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Gold Seeker Weekly Wrap-Up: Gold and Silver Fall About 3% on the Week
By: Chris Mullen, Gold-Seeker.com


-- Posted Friday, 2 March 2012 | | Disqus

 

Close

Gain/Loss

On Week

Gold

$1711.60

-$3.10

-3.41%

Silver

$34.73

-$0.70

-2.80%

XAU

194.22

-1.72%

-2.94%

HUI

523.37

-1.98%

-3.41%

GDM

1521.03

-1.89%

-3.05%

JSE Gold

2657.48

-26.70

-5.37%

USD

79.42

+0.61

+1.37%

Euro

132.03

-1.15

-1.89%

Yen

122.30

-1.01

-0.94%

Oil

$106.70

-$2.14

-2.80%

10-Year

1.986%

-0.051

+0.46%

Bond

142.65625

+0.75

-0.24%

Dow

12977.57

-0.02%

-0.04%

Nasdaq

2976.19

-0.43%

+0.42%

S&P

1369.63

-0.32%

+0.28%

 
 

 

The Metals:

 

Gold saw slight gains in early Asian trade, but it then chopped back lower in London and New York and ended with a loss of 0.18%.  Silver slipped to as low as $34.34 and ended with a loss of 1.98%.

 

Euro gold rose to about €1296, platinum lost $6.50 to $1691.50, and copper fell a couple of cents to about $3.90.

 

Gold and silver equities fell about 2% by midafternoon and remained near that level for the rest of the day.

 

The Economy:

 

U.S. housing market, fiscal policy pose risks: IMF Reuters

Pact for budget discipline signed by 25 EU states Reuters

Geithner Shows Own 'Amnesia' Over Bank Crisis: Bove Yahoo

Wage Gains in U.S. Lay Ground for Stronger Consumer Spending This Year Bloomberg

 

There were no major economic reports today.  All of this week’s other economic reports:

 

Construction Spending - January

-0.1% v. 1.4%

 

ISM Index - February

52.4 v. 54.1

 

Personal Income - January

0.3% v. 0.5%

 

Personal Spending - January

0.2% v. 0.0%

 

PCE Prices - Core - January

0.2% v. 0.1%

 

Initial Claims - 2/25

351K v. 353K

 

Chicago PMI - February

64.0 v. 60.2

 

GDP Deflator - Q4

0.9% v. 0.4%

 

GDP - Q4

3.0% v. 2.8%

 

Consumer Confidence - February

70.8 v. 61.5

 

Case-Shiller 20-city Index - December

-4.0% v. -3.8%

 

Durable Orders - January

-4.0% v. 3.2%

 

Durable Orders -ex Transportation - January

-3.2% v. 2.1%

 

Pending Home Sales - January

2.0% v. -1.9%

 

Next week’s economic highlights include Factory Orders and ISM Services on Monday, ADP Employment, Productivity, and Consumer Credit on Wednesday, Initial Jobless Claims on Thursday, and February’s jobs data, Wholesale Inventories, and the Trade Balance on Friday.

 

The Markets:

 

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

 

Oil fell and the U.S. dollar index rose as the euro dropped after Spain set a deficit target that was not as strict as agreed upon in the European Union's new fiscal pact.

 

Treasuries rose as the Dow, Nasdaq, and S&P traded mostly slightly lower on renewed worries about Europe.

 

Among the big names making news in the market Friday were Kodak, Yelp, and Toyota.

 

The Commentary:

 

Yesterday the S&P 500 give a hint that it might be forming a sort of interim top as it shot to a brand new 52 week high only to move steadily lower throughout the rest of the session closing below the previous day's low. That constitutes a downside reversal day on the price chart, normally a powerful bearish signal.

Once again, as has often been the case in this market, once the liquidity spigots are wide open, no downside follow through was seen. Early in the overnight session there was some light selling but nothing heavy. Today, this market is once again working on testing yet another new 52 week high. The session is not over yet so we might still see some late selling efforts but no matter if that does show up, the perma bulls once again have prevailed in this one way market.

 

(I wish to interject here that no matter how high the US stock market might run and how long the rally lasts - you will be fortunate if you ever hear the word, "OVERBOUGHT" pronounced by the talking heads, whom I might add are always SWIFT TO PRONOUNCE GOLD AND SILVER OVERBOUGHT. It seems that the stock market can never become overbought since that is equivalent to some sort of financial blasphemy). Nope, overbought is a one way term reserved for the gold and silver markets by these yahoos.

 

I am noting however that the bond market is showing some heavy selling pressure in today's session. Whether that too will last is anyone's guess, particularly with the Fed through its primary dealers fooling around in that market and working to artificially distort interest rates.

 

Note on the bond chart the market dropped to the bottom of the 4 month old trading range and is trying to bounce. My guess is that the crony pals of the Federal Reserve, the primary dealers, are buying furiously to try to prevent long term interest rates from getting away from their control.

 

What the dishonest Fed is trying to do is convince the investment/trading community that the economy is in decent shape and is moving in the right direction (here is their subliminal message - GO AND BUY STOCKS; GO AND BUY STOCKS; GO AND BUY STOCKS), so that they can get their rising stock market and pull up consumer confidence, but is not in good enough shape to have long term interest rates begin a steady climb. That would be a gigantic NO-NO. "OH, it is good but not that good". Subliminal message repeats - GO AND BUY STOCKS BUT DO NOT SHORT THOSE BONDS.

