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The Coming Big Money Bang

The Markets:

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

Oil fell on profit taking and concerns over waning demand, but it did end well off its lows and still above $81.

The U.S. dollar index initially rose following the stronger than expected jobs report, but it soon fell back off and ended the day lower in an apparent resumption of its long term downtrend after the fed’s Kohn commented that we should expect further near-term weakness.

Treasuries fell markedly after the jobs report came in better than expected and pushed interest rates higher as it made it less likely the fed will continue to cut interest rates.

The Dow rose back above 14,000, the S&P rose to a new record high, and the Nasdaq rose to a new 6 and ¾ year high on hopes that jobs data indicates that the economy is recovering nicely from credit problems and recession fears that began in August.

Among the big names making news in the market Friday were Research in Motion, Barclays and ABN, Goldman, Aetos, Simplex, and Washington Mutual.

The Commentary:

“The gold price behaved impressively yesterday after being knocked down to $723, then running up to over $737, then back down only to finish at close to the days high.   This made it clear to funds and dealers who were probably the culprits on the down side that investment buying is still strong as is shown by the tonne a day investment buying at the moment.

With HSBC warning of massive capital outflows in the U.K. and U.K. investors pouring into the gold E.T.F. fund there [GBS – Gold Bullion Securities], could matters go back to the Exchange Controls seen there in 1971, to prevent such an outflow?   This will certainly benefit the gold price.

There has been a massive degree of support for the $ as it has rallied back to what was support but is now resistance, but we suspect that this is just a rally.   The uncertainty appears likely to persist in many quarters of the financial world with confidence being the victim.   There is little sign of the actions needed to structurally improve prospects for the $, so we see no reason why gold and silver should not continue to rise.”- Julian D.W. Phillips, www.goldforecaster.com

“December Gold finished up 3.4 at 747.2, 3.5 off the high and 14.2 up from the low.

December Silver closed down 0.01 at 13.49. This was 0.16 up from the low and 0.11 off the high.

The gold market really forged an impressive reaction to the Monthly Non farm payroll readings, as it deflected an initial rally in the Dollar and managed to finish firm. Some traders suggested that seeing decent economic activity and seeing a weaker Dollar was the best of both worlds. In fact, seeing a slide in the Dollar in the face of a soaring equity market would almost seem to put the gold market back into the fundamental posture that was in place in January and February. In the January and February time the gold market seemed to have a very tight and positive correlation with the US equity market. About the only thing disappointing to the bear camp in gold was the weakness in oil and copper prices.

The silver market certainly underperformed the gold market and that might be the result of the gold market being closely tied to the ebb and flow of the US Dollar. However, the silver market as a quasi industrial demand led commodity market should have been boosted by the favorable Non Farm payroll readings and the optimism brought on by the rise in the equity markets. It is possible that silver prices were periodically held back as a result of weaker oil and copper prices, but with lead market managing a new all time high early in the session, there just wasn't much weight given to any macro economic themes on Friday.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Rise of giant funds sparks fear of global shockwave

No inflation? Rare gold coin doubles in value in two years

Central bank gold sales fall below quota for second year

Credit squeeze induces ECB to avoid rate increase

Bank of England leaves interest rates on hold

Former Goldman Sachs exec is new governor of Bank of Canada

The Statistics:

As of close of business: 10/4/2007

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: The JSE added 0.25 tonnes.

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)

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

The Stocks:

Peter Hambro Mining’s (POG.L) $159 million offering, Lundin Mining’s (LMC) plans to increase production, and Aquiline’s (AQI.TO) filed court response were among the big stories in the gold and silver mining industry making headlines Friday.

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