From Ed Steer:

The gold price declined about $7 between the Globex open in the Far East on Tuesday morning, right up until its low of around $830 an hour before Comex trading began in New York. From there it crawled back up to basically unchanged from its closing price on Monday. However, the moment that the interest rate decisions were made, gold only tacked on about $20. Without doubt, the price activity would have been more extreme to the upside if the news had broken during regular Comex hours...instead of the after hours trading on the Globex. Silver did quite a bit better...and has outperformed gold during the last two trading days by quite a wide margin...but it too would have done better if 'gentle hands' weren't there to make sure that the price didn't get totally out of hand to the upside.

Open interest for Monday in gold was as follows...up another 3,994 contracts to 279,280. In silver, the o.i. was up 1,493 contracts to 86,747.

With interest rates now effectively zero...and the US$ taking another big hit...I must admit that I was underwhelmed by the performance of the precious metals yesterday. The rally in both metals was obviously met with a lot of opposition, which has continued well into Wednesday morning in the Far East as I write this. There's never a lot of volume in Far East trading at the best of times, so the boyz can push the price around quite a bit...and they're obviously trying to set the tone for the European open in London this morning.

In other gold and silver news, I note that on Monday the GLD ETF was up 100,000 ounces while the SLV was down 1.5 million ounces.

In news from around the world yesterday, I offer the following...The Telegraph (London): The headline reads..."Ecuador bond default: Fears grow that others will follow"..."There are fears that Venezuela, Bolivia and Argentina may be tempted to follow suit, setting off the sort of stampede seen across the region in the early 1930s." Bloomberg (Beijing): "China to increase money supply 17% in 2009 and boost lending." The Guardian (London): The headline reads "Supermarkets' emergency plans to keep shelves full"..."Fears that scores of supermarket suppliers will go bust next year have led the country's major chains to draw up emergency plans to replace them...Supermarket chain Asda, led by Andy Bond, is working on 'worst-case scenarios' across the board - combing its supplier base and examining alternatives to them. 'Suppliers are under a lot of pressure and there will be casualties,' said a senior executive at another store chain, which has already stepped in to pay troubled suppliers ahead of schedule. ‘We need each other, it is not a zero-sum game’." (This is a problem that will not confine itself to Britain...as I expect similar problems to surface almost immediately in 2009 in the USA and Canada. - Ed) Bloomberg (Madrid): "Spanish building materials producers spanning cement to steel may cut twice as many jobs this year as forecast earlier and face ‘catastrophe’ if cash flow doesn't improve, an industry group said." Reuters (Washington): "New housing starts and permits plunged to record lows in November." And lastly...The Times (London): The head of the IMF said on Monday that "Violent unrest may be sparked around the world by a prolonged global slump unless governments act with greater urgency to jump-start stalled economies."

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Today's first story is the latest commentary from silver analyst Ted Butler. The piece is entitled "Flight to Safety First" and the link is here.

The second offering is a short editorial from Chris Powell, GATA's secretary treasurer, which is well worth the read. It's entitled "Comex concentration hints that shorts are all government now"...and the link is here.

After yesterday's Fed rate cut, it's obvious from their press release that they are petrified of what they see out there...and have resorted to the last arrow in their quiver...the one that Richard Russell says has "Print, or die!" etched into it. This Bloomberg story entitled "Fed Cuts Rate to As Low As Zero, Will Use All Tools" sums it up exactly. The link is here.

The Fed is sending a message that it will print money to an unlimited extent until it starts to see the economy expanding. - William Poole, former president of the St. Louis Fed, Bloomberg, 16 December 2008

That quote by William Poole should put the fear of God into any US$ holder out there. Until further notice, hard assets are the place to be...with the monetary metals right at the top of that list. It won't be long before the gold rush is really on in earnest. And as Bill King said in The King Report earlier this morning..."The Fed is frantically signalling that it wants asset prices to inflate and will engage in any and all activities that will force asset prices higher. The Fed announced that it will monetize the entire debt market if necessary. As we have asserted, the Fed has bet the entire ranch. Now we get to see if it works."

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.