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-- Posted Friday, 23 May 2008 | Digg This Article | Source: GoldSeek.com

Note: US markets are closed Monday in observance of Memorial Day.

The Metals:

Gold fell slightly to $915.40 in Asia, but it then rallied back higher in London and New York and ended near its high of $928.75 with a gain of 0.82%.  Silver dropped to $17.84 before it rose to over $18.20 by early trade in New York and then fell back near $18.00 by late morning, but it then rallied back higher in the last hour and a half of trade and ended near its high of $18.25 with a gain of 1.67%.

Euro gold rose near €587, platinum lost $1.50 to $2166.50, and copper gained a few cents to about $3.75.

Gold and silver equities rose over 1% at the open, but they then fell back off with the major indices by late morning and traded slightly lower for the rest of the day.

The Economy:

All of this week’s economic reports:

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

The Markets:

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

Oil recouped most of yesterday’s 2% losses as traders entered long positions ahead of the long weekend, but it did end a bit short of Wednesday’s record closing high.

The U.S. dollar index fell and treasuries rose as the Dow, Nasdaq, and S&P fell roughly 1% on worries over high energy prices and their impact on the economy.

Among the big names making news in the market Friday were InBev and Anheuser-Busch, Expro and Halliburton, and Gap.

The Commentary:

“Gold shrugged off overnight weakness due to follow through selling from the previous session as both the Euro and crude oil recovered from yesterday's bout of weakness.

In the process, it snapped above the power downtrend line and recaptured some of its previous bullish momentum before the usual gang of thieves beat up on it again. We now have a mini range trade established with resistance at this week's highs and support at yesterday evening's low.

The Dollar has resumed its disappearing act and is on course for its worst week in two months. While there is no doubt that the Fed's monetary policy along with the structural problems that beset the US economy due to its runaway budget and trade deficits, not to mention the ongoing derivatives debacle, are the main factor in the Dollar's shellacking, part of the blame for the weak Dollar can be placed firmly on the shoulders of the bond market. As long as Treasury yields refuse to rise and compensate foreign buyers in particular for currency-related risks, the Dollar will find NO support and will continue to sink into oblivion. With real yields on Treasury paper in negative territory and stubbornly refusing to correct that untenable situation, there is little incentive to bid the dollar higher. One has to wonder what exactly is so mystical about the 4% level in the 10 year that whenever yields threaten to break through that level and move to more reasonable levels, they reverse faster than a politician on the campaign trail.

From my perspective, the action in the bond market is simply reinforcing weakness in the dollar which in turn reinforces strength throughout the entire commodity complex, crude oil and energy in particular. That in turn feeds into the stagflation scenario which then reinforces further weakness in the Dollar and further strength in the commodity sector. In other words, without yields on Treasuries moving higher, I see no end in sight to Dollar weakness. You will recall in the late 70's and early 80's, Chairman Volcker killed inflation and derailed commodities for a long time but the medicine required to do so was extremely harsh even though necessary. Today's leaders do not have the courage and conviction of Volcker but seem instead to be passively standing by for fear of upsetting the US stock market and aggravating the woes in the housing sector, not to mention upsetting the apple cart of the investment banks and their insanely stupid credit derivatives. If as I suspect the US monetary authorities have been surreptitiously buying along the yield curve to artificially keep long rates low, then they have created a situation conducive to runaway inflation at both the consumer and wholesale levels.

