Gold Seeker Closing Report: Gold and Silver Fall Almost 3% While Stocks, Dollar, and Oil Also Drop

-- Posted Wednesday, 7 January 2009 | Digg This Article Digg It!

| | Source: GoldSeek.com

	Close	Gain/Loss
Gold	$840.15	-$24.60
Silver	$11.095	-$0.325
XAU	111.29	-8.37%
HUI	269.97	-8.14%
GDM	822.71	-8.36%
JSE Gold	2277.38	+76.07
USD	82.25	-0.58
Euro	136.34	+1.19
Yen	107.97	+1.22
Oil	$42.63	-$5.95
10-Year	2.494%	-0.011
T-Bond	132.6875	UNCH
Dow	8769.70	-2.72%
Nasdaq	1599.06	-3.23%
S&P	906.65	-3.00%

Gold and silver remained near unchanged in Asia and London before they dropped as much as 3.38% and 4.82% to $835.55 and $10.87 by midmorning in New York and then cut into their losses a bit by early afternoon, but they subsequently fell back off in the last hour of trade and ended with losses of 2.84% and 2.85%.

Euro gold fell to about €615, platinum gained $13 to $973.50, and copper fell over 7 cents to about $1.50.

Gold and silver equities fell over 5% about an hour into trade before they cut into their losses slightly by about noon EST, but they then fell back off to new lows along with the major indices in afternoon trade and the miners ended with over 8% losses on the day.

There were no major economic reports today, but the ADP Employment report showed a greater than expected loss of 693,000 jobs in December, “the most since ADP Employer Services began its gauge based on payroll data in 2001.”

“The U.S. budget deficit will swell to a record $1.186 trillion in fiscal 2009 as the global recession saps the economy, congressional forecasters said on Wednesday.”

“Applications for U.S. residential mortgages slipped from a five-year high last week as homeowners delayed refinancing ahead of expected federal action to lower housing costs, an industry group said on Wednesday.”

The American Bankers Association also reported consumer loan late payments at a 28-year high.

Oil fell 12.25% and the most in over 7 years as inventories grew much more than expected and more poor economic indicators increased worries over falling demand. Crude inventories built 6.7 million barrels, gasoline inventories built 3.3 million barrels, and distillates rose 1.8 million barrels.

The U.S. dollar index plummeted and bonds remained near unchanged as the Dow, Nasdaq, and S&P fell about 3% on poor company reports and the ADP Employment report that showed a record high drop in jobs.

Among the big names making news in the market today were Family Dollar, Time Warner, Monsanto, Intel, and Alcoa.

That is really all one needs to know to explain today’s price action across the entire gamut of commodities, gold included. I warned yesterday that the dipsticks that run these pestilential institutions will spin on a dime and do the exact opposite of what they did the day before whenever their little black boxes tell them to. The “strategy” of these ninnies consists of throwing money en masse into whatever markets their algorithms tell them to or withdrawing it all at once should the same computer command them to do so the very next day. This is what passes for trading nowadays. Let me let you in on an apparently little-known secret – this is not trading – trading is a skill that some of us have been plying for many, many years which consists of long, hard hours of research and analysis, meticulous planning and sound money management techniques. What we have today among the index funds is more closely akin to craps, which is better suited to Las Vegas or some other gambling casino.

What has set off this particular rash of idiocy is the rebalancing of the various commodity indices which have lowered the weightings of some commodities while raising the weightings of others. This has resulted in both front running ahead of the actual date that the new changes go into effect as well as some preliminary action by the funds. Again – no questions asked – no attempts to finesse a movement of positions – what we get is a big “KERPLUNK!” with enormous sums of money being shoved into markets or withdrawn from markets irrespective of the effects of such massive one-sided flows. There was once a time when large traders knew how to slowly and gradually move money into and out of markets in a manner which allowed them to position themselves somewhat furtively by making only minimal disruptions to prices. Those days are long gone since we now have the Pac-Man crowd and the Mortal Kombat generation who are manning the trading desks at these firms. Maybe they are looking for the combination of the right keys to press to produce a power move that will allow them to gobble up all the competition. Nothing else can explain this display of such ineptness and clumsiness. Personally, I am insulted to be grouped in the category of a trader if these people define what trading consists of.

