-- Posted Tuesday, 3 January 2012 | | Disqus

The Metals:

Gold soared to as high as $1607.28 by late morning in New York before it fell back off a bit in early afternoon trade, but it still ended with a gain of 2.53%.  Silver surged to as high as $29.722 and ended with a gain of 7.12%.

Euro gold rose to about €1228, platinum gained $34.70 to $1427, and copper gained over 9 cents to about $3.53.

Gold and silver equities rose about 4% by late morning before they fell back off a bit in early afternoon trade, but they then climbed to new highs in the last couple of hours of trade and ended with almost 5% gains.

The Economy:

30-year mortgage falls to lowest level in years MarketWatch

World’s Biggest Economies Face $7.6T Debt Bloomberg

FOMC Minutes from the fed’s December 13^th meeting showed that “Federal Reserve officials will for the first time make public their own forecasts for the federal funds rate at their Jan. 24-25 meeting.”

Tomorrow at 10AM EST brings Factory Orders for November expected at 2.1%.

The Markets:

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

Oil rose over 4% on worries about Iran and the possible closing of the Strait of Hormuz.

The U.S. dollar index and treasuries fell on better than expected economic data that sent the Dow, Nasdaq, and S&P almost 2% higher.

Among the big names making news in the market today were BP and Halliburton, Total, and Sears.

The Commentary:

“It certainly appears that hedge fund managers are hungry for gain this year as they used data coming out of China and India as a reason to plow idled money into commodities and jettison the Dollar. “SAFE HAVEN” was anathema to begin the New Year's trading as bonds are being pummeled in today's session.

The surge in money flows pushed gold and silver sharply higher with Silver leading the gains (as we have said repeatedly - Silver will outperform gold anytime the RISK trade is back on) as it is currently trading near $29.60, up some 6% to start out the New Year. It still remains below $30 however and until it does, stronger hands are going to look to sell silver rallies.

Gold is acting very impressively as it has been able to push through the $1600 level and maintain its footing over this psychological resistance. A good finish to the day (needs to stay over $1600) and it has a good shot at running to $1620 where stronger-handed shorts are going to be waiting for it. If the bulls can absorb that selling, then this thing has a real shot at pushing all the way back towards $1650, which will be the indicator whether or not we can get a trend higher to commence. A short term bottom is in however - now, we will need to see whether the metal can build enough buying momentum to kick it out of a range and into a trend.

There still remains enough of a contingent of traders who remain very leery of bad news out of Europe and until that number dwindles down further, some are not going to be convinced by one day's trading gains, even though those gains are strong.

Aiding the cause of both metals is the recovery in the HUI which has managed to get back into that year-long trading range bounded by 600 on the top and 500 on the bottom. It seems that some of the same funds that were accumulating the shares last year came back in late last week and continued buying this morning. That is a good sign that the bulls were able to thwart a huge bear raid and force some short covering by frustrated shorts as the flows into the sector did not disappear as they had been hoping. The price action is telling us that the same big buyers of the shares are still bullish and see value when these things move lower. The big question in my mind is whether or not they are going to be able to recruit sufficient allies to their cause to really enable a change in the trading range pattern which has defined this sector for more than a year now.

Part of the rally in the commodity sector is being fueled by a sharp rise in the crude oil price as Iran jawbones more nonsense about shutting down the Straits of Hormuz. Let them try as such an event, while it would disrupt world oil flows, would affect their economy far worse. What else are they going to export - pistachio nuts?

I might be a bit more nonplussed than some by all this chatter as I remain very skeptical that Iran would be able to sustain a closure of these straits for very long. My guess is that the Iranian leader needs to gin up local support to take the mind of the oppressed Iranian citizens off of their pathetically lousy economy.”- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

“My Dear Extended Family,

On this first business day of the 2012 New Year, let us keep our eye on the ball of gold fundamentals.

Nothing yet has occurred that would reverse the Formula given to you years ago. Government spending, call it monetary stimulation or entitlements, continues to grow.

Business struggles to perform as people drop off the jobless count, still without jobs. Governments have gambled all on business improvements to offset the loss of revenue versus spending. They have lost.

Nothing has changed and nothing is changing. The best economic figures are bottom bouncing or provided by the problem itself, large lending to those with weak credit, such as in autos.

The din of gold voices is at best confused. The hedge funds have won a battle, but will surely lose the war.

Stay focused, hunker down and stay the course. This is hardcore stuff.

Just like Conrad Colman, the 28 year old sailor who raced around the world in sailboats since he was 16, won his around the world leg into port in his home country of New Zealand, persistence when you have the right stuff brings home first place. We will persist through the mindless algorithms and evil plans of the winderkun master of the universe, the hedgies.

Alf is right. Gold will make new highs.

Each 1,000,000 ounces a gold company has will be worth not millions, but rather billions. The fact that gold is honest money will overcome all the MOPE fiat manufacturers can produce. Conrad Colman never took his eye off the ball regardless of multiple challenges along his life course.

Forty days of battle without seeing land and just skirting the icy dangers of the South Oceans, the youngest crew in the race were always challenged by professional boatmen and wild seas. They never gave in to self doubt and won.

So will we.

