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-- Posted Friday, 26 September 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold fell $10.20 to $865.80 and silver dropped $0.18 to $13.01 by late trade in Asia before both metals climbed higher in London and rose to as high as $911.70 and $13.632 by about 10AM EST in New York, but they then fell back off into the close and ended with gains of just 0.84% and 1.67%.

Euro gold rose to about €605, platinum lost $88 to $1095.50, and copper fell over 6 cents to about $3.08.

Gold and silver equities rose about 2% at the open, but they then fell back off for the rest of the day and ended with about 2% losses.

The Economy:

All of this week’s economic reports:

Next week’s economic highlights include Personal Income and Spending on Monday, Chicago PMI and Consumer Confidence on Tuesday, ADP Employment, Construction Spending, and the ISM Index on Wednesday, Initial Jobless Claims and Factory orders on Thursday, and ISM Services and September’s jobs data on Friday.

The Markets:

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

Oil fell on further worries that demand will continue to drop off in a slowing global economy.

The U.S. dollar index waffled near unchanged and treasuries rose as the Dow, Nasdaq, and S&P traded mostly lower on concerns that a deal cannot be reached over the bailout plan, but stocks rebounded late on hopes that a deal will be reached over the weekend and the Dow and S&P ended higher while the Nasdaq remained lower on a weak forecast from RIM.  Also dragging on the market was the largest bank failure in history announced last night as the government seized WaMu and sold some of its assets to JPMorgan.  Just at the close emerged rumors of some kind of business combination between Citigroup and Wachovia.

Among the other big names making news in the market Friday were Wachovia, National City, KB Home, and HSBC.

The Commentary:

“Some of the largest wholesalers in the world are out of all bullion product except for exchange bullion product -  100 ozt and 400 ozt gold bars and 1,000 ozt silver bars.

They cannot supply South African Krugerrands, American Eagles and Buffaloes, Canadian Maples, Austrian Philharmonics, Chinese Pandas, Australian Nuggets (all 1 ozt). They cannot supply 1 oz or 10 oz gold bars or 1, 10 and 100 oz silver bars. And I have confirmed they cannot sell any European or world gold coins such as British sovereigns, francs, marcs, Mexican pesos etc. etc.

They have confirmed that there is no physical supply at all from the primary marketplace - large refiners and government mints. Worryingly they are being informed that this is not a temporary problem and there are no supply side commitments and there is little in the pipeline for the foreseeable future due to excessive and unprecedented demand.

Secondary supply from the public and retailers is nearly non existent as there are nearly no sellers and nearly all buyers.

Bullion shortages and the confluence of unprecedented supply and limited demand in conjunction with macroeconomic, inflation and systemic factors is leading to extremely bullish conditions for the gold market - probably even more bullish than in the 1970s when gold rose some 3,000% from $35 to over $850 in just 9 years.” - Mark O’Byrne, Director, Gold and Silver Investments Limited

“Dear CIGAs,

What more can be said? The amount of money being discussed today along with the argument of why should the average American have to take on OTC derivative losses (can you imagine anyone reluctant to pay off Wall Street losses?) is not even scratching at the funds that are going to be required. Monty's estimates range from a low of $5 trillion to a high of $20 trillion. Some think the amount might even be higher than Monty's upper estimate. The public is quickly getting the idea of just how bad the problem is while the Wall Street types are still being paid huge bonuses for doing things like creating bankruptcy.

CONSEQUENCES will only increase as the supply of dollars increases. As dollars come under pressure from the excess supply, gold will rise to $1200 and then $1650.

CONSEQUENCES is the stuff that even spin cannot delay or change.

Look at one days borrowing - Wednesday.

The comforting feeling to the general market is that relief comes Sunday, when a compromised bailout deal will be announced. What few are focused on is that there will be another Sunday, and another Sunday, and another Sunday.

The media has convinced many that this is a one off event that if it does not fix everything, at least the crisis will not reappear.

This covers all one needs to know now.

For those like myself that consider Harry Schultz to be the Dean on markets, I suggest you seek what his opinion is NOW.

Stay the Course.”- Jim Sinclair, JSMineset.com

“December Gold closed up 6.5 at 888.5. This was 2.5 up from the low and 19.5 off the high.

December Silver finished up 0.228 at 13.503, 0.097 off the high and 0.133 up from the low.

Gold prices firmed, but trading was volatile amid wild price swings. The market rallied sharply in the early trade on flight to quality buying after Congress failed to compromise on a government bailout of the financial sector. The gold market nearly traded back to last week's highs on the early move as investors rushed to the safety of hard metal assets and away from the financial market uncertainty. News of the Federal seizure of Washington Mutual Bank, the biggest US bank failure, added to the buying interest in gold. Sharp early session gains in the Yen, which was a reflection of investor's rising risk aversion, may have also provided a buying incentive in gold. But gold trimmed gains as the session wore on, pulling back as the equity markets were able to recover and the Dollar stabilized. Ideas that some sort of government bailout plan could be reached by Monday seemed to convince some traders to book gold profits.

Silver also traded firmer as the metal continues to key off of the gold market's direction. Jitters in the financial markets and a stalled government bailout plan attracted flight to safety buying in silver. But the market was confined to a well defined range as gains in silver were likely capped by weakening global economic conditions which affects silver due to its status as a quasi industrial metal. The downward revision in 2nd quarter GDP may have tempered the bull camp a bit. Concerns over base metal demand was certainly reflected in the sharp drop in copper prices which seemed to limit flight to quality gains in silver.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

David Morgan: How to get real metal from commodities exchanges

Bank borrowing from Fed reaches record $188 billion a day

Largest bank failure in history couldn't wait for Friday night

U.S. Mint runs out of 1-ounce gold buffaloes

U.S. financial dominance is over -- and it's Germany saying so, not just Iran

The Statistics:

As of close of business: 9/25/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 1.23 tonnes and the ASX added 1.54 tonnes.

COMEX Gold Trust (IAU)

 Note: Change in Total Tonnes from yesterday’s data: 0.76 tonnes were added to trust.

Silver Trust (SLV)

 Note: Change in Total Tonnes from yesterday’s data: 27.66 tonnes were added to trust.

The Stocks:

Sterling Mining’s (SRLM.OB) litigation was the only big story in the gold and silver mining industry making headlines Friday.

WINNERS

LOSERS