From Ed Steer:

Not much happened in gold on Tuesday. The top was in around 10:00 a.m. in London trading...just like Monday. From there it got sold off a bit...and the boyz in New York finished the job. Volume in gold yesterday was light...81,377 contracts less a switch effect of 4,870. With some notable exceptions, gold is never allowed to rise into, or during, an FOMC meeting.

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Silver's path was similar...and one could be forgiven if one thought that Tuesday's price action looked suspiciously similar to Monday's. Silver's trading volume was extremely light.

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Monday's gold activity brought a decline in open interest of 5,741 contracts. Silver o.i. actually rose 30 contracts. Cut-off for this Friday's COT is today, so whatever o.i. changes are reported later this morning, should be in Friday's report...fingers crossed. In Comex gold deliveries yesterday, there were 110 contracts delivered. The big issuer was Prudential Bache [92 contracts] and the big stopper was the Bank of Nova Scotia [89 contracts]. In silver, only 20 contracts were delivered, which isn't very many. F.C. Stone was the issuer and JPMorgan was the biggest stopper. The Comex-approved warehouses reported that 425,031 ounces were withdrawn. The U.S. Mint didn't update their gold or silver eagle mintings yesterday either...and GLD and SLV were both unchanged.

With this week's price declines in both metals, it's possible that we may revisit the 50-day moving averages in each. Gold spent part of one day below it last Tuesday...which is why we had a big improvement in last Friday's Commitment of Traders report. I would be happier if we broke it again...say down to $890/$895...and stayed there for a couple of days. That would flush out the rest of the tech longs in the Non-Commercial category. I do not wish to contemplate the thought that we might revisit the 200 day m.a...as I don't think that number [currently $859.07] is in the cards. In silver, we haven't broken the 50-day moving average at all during this price decline...and if JPMorgan et al decided to drop the silver price another two bits to flush the tech longs there too, I wouldn't be surprised...or disappointed. [We're already below the 200-day m.a.] If this, in fact, does pan out...then it will be by design...not by chance. We'll see. The 3-year silver graph is below to put things into a longer-term perspective.

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In other precious metals news, the usual N.Y. commentator has the following..."Tuesday's European Central Bank weekly statement of condition indicates that the group shed €105 million [5.25 tonnes at the present book value] in 'gold and gold receivables.' The previous week's quantum was 1.85 tonnes; the week before that was 10.86 tonnes."...the fall is once again attributed to a sale by one CB and 'a purchase of gold by another Eurosystem central bank.' It is a long time since any European CB bought significant amounts of gold...The Gartman Letter, expressing disgruntlement about the sluggishness of gold, has begun to mutter about shorting gold--probably against grains, which TGL likes." [Note to Dennis: I'll be delighted to take the long side of that trade! - Ed]

In a story from Reuters posted over at Bill Murphy's lemetropolecafe.com yesterday..."Holdings of Julius Baer's gold-backed ETF [Switzerland] rose 149,200 ounces, or 20%, in the week to March 17th, the bank said in its weekly statement. The amount of gold the fund holds to back its exchange-traded securities had climbed to a record 877,775 ounces by Tuesday, from 728,575 ounces a week before, it said." In a Reuters story that Ted Butler sent me, I see that Anglo American sold the rest of its stake [11.3%] in AngloGold Ashanti to super rich [and super successful] hedge fund, Paulson and Co. Yesterday I mentioned that Bad Boy Barrick Gold had been whacked by the courts for lying to their shareholders about hedging not hurting profits as gold prices rose. Well, in a Bloomberg story posted yesterday, they [at least their insurance company] got the bill for $24 million...."There is no admission of liability" in the settlement, said Barrick spokesman, Vince Borg. We at GATA know just how guilty these 'fine folks' really are...and have all the numbers to back it up.

As an aside, and with thanks to the King Report, here's a graph from economicdata.com that shows who got paid [and how much] by AIG... from the public funds that were given to to bail them out. I can see why one U.S. Senator thought that AIG executives should "go Japanese" and either resign or commit suicide. As Eliot Spitzer said in a piece over at slate.com..."The real scandal at AIG is not the bonuses...it's that AIG's counterparties are getting paid back in full."

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Here's another take on what's going on at over at AIG. This commentary [again courtesy of the King Report] is posted over at agonist.org. It's entitled "The Real Story Behind Those Greedy AIG Bankers". I've read it carefully...and I feel that you should do the same. The link is here.

The next story is from The Telegraph in London. The headline reads "IMF poised to print billions of dollars in 'global quantitative easing'. They will do this with what I referred to yesterday as Special Drawing Rights [SDRs]. It's an electronic currency made up out of thin air by the IMF for use between member countries. You can be forgiven if you think you've entered "The Twilight Zone" on this one. The very short article is linked here.

Posted at Reuters is this story headlined "Credit Card Defaults at 20-Year High."...with losses particularly bad at Citigroup and American Express. "Analysts estimate credit card chargeoffs could climb to between 9 and 10 percent this year. In that scenario, such losses could total $70 billion to $75 billion in 2009." You can't stay in the credit card business long with losses at these levels. How soon will it be before the government [and the U.S. taxpayer] is covering those debts as well. The link is here.

The last piece today is from marketwatch.com. In it, Mark Hulbert asks "Where have all the gold bugs gone?...Huge shift among gold timers from bull to bear"..."Contrarians therefore believe that gold's recent decline is more likely to prove a correction within a longer-term up move than the beginning of a major bear market." Your humble scribe agrees with that assessment 100%. Let's hope that JPMorgan et al agree as well...as they have an iron grip on gold and silver prices. The link is here.

I think we may still have a rally [in the S&P] until about the end of April, and probably then a total collapse in the second half of the year sometimes, when it becomes clear that the economy is a total disaster. - Marc Faber, CNBS, 17 March 2009

The U.S. equity markets 'enjoyed' what can only be described as a short covering rally yesterday. There certainly weren't any fundamentals driving it, as the U.S. economy is collapsing in ruins at breathtaking speed. No amount of money...Special Drawing Rights notwithstanding...will save the world now. The existing debt must be cleansed from the system. Trying to save the world by creating more of what got us into this mess in the first place, is totally counterproductive. I'll be 61 years young on my next birthday...and with the way things are going at the moment...I'll be a very old man before this newly-born bear market breathes its last.
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.