From Ed Steer:

The bottom for both gold and silver prices straddled the Hong Kong open in Far East trading on Friday morning. The top was in for silver shortly before Hong Kong closed for the weekend; and for gold, it was shortly after the London a.m. fix. From these points, both metals got gently sold off until the close of trading on the Comex in New York. Trading volume was very light.

The usual NY commentator had this to say about yesterday's activity..."Friday's rather diffuse repression of the post-TOCOM rally (a matter of $19 from the low) resulted in Comex gold closing up $2 ($12 off the intra-day high). Estimated volume was 104,799 contracts which, less the switch effect of 27,020, is only 77,779 lots. Clearly nobody in the Western Hemisphere wishes to challenge the obvious presence in the gold market."

Open interest changes on Thursday were as follows: gold o.i. rose 893 contracts to 303,884, and silver o.i. also gained a small number of contracts...158 to 94,056.

The Commitment of Traders report for silver on Friday showed further deterioration...not what I was expecting at all. For the second week in a row the bullion banks added to their short positions and reduced their long positions...exactly what I didn't want to see. The bullion banks sold 3,218 longs and went short an additional 1,178 contracts...for a net change of 4,396 contracts. This is a fairly large amount. The Non-Commercials (which includes the tech funds) did the opposite. They increased their long positions by 1,193 contracts and reduced their short position by 1,246 contracts, for a net change of 2,439 contracts. The difference came from the Nonreportable position (the little guys). They showed an increase in long positions of 592 contracts and further reduced their short position by 1,365 contracts. So what happened during the last two weeks is the "same old, same old". As everyone else piles in on the long side (or covers short positions), the US bullion banks take the other side of each trade. The COT for silver is still very bullish to the upside, but not as bullish as it was last week...or the week before.

For gold, it was another week of big (and very positive) surprises! The bullion banks in the Commercial category improved their position in a big way for the second week in a row...and are now down to their lowest net short position I can remember...76,406 contracts. Their net short position dropped by 8,670 contracts this past reporting period. They sold 5,935 long contracts, but covered a whopping 14,605 shorts. Their primary food supply, the tech funds in the Non-Commerical category, added a measly 528 contracts to their long position...but went short a gargantuan 10,648 contracts....for a net change of 10,120 contracts. The Nonreportable position was a wash.

Why there is such a dichotomy between what's happening in the silver COT and its gold equivalent (over the last two reporting periods) is a mystery for which I have no answer. The price activity, and the daily open interest changes, don't seem to bear any resemblance to what the Commitment of Traders shows. Maybe next Friday will shed a little more light on this very strange situation. The link to this week's COT data is here.

In gold news, a Bloomberg story entitled "Gold Hedges Fell 2.3 Million Ounces in the Third Quarter" is worth running through, as it's only a handful of paragraphs. The link is here.

In other news, I see that Bloomberg News, using the Freedom of Information Act, has asked a U.S. court to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans from the bank. (Note to Bloomberg: Expect stone-walling and obfuscation...as their lawyers are better than your lawyers. - Ed) And in a story out of The Times in London, I see that the day after Barack Obama's election victory, Russian President Dmitri Medvedev has ordered missiles to be stationed up against NATO's borders.

Three stories again today. Bloomberg has a story about zero interest rates world-wide...which is something I mentioned in my rant yesterday...but I guess this story makes it 'official'. The headline reads "Zero Rate World May Lie Ahead as King, Trichet Cut". The link is here.

Next is a Reuters story that reads "Gold to outperform oil as recession brews". We can only pray that they are right! The link is here.

And lastly, a short video interview with John Embry, Chief Investment Strategist at Sprott Asset Management in Toronto. It's entitled "Gold's Game-Changing Moment Could be Fast Approaching" and the link is here.

Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries. - Doug Casey, caseyresearch.com

Today's 'blast from the past' is another well known piece from the 70s. Turn up your speakers and then click here.

I see that GM says it may not have enough cash to finish the year...and Ford burned through about $3 billion in cash during the 3rd quarter. And a Bloomberg headline reads "Obama will inherit worst U.S. Recession since Reagan era". Reagan??? After this is all over, I would suspect that the pundits will be comparing the "Obama era" to the "Hoover era". I wish the new president a lot of luck.

Enjoy the rest of your weekend. I probably won't have a rant on Tuesday morning, as I'm on my way to New Orleans. I might be able to squeeze a short one in...but don't be surprised if there's a big blank space where my column should be.

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