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-- Posted Wednesday, 3 September 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold fell over $15 to as low as $789.15 by late trade in Asia before it rose to see a $3.60 gain at $808.50 by midmorning in New York, but it then fell back off for most of the rest of trade and ended with a loss of 0.2%.  Silver fell fifty cents and $12.54 by late trade in Asia before it rose back to about $13 in early New York trade, but it also fell back off into the close and ended with a loss of 1.07%.

Euro gold remained at about €554, platinum lost $10.50 to $1382, and copper gained a few cents to about $3.35.

Gold and silver equities fell as much as 5% by late morning, but they then bounced from their lows in afternoon trade and ended with less than 4% losses.

The Economy:

The fed’s Beige Book said economic growth remains slow and lending standards remain tight, but it also noted some signs of moderating inflation.  Tomorrow at 8:15AM EST is the ADP Employment report for August expected at -30,000.  At 8:30 is the Initial Jobless Claims report for 8/30 expected at 420,000 and second quarter Productivity expected at 3.5% and at 10AM is the ISM Services report for August expected at 49.5.

The Markets:

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

Oil fell as it was mostly confirmed that Gustav did little damage to energy installations in the Gulf of Mexico.  Many refineries are now coming back online safely, but traders were also watching developing storms in the Atlantic and preparing for tomorrow’s delayed inventory report.

The U.S. dollar index rose as much as 60 points in early trade as the euro and pound both fell on further signs of economic weakness in that region that will likely keep the Bank of England and the European Central bank on the dovish side for their policy in the near future, but the dollar fell off to close with a slight loss on speculation that view may be getting overplayed by now.

Treasuries rose as the Dow, Nasdaq, and S&P traded mostly lower on further worries over a weak global economy, but the Dow was able to rally higher in late trade to end with a slight gain.

Among the big names making news in the market today were Ford, Nissan, Staples, Ospraie, Wachovia, Corning, Coca-Cola, Costco, and Wal-Mart.

The Commentary:

“Dear Friends,

We are in the middle of “Operation Keep the Hill,” an operation in which every stop has been pulled out to paint a picture of improving business conditions and permanent declining inflation as a result of lower long term energy and food prices. The big six are forecasting a 3% improvement in consumer demand as sentiments improves due to the drop in inflation at the gas station and food market. The improvement in share value of some financials, based on nothing but hype, is held up as proof that the credit problems are behind us regardless of Lehman being busted while Fannie and Freddie are hopeless hulks in dire need of camouflage.

The FDIC is getting to a point where they need recapitalization with 199 banks on the troubled list and probably a lot more to come.

SIPC is a joke capitalized at $1.5 billion, yet they are still quoted as the guarantor of all security values at all brokerage firms.

The problem is that all the above is spin. The spinner chants to the dark forces are in hopes that the con job can last until Election Day.

Those that hold the hill generally have the advantage, but this time they absolutely must hold it.”- Jim Sinclair, JSMineset.com

“We hear a good deal about the paper trading game (derivatives) having a great affect on the physical market … and that is true, but only for a relatively short period of time. The gold shorts, such as The Gold Cartel, can bomb the derivatives markets at the right time and turn speculative longs into sellers. Remember, the futures market is, and is known as, a price discovery mechanism. This price discovery can be based on different factors at different times. In the months ahead, however, it will get back to demand versus total available supply.

What is the fair price of gold? The futures market price is supposed to give us an idea what that fair price is now and for many months ahead. Sometimes it is right on, sometimes too eager, and sometimes too pessimistic. The Gold Cartel camp waits for the specs to become overly exposed on the long side (even if the specs are correct in their assessment) and then makes their move to flush them out, as we have just seen. We have witnessed the same pattern for the last 8 years of this bull market.”- From yesterday’s Midas report by Bill Murphy of LemetropoleCafe.com

“December Gold finished down 2.3 at 808.2, 4.3 off the high and 7.7 up from the low.

