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-- Posted Wednesday, 20 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose almost 1% to $818.05 and silver climbed over 2% to $13.40 in Asia before both metals fell to see over 1% and 2% losses at $799.80 and $12.79 by late morning in New York, but they then rallied back higher into the close and ended with losses of just 0.1% and 0.72%.

Euro gold rose to over €541, platinum gained $13.50 to $1364, and copper fell a few cents to about $3.40.

Gold and silver equities rose over 1% at the open before they fell to see slight losses by early afternoon, but they then rallied back higher into the close and ended mixed and near unchanged.

CBGA member gold sales may be lowest since '99-WGC
AFX News

The Economy:

There were no major economic reports today, but the Mortgage Bankers Association reported that mortgage application fell another 1.5% last week to the lowest level since December 2000.  Tomorrow at 8:30AM EST brings Initial Jobless Claims for 8/16 expected at 438,000 and at 10AM are Leading Economic Indicators for July expected at -0.3% and the Philadelphia Fed expected at -13.4.

The Markets:

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

Oil was up and down and ultimately ended slightly higher as traders digested a widely varied inventory report and a reiterated call from Goldman Sachs still calling for $149 oil by the end of the year despite their recent call for a strengthening dollar.  Russia also said that it will respond to the recent missile defense deal between the US and Poland with more than just diplomatic protests as it considers the step as an escalation to an arms race.  The market was not quite sure what to make of the statement, but any further developments could certainly increase any geopolitical concern premium in energy prices.  Crude inventories built 9.4 million barrels, gasoline inventories fell 6.2 million barrels, distillates built 500,000 barrels, and refinery utilization fell 0.2% to 85.7%.

The U.S. dollar index rose on the view that the outlook for other world economies going forward is relatively worse than where the US is headed.

The Dow, Nasdaq, and S&P opened lower on more worries about the financials as Fannie and Freddie were rumored to be meeting with the Treasury despite their public claim of no need for new capital.  All three indices rose as oil dropped from its highs, but gains were modest at the close.  Treasuries ended higher on economic and geopolitical jitters.

Among the big names making news in the market today were American Airlines, HP, Lehman, Fannie and Freddie, Eaton, EBay, and BJ’s.

The Commentary:

“Gold bounced off strong support strongly today as we come to the close of the quiet season for gold and enter the main annual gold season in the final quarter of the year.  Many U.S. players are also soon to wind up their holidays and return to the gold market.  Indian physical buying has entered the market as a force taking up bargain pricing of gold as an early entry into their season for gold. 

The main driver of gold of late has been U.S. selling primarily from the speculative COMEX quarter, with investment demand showing uncertainty and as net sellers of small amounts.   This left the field at the mercy of short-term traders who have pressed the metal down until this vigorous support was shown.   Below $800 that support has been visibly resistant to these pressures, as we see in the bounce we are now witnessing.  

Separately the $ is now struggling to hold its ground at $1.46 against the Euro.   The malaise of the U.S. economy is by no means over as the I.M.F. itself is warning of a really big bank bust before long.   Fannie Mae and Freddie Mac are sending out alarm bells as the cost of financing their bonds is rising, again threatening a failure of equity support and the likely support from the Fed, emphasizing that the credit crunch is getting worse.  

The U.S. consumer is not in a position to add to the inflationary pressures we are seeing in the wholesale numbers, so we would expect the Fed to allow inflation to go untended, relying on deflation in many quarters to dampen it.   We expect the Fed to nurse already fragile growth instead.

This translates into slower capital investment into the States from Asia and the Middle East and a continuation of the Trade deficit at unacceptable levels, leaving the $ to turn down shortly.

Gold and silver are nearing the end of the savage correction they have endured.   With silver the 'long shadow' of gold falling further on the decline we would expect it to outperform gold going forward, particularly as we see investment demand in that metal appearing ahead of that demand in gold.”- Julian D.W. Phillips, www.goldforecaster.com

“December Gold finished down 0.5 at 816.3, 6.1 off the high and 9.5 up from the low.

