From Ed Steer:

Yesterday was another day of little volume in the gold market...even less than Tuesday. Gold's only excitement was after the London p.m. 'fix' when it took off to the upside like a scalded cat...only to run smack dab into the JPMorgan 'fix' a few minutes later.

In silver, the top was in at 3:00 a.m. NY time in Far East trading...and it was all downhill from there...literally. The dealers pulled their bids twice...shortly before the Comex open and shortly before the Comex close. And as I scribble these words, I see that the boyz pulled their bids again in early morning trading in Sydney today. They made such a pretty picture on the silver chart over at Kitco, I thought I'd share it with you.

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The volume in silver was a little heavier yesterday than on Tuesday...but still nothing to write home about. Surprisingly enough, the silver ETF...SLV...rose two million ounces, while GLD was down 200,000 ounces. In a nutshell, the gold and price crucifixion last Friday had nada, none, zilch, zero effect on the silver and gold ETFs. As a matter of fact...SLV was up!

How long these guys can keep gold and silver suppressed in the face of massive investment demand is unknowable. But as long as the 50-day moving averages for both gold and silver can be defended, the tech funds (who are the ones that always drive the market prices higher by going long on the Comex in the Non-Commercial category) will keep their wallets firmly closed. But the bifurcation of these two markets (paper price vs. physical price) is now the talk of the town. I'm sure that the boyz are trying to prevent the metal prices from rising so that investors can't see the exit signs that would most certainly save their lives if the lights were allowed to be turned on. It looks like they want everyone, and everything, to go down with the fiat currency ship. Unfortunately for them, they won't be able to fool "all of the people, all of the time"...to steal a line from Abe Lincoln.

I note in a Reuters story that JPMorgan "sees gold prices at $904 an ounce in 2008, against a previous forecast of $884, and at $875 an ounce next year, up from $854 previously expected." And for silver "the bank revised its silver prices lower, to $15.40 an ounce from $16.10 in 2008 and to $12.30 from $12.50 an ounce next year." In their dreams!

In a Bloomberg story yesterday I see that "Lehman's hedge fund clients face a margin call on frozen assets." That sounds like fun! "Every second that they waste...hurts," said Edward Chin, who runs Pride Revelation Fund, one of dozens of hedge funds in Hong Kong that used Lehman as their sole prime broker. "We're looking at many hedge funds that will have to shut down, but they can't even shut down because they don't know what they have left. The thing is I cannot now even liquidate the fund." Outraged ex-Lehman Brothers employees staged a protest by blockading the entrance to their corporate trading headquarters....!

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Three stories today...all gold related. The first is from bbc.co.uk and is entitled "Austria witnesses new gold rush" and the link is here.

The second story is from Bloomberg and is headlined "Zurich Bank's Vault is 'Full to the Top' With Gold" and the link is here.

The last story is from my very good friend John Embry, Chief Investment Strategist at Sprott Asset Management in Toronto. His latest commentary, courtesy of Investor's Digest of Canada, is entitled "Rescue will send gold to surreal price level." It's well worth the read and the link to the pdf file is here.

Letters of credit and the credit lines for trade, currently are frozen...Nothing is moving because (traders don't) want to take the risk of putting cargo on the boat and finding that nobody can pay. - Khalid Hashim, managing director of Precious Shipping, Thailand's second-largest shipping company - 14 October '08

It's obvious in this quote from a Bloomberg story yesterday, that tight credit is starting to have a hugely negative impact on world trade. The sky-high LIBOR rate is spilling over from the banks not lending to each other...but now they don't want to lend to anyone. All the trillions of fiat that the central banks of the world have poured into the credit markets since Monday has made no difference at all. If this continues...and spreads, as it most likely will...the world's current economic, financial and monetary system won't make it to 2009.

Got (physical) gold?

All of us at Casey's Daily Resource Plus look forward to seeing you bright and early on Friday morning.

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