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-- Posted Wednesday, 27 August 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose over 1.5% to $834.90 by midday in London before it fell to a tiny loss at $822.45 in New York, but it then rallied back higher by the close and ended with a gain of 0.65%.  Silver rose over 2% to $13.86 and fell $13.39 before it also rallied back higher, but it still ended with a loss of 0.52%.

Euro gold rose to about €563, platinum gained $20.50 to $1437, and copper rose a few cents to about $3.47.

Gold and silver equities rose over 2% at the open before they fell back near unchanged midday, but they then rallied back higher into the close and ended with about 2% gains.

The Economy:

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 8/23 expected at 425,000, second quarter GDP expected at 2.7%, and the Chain Deflator expected at 1.1%.

The Markets:

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

Hurricane Gustav became Tropical Storm Gustav as it lost steam crossing over Haiti, but forecast models call for it to turn back into a hurricane as it enters the Gulf of Mexico and most predictions now call for it to head straight into many oil and natural gas rigs.  Many energy companies are already evacuating installations as a precaution and rigs are already shutting down, but the question now is what long term damage, if any, will occur, and how soon will these rigs get back into production after the hurricane passes.  If no major damage is done and the Gulf of Mexico remains calm after, then most rigs could likely be back into production within a week.  Oil rose on these storm threats while traders also had to factor in today’s inventory report that showed crude inventories fell 100,000 barrels, gasoline inventories fell 1.2 million barrels, and distillates remained unchanged.

The U.S. dollar index fell over night as the euro rose on hawkish comments from the ECB’s Weber, but the durable goods data took the index well off its lows and it ended with just a modest loss.

Treasuries ended higher after a strong 2-year note auction.

The Dow, Nasdaq, and S&P rose on better than expected durable goods data and hopes that a bailout of Fannie and Freddie may longer be necessary.

Among the big names making news in the market today were FDIC and the Treasury, Dollar Tree, Pimco, Boeing, Fannie and Freddie, Grupo Mexico, and Northrop Grumman.

The Commentary:

1. “The USA and to a lesser degree the rest of the West’s financial system is broken like a shattered eggshell. It will be lied about, covered up, hidden after Fridays and rescued only when you are not looking. It will be labeled anything but the bailout it is. All of that is a rehash of what got us here in the first place. It does not have even a small chance of fixing the problem for even a short period.
2. Because the financial system of the USA is broken to a much larger degree than that of any other country on the planet, the US dollar has limited ability to rally regardless of the arguments being blasted out by Financial TV and all who make their living as purveyors of paper so-called assets casting your attention to competitive levels of economic activity away from the real why of all of this.
3. Geopolitics are deteriorating with the greatest risk of all being Pakistan. That risk is reaching critical levels. The price of Crude can easily be put on a course of plus $100 from whatever level it is trading at when Pakistan blows.
4. The Fed is jawboning against inflation and practicing verbal intervention by placing an outlook for increased interest rates in the minutes of the last Fed meeting.
5. The message that would be sent by a September increase in interest rates would trigger the need for more rescues, more loans to develop electric cars and more funding for Freddie and Fanny as starters.
6. The Case Shiller approach to predict housing market and render valuation for the many forms of credit and mortgage derivatives only looks back with accuracy. Projecting forward is its major weakness.

You must act to defend yourselves by reducing your exposure to financial agents, ignoring the lies and spin being thrown at you until you are covered by six feet of fabricated crap.

The USA has adopted a plan of inflating monetary policy and lying in order to save USA Inc. from bankruptcy. The US dollar is the common share of the USA Inc. If you are a bull on the dollar you have bought the bull blasted at you.

You can always have a bear market rally in the common share of USA Inc., but it is limited by major cash sellers and the distasteful event in government agencies.

Gold will trade at $1200 and $1650. The US dollar will trade at .62 and .52 on the USDX as bull cannot change a pig's ear into a silk purse.

The argument that the USA is the major of the major power militaristically is what collapses in currency are made of, not a universal acceptability as the warmongers would have you believe. That is exactly what happened when the Ruble became rubble as the USSR went broke and imploded.

