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-- Posted Tuesday, 14 October 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

Gold rose $14.50 to $854 in London before it saw about 1% losses at as low as $830.80 by late morning in New York and then rallied back higher in the last couple hours of trade, but it still ended with a loss of 0.17%.  Silver rose 38 cents to as high as $11.15 at the New York open and then fell slightly to as low as $10.65 by about noon EST, but it then rallied back higher into the close and ended with a gain of 1.67%.

Euro gold closed at about €613.50, platinum gained $36.50 to $1024, and copper gained over 8 cents to about $2.41 to add to yesterday’s 18 cent gain.

Gold and silver equities rose about 5% by early afternoon before they then fell back off to about unchanged with an hour left to go in trade, but the miners then rallied back higher into the close and ended with about 3% gains.

The Economy:

There were no major economic reports today, but the US government announced plans to spend $250 billion to buy stock in private banks with hopes that it will inject confidence in the banks and get them lending again.  Treasury's Paulson statement on bank equity plan  Reuters

Tomorrow at 8:30AM EST brings PPI for September expected -0.4%, Core PPI expected at 0.2%, the NY Empire State Index for October expected at -10.0, Retail Sales for September expected at -0.7%, and Retail Sales excluding autos expected at -0.2%.  At 10AM is the Business Inventories report for August expected at 0.5% and at 2PM is the release of the fed’s Beige Book.

The Markets:

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

Oil saw nice gains in early trade, but it then fell back off and ended lower again on more demand concerns.

The U.S. dollar index traded mostly slightly lower as market participants considered the implications of the latest step in the government’s bailout plan.

Treasuries fell as interest rates rose in reaction to yesterday’s large stock rally during which the bond pits were closed.  Well noted by Rick Santelli on CNBC today was that bills issued by the treasury are yielding 0.5% to 1.10% while bills issued by GSEs like Fannie and Freddie are yielding a substantially higher 1.95% to 2.70%.  If the bailout were working, the spreads between treasury and GSE yields should be much lower if not non-existent.

The Dow, Nasdaq, and S&P opened higher to add to yesterday’s remarkable gains, but all three indices then fell back off for most of the rest of the day and ended modestly lower on profit taking and apprehension about what is ahead.

Among the big names making news in the market today were Linen ‘n Things, Domino’s, and PepsiCo.

The Commentary:

“Dear Friends,

To answer the deluge of question today breaking over me like Hurricane Katrina:

If this disaster was under control there would not be three financial giants speaking so far today. Actually I want another Nobel Laureate, Dr. Brenner, to stand up and be counted.

Iceland's collapse is no small event. It is not something meaningless that cannot be applied to a broke giant like the USA whose debt to non US entities are enormous problem from banks to government.

This morning the stock market in Iceland, after a three day stop, opened up down 77%. The Krona is in the tank.

The very few in Iceland that survived their crisis are those that, against all advice from every corner, held gold. They are sound and solvent. When this happens to a country their distribution means melts down. Then it is a rush to buy everything you will need for a minimum of 90 days, maybe much longer.

Gold was up $20 in non-US hours, but got mauled by intervention to the negatives and is now slightly higher regardless of the US dollar’s nature.

Think about the load of garbage suggestion that Europe has more problems than the US. That is an Urban Legend without substance. You will see!

This window dressing has 21 days to go because it is more political than it is economic.

That does not mean the Exchange Stabilization fund is non-existent except as an order from the Secretary of the USA to his preferred brokerage firm to sell gold in the paper market. That broker does not even try to hide their actions in either the gold market or equity index related vehicles. The second Goldman appears, every local jumps to whatever side they proudly demonstrated. Such a position of ego usually occurs only at or near the end of that Financial God's name.

Those of you that erroneously think this can never end have never lived through this before. I have lived here for 50 years and am well aware of how the ultimate currency acts.

Gold is insurance against bailouts, busted banks, money market funds like Reserve Funds which have missed their promised payback today, conflagration in the OTC credit default and other varieties of credit derivatives, enormous and unprecedented expansion, regulatory bodies that ignore rape and pillage as well as many more potential financial disasters in themselves… ”- Jim Sinclair, JSMineset.com

“December Gold closed down 3 at 839.5. This was 5.5 up from the low and 15.5 off the high.

