-- Posted Thursday, 9 August 2007 | Digg This Article
| Close | Gain/Loss |
Gold | $660.80 | -$14.00 |
Silver | $12.67 | -$0.44 |
XAU | 142.64 | -2.91% |
HUI | 339.38 | -2.27% |
GDM | 1066.01 | -1.99% |
JSE Gold | 2307.85 | UNCH |
USD | 80.77 | +0.46 |
Euro | 136.391 | -1.12 |
Yen | 84.56 | +1.07 |
Oil | $71.59 | -$0.56 |
10-Year | 4.790% | -0.070 |
T-Bond | 109.125 | +0.1875 |
Dow | 13270.68 | -2.83% |
Nasdaq | 2556.49 | -2.16% |
S&P | 1453.09 | -2.96% |
Summary:
BNP Parabis suspended three funds(froze withdrawals) due to problems in the U.S. subprime mortgage market that impacted the value of the funds and this event sent a new wave of credit worries throughout the rest of the world’s markets. Stocks, oil, gold, and the euro all fell as a result on increased worries over slowing economic growth stemming from subprime contagion and the spread of credit risks. This also encouraged another round of unwinding in the yen carry trade which furthered losses in most markets as traders sold their investments to buy back the yen they had borrowed in order to take positions in those investments in the first place, thus resulting in a drop in nearly all investments.
The panic was so bad that the “European Central Bank tried to calm markets by pumping a record 94.8 billion euros ($130.6 billion) in overnight funds into the money market” and “the Federal Reserve carried out a $12 billion one-day repurchase agreement, on top of an earlier $12 billion 14-day repo… as an attempt to boost liquidity after overnight interest rates spiked.”
Shortly after 11:30AM EST was a segment on CNBC including Peter Schiff, a weekly contributor to articles at GoldSeek. The roundtable discussion sums up the situation quite well and is expected to be found soon here.
The Metals:
Gold fell along with the majority of assets as traders were forced to sell any and everything in their portfolios to raise cash and buy back borrowed yen among other things. It seems counterintuitive that traders would sell the ultimate safe haven asset to do so, but many are motivated to sell assets that show gains in order to offset losses in other investments that they are forced to cover due to margin calls and other necessary obligations. Bottom-line, this looks like a short-term and erroneous reaction in gold and such events have proven to be short-lived opportunities in the past.
Gold began its fall in London and dropped to as low as $659.50 in early New York trade before it bounced around at slightly higher levels in the low $660s for the rest of trade, but it still ended near its low with a loss of 2.07%. Silver dropped to as low as $12.66 before it rebounded about 1% off its low by late morning, but it then fell back off in afternoon trade and ended with a loss of 3.36%.
Euro gold fell to about €483, platinum lost $15 to $1,269, palladium lost $2 to $359, and copper fell roughly 4 cents to about $3.58.
Gold and silver equities fell over 3% in the first 20 minutes of trade before they rebounded and saw less than 2% losses by late morning, but they then fell back off in afternoon trade and remained roughly 2.5% lower into the close.
The Economy:
Report | For | Reading | Expected | Previous |
Initial Claims | 8/04 | 316K | 310K | 309K |
Tomorrow at 8:30AM EST brings Import and Export Prices for July and at 2PM is the Treasury Budget for July expected at -$33.0 billion.
The Markets:
Charts Courtesy of http://finance.yahoo.com/
Oil fell on worries over slowing economic growth and on a NOAA forecast that predicted fewer tropical storms, but losses pared in all energy prices after it was announced that natural gas inventories built a smaller than expected 42 billion cubic feet.
The dollar rose strongly versus the euro as subprime mortgage worries spread to European banks and encouraged euro selling, but it fell verses the yen on further unwinding of the carry trade as traders sold their riskier investments to buy back their previously borrow yen. Overall, the U.S. dollar index rose along with treasuries as investors sold nearly all other assets in a flight to quality move and dumped their money into the supposed safety of what so far remains the world’s reserve currency. For an in depth look at why looking towards US dollar related assets for safety may be the wrong move, I suggest reading today’s post at GoldSeek by Jim Willie titled MBS Monetization and USDollar.
The Dow, Nasdaq, and S&P fell markedly throughout the day and closed AT their lows of the session with over 2% losses on renewed credit worries and preliminary retail sales reports that have so far not come out as good as expected. Early reports also show that this massive down day came on record high volume as well.
Among the big names making news in the market today were various retailers, BNP Parabis, NIBC, Campbell and Godiva, BAE, and Fortis.
The Commentary:
“December Gold finished down 13.5 at 672.8, 5.2 off the high and 3 up from the low.
September Silver closed down 0.465 at 12.705. This was 0.005 up from the low and 0.195 off the high.
Apparently the gold market wasn't able to get out from under the weight of a broad based macro economic washout. It is also clear that the gold market on Thursday was under the ongoing influence of a broad based physical commodity market liquidation. Seeing the Dollar rise sharply as a flight to quality instrument has several negative consequences for gold, as many gold bulls are really disappointed that gold was put out of favor in a situation that historically benefited gold prices and also the Dollar action clearly prompted some fresh currency related selling interest. With the stock market under significant duress and the Press fanning concerns of severe slowing ahead, it is logical for the gold market to fear a reduction in investment and physical demand.
