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-- Posted Monday, 25 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold briefly spiked lower to $815.85 at the New York open before it quickly rallied back near unchanged to as high as $825.85, but it then meandered lower into the close and ended with a loss of 0.76%.  Silver dropped to $13.21 by late trade in Asia before it rallied to find a slight gain at $13.56 in New York, but it also fell back off into the close and ended with a loss of 1%.

Euro gold fell to about €556, platinum lost $14 to $1424.50, and copper rose slightly to about $3.48.

Gold and silver equities rose roughly 1% at the open, but they then fell back off for most of the rest of trade and ended with about 1% losses.

US Mint resumes gold coin orders on limited basis  guardian

The Economy:

Existing Home Sales rose 3.1%, but inventories rose even more to an 11.2 month supply as more sellers put their homes on the market than there were buyers.

Tomorrow at 10AM EST brings Consumer Confidence for August expected at 53.0 and New Home Sales for July expected at 525,000.  At 2PM is the release of FOMC minutes from the fed’s August 5^th meeting.

The Markets:

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

Oil found slight gains on storm worries and increased geopolitical concerns.

The U.S. dollar index ended marginally higher on the view that the US is better off economically than Europe going forward.

Treasuries rose as the Dow, Nasdaq, and S&P were led markedly lower by the financials on worries over credit spreads and also some increased rhetoric between the US and Russia that so far has been mostly ignored by the market.

Among the big names making news in the market today were Citigroup, Fannie and Freddie, JPMorgan, AIG, and Precision Drilling and Grey Wolf.

The Commentary:

“Dear Friends,

Part of my attempt to serve is to be barraged with every opinion from every chat site and blog that presents arguments against gold.

The most popular one now starts off sounding reasonable. It states that crude will trade down between $110 and $85, making inflationary expectations fall and as a result the trade deficit will decline making the dollar rise and therefore commodities fall. This will raise consumer expectations that will then increase spending, making the dollar rise.

The following is missing:

1. Deflation is assumed here to mean the falling cost of living. Deflation is the failure of debt. That looks toward the OTC derivative meltdown and the ongoing collapses occurring now in financial entities that require liquidity increases through rescues that use public money. Increased liquidity results in an increased cost of living regardless of economic conditions. That is an economic axiom.
2. The assumption many have that Gold is not a currency speaks to their eyesight and poor memory. It stares you in the face every day if you look.
3. The US is the MAJOR manufacturer and exporter of OTC derivatives. Should any side of the specific performance contract fail, the failure potential of the counter party is extremely high. That is quite dollar negative.
4. There is a desire worldwide for central bank diversification out of the US dollar, which is unlikely to change.
5. Central banks have already indicated they will cease buying US agencies, which is TIC negative and therefore dollar negative.
6. There is no consideration of an explosion in the Federal Budget deficit that will eclipse any improvement in the US Trade deficit that is always looked at in comparison to TIC. It is certain to drop faster that the trade deficit drops, therefore making the Trade Deficit drop meaningless.
7. This coming and present crisis is from a lockup of the credit system that is emerging from the meltdown of OTC derivatives. Consumers hold too much debt and are on the ropes. You would first need one hell of a recovery in housing to reinstate home equity and a major unlock of the credit market before consumers see any light at the end of their bankruptcy tunnel. Consumers being gleeful in this crisis at any point are simply NOT GOING TO HAPPEN.
8. Consumers picking up the dollar is an interesting view because internal consumer glee means nothing to foreign exchange except as it impacts expectations of a US recovery in the middle of what the writer says will be the Great Greater Depression. That scenario defies logic.
9. In the same argument the writer says the US economy slows, so where does the gleeful consumer fit in? The answer to that question is they don’t
10. The writer feels the Trade Balance stands alone and will, by contraction, move the dollar. The trade deficit, whether or not covered by the TIC report, is what the Trade Balance is all about.
11. This argument has, along with the totally non-existent yet still popular “Synthetic Dollar Short,” many of you angry with me. That is ok and deserved, as you are as good as your last call, but the arguments you now base that on are totally wrong in both instances.
12. The Bush Administration will do what they did the last time the "D" word was used as recorded below. That was totally dollar negative long term. Should Obama win, his administration would invent social approaches to money and business that the Bush and Roosevelt administration never heard of. These approaches will without any doubt be long-term dollar negative.

