Both gold and silver shot up about an hour or so after the Sydney open, only to be smacked into submission very shortly after Hong Kong opened…and that was basically it for the day in both metals. Every rally attempt in gold that got anywhere near $850 got sold…and silver drifted down to around $10.75 before recovering a bit towards the close.

Volume was paper thin yesterday, so it wasn’t difficult for anyone who wanted to, to bend the metal prices to their will. I expect this trading pattern to continue for the balance of the year as the Western world (such as it is) heads into the holiday season. So, unless something totally unexpected appears out of left field over the next two weeks, I don’t expect most markets (including the precious metals) to be any more exciting than watching paint dry.

Open interest in Friday’s trading was as follows…gold o.i. fell 4,103 contracts to 290,731…while silver o.i. fell a smallish 167 contracts to 85,917. In other gold news I noted that the Swiss silver ETF added another 500,000 ounces late last week.

With the weekend now behind us, there’s a lot of other news…and I’m just going to hit the high points on some of them. In a Bloomberg story, Marc Faber says that 2009 will be ‘disastrous’ for the world’s economy…and over at breitbart.com, the head of the IMF is saying the same thing…”We see 2009 as really being a bad year, with recession for most advanced economies and growth decreasing for emerging economies.” He also added…”Our forecasts are already very dark but they will be even darker if not enough fiscal stimulus is implemented…I can see that some measures have been announced, but I’m afraid it won’t go far enough.” In a story over at abcnews.com the headline read “Joe Bidden: U.S. Economy in Danger of “Absolutely Tanking.”‘ And if that isn’t the sign of the “Four Horseman of the Appocolypse”…here a Bloomberg story about the head of the Bank of Spain saying ‘the world faces total financial meltdown”. With a comment like that I guess the Bloomberg stories about the possibility of commercial real estate loan defaults tripling as rental income declines…plus Japan’s export plunging 27% in November…are hardly worth a mention! And lastly is this headline from globalresearch.ca…”If the Former Chairman of Nasdaq is a Crook, Who Can You Trust in America? Good question! I know a couple of places you don’t have to look…the SEC and the CFTC.

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In today’s first story, silver market analyst Ted Butler presents more evidence of manipulation of the silver market, evidence taken right from the data of the CFTC itself. That is, the enormous mismatch in the size of the largest short traders on one hand…and the largest long traders on the other…a disparity that doesn’t occur in other futures markets. Butler’s commentary is headlined “More Evidence of Manipulation” and you can find it linked here.

The second commentary for the day is from Sprott Asset Management’s John Embry. He writes in detail about the gold price suppression scheme in his latest essay for Investor’s Digest of Canada. It’s headlined “U.S. Calls the Tune as Gold, Silver Plunge” and you can find it in pdf format linked here.

And lastly…and as I mentioned previously, the governor of the Bank of Spain did not mince words in his interview with Spain’s El Pais daily newspaper on Sunday when he issued a bleak assessment of the economic crisis, warning that the world faced a “total” financial meltdown unseen since the Great Depression. Not too many shades of gray in that comment…which is probably pretty close to the truth. It’s good to see at least some honesty about how bad things really are. The link is here.

The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending…There is an almost total paralysis from which no-one is escaping. – Miguel Angel Fernandez Ordonez, governor…Bank of Spain, December 21, 2008

I see that the PPT was in the market at 3:30 yesterday afternoon saving the Dow once again. The only reason I can think of is that they’re trying to save the real crash until the day before Obama gets sworn in. Will they make it? I wouldn’t bet a lot of money on it. But while the boyz are screwing around with that…and the precious metals…there’s still time to convert your worthless paper into that “ancient metal of Kings.” Make it an early new year’s resolution!

See you tomorrow.

Source: And Then There’s This…Tuesday, December 23rd, 2008