From Ed Steer:

Not a lot happened in gold and silver on Monday. Every attempt at a rally was capped...and both metals traded within a range. Options expiry on the Comex is at the close of business today...OTC options on Thursday...and first day notice on Friday. Will anything happen between now and then? It's difficult to say...but after that huge discovery by Ted Butler last Friday, I'd say that anything could happen going forward.

Last Friday I was interviewed about Ted's discovery by Al Korelin of the Korelin Economics Report. Most of it is almost 'old news' by now, but if you care to listen, the link is here.

The usual NY gold commentator, besides saying that gold imports into India continue at a torrid pace, added the following comments..."Friday’s relentless beating down of gold from a pre Europe peak of $837 did see an effort at reversal towards the Comex floor close, gold still finished down $5.50 on the day and some $8 below the early peak. Oddly, for quite a violent day, open interest was almost unchanged...down 537 lots (1.67 tonnes)."

"Today (Monday) selling interest was apparent once again in Comex hours but, perhaps significantly, could make no progress beyond the damage done on the TOCOM open. This would fit with buying from India's notoriously nocturnal bullion arbitrage community. Comex closed down $7.80 on estimated volume of a low 77,639 (contracts), with a switch effect of 2,200."

Yesterday, The Wall Street Journal reported that "Earlier this month, the Detroit Free Press reported that the top dogs at Ford, GM and Chrysler had a meeting of the minds and decided that the way out of their current losing streak would be to ask the feds for a lifeline." Lifeline discussed...$40 billion. In a CNBS story..."Embattled Wall Street investment bank, Lehman Brothers, is running out of time to shore up its financial situation and could be subject to a hostile take-over as early as next week." In a Bloomberg story..."The ECB will announce changes to the rules governing its money market auctions in coming weeks to head off the risk of abuse by European financial institutions"..."At the margins there can still be cases where you see dangers of gaming the system," said council member Yves Mersch (No!!!...really??? Who would have thunk that!!! - Ed)

Today's first story is from Bloomberg, the title of which is "Libor Signals Credit seizing as Banks Balk at Lending". LIBOR stands for London Inter-Bank Offered Rate...the interest rate that British banks charge each other for overnight loans. Trust amongst the banks is at an all-time low...and the problems are now systemic...as the article admits. But the best giggle comes at the end with a comment from Nobel prize winner Myron Scholes. He was one of the mental giants behind Long-Term Capital Management...and we all know what happened to it. The whole article deserves careful reading...and is linked here.

The second story today, filed over at resourceinvestor.com, is a report by Gene Arensberg which expands on Ted Butler's exposure of the recent vast downward manipulation of the silver market by two unidentified U.S. banks. (Gene will have a similar report out for gold later this week.) I've already sent an e-mail to all and sundry at the CFTC/NYMEX/CME asking for an explanation of this rather blatant act, and I'll let you know what kind of answer I get...if any. Anyway, Gene's essay is entitled "Special Got Gold Report - Silver Investors Sucker Punched by Two U.S. Banks" and the link is here.

The August options expire this week (Comex options on Tuesday and most over-the-counter options on Thursday). So do not be surprised if the gold cartel tries to pound the metals some more to get the lowest possible price on option expiry. In that way its members can earn the highest possible amount of premiums on the options they have shorted, repeating the same pattern we have seen so many times in the past. - James Turk, goldmoney.com - 24 August 2008

However, as we sit here and lick our wounds, don't forget the famous line that "this too, shall pass." I've got a graph that should be of some comfort...just click here...and I'll see you again tomorrow.

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