How about a Chicken and $100,000 in every pot?”- Jim Sinclair, JSMineset.com

“December Gold finished down 7.8 at 825.7, 4.8 off the high and 3.7 up from the low.

December Silver closed down 0.111 at 13.479. This was 0.079 up from the low and equal to the high.

The gold market mostly behaved poorly on the first trading session of the week. In fact, despite weakness in the Dollar and a very sharp slide in the US equity market one could have come away from the trade Monday with growing flight to quality expectations. Apparently credit concerns were behind the anxiety in the US equity market but with the Dollar showing more frequent weakness, the deterioration in the US condition was certainly justifiable. The gold market wasn't even supported by talk of falling gold reserves at a major mining company, nor was the market supported by recent talk of strong gold jewelry demand in the Middle East. Given the rising fear of slowing one almost gets the impression that gold was partially undermined off the fear of too much slowing.

As mentioned in the mid day coverage, the silver market at times managed to throw off the aggressive pressure being seen in the gold market. Perhaps the residual strength in the copper market and the positive impact of the weakness in the Dollar provided the silver market with a partial pass on the wave of selling that dominated gold and platinum prices. In the end, the fear of too much slowing seemed to leave the silver market out of favor.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

James West: Where's the gold?

Gene Arensberg: Silver sucker-punched by two U.S. banks

A new summary of GATA's work and outlook

Chris Powell: A new summary of GATA's work

Bailout aid for Wall Street questioned at Fed event

Washington Post exposes CFTC's failure amid market concentration

Join GATA at Toronto Resource Investment Conference

No need for a bailout at the bank of the poor

What happens when metal exchanges, Freddie, Fannie fail?

Bundesbank says gold reserves gaining importance

Gerald P. O'Driscoll Jr: Washington is quietly repudiating its debts

Mint to ration gold coins as it resumes taking orders

The Statistics:

As of close of business: 8/22/2008

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: Change in Total Tonnes from yesterday’s data: 67.64 tonnes were added to the trust.

The Stocks:

Gold Fields’ (GFI) reserves, US Gold’s exploration results, Anatolia’s (ANO.TO) lead arranger for senior project financing, Sabina Silver’s (SBB.V) drill results, U.S. Silver’s (USA.V) production in July, Esperanza’s (EPZ.TO) drill results, and Silver Standard’s (SSRI) increased resources 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:

Crosshair Exploration & Mining Corp.: News Release - More
- August 25, 2008 | Item | E-mail

Sabina Silver Announces Initial 2008 Jo Zone Results - "Sabina Silver Corp. (CDNX:SBB.V - News) is pleased to announce favourable results from the initial 2008 drilling at the recently defined Jo Zone at the Hackett River Project in Nunavut Canada." More
- August 25, 2008 | Item | E-mail

U.S. Silver Reports July Silver Production Up 30% Over 2nd Quarter 2008 - "U.S. Silver Corporation (CDNX:USA.V - News) ("U.S. Silver" or the "Company") is pleased to announce that July silver production was 179,400 ounces, which is 30% higher than the average monthly production in the 2nd quarter 2008 and 94 % higher than the average monthly production from 2007. This is an annualized rate of approximately 2.15 million ounces." More
- August 25, 2008 | Item | E-mail

Duran Ventures and Macmillan Gold Drilling at Aguila and Pasacancha Targets in Peru - More
- August 25, 2008 | Item | E-mail

Oromonte announces effective date of share consolidation and name change to Georox Resources Inc. - More
- August 25, 2008 | Item | E-mail

Vencan Gold Corporation announces closing of $675,000 non-brokered private placement financing with the MineralFields Group & other investors - More
- August 25, 2008 | Item | E-mail

Franconia Files Technical Report Supporting Latest NI 43-101 Resource Estimate on Birch Lake Copper-Nickel-PGM Resource - More
- August 25, 2008 | Item | E-mail