Regardless, gold was beaten down as a result as were many other commodities which only yesterday were soaring upwards only to abruptly reverse course and puke out all of those gains. That is why I said you have to be careful trying to read too much into the price action of these markets right now because they are being governed by other factors than fundamentals. It is all a money flow game which is why scalping, or short term trading is about the only way to trade these things right now, at least until the fools running these hedge and index funds calm down a bit.

Let me make one further comment about the reduction in the gold weighting in some of these indices – Do any of you recall back in 2006 just prior to the midterm elections here in the US when Goldman Sachs inexplicably made a change in their commodity index and reduced the weighting of unleaded gasoline? That resulted in a huge sell off in that market which “fortuitously” knocked the price of gasoline lower right in front of the elections. Hmmm. Those who own the index can of course do whatever they want with it but I personally feel that this is another area where shenanigans are much too likely. Given the lack of ethics that mark out society, especially in our financial system (can anyone say Madoff), the cynic in me says that anything is possible nowadays and that there is far too much room for “politics” to influence the weightings assigned to various commodities in some of these indices. That is why I still prefer the old reliable CCI or the Continuous Commodity Index over these others. Unfortunately it seems like very few of the index funds use that particular index when assigning money to the various commodity markets.

There are various estimates out there about the amount of gold contracts that will need to be sold in order to bring the funds down to the respective weighting in gold so as to bring themselves into alignment with the new changes to a couple of the indices. I will not bore you with the details but suffice it to say, this is where the selling is coming from. It was also probably given a good kick lower by the appearance of more of the usual selling as gold neared the $880 resistance level. I will say one thing about all this – if you really know the fundamentals of a market and if those fundamentals are bullish, then you can take advantage of the short-sighted stupidity of the funds as their actions present opportunity for traders of convictions who are also well-capitalized. If they insist on indiscriminately throwing away everything of value even at prices below value, then use that to your advantage. The simple fact is that these bozos are here to stay so smart traders (you know – the ones who actually use their brain to trade) will adapt to their presence.” - Dan Norcini, More at JSMineset.com

“February Gold closed down 24.3 at 841.7. This was 5.2 up from the low and 10.8 off the high.

March Silver finished down 0.34 at 11.105, 0.46 off the high and 0.085 up from the low.

The gold market showed signs of attempting to throw off early weakness but in the end a quasi deflationary environment or perhaps even the fear of too much slowing seemed to leave the bear camp with an edge. Not surprisingly noted weakness in the US Dollar failed to provide the gold bulls with much in the way of support and that in turn might have been the result of broad based deflationary sentiment operating in a host of commodity markets. However, seeing gold slide in the face of weak equities, weak oil and a weak Dollar seems to suggest that gold is attempting to embrace its classic commodity market influences and is disappointed by financial market factors.

The silver market tried to put on a positive face early in the trade but as was the case in a number of physical commodity markets today, the combination of a very dismal private jobs forecast, sagging equity prices and weaker oil prices was simply too much for the bull camp to absorb. Given recent action the weakness in the equity market might have been the prime force favoring the bull camp on Wednesday, but seeing copper and platinum prices also markedly lower probably added to the price pressure seen in silver. It is possible that physical commodity markets in general will now be poised to fret over the prospect of weak economic data as the monthly non Farm payroll is drawing closer.”- The Hightower Report, Futures Analysis and Forecasting

Note: Change in Total Tonnes from yesterday’s data: SPDR added 7.65 tonnes to a new record high holding.

