Despite a falling US$ and wall-to-wall bad economic news, someone was there to sell off gold and silver as soon as Globex trading began in the Far East on Monday morning. After that, there was a stair-step down in the price…four different bouts of not-for-profit selling…2 a.m., 5:00 a.m., the Comex open…and shortly before lunch in New York. All times are Eastern. After each suspicious sell off, gold tried to rally…but each attempt, big or small, ran into a willing seller. Neither metal had a chance.

According to the usual N.Y. commentator…”Overall estimated volume however, was light…only 66,458 lots net of switches.”

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Friday’s big spike down in gold at the Comex open, was probably fresh short selling by the three [or less] American bullion banks, as gold open interest rose 3,172 contracts…while silver, which finished on its high of the day, showed an o.i. increase of another 1,140 contracts. None of this is terrific news. There could have been some switches added as well, but we won’t know until the next COT this Friday.

A couple of things in gold news yesterday. Gold fund manager Marc Gugerli said that the New York Commodities Exchange’s paper gold market is dominated by a few traders connected to the U.S. government and that he expects that market to default soon. Haven’t we heard that default story before? Last time I checked, the Comex was still there. And here’s a gold story by Peter Brimelow over at marketwatch.com. It’s entitled “Something new stirring in precious-metals pond” and the link is here.

In the GLD ETF (NYSE:GLD)…another new record was set yesterday as 14.5 tonnes [470,000 ounces] were added. That’s 1.2 million ounces in the last six business days. I guess Ted Butler’s estimate of 1.0 million ounces owed, proved to be a little on the conservative side. And in the SLV, another 2.5 million ounces were deposited…and if Mr. Butler is right about the SLV (NYSE:SLV)…then there’s around 15 million more ounces yet to come. Across the Atlantic at the Swiss ETFs…they just added another 199,946 ounces of silver and 126,665 ounces of gold.

In other news, it appears that the Manas air base in Kyrgystan that the U.S. was using to supply troops fighting in Afghanistan is now officially closed to them. “The decision has been made” a government spokesman said. Closer to home, Nissan (NASDAQ:NSANY) just cut 20,000 jobs and forecast a $2.9 billion loss. In a Bloomberg story on Sunday was this additional info out of Japan…”Panasonic (NYSE:PC), Hitachi (NYSE:HIT) and NEC — all of which are forecasting losses for the current fiscal year — have announced a combined 39,000 job cuts in the past two weeks.” And lastly, in another Bloomberg story with the headline “U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs”, is this eye-popping paragraph…”The $9.7 trillion in pledges would be enough to send a $1,430 check to every man, woman and child alive [on the planet]. It’s 13 times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office data, and is almost enough to pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.” But if you think that’s scary…this is far worse…click here!

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It was a newsy weekend and I have four stories this morning. The first two are from The Telegraph out of London…and both are written by their international business editor…Ambrose Evans-Pritchard. The headline of the first [and very short] story reads “Europe ambushes Germany on debt bail-out”. Europe has huge problems that are growing by leaps and bounds every week. “The European Union has called an emergency summit of national leaders this month to halt the drift towards protectionism and stem the risks of a debt crisis as the slump deepens.” The link is here.
The second article by Ambrose is slightly longer…more substantial…and even more ominous. It’s entitled “Bond market calls Fed’s bluff as global economy falls apart”. The piece looks at the bond market from a world perspective…not just an American one. This will keep you up at night. The link is here.

The third story is from worldnetdaily.com. It appears that as the Obama administration tries to push through their $1 trillion dollar rescue package….”a rebellion against the growing dominance of federal control is beginning to spread at the state level.” The article is entitled “Lawmakers in 20 states move to reclaim sovereignty”. I thank the “Charleston Voice” for bringing it to my attention…and the link is here.

And lastly, here is silver analyst Ted Butler’s latest commentary. As I mentioned in my rant on Saturday [after a long chat with Ted], the combination of the release of the Commitment of Traders report and the Bank Participation Report on Friday, proves absolutely that the three [or less] traders in gold…and the two [or less] traders in silver…have an iron grip on gold and silver prices. We at GATA thank him for his work in this area. The article itself is a GATA release with a comprehensive introduction by our secretary treasurer, Chris Powell…and the link is here.

Keynesian economics, and socialist central planning, have trapped the Western economies into a slow death. – Wayne N. Krautkramer

So Obama’s bailout package is upon us…but it matters not one iota. The catastrophe that is about to be visited upon the U.S.A…and the rest of the world…is now unstoppable. As I’ve said a couple of times before…last week being the latest…the world’s central banks only have one option left. Print, or die! No wonder the Fed, The Treasury and the President’s Working Group are trying to keep gold and silver prices under wraps. But in the end, that too will fail. But it won’t be for lack of trying.

See you on Wednesday.

Source: And Then There’s This…Tuesday, February 10th, 2009