From Ed Steer:

As per usual lately, gold didn't do much in Far East trading on Wednesday. The price drifted a few dollars higher until 1:00 p.m. in Hong Kong...then slid the same amount into the London open. From there, gold rose gently until shortly before lunch in London...7:00 a.m. Eastern. I'll let the usual N.Y. commentator take it from there..."An increasingly familiar pattern exerted itself again today. A strong early upthrust [actually beginning at 7 a.m. N.Y. time] had gold up some $9 in a few minutes. Another effort around 8:30 a.m. also drove gold up another $9 in 15 minutes to the day's high of $935.80 basis June. This was just as abruptly reversed...[and] by 10 a.m...54% of the day's volume had traded, and by 1:30 a.m., gold had lost some $16. Then, unusually, gold drifted up, recovering some $6...and closing the floor session up $2.70 on the day. Estimated volume was a low 92,686 lots, with a switch effect of 6,036."

You will note from the blue line on the Kitco chart below, that a similar pattern was evident during Monday's trading. It should be obvious to anyone, that all attempts by either gold or silver to break sharply higher in New York this week have been stopped dead in their tracks...and then reversed.

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Silver's pattern was virtually the same as gold's. Low of the day at the London open...highs at 8:45 a.m. in New York. Lots of people consider silver to be primarily an industrial metal...which is what it is at this point in history. But, in the ten years I've been following it, it has remained in lockstep with the gold price. And, if you check the Periodic Table of Elements, it sits right above gold in the block of six metals that are described as "precious". That's how I see silver. That's how JPMorgan Chase and HSBC USA see it as well. They aren't short massive amounts of copper, nickel, zinc or lead. Just gold and silver. Why? Because they're the monetary metals. They always have been...and always will be.

But despite the less-than-spectacular gold price performance yesterday, the shares were on fire, and they made another new high for this move. Are they telling us something? Below is the 1-year HUI chart. For the first time since June of last year, the 50-day moving average is about to cross the 200-day m.a. But this time it's going in the right direction. Fingers crossed.

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Open interest in gold for Tuesday fell 3,486 contracts to 368,618. In silver, after its 90 cent price range, o.i. actually rose 1,584 contracts to 94,506. I don't know what to make of that...as I was expecting quite a drop. The Commitment of Traders report tomorrow should tell all...hopefully.

In other gold news, there were 1,441 gold contracts delivered yesterday...lots of issuers and acceptors/stoppers. Only six silver contracts were delivered. GLD and SLV added nothing. Comex-approved warehouse silver stocks took a big drop yesterday...down 1,777,450 ounces. And the N.Y. commentator also reported that "over the past six months, Turkey, which normally imports around 20 tonnes of gold a month, has imported a total of 1.27 tonnes." There was a story posted at yahoo.com early yesterday morning that reported..."On 31 March 2009, the European Central Bank has completed gold sales amounting to 35.5 tonnes of gold." Chris Powell, GATA's secretary treasurer, had a few things to say about that story in a dispatch entitled "More moronic gold market 'analysis' "...and the link is here.

This morning's first story is from Toronto's Globe and Mail. It's a Q&A with Eric Sprott of Sprott Asset Management in Toronto. Eric, of course, is no shrinking violet...and doesn't hesitate to express his opinions...no matter how unpopular or truthful they are. The story is a must read and is entitled "First 'fix the economy': Eric Sprott, a veteran bear, sees no reason to change his outlook" and the link is here.

The next story is from Bloomberg and is headlined "CDOs Becoming 'Unmanageable' as Trading Costs Surge, Fitch Says"..."Managers of collateralized debt obligations are struggling to operate the funds because the cost of trading the underlying contracts has soared, according to a report by Fitch Ratings." I thank Craig McCarty for the story...and the link is here.

James Turk of goldmoney.com has a new piece out as of yesterday. It's entitled "A Message from the Weak Currency". It's accompanied by the usual wonderful graphs...and the link is here.

And lastly, is the third in a series of essays by silver analyst Ted Butler. In it, he reports on the creation of gold and silver futures contracts for which there will be no mechanism for delivery of metal -- just more potential for price manipulation. Butler's commentary is headlined "A Bad Joke?" and you can find it posted at silverseek.com. The link is here.

We will not have any more crashes in our time. - John Maynard Kenes, 1927

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Yesterday's sharp fall in the Dow at the open was suddenly reversed out of nowhere. The talking heads on the business channels just couldn't figure it out. As I write this, I see that the S&P futures are up 12.75. For the moment..."everything is fine" once again...until the moment it isn't. The financial situation continues to deteriorate...and if you're not convinced of that...go back and read that Eric Sprott interview one more time.

See you on Friday.

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