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The Coming Big Money Bang

The Markets:

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

Oil rose back above $70 and closed at a 10-month high on continued supply worries in the face of strong demand as some geopolitical worries were also raised with the discovery of at least one unexploded car bomb in London.

The U.S. dollar index fell and treasuries rose after year-over-year Core PCE came in at 1.9% and dropped below 2% into the fed’s comfort range for the first time since February 2006.

The Dow, Nasdaq, and S&P opened nicely higher on tame inflation and strong economic data before they fell off markedly in afternoon trade on worries over subprime mortgages and their potential impacts on the rest of the market, but all three indices rebounded to find just slight losses by the close in volatile fashion ahead of holiday shortened trade next week.

Among the big names making news in the market Friday were Delphi, Apple, RIM, Commerce Bancorp, and S&P, Moody’s, and Fitch.

The Commentary:

“August Gold finished up 0.5 at 650.9, 4.1 off the high and 0.7 up from the low.

July Silver closed down 0.026 at 12.353. This was equal to the low and 0.117 off the high.

While trading activity was choppy it seemed as if the bull camp was able to keep a slight edge since gold seems to be coming back into favor as a hedge vehicle against inflation which physical buying in the metal has also picked up. Gold was able to garner support from inflation fears being rekindled by rising energy and grain prices, warnings by the Fed and a weaker Dollar. Crude oil prices moved convincingly above the $70 per barrel level on concerns of tightening product supplies and "agflation" worries were certainly conjured up by sharp gains seen in some grain and food markets on Friday. With higher food and energy prices being seen, the gold market seemed to discount the May core PCE Price Index especially since the 1st quarter price deflator released yesterday showed a surprising large quarterly jump leaving traders cautious over the near-term inflation outlook. The "on hold" Fed policy also softened US Treasury yields a bit and pressured the Dollar which has created a better investment environment for gold. However, some in the trade seemed to be disappointed in the gold market's response to the bullish news this session and profit taking set in to limit gains ahead of the weekend.

The silver market waffled around both sides of unchanged as the market didn't seem to get too much support from the inflation theme. Silver trading seemed to be more tied to action in the stock market where equity indexes traded weaker in the afternoon on continued uncertainty tied to the sub-prime market and less M&A activity. It was a little surprising silver couldn't find more support from higher copper prices which were up on news of protests and strikes at major copper mines in Chile. In the end, it appeared that pre-weekend profit taking kept the bulls at bay.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

India is rolling in gold but still poverty-stricken

Richard Greene: You would have thought it was a gold bull market

The Statistics:

As of close of business: 6/28/2007

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data:  The NYSE/SGX added 0.92 tonnes.

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)