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-- Posted Friday, 16 November 2007 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold traded modestly higher in Asia and London and surged to find a nearly $10 gain at $797.50 by midmorning in New York, but it then fell back off for most of the rest of trade and ended with a loss of 0.04%.  Silver dropped to $14.347 by late trade in Asia before it rose in London and New York to find over 2% gains at as high as $14.717 by midmorning, but it also fell back off into the close and ended with a gain of just 0.07%.

Euro gold fell to about €536, platinum gained $18 to $1446, palladium lost $5 to $365, and copper rose over 4 cents to about $3.15.

Gold and silver equities traded mostly modestly higher and closed near their highs of the session with over 1.5% gains.

CoT Reports: Gold | Silver

Gold May `Easily' Rise to $1,000, Marc Faber Says  Bloomberg

A perfect storm for gold as mines left empty  Telegraph

Long-term prospects for bullion continue to glisten  FT

The Economy:

Net Foreign Purchases were negative again!  Though the decline was not as bad as in August, it was still a decline in capital flows coming into the US that are needed in order to cover the nation’s trade deficit.  More on this from Dan Norcini at JSMineSet.com:

“It is amusing to read the various analysts being quoted by the wire service commentary writers this morning in regards to the Treasury International Capital Flows data for the month of September. Some were spinning the report as being a “positive” since it showed a net inflow. The problem for the spinmeisters who are doing nothing but talking their book anyway, is that while the long term flows were indeed positive, they were still insufficient to fund the negative trade balance for the second consecutive month (please see the first chart in the set provided). If one takes the even broader measure that Treasury releases which includes the short term securities as well as the long term ones, the capital flows data showed a NET OUTFLOW for the second month in a row. That is hardly “positive” as some of these mad dreamers are spouting.

The truth is that even after the debacle in August which was when we saw the first signs of the fallout from the subslime contagion, foreign appetite for US securities is not exactly on a screaming rebound. Given the meager performance of the US stock markets this month (November), I suspect we will soon see net foreign selling of US stocks before long in these reports (which by the way are extremely dated being two months old). Keep in mind that foreigners are observing the dollar falling through the floor and are not going to be in any huge haste to send their money over here as a result.

Next month’s data had better show numbers sufficient to cover the trade imbalance or the dollar is going to get whacked with an ugly stick.

It is also interesting to note in a memo that the Treasury published this morning that out of the -$14.7 billion in net capital outflows (this is the number we get when using the broader measure which includes short term securities), net foreign private flows were negative $27.8 billion, and net foreign official flows were positive $13.1 billion. In other words, it was only official sector buying which kept the number from being far worse.”  Much more free commentary from Dan Norcini, Jim Sinclair, and others at JSMineSet.com

Also making economic news today was the fed’s Kroszner who stated in a speech to international bankers in New York that “the current stance of monetary policy should help the economy get through the rough patch during the next year, with growth then likely to return to its longer-run sustainable rate.”  This was taken by many to mean that the fed may not cut interest rates further as the market is calling for.

All of this week’s economic reports:

Next week’s economic highlights include Building Permits, Housing Starts, and FOMC minutes on Tuesday and Initial Jobless Claims, Leading Economic Indicators and Michigan Sentiment on Wednesday.  US markets will be closed on Thursday for the Thanksgiving Holiday and markets will close early on Friday.

The Markets:

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

Oil rose on cold weather forecasts in the Northeast and closed above $95 after dropping to as low as $90 earlier in the week on Tuesday.  Attention now turns to the OPEC heads of state meeting this weekend, but the topic of conversation is scheduled to be climate change and not a possible output increase.

The U.S. dollar index fell and treasuries found small gains as the yield on the 2-year flirted with its lowest reading since February 2005 and the yield on the 10-year tested its lowest level since September 2005.  These moves came despite the hawkish remarks from Kroszner as poor economic data and worries over the subprime mess dominated overall market sentiment.

The Dow, Nasdaq, and S&P traded mixed in volatile trade before finally ending decently higher as traders debated ongoing credit concerns and whether or not the American consumer is finally slowing down spending due to high energy costs, a tighter credit market, and a continuously falling dollar.

Among the big names making news in the market Friday were FedEx, Fannie Mae, Garmin, and GM, Ford, and UAW.

The Commentary:

“Is it the battle of the gold price or the price of the $ outside the States?   Gold is fighting to hold up under the week’s end selling pressure.   Gold is moving up and countering the dollar’s fall.   Gold is following the dollar and is focused on it, not on its own market factors.   It should continue to do so through next week too.   The global picture is stronger than that seen today in the U.S. markets, so the battle should continue.”- Julian D.W. Phillips, www.goldforecaster.com

“December Gold finished down 0.3 at 787, 11 off the high and 0.3 up from the low.

December Silver closed up 0.028 at 14.51. This was 0.01 up from the low and 0.22 off the high.

While outside market action gave gold an early session push higher, profit taking began to pull prices back in the afternoon trade. Gold came under selling pressure despite early gains in the equity market and higher crude oil prices and another down turn in the Dollar which certainly has to be disappointing to the bull camp. We also suspect the trade was hesitant to lift gold prices back over key levels early in the session since comments from Fed members today were giving traders the impression the Fed may not cut rates next month. If expectations for a US rate cut are lowered, it could dampen the demand for gold as an inflation hedge. With expectations for slower economic growth in coming months, perhaps some traders are being encouraged to take profits since the October Industrial production report came in much weaker than expected.

Silver also pulled back from higher price levels reached earlier in the session as the market seemed to be trading lock-step with the gold market. We suspect silver was undermined to a certain degree by the slack US Industrial Production readings. Certainly silver's poor performance has to be disconcerting for the bulls since the weaker Dollar, higher crude oil, and rebound in copper prices should have provided plenty of outside market support to the market.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Do you wonder why central banking also is conducted in secret?

Saudis fear that open discussion by OPEC could collapse dollar

Liberty Dollar posts search and seizure warrants

Attack on Liberty Dollar also seized metal dies in Idaho

A perfect storm for gold as mines left empty

Gulf Arabs increasingly expected to ditch dollar pegs

FBI raid on Liberty Dollar confirmed without explanation

The Statistics:

As of close of business: 11/15/2007

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

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

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)