gold world yesterday, I also noted that gold's 200-day moving average has still not been violated.

The silver price was comatose. The price was almost ruler-flat all through Far East trading. But, it too got smacked at the same time as gold during early morning trading in London. From there, in a series of small stair-steps, silver closed below $11.90...a new low for this down-move.

As Ted Butler keeps saying...and I totally agree...silver is the centre of the bullion banks’ universe. The real purpose of the attack on the gold price was to get at the silver longs...so JPMorgan/HSBC could cover as many of their short positions as possible...and their plan is working just fine. Not only are the Non-Commercials and Nonreportable traders selling their long positions...but they are going short as well...in both gold and silver. The bullion banks may also be going after the hedge funds that are still long in the OTC market...which is obviously who they were after in the last quarter of 2008. The last derivatives report from the OCC proved that.

The open interest numbers for Thursday were very revealing In the face of huge price declines, o.i. numbers in both metals rose. In gold, o.i. rose 3,614 contracts to 339,757...and silver o.i. rose 374 contracts. Huge price declines, combined with rising open interest, is almost always a sign that the Non-Commercials and Nonreportables are selling longs and going short...while JPMorgan/HSBC USA et al cover short positions and go long. Friday's open interest numbers [when available on Monday] will most likely show a continuation of this pattern.

However...because all this activity occurred on Thursday and Friday...it won't show up until the Commitment of Traders report next Friday...April 24th.

Talking about the COT, the new one on Friday was underwhelming. I wasn't happy about it, and Ted told me to take another pill. After some explanation, I must admit that he was right...the real price declines in silver didn't start until Thursday...long after Tuesday's cut-off for yesterday's COT report. Silver actually rose most of the time during this past COT reporting period. The real improvements won't show up until next Friday's report.

In this latest COT...the bullion banks decreased their net short position in silver by 723 contracts while the tech funds in the Non-Commercial category decreased their net long positions by 835 contracts. The other 112 contract increase in net long position [don't forget...the longs and the shorts must balance] came from the small traders in the Nonreportable category. The link to the full-colour silver COT report is here.

In gold, the bullion banks actually increased their net short position by a smallish 286 contracts. The tech funds in the Non-Commercial category went longer still...increasing their net long position by 2,083 contracts. To balance it all out, the small traders increased their short position by 1,797 contracts. As with silver, the real damage didn't start until after the Tuesday cut-off for yesterday's COT report. The easy-to-read, full-colour graphics-intensive gold COT report is linked here.

In other gold news, the usual N.Y. commentator had this to say..."The GLD ETF dropped another 13.45 tonnes [432,400 troy ounces] in reported gold holdings...to 1105.98 tonnes. This means that in two days, 21.7 tonnes has been shed. To find similar declines, one has to return to the tumultuous days of early September last year. Those who lay weight on the timing of GLD changes will be negatively influenced...UBS cast some further light on the Indian situation today: Yesterday, UBS sold the largest daily amount of gold to India in 2009...a quantity large enough to be called "good", if not quite "strong"...Vietnam reported a sharply higher local physical gold premium of $19.48. Smuggling demand is certain. The Shanghai Gold Exchange bounced back to a premium of $5.32...Today The Gartman Letter considered adding to its short, but decided to wait until Monday."

And lastly...in palladium news...I hear that "New legislation has been passed by the U.S. government which will allow the U.S. Mint to produce 0.995 fine one ounce palladium versions of Saint-Gaudens' ultra-high-relief bullion coins. All the palladium is to come from the Stillwater Mine in Montana." I get the distinct impression that the palladium coin will only be issued in a set with the ultra-high-relief gold bullion coin...and cannot be purchased on its own. In an interesting comment at the bottom of the article it said the following..."Figures suggest that 28,173 gold 2009 ultra-high-relief $20 double eagle coins were sold by the Mint on their first day of release, with that total now rising to 56,527." If you combine that mintage with the 415,500 one ounce gold eagle bullion coins that the U.S. Mint has already produced this year...there's some really large gold consumption occurring. I thank Brad Robertson for sending that info along.

I have three stories today. The first is from Bloomberg where Bernanke finally admits that the "collapse of U.S. lending will probably cause 'long lasting' damage to home prices, household wealth and borrowers' credit scores." [Note to Bernanke: Ben, you have a keen grasp of the obvious. Now do the world a favour and resign! - Ed] The link is here.

The next story is from the April 16th edition of The Economist. It's another story about South Africa. This one bears the headline "South Africa's Elections: Voting for the people's man". The outcome of this election is not in doubt, but many Africans are nevertheless deeply worried about what might happen to the country under the new President and an all-powerful, perhaps even vengeful, African National Congress. The story is definitely worth the read, and I thank P.S. for sending it along. The link is here.

And from The Times in London comes this story. The headline reads "Israel stands ready to bomb Iran's nuclear sites". We've been hearing stories/threats like this for years. Does this one have any more credibility than the others? Time will tell. I thank Craig McCarty for the story..and the link is here.

One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be...The damage from this turn in the credit cycle -- in terms of lost wealth, lost homes, and blemished credit histories -- is likely to be long-lasting. - Federal Reserve Chairman Ben Bernanke, Bloomberg, 17 April 2009

Today's 'blast from the past' is one of these 'one hit wonders' that ensured that this artist would forever have a place in the sun. The year was 1974...and what a song it was! Turn up your speakers and click here.

Well, Ben Bernanke said it all. Absolutely nothing has to be added to that above quote. He knows perfectly well...like you, dear reader...just how black it's going to get as we move farther down the economic, financial and monetary road we're travelling. As for gold and silver...the current gold cartel-inspired shit-kicking will end soon enough. It's always darkest just before dawn...so hang in there.

I hope you enjoy what's left of your weekend...and all of us here at CDR+ will see you bright and early on Tuesday morning.

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