Too many people have erroneously believed that the surge higher in energy costs was temporary and that crude along with gasoline and diesel prices would soon subside. Many businesses and suppliers therefore were willing to absorb some of the losses associated with higher input costs on the notion that such would only be a temporary situation and that by so doing they could retain their market share. A grim and sobering realization that these higher prices are no longer temporary but are becoming ingrained is leading many of these same entities to reconsider their marketing policies and product pricing. In so doing, they are coming to realize that in order to retain profitability they have no choice but to begin passing on these higher costs (Did you see that American Airlines is considering charging air travelers for check-in bags now – additionally – how long do you think trucking firms and carriers such as UPS are going to be able to restrain from raising their fares). As they do, more and more of the public is going to become extremely cognizant of the fact that EVERYTHING is going up in price. In other words, inflation expectations are becoming entrenched. All of this is occurring against a backdrop of a sinking bond yields which makes matter all the more perverse. I submit that this situation in the bonds is becoming untenable and cannot continue indefinitely. Sooner or later that market must respond to the fact that inflation is flaring out of control.”- Dan Norcini, More free commentary at JSMineset.com

“At times like this, when The Gold Cartel is going all out, it is critical to keep the big picture in focus. Gold is on pace to finish the year up again. This will make it 8 years in a row … and still Planet Wall Street pays it scant attention and only when it has to. The likely upside potential for gold and silver is staggering … as future demand for both will probably go off the charts, while mine supply is declining and available central bank gold supply dries up (already it seems the ECB banks are now inclined to keep most of what they have left).

Yet, while gold will rise for the 8th year in a row, the shares of most of the gold/silver companies have been brutalized for the last couple of years, and gone in a complete tailspin vis-a-vis the bullion prices. It is a strange phenomenon which is somewhat difficult to explain. I attribute most of it to the market analysts. VERY FEW are bullish … most are neutral to bearish at these prices. FEW out there are telling Joe and Jane investor to buy, which means there is little demand … with all rallies sold before the coming price plunge.

As a result, many share prices of the quality junior/exploration companies are at bargain basement prices. They present an extraordinary opportunity for investors with cash to put in play. At this point I have no idea when this demoralized sector will spring to life, except to say it ought to be sooner rather than later.”- From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com

“June Gold finished up 7.5 at 925.8, 2.4 off the high and 3.8 up from the low.

July Silver closed up 0.265 at 18.29. This was 0.17 up from the low and 0.04 off the high.

The gold market showed early strength but that strength seemed to wane in the face of renewed strength in US Treasuries and a moderate sell off in the US equity market. In other words, it seemed as if the gold market was negatively impacted by the rising fear of slowing in the US economy. In fact, despite ongoing weakness in the US Dollar, the gold market fell back from its initial highs. Perhaps the evidence of slowing from the US existing home sales data and the magnitude of the slide in equity prices simply prompted week ending profit taking ahead of the long weekend.

Like the gold market, the silver market showed some early strength but then seemed to sag in the face of weakness in US equity prices. In fact, ongoing weakness in the Dollar didn't seem to markedly alter the initial stance in the silver trade, even though equity market weakness seemed to foment concerns of slowing again. However, a mid day recovery bounce in copper prices probably emboldened some of the bull camp in silver but given the action in the US equity market, the threat of liquidation in many physical commodity markets might be set to continue into the coming week.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Collectors angered as U.S. rations 'silver eagles'

Ed Steer: Write to the CFTC's inspector general

David Morgan: Silver price manipulation

The Statistics:

As of close of business: 5/22/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: SPDR added 7.67 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:

Claude’s (CGR) debenture offering, Minefinders’ (MFN) arbitration, and Oro Silver’s (OSR.V) granted stock options were among the big stories in the gold and silver mining industry making headlines Friday.

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:

Arehada Mining Announces New Bank Term Loan - More
- May 23, 2008 | Item | E-mail

Minefinders Subsidiary Commences Binding Arbitration Seeking US$10 Million in Damages From Ausenco - "Minefinders Corporation Ltd. (the "Company") (Toronto:MFL.TO - News)(AMEX:MFN - News), a precious metals mining and exploration company, announced today that a subsidiary company has commenced a binding arbitration process seeking approximately US$10 million in damages from Ausenco International PTY of Brisbane, Australia and a related company, Ausenco Americas LLC." More
- May 23, 2008 | Item | E-mail