From Ed Steer:

Gold began to rise the moment that Globex trading began in New York on Monday night...very early Tuesday morning in the Far East...before any other exchange is open. But nothing much happened in either the Far East or European markets yesterday. The low for the day was the Comex open in New York. From there, it rose to around $882 just before lunch...and that's basically where it stayed for the rest of the day. Estimated volume for the day was a very smallish 71,884 contracts, with a switch effect of 6,732.

Silver also rose...to around $12.25 in the Far East...and stayed there until the London open. From that point it got taken down...and the bottom [$12.03] was at 8:00 a.m. in New York at the Comex open. From there, it gained back all it lost during London trading. The PM shares faded as the day wore on...but at least they finished in the plus column.

Open interest in gold for Monday's big down day showed a drop of 8,308 contracts to 343,276. That doesn't seem like a lot, but don't forget...that's a 'net' number. The bullion banks could have been going long and covering shorts at the same time...making the improvement actually much larger than it shows in this number. We won't know what's really going on until the COT on Friday. Another case in point is the silver o.i. Despite being taken out and shot, net silver o.i. only fell 24 contracts [to 93,903]...which is impossible for such a big move. The bullion banks were pulling the same stunt in silver as they were in gold.

On Tuesday, there were only 96 contracts delivered in gold...and there are still about 2,300 contracts yet to be delivered in the April contract. In silver, there were 166 contracts delivered on the Comex. The big issuer was the Bank of Nova Scotia [139]...with the big stopper/receiver being Triland USA [122]. Yesterday, there was even more silver removed from the Comex-approved warehouse facilities. As I mentioned on Monday, nearly 7.7 million ounces of silver had been taken off the exchange in the previous four business days. Well, another 2,151,389 ounces were withdrawn yesterday. Now we're up to a hair under 10 million ounces removed in just five days.

Only one precious metals story of note yesterday. I see in a press release issued at 4:06 p.m. Eastern time last night, that the Central Fund of Canada has announced a proposed offering...."The remaining amount of approximately U.S.$340,000,000 of the original U.S.$750,000,000 provided for in the base shelf prospectus is available for this offering. Substantially all of the net proceeds of the offering will be used for gold and silver bullion purchases." I doubt that all US$340 million will be taken up. If the past is any guide, the underwriting is normally for about $130 million by the time the smoke clears. And by the time you read this, the press release for the underwriting agreement will already be in the public domain. Central Fund was selling at a 17% premium to NAV at the close of trading on Tuesday. So...another pile of silver and gold bars is about to be permanently removed from circulation. Just how much, should be in a press release early next week I would think.

The latest U.S. Treasury International Capital (TIC) report shows the January outflow of foreign private investments was $158 billion. Since June of 2007, there has been a massive flight of foreign capital from the United States, though the impact has been mitigated by a collapse in U.S. investments abroad. The graph below...courtesy of Casey's Charts...tells all.

click to enlarge

Nonetheless, the exodus reveals increasing unease by foreign capital holders about the U.S.’s economic future, especially troubling at a time when the government needs to finance a $3 trillion budget. The outlook for the dollar is not so good. [Unease??? How about outright panic? - Ed]

Today's first story is from timesonline.co.uk. The headline reads "Toxic debts could reach $4 Trillion, IMF to warn". Well, finally, we're starting to talk some significant numbers. One wonders, when the real truth comes out, how many multiples of $4 Trillion dollars it’s going to take to really get the job done. This just proves that the entire world's financial system is insolvent right now. I thank Casey Research's John Grandits for the story...and the link is here.

Today's second story is from China's 'official' newspaper...chinadaily.com. The story is a couple of months old, but I don't remember seeing anything about it in North America's mainstream press....but maybe I was asleep when it showed up. The headline reads "China's auto sales 'surpassed U.S. in January'. I thank Craig McCarty for sending it along...and the link is here.

This next story, posted at USA Today, is really interesting. It looks like the U.S. dollar has another local paper competitor. As the story says..."A small but growing number of cash-strapped communities are printing their own money." I wonder if the U.S. government will be out there shutting them down, just like they did for the Liberty Dollar folks? Just asking. The headline reads “Communities print their own currency to keep cash flowing.” Once again I thank John Grandits for the story. The link is here.

I always try to save the best [imho] to last. Here is silver analyst Ted Butler's latest commentary about the current goings-on in the silver market. It's entitled "A Simple Decision". As always, I consider anything that Ted writes about to be worth reading. This essay is no different, and the link is here.

The depression has ended. - Dr.Julius Klein, Assistant Secretary of Commerce, 06 September 1931

I have just finished reading the latest edition of the Weldon Money Monitor. Just about everything in there would make you want to run screaming to join the Mogambo Guru in his concrete bunker. Far worse is yet to come...so enjoy this interlude [such as it is] while it lasts. Or...now that spring has sprung...try a nice relaxing round of golf. For all you 'pro' golfers out there...here's a 'Par 3' hole at the Legends Golf and Safari Resort in South Africa that should test your skill. Click here...and see if you agree.

See you on Thursday.

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