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The Markets:

Charts Courtesy of http://finance.yahoo.com/

Oil rose on word that OPEC will cut production by one million barrels a day, but no date has yet been set for the start of that output reduction and large early gains were pared by the close.

The U.S. dollar index rose slightly as the euro fell after the ECB raised interest rates, but did not indicate further hikes as strongly as some expected.  European Central Bank president Trichet hinted towards at least one more rate hike this year, but did not give any indication of the ECB’s plans after that.

Treasuries fell as today’s Initial Jobless Claims report showed fewer claims than expected and reversed the negative view on the labor market raised yesterday by a private report.  Kohn’s warning on inflation in his speech last night and Plosser’s comments today about interest rates possibly not being high enough also encouraged selling as traders prepared for tomorrow’s jobs report.

The Dow, Nasdaq, and S&P traded on either side of unchanged in a relatively tight range as higher oil and higher interest rates worried traders a bit while strong retail sales reports encouraged investors.

Among the big names making news in the market today were Pequot Capital, Target, Wal-Mart, Ryanair and Aer Lingus, Marriott, and Ford.

The Commentary:

“With the 'ceiling' of 500 tonnes not being reached [only 390 - 394] tonnes finally being achieved, the clear picture is that the signatories of the Central Bank Gold Agreement did not have the desire to sell the full 500 tonnes.  

But of more significance than this now piece of history is the fact that, of the announced sales for the full 5 years only 665 tonnes remain for the next three years.   Of the unannounced sellers, Spain & Belgium, Belgium sold none this year, implying they are not ongoing sellers.   Spain could be but to date have sold only 30 - 36 tonnes per annum, implying they could sell another 90 tonnes in the next three years.   This still only leaves an average of 192 tonnes for sale each of the remaining three years of the agreement.

Italy has stated it has NO PLANS to sell any gold and Germany's Bundesbank Prsident has publicly stated that "Gold is a good counter to the swings in the $" and resisting their own governments attempts to pressure them into selling gold, leaving us with the expectation they will not be sellers, [having sold none -except small amounts for coins to date] in the next three years.

So we expect the signatories either to sell a similar amount to this year for the next two years then cease, or to sell under 200 per annum for the remainder of the agreement.

We do not accept some opinions that these Central Banks want the gold price lower or they would have behaved differently.” - Julian D.W. Phillips, www.goldforecaster.com

“The ECB ONLY SOLD 2.3 tonnes of gold in the final week under the terms of the Washington Agreement for the calendar year Sep 26/05 thru Sep 26/06. This only brought the total up to 400 tonnes.

This is a big deal because numerous banks such as UBS and Barclays have reported HUGE central bank selling around the Fix for some time now. These banks all suggested it was massive selling of gold by the European banks to fill their quotas of that agreement. For many weeks now it was my contention the selling was more likely The Gold Cartel. This latest report reveals that GATA IS CORRECT. There is no other explanation for this enormous selling to knock gold down … ahead of the US elections.

The motive is the same as always. The ferociousness of the selling by the cabal is remarkable. As mentioned for months, Paulson doesn’t care how it looks, in his typical, arrogant Goldman Sachs style. He wants interest rates down and the stock market up for the elections.” - From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com

“December Gold finished up 8.8 at 575.5, 3.3 off the high and 3.9 up from the low.

December Silver closed up 0.275 at 11.07. This was 0.11 up from the low and 0.15 off the high.

The capacity to hold above the psychological consolidation zone of $575 in the December contract might serve to temper the selling interest of the bear camp. However, it is clear from daily price correlations that the gold market is paying significant attention to the ebb and flow of oil prices. However, the gold market might have been partially supported by suggestions from German officials, who criticized the Bundesbank decision to wait until September of 2007 before they sell additional gold reserves. However, it might be difficult to totally come away from the delayed German gold sales story with a conclusively bullish view, as the Bundesbank does seem intent to eventually sell some gold. It does not seem like the pattern of gains in the Dollar, is a major concern to the gold trade, but it is possible that the somewhat hawkish Fed dialogue of the last 24 hours is actually serving to undermine sentiment.

The silver market managed an impressive upward thrust Thursday and managed part of the gains on the fact that gold and copper prices were firm. Certainly the silver market was also lifted as a result of the attempted recovery in oil prices and might also have been lifted by more Press coverage of the recently extremely oversold technical condition of the silver market. However, the trade in general seems to be suggesting that the rally was primarily short covering and not necessarily a sign of fresh long term position buying. With the stock market at times managing to rise to fresh new all times highs in a number of measures, it would seem like the outlook for the economy is generally favoring the bull camp.” - The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Once in Morgan's hands, Amaranth's losing trades became winners overnight

The money isn't as good as the coffee anymore

Europe's central banks sell less gold than target

The Statistics:

As of close of business: 10/4/2006

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data:  The NYSE added 2.96 tonnes and the LSE added 1.09 tonnes.

COMEX Gold Trust (IAU)

Note: change in Total Tonnes from yesterday’s data: 474.15 ounces were subtracted from the trust.

Silver Trust (SLV)

Note: No change in Total Tonnes from yesterday’s data.

The Stocks:

Goldcorp’s (GG) defense of Robert McEwen’s claim, Rio Narcea’s (RNO) additional stake in Chariot Resources (CHD.TO), Eldorado Gold’s (EGO) Tanjianshan Commissioning, Nevsun’s (NSU) Bisha Reserve Announcement, Fronteer’s (FRG) $10 million private placement in Aurora, Apollo Gold’s (AGT) updated progress at its Montana Tunnels Mine, Scorpio’s (SPM.V) drill results, Fortuna’s (FVI.V) agreement with Continuum Resources Ltd. to purchase a 100% interest in the San Jose silver-gold project in Mexico, Sterling Mining’s (SRLM.OB) exploration program for the property leased from Metropolitan Mines, and First Majestic’s (FR.V) DESMIN acquisition were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

LOSERS

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

All of today's gold and silver stock news:

MacDonald Mines Commences Drill Program on McNugget Property - More
- October 05, 2006 | Item | E-mail

Goldcorp to Defend Claim by Robert McEwen - "GOLDCORP INC. today announced that it will vigorously defend the application filed by Robert McEwen with the Ontario Superior Court of Justice relating to Goldcorp's proposed transaction with Glamis Gold Ltd. The application seeks to have the court require that Goldcorp call a shareholders' meeting to approve the transaction with Glamis." More
- October 05, 2006 | Item | E-mail

Rio Narcea Acquires Additional Stake in Chariot Resources - "This purchase constitutes approximately 13.7% of the outstanding common shares and the common shares and warrants together constitute 14.7% of the common shares and warrants outstanding of Chariot. The purchase is to be completed at C$0.65 per common shares and C$0.30 per warrant for an aggregate purchase price of C$24,137,725. Each share purchase warrant entitles Rio Narcea to acquire an additional common share of Chariot at a price of C$0.35 per share until December 22, 2006." More
- October 05, 2006 | Item | E-mail

Chapleau Resources Ltd. drilling to commence on October 12 at Nova Canaa - More
- October 05, 2006 | Item | E-mail

Western Copper: Project Update - More
- October 05, 2006 | Item | E-mail

Amerigo sells strategic stake in Chariot Resources Limited for $24.1 million, representing a gain of $9.68 million - More
- October 05, 2006 | Item | E-mail