Latest Headlines

Search

-- Posted Friday, 15 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold spiked to as low as $772.45 by late trade in Asia before it rose back to $799.60 by early trade in New York, but it then fell back off into the close and ended with a loss of 2.84%.  Silver dropped all the way to $12.21 in early Asian trading before it climbed back to $13.347 by early trade in New York, but it also fell back off into the close and ended with a loss of 9.78%.

Euro gold fell to about €535, platinum lost $113.50 to $1378, and copper gained a couple of cents to about $3.34.

Gold and silver equities fell over 4% by midmorning before they rebounded a bit, but they still ended with over 3% losses.

The Economy:

Next week’s economic highlights include PPI, Building Permits, and Housing Starts on Tuesday and Initial Jobless Claims, Leading Economic Indicators, and the Philadelphia Fed on Thursday.

The Markets:

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

Oil dropped with nearly all other commodities on expectations for a drop in world demand.

The U.S. dollar index continued its recent bounce as investors continue to downgrade the outlook for other world economies and give the US relative staying power over their weakness that until recently had not been factored in.

Treasuries rose on geopolitical concerns due to uncertainty over the conflict between Russia and Georgia.

The Dow, Nasdaq, and S&P found modest gains in early trade on oil’s continued fall, but worries over the health of the world economy seemed to damper sentiment and held the Dow and S&P to just slight gains while the Nasdaq ended with a small loss.

Among the big names making news in the market Friday were Wachovia, J.C. Penney, Abercrombie, Merrill Lynch, and UAL.

The Commentary:

“After breaking through some key technical supports in the mid-$800s, gold’s pullback deepened as funds continue to liquidate positions and add to the short-term negative momentum. This has made a move back up towards the mid $800’s difficult with many traders now waiting for a period of consolidation to ensue before seeing gold return back up to the mid to upper $800s.  The fundamental drivers remain in place for gold and I would view this as an excellent opportunity to buy the dip of this long-term secular bull market. There is strong physical demand emerging which will help place a floor in the gold market around the $800 level.

The short-covering rally in the dollar is a prime driver for the pullback in gold prices and that was aided by free market intervention by Central Banks. All this has done is provided additional time before the serious nature of the financial crises has to be once again confronted.  There are major banks and financial institutions which remain highly undercapitalized. I would expect some major news in the coming months which will again bring to the forefront the gravity of the situation.  The ingredients are in place for a significantly higher gold price and this short-term anomaly only means that gold can still be accumulated sub $1,000 an ounce. The rapid rate at which dollars are being created (according to shadow stats the no longer published M3 is expanding at double digit rates) remains the primary driving force in the gold market, this cheap monetary policy will continue to debase the value, integrity and confidence in the faith-backed Dollar. Competitive paper money devaluations will enhance gold’s luster going forward as hundreds of billions of fictitiously created paper currency is used to continue these monstrous bailouts with government deficits rapidly growing.

I do believe we could easily see record gold prices as we close out 2008 and enter 2009. These are desperate times and desperate times call for desperate actions. The pullback is the result of free market manipulation by the powerful central banks.”- Peter Spina, www.goldforecaster.com

“Gold continued to drop on the back of COMEX and speculative selling as the $ climbed to almost 10% better than the low of its recent $1.60 low against the Euro.   The market believes that the strength of the $ is being engineered by the G-7 central banks, because the interest rate differentials favor the Euro as well as the oil price ensuring still that the Trade deficit continues to bleed the U.S Balance of Payments.   This almost straight line move by speculators exacerbates the volatility of the market in precious metals and now in the $.   It seems too good to be true and in the past, when such intervention is seen, it almost always ended badly, so we expect considerable volatility in the currency markets as well as the precious metals and it could well be both ways.”- Julian D.W. Phillips, www.goldforecaster.com

