From Ed Steer:

In early Monday morning trading in Hong Kong, the gold price did a quick re-test of New York's Friday afternoon's low and slowly started working its way higher from there. Gold really began moving to the upside the moment that Comex trading began in New York. The price moved higher in fits and starts until 12:45 Eastern, when the top was in. Since then, it’s been basically trading sideways.

In silver, the price spiked down the moment that Globex trading began in New York on Sunday evening...and hit a low of $11.73 before recovering to unchanged around $11.90. There it sat until 9:00 a.m. in London trading where it tacked on 20 cents...and from that point, spent the next 22 hours within a dime of that price.

I'm still not sure what to read into the fact that the boyz haven't broken through the 200-day moving average in gold...if there is, in fact, anything to read into it at all. We've had a triple bottom just above the 200-day m.a...and whether that means we're moving higher from here, or about to fall off a cliff, is something we'll discover very soon I would think. The bullion banks are still about 50,000 Comex gold contracts off their lows of last October...and the question still remains whether or not they are finished the liquidation process [Can they? Will they?] ...or do we have some more pain to endure? As I said, the price action will tell all. If I was forced to bet a dollar, I'd bet we're going higher this week...but wouldn't be surprised if I lost that bet either. Here's the 1-year gold chart.

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On Friday, gold open interest fell 1,050 contracts to 338,707. Silver o.i. rose 618 contracts to 95,543 contracts. It's impossible to read much into those numbers...but I would venture a guess and say that bullion banks [in both gold and silver] covered shorts and went long...and the tech funds in the Non-Commercial category [and the small traders in the Nonreportables] pitched longs and went shorter. Monday's gains in both metals would certainly have cancelled out some of Friday's activity. Today's price action should also be in the Commitment of Traders report on Friday. While on the subject of "price action"...the shares did OK yesterday.

The usual N.Y. commentator had the following to report yesterday..."Reuters carried a decisive story this moring: 'Asia Gold-India soaks up bullion bars: Hong Kong premium at 4-month high'. Singapore, April 20 (Reuters) - Premiums for gold bars were steady at two-month highs in Singapore on Monday and may firm up this week as India buys more before a religious festival, while bullion's drop to a three-month low spurred buying elsewhere. Gold bars in Hong Kong were quoted at a premium of as much as 80 U.S. cents an ounce to the spot London prices, their highest since December, on weaker gold prices and buying interest from jewelers...’India demand has picked up a lot. They are buying gold bars.’...said a dealer in Singapore. Vietnam physical gold stood $15.45 above world gold today, despite a sharp drop in the unofficial Dong exchange rate. Uncharacteristically careless, The Gartman Letter drew comfort for its short position today from the documentation currently appearing of heavy scrap sales last quarter. This is akin to driving using the rear mirror."

The Comex Delivery Report for Monday showed that 40 contracts were delivered in gold and 14 contracts in silver. As of yesterday, there were still a bit over 1,300 gold contracts to be delivered for April. They've got about a week left to get it over with. Over at the Comex-approved precious metals warehouse, another 496,319 ounces of silver was added yesterday. That goes along with the 600,000+ ounces that was added on Friday [that I neglected to mention in my Saturday rant]. There were no additions to the U.S. Mint's gold or silver eagles yesterday...and both the GLD and SLV were unchanged.

Across the Atlantic in Switzerland, the good folks at the Zürcher Kantonalbank have updated their gold and silver ETFs for last week. In gold, a smallish 28,487 ounces were added...but in silver, it was a more robust 451,364 ounces. Their platinum and palladium ETFs are also climbing as well. As of the close of business last Friday, the ZKB ETFs held 4.51 million ounces of gold, 557,124 ounces of palladium, 167,306 ounces of platinum and 45.26 million ounces of silver. I thank Carl Loeb for that update.

Moving a little further east, I see that The Central Bank of the Russian Federation added about 200,000 ounces of gold to their stash last month. As of the end of March, they were sitting with 17.1 million "fine troy ounces".

I note in an e-mail that I received from Craig McCarty over the weekend that "…economists Simon Gilchrist and Vladimir Yankov at Boston University, and Egon Zakrajsek at the Federal Reserve constructed credit spreads over the 1990-2008 period from monthly price data on the corporate debt of about 900 U.S. nonfinancial companies. In a forthcoming paper in the Journal of Monetary Economics they show that spreads on low-to-medium risk corporate bonds, particularly those with 15 or more years until maturity, predicted changes in the economy phenomenally well, forecasting the ups and downs in both hiring and production a year before they occurred. It would be better for everyone if it doesn't hold in the future. With the massive widening in corporate bond spreads last fall, the economists' model predicts [U.S.] industrial production will fall 17% by the end of 2009, and the economy will lose another 7.8 million jobs on top of the 5.1 million it has shed since the recession began." Check the graph below.

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I have a few stories today...as I have some fairly interesting commentary to pass along.

First are a couple of blogs from tjhorton.blogspot.com that were sent to me over the weekend. Neither one is particularly long...but both deserve your attention. The first is titled "[Gold] Head Fakes" and the link is here. The second is "Goldman Sachs manipulating markets" and the link is here.

The second story is from Bloomberg and bears the rather sensational headline..."Volcker Says Fed's Authority Probably to be Reviwed". U.S. lawmakers from both political parties have expressed concern in recent months that the central bank has overstepped its authority..." [Note to Volcker: Paul, "The Creature From Jekyll Island" will not take too kindly to losing power. Good luck! - Ed] The link is here.

It's been a while since I've run a story by Ambrose Evans-Pritchard...but Craig McCarty sent one in my direction yesterday that should make you feel better. It is, of course, from the Telegraph in London and bears the headline..."Gold price could hit $1,500" Evans-Pritchard says..."The aggressive monetary policy of central banks around the world is playing havoc with the structure of the bullion market, creating a chronic shortage of gold that may soon push the metal to fresh records above $1,500 an ounce." [Note to Ambrose: From your lips...to God's ears! - Ed] The link is here.

And lastly, here is a really interesting article from thedailybell.com. If you've ever had questions about the Swiss banking system...and what's really happening over there...this story answers all of them. I was enthralled from beginning to end. I urge you to find the time and give it the attention it deserves. The article is entitled "The Future of Swiss Banking" and the link is here.

I don't think the political system will tolerate the degree of activity that the Federal Reserve, in conjunction with the Treasury, has taken. - Ex-Federal Reserve Chairman Paul Volcker, 18 April 2009

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Everyone and his dog knows that the equity markets are in the midst [or at the end] of a bear market rally. The bank earnings being reported are complete B.S...and it's only a matter of time before the next down-leg begins in earnest...and the US$ will go with it.

See you here on Wednesday morning.

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