From Ed Steer:

In early Monday morning trading in the Far East yesterday, gold managed to tack about $20 onto its price. The top was in shortly before the Sydney close...and by the time the London p.m. fix rolled around, gold had given that $20 back. However, as per usual, once the London p.m. fix was in...or very shortly before...the gold price dropped $30 in about 25 minutes. The only way that happens is if the bullion bank(s) pull their bids...and that's what occurred. The net result of that was another waterfall decline in the gold price like we had late Friday afternoon. Here's the Kitco gold chart from yesterday. No profit-maximizing seller sells like this...ever!

click to enlarge

Silver was different this time. The price rose from the beginning of Globex trading in the Far East...and continued to climb until the London a.m. gold fix...which is 5:30 a.m. New York time. From that point the price 'fell' 40 cents...and the bottom was in at the London p.m. gold fix...which is 10:00 a.m. New York time...3:00 p.m. in London. From there, it almost got back to its London a.m. fix price...but once regular Comex trading was done for the day...the price was capped in the Globex market until trading was over at 5:15 p.m. yesterday afternoon. Comex volume in both gold and silver wasn't particularly heavy.

Open interest numbers for Friday's debacle in both gold and silver were a huge surprise. On Friday...gold had a $100+ move from its peak to its bottom...and open interest only fell 821 contracts! Go figure. In silver...where the move from peak to trough was $3+...open interest rose 2,253 contracts! Was this new short selling? Hopefully we'll find out what it all means in Friday's COT report. The cut-off for that is today at the close of trading...5:15 p.m. New York time.

If you are interested in listening to them, here are a couple of interviews from Al Korelin of Korelin Economics. The first is by James Turk over at goldmoney.com...and the link is here. The second interview is with myself, and the link for that is here.

I see in a Bloomberg story yesterday that the U.S. Government has 'officially merged' with nine U.S. banks..."The companies are Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley, State Street Corp., and Bank of New York Mellon Corp. The Treasury plans to spend $25 billion each for stakes in Citigroup and JPMorgan, people said. Another $25 billion will be divided between Bank of America and Merrill, which agreed last month to be acquired by Bank of America. Goldman and Morgan Stanley will each get $10 billion, while State Street and Bank of New York will get injections of about $3 billion each....and none of the companies was given a choice about it."

Today's first story is from barrons.com. You will note from the preamble that due to a "production error" it wasn't included in Monday's print edition. We've heard from the paper itself that they will be updating it and printing it within the next two weeks. I'll let you know if it shows up. The article is entitled "Golden Opportunity" and is linked here.

The second story is from Iceland...where foreign exchange is hard (if not impossible) to come by since their banks went under...as nobody wants their currency any more. There's a run on all things imported. Soon, like Zimbabwe, the supermarket shelves will be bare. This is just the first country of many that will experience this as time marches on. The Bloomberg story is entitled "Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports"...and the link is here.

And lastly...silver analyst Ted Butler's latest. This week he dissects the Friday Afternoon Comex Massacre along with the rape of the entire gold and silver industry...all for the benefit of the '2 or 3' U.S. bullion banks. The article is entitled "The Masters of Destruction" and is linked here.

In the beginning of a change, the patriot is a scarce and brave man, hated and scorned. When his cause succeeds however, the timid join him, for then it costs nothing to be a patriot. - Mark Twain

Infinite money...for as long as necessary! Why the world-wide bond market isn't a smouldering ruin by now is a complete mystery to me. As you know...even if the prices don't show it on the Comex...the run to physical gold and silver is on in earnest. I wouldn't own a financial stock if you gave me one, no matter what the government...any government...promised. Only physical metal in hand (gold or silver)...or if you have to...an equity that you really really know has precious metals backing it.

See you tomorrow.

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