ed steer of casey research comments on the futures markets. he also notes the strong demand for physical bullion, both the record sales of silver eagles, and the purchases by silver etf's:

As far as changes in open interest go, Friday's price spike in gold resulted in an increase of 4,300 contracts...up to 295,065. In silver, open interest actually fell 107 contracts...to 85,554.

The Commitment of Traders report came out yesterday. For whatever reason, the boyz at the CFTC used last Monday as a cut-off date, rather than the usual Tuesday at the close of trading at 5:15 Eastern, so the changes in open interest only tell a four-day story. As was expected, there was further deterioration in the Commercial position in both gold and silver once again, as JPMorgan et al sold longs and added to their short positions in both metals. In a nutshell, their positions deteriorated by 1,500 contracts in silver and about 9,700 contracts in gold. As I said last week, and it applies even more this week...this is a "same old, same old" type of rally...as JPMorgan takes the short side of every long trade.

What it means is that unless JPMorgan gets overrun...or stops going short against everyone...this rally will end in the same way as they all have. They will get as many mice in the trap as they think they can...and then they'll pull their bids, and we'll have another waterfall decline in prices in both gold and silver. They could do it now (to paint the tape for year-end...or the beginning of 2009). Or they could wait for many more months....as we are nowhere near the old record highs in total open interest in either metal.

In silver and gold news, I note that the U.S. Mint has released its figures for December production in both gold eagles (161,500 one oz. bullion coins) and silver eagles (2,085,000). The mint used 846,000 troy ounces of gold in its gold eagle program in 2008. It's been a lot of years since the mint went through that much gold in a twelve-month period. Of course for silver, the 19,510,000 one ounce silver eagles produced is almost double whatever the previous record year was.

I see that the silver ETF, SLV, added 987,000 ounces to its stash...and the Swiss silver ETF added another 300,000 ounces as well. There are also rumblings about the Central Fund of Canada adding to its position as well. We'll find out soon enough if there's any truth to that.

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