“Dear Friends,

1. Goldman gets an Olympic gold medal for lowering their gold target for 2008. This is now a world record three changes within 12 month. I am waiting for the fourth change which will be back to an estimated four figures.
2. The USA and Poland decide to really get Putin angry. It would seem that this might be asking for a major confrontation almost immediately.
3. Pakistan is getting hotter by the day which will require a Coalition of the Willing to once again remove the nuclear hardware as the Taliban working with the Pakistan Army and Intelligence increase their control.
4. Everything is just dandy in US economics as an increase in automobile manufacturing is reported, regardless of the fact they cannot sell them. It is always nice to see the dealer's lots filled.
5. Fannie and Freddie, who are under critical financial strain, get the go ahead to back and buy more mortgages. They therefore get to securitize more debt instruments, even the huge but scary no paperwork Alt A types.
6. JP Morgan has its debt downgraded as there is no loosening of credit conditions.
7. Moody fired a significant number of top executives over miscalculation of ratings. You can be sure that ratings for many financial entities will now tank as they should have already
8. A major reason for the follow through weakness of the euro is an assumption of increased interest differentials favoring the dollar over the euro because of assumed inflation fighting on the part of the US Fed as the US economy improves. There are multiple and critical holes in that reasoning which I will cover today on www.JSMineset.com.

You are witnessing violence in the gold market that is but a starter lesson. This violence has as its basis the first major coordinated currency intervention in the euro. The dollar as a mirror image of the euro rose with absolutely no economic basis. Gold fell as it is an inverse currency of the US dollar. Certain hedge funds went broke on other items. They were holding gold and the last of that was thrown into the market to sell after cash gold broke $800. Margined gold holders went in mass into negative cash positions which resulted in them being sold out last US evening as every commodity house now operates in the 24 hour market with computer margin real time valuations. All the gold and commodity bears are being dragged out for media exposure because it fits the agenda of the moment.

This is the prime example (as I told you a thousand times!) any margin in gold anything is a financial death wish.

As gold hit its lows last evening over $40 off I am told the Chinese entered the cash market to take the layoff in cash gold off the bankrupt hedge funds and negative value sellouts in the paper market. You have seen massive involuntary liquidation last US evening. That type of a situation is common to lows. The bull market in gold will not be broken because fundamentally the problems will not obey and go away.”- Jim Sinclair, JSMineset.com

“December Gold finished down 22.4 at 792.1, 12.9 off the high and 8.1 up from the low.

September Silver closed down 1.415 at 12.815. This was 0.095 up from the low and 0.445 off the high.

The gold market suffered a rather significant downward washout on Friday and in the process prices fell to the lowest level since the late fall of 2007. Clearly the ever present strength in the Dollar provided the gold market with a large measure of the selling or liquidation pressure, but with oil prices also falling sharply the selling pressure could have come from a number of angles. In fact, the Dollar was showing signs of extending its gains in the wake of fresh inflationary warnings from a US Fed speech in the afternoon action. Given the massive declines on the charts it is likely that technical stop loss selling and out right technical selling pressure was adding into the slide in prices on Friday.

The silver market seemed to come under intense and somewhat historical liquidation pressure on Friday. While the US scheduled economic numbers didn't paint a negative picture on the economy Friday and the US stock market didn't seem to be factoring in a recession, one gets the sense from the magnitude of the slide in silver prices that some type of deflationary selling wave was being carried out. However, with the copper market actually managing to turn positive on the trade it was clear that not all physical metals markets were being viewed in the same bearish light on Friday.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Hommel, Bond report on growing shortage of silver

Goldman Sachs slashes gold forecast

U.S. mint suspends gold coin sales; futures price is a fiction

The Statistics:

As of close of business: 8/14/2008

“The August 6, 2008 Delaware Depository Silver inventory information was over-stated due to a clerical error.  The inventory data should have remained un-changed from the previous days reported inventory.  The Stock Report inventory was corrected the following day, August 7, 2008.” - Nymex

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: The LSE subtracted 3.07 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:

Harmony’s (HMY) yearly loss, Silvercorp’s (SVM.TO) annual general meeting, and First Majestic’s (FR.TO) second quarter financial results were among the big stories in the gold and silver mining industry making headlines Friday.

WINNERS

LOSERS