December Silver finished up 0.27 at 11.06, 0.12 off the high and 0.32 up from the low.

All things considered the gold market over the last two trading sessions probably surprised a large portion of the bear camp. In fact with a record run up in equity prices on Monday morning and some rather impressive initial follow-through on Tuesday morning one might have expected gold to come under intensive liquidation pressure. Perhaps the flight to quality longs in gold are still of the mind that the financial crisis is still a threat. On the other hand, it is possible that further declines the US Dollar have temporarily replaced flight to quality buying as the primary driving force in the gold market.

After an early attempt to rally in the wake of ongoing gains in the number of physical commodity markets, the silver market fell back by as much as 48 cents before it mounted an early afternoon bounce. For most of the trading session the silver market woefully lagged behind the copper and platinum markets, but in the end it was that a number of physical commodity markets were tying their wagons to the stock market.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Toni Straka: Gold bullion shortage, spot prices in contradiction

GoldMoney's James Turk interviewed on Korelin Economics Report

CFTC 'looking into' gold market as well as silver

Steve Hickel: The golden bailout plan

U.S. Govt. merges with Morgan Chase, Goldman Sachs

Dominic Lawson: It all went wrong when we left gold standard

GATA's Ed Steer interviewed by Al Korelin

Private commodity traders losing trust in counterparties

Libor dollar rates drop amid stepped-up bank rescues

Gold price manipulation makes it back on CNBC

Ted Butler: The masters of destruction

Take delivery from the futures exchanges

The Statistics:

As of close of business: 10/13/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

COMEX Gold Trust (IAU)

Silver Trust (SLV)

The Stocks:

Freeport’s (FCX) review of capital projects, Gammon Gold’s (GRS) trading on the NYSE, Paramount’s (PZG) assay results, Great Panther’s (GPR.TO) production, Endeavour’s (EXK) production, Metalline’s (MMG) commonly asked shareholder questions, International Minerals’ (IMZ.TO) share repurchase program, and Coeur’s (CDE) production guidance 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:

Great Panther Continues Record-Setting Trend With Q3 Production - "Great Panther Resources Limited (Toronto:GPR.TO - News) (the "Company") is continuing the trend of record production at its 100% owned Mexican mines. The Company has successively increased production in nine of the eleven quarters since commencing production in the first quarter of 2006." More
- October 14, 2008 | Item | E-mail

Lounor acquires the Tiger Gold Property - More
- October 14, 2008 | Item | E-mail

Golden Dory Completes Airborne EM at the Sterling Copper Project, Newfoundland -- Rock Sampling Returns Cobalt and Silver - More
- October 14, 2008 | Item | E-mail

Laurion Samples 65.7 g/t Au at Sturgeon River Property - More
- October 14, 2008 | Item | E-mail

MacDonald Mines Increases its Newly Acquired, Highly Prospective Base Metal Property in Sachigo Greenstone Belt by Entering into JV with Escape Gold - More
- October 14, 2008 | Item | E-mail

Oromin Explorations Ltd.: Progress at Santa Rosa Oil Project, Argentina - More
- October 14, 2008 | Item | E-mail

Forsys in Exclusive Negotiations Regarding Potential Sale of Company - More
- October 14, 2008 | Item | E-mail

Nevada Copper-Intersects 128 Meters (421 Feet) of 0.58% Copper in the Open Pittable South Deposit - More
- October 14, 2008 | Item | E-mail

Queensland Minerals Ltd. Completes Non-Brokered Private Placement Raising $1,903,500 - More
- October 14, 2008 | Item | E-mail

Amarc's Exploration Programs Defining New Massive Sulphide Deposit Targets in Central BC - More
- October 14, 2008 | Item | E-mail

Geoinformatics Completes Drilling On Its Molybdenum-Copper Prospect in British Columbia - More
- October 14, 2008 | Item |