The silver market seemed to suffer more than the gold market at the hands of the broad market washout on Thursday. With the equity market remaining under significant pressure, it is likely that the sharp declines in silver were directly the result of sagging macro economic expectations. With copper and platinum prices under significant pressure, one could also say that silver prices were pressured by both physical commodity market developments and financial market concerns.” - The Hightower Report, Futures Analysis and Forecasting
GATA Posts:
ECB gushes cash as credit market turmoil spreads
Another shot in the currency fight: Chinese threaten divestment
Bush, Paulson tell Chinese they'd be stupid to dump dollar
The Statistics:
As of close of business: 8/8/2007
Gold Warehouse Stocks: | 7,151,958 | - |
Silver Warehouse Stocks: | 133,346,423 | - |
Global Gold ETF Holdings
[WGC Sponsored ETF’s]
| Product name | Total Tonnes | Total Ounces | Total Value |
New York Stock Exchange (NYSE) AND Singapore Exchange (SGX) | Streettracks Gold Shares | 509.29 | 16,374,170 | US$ 11,060m |
London Stock Exchange (LSE) AND Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse ) | Gold Bullion Securities | 94.64 | 3,042,619 | US$ 2,014m |
Australian Stock Exchange (ASX) | Gold Bullion Securities | 12.48 | 400,751 | US$ 266m |
Johannesburg Securities Exchange (JSE) | New Gold Debentures | 14.28 | 459,246 | US$ 306m |
Note: Change in Total Tonnes from yesterday’s data: The NYSE/SGX subtracted 0.31 tonnes.
COMEX Gold Trust (IAU)
Profile as of 8/8/2007 | |
Total Net Assets | $1,008,255,433 | Ounces of Gold
in Trust | 1,494,949.081 |
Shares Outstanding | 15,100,000 | Tonnes of Gold
in Trust | 46.50 |
Note: No change in Total Tonnes from yesterday’s data.
Silver Trust (SLV)
Profile as of 8/8/2007 | |
Total Net Assets | $1,845,005,095 | Ounces of Silver
in Trust | 141,612,134.500 |
Shares Outstanding | 14,250,000 | Tonnes of Silver
in Trust | 4,404.63 |
Note: No change in Total Tonnes from yesterday’s data.
The Stocks:
Second quarter results from Apex Silver (SIL) and Goldcorp (GG), Tanzanian Royalty’s (TRE) contract negotiations for 13 Prospecting licenses in Tanzania, Seabridge’s (SA) buy rating from Dutton Associates, Paramount’s (PZG) Amex opening bell ringing, Royal Gold’s (RGLD) merger with Battle Mountain, SNS Silver’s (SNS.V) drilling, Abcourt’s (ABI.V) feasibility study, and Sabina’s (SBB.V) President and CEO appointment were among the big stories in the gold and silver mining industry making headlines today.
WINNERS
1. US Energy | USEG +5.65% $5.05 |
2. Gammon Gold | GRS+4.23% $10.84 |
3. Apex Silver | SIL +2.67% $17.30 |
LOSERS
1. Hecla | HL -11.96% $6.70 |
2. Taseko | TGB-10.94% $4.72 |
3. Paramount | PZG -8.39% $2.73 |
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:
Antares intercepts 385 m grading 0.74% Cu and 0.043% Mo in second deep hole at Haquira East porphyry discovery - More
- August 09, 2007 | Item | E-mail
Drilling Continues to Expand the Gold Oxide Skarn Zone at Acero-Martin's Pinaya Project, Southeastern Peru - More
- August 09, 2007 | Item | E-mail
SNS Silver Completes 10 Drill Holes at Crescent Mine - "SNS Silver Corporation (TSX-V: SNS - News; "SNS") reports continued progress at the Crescent Mine. SNS has completed the drilling of 10 holes in the upper country of the Crescent Mine approximating 12,000 feet of core. SNS is currently waiting on assay results." More
- August 09, 2007 | Item | E-mail
Saturn Minerals Inc. to Be Available Through Standard & Poor's Market Access Program - More
- August 09, 2007 | Item | E-mail
Dynacor Gold Mines Inc., wholly-owned subsidiary of Malaga Inc., raises CA$4 million - More
- August 09, 2007 | Item | E-mail
Prospecting results from McFarlane property - More
- August 09, 2007 | Item | E-mail
Gold Reserve Announces Conference Call to Discuss 2007 Second Quarter Results - "Gold Reserve Inc. (TSX:GRZ - News; AMEX:GRZ - News) will hold a conference call to discuss 2007 second quarter results on Monday, August 20, 2007 at 4:30 p.m. Eastern daylight time (1:30 p.m. Pacific daylight time)." More
- August 09, 2007 | Item | E-mail
ABV Gold, Inc. Updates Shareholders - More
- August 09, 2007 | Item | E-mail
Conference Call Notification - Q2-2007 Financial Results - More
- August 09, 2007 | Ite
Gold Seeker Closing Report: Gold and Silver Fall As Credit Concerns Roil Markets Again