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-- Posted Monday, 18 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose nearly $20 to $804 and silver rose over $0.50 to $13.33 by late trade in Asia before both metals fell back off in London to see just slight gains at as low as $789.67 and $12.89, but they then rallied back higher in New York and ended back near their Asian highs with gains of 1.81% and 2.34%.

Euro gold rose to about €543, platinum gained $10 to $1388, and copper fell slightly to about $3.32.

Gold and silver equities rose over 3% at the open before they fell back off to see only modest gains by late morning, but they then rallied back higher into the close and ended with nearly 2% gains.

The Economy:

There were no major economic reports today, but the NAHB reported that homebuilder sentiment remained at a record low.  Tomorrow at 8:30AM EST brings PPI for July expected at 0.6%, Core PPI expected at 0.2%, Building Permits for July expected at 959,000, and Housing Starts expected at 960,000.

The Markets:

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

Oil saw gains in early trade, but it then fell back off and closed slightly lower after Tropical Storm Fay was seen as not significantly impacting energy operations in the Gulf of Mexico.

The U.S. dollar index fell, treasuries rose, and the Dow, Nasdaq, and S&P dropped over 1% on renewed worries over the financial sector.  “Investors were concerned once again about the health of financial companies after media reports of further problems in the sector. The Wall Street Journal reported, citing unidentified sources, that Lehman Brothers Holdings Inc. might have to pre-announce its third-quarter results in anticipation of a large loss, while Barron's said the U.S. Treasury might have to recapitalize mortgage financiers Fannie Mae and Freddie Mac.”

Among the big names making news in the market today were Qwest, BHP Billiton, Lowe’s, CME and Nymex, and Fannie and Freddie.

The Commentary:

“Dear Friends,

Before you sign on to the concept of the perma-weak euro (Pritchard-Telegraph), consider the following:

1. The foundation of the entire present problem is a credit lock up based primarily on the US manufacture of noxious paper - OTC derivatives.
2. Only UBS can be considered a major OTC derivative manufacturer that nears the copious level of US greed driven money manic sociopath purveyors of that Ebola of the financial world.
3. Assumptions that Euroland has problems as serious and threatening as the US (Pritchard-Telegraph article) is presently an arm wave, not a solid demonstrated fact.
4. Now we know what the statement made by Chairman Bernanke meant when he referenced the possibility of non-US entities having access to the Fed Begging Bowl loan window. The European Central Bank is precluded from Bear Stearns type bailouts.
5. That would suggest the US Fed might bail out major European financial entities that are major grantors of OTC derivatives, thereby monetizing world bankruptcies.
6. The load on the US dollar is becoming terminal. As of today’s Barron’s article, this load will sink it.
7. Markets, thanks to the combination of hedge funds and black boxes, possess an unprecedented vengeance that is convincing investors to panic.
8. Media works to reinforce viewpoints that sustain the marketing of all sorts of paper. When have you heard that OTC derivative factories caused this planetary killer meltdown?
9. Media has worked hard to convince you that the dollar is king, commodities are junk, energy has only one way to go (down) and that the ECB is going to lower rates every month until they hit minus 1%.

Conclusion:

Either argument carries us on a clear path to $1200 and then $1650. A weak euro takes some more time while a strong euro is as close to immediate as markets can be.

It is no forgone conclusion that the euro is going to win the race of currencies to the bottom, as Pritchard indicates.

Pritchard-Telegraph disdain for the management of the ECB is clear. He fails to grant to them that they have a history of seeing what the result of today’s monetary push forward actions have resulted in - the Weimar Republic.

With a strong euro, gold is going to $1650 now. With a weak euro and the US Fed bailing out Euroland’s financial entities, gold will move to even higher prices.

This move will occur by the 2nd week of January, 2011.

Gold will be center stage trading at or above $1650.

The US dollar will be below .62. Right now a break below .72 we can call the major panic number.

I do not buy the entire Pritchard case, but you had to hear it to know both are gold positive, one immediate while the other takes longer and gold goes higher.

Respectfully,”- Jim Sinclair, JSMineset.com

“December Gold finished up 13.6 at 805.7, 1.8 off the high and 9.7 up from the low.

September Silver closed up 0.285 at 13.1. This was 0.13 up from the low and 0.11 off the high.

The gold market waffled back and forth in the morning trade before firming in the early after trade. Given the weekend news that rekindled talk of a government bailout of US agencies and the overt weakness of the US agency shares, it was clear that US financial sector concerns were serving to rekindle flight to quality interest in the gold market. With the Dollar showing signs of weakness and the US equity market under significant duress during most of the trade Monday one certainly gets the impression that safe haven buying was coming back into vogue. Surprisingly the weakness in oil prices into mid session wasn't a significant deterrent to strength in the gold and that would seem to suggest that the patently bearish attitude toward gold from last week was at least temporarily reversed.

The silver market generally tracked with the gold market and certainly seeing the Dollar showing signs of weakness emboldened some bulls. With some in the trade fomenting ideas that the silver market reached some form of liquidated or more balanced spec long positioning around last week’s lows it is certainly possible that some of the buying in silver is coming from short covering. With copper prices remaining weak on Monday, the silver market was apparently able to rise against price action that would seem to point to ongoing physical demand for physical commodity markets.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Ambrose Evans-Pritchard: The race to the bottom has begun

Jason Hommel: Silver shortage causes price disconnect

James Turk: A fabrication bottleneck or something more?

Franklin Sanders: Paper prices no longer rule the precious metals markets

The Statistics:

As of close of business: 8/15/2008

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:

Barrick’s (ABX) Pascua Lama project, Banro’s (BAA) filed technical report, SNS Silver’s (SNS.V) drill results, and Fortuna’s (FVI.V) second quarter 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:

Argentina taxman holding up major gold mine: Chile - "It is Argentina's taxman, and no longer environmental or terrain issues, that is holding up development of Pascua Lama, one of the world's last known mega-gold finds, neighboring Chile charged on Monday." More
- August 18, 2008 | Item | E-mail

ATAC Resources Ltd. Reports New Assays Further Confirming Gold Potential at Rau Property - More
- August 18, 2008 | Item | E-mail

Nevada Exploration Inc. completes Phase I drilling at Bull Creek project and commences Phase I drilling at Awakening project - More
- August 18, 2008 | Item | E-mail

Continuum Provides Corporate Update - More
- August 18, 2008 | Item | E-mail

SNL Enterprises Ltd. - Exploration update - More
- August 18, 2008 | Item | E-mail

Unico, Inc. Issues Statement on Press Release Issued by Krause Kalfayan Benink and Slavens, LLP - More
- August 18, 2008 | Item | E-mail

Hard Creek Nickel Intersects 32 Metres of 0.35% Ni and 0.29 g/t Pt Pd in Cliff Zone - More
- August 18, 2008 | Item | E-mail

Drilling Begins on Miranda Gold's Horse Mountain Project - More
- August 18, 2008 | Item | E-mail

Gemini Explorations, Inc. to Report New Sampling Results for the La Tapata Gold Mine - More
- August 18, 2008 | Item | E-mail

Eaglecrest Completes Two Gold Concentrate Shipments From San Simon Project - More
- August 18, 2008 | Item | E-mail

Reclamation Report for Continental's Xietongmen Project Approved - More
- August 18, 2008 |