this is from ed steer's daily analysis:

Yesterday was also options expiry for the October contract in both gold and silver. October is not a big delivery month for either metal, so it was a surprise to see the bullion banks do what they did, because there really weren't a lot of contracts that were affected. Maybe 4,300 in gold and 400 in silver. These numbers represent less than 1% of total open interest in each metal... so why did they bother? I guess they have to start somewhere. The Commitment of Traders report is due out this afternoon. It will certainly show that the grotesque short positions in both silver and gold continue unabated. I'll report on that tomorrow.

The other thing that was going on in the silver world yesterday, that was below everyone's radar screen, involved the huge short position that the SLV ETF managers currently have. As I mentioned on several occasions, Ted Butler felt the SLV ETF was owed about 30 million ounces. When the bullion banks were covering their short positions on the Comex, the SLV managers were [at the same time] covering their short positions in SLV shares... because they couldn't get the metal, they're forced to short their own shares. If the price correction is deep enough [courtesy of JPMorgan, the biggest silver short on the planet, who just happens to be the custodian of all the silver in the SLV], then the fund can cover its short position and not have to deliver a single ounce of metal into the fund... which they don't have [and can't get] without driving the price to the moon. Ain't this grand???

I must assume, until proven wrong, that the flush-out of the technical funds holding massive Comex long positions in both gold and silver may have begun. If true, then how low we go [and how fast we get there] are always the great unknowns. That's why this record short position in gold scares the hell out of me. Do the bullion banks take the prices down to just the 50-day moving averages [currently $965.12 for gold, and $14.94 for silver]... or are the 200-day moving averages in their sights? This is unknowable... and falls into the category of 'can they or will they'. With a current short position of around 28 million ounces, they could do a lot of damage if they really decide to.

http://www.caseyresearch.com/displayGsd.php