From Ed Steer:

The high for gold came at about 1:30 p.m. in Hong Kong yesterday...which was half past midnight Tuesday morning in the Eastern time zone. From there, gold got sold off about $15...and never fully recovered the rest of the day. An attempt to break out early this morning (Wednesday) met with the usual fate in Far East trading.

Silver was similar...but far more volatile. Unlike gold, it managed to finish positive on the day...even over $12. Let's see if that lasts into today.

As I said yesterday...today is options expiry...and I'm ready for anything...both before and after the close of trading on the Comex this afternoon.

The open interest on Monday was a little more subdued. Gold o.i. rose 1,568 contracts to 361,473...and silver o.i. rose 300 contracts to 88,899 contracts.

The usual N.Y. commentator had the following yesterday, which I thought was worth sharing..."Since gold’s recent low nearby Comex close of $807.30 on January 15th, to Monday’s close of $908.50, Comex gold had gained $101.50 (12.6%) and added 47,675 contracts of open interest (148.3 tonnes or 15.2%). On past form, open interest will now balloon.

"(Yesterday’s) ECB (European Central Bank) statement of condition indicates a drop of €47Mm in ‘gold and gold receivables’...2.35 tonnes at the current book value. This was attributed to a sale by one captive CB, partially offset by a ‘net purchase’ of gold coin by another. Last week’s fall was E26Mm or 1.3 tonnes with only one CB involved...well under the notional weekly average needed to meet the WAG2 quota, of course.

"Gold’s friends will be heartened by a Reuters story (yesterday) afternoon that ‘…the budget spokesman for Chancellor Angela Merkel's Christian Democrats’ has said that ‘The Bundesbank has to consider, within its own autonomy, whether it will now use gold and currency reserves for refinancing or other areas.’

"The chances of the Bundesbank parting with its gold – especially with unprecedentedly widespread talk of a Eurozone break up...to please a mere politician...may be judged with some confidence at zero. However, there has been a pattern of these statements appearing from Germany immediately before a serious upward move by gold. Jawboning for friends, perhaps? The story out of the U.K.'s The Guardian about the Bundesbank selling gold is linked here."

The SLV ETF was up 3.6 million ounces to 239.6 million ounces yesterday...with more to come, and the GLD was unchanged. Central Fund of Canada estimates that their US$130 million will purchase about 75,000 troy ounces of gold and around 3.75 million ounces of silver. I would think that they will get the gold pretty quick, but it will be interesting to see how long it takes to get all that silver.

In other news, Bloomberg..."California home prices plunged 42 percent in December from a year earlier as the U.S. housing slump deepened and foreclosures hit record levels." [On a more positive note, the same story reported that sales were up 85% in December compared to December '07. – Ed] In a story out of Iran...presstv.ir..."The Jamaat-i-Islami party calls on Islamabad to close supply routes for NATO forces in Afghanistan, if U.S. drones continue hitting Pakistan."

I have the usual three stories today. The first is from themoscowtimes.com. "Prime Minister Vladimir Putin will call for a change in the world economic order and deliver his assessment of what caused the global economic debacle in an opening speech at the World Economic Forum in Davos on Wednesday night." I'm watching this year's Davos conference with particular interest...as the NWO boys will be out in force. The link to the story is here.

In a story out of The Independent in the U.K. on Sunday, the headline read "Britain is facing return of the three-day (work) week...as it emerged that ministers are considering paying firms to cut hours in order to survive the recession." [It's going to get very ugly everywhere. – Ed] The link is here.

In a story out of the Financial Times in London on Monday, it appears that "Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars. The revival of these trade practices, used rarely in the last 20 years, is a result of the countries’ failure to secure trade financing as bank lending has dried up." The story is linked here.

Private property creates for the individual a sphere in which he is free of the state. It sets limits to the operation of the authoritarian will. - Ludwig von Mises

It was wonderful to meet so many readers of Casey's Daily Resource Plus while I was attending the Cambridge House Natural Resource Investment Conference in Vancouver, B.C. this past weekend. Thanks to all who stopped by the GATA booth to express their best wishes...as it was much appreciated.

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.