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-- Posted Wednesday, 21 May 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose to over $927 by midday in London before it fell back to $916.30 by about 9:30AM EST in New York, but it then rallied back higher for most of the rest of trade and ended near its high of $930.70 with a gain of 0.9%.  Silver rose to over $17.80 and fell to $17.56 before it also rallied back higher and ended near its high of $18.01 with a gain of 2%.

Euro gold rose to over €588, platinum gained $52.50 to $2186.50, and copper fell almost four cents to about $3.75.

Gold and silver equities rose over 1% by early afternoon before they fell back off a bit as the general indices fell almost 2% in late trade, but the miners still ended with only minor losses.

The Economy:

FOMC minutes from the fed’s April 30^th meeting showed a lower growth forecast, higher inflation and unemployment expectations, and an unwillingness to cut rates any further even if problems persist.  The fed still sees inflation pressures moderating in the longer term despite a short term outlook of inflation risks increasing.

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 5/17 expected at 372,000.

The Markets:

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

Oil rose to another new record high of $133.72 a barrel after crude inventories unexpectedly dropped a large 5.4 million barrels.  Gasoline prices rose to a new record over $3.80 a gallon as gasoline inventories fell 800,000 barrels.  Distillates built 700,000 barrels and refinery utilization rose 1.3% to 87.9%.

The U.S. dollar index fell after German business sentiment came in better than expected and bettered the case for the ECB to start raising interest rates.  One might think that the fed’s assertion of no more rate cuts would help the dollar, but that seemed to be more than offset by the fed’s call for rising unemployment as well.

Treasuries ended lower on inflation fears while the Dow, Nasdaq, and S&P fell markedly on the fed’s claim of no more interest rate cuts even if the economy deteriorates further.  The fed is out of bullets and people are justifiably worried.

Among the big names making news in the market today were AMR, Time Warner, Talbots, and BJ’s.

The Commentary:

“Clearly the gold market is riding on the waves of momentum generated from the ailing US Dollar and from extremely strong oil markets, among other driving forces.  There remains very good potential for gold to revive the powerful bull market momentum from earlier this year which could carry it significantly higher in the coming weeks. Current market expectations are rather subdued and from a contrarian standpoint that is a rather bullish sign.  Gold continues to have inter-market relationships which demonstrate the present gold price is highly undervalued. The possibility is quickly growing for gold to revisit the four figures area.

The other side of the short-term risk/reward equation is a sizeable pullback in the oil price as short-term gains appear overextended.  The US Dollar’s prospects on the whole remain bleak and any short-term rebounds will be met with heavy selling.  How will reversals in those short-term trends translate into the gold price going forward?  They could inflict some damage into its renewed and growing momentum.  Until the reversal in these pro-gold trends, I would be quite afraid to stand in front of this golden bull!” - Peter Spina, www.goldforecaster.com

“Dear Comrades in Golden Arms (CIGAs),

In years to come, market students reviewing gold's price action moving from $600 to $1200 will appear as much of a straight line as any market can produce.

Don't miss the historical move you are in. Look at the big picture.

Don't allow the daily arranged noise to dull your market senses. Nothing gold will fail to perform.

The larger the legal and illegal short, the more dynamic the upcoming move of the juniors will be.

Cancel all open sell orders in gold anything.

The sun is setting on the gold and gold share bearish bullies who wished only to destroy, contributing nothing to anyone but themselves. The world is made up of builders and destroyers, givers and takers. When the book is written, the hedge funds will be seen as destroyers of the financial world and having taken all the wealth of their investors in the process.” - Jim Sinclair, JSMineset.com

“June Gold finished up 8.4 at 928.6, 2.4 off the high and 11.6 up from the low.

July Silver closed up 0.325 at 18.05. This was 0.415 up from the low and 0.01 off the high.

The gold market managed another new high for the move but it took a combination of new lows for the move in the Dollar and a new high for the move in the crude oil market to definitively power up gold prices. Clearly the fear of classic inflation pressure was providing buying interest to gold, but it is also possible that currency related buying was playing a key role. At least in the near term some traders have suggested that the gold market might begin to take most of its direction from oil prices and less from the Dollar. The FOMC meeting minutes showed that the Fed was just barely able to reduce rates in their last meeting and that might suggest that the Fed is closer than expected to hiking interest rates in an inflation battling move. With a less dovish Fed than expected that could be supportive of the Dollar, which in turn could undermine gold prices.

