Market Analysis from CapitalUpdates.com:

The Trade Deficit for June came in higher than the expected $57.2 billion and rose 6.1% from May’s $55.4 billion mark to $58.8 billion “as a strengthening economy prompted companies to import more expensive crude oil and a record amount of goods from China... June exceeds the monthly average deficit of $51.5 billion in 2004, when the annual shortfall of $618 billion was the largest ever. The deficit is already $342.9 billion so far this year, compared with $290.9 billion in the same six months of 2004.”  Exports rose $52 million to a record $106.8 billion, but imports rose a much larger $3.44 billion to a record at $165.7 billion, resulting in the 3^rd largest deficit on record.  June’s mark falls short of only last February’s record high mark of $60.1 billion and November 2004’s mark of $59.0 billion.

Import Prices rose 1.1% in July, but fell 0.1% when excluding oil prices and fell 0.3% when excluding all fuels, “the largest decline in the 3 1/2-year history of the index.”  Export Prices rose 0.1% and rose 0.2% when excluding agriculture.

The preliminary survey of August Michigan Sentient fell for the first time since May and came in much less than the expected 96.5 at 92.7, presumably on record high energy costs.

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Oil continues to make new record highs on refinery concerns, climbing to as high as $67.10 on news of yet another refinery outage Friday.  Oil ended with a gain of $1.06 to $66.86 on Friday and is up on the week by $4.55 or 7.3%.  Gasoline futures climbed over a record high $2 a gallon on Friday as well.

Treasuries rose on economically disappointing reports, adding to their large gains from Thursday.

For the week, the yield is down 3.51% and the bond is up 1.56%, marking the first time in 7 weeks that yields fell and bonds gained on the week.

The Dow, Nasdaq, and S&P fell on disappointing economic reports and record high oil, falling throughout most of trade Friday and erasing gains from earlier in the week.

For the week, the Dow is higher by 0.4%, the Nasdaq is lower by 0.96%, and the S&P is higher by 0.32%.

Among the big names making news in the market Friday were Ford, Red Robin, Taser, United, Delta, Continental, Texas Instruments, DreamWorks, and Dell.

The U.S. dollar index traded slightly lower ahead of the release of Trade Balance data and extended its losses as the Trade Deficit came in higher than expected, but the dollar soon rose as profit taking in the euro and other world currencies pushed the U.S. dollar index higher.  After briefly spiking higher, the dollar soon returned to levels seen before the Trade report and ended the session near unchanged.  The euro index dropped off markedly on profit taking after initially finding gains early Friday, but the euro was able to rebound to end with slight gains and make new 2 month highs.  The yen made new 6 week highs.

For the week, the dollar is down 1.2%, the euro is up 0.85%, and the yen is up 2.48%.

This week’s economic reports:

Next Monday at 8:30AM EST brings the New York Empire State Index for August expected at 20.0.  Also on Monday is the Treasury Department's release of June Capital Flows data into U.S. assets.  Should Capital Flows come in less than the 3^rd highest Trade Deficit ever, the US dollar may find continued weakness.  Among the highlights for the rest of the week include CPI on Tuesday, PPI on Wednesday, and the Philadelphia Fed on Thursday.

Gold & Silver Report from GoldSeek.com & SilverSeek.com: 

COT Gold Report - August 12, 2005

COT Silver Report - August 12, 2005

Gold and silver traded slightly higher in Asia and made impressive new highs in London (gold traded as high as $449.30 at one point), but both inexplicably fell off in early New York trade as a large Trade Deficit number should have sent the dollar to new lows.  Apparent profit taking in the euro created a spike upward in the dollar and sent both gold and silver lower despite a trade report that would normally instigate traders to do the opposite.  After falling to as low as $443.10, gold rebounded and remained in a pretty tight range for the rest of trade Friday, gaining $0.70 to $445.60, a new 8 month closing high.  Gold now sits just $10.10 from reaching what would be a new 17 year closing high at $455.70.  Euro gold climbed back above €360 for the first time in over a month.  Silver was not able to recover from the morning sell-off in New York and lost $0.09 to $7.05.

For the week, gold is up $8.90 or 2.04% for its 4^th straight week of gains and silver is down $0.06 or 0.84%.

The CRB Index made another new 24 year high, gaining 0.37 points to 322.96 on Friday.  The historic record high hit 24 years ago is at about 335.  Copper set a new record high and gained $0.0315 to $1.7375 on Friday.  Platinum climbed to a new 15-month high and gained $3 to $921.  Platinum climbed to as high as $936 on April 19^th 2004 and that is the highest since the record high of about $1050 hit in early 1980.

Gold and silver equities started off slightly higher Friday, but turned slightly lower in midday trade before rallying to end the session mixed and near unchanged.  The XAU and GDM set new 4 and ½ month highs, while the HUI fell from its 4 and ½ month high set yesterday.

For the week, the XAU is higher by 5.37%, the HUI is higher by 5.7%, and the GDM is higher by 4.87%.

More Precious Metals Analysis:

“The gold market spiked up again but then failed to hold the gains despite the slide in the equity market, the rise in energy prices and the mostly weaker US Dollar. Therefore, it would seem like the market reached an overbought status but with most of the metals market showing positive action on the day it would seem like the trade remains bullishly biased. Some gold longs might have been disappointed by the lack of downside extension in the Dollar and it is also clear that the silver market remains the weakest component of the complex.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

An end to the mining strike in South Africa and its impact/implications on Gold Fields and Anglogold Ashanti, Northern Dynasty’s new director, financial results from Seabridge and Ivanhoe, and Yamana’s warrants being exercised were among the big stories in the gold and silver mining industry making headlines Friday.

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- Written by Chris Mullen

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