Gold Seeker Weekly Wrap-Up - Gold Jumps as Dollar Falls; Oil Hits New Highs

The Current Account for the 1^st quarter came in higher than the expected -$190 billion at -$195.1 billion, a new record high. It also ran at a record high 6.4% of GDP. The record high Current Account puts the

further into debt with the world, particularly to Asian countries like

Japan

and

China

. The previous record was last year’s 4^th quarter reading, which was revised up from -$187.9 billion to -$188.4 billion. This brings 2004’s deficit to “a record $668.1 billion, up a sharp 28.6 percent from the previous record of $519.7 billion in 2003.”

Michigan Sentiment for June rose for the first time this year, rebounding from over 2 year lows and coming in higher than the expected 88.8 at 94.8.

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The gold price is an amalgam of diverse and changing influences, from Currencies to Jewellery, from Investors to Speculators. From Asia, to India, to Australia, to Canada, to South Africa, to the U.S.A. and to Asia, the gold price is of interest to all. It cannot be seen in isolation as a metal, but must be understood as a Global Thermometer measuring monetary, political, economic, stability as well as the raw demand / supply features of the metal itself. These factors do not merely add up to the price, but interact in sometimes strange ways, to produce the gold price. For example, rising prices often lead consequently to rising demand, as the appetite for the metal grows. Its price may rise in one currency and fall in another, at the same time. Overall, it reacts sensitively to the overall level of global stability, which, in turn, gives us the gold price.

It is our task in this letter to track these different features, giving you both the Technical Analysis and the fundamental features impacting on the gold price each week along with a T.A. focus on metal equities. It is our goal to help you to understand and profit from this market, wherever you are on this globe, in a professional manner.

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Oil made a new record intraday high of $58.60 Friday, breaking the previous intraday record of $58.28 set last April 4^th. Concerns over terrorism in

Nigeria

added to basic supply and demand concerns to drive oil higher throughout trade Friday, with oil ending the session higher by $1.89 or 3.34% to $58.47, a new record closing high. For the week, oil is higher by $1.33 or 2.48%.

The 10-Year Treasury note yield traded mixed and near unchanged Friday and ended with a gain of just 0.002 points to 4.078% as the June 2005 US Treasury bond gained 1/32 to 116 25/32. For the week, the yield is higher by 0.77% and the bond is lower by 0.29%.

It was quadruple witching Friday to end the week, meaning a variety of futures and options expired. This typically means there is greater volume and volatility in the indices, but there is little impact on the average investor. The Dow and S&P traded higher every day this week and remained nicely higher on Friday with the Dow making near 3 month highs and the S&P making over 3 month highs. The S&P founds gains on the year for the first time since March and is just 8 points away from multi-year highs. The Nasdaq traded mixed and near unchanged Friday and ended with a small gain to come within 7.69 points of over 5 month highs. The Dow gained 0.42% to 10623.07 on Friday and is higher on the week by 1.05%. The Nasdaq gained 0.05% to 2090.11 on Friday and is higher on the week by 1.31%. The S&P gained 0.5% to 1216.96 on Friday and is higher on the week by 1.57%.

Among the big names making news in the market Friday were Tyco, Ford, St. Paul, Adobe, Nautilus and Pearl iZumi, Airbus and Boeing, Pernod and Allied Domecq, Circuit City, Bank of America and a Chinese construction bank, Constellation and Allied, and UAW and GM.

The U.S. dollar index continued its losses Friday as a new record high Current Account Deficit was announced. The U.S. dollar index lost 0.99 points to 87.72 on Friday and is lower on the week by 1.09%. The euro index jumped back above the 122 level on Friday as it gained 1.75 points to 122.73. For the week, the euro index is higher by 1.28%. The yen gained 0.23 points to 92.01 on Friday and is higher on the week by 0.98%.

Next week starts off economically on Monday at 10AM with Leading Indicators for May expected at -0.3%. On Thursday are Initial Jobless Claims and Existing Home Sales, and on Friday are Durable Orders and New Home Sales.

Gold and silver remained firm overnight and traded mostly higher before taking different paths in New York trade Friday. Gold extended its gains to make new 7 week highs and ended the session higher by $2 to $437.70. Gold for August delivery reached as high as $441.30. Silver kept overnight gains in early New York trade, but fell off a bit in the late morning and remained near its lows to end with a small loss of $0.02 to $7.31 to end the session. For the week, gold is higher by $10.80 or 2.53% for its 4^th straight week of gains and silver is higher by $0.06 or 0.83% to give it its 6^th winning week in 7.

Euro gold again traded near all-time highs Friday, trading over €360 at one point.

Copper made new 16 year highs, with copper for June delivery reaching as high as $1.69 per pound Friday.

Gold and silver equities found their 5^th straight week of gains, ending this week by trading just modestly higher throughout the day Friday. For the week, the XAU is higher by 4.37 points or 4.94%, the HUI is higher by 10.09 points or 5.25%, and the GDM is higher by 30.38 points or 4.88%.

Index	Close	Gain/Loss
XAU	92.91	+0.55%
HUI	202.16	+0.36%
GDM	652.83	+0.30%

“The rise in the gold shows little sign of halting despite the fact that the spec and fund long position is rising toward some moderately overbought levels. However, it continues to be clear that the gold market is leading and the silver market is following along. We continue to think that the majority of the buying is coming from currency related issues as the world is having trouble finding a solid currency and is apparently rotating into gold as a substitute. Some players think that the Fed's stubbornness on rates is going to put the

economy in peril and with the soaring deficits, a problem in the

might end up being a significant global event.” - The Hightower Report, Futures Analysis and Forecasting

Richmont Mines private placement that raises C$15.9 million, Yamana’s early exercise of publicly traded warrants, and Barrick’s Veladero project on track despite heavy snowstorms in the argentine Andes were among the big stories in the gold and silver mining industry making headlines Friday.

1. Gammon Lake	GRS +3.82% $7.07
2. Cumberland Res.	CLG +3.36% $1.23
3. Sterling Mining	SLRM.PK +3.23% $3.52

1. MK Resources	MKRR.OB -5.88% $1.12
2. DRDGOLD	DROOY -5.36% $1.06
3. SILVERCORP	SVM.V -5.06% $2.25

Do you have questions, comments, or suggestions about this report? Email Chris Mullen at cm@goldseek.com.

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