From Ed Steer:

After Friday's lousy action in the gold and silver price...and their shares, it was no surprise to me that the boyz hit the price right at the open in Far East trading early Monday morning. They weren't even trying to hide...it was like a two by four right between the eyes. Every rally was crushed...and once the London p.m. fix was in at 10:00 a.m. New York time, they really went to work on the price. This continued through what was left of Comex trading...and then into the electronic Globex trading after. Here's the 3-year gold chart. Hopefully this put the current situation in some sort of historical perspective.

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Silver was similar. Its price was driven down all through Far East trading as well...and it even got smacked pretty good at the London silver fix (noon in London...7:00 a.m. Eastern)...as did gold, come to think of it.

With both gold and silver putting in strong performances on Friday, one would have expected that the open interest numbers would show increases in both metals. One would be wrong. Gold open interest fell 5,470 contracts to 342,626. About 1,400 of that open interest was deliveries into the February contract. In silver, o.i. rose 2,035 contracts...not what Ted or I wanted to see. There was a lot of movement in silver in the various Comex warehouses on Monday. If the numbers are to be believed, silver inventories declined about 1.7 million ounces since last Friday. That's a chunk.

In other gold news yesterday was this story from tradearabia.com that was posted at Kitco. The headline read "Abu Dhabi gold jewellery sales slide 70%"..."The volume of gold jewellery sales in Abu Dhabi slid 70 per cent in January, as rising prices and the impact of the slowing global economy on consumers crimped buying, the emirate's industry group said on Sunday." I sent that story around to the Casey crowd on the weekend and got this reply from CR's Fitzroy McLean..."we were just in Dubai and you could have driven a truck through the normally packed Gold Souk and not have hit anyone. All the Indian and Pakistani laborers who buy gold monthly have been sent home. We were able to buy coins 30 US$ under spot from dealers needing cash to pay bills. Could have gotten even better deals on .99 jewlery."

In 'other' gold and silver news, I see that the GLD ETF was up another 320,000 ounces...10 tonnes. There were still no changes in SLV. As I said on Friday, they have a lot more silver owed to them. In January, it appears that the Swiss gold ETF added 364,100 ounces...and the Swiss silver ETF added 5,776,000 ounces...if I'm reading the spread sheet correctly that Carl Loeb sent me...for which I thank him. And lastly, since the beginning of the year, the U.S. Mint has hammered out 94,500 one ounce gold eagles...and 2,307,000 silver eagles.

The 5-day wiener roast in Davos, Switzerland was a bust. In a Bloomberg story the headline read...'Grimmest' Davos Ever Brings Anger, Finger-Pointing at Bankers..."The search for scapegoats and the worst economic prospects since World War II resulted in a gathering marked by fear, anger and bitterness, a far cry from the usual search for consensus." [Looks good on 'em! – Ed]

I have five stories today, as it was a very 'bad news' weekend. This first story arrived in my in-box early Saturday morning...long after my Saturday commentary was filed. Unrest is everywhere these days, and without doubt will get much worse. The story is from thetimesonline.co.uk and bears the headline "Dawn of new age of industrial unrest as wildcat strikes spread across UK". Such protectionist strikes have ominous implications for the E.U., and the world, as protectionism increases globally. I thank Craig McCarty for this story...and the next two as well. The link is here.

The second story is filed from Vladivostok...and appears at the telegraph.co.uk web site. There are big problems in Russia...and it appears that they will only get bigger. It sounds like Vladimir Putin is having his share of issues. The headline reads "Vladimir Putin faces signs of mutiny in his own government as protest break out in east" and the link is here.

The next story is also from The Telegraph, and is filed by Ambrose Evans-Pritchard in Davos. This is a story from last Friday that didn't make the Saturday cut, but is important enough that you should read it. Doug Casey calls the Euro a "who owes you nothing" currency...which is different from the US$...which is an "I owe you nothing." Jean-Claude Trichet, the president of the European Central Bank, doesn't sound too convincing in this piece. The headline reads "Trichet is bounced into defence of the euro" and the link is here.

The next story is from The Guardian in the U.K. "A series of hearings in Washington over the next four weeks will determine whether UBS faces criminal prosecutions and possibly even the loss of its US bank licence." The article is headlined "Fate of UBS hangs on tax evasion case". It's worth a read...and the link is here.

And lastly, in a story that appeared early this morning in Business 24/7 out of the United Arab Emirates, the headline reads..."Gold prices could hit $1,500, fears Merrill Lynch CIO". Works for me, and the story is worth reading. I thank Bill Rummel for sending it along. The link is here.

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With confidence in currencies shaken to the core, the yellow metal is increasingly assuming the role of "the most trusted currency". We have never seen such a rush to buy gold. It's bringing in security and it's still affordable. - Gary Dugan, Chief Investment Officer, Merrill Lynch, February 3, 2009

Well, it should be obvious to anyone that the bullion banks, probably under instructions from the Fed, are trying to stampede the tech funds into tossing their long positions so that JPMorgan et al can cover all these shorts they've placed all the way up on this last rally. To take out the 50 day m.a. in gold...and clean out most of the tech longs...we'd need a decent close under $838...which is the current price of that moving average. $70 from yesterday's close would do it. In silver, we'd have to see a close of around $10.65 to get the tech funds to puke up all their longs.

Can the boyz get a waterfall decline started? Who knows...but they'll certainly try...and we've all seen it before. This has been their primary objective since trading opened in the Far East early Monday morning. And as I fire this off to my editor in the wee hours of Tuesday morning, I can see that they're still at it.

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.