From Ed Steer:

As is almost always the case, gold got sold off a bit when the New York bullion banks were the only show in town early on Tuesday morning in the Far East. From there, gold added about five bucks, with the Far East high coming around lunch time in Hong Kong yesterday. From that point it got sold down into the London open...but from there...a rally began which lasted until London closed for the day at 11:00 a.m. New York time. Gold then got sold off five bucks to around $980...and that's where the price stayed until the end of electronic trading at 5:15 Eastern time. The usual N.Y. commentator said that "Estimated volume was only 87,230 lots, with barely 10,000 contracts trading in the final 90 minutes."

For the most part, silver's path was similar to gold's...with the bottom coming about 4:00 p.m. Tuesday afternoon in Hong Kong...shortly before the Tuesday morning open in London. The rally that began from there, tacked 50 cents onto the price by the time London closed for day...but someone [JPMorgan, most likely] took almost half that gain back in the next hour. However, silver powered back to within a dime of its London high by the close of Globex trading at the usual time...5:15 Eastern...and it's looking pretty frisky in early Wednesday afternoon trading in Hong Kong as I write this.

And talking about frisky...the gold and silver shares did pretty well for themselves yesterday as well.

Both gold and silver prices had down days on Monday, but you'd never guess that by looking at the open interest numbers. Gold o.i. only fell 38 contracts to 388,594 contracts. Volume was pretty light for a change...only 107,180 contracts. Despite the fall in the silver price, o.i. actually rose a largish 868 contracts to a total open interest of 103,499 contracts. Volume was a chunky 27,326 contracts. The new COT comes out on Friday, and all Monday's data will be in that report.

A fair amount of gold and silver news today...the first of which has to do with GLD and SLV. In my rant yesterday I stated that there were no changes to either ETF on Monday. I was wrong...and in spades. GLD added 15.27 tonnes [490,000 ounces] to its alleged gold holdings...and a new record high of 1,134.03 tonnes. And there were even bigger changes at SLV, which was up 8.3 million ounces to 276.77 million ounces...also a new record high. Ted Butler feels that SLV is "still owed 15 million ounces, perhaps." Yesterday in SLV, there were 100,000 ounces withdrawn...which Butler feels is probably a fee payment. There were no changes in GLD on Tuesday. Over in Switzerland at the Zürcher Kantonalbank, both their gold and silver ETFs showed declines last week, which is the first time that this has happened since I began reporting their numbers earlier this year. Their gold ETF declined 38,576 ounces...and their silver ETF was down a very small 1,871 ounces. I thank Carl Loeb for those numbers.

Yesterday, the Comex Delivery Report showed that 184 gold contracts and 16 silver contracts were delivered. With those 184 gold contracts, that only leaves about 3,550 gold contracts left for delivery in June...plus whatever is purchased and delivered between now and the end of the month. Over at the U.S. Mint, they reported that 3,000 one ounce gold eagles and 337,000 silver eagles have been minted so far for the month of June. And over at the Comex-approved warehouses, silver inventories rose 999,379 ounces.

The usual New York gold commentator had the following to report yesterday..."The European Central Bank's weekly statement of condition showed a reduction in "gold and gold receivables" of €6 million [0.27 tonnes]. The prior week, the reduction was 0.63 tonnes. Intriguingly, this was said to be the consequence of a sale by one captive central bank and "the purchase of gold by another." The lack of reference to the purchase being for coin purposes continues to keep alive the possibility that an ECB central bank is making porfolio purchases.

I have four stories today...and they're all worth your while...at least in my humble opinion. The first is a Bloomberg piece. It appears that Congress may begin chipping away at the Fed's secrecy and unaccountability. The headline of the article is "Fed's Role in AIG May Be First Target of GAO Audit" and the link is here.

In a story out of the Financial Times in London comes this article headlined "Merkel mauls central banks". "Angela Merkel, the German chancellor, criticised the world's main central banks in surprisingly strong terms on Tuesday, suggesting that their unconventional monetary policies could fuel rather than defuse the economic crisis." This story is definitely worth the read. It's contained in a GATA release, as a subscription is sometimes required in order to view a story from the FT. The link is here.

Here's a piece from last Friday's Baltimore Chronicle that may be of interest. It bears the interesting title of "THE FIX IS IN: Manipulation: How Markets Really Work". I guess that the word is finally getting out that "there are no markets anymore...only interventions." The story is certainly worth the read...and I thank P.S. for sending it along. The link is here.

And lastly is silver analyst Ted Butler's latest commentary. In it, he is crystal clear on what's wrong in the gold and silver markets...the offense is that the short positions in gold and silver are exceedingly and uniquely concentrated, held in just a few hands, so that collusion and manipulation can defeat a free market. This is the huge failure of the U.S. Commodity Futures Trading Commission. The essay is entitled "Showdown Time?" and the link is here.

That lighting photo yesterday was interesting. Here's another one. In this photo, the lightning goes from ground-to-cloud....not the other way around, which is the norm. The upward branching in this photo shows that the Eiffel Tower actually initiated the discharge...shorted out the cloud...and produced the return stroke pictured below. The photo is courtesy of spaceweather.com.

click to enlarge

As Ted Butler asks in his latest commentary above...is it "Showdown Time?" In the past, these overbought situations in both gold and silver have always ended the same way...the dealers start the ball rolling down the hill, then pull their bids...the spec longs flee in terror...and the bullion banks 'ring the cash register' as gold and silver prices plummet. They have a habit of starting this at 3:00 a.m. the day after the cut-off for Friday's COT...which is today...Wednesday. As I put this rant to bed, it appears to be unfolding that way right now. Will it work this time? As I said yesterday...we'll find out soon enough...but I'm still dreaming of the day when these bastards [JPMorgan et al] get overrun.

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.