The silver market also managed another new high for the move on Wednesday and it goes without saying that the market was led higher by the action in gold. However, silver certainly showed a compacted but aggressive upward thrust in the lead up to and aftermath of the US weekly oil inventory data and like the gold market that could suggest that the silver market will being to take even more guidance from the energy complex. With increasing fears of energy price derived slowing, it is possible that some silver buyers were discouraged, especially considering the new low for the move in the copper market. In looking at the FOMC meeting minutes some silver traders might also have seen too much concern of slowing ahead and that could weaken the bulls resolve.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

James Turk: Gold is the ultimate inflation and catastrophe hedge

Nadler sees intervention again, just not in his own markets

CFR official: Gold is the world currency of the future

Yeah, right! Moody's blames computer error for A ratings on junk

The Statistics:

As of close of business: 5/20/2008

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)

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

The Stocks:

Paramount’s (PZ) assay results, Silvercorp’s (SVM.TO) earthquake relief donation, Excellon’s (EXN.TO) suspended mine work, Fortuna’s (FVI.V) drill results, Silvermex’s (SMR.V) assay results, and SilverCrest’s (SVL.V) project progress were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

LOSERS

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:

Moneta Drills 2.21 Grams/Tonne Gold Over 47.3 Metres on Windjammer Gold Property - More
- May 21, 2008 | Item | E-mail

Richview Resources Inc. Completes $660,000 Private Placement With the MineralFields Group - More
- May 21, 2008 | Item | E-mail

Cameco poisons may be seeping into Lake Ontario - More
- May 21, 2008 | Item | E-mail

Golden Peaks Resources Ltd. - G Zone Extends 450 Meters - More
- May 21, 2008 | Item | E-mail

Paragon Minerals Updates Drilling at South Tally Pond VMS Project - More
- May 21, 2008 | Item | E-mail

Silvercorp Metals Inc., New Pacific Metals Corp. and Dr. Rui Feng Donate $700,000 to Sichuan Earthquake Relief - "Silvercorp Metals Inc., (Toronto:SVM.TO - News) ("Silvercorp") and its affiliate New Pacific Metals Corp. (CDNX:NUX.V - News) ("New Pacific") today announced that the Companies and their employees have committed to donations of over US$700,000 to provide relief support for the victims of China's May 12, 2008 earthquake in Sichuan province." More
- May 21, 2008 | Item | E-mail

Excellon Temporarily Suspends Work at Platosa Test-Mine - "Excellon Resources Inc. (Toronto:EXN.TO - News) announces that it has temporarily suspended work at the Platosa Test-mine while it investigates an unexpected underground water inflow. No employees were hurt and all mobile equipment was brought to surface." More
- May 21, 2008 | Item | E-mail

Pediment Exploration Ltd.: Drilling Returns 54.9 Metres of 1.6 g/t Gold and 53.3 Metres at 1.47 g/t Gold at San Antonio - More
- May 21, 2008 | Item | E-mail

Paramount Announces First Assay Results Under the New Strategic Alliance With Mexoro From the Cieneguita Mine Including 74 Meters of 1.72g/t Gold - "These results are from 6 additional drill holes from the Cieneguita project (CI-13 to CI-18) and partial results from three other holes: CI-19, CI-20 and CI-21 (only Au and Ag for the upper part of the drill holes). These assays continue to intersect significant gold and silver mineralization at the Cieneguita project in the Urique District, 375 km to the southwest of Chihuahua City, Mexico." More
- May 21, 2008 | Item | E-mail

Bonaventure Resumes Drilling at New Pass Project, Nevada - More
- May 21, 2008 | Item | E-mail

Fortuna Discovers Extention to Animas Vein at Caylloma Mine, Peru - "Fortuna Silver Mines Inc. (CDNX:FVI.V - News) is pleased to announce the discovery of Ag-Pb-Zn mineralization, with local high grade gold values, in the Nancy area in the east-central portion of the Caylloma District, Arequipa, Peru. Nancy is an extension of the Animas Vein and is approximately 2 kilometers on-strike to the northeast from the Animas Central area where the bulk of mine production is currently sourced." More
- May 21, 2008 | Item | E-mail

Drill Program to Begin at Kafunjo, Uganda - More