From Ed Steer:

Well, yesterday was vintage Ben Bernanke/Hank Paulson and the Fed in action...through JPMorgan of course. Gold got sold off a little as soon as the Globex trading system opened in Sydney...rose a little in Hong Kong...and then got sold off a little more on the London open. Then, at 10:00 a.m. in London, while most of North America slept, a nice rally commenced which lasted until shortly before Comex trading began. The boyz in N.Y. then sold gold down to its low of the day, and once the London p.m. fix was in...away it went to the upside. Then at twelve noon, the price went vertical for all of ten minutes before the usual suspects not only stopped the rally cold...they turned a positive day, into a down day for gold. I guess they didn't want any 'happy talk' about gold over the weekend. Silver had the same ride as gold. Estimated net volume on Friday was about 108,000 contracts...of which 29,170 came in the last 90 minutes of trading. Why am I not surprised...as that's the amount of time between the lunchtime spike and the Comex close.

Open interest on Thursday's big intra-day rally showed a decline of 81 contracts to 328,203! What is happening here? Was there massive shorting along with the buying...or spread trades? Beats me...but that's what it would take to come up with such a neutral number on such a big up day. Silver o.i. was down also...282 contracts...to 86,202. Volume in gold on Thursday was 129,472 contracts...and silver traded 20,193 contracts. These are pretty big numbers...which also include switches, which are price neutral.

The Commitment of Traders report yesterday was a big disappointment. Both Ted and I were expecting an improvement in the net short position of the '4 or less' traders in both gold and silver. Didn't happen. There was further deterioration instead. The Reader's Digest version of the report showed that the '4 or less' bullion banks went net short a further 676 contracts in silver. That may not seem like a lot, but when both of us were expecting a number at least three times that size in the other direction...it was a disappointment. In gold, the '4 or less' bullion banks increased their net short position by 6,709 contracts. It's my opinion that not all the data that was supposed to be in this report...was. In gold, the net short position of the bullion banks is now 14.5 million ounces...which is getting up there. In silver, the bullion banks are now net short 154,600,000 ounces. This is not that big a number if you consider how big it was in June of last year. As a matter of fact, it's a pretty small number. The latest Commitment of Traders report is linked here.

In gold news today, Central Gold Trust's offering (that I spoke of yesterday) came in at $38 million...which translates into about a tonne and a half of gold...48,000 ounces give or take. I see that another newsletter writer has finally caved and admitted that the gold market may be managed. Mark Hulbert admitted as much in a piece in Barron's on Thursday. He's also bearish on gold at the moment, as his sentiment indicator of bullish newsletter writers checks in at 75.2%...a three and a half year high. We'll see. He could be right, as the Fed shows no sign of caving at this juncture. And lastly, along with a new record of 778 tonnes in the gold ETF, GLD...the silver ETF, SLV, added a net 270.5 tonnes of new silver for the week and now shows 7,063.5 tonnes of silver (allegedly) held for the trust by custodians (JPMorgan...the biggest silver short on the Comex!!!) in London. This is a new record. The graph is below...and I thank Gene Arensberg for providing it.

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In 'other news', I see in a Bloomberg story that "The Illinois House of Representatives impeached Governor Rod Blagojevich for abuses of power after federal prosecutors accused him of trying to auction President-elect Barack Obama's former seat in the U.S. Senate." And in a similar vein is this story in the New York Post..."Maryland's state prosecutor says a grand jury has indicted Baltimore Mayor Sheila Dixon on 12 counts, including perjury, theft and misconduct in office." Reuters (Zurich)...Swiss wealth manager UBS AG is closing all the offshore accounts of its U.S. clients, the bank said on Friday, as it comes under pressure from U.S. tax authorities. The Swiss bank decided in July last year to stop offering offshore accounts to U.S. citizens. "This is an ongoing process. It started last year and accelerated since last summer," UBS spokesman Serge Steiner said, confirming a New York Times report." And finally, from The King Report shortly after the jobs numbers came out yesterday morning..."Not seasonally adjusted, 954,000 jobs were lost. Additionally, the BLS's hokey Net Business Birth/Death Model unfathomably created 72k jobs in December. More importantly, the U6, or comprehensive unemployment rate, surged to 13.5%. If 'discouraged workers' are added, the total unemployment rate would be about 17.5% as estimated by John Williams." [over at shadowstats.com - Ed]

Today's first story comes from "the land down under." The report says that "Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth." The story is entitled "Gold rush erupts over financial crisis" and the link is here.

Today's second story is from The Wall Street Journal. It's about one of Ayn Rand's books...and the title says it all..."Atlas Shrugged": From Fiction to Fact in 52 Years". It's well worth the read and the link is here.

And lastly, here is an interview with Eric Sprott, of Sprott Asset Management and Sprott Money in Toronto. It covers the prospects for banking, the stock market, gold, and gold stocks. It's headlined "Gold: The Go-To Asset in Any Environment," and you can find it linked here.

I happen to be in the Ted Butler camp--when you look at the goings on and the commodity exchange, it just looks so perverted with the size of short positions that are going on--I think the quoted values, ultimately, will prove to be irrelevant. - Eric Sprott, Sprott Asset Management

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This week's 'blast from the past' is from the 1970s once again. Everyone knows this timeless classic...and if you still remember the words...you can sing along. Turn up your speakers and then click here.

It was a hell of a week in the gold market. As the usual N.Y. gold commentator said on Thursday..."There be elephants here"...and they were certainly stomping about the gold market this past week...both on the long side and short side. I have no idea what next week will bring, but I do know that I will be watching the movie I.O.U.S.A. which will be airing on CNN on both Saturday and Sunday. Check your local TV listings for the showtimes in your area.

Enjoy the rest of your weekend, and I'll see you on Tuesday.

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