From Ed Steer:

The gold price had returned to unchanged by the time London opened for business yesterday, but got sold off hard from that moment on. Silver was the same. Strangely enough, the bottom was in for both metals at noon precisely in London (7:00 a.m. NY time)...which just happens to be the time of the London silver fix. Is that significant? Don't know...I'm just pointing it out. From that low, gold tacked on about ten bucks and silver was up around 40 cents at its high of the day in New York trading. After that, both metals flat lined as trading quietly petered out as the weekend approached. However, it was gratifying to see the HUI recover most of its losses on the day, even though the Dow rolled over into negative territory at the close.

Open interest changes for Thursday showed that gold o.i. rose 1,122 contracts to 294,634. This is rather strange considering that gold got smacked pretty good. And silver? Open interest was down again for the second day in a row...this time by 266 contracts to 86,084. This makes inherent sense because the price was down on Thursday...which it wasn't on Wednesday.

There was deterioration in the Commitment of Traders report that came out on Friday. In a nutshell, the tech funds purchased long positions and covered shorts, while the bullion banks in the Commercial category sold longs and went short. The 'four or less' traders in the Commercial category in silver (JPMorgan being the largest trader) now hold 138% of the entire Commercial net short position, with 40,459 contracts. In gold the 'big 4' hold 98% of the entire Commercial net short position. A more crooked or manipulated market is impossible to imagine.

In more detail, the tech funds in the Non-Commercial category in silver put on 2,236 long positions and covered 202 short contracts...while the small traders in the Nonreportable category placed 1,897 longs and covered 97 shorts. Against the traders in these other two categories, the boyz sold 288 long positions and put on 4,144 shorts. The banks going short again was not the sort of thing that either Ted Butler or myself wanted to see. In gold, the deterioration is even more pronounced. The tech funds in the Non-Commercial category went long 21,390 contracts and covered 3,704 short positions. The small traders in the Nonreportable category placed 3,614 longs and actually went short another 469 contracts. Against them all were the big banks in the Commercial category, who covered 4,792 longs and went short a whopping 23,447 contracts. The situation has deteriorated (in both metals) by even more since the Tuesday cut-off.

As I pointed out to Ted...and he reluctantly agreed...for the moment it appears we're back to the same old situation that we both hoped we'd seen the end of after the huge sell-off in gold and silver (plus all other commodities) that started in July. JPMorgan et al are putting their heads back in the lion's mouth again. This week's COT report is linked here.

However, having said that, the COT report is still very bullish compared to what it was in the past, so there's still a lot of room to move to the upside...provided that JPMorgan doesn't decide to harvest some profits by 'gaming the market' in their usual way. That's what I thought I saw signs of on Wednesday when I said a temporary top might be in. By the way, the jury is still out on that...so we'll have to wait and see what the new week brings. However, if JPMorgan (and by extension Bernanke and Paulson) want to let the gold price run, they just phone their man that runs the trading platform at JPM and tell him what they want to do, and how they want it done. Don't forget that over 90% of all trading in gold and silver is done by New York traders...either directly during regular Comex hours...or via the Globex trading platform where they can enter world markets at any time of day they wish...and they do.

But when (not if) the next sell-off comes, I'm just explaining it in advance as to why it will happen, what form it will take, who is responsible...and how it all works. It has zero to do with dollar, the Dow, oil prices or the price tea in China. But those are what the main stream media's comments will be...as they have to tie it to something...even if they have to make it up...or phone some bozo gold commentator(s) for their 'professional opinions'. A couple of names come to mind, which I won't utter here.

So...Washington finally caved and bailed the 'Big 3'. Today's first story is about exactly that...as the bailout not only saved the car companies (and their related financing firms)...but all the bond and credit default swap holders as well. Some of these would be Wall Street and money centre banks, don't ya know! The article is by Elizabeth MacDonald over at foxbusiness.com and is entitled "Auto Bailout Saves Wall Street, Too" and the link is here.

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To complete my Saturday rant, I have two excellent commentaries that were posted late last evening that anticipate a devaluation of the U.S. dollar against gold. The first, by John Ing of Maison Placements Canada, posted at gold-eagle.com, sees an upward valuation of gold as necessary to recapitalize the world, and gold then being incorporated into a formal measure of world currencies. Ing's commentary is headlined "Gold: The Antidote to Our Problems," and you can find the story linked here.

The second, by John Browne of Euro-Pacific Capital, posted at goldseek.com, notes that devaluation of the dollar against gold was used once by the United States to reduce the burden of debt and argues that it could be used the same way again soon. Browne's essay is headlined "2009 -- Likely Vintage Year for Gold" and you can find that story linked here.

The dollar is a terribly flawed currency. I hate to say it, but my goodness, they've messed up the dollar badly. So, I don't like to do it, but I'm going to sell all the rest of my dollars sometime in the next few days, weeks, or months...Again, I don't like saying it, but I'm afraid the dollar is going to go the way the pound sterling went. - Jim Rogers, Bloomberg

Today's 'blast from the past' is one that I must admit that I'd almost forgotten about. I'm glad that I stumbled on it as I was thumbing through music over at youtube.com...because it's a really terrific piece...and has one of the best intros of any pop song written. Plus it's one of the last great classics of the 1970s. Turn up your speakers, then click here. Enjoy!

As we wind down into the week before Christmas, it may be the last "Peace on Earth" that we have for a long long time to come. There's nothing I can see anywhere that leads me to believe that the world's central banks can print their way out of this one...and whether the can or they can't...gold will still be the 'last man standing' when it's all over.

All of us at Casey's Daily Resource Plus hope that you enjoy the rest of your weekend and we'll see you right here bright and early on Tuesday morning.

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