From Ed Steer:

Although trading was thin once again yesterday, there was obviously someone not interested in seeing the gold price do well. Twice in early trading (at least to us here in North America)...the first occurring shortly before Hong Kong closed and London opened (4:30 p.m. in Hong Kong...8:30 a.m. in London); and the second time was at 7:45 a.m. in New York, just before the Comex opened...which would be 12:45 p.m. in London...lunchtime for them. Both times gold got hit for about US$8 in a matter of minutes. Not a lot, but enough to make sure that gold finished down on the day. Whether these two smack-downs were local traders, or traders from New York entering the market on the Globex system, is unknown. But both had the stench of JP 'not-for-profit' Morgan all over them.

Silver suffered at precisely the same times. Funny how that works, isn't it? But silver really took off once its bottom was in at 7:45 in N.Y. However, JPMorgan showed up shortly after the price passed through $11.00, and that was it for the day. In the last three or four months, it has become common knowledge that JPMorgan (with the Federal Reserve in tow) has become the biggest short in both gold and silver. More evidence to that effect is posted further down.

Open interest for gold on Monday increased another 3,241 contracts to 298,306...but silver o.i. only rose 199 contracts to 85,753. Unlike gold, the silver price has being moving around a lot lately on razor-thin volume, which is very constructive. I'd be really unhappy if all these price movements were on big volume. It's alarming enough that gold open interest is deteriorating as much as it is. Maybe JPMorgan is going to smash gold to blow out all these new silver longs. I sure hope not. But both Ted Butler and I are fearful of that.

In gold news today, the usual N.Y. commentator had the following to say..."Today's European Central Bank weekly statement indicates consolidated ‘gold and gold receivables’ fell by €117Mm, 5.8 tonnes at current book value. Only one captive CB was involved. The previous week, the fall was 6.12 tonnes. Reported disposals have picked up somewhat recently, but of course are still well below the 9.6 tonnes notionally needed if the WAG2 quota were to be evenly sold throughout the year...Courtesy of thebulliondesk.com, Chinese gold production for the first eleven months of 2008 was reported at 246.51 tonnes...up 2.14% over the same period in 2007."

In a Wall Street Journal story, they report that "the Treasury Department has committed nearly $10 billion more than the $350 billion Congress has authorized to date...That suggests Treasury is tapping into the second half of the $700 billion set aside in October before it has been released by Congress. "They are pushing the envelope here," said Sen. Bernie Sanders (I., Vt.), a critic of the bailout. "What they are trying to do is create a situation to put pressure on [President-elect Barack] Obama and the Congress to provide the next $350 billion." In a Reuters story I see that U.S. home prices plunged a record 18% year/year in October...and down a hefty 2.2% from the previous month! (Please call me in 2013 and we'll talk about the bottom of the U.S. real estate market then. - Ed) And, in another Reuters story, the headline read "U.S. consumer confidence at record low in December". I see in a Bloomberg story that now that GMAC has been bailed by the Fed, they are offering 0% financing up to 60 months. This basically means that the U.S. taxpayer is financing all of GM's new car buyers. (Can 0% financing on homes be too far behind? - Ed) And lastly, from Frank Veneroso yesterday..."China must be in a significant outright contraction, which the 24.9% annual rate of decline in China power output over the last 6 months has been indicating."

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Three stories again today. All three are must reads. The first is a Reuters story filed from Chengdu, China. "The biggest migration in human history has gone into reverse...an ocean of China's blue-collar workers is streaming back to the country's farming hinterland...as they fall victim to the global economic crisis." The link is here.

The next article is silver analyst Ted Butler's latest commentary. It's a 'must read' because of the following e-mail that arrived in my in-box yesterday. Please read this e-mail very very carefully...then read Ted's latest very very carefully as well..."Silvercorp Metals came out after the close and announced that it is suspending its TLP and HPG mines, as well as scaling down mining at the LM mine in China. The miner also expects its newly constructed Ying mill to be put on care and maintenance. A sign of things to come, Silvercorp says that smelters in China are shutting down or reducing their capacities, resulting in less demand for concentrates and a change in smelter terms. Silvercorp ended the day unchanged at C$2.95. As a Silvercorp shareholder, I am very puzzled. Why would they do this? Silver is moving higher, and the byproduct people are shutting mines. One would think that pure silver producers would be champing at the bit. I don't get it. Any ideas?" Yep! Ted Butler has the answer. Click here.

And lastly, here is a GATA release entitled "Morgan Chase's gold derivatives soared as gold was floored." The article (with wonderful graphs and charts) is prefaced by comments by GATA's secretary treasurer, Chris Powell, and this is worth the read as well. I mentioned earlier in my rant that JPMorgan was the big gold and silver short on the Comex. Here's some more proof. With this in mind, it's easy to see why the SEC and CFTC do nothing, as they are there to protect the big shorts, including JPM...and by extension, the Federal Reserve. The link is here.

That's it for another year! As bad as 2008 was, I'm expecting 2009 to be worse...much worse. And on that happy note, all of us at Casey's Daily Resource Plus wish you...our loyal readers...a happy, prosperous and Golden New Year!

See you on Saturday morning.

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