-- Posted Wednesday, 31 October 2007 | Digg This Article
| Source: GoldSeek.com
| Close | Gain/Loss |
Gold | $791.70 | +$7.30 |
Silver | $14.37 | +$0.11 |
XAU | 188.10 | +4.10% |
HUI | 435.08 | +3.79% |
GDM | 1371.06 | +3.63% |
JSE Gold | 2530.30 | +2.13% |
USD | 76.55 | -0.19 |
Euro | 144.56 | +0.30 |
Yen | 86.89 | -0.19 |
Oil | $94.53 | +$4.15 |
10-Year | 4.475% | +0.092 |
T-Bond | 112.59375 | -1.00 |
Dow | 13930.01 | +1.00% |
Nasdaq | 2859.12 | +1.51% |
S&P | 1549.38 | +1.20% |
The Metals:
Gold fell about 1% to as low as $776.65 in early Asian trade before it rebounded in London and came into New York near unchanged at about $784. It then continued to rise throughout most of trade in New York and ended near its high of the session with a gain of 0.93% at a new 27 year high.
Silver traded about 1% lower in Asia before it also rallied back higher to about unchanged in London and then continued its gains in New York. It rose to as high as $14.475 by early afternoon before it came back off a bit in the last hour of trade, but it still ended with a gain of 0.77%.
Both metals initially dipped in after hours trade following the fed’s announcement, but at the time of writing they have rebounded from that early reaction and have come up to add further to their earlier gains. Gold futures have even topped $800 for the first time since 1980 while spot gold has risen to as high as $797.30 by 4PM EST.
Euro gold rose to over €548, platinum gained $3 to $1441, palladium gained $2 to $369, and copper fell slightly to about $3.52.
Gold and silver equities rose about 2.5% by late morning before they fell back off to see only about 1% gains directly after the fed’s statement, but they then surged back higher in late trade and ended at new record highs with about 4% gains.
The Economy:
Report | For | Reading | Expected | Previous |
GDP | Q3 | 3.9% | 3.1% | 3.8% |
Chain Deflator | Q3 | 0.8% | 2.0% | 2.6% |
Employment Cost Index | Q3 | 0.8% | 0.9% | 0.9% |
Chicago PMI | Oct | 49.7 | 53.0 | 54.2 |
Construction Spending | Sep | 0.3% | -0.4% | -0.2% |
Fed Funds Rate | 10/31 | 4.5% | 4.5% | 4.75% |
Economic data came in mostly better than expected to buck the recent trend of economic data coming in worse than already low expectations, but the reports were mostly ignored as traders still expected the fed to cut rates 25 basis points due to recent and ongoing credit problems.
The fed did exactly that and cut rates ¼% to 4.5%, but their overall message was not as dovish going forward as most seemed to expect. They noted that upside risks to inflation roughly balance the downside risks to economic growth, but that “recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation.” They also cut the discount rate 25 basis points to 5.0%. Of note was one dissenter in the ten fed members who voted and that was Kansas City member Hoenig who wanted to keep rates unchanged.
Tomorrow at 8:30AM EST brings Personal Income and Spending for September both expected at 0.4%, Core PCE Inflation expected at 0.2%, Initial Jobless Claims for 10/27 expected at 330,000, and at 10AM are Pending Home Sales for September and the ISM Index for October expected at 51.5, but most are already looking ahead to Friday’s government jobs report. As a preview to that today was the ADP’s private sector jobs report that showed a larger than expected creation of 106,000 payrolls in October.
The Markets:
Charts Courtesy of http://finance.yahoo.com/
Oil rose nearly 5% to a new record high over $94 after inventory reports came in worse than expected. Oil also remained near its highs into the close despite the fed’s balanced statement that made it less likely than previously thought that they would continue to cut rates at their next meeting in six weeks. Some may think that this would cut into demand more than previously thought, but the energy market appears to be much more focused on waning supplies at the moment. Oil inventories surprisingly fell 3.9 million barrels, gasoline inventories built 1.3 million barrels, distillates built 800,000 barrels, and refinery utilization dropped a whopping 0.9% to 86.2%.
The U.S. dollar index fell to fresh new record lows before the fed and then fell even further after the announcement despite their apparent jawboning aimed at helping the plummeting currency.
Treasuries fell in early trade on decent economic data and then fell even further after the fed’s statement came in more hawkish than most were looking for.
The Dow, Nasdaq, and S&P rose in early trade on optimism leading up to the fed before they almost immediately fell back near unchanged following the announcement, but all three indices rallied to new highs on the day by the close and ended with roughly 1% gains on faith that the fed did the right thing.
Among the big names making news in the market today were Sprint and Google, MasterCard, Kraft, and Wyndham.
