From Ed Steer:

Tuesday trading in gold turned into a pretty big bear raid. As I mentioned briefly in my rant yesterday...starting shortly after Sydney opened on Tuesday morning...someone bombed the bullion market with a big sell order. The word 'big' is relative in this case. In the extremely thin trading that characterizes Far East gold and silver activity...a 1,000 contract sell order would hammer the market...and that's pretty much what happened in gold. Ditto for silver.

Anyway, after the Sydney pounding [courtesy of the U.S. bullion banks out of N.Y. one would think], gold didn't stray far away from $897...and was within a whisker of that price when trading began on the NYMEX/COMEX at around 8:20 a.m. in New York. Then it was lights out. A vertical decline like that can only occur if there is huge selling volume into a no-bid market...i.e. the traders for the bullion banks stand there with folded arms while the other traders try to sell. No bid...down goes the price until the bullion bank traders unfold their arms and start buying at the price they've been told to buy at. It's as simple as that. It works the other way as well. A vertical price spike [and we have seen a few of those recently] means there are lots of bids...but few [or nobody] on the 'ask' side. But I digress...

Silver's activity followed pretty much in lock step with gold...although the price moves weren't as violent...and silver was helped to the down-side during London trading...a couple of hours before the boyz in New York went to work on the price.

Anyway, when you blow away all the smoke, between the Sunday night price peaks in Sydney and Hong Kong...and the lows shortly after the Comex opened in New York Tuesday morning...gold was smacked for $35, and silver for 90 cents. Most of the damage was done in three or four strategically placed hits to the market that just set the tone and the momentum. This is not normal trading at all...and it certainly isn't a free market, as no profit-maximizing sellers ever sell like this...ever! I've been using that expression a lot lately. I hope you're getting the message.

Here's the gold chart for the period specified above. You can see every place that the New York [not for profit] bullion banks showed up.

click to enlarge

Needless to say, Ted Butler and I had our usual chats yesterday. He said that the volume in silver on Tuesday was super-low...like the lowest ever [net of spreads]. He felt that the senseless attack on gold and silver [especially silver] was not directly Comex-related...but could have been the bullion banks going after the silver longs held by the hedge funds that trade in the OTC market. Options expiry in the OTC market was Tuesday...not Monday.

The usual N.Y. commentator had the following to say yesterday..."Today’s European Central Bank weekly statement of condition indicates a drop of €823 million in “gold and gold receivables” which “reflected the sale of gold by two Eurosystem central banks”. This is 37.1 tonnes. Of this, 35.5 tonnes must be the sale by the ECB itself, revealed at the end of March. A 1.6 tonne sale by one of the captive CBs is a bit higher than the recent pace – last week’s reported sale was only €6.0 million...or 0.27 tonnes. Far below the notional 9.6 tonne average implied by WAG2.

"Why the ECB chooses to wreck the veracity of its weekly statements of condition (initially so impressive) remains a puzzle. An ECB Council member told Reuters today that Bank plans to ‘renew its commitment to the Central Bank Gold Agreement (CBGA)’ which expires in September and is running late for renewal. That goes some, but not all the way, to meaning that there will be a new one."

Open interest changes for Monday [Comex options expiry in gold and silver] were as follows. Gold o.i. fell a smallish 157 contracts to 346,479 contracts...and silver o.i. fell a more substantial 899 contracts to 94,721. These numbers will be in Friday's COT. Tuesday's open interest numbers will be interesting when they become available later this morning.

The Comex Delivery Report showed that 752 gold contracts [75,200 ounces] were delivered yesterday. The big delivery was by Goldman Sachs [710 contracts]...and the big receivers/stoppers were Bank of Nova Scotia [413], JPMorgan [161] and Bank of America [134]. Today is the last delivery day for April and it will be a pretty busy one...as yesterday was the last day of trading in the April contract...and it was interesting, as another 1,179 contracts were purchased for delivery in April. As I said, today is the last day for delivery into the April contract...so the Comex Delivery Report should show as many as 1,752 gold contracts delivered when it's released this morning.

Over at the Comex-approved warehouses, silver stocks rose a smallish 203,678 ounces. There were no other changes anywhere...the U.S. Mint...the ETFs...nothing.

The only gold/silver story worth noting was the Bloomberg piece filed over at Kitco...where GFMS Ltd. was waxing philosophical on the first quarter gold scrap situation. This is sort of old news, but now they have some real numbers to go with it. The piece is entitled "Gold Scrapping May Have Reached 500 Tons, GFMS Says". This short story is worth running through...and the link is here.

I've got another whack of stories again today. The first is an AP story from this past weekend that was posted at breitbart.com and is entitled "Italy's Mafia thrives in global financial meltdown". I thank P.S. for sending this story along...and the link is here.

In a story that appeared in The Wall Street Journal yesterday is this missive entitled "Car Dealers' Next Headache: Inventory Loans"..."The two auto makers have about 10,000 dealers in the U.S., with the bulk of them carrying considerable debt, mainly from the money they borrow to buy cars that sit on their lots. If Chrysler or GM were to file for bankruptcy protection, the banks extending that credit could immediately begin calling dealer loans, demanding a good portion of the money back and refusing to extend any more inventory financing." It sure sounds ugly to me. I thank Craig McCarty for the story and the link is here.

A story posted in the New York Times bears the following headline..."Italy Seizes Millions in Assets From Four Banks". With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized abut $300 million in assets of four global banks...JPMorgan Chase, Deutsche Bank, UBS and Defa. This is another multi-billion dollar story in the making. I once again thank Craig McCarty...and the link is here.

The next story is by John Crudele from the New York Post. John smells the body odour of Goldman Sachs all over this stock market...and at the same time wonders what the President's Working Group [PPT] is up to. The article is entitled "Questions About Goldman Sachs' Role in Market" and the link is here.

And lastly comes this story...once again from The Wall Street Journal. It asks lots more embarrassing questions about the Bank of America and the Merrill Lynch deal. And rightly so! The title of this article is "Busting Bank of America: A case study in how to spread systemic financial risk" and the link is here.

I look at the stock, bond and currency markets and just give my head a shake. It's amazing what blind faith, B.S. and the Plunge Protection Team can do. As I've said before, the world's economy, financial and monetary system is done for. The bullion banks in turn are trying to shake the gold and silver trees for the last available long contract they can get, because I doubt very much that they will be around to short the next rally in either gold or silver...at least not at these price levels. That's what the last several days’ shenanigans have been all about. For gold and silver, today is the last delivery day in the April contract and tomorrow is first notice day for the May contract. Then all bets will be off.

See you on Thursday morning.

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