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-- Posted Wednesday, 28 May 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose slightly to $909.75 in Asia before it dropped over $20 to as low as $888.95 by midday in London, but it then rallied back higher in New York and ended over 1% off its low with a loss of just 0.82%.  Silver rose to over $17.50 in Asia and dropped to $17.06 in London before it rose to a new session high of $17.63 and saw a gain of over 1% by a little after 10AM EST in New York, but it then fell back off into the close and ended with a small loss of 0.34%.

Euro gold remained at about €577, platinum gained $41 to $2064, and copper fell a couple of cents to about $3.72.

Gold and silver equities fell roughly 2% at the open, but they then rallied back higher for the rest of trade and ended with about 1% gains.

The Economy:

Fed governor Mishkin announced his resignation today.  Tomorrow at 8:30AM EST brings Initial Jobless Claims for 5/24 expected at 370,000, first quarter GDP expected at 0.9%, and the Chain Deflator expected at 2.6%.

The Markets:

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

Oil started off the day lower on demand concerns, but it then rose throughout the rest of trade on supply concerns in Nigeria and ended over 1% higher above $131 after making a low of $125.96 earlier in the session.  Traders are also waiting for tomorrow’s inventory reports that were delayed from today due to the Memorial Day holiday.

The U.S. dollar index rose and treasuries fell after Durable Goods Orders did not fall as much as expected and reduced recession worries.  A 2-year note auction also went well as the yield on the 10-year rose over 4.0% for the first time in 2008 and the yield on the 30-year rose to a 7 month high.

The Dow, Nasdaq, and S&P opened slightly higher as oil prices moderated and then reversed lower as oil rose back above $130, but all three indices rallied back higher in late trade and ended decently higher on apparent satisfaction with the Durable Goods Orders report.

Among the big names making news in the market today were Exxon, XTA and Bakken, Dow Chemical, and Polo.

The Commentary:

“Dear Friends,

Gold is not acting in a manner outside of what should be anticipated in the smallest market anywhere being played by the largest money in the world.

The violence you are experiencing is based on the above along with a misunderstanding of the mechanics of a metals dealer.

The big six that are generally identified as the enemy of gold also represent major metals dealers and in some cases are metals dealers themselves via subsidiaries such as J. Aron in London.

1. Metals dealers buy metals from producing companies at a discount to form, condition and location.
2. The metals dealer prices their buy according to their ability to sell the metal in the forward market.
3. That transaction is a true hedge.
4. The short side of the gold trade as in this example is risk free at that point.
5. In the old days a modest profit fulfilled the desire of the metals brokers.
6. The short was covered when the purchased bullion metal was sold to industry.
7. Today the world has no ceiling on desires.
8. The metals dealer of today wants to make $50 or more, not 50 cents.
9. The gold market becomes prone to declines from time to time by entities like crude oil or the euro.
10. The metals dealer has a risk-less short position on.
11. At this point risk is taken by selling to hammer prices lower, not to sell volume.
12. This can be identified by a floor trader in open outcry or later by computer entry offering thousands of gold contracts for sale when a few hundred or even ten is the only buyer showing.
13. The bravado has a purpose. That is to scare the gold market lower using the least sales required.
14. As gold moves into areas of major support the metals dealer buys back the short.
15. As the producers continue to sell, dealers then buy as in number one but play the market and back higher the gold price goes.
16. The short is then put on by the metals dealer at Angels or round numbers.
17. This along with mindless black boxes and follow the leader hedge funds results in the largest money on the planet playing the smallest market on the planet. This creates a large degree of unprecedented volatility.
18. The net result is that people assume a huge dedicated short, which is wrong.
19. What is correct is a turning short that keeps the number high but in fact is made up mostly of risk-less trades.
20. The trades are not registered as hedges rationalizing that; in today’s world a hedge is defined as a different transaction than outlined.
21. Since these trades are made generally either as broker or principle by the big six who can do no wrong, who cares how they report it.
22. The metals dealers do all possible to invite the assumption that they are dedicated shorts when they are NOT. This benefits their desires as up moves try and push a short that in fact turns over at a profit and has no dedication to anything other than the 21 points just made.
23. What people refuse to believe is that just those that are identified as the enemies of gold will be the ones that make the most long gold.
24. We will discuss 24 as times moves along. I have outlined to the attendees recently in New York and Toronto why 23 is FACT, not fancy. ”- Jim Sinclair, JSMineset.com

“June Gold finished down 7.4 at 900.5, 2.5 off the high and 11.5 up from the low.

July Silver closed down 0.05 at 17.415. This was 0.205 up from the low and 0.225 off the high.

The gold market started out under moderate pressure and generally remained under pressure in the wake of a mostly positive US Dollar trade. However, the gold market did manage to throw off some of the weakness in the face of a mid Day recovery in oil prices and it also seemed as if the gold market was attempting to give the even number price zone of $900 some credence. However, the gold market was also dogged by the fact that both platinum and copper prices were under moderately aggressive pressure throughout the trading session. Fortunately for the bull camp in gold, the US Durable goods report was better than expected, but not so much better than expected that the Dollar gathered significant additional upside momentum.

The metals markets were under universal pressure early in the trade on Wednesday, but at times the silver market managed to climb out from under selling pressure to track higher on the day. Certainly ongoing strength in the US Dollar and negative leadership from the gold market were early burdens to the silver market, but with the silver market unable to fully benefit from a slightly better than expected US Durable goods report, it was clear that the market remained at least partly concerned about the ongoing threat of US slowing growth. Not surprisingly the recovery in oil prices was of little lasting support to silver prices, which were roughly 25 cents below their morning highs into the close.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Gary North: The next attack on gold has begun

Ted Butler: A few thoughts on silver

The Statistics:

As of close of business: 5/27/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: Change in Total Tonnes from yesterday’s data: The JSE added 0.12 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:

Buenaventura’s (BVN) completed $450 million syndicated term loan, Paramount’s (PZG) exploration progress, Gammon Gold’s (GRS) presentation, Keegan’s (KGN) drill results, ECU Silver’s (ECU.TO) assay results, and Coeur’s (CDE) mine start-up in Bolivia 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:

Buenaventura Completes US$450 million Syndicated Term Loan and Repayment of Bridge Loan - "Compania de Minas Buenaventura S.A.A. ("the Company" or "Buenaventura") (NYSE: BVN; Lima Stock Exchange: BUE.LM), Peru's largest publicly-traded precious metals mining company announced that it has completed a US$450 million syndicated term loan borrowing. Proceeds from the syndicated term loan were used to repay in full the Company's US$450 million bridge loan, which Buenaventura used to finance the unwinding of its gold hedge book in February, 2008." More
- May 28, 2008 | Item | E-mail

Permitting for Abcourt-Barvue Project Progressing Well - More
- May 28, 2008 | Item | E-mail

Lincoln announces adoption of Shareholder Rights Plan - More
- May 28, 2008 | Item | E-mail

Tiomin Announces Proposed Acquisition of Radiant Resources Inc. - More
- May 28, 2008 | Item | E-mail

Tiberius provides update on activities and accomplishments - More
- May 28, 2008 | Item | E-mail

Tiberius announces new private placement - More
- May 28, 2008 | Item | E-mail

RSM Activities at Goldwedge, Dixie Comstock, Railroad Projects, Nevada and CFO Resignation - More
- May 28, 2008 | Item | E-mail