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-- Posted Thursday, 14 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose over $10 to $836.65 and silver climbed more than 30 cents to $15.11 by late trade in Asia, but both metals then fell back off for most of the rest of trade and ended near their lows of $804.35 and $14.10 with losses of 2% and 3.92%.

Euro gold fell to about €546, platinum lost $15 to $1491.50, and copper fell nearly 5 cents to about $3.32.

Gold and silver equities fell roughly 4% by early afternoon before they rebounded to trade only about 3% lower, but they then fell back off to new lows in the final hour and ended with over 4% losses.

The Economy:

“Banks repossessed almost three times as many U.S. homes in July as a year earlier and the number of properties at risk of foreclosure jumped 55 percent as falling prices made it harder to sell or refinance.”  “Existing U.S. home sales fell to a 10-year low in the second quarter and the median price for a single-family house dropped 7.6 percent as the real estate recession deepened.”

Tomorrow at 8:30AM EST brings the NY Empire State Index for August expected at -5.0.  At 9AM is the Net Foreign Purchases report for June expected at $57.5 billion, at 9:15 is Capacity Utilization for July expected at 79.8% and Industrial Production expected at 0.0%, and at 10AM is Michigan Sentiment for August expected at 62.0.

The Markets:

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

Oil fell as the U.S. dollar index rose again on euro weakness since the “euro-zone economy shrank 0.2 percent in the second quarter” and reinforced the view that the ECB will not be raising rates anytime soon.

Treasuries rose on the hope that a weak economy will help curb inflation in the future.

The Dow, Nasdaq, and S&P opened lower on the unexpectedly large jump in CPI, but stocks soon turned higher and ended with decent gains on the view that the worst is behind the US while the rest of the world is still dealing with the harsh impacts of the credit crunch.

Among the big names making news in the market today were Morgan Stanley, JPMorgan, GM, Sirius XM, Estee Lauder, InBev, and Wal-Mart.

The Commentary:

“We have just witnessed the first massive act of intervention coming off the .7199 USDX and $1.5974 Euro. We have covered why this happened and its meaning in terms of the instatement of currency parities, albeit this time on a floating basis.

Now you need to understand how intervention works when repeated over time:

1. Currency intervention is like being addicted to a controlled substance. Your first experience at the height of the controlled substance produces mind-altering feelings and emotions. From this point forward you require more and more of the controlled substance to reach anything near the first experience. When you fail to get the fix, the pain and/or downer is unbearable.

2. Each subsequent experience of foreign exchange intervention demands more vocalizing and funds. That being said, you have just seen the most success you will see in the Euro via intervention - and thence gold

3. Eventually it becomes much too expensive to sell a more valuable and appreciating currency in return for fundamentally weak and therefore depreciating dollars.

4. The operation loses capital input because it is the reverse of what central banks in the East wish to be a part of.

5. The operation runs out of capital as one central bank after another uses intervention to covertly unload US treasury instruments into demand.

6. The operation runs out of power as the market senses a wounded strategy. The seven trillion dollar a day turnover in the world dollar market now fades it. That means taking the opposite position to the desired impact of the intervention earlier and earlier in the process.

7. Eventually the operation moves to 75% verbal intervention and 25% capital-driven intervention.

8. As the price of the fade comes in closer, the power of the strategy weakens. The USD troops will move up in price as a secondary line of defense for the ongoing operation.

9. Eventually the strategy fails at that level. This is why you have heard many times that intervention in foreign exchange markets always fails. Intervention in foreign exchange markets never has nor ever will change the trend in any currency.

Intervention can only have legs when it floats the temporary parities in the direction of the major market trend. Understand this and you will understand why and how much of an influence the strategy will produce. When the vocal instruments get louder, the reactions become smaller until the strategy at that level of floating parity is checkmated by the world marketplace.”- Jim Sinclair, JSMineset.com

“December Gold finished down 17 at 814.5, 22.7 off the high and 4.5 up from the low.

September Silver closed down 0.615 at 14.23. This was 0.09 up from the low and 0.55 off the high.

The gold market attempted a rally Thursday but then failed to sustain those gains. Surprisingly the gold market wasn't supported by a hot CPI reading, news that President Musharraf of Pakistan would step down or by the talk that the Russian situation has the potential to return to a cold war status. In conclusion the gold market didn't seem to be that interested in potentially supportive geopolitical developments. Perhaps the sharp slide in oil and metals prices downplayed the inflation argument and in retrospect the gold market didn't seem to be in a position to embrace any of the prospective flight to quality angles.

While the silver market did manage a fleeting bounce on Thursday morning back above the $15.00 level, the silver market was simply unable to hold that move into the close. In fact, the silver market seemed to come under progressively more negative pressure as the session progressed possibly because of the weakness in oil prices and perhaps because of the residual strength in the US Dollar. With platinum down at times by as much as $35 an ounce and gold down by as much as $21 an ounce it was clear that silver was feeling the weight of weakness in the outside markets on Thursday afternoon.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Richard Daughty: The great variety of poor rich people

Jim Sinclair: European Central Bank intervention is out in the open

The Statistics:

As of close of business: 8/13/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: The LSE subtracted 0.62 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:

Ivanhoe’s (IVN) second quarter results, Crystallex’s (KRY) shareholder update, Orezone’s (OZN) debt facility, Apollo Gold’s (AGT) drill results, Royal Gold’s (RGLD) fiscal 2008 results, New Gold’s (NGD) second quarter results, MAG’s (MVG) second quarter results, Silvercorp’s (SVM.TO) dividend, and Silver Bear’s (SBR.TO) drill and financial results 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:

SRA Reports Third Quarter 2008 Results - More
- August 14, 2008 | Item | E-mail

Richview Files Second Quarter Statements - More
- August 14, 2008 | Item | E-mail

Redcorp Updates Progress at Portugal Base Metal and Gold Exploration Projects - More
- August 14, 2008 | Item | E-mail

Passport Metals Inc.-Board Appointment - More
- August 14, 2008 | Item | E-mail

Results of Mindoro annual general meeting - More
- August 14, 2008 | Item | E-mail

Yankee Hat Acquires Two Additional Tungsten Properties - More
- August 14, 2008 | Item | E-mail