From Ed Steer:

From the first paragraph of my Saturday commentary..."I don't know what it is about that [one hour and change] stretch of time between the Sydney close and the London open...but if there is going to be a down day...it starts right there a large percentage of the time." Any questions? Actually, both gold and silver got sold off the moment that the New York bullion banks opened for business 6:00 p.m. on Sunday night...which is very early Monday morning in Far East trading. Shortly before 3:00 p.m. in Hong Kong, gold had almost made it back to unchanged...and silver was actually up a couple of cents when the hammer fell. The bottom for gold came very shortly after the London a.m. gold fix at 5:30 New York time...and in silver, shortly after the Comex open.

The 'rally' in the US dollar that started at the same time as the precious metals got hit, gave all its gains back before the end of trading yesterday...but you will carefully note that neither precious metal was allowed to recover their full losses. How typical.

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With both metals firmly set back on their respective heels, both Ted Butler and I felt sure that the bullion banks would continue to press their advantage once trading in New York began...but they did not...and gold and silver recovered somewhat as the trading day wore on. Volume in both metals was very low. The shares got creamed...but closed off their lows of the day.

Thursday's big down day in gold and silver before the long weekend should have shown big declines in open interest in both metals...but, once again, that didn't happen. Open interest in gold rose 2,928 contracts to 381,287...on huge volume of 114,743 contracts. In silver, o.i . rose only 428 contracts to 101,397...on smallish volume of 20,172 contracts. Ted and I didn't know what to make of this, as these numbers are ludicrous...unless someone loaded up on short positions in both metals....or are the open interest numbers not being reported in a timely manner? I guess the July 4th long weekend may have slowed them down a little. Let's see how the rest of the week shapes up. Today [at the close of trading] is the cut-off for this Friday's COT report.

The Commitment of Traders report [which was released yesterday instead of the Friday holiday] was not hugely positive either. In silver, the bullion banks only improved their short position by 1,509 contracts...and in gold, open interest for the week that was [for the close of trading a week ago today] actually showed an increase in the bullion banks’ short position of 3,388 contracts. There certainly has been an improvement since then...but I start to have my doubts about that when I have the daily numbers that I reported in the previous paragraph so out of whack with what the metal prices actually did.

And from the usual N.Y. commentator.."The [Indian] budget today doubled the import duty on gold and silver to R20 [20 Rupees]...$600/kilogram of gold and R1...30 cents/kilo for silver, effective immediately. The Indian bullion trade is naturally hostile to the duty increases...making dire predictions in this Reuters story filed from Mumbai linked here. In reality, UBS is probably right in suggesting that at about $6 an ounce, the impact on gold is marginal."

The Comex Delivery Report for Monday showed that 21 gold contracts and 59 silver contracts were delivered. GLD dropped a minor 11,465 ounces and SLV was unchanged for the umpteenth day in a row. The U.S. Mint reported another 7,000 one ounce gold maple leafs and another 225,000 silver maple leafs stamped out. And over at the Comex-approved warehouses, 724,141 ounces were shipped in last Thursday...just before the long weekend.

In other news I noted that the CIC... the China Investment Corporation...purchased a 17% interest in Teck Resources here in Canada. For those of you who are non-Canadians, that's one of Canada's largest resource companies. I see in a story posted at Kitco that the Bank of Korea is making noises about buying gold. The headline reads "Bank of Korea to Buy Gold for First Time in 11 years" and the link is here. And I noted an article posted at China Economic Net that's headlined "China encouraged to further boost gold reserves". The link is here.

And lastly, I see that GATA was cited on CNBS by Dennis Gartman. He remarked that "'the conspiratorialists are out there buying gold, the GATA boys are out there buying gold, and gold acts rather poorly. ... I'd rather leave gold alone. It still looks like it wants to go lower.' Gartman speculated that gold could go down to $880." [Note to Dennis: A nice, safe call...the 200-day moving average. I guess that's why you get paid the big bucks. - Ed]
Last Thursday, Al Korelin of Korelin Economics was kind enough to take the time to interview me. If you care to listen, the link is here.

Here's a graph that I thank P.S. for sending along. While jobs/job loss is traditionally a lagging indicator, the numbers increasingly suggest that Greenspan's celebrated "green shoots" are actually weeds.

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Today's first story is from the The Wall Street Journal. "France, Russia and India questioned the role of the dollar as the world's reserve currency during the weekend, indicating its status is likely to be a strong talking point in this week's Group of Eight leading nations' summit in Italy." It's entitled "Dollar's Role Under Debate In Run Up to G8 Summit" and the link is here.

The next piece is from thedailybell.com in Switzerland. This is an interview with James Turk over at goldmoney.com. It's headlined "James Turk on how the elites always destroy the paper money they value - and why gold wins." The link is here.

I see that the "vampire squid [Goldman Sachs] with its tentacles wrapped around the face of humanity" was in the news again. It appears that some its proprietary trading codes were 'stolen' and a lawyer for GS said "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways." I guess Goldman fears infringement of its market-rigging power...and that someone other than they can now do it as well. Why is it that when GS does it...it is seen as a "fair way"...but when the manipulator is someone else...the ways become "unfair?" Just asking. The Bloomberg headline reads "Goldman Trading-Code Investment Put at Risk by Theft" and the link is here.

I see in a GATA dispatch that Austrian silver euro coins are being used to beat German taxes. The headline...in a story filed in spiegel.de from Germany...reads "Quick Silver: A New Austrian Coin Trick"..."Hot tip for German investors: an Austrian silver coin that can be smuggled legally. It's music to the ears of Germans who bank in Austria. But how long can the party last?" It's a very interesting read...and the link is here.

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I place [the] economy among the first and most important virtues, and public debt as the greatest of dangers to be feared...we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty...or profusion and servitude. - Thomas Jefferson

The liquidation of the spec longs in gold and silver is proceeding like molasses in January. The bullion banks are obviously in no rush to get this done. It appears that they have all the time in the world...and are drawing the process out for as long as possible. A manufactured 'summer doldrums' if you will. Even though gold is down $65 from its high...and silver over $3...the 200-day moving averages are still quite a ways off...and there hasn't been very much short covering by the bullion banks during this decline. If JPMorgan, HSBC USA et al really put their minds to it...it could get ugly, as we could get another monster sell-off like last year. Ted Butler and I spent part of yesterday talking about this scenario...a scenario that I've spoken of several times during the last month or so. But can they...or will they? Here's hoping they can't...but based on past history, I don't like the odds.

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.