we used to see gold and silver climbing overnight in asia, only to be smashed back dwon in new york. ed steer of casey research describes the reverse now taking place. the metals declining overnight, as the not-for-profit sellers try to keep things in check. open interests for gold and silver have declined as the prices ran up in the past week, which could indicate the rally was based on short covering by the banks, not that speculators have bought in yet again:

Tuesday was the third day in a row that gold and silver got sold off as soon as trading began in the Far East...and as I write this, Wednesday morning in Asia is shaping up the same way. Gold was down about $15 when the Comex opened in New York on Tuesday...and a ferocious $25 rally (tech funds?) got stopped dead in its tracks at precisely 9:00 a.m. Eastern time...the second day in a row it didn't get past $830 the ounce. Silver's fate was similar. Both sold off from there and both finished basically unchanged from Monday. The HUI traded as low as 218...but managed to tack a 5% gain onto that number to close in slightly positive territory for the day.

Monday's open interest numbers were interesting. Gold open interest fell 5,533 contracts to 282,978...another new low. One would think that it should have gone up with the gold price, but the large players are still switching their gold and silver contracts into future months in 2009; so, in this process, there could be a lot of spread trades being lifted as well...which would contribute to a drop in open interest. All this frantic activity will cease at the end of Comex trading today. First day notice is on Friday. Then we'll really find out who is standing for delivery...and then we'll also find out if there's anything to all this short squeeze talk that we've all heard so much about in the last couple of months. And not to forget silver, its o.i. on Monday was down as well...a smallish 204 contracts to 90,418.

So...were the "2 or less" U.S. bullion banks lurking about yesterday? It sure looked like it to me if I just had the gold chart to go on; because like I've said ad nauseum...NO profit maximizing seller sells like that...EVER! However...because of all the switches and other gaming going on as we approach the biggest delivery month of the year in both gold and silver...I think I'll begrudgingly reserve judgement and wait for further developments today, Friday...and Monday.

http://caseyresearch.com/displayDrp....