The Commentary:
“December Gold finished up 7.5 at 795.3, 0.7 off the high and 7.8 up from the low.
December Silver closed up 0.11 at 14.438. This was 0.088 up from the low and 0.107 off the high.
The gold market clearly got on a roll as the day progressed. Seeing the combination of a stronger than expected US GDP reading, sharply higher oil prices, weakness in the Dollar and significant strength in grain prices had to foster an inflationary psychology. As expected the US Fed went ahead and cut interest rates by 25 basis points and that didn't initially seem to have much of an impact on gold prices. However, once it was clear that the equity market was remaining positive after the move and with Treasury prices falling sharply in the face of the Fed move, gold prices eventually managed to forge a fresh new high just ahead of the close. Perhaps more importantly the gold market did manage to rise above the psychologically important $800 level.
The silver market mostly followed the gold market around on Wednesday but in the wake of the US rate cut the bull camp surfaced with another wave of fresh buying interest. With the stock market pushing sharply upward in the wake of the Fed move, oil prices firm and the Dollar weak the overall environment for silver was pretty positive. With gold making a new high and reaching above the $800 level that could create a favorable buzz for all the metals markets in the coming sessions.”- The Hightower Report, Futures Analysis and Forecasting
GATA Posts:
Hong Kong central bank gushes cash to prop up U.S. dollar
Oil market is 'out of control,' OPEC says
Gulf Arabs could drop dollar peg together
Ted Butler: A simple and constructive solution
The Statistics:
As of close of business: 10/30/2007
Gold Warehouse Stocks: | 7,345,762 | -9,835 |
Silver Warehouse Stocks: | 133,704,691 | +732,159 |
Global Gold ETF Holdings
[WGC Sponsored ETF’s]
| Product name | Total Tonnes | Total Ounces | Total Value |
New York Stock Exchange (NYSE) AND Singapore Exchange (SGX) | Streettracks Gold Shares | 597.53 | 19,211,042 | US$ 15,042m |
London Stock Exchange (LSE) AND Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse ) | Gold Bullion Securities | 97.87 | 3,146,635 | US$ 2,486m |
Australian Stock Exchange (ASX) | Gold Bullion Securities | 15.06 | 483,858 | US$ 383m |
Johannesburg Securities Exchange (JSE) | New Gold Debentures | 18.33 | 589,248 | US$ 461m |
Note: No change in Total Tonnes from yesterday’s data.
COMEX Gold Trust (IAU)
Profile as of 10/30/2007 | |
Total Net Assets | $1,318,755,035 | Ounces of Gold
in Trust | 1,681,961.330 |
Shares Outstanding | 17,000,000 | Tonnes of Gold
in Trust | 52.31 |
Note: No change in Total Tonnes from yesterday’s data.
Silver Trust (SLV)
Profile as of 10/30/2007 | |
Total Net Assets | $2,040,079,150 | Ounces of Silver
in Trust | 143,977,749.600 |
Shares Outstanding | 14,500,000 | Tonnes of Silver
in Trust | 4,478.21 |
Note: No change in Total Tonnes from yesterday’s data.
The Stocks:
Newmont’s (NEM) 3rd quarter earnings, Claude’s (CGR) exploration results, Freeport’s (FCX) new senior vice president, Aurelian’s (ARU.TO) new senior operations team members, Kirkland’s (KGI.TO) drilling update, Gold Fields’ (GFI) shut shaft due to worker deaths, Tumi’s (TUMIF.OB) completed drill program, and Avino’s (ASM.V) drill results were among the big stories in the gold and silver mining industry making headlines today.
WINNERS
1. Claude Resources | CGR +11.26% $1.68 |
2. Newmont | NEM +9.60% $50.90 |
3. Metalline | MMG +8.67% $3.26 |
LOSERS
1. DRDGOLD | DROOY-5.36% $8.792 |
2. Orezone | OZN -1.94% $1.52 |
3. Crystallex | KRY -1.88% $3.14 |
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:
Cameco profit higher, but more Cigar Lake delays - More
- October 31, 2007 | Item | E-mail
First Narrows Adopts Shareholder Rights Plan - More
- October 31, 2007 | Item | E-mail
Barrick Gold Announces Dividend - "Barrick Gold Corporation (Toronto:ABX.TO - News)(NYSE:ABX - News) today announced that its Board of Directors has declared a dividend of US15 cents per share, payable on December 17, 2007 to shareholders of record at the close of business on November 30, 2007." More
- October 31, 2007 | Item | E-mail
Gaspe: Metco Renegociates Agreements on Parts of Mont de l'Observation Property - More
- October 31, 2007 | Item | E-mail
Gold Seeker Closing Report: Gold and Silver Gain Nearly 1% Before Fed Announcement and Climb More After