From Ed Steer:

Gold's path was about the same on Tuesday as it was on Monday...with strength in London right up until the p.m. fix...or the London close. Then, from either of those two points (or both), down it went once the New York crowd had the metals to themselves. However, the sharp decline in both silver and gold yesterday brought in strong buying...which brought the prices back to their Monday closes. Volume was 98,000 contracts...net of switches.

I'm still of the opinion that we're not out of the woods yet. The 50-day moving average for gold has moved up three dollars from Monday and now sits at a hair over $841...and soon the 50-day m.a. will cross the 200-day moving average....which is an important point for some market technicians. I'm not expecting this correction to be deep, or very long...if it happens at all...unless the boyz have something special planned...like what they did to us last July. What we have now is an intermediate top with some cartel-inspired 'backing and filling'. I'd be surprised if we saw a price below $825...except on a brief spike down. Whatever correction we have, I figure we'll soon see new highs after that. My money is still 'all in'.

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Despite Monday's price correction, open interest was up once again in both metals. In gold, o.i. rose 4,889 contracts to 347,515. In silver, it was 871 contracts to 93,861. I don't know what to make of that, unless the boyz are piling on the short positions before they really whack the prices. In the past, I've sometimes noticed that the boyz like to start a major take-down as soon as the Comex closes after Tuesday's trading, so little or none of their subsequent activity shows up in Friday's Commitment of Traders report. Then you have to wait a week and a half to see what they've been up to. We'll find out in a few hours whether that's their game plan or not.

In gold and silver news, the first story is from the Economic Times in India. It appears that there is some serious worry amongst bullion dealers about the fact that the Reserve Bank of India has not yet renewed anyone's licence to import silver in 2009. Last year, both gold and silver import licences were issued together. This year they're separate. Gold import licences have been renewed, but so far, not silver. India imports about 3,000 tonnes of silver a year. I'll keep you posted if I hear anything further. And from the usual N.Y. commentator, comes this..."The European Central Bank's weekly statement of condition indicated a rise of €1Mm (0.05 tonnes at the current book value) – said to be caused by a purchase of gold coin by one subordinate CB (Central Bank - Ed). This is, I believe, only the second time in the 9 year history of WAG sales agreements that an increase has been reported. Last week’s sale was 2.35 tonnes." Lastly, I see in a story filed at marketwire.com that Central Fund of Canada completed its sale of 12.5 million Class A shares. This sale has raised their bullion levels to 1,049,328 troy ounces of fine gold...and 52,670,793 troy ounces of silver...give or take. Now let's see how long it takes to get the silver they ordered. And this just in...the SLV ETF added another 2.5 million ounces yesterday...another record high. There was no change in GLD.

In 'other news', I note in a Bloomberg story that at the end of 2008, there were 19 million vacant homes in the U.S.A. "There were 2.22 million new foreclosures in 2008, an average of 6,090 a day, according to Washington-based Hope Now Alliance." Based on a four-person family, this many homes would house all of Canada's population more than twice over! In a marketwatch.com story, the headline read..."GM U.S. sales fall 48.9% to 128,198 units in January"..."The automaker also forecast its North American production to total 380,000 vehicles in the first quarter--118,000 cars and 262,000 trucks, down 57% from the same quarter last year." [It's hard to believe that these numbers are going to much worse as the year progresses...but they will. – Ed] And in a headline out of The Telegraph in London..."Let banks fail, says Nobel economist Joseph Stiglitz"..."The government should allow every distressed bank to go bankrupt and set up a fresh banking system under temporary state control rather than cripple the country by propping up a corrupt edifice, according to Joseph Stiglitz, the Nobel Prize-winning economist." And lastly...Monday was Ground Hog Day...even here in Canada. New York Mayor, Michael Bloomberg, got bitten by the ground hog that he was holding up at a photo op. [Note to Michael: It could have been worse...just think of the alternative! – Ed]

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Today's first story is from Bloomberg. In it, Eric Sprott, of Sprott Asset Management in Toronto says that the "U.S. Depression Will Boost Gold Price"..."Sprott, who manages $4.5 billion, said (last) March that the world was in a ‘systemic financial meltdown,’ a call that presaged the collapse of financial institutions including Bear Stearns & Co. and Lehman Brothers Holdings Inc." The link is here.

And as further background to the previous story, here is the January edition of "Markets At A Glance" from Eric Sprott himself...and co-author Sasha Solunac. It's a 'must read' and the title says it all "So You Think 2008 Was Bad? Welcome to 2009". The link is here.

There were two stories on the following issue today. One from the Financial Times in London...and the other from the National Post in Canada. Both deal with the same issue..."U.S. set for 'big bank' financial clean-up" as the headline in the FT read. The story from the National Post is the story that I've selected. It's written by Diane Francis and is entitled "U.S. dollar devaluation on its way". The link is here.

In a story from the German newspaper spiegel.de comes this very related story. "The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?" The headine reads "Iceland on the Thames: Can Countries Really Go Bankrupt?" and the link is here.

And lastly is silver analyst Ted Butler's latest commentary. He reviews the shorting of the exchange-traded fund SLV and concludes that the market is not only manipulated, but tighter than ever. It's entitled "Unfinished Business" and the link is here.

There's a rumor going around that states cannot go bankrupt. This rumor is not true. - German Chancellor Angela Merkel

As the cartoon I used yesterday hinted at, it will be interesting to see what lipstick the Obama team will put on this rescue pig that's coming out. Let's face it, world governments and their associated banking systems are making things up as they go along. But "this time it's Austrian"...and sometime in the next twelve months or so, there will only be a smouldering crater to show where the world's current economic, financial and monetary system used to be...unless some country "goes for gold" along the way.

I suggest you do exactly that yourself...right now.

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.