Nevsun’s (NSU) outlook, Claude’s (CGR) gold output, Ivanhoe’s (IVN) coal project, Seabridge’s (SA) drill results, Endeavour’s (EXK) drill results, Fortuna’s (FVI.V) drill results, Orko’s (OK.V) year end summary, and Revett’s (RVM.TO) Environmental Assessment were among the big stories in the gold and silver mining industry making headlines today.

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

2009 Outlook for Nevsun - "Nevsun Resources Ltd. (Toronto:NSU.TO - News)(AMEX:NSU - News) ("Nevsun") is pleased to provide its outlook for the Company for 2009. The Company holds the World Class Bisha Project in Eritrea, maintains a strong cash position, benefits from the continued support of the local Eritrea Government and, despite the "credit crunch", has assembled a reputable lending group to provide all necessary additional finance for the Bisha development. The Project is on schedule and on budget." More
- January 07, 2009 | Item | E-mail

Claude Resources 2008 gold output rose 28 percent to 45,466 ounces - "Claude Resources Inc. (TSX:CRJ), a small gold miner based in Saskatchewan, said its 2008 gold production rose to 45,466 ounces, including 13,551 ounces in the fourth quarter and 25,513 ounces in the second half." More
- January 07, 2009 | Item | E-mail

Equinox to defer Zambia uranium plant - More
- January 07, 2009 | Item | E-mail

Kinti Mining Limited Encouraged by Radiometric Airborne Survey of Its Manyoni Uranium Prospect - More
- January 07, 2009 | Item | E-mail

Ivanhoe Mines Ltd.: SouthGobi Energy Resources Receives Approval for the Start of Surface Coal Mining at the Mamahak Coal Project in East Kalimantan, Indonesia - "Peter Meredith, Chief Executive Officer of SouthGobi Energy Resources Ltd. (CDNX:SGQ.V - News), and Gene Wusaty, Chief Operating Officer, announced today that a Location Permit (ljen Lokasi) has been issued by the local government that allows the company to commence surface coal mining of the SW Deposit on the MCM concession at the Mamahak Coal Project in East Kalimantan, Indonesia." More
- January 07, 2009 | Item | E-mail

Golden Peaks Resources Ltd. Announces $585,000 Financing - More
- January 07, 2009 | Item | E-mail

Uranium Star Corp. Announces Results of Annual Meeting of Stockholders and Special Meeting of Board of Directors - More
- January 07, 2009 | Item | E-mail

Canstar Resources Inc. Completes Drilling on CBS Project, Newfoundland; Mary March Hearing Update; New Website Launched - More
- January 07, 2009 | Item | E-mail

ICS Abandons Mokambo Property - More
- January 07, 2009 | Item | E-mail

Hassai Mine Tailings Begin Adding to La Mancha's Gold Resources - More
- January 07, 2009 | Item | E-mail

Clifton Star's Exploration Continues to Yield Encouraging Results at Duparquet Township, Quebec Gold Projects: NI 43-101 Resource Calculations Under Preparation - More
- January 07, 2009 | Item | E-mail

Western Troy Outlines Plans for 2009 - More
- January 07, 2009 | Item | E-mail

Canarc Announces Improved Economic Outlook for New Polaris Gold Mine Project - More
- January 07, 2009 | Item | E-mail

Providential Holdings Subsidiary PHI Mining Group Signs Agreement With Angkor Metal Corporation to Engage in Copper Mining in Cambodia - More
- January 07, 2009 | Item | E-mail

First Quantum Minerals Reports 2008 Copper Production of 334,400 Tonnes - More
- January 07, 2009 | Item | E-mail

MAX intercepts 8.20 g/t Gold over 0.3 m, 209.0 g/t Silver over 0.5 m at Indata - More
- January 07, 2009 | Item | E-mail

Premier - Sutter releases additional high grade gold at Santa Teresa including 16.68 gpt (0.49 opt) across 3.1 metres - More
- January 07, 2009 | Item | E-mail