December Silver closed down 0.198 at 12.947. This was 0.057 up from the low and 0.203 off the high.

The gold market managed another new low for the move today but seemingly managed to reject a good portion of the losses. Ongoing strength in the Dollar seems to sit squarely on the back of the gold market and even a fresh round of weakness in the US equity market didn't seem to foster much in the way of flight to quality interest for gold. Clearly some gold players saw the better than expected US economic numbers as a flight to quality offset to the weakness in equity prices. It probably also goes without saying that ongoing weakness in oil prices and other physical commodity markets contributed to the weakness in gold prices again on Wednesday.

With the Dollar keeping overall psychology in the precious metals markets edgy again, it was not surprising to see silver prices spend most of the session trading in the lower portion of the prior sessions trading range. As suggested at mid day the silver bulls weren't the least bit supported by the strength in copper prices or even the better than expected US scheduled economic data. In short, the fear of too much global slowing, a rising Dollar and sinking oil prices seemed to leave silver without much in the way of buying interest.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Troubled lenders' junk swaps with Bank of England soar

The Statistics:

As of close of business: 9/02/2008

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: 2.91 tonnes were removed from the trust.

The Stocks:

Kinross Gold’s (KGC) bid for Aurelian (ARU.TO), NovaGold’s (NG) sale consideration, Nevsun’s (NSU) construction, Gammon’s (GRS) drill results, Orezone’s (OZN) closed debt facility, Crystallex’s (KRY) mill progress, Eldorado’s (EGO) legal update, Great Basin’s (GBN) drill results, Sabina’s (SBB.V) financial results, ECU’s (ECU.TO) drill results, Oro’s (OSR.V) property acquisition, and Scorpio’s (SPM.TO) operations update 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:

Kinross seen winning Aurelian with C$890 mln bid - "Kinross Gold (K.TO: Quote, Profile, Research, Stock Buzz) looks set to triumph in its C$890 million ($840 million) bid for Aurelian Resources (ARU.TO: Quote, Profile, Research, Stock Buzz), although the takeover is by no means a done deal because of concerns a new Ecuadorean mining law could hurt the value of Aurelian's Fruta del Norte gold deposit." More
- September 03, 2008 | Item | E-mail

Nirek Resources Inc.: Director Exercises Options for Shares - More
- September 03, 2008 | Item | E-mail

Golden Goose doubles its Lac Levac Land position to 200 km2 - More
- September 03, 2008 | Item | E-mail

Nevoro Inc. Announces Drilling Programs for Stillwater, Moonlight and Monarch Projects - More
- September 03, 2008 | Item | E-mail

Vena Resources Completes Phase-One of Uranium Drill Program at Macusani - More
- September 03, 2008 | Item | E-mail

NQ Exploration Inc.: Launch of our Website - More
- September 03, 2008 | Item | E-mail

NovaGold considering sale; shares hit 9-month low - "NovaGold (NG.TO: Quote, Profile, Research, Stock Buzz) hit a 9-month low on Wednesday after the Canadian gold company said it was considering selling all or part of itself due to the sharp plunge of its shares over the past year.

NovaGold, whose main assets are 50-percent stakes in the Donlin Creek gold project in Alaska and the Galore Creek copper-gold property in British Columbia, said in a statement on Tuesday it was reviewing strategic alternatives to maximize shareholder value." More
- September 03, 2008 | Item | E-mail

Constellation Copper to delist from TSX - More
- September 03, 2008 | Item | E-mail

Latin American Minerals Retains Consultants and Expands Exploration Program to Include Drill-Testing a Resource at Paso Yobai, Paraguay - More
- September 03, 2008 | Item | E-mail

Colorado Goldfields' Upcoming Investor Conference Call and Gold and Silver Challenge - More
- September 03, 2008 | Item | E-mail

Nevsun Resources Ltd.: Bisha Construction Underway