-- Posted Thursday, 1 September 2005 | Digg This Article
Market Analysis from CapitalUpdates.com:
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Personal Income for July came in less than the expected 0.5% at 0.3%. Personal Spending came in as expected at 1.0%. The Core PCE Deflator came in as expected at 0.1%. “The jump in spending pushed the personal savings rate to a record-low minus 0.6 percent from zero in June. The only other negative reading occurred in October 2001.”
Initial Jobless Claims for 8/27 came in higher than the expected 315,000 at 320,000. Last week’s claims were revised up from 315,000 to 317,000. This marks the 25th straight week that the prior week’s numbers were revised up.
The ISM Index for August came in below the expected 57.0 at 53.6. A reading over 50 still indicates expansion, though the trend appears to be down from here.
Construction Spending for July came in unchanged versus an expected 0.5% rise. June’s number was revised to a 0.6% loss from a 0.3% loss.
Overall, this morning’s economic data was pretty disappointing. This adds to the expected future economic slowdown due to implications of Hurricane Katrina. President Bush met with Greenspan today and speculation is rampant as to what was said, but many guess that they talked about the future of interest rate hikes, which many now believe will slow or stop due to the economic impacts of Hurricane Katrina. President Bush later spoke on TV with former Presidents Bush and Clinton at his side, but he mentioned nothing about interest rates. He encouraged donations, gave an update about oil pipelines, urged Americans to curb gasoline purchases, and waived rules on foreign ships in U.S. ports.
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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 traded mixed and near unchanged as various reports came in about the functionality of refineries and pipelines, ending with a gain of $0.53 to $69.47. Gasoline continued its move higher, today gaining 15.37 to 240.90; meaning a gallon of wholesale gas now costs about $2.41. Right now, there are still 9 refineries that are completely shut down (about 11% of U.S. production) and there are an additional 12 that are producing below normal levels.
Treasuries traded near unchanged as the yield on the 10-year held near 8 week lows. The yield fell under 4% at one point before rebounding, but it still ended slightly lower.
Treasuries | Close | Gain/Loss |
10-Year Note Yield | 4.019% | -0.001 |
September 2005 Bond | 118 8/32 | -4/32 |
The Dow, Nasdaq, and S&P started off briefly higher before dropping at about 10AM EST on the disappointing readings from the ISM Index and Construction Spending, but all three indices then rebounded off their lows to trade mixed and near unchanged for the rest of the day.
Index | Close | Gain/Loss |
Dow | 10459.63 | -0.21% |
Nasdaq | 2147.90 | -0.19% |
S&P | 1221.59 | +0.10% |
Among the big names making news in the market today were Boeing, Ford, Chrysler, GM, Del Monte, Seven-Eleven, Verizon, Wal-Mart, and Novartis.
The U.S. dollar index fell off to new 3 month lows on this morning’s disappointing economic data, with the euro rising to new 3 month highs and the yen trading nicely higher.
Currency | Close | Gain/Loss |
U.S. Dollar Index | 86.57 | -1.04 |
Euro Index | 124.99 | +1.59 |
Yen | 91.07 | +0.70 |
Gold & Silver Report from GoldSeek.com & SilverSeek.com:
Gold Warehouse Stocks: | 6,008,486 | - |
Silver Warehouse Stocks: | 115,588,246 | - |
Gold traded around $2 higher in Asian and London trade before accelerating its gains in New York. Gold reached as high as $445.00 before falling off a bit, but still ending the session with a gain of $8.40 or 1.94% to $441.50, a new 2 week high. Silver followed a similar pattern and gained $0.18 or 2.65% to $6.96 after reaching as high as $7.02.
Gold and silver equities rose over 3% in early trade and remained near their highs for the rest of trade to end with impressive gains.
Index | Close | Gain/Loss |
XAU | 99.15 | +3.53% |
HUI | 213.43 | +3.61% |
GDM | 692.32 | +3.92% |
More Precious Metals Analysis:
From Peter Spina from this morning’s intraday update: The price of gold and silver surged Thursday as funds piled into the metals as a sliding dollar added to the buying frenzy. Attempts this week to drop the gold price to sub-$430’s, despite the surging prices of energy and commodities, have failed and are adding to today’s fuel with short-covering activity spurring today’s $10+ increase. With economic data falling sharply before this current round of problems from Hurricane Katrina, one can only expect the situation to worsen. All this leads to additional fundamental weakness for the U.S. and global economies and the U.S. Dollar.
Metal equities rocketed from the open of trade, with the HUI once again above the 212 resistance, higher by nearly 8 points or 4% to 213 and change. Of technical consideration, many equities did gap open higher on the strong metal prices, yet upside momentum has been exceptionally strong in today’s session with over two hours of trading behind us and no profit taking occurring.
Expectations of the Fed reentering with massive anti-deflationary tactics will only lead to additional reasons for gold to remains very strong in the coming future as monetary dilution weakens the greenback. Investors have failed to recognize the value of gold and silver in face of all the global economic and geo-political problems, yet “shock and awe” at the gas stations this week along with a sharp spike in energy costs for the winter period will challenge the debt-laden consumer to curtail spending. One can only imagine the implications for the U.S. and global economies which rely so heavily on the ability of the U.S. consumer to spend beyond its means.
Peter Schiff today reports more on this issue in today’s article: Nothing Saved For a Rainy Day.
“The gold market flashed higher in one of the biggest upward runs since August 11th and with the US Dollar falling through a series of critical chart support levels it is possible that the upward bias remains in place. With the rest of the metals markets also rising sharply during the session, it is clear that the markets were coming into vogue in a fashion that hasn't been seen for several months. In short, the metals market action on Thursday certainly appears to be significant and while we doubt that the interest was strictly off flight to quality or inflation interest it was probably fostered in part by fund interest.” - The Hightower Report, Futures Analysis and Forecasting
Gold & Silver Stock News Update from GoldReview.com:
Freeport-McMoRan’s temporary HQ move, Cardero’s Baja California drill permits, Orezone’s Essakane drill results, and Silvercorp’s increased private placement were among the big stories in the gold and silver mining industry making headlines today.
WINNERS
1. CARDERO | CDY +8.46% $2.82 |
2. Kinross Gold | KGC +7.91% $6.82 |
3. Orezone | OZN +7.84% $1.65 |
LOSERS
1. Crystallex | KRY -1.14% $2.60 |
Note: Winners & Losers Will No Longer Track Stocks Under $1.
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- Written by Chris Mullen
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© Gold Seeker 2005
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-- Posted Thursday, 1 September 2005 | Digg This Article
Gold Seeker Closing Report – Gold & Silver Surge
