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-- Posted Thursday, 20 March 2008 | Digg This Article | Source: GoldSeek.com

Please Note: US Markets are closed tomorrow in observance of Good Friday.

The Metals:

Gold fell all the way to $904.45 by early trade in London, but it then rallied back higher for most of the rest of trade and ended nearly $15 off its low with a loss of 2.76%.  This week’s drop of 7.96% marks the largest one week drop since 1983.  Silver, however, was not able to find a rebound in New York and it ended near its low of $16.752 with a loss of 7.94%. 

PHYSICAL SILVER SHORTAGE?  Today’s losses of 2.76% and 7.94% follow yesterday’s losses of 5.8% and 7.5% in gold and silver.  The remarkable drops in the paper contract markets appear to be spurring plenty of demand in the physical markets, especially in the silver market with reports of shortages by Jason Hommel and many more individual reports in the forums today at SilverSeek.com. While physical metal in your possession is an important part of any diversified metals portfolio, a service I also use and have been happy with is holding metal in an online account at GoldMoney.com.  Founder & Chairman James Turk reports today that they have no problems acquiring metal through LBMA:

“I've heard about the shortages of coin (particularly silver coin) and believe them to be accurate. We of course deal only in LBMA bars, so we haven't seen any shortage. There will always be LBMA bars available -- at a price.”

Euro gold dropped to about €594, platinum fell $45 to $1860, and copper lost roughly 5 cents to about $3.61.

Gold and silver equities fell over 5% at the open, but they then rallied back higher into the close and ended with only about 3% losses.

The Economy:

All of this week’s economic reports:

Next week’s economic highlights include Existing Home Sales on Monday, Consumer Confidence on Tuesday, Durable Goods Orders and New Home Sales on Wednesday, GDP and Initial Jobless Claims on Thursday, and Personal Income and Spending, Core PCE Inflation, and Michigan Sentiment on Friday.

The Markets:

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

Oil extended its losses as the U.S. dollar index continued its rebound on the Philadelphia Fed survey that was not as horrible as expected.

Treasuries rose as strong recent demand due to worries over the credit market has caused “failures to deliver or receive government debt in the $6.3 trillion a day market for borrowing and lending to climb to the highest level in almost four years.”

The Dow, Nasdaq, and S&P rose over 2% after the Philadelphia Fed reported manufacturing activity declined in March less than it did in February.  The report barely beat consensus expectations, but there were rumors that a significantly worse report was coming and when those rumors proved unfounded buyers stepped in.

Among the big names making news in the market Friday were Allianz, Citigroup, JPMorgan and Bear Stearns, FedEx, and Barnes & Noble.

The Commentary:

“April Gold finished down 25.3 at 920, 9 off the high and 5.5 up from the low.

May Silver closed down 1.595 at 16.85. This was 0.03 up from the low and 0.69 off the high.

The gold market forged a major range down extension and barely managed to recover from the selling ahead of the long holiday weekend. However, seeing such significant gains in the Dollar and also seeing continued deflationary price action in a host of physical commodities seems to leave gold under pressure from a number of fronts. In fact, seeing a sharp run up in US equity prices was taken by some traders as a sign that the US crisis was moderating and that in turn might have prompted another layer of spec longs to exit from gold positions. The stock market was embracing the idea that recent declines in long term interest rates could help to lessen the pain in the US real estate market and that type of view could have pushed another layer of gold bugs to the sidelines.

Like gold, the silver market remained under intense pressure for most of the trading session. Also like gold the silver market seemed to be under a broad based liquidation wave that might have been mostly technical in nature but it could also have been fundamental in nature. In fact, seeing massive gains in US stock prices and the US Dollar suggests that a portion of the fundamental bull case was coming apart. In fact, given the magnitude of the declines in a number of physical commodity markets this week, it wouldn't be surprising to see that some silver longs were exiting because they see the risk of inflation to be on the decline.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Jason Hommel: Silver shortage -- 19 dealers reported sold out

The Statistics:

As of close of business: 3/19/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: StreetTRACKS subtracted 15.04 tonnes from its record high holding and the LSE added 1.09 tonnes.

COMEX Gold Trust (IAU)

Note: Change in Total Tonnes from yesterday’s data: 1.84 tonnes were added to the trust.

Silver Trust (SLV)

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

The Stocks:

Lihir’s (LIHR) plans to merge with Equigold (EQI.AX), Almaden’s (AAU) optioned project, AngloGold’s (AU) joint venture in Congo, NovaGold’s (NG) priced offering, Imperial’s (III.TO) exploration results, Great Panther’s (GPR.TO) appointments, and Silvercorp’s (SVM.TO) normal course issuer bid were among the big stories in the gold and silver mining industry making headlines Friday.

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