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-- Posted Friday, 22 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose about 0.5% to $837.90 in Asia before it dropped all the way to $820.85 by early trade in New York, but it then rallied back higher into the close and ended almost 1% off that low with a loss of just 0.76%.  Silver rose 21 cents to $13.95 in Asia before it dropped to see a 44 cent loss at $13.30 in early New York trade, but it also rallied back higher into the close and ended with a loss of just 1.6%.

Euro gold fell to about €559, platinum lost $14.50 to $1438.50, and copper fell over 7 cents to about $3.47.

Gold and silver equities fell about 4% by mid-afternoon before they rallied back higher into the close, but they still ended with about 3% losses.

The Economy:

There were no major economic reports today, but there were several notable names making comments.  Bernanke called the inflation outlook “uncertain” and said that the financial storm “has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment.”  Warren Buffet said that the “game is over” for Fannie and Freddie as independent companies and he pointed out that they “don't have any net worth.”  Bloomberg speculated that “Treasury Secretary Henry Paulson's response to the sinking fortunes of Fannie Mae and Freddie Mac might boil down to picking which investors get hurt and by how much.”

All of this week’s economic reports:

Next week’s economic highlights include Existing Home Sales on Monday, Consumer Confidence, New Home Sales, and FOMC minutes on Tuesday, Durable Goods Orders on Wednesday, GDP and Initial Jobless Claims on Thursday, and Personal Income and Spending, Chicago PMI, and Michigan Sentiment on Friday.

The Markets:

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

Oil erased all of yesterday’s $5.62 gain and more as Russia started pulling out of Georgia and Tropical Storm Fay finally turned North and decidedly away from operations in the Gulf of Mexico.  Reports showing an increase in OPEC output and another showing an expected decline in US travel this upcoming Labor Day holiday weekend also turned the supply/demand valuation more bearish on both counts.

The U.S. dollar index rose after Warren Buffet stated in a CNBC interview that he had no bets against the dollar and a weak UK economic growth report reiterated the view that central banks in and around Europe will likely not be raising interest rates anytime soon and may even more biased towards cutting rates.  This premise of relative dollar strength is however based on the assumption that the fed may be more biased towards raising rates for their next move and that supposition is certainly up for debate.  Any change in either of these views or a reversal of both will certainly be very bearish for the dollar.  In fact it could be said that the current mindset of the market for interest rate differentials is as good as it can get right now for the dollar.  And if the mindset can’t get any better than it should go without saying that it can only get worse in the coming weeks and months as views change.  The tide turn for the dollar’s recent bear market rally may well be upon us as noted with a couple of the many other reasons this may be the case in yesterday’s report.

Treasuries fell as the Dow, Nasdaq, and S&P rose nicely at the open on rumors over a buyout for Lehman Brothers.  Gains moderated a bit midday, but stocks then rose back to nearly equal or surpass their earlier highs after oil added to its losses heading into its close.  Market participants seemed undaunted by Bernanke’s comments about a slow economy, an uncertain outlook for inflation, and an overall perception that this is still the most trying time for the markets in recent history.

Among the big names making news in the market Friday were Ore Hill Partners, Lehman Brothers, King Pharmaceuticals and Alpharma, and Ann Taylor.

The Commentary:

“December Gold finished down 5.5 at 833.5, 2 off the high and 6.3 up from the low.

December Silver closed down 0.253 at 13.59. This was 0.03 up from the low and 0.05 off the high.

The gold market started out weak on Friday morning but after an early morning slide, prices managed to recover and for a short period of time the gold futures managed to regain the 200 day moving average. However, residual strength in the Dollar and a slight decline in overall financial sector anxiety in the US markets seemed to prompt a profit taking setback in gold and other flight to quality instruments. In fact, even the crude oil market came down sharply in what seemed to be a flight to quality liquidation. Perhaps soothing comments from the US Fed Chairman and upbeat US dialogue from Warren Buffet simply prompted an exodus from gold. In the end, seeing the US equity market manage a sharp rise for a large portion of the trading session clearly seemed to shake out as a negative for the gold market.

The silver market saw early morning weakness but at times the silver contract was able to rise by as much as 35.5 cents above the mid morning lows. However, the silver market was clearly undermined by the recovery in the Dollar, weakness in oil prices and weakness in a host of physical commodity markets. In fact, seeing the crude oil market at times down by more than $4 a barrel and seeing equity prices up sharply simply seemed to take the bullish wind out of the silver market from the prior trading session.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Ted Butler: The smoking gun

Richard J. Greene: Amateur hour in the precious metals markets

Who could have anticipated such demand for gold?

Congressman extracts statement from Mint on gold coin shortage

The Statistics:

As of close of business: 8/21/2008

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:

Crystallex’s (KRY) project update in Venezuela, Gold Fields’ (GFI) summons, U.S. Energy’s (USEG) completed sale, and AngloGold’s (AU) received criticism for docking pay of mourning workers were among the big stories in the gold and silver mining industry making headlines Friday.

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:

Verena Intersects 7.10 g/t Gold Over 14.30 Metres at Volta Grande - More
- August 22, 2008 | Item | E-mail

Pelangio Provides Update on Arrangement and Schedules Hearing for Final Order - More
- August 22, 2008 | Item | E-mail

Augen Gold grants options to consultants - More
- August 22, 2008 | Item | E-mail

RT Minerals Corp. Announces Completion of Initial Public Offering - More
- August 22, 2008 | Item | E-mail

Augyva Mining Resources Inc./Update on Duncan Iron Project Agreement and Drilling Program - More
- August 22, 2008 | Item | E-mail

Coro Enters Into Financing Arrangement to Fund Acquisition of Cerro Negro Copper Mine, Chile - More
- August 22, 2008 | Item | E-mail

Midlands Minerals and PMI Gold Clarify New Ghana Property Acquisition by PMI Gold - More
- August 22, 2008