this is from ed steer, who starting next week will have his own column, and well deserved:

I wouldn't read a lot into the action in the gold market on Friday. It was just another day off the calendar...as Ted Butler would say. The only comment I would make is that the action in the gold price feels more like a top than a bottom.

Silver was a little more interesting, as it rose in price through the entire trading day, and finished virtually on its high of the day...and a new high for this move. Now the dichotomy between gold and silver is starting to show up in the price action, and not just the open interest numbers.

Speaking of open interest numbers, gold o.i. on Thursday fell 3,216 contracts to 391,144...on absolutely monstrous volume of 174,662 contracts. Silver's decline was much more modest...only 93 contracts to 96,309...on total volume of 18,664 contracts.

The Commitment of Traders report issued yesterday, was as expected. In silver, the bullion banks decreased their net short position by 1,522 contracts. This doesn't seem like a very big number, but it's impressive because o.i. fell in the face of a silver price that rose quite a bit during the reporting week. The full color COT report is linked here.

Gold o.i. was exactly as expected...with the bullion banks going short against every long...effectively stopping the gold rally in its tracks. The bullion banks increased their net short position by a staggering [but not surprising] 21,939 contracts. The bullion banks are now net short 204,226 contracts...20.4 million ounces. The full-color COT graph for gold is linked here.

We are now sitting with a COT structure that is bullish to very bullish for silver...and very bearish for gold. This situation has only existed a few times during the last ten years. Ted suggested [and not for the first time] that maybe 'da boyz' are trying to permanently separate silver and gold prices so that silver will rise independently of gold. That's possible...but we'll have to wait and see if it pans out that way.

Something appears to be up in the gold and silver market...which the latest COT confirms. Further rallies in gold never amount to much when the bullion banks are short this amount of gold. Sure, I've seen their short position as high as 26 million ounces...which is 55,000 contracts higher than we are today...so I guess we can go higher, but the odds are not in our favor. How high we go from here [if we do go higher] depends entirely on whether the bullion banks are prepared to take on an even larger short position. But once that high [whatever, and whenever it is] is in, there is only one direction gold can go...down. Will silver go with it? Don't know, but Ted Butler says that they would have to get the price below its latest low, which is around $12.40...about $1.50 below where it closed yesterday...before there would be any more significant long liquidation by the tech funds and the small traders. The 200-day moving average is at $12.29. Ted doesn't think they can do it. We'll see.

http://www.caseyresearch.com/displayDrp.php?e=true