Tiomin Resources Comments on 2009 Outlook & Strategy - More
- January 07, 2009 | Item | E-mail

Trevali Produces Marketable High-Grade Silver-Lead-Zinc Concentrates From Santander Mine Project in Peru - More
- January 07, 2009 | Item | E-mail

Mountain Lake Provides Year-End Corporate Update - More
- January 07, 2009 | Item | E-mail

Katanga Confirms Proxy Cut-Off Time - More
- January 07, 2009 | Item | E-mail

Champion Minerals Commences Diamond Drilling to Test New Combined Gravity-Magnetic Anomalies at Gullbridge and Powderhorn Properties in Buchans Mining Camp - More
- January 07, 2009 | Item | E-mail

Crosshair & Target Agree to Combine to Create a Solid North American Uranium Asset Base - More
- January 07, 2009 | Item | E-mail

UC Hub Group, Inc. Acquires Mining Assets From Tri-Star Holdings, Inc. - More
- January 07, 2009 | Item | E-mail

Canasia Industries Corporation: Reed Lake Work Program Commences - More
- January 07, 2009 | Item | E-mail

Endeavour Silver Drilling Extends High Grade Silver Mineralization in Alex Breccia Zone at Guanacevi Mines Project, Durango State, Mexico - "Endeavour Silver Corp. (Toronto:EDR.TO - News)(AMEX:EXK - News)(DBFrankfurt: EJD) announces that exploration drilling in late 2008 at the Guanacevi Mines project in Durango State, Mexico, was successful in extending high grade silver mineralization in the Alex Breccia mineralized zone for a total of 150 meters along strike and more than 200 meters vertically below the shallow historic mine workings." More
- January 07, 2009 | Item | E-mail

Fortuna's In-Fill Drilling Results Continue to Confirm High-Grade Mineralization at San Jose Project, Mexico - "The 33,000 meter in-fill drill program was initiated in June of 2008 and is designed to convert a significant portion of the resources in the upper 250 meters of the deposit to the Indicated category. Initial drill results from the program have been previously announced in September, October and November of 2008 (see Fortuna news releases dated September 25, 2008, October 28, 2008 and November 27, 2008). The in-fill drill program is projected to be completed by mid-January 2009 and has been designed following recommendations by AMEC E&C Services Inc. indicating that a drill spacing of 31 meters will be required for classification of the resources to the Indicated category." More
- January 07, 2009 | Item | E-mail

Orko Silver Provides 2008 Year End Summary - "Calendar Year 2008 represented a significant expansion of the Martha Vein with four diamond drills turning until October when the Company cut back to two drills in order to preserve working capital. All drills were idled in early December, with present plans to resume drilling early in 2009, subsequent to the issuance of the Company's upcoming sixth resource estimate being conducted by Mine Development Associates of Reno, Nevada (MDA), and incorporating their recommendations for ongoing drill testing." More
- January 07, 2009 | Item | E-mail

Seabridge Gold Reports Final 2008 Drill Results From Sulphurets Zone - "Results of the final two drill holes from the 2008 program at the KSM project continue to confirm the extension of a higher grade breccia zone in the Sulphurets resource area. These two drill holes were added to the 2008 program after positive results on Seabridge's first drill hole into the target. These results are expected to expand the Sulphurets resource model down-dip and along strike to the north and west. " More
- January 07, 2009 | Item | E-mail

Revett Receives Approval of Rock Creek Environmental Assessment - "Revett Minerals Inc. (RVM-TSX) ("Revett" or "the Company") 67% held subsidiary, Revett Silver Company, and its wholly owned subsidiary RC Resources Inc. is pleased to announce it has received notice from the Montana Department of Environmental Quality (MDEQ) that the draft Environmental Assessment (EA) covering final design modifications of the Rock Creek Project, located in Sanders County Montana, has been approved as final with several stipulations." More
- January 07, 2009 | Item | E-mail

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