September Silver closed down 0.065 at 13.04. This was 0.06 up from the low and 0.2 off the high.

The gold market tried to climb back above the prior session's highs but was unable to sustain the rise in prices in the face of minor strength in the US Dollar and a slide in oil prices. The market could have garnered some support from news out of London that Central Bank gold sales might be on a pace to be the slowest in over 8 years. While tracking the Central Bank sales is difficult due to the delayed nature of the statistics from different countries, the pace apparently has some players anticipating less supply flow from that source compared to recent history. While the gold market hasn't paid that much attention to physical supply and demand side stories recently, the fact that gold prices to the August low were almost $220 an ounce below the July highs could mean that the trade will become somewhat more receptive to classic supply side issues. In the near term the gold trade looks to remain focused on the direction of the Euro.

While the silver market was able to recoil from the lows, the trade seemed content to spend a large portion of the session close to the middle of the days trading range. With copper prices sharply lower and platinum prices showing strength the outside quasi industrial metals market spillover into the silver market was mixed, while the outside impact from the energy complex was negative for the second half of the trading session. Like the gold market, the silver market looks like it might have run out of near term technical short covering interest.”- The Hightower Report, Futures Analysis and Forecasting

The Statistics:

As of close of business: 8/19/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 7.66 tonnes.

COMEX Gold Trust (IAU)

Note: No change in Total Tonnes from yesterday’s data.

Silver Trust (SLV)

Note: Change in Total Tonnes from yesterday’s data: 61.49 tonnes were added to the trust.

The Stocks:

AngloGold’s (AU) worker boycott tomorrow at Mponeng to mourn a worker death last week, Golden Star’s (GSS) appointed CFO, Keegan’s (KGN) appointed Environmental Manager and project updates, and Minefinders’ (MFN) Dolores update and second quarter results were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

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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:

Melkior Resources: Timmins Gold Project Drilling - More
- August 20, 2008 | Item | E-mail

Amarillo Drills 88m @ 1.83 g/t Au at Butia, and 162m @ 0.70 g/t Au at Cerrito, Lavras do Sul - More
- August 20, 2008 | Item | E-mail

Global Hunter Receives Permit for 3,700 Metre Drill Program at its Rabbit South Project in British Columbia - More
- August 20, 2008 | Item | E-mail

Copper Reef Mining-Board Appointments - More
- August 20, 2008 | Item | E-mail

Golden Star Appoints John Labate as Chief Financial Officer - "Mr. Labate has held numerous positions in the mining finance and accounting field. Most recently, John was Chief Financial Officer for Constellation Copper Corporation. His previous experience includes Vice President and Chief Financial Officer of GeoBiotics, Inc. and Crown Resources Corporation. Mr. Labate also served at Bond International Gold as Controller and in various accounting positions at Anaconda Minerals Company." More
- August 20, 2008 | Item | E-mail

Constellation Copper announces the appointment of David Mueller as Chief Financial Officer - More
- August 20, 2008 | Item | E-mail

First Narrows Provides Update on Chester Project - More
- August 20, 2008 | Item | E-mail

Oriel Resources plc Announces Compulsory Acquisition of Shares and Cancellation From AIM - More
- August 20, 2008 | Item | E-mail

Norsemont Mining Advances Constancia Feasibility Study - More
- August 20, 2008 | Item | E-mail

Goldcliff Resource Corporation: Multi Ounce Gold Sampled at Expanded Bonanza Trench - More
- August 20, 2008 | Item | E-mail

Klondike Silver Corp. -- Connaught Update - More
- August 20, 2008 | Item | E-mail

Metanor: Trading of Warrants on the TSX Venture Exchange = MTO.WT - More
- August 20, 2008 | Item | E-mail

Puma Exploration: Surface Drilling Intersects High Grades at Shaft Lens With 130 g/t Ag, 4.3% Zn and 3.6% Pb Over 10.2 Meters - More
- August 20, 2008 | Item | E-mail

Colossus Minerals Inc. Takes Another Step Ahead With the Completion of Its Phase I Drilling Program on Serra Pelada - More
- August 20, 2008 | Item | E-mail