From Ed Steer:

All was calm in Far East trading on Friday morning. Both metals began to slip a little starting at 3:00 p.m. on Friday afternoon in Hong Kong. This lasted through London trading as well...and by the time the Comex opened, gold was down $10 and silver had slid about 23 cents.

But once trading started in New York, both gold and silver rallied strongly...but it should be noted that gold 'ran out of gas' just before $940 once again. However, silver did better...adding a bit over 30 cents before it, too, ran into 'resistance'...but managed to close almost on its high of the day.

There wasn't big volume yesterday, so not too much should be read into this action...but it's always noteworthy so see that parabolic rises in prices are never allowed to get too far out of hand before the usual 'not for profit' sellers show up.

Despite the fact that Thursday was a quiet trading day and neither metal did much price wise...open interest in gold increased another 3,100 contracts to 383,107 contracts. Volume was decent....74,589 contracts. Open interest in silver rose as well, another 410 contract to 99,744...on volume of 15,052 contracts.

The Commitment of Traders report came out yesterday as per usual. In silver, the bullion banks decreased their net short position by a respectable 2,807 contracts...but are still net short 34,625 contracts or 173.1 million ounces of silver. Virtually all of that net short position is held by two U.S. banks...JPMorgan and HSBC USA. Since the Tuesday cut-off for this report, the bullion banks have decreased their net short position a bit more. The full-color COT graph for silver is linked here.

In gold, the bullion banks decreased their net short position by 9,020 contracts...but are still net short 182,287 contracts...which is quite a bit...18.23 million ounces of the stuff. What's really unfortunate in gold is that since the Tuesday cut-off, these same bullion banks have put the entire 9,020 short contracts back on...plus more! A 'back-of-the-envelope' calculation indicates that they're short position is now back up to around 19.5 million ounces as of the close of trading on Thursday...and they probably added more on Friday when they capped that $10 rally. So, from a COT point of view, gold is still well into the danger zone...and the chance of a huge sell-off in gold is still a distinct possibility. The full-color COT graph for gold is linked here.

But...under current circumstances...can they, or will they??? This is why I find this price capping at $940 so suspicious. If they're painting the charts with a false top, we could get creamed in the near future. But...then again...maybe not. The COT says 'yes we will'...and current circumstances say 'no we won't.' And as I said yesterday, I could easily explain a big price move in either direction for both metals. I'm sure glad that I don't have to bet any money on the near-term outcome of all this.

As far as deliveries went yesterday, the Comex reported that 55 gold and 42 silver contracts were delivered. There were no changes in the SLV ETF...but over at GLD, I see that they reversed the transaction of the piddling 9,817 ounces they added on Thursday...and have now removed it. Much to my amazement, the U.S. Mint had another update to their production numbers. This is five days in a row...a record! On Friday they reported another 5,500 gold eagles and another 75,000 silver eagles...bringing the monthly totals up to 56,000 in gold and 1,800,000 in silver. And over at the Comex-approved warehouses, another 208,010 ounces of silver were withdrawn on Thursday. Friday's changes will be reported on Monday.

The big precious metals news yesterday was in the silver market...and I'm surprised that nobody has picked up on this already...and I thank Ted Butler for sending it to me in the wee hours of Saturday morning. The story is posted at newswire.ca and the headline reads "Claymore Silver Bullion Trust Closes its IPO". The IPO was for 3.6 million units at $10 [probably Canadian dollars since it's a Canadian fund]...plus a full warrant. The fund has also granted the agents an over-allotment option for up to an additional 540,000 fund shares [plus warrant] during the next 30 days. A quick guess says that they should be able to pick up about 2.6 million ounces of silver if everything works out. Central Fund of Canada and their silver trust should be out of the starting gate pretty soon too, I would think. The link to the Claymore IPO story is here.

Today's first story is from cnsnews.com. Just when you thought you'd heard everything, here is U.S. Vice President Joe Biden saying "We Have to Go Spend Money to Keep From Going Bankrupt". I wonder if the Chinese government has read this article and heard the video? I thank P.S. for this story...and the link is here.

The next story comes from the ...and I thank the usual New York gold commentator for bringing it to my attention. In what some on Wall Street are calling the biggest blockbuster deal in the history of the financial sector, Goldman Sachs confirmed that it was in talks to acquire the U.S. Treasury Department. I know that it's 'impossible!!!' to believe, but the story is linked here, so you can draw your own conclusions.

The third story today is from over at the mineweb.com...and I thank Bill Murphy over at lemetropolecafe.com for running it in his MIDAS commentary yesterday, or I would have missed it entirely. The headline reads "Vault Space Shortage: Swiss banks running out of storage space for gold bullion". This is a problem that sounds like it's going to get much worse before it gets any better. The link is here.

And lastly is this piece from Hugo Salinas Price. Not only is Hugo one of the richest men in Mexico, he is also the President of the Mexican Civic Association for Silver...an organization that is getting very close to re-monetizing silver in that country. When he is talking, I'm only too happy to listen. His latest commentary is entitled "Causes and effects" and the link is here.

There is only one way to kill capitalism...by taxes, taxes and more taxes. - Karl Marx

Today's 'blast from the past' is somewhat different this week. The rock band Toto scored its biggest hit with Africa back in 1982. But this is not the 1982 version linked here...it has, as they say, been reinvented. It is sung a cappella...by a jazz choir called Perpetuum Jazzile from Slovenia of all places! And before you dismiss this out of hand, I urge you to give it a listen. It's absolutely amazing! I was totally blown away. It was a Paul Potts/Susan Boyle [Britain's Got Talent] kind of moment when I heard this for the first time. I like it even more than the original version...and I thank reader Dave Delve for sending it to me. This piece definitely requires that you turn up your computer's speaker system...then click here. Enjoy!!!

I have no idea what gold and silver prices will do next week. If they scream higher...I'll understand the reasons. And if they get killed...I'll understand the reasons for that, too.

But, that's two days away. So forget about it, and enjoy the rest of your summer weekend and I'll see you 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.