From Ed Steer:

Wednesday's action in the gold market world-wide was nothing short of a yawner from one end to the other. Ditto for silver. Volume was very low as well...so I wouldn't read a thing into yesterday's price action.

With deliveries into the December contract in both gold ands silver still ongoing, it should come as no surprise to anyone that the open interest in both metals was down again on Tuesday. This time gold o.i. fell another 1,938 contracts to 264,796. In silver, the open interest fell another significant chunk...2,609 contracts...to a new low of 82,434. These numbers should be in this Friday's COT. As Ted Butler said in his commentary on Tuesday, we haven't been at these levels of open interest for quite a number of years...as JPMorgan et al are breaking every commodity law in the book to cover their short positions.

Two days before Christmas...December 23rd...is options expiry for the January contract. January isn't a big delivery month as was December...but it's options expiry nevertheless. It's hard to imagine that JPMorgan can get any more blood out of these precious metal stones, but who knows what the hell these guys have up their sleeves. Whatever it is, you can rest assured that neither the Comex nor your mining companies are going to say (or do) anything about it. We'll have to wait and see how the month unfolds. As far as I'm concerned, the Commitment of Traders numbers are already beyond wildly bullish in both gold and (especially) silver...and are set to blow up at any time. Why they haven't already is a surprise to me...and Ted. But as long as JPMorgan thinks they can get more shorts covered, these markets aren't going anywhere.

In world news yesterday, I note in a Financial Times story out of London that "Financial markets are braced for large interest rate cuts across Europe (today) amid mounting evidence of a sharp slowdown in the leading global economies...traders priced in a 0.75% reduction by the European Central Bank to 2.5%...a move that would be bigger than any it has made in its near 10-year existence." And in a Bloomberg story out of London comes this cheerful headline..."Corporate Debt Protection Costs Climb Amid Depression Concern"..."The cost of protecting corporate debt from default jumped to a record in Europe and neared a high in the U.S. amid concern that the global recession will sink into a depression. Credit Default Swaps on a benchmark index tied to below investment grade companies in Europe, reached levels considered distressed for the first time. The cost to protect U.S. leveraged loans from default neared a record, and a benchmark gauge of credit risk tied to investment-grade companies, also jumped..."

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Three stories again today...all from Ambrose Evans-Pritchard at The Telegraph in London. This first story must have sent chills throughout Southeast Asia this morning. The headline reads..."1930s beggar-thy-neighbour fears as China devalues" and the link is here.

This next story is a couple of days old, but still worth the read. The headline states..."World stability hangs by a thread as economies continue to unravel". The link is here.

And lastly, here's a story that's a bit of a surprise. It's a short commentary...and the headline reads..."Metal prices fall further than during Great Depression". The link is here.

The service industry laid off another 181,761 workers in November...the Fed's Beige Book showed that "overall economic activity weakened" across all 12 Fed districts since the last report in mid-October...the Fed also reported that consumer spending fell across the US, with vehicle sales "down significantly" in most regions. Manufacturing activity "declined noticeably" in most areas, and almost all regions reported falling exports.

In light of all this horrific news yesterday, it was obvious that without massive intervention on a couple of occasions yesterday, the Dow would have crashed and burned...just like the PPT intervened on Tuesday...so we wouldn't have a continuation of Monday's mini-crash.

There are no markets anymore...only interventions. - Chris Powell, GATA

See you Friday.

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