Respectfully,”- Jim Sinclair, JSMineset.com

“Those of us who look into a crystal ball end up eating lots of broken glass.”

“The finest gentleman I ever met in nearly three decades of being in and around the financial services industry, Mr. Kennedy Gammage, often said the above when asked for his outlook. At best, some of us can make an educated guess. At worst, one would have been better off with darts. In 2011, yours truly fell somewhere in between.

In a world where “what have you done for me lately” is paramount, I begin 2012 with a mixed bag of thoughts and a sense it shall end up better being a live chicken versus a dead duck. Because I derive a living and much of my personal investing dollars are geared towards an industry where failure is the norm, the junior resource market, I believe I’ve become more realistic of my chances and have borrowed an old slogan of “bet with your head, not over it.” Unfortunately, too many people don’t treat it as gambling and are not prepared financially and mentally to lose part or all their capital – a feat all too common in the junior resource market.

Instead of having a very small amount of high-risk capital allotted to the junior resource segment with a true understanding that failure is the norm and losing part or all of one’s capital is very real, they instead plow a large percentage of their monies and then look to blame anybody but themselves when the odds stacked against them play out. The fact that most of the pundits in this arena never note the dark side doesn’t help.

So first and foremost, to any and all readers of my blog I say that when it comes to the junior resource market, failure is the norm and I will have my fair share of it. Don’t fool yourself into thinking a business where 9 out of 10 companies eventually failed to go the whole nine yards is a place where you should place any capital that you’re not fully financially and mentally prepared to lose.

Keeping in mind that while I comment on various markets, this blog’s main purpose is to feature companies I’m compensated by, I shall endeavor to make “guesses” on what may unfold in the following markets:

U.S. Stock Market – Perhaps the best thing I did in 2011 was not to short this market despite lots of suggestions to, and I ended up making my only trade from the long side. While something unforeseen can take it down hard, it continues to look like for the early part of 2012 that the least resistance is to the upside. I think the “Don’t Worry, Be Happy” crowd will make the argument that the market held up despite an onslaught of so-called bad news like the European debt crisis and, with the U.S. economy grudgingly improving, can push share prices higher.

The key question is, can the November presidential election create another “hope” win for either party and therefore postpone until after 2012 the inevitable horrific fiscal crisis that is coming here at home… no ifs, ands or buts? I don’t know the answer, but I do know it’s not a question of if it gets real bad here, but when.

U.S. Bonds – Personally, I think it’s insane to lend anyone (let alone broke Uncle Sam) money for 10 – 30 years for interest rates of 2-4%. You would have to believe in Santa Claus and the Tooth Fairy and think that Elvis and Jimmy Hoffa are alive on an island somewhere to believe inflation is/will be less than these interest rates over the next 10 -30 years. In the end, I think bonds end up the worst bet for the next 10 years.

U.S. Dollar – Its main competition, the Euro, is in horrific shape at the moment and giving some wind behind the dollar’s sail. The problem with that is the Europeans have at least come face to face with the debt problem. Americans by and large still have their heads buried in the sand and have made an already bad problem worse. I don’t know the date or time, but the ability to kick the can down the road is nearing an end. The price to be paid will be enormous and shall eventually kill the U.S. Dollar.

I continue to believe the Canadian Loonie (dollar) is the only currency to own. I love Canada (I’m working on the Canucks part).

Gold – Whatever lows we make in this current correction (worse case is the low $1400s, best case is low being put in very near term), I suspect it shall be well within the 1^st quarter and by the time 2013 arrives, we shall be at new highs. The mother of all gold bull markets remains, IMHO.

Base Metals – After a couple years of seriously underweighting with base metals, I think many of them are at or near their lows. I especially like zinc and continue to favor copper.

Oil and Natural Gas – Believing a crisis or a series of crises in the Middle East is inevitable, it’s hard to envision oil much lower and can spike to new highs if and when one or more crises raise their ugly heads.

Much more abundant supply of natural gas has taken the air out of a budding new bull market. However, with natural gas at $3 and oil at $100, a long gas/short oil play for the one in one million speculators/gamblers out there who meet the financial and mental toughness to engage such a play is worth considering.”- Peter Grandich, Grandich Letter

GATA Posts:

American Banker notes GATA's efforts to clarify Blinder's position

Peter Brimelow: Gold bugs' unmerry Christmas

Here's what GATA accomplished in 2011; please help us do more in 2012

Paul cites 'shenanigans' with loaned gold

Ex-Fed Governor Warsh again confirms gold price suppression

The Statistics:

Activity from: 12/30/2011

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

Note: No change in Total Tonnes from yesterday’s data.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 171.03: -1.49 change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 9,605.79: No change from yesterday’s data.

The Miners:

Tanzanian Royalty’s (TRX) new investor relations program, Brigus Gold’s (BRD) management changes, and Vista Gold’s (VGZ) management changes were among 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.

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

- Chris Mullen, Gold Seeker Report

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• http://www.capitalupdates.com
• http://www.goldseek.com
• http://www.silverseek.com
• http://www.goldreview.com 

© Gold Seeker 2012

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-- Posted Tuesday, 3 January 2012 | Digg This Article | Source: GoldSeek.com

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