From Ed Steer:

Gold rose right from the beginning of trading in the Far East on Monday morning, but began to sell off around 1:30 p.m. in Hong Kong. From there it drifted lower right up until the London p.m. fix was in...3:00 p.m. London/10:00 a.m. New York. Then the price tacked on $16 in the space of less than twenty minutes. The price was obviously capped from there, and any further rally attempts over $840 were squashed. The action in silver was similar, and it had an even more impressive rally after the London p.m. gold fix was in. But it too was capped at precisely the same moment as gold...probably JPMorgan in both metals. I often wonder how high these precious metals prices would go if JPMorgan and HSBC USA weren't around.

In Friday's activity, gold open interest rose another 3,951 contracts to 275,286. In silver, open interest only rose a smallish 371 contracts to 85,254...which isn't a lot. The usual N.Y. commentator had this to say about yesterday's volume..."73% of the day’s estimated volume of 96,015 had traded before 11am, 32% in the previous hour. The switch effect was only 2,896."

You may remember last Friday that there was a story that mentioned that the Fed is supposed to have gold certificates, well...here are the facts I received from James Turk at goldmoney.com over the weekend..."The certificates are notes redeemable in gold. In other words, the Federal Reserve has a claim to the 261 million oz supposedly stored in the US gold reserve. The interesting point is that both the Treasury and the Fed talk (when they occasionally talk about gold) as if this 261mm oz was their asset. But this is just another example of the leverage in the system. Even what little gold they own (supposing all of it is still there in Ft. Knox) is leveraged in the sense that both Treasury and the Fed consider this same hoard of gold to be their asset."

In other gold news yesterday, I see in a story at yahoo.com that "Sprott Resource Corp. announced that it has acquired during this quarter 40,475 ounces of gold bullion and 852,478 ounces of silver bullion. The balance of SRC's working capital is in short-term government of Canada treasury bills. President and CEO, Kevin Bambrough said that, ‘We may allocate a larger portion into gold and silver, or other physical commodities, in the future depending on market conditions’." In a story posted at swissinfo.ch was the following headline..."Financial crisis boosts Swiss gold production". The story went on to say that "Gold refineries in Switzerland are working at their limit to cope with demand for the precious metal from investors seeking ways to shield their wealth. The staff at the Argor-Heraeus company in the southern town of Mendrisio are putting in overtime to produce gold bars for people turning their backs on the financial markets. ‘I've never experienced anything like this in my whole career,’ Erhard Oberle, chief executive of the firm for the past 20 years, told swissinfo. He said the demand was so heavy that it could hardly be satisfied." Talking about Switzerland, the Swiss silver ETF added 900,000+ ounces to its stash late last week.

One last gold story...this one out of the Financial Times in London last Friday..."Traders have been hearing talk that the gold market could face a potential squeeze at the end of this year if market participants with futures positions on New York's Comex exchange decide not to roll over their positions, because of concerns about counterparty risk, and opt for physical delivery instead. But dealers dismissed the threat of a squeeze, pointing out that Comex gold stocks stand at 8.5 million ounces, well above the five year average of almost 6 million ounces." (Some entity with many billions of dollars had better show up demanding delivery before month's end, as that's the only way a short squeeze will materialize at this point in the delivery cycle. - Ed)

In other news yesterday: Bloomberg (Tokyo)...The Tankan Survey produced by the Bank of Japan showed that "sentiment among Japan’s largest manufacturers fell the most in 34 years." In a Financial Times story out of London, the headline read: "Citadel joins rush to lock up funds"..."Citadel Investment Group has joined the rush of hedge funds suspending redemptions to investors, a development that is in effect locking up hundreds of billions of dollars in cash during a volatile period in global markets...Citadel joins a growing list of hedge fund groups – including Tudor, Farallon and DE Shaw – that have imposed restrictions on the ability of investors to withdraw money." (I would bet that redemption problems such as these, have put the hedge fund business model on the same path as the Passenger Pigeon. - Ed)

And lastly is this headline from Bloomberg (Rio de Janeiro): "Bush Excluded by Latin Summit as China, Russia Loom"..."Almost two centuries after President James Monroe declared Latin America a U.S. sphere of influence, the region is breaking away...Latin American and Caribbean leaders gathering in Brazil tomorrow will mark a historic occasion: a region-wide summit that excludes the United States."

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And while on the subject of poor G. Dubya. He had some problems with flying shoes in Iraq. He's lucky that it was only shoes this time. "American mainstream media has treated the Baghdad shoe tossing at GW like a college prank as opposed to a profound sign of disrespect both to GW and America. The International Herald Tribune properly interprets the Arab anger." The story is well worth the read...and the link is here. I thank Craig McCarty for the comment and the story.

And if you think the Iraqi reporter was disrespectful and insulting...try this youtube.com video of a CNN story about how George was treated by world leaders at the G-20 conference last month. It, too, is worth watching...and the link is here.

I have three stories today...all chock full of material that's worthy of your attention. The first is from Peter Brimelow over at marketwatch.com. His tome is entitled "Dollar's decline to drive gold?" and the link is here.

The second offering today is a piece posted over at marketoracle.co.uk. It's a 'must read'...and bears the intriguing title of "How Deflation Creates Hyper-inflation". The author, Eric deCarbonnel, has some very interesting comments about deflation, hyper-inflation and gold that are worthy of your close attention...and the link is here.

And lastly, but certainly not least, is an offering from Doug Pollitt of the Toronto investment house Pollitt & Co. He has written a wonderful essay about the possible imminent end of the paper gold market. It's headlined "Positive Carry" and you can find it in pdf format at Kitco. The link is here.

Gold backwardation signals that the next phase of the economic crisis, a rapid acceleration in the velocity of money, is about to begin. Right now, the flow of money through the economy is basically frozen: everyone is panicking into treasuries due to deflation fears. Negative yields on the 3-month treasuries are a sign of this. - Eric deCarbonnel, Editor, marketsceptics.com

Right now, you should focus on nothing else but surviving (but maybe even prospering through!) the "Greater Depression" that is almost upon us. There is only one sure way to do that, and that is to buy physical gold and silver...and take delivery asap...as the window of opportunity that we are being provided with, won't be open much longer.

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.