Maybe standing back and watching the flow is better than locking onto some isolated event that I receive so many questions on.

Respectfully yours,”- Jim Sinclair, JSMineset.com

“December Gold finished up 5.9 at 834, 5.3 off the high and 6 up from the low.

December Silver closed down 0.11 at 13.568. This was equal to the low and 0.182 off the high.

The gold market forged a series of stair steps down from the early morning highs but generally gold prices seemed to prefer positive ground. Clearly the weakness in the Dollar failed to live up to initial expectations for the bull camp and that wasn't surprising considering that the US Durable Goods report was better than most expectations. Surprisingly the gold market didn't seem to get a definitive added lift from what seemed to be escalating geopolitical tensions between Russia and the EU. Some gold traders suggested that until the September Dollar Index consistently trades below the 77.00 level, the currency impact for gold might not be definitively supportive.

After an early morning slide off the overnight highs, the silver market managed a weak drawn out attempt to rally off the post report sell off. Clearly silver underperformed the entire metals complex with gold, platinum and copper prices clearly strong and silver flirting with both sides of unchanged throughout the trading session.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Greg Peel: The great U.S. gold shortage

FDIC weighs tapping Treasury as funds run low

The Statistics:

As of close of business: 8/26/2008

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:

South Africa’s cost cutting, Apollo’s (AGT) repaid loan, Gammon’s (GRS) settled lawsuit, Paramount’s (PZG) acquired remaining interest in the San Miguel project, Gold Reserve’s (GRZ) comments on Rusoro’s offer, Metalline’s (MMG) letter from the President to shareholder’s, and ECU’s (ECU.TO) and Golden Tag’s (GOG.V) drill 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:

Gold Reserve Reports on Offer from Rusoro Mining Ltd. - "Gold Reserve Inc. (TSX:GRZ - News) (AMEX:GRZ - News) announced that it received an unsolicited non-binding expression of interest from Rusoro Mining Ltd. (“Rusoro”) (CDNX:RML.V - News) to complete a 100% business combination by issuing two shares of Rusoro for each share of Gold Reserve." More
- August 27, 2008 | Item | E-mail

Aura Silver to Focus on Emerging Higo Blanco Jasperoid Prospect - More
- August 27, 2008 | Item | E-mail

Apollo Gold Repays RMB Resource Loan of US$1.7 Million Early - "Apollo Gold Corporation (“Apollo”) (TSX: APG - News) (AMEX: AGT - News) announces that it has repaid early the balance of the facilities agreement owing to RMB Resource Inc. of US$1,654,000 mainly from proceeds of unwinding its hedge position with a maturity date of September 26, 2008 as more fully described below." More
- August 27, 2008 | Item | E-mail

Duluth Metals Announces Extension of Exercise Period for Class A Warrants to September 30, 2009 - More
- August 27, 2008 | Item | E-mail

MacMillan Gold Options The La Sarita Project in Mexico - More
- August 27, 2008 | Item | E-mail

Gammon Gold Resolves Suit by Midas Fund, Inc. - "Gammon Gold Inc. ("Gammon Gold") (TSX:GAM and AMEX:GRS) is pleased to announce that it has reached an agreement with Midas Fund, Inc. ("Midas") to settle a lawsuit filed against Gammon and several of its officers and directors in U.S. District Court New York. Midas will dismiss the lawsuit in exchange for a US$200,000.00 cash payment by Gammon. The settlement does not constitute an admission of liability on the part of Gammon or any of the other defendants." More
- August 27, 2008 | Item | E-mail

Marathon Acquires Remaining Discovery Shares Pursuant to Compulsory Acquisition - More
- August 27, 2008 | Item | E-mail

Infinito Arranges $18,000,000 Convertible Note Financing To Fund Crucitas Development - More
- August 27, 2008 | Item | E-mail

Coro Mining Corp. Closes Initial $3 Million Private Placement - More
- August 27, 2008 | Item | E-mail