 

If this bond market breaks down, it would signify a change in psychology among the interest rate community and illustrate the need for a new subliminal message crew from the Federal Reserve.- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

 

My Dear Extended Family,

 

The history of this period will focus attention on two economic clutch type events. These events will have mandated the need for the construction of a new monetary system utilizing a virtual reserve currency traded only by central banks. This reserve currency will be related to gold via a global Western world M3.

 

An economic clutch type event is one that by its occurrence allows the world to shift gears and change into a new economic velocity and direction.

 

The first economic clutch event took place when the decision was made that the US Federal Reserve and US Treasury would not support a rescue of the prestigious investment firm of Lehman Brothers. By doing this, they threw that institution and all of its transactions in which it was the deficit other party into default via bankruptcy.

 

Before then the entire OTC derivative debacle had a simple but extremely controversial solution. The tactic would have been similar to the means of nullifying the effect of the historic failure of the Savings and Loan Institutions during the last great housing recession. This at hand solution was to net the entire global derivative problem into a singular institutions named the Derivative Bank. At that time all OTC derivatives which were established would be returned to the instance of establishment when obligations netted almost zero. It was the institution of Lehman as a bankruptcy that removed the ability to net out to near zero from the daisy chain of global derivatives. To bring the daisy chain of OTC derivatives to net the winner would have to place their paper winnings into the pool and the paper losers would have placed their paper losses back into the pool. This would have reduced the entire loss to only part of the earnings on the banking institution from 1991 (the birth of the derivative use globally) rather than the more than now 20 trillion dollars worth of liquidity required to fund the winners who have benefited mightily from that windfall we financed.

 

The forced flushing of Lehman Brothers is therefore the economic clutch event that brought quantitative easing to provide the rescue funds to finance the winnings of the global Western world financial system. The downshift was from 5th gear to 1st gear that nearly blew up the world economic engine.

 

We now have had the 2nd Western world economic clutch event that will shift the gears directly from the plodding along in 1st gear economically into reverse gear, therein blowing the transmission and engine simultaneously. This event is the ISDA blessing of the credit event which reduced the value of Greek debt to its holders by 70% without triggering a default. They have now made it virtuous to walk away from the once lest risk loans, loans to Western governments. Such a walk away is now deemed a credit event, not the dirty D word, default.

 

A pattern of action has been set in place now which takes QE, the gift from Lehman’s economic clutch event, to QE to infinity, the direct result of the Greek economic clutch event that was declared via the International Swaps and Derivative Association. These Gods of Mammon declared 70% of the Greek sovereign debt to be valueless without guilt, sin or consequences.

 

Replacing the lost value from the sovereign credit event (non-default) in this paper selectively to the banking system makes unlimited creation of liquidity an act of virtue and blessedness.

 

To assume that other nations facing the same problems will not wish the same treatment is madness. To assume the private sector facing the same problems will not demand the same treatment is madness. Therefore QE to infinity is now deemed an act of virtue and blessedness.

 

A 70% haircut in the value of the Greek sovereign debt does not constitute a credit event defined as a credit default according to the most powerful financial entity on the planet, the ISDA. This group is more financially influential than governments today. This decision by the revered members of the Association’s Determinations Committee has acted to prevent the notional value of all the credit default swaps, an OTC derivative, from becoming real value as would occur if the CDSs were called upon to function.

 

The ISDA has, according to MSM, taken offense to being described as secretive in its proceedings. The ISDA said minutes of the meeting of the committee would not be publicly distributed as the decision was unanimous.

 

What has occurred in what is now described as “the successful handling of the Greek problem” by the ECB is in fact a total disaster for mankind in its introduction of QE to Infinity as the blessed settlement to a problem that now is more severe than it was prior to the Lehman event. That problem is that the mountain of OTC derivative has not been attended to, but rather has grown to include the size of all Western world sovereign debt as it is all western sovereign debt that is now threatened by an event of default on a national level. That will simply occur regardless of whatever the ISDA says. Much of it will not be paid, period.

 

This enfranchised QE to infinity sets a floor via Chinese gold acquisitions to any reaction in price. Alf Field’s price objective of gold at $4500 is by this 2nd economic clutch event now in the crosshairs of the gold price.

 

Gold prices staying high have now been guaranteed. Further to that, those intelligently managed gold producers internationally will shift to dividend payers of note, transforming the gold industry into the utility type equity of the future. Opinions expressed to the opposite are simple exercises in economic ignorance.

 

Gold’s price reactions, when they do occur, will be violent and very short lived. This is fact.

 

Respectfully,”- Jim Sinclair, JSMineset.com

 

“U.S. Stock Market – Despite numerous bearish long-term fundamentals, I’ve stated the market’s least resistance is up. While not a card-carrying member of the “Don’t Worry, Be Happy” crowd, I’ve managed to avoid taking any bearish strategies and thus not becoming part of the perma-bear carnage that has grown since the bottom in March 2009.

 

Having said that, I do think it’s time to start preparing for the top in this massive countertrend rally in a secular bear market that began back in late 2007. Somewhere between here and the marginal new, all-time high I suggested the DJIA could reach, I feel selling non-metals related shares seems wise. I would like to be mostly in cash (except for mining shares) before years-end.

 

I know the question many now have – what about resource stocks? Selling in May and going away may just be wise this year but for now, all systems remain go.

 

I do believe on the first news of a large-scale military conflict with Israel and Iran, we shall likely expedite any selling still left to do.

 

Stay tuned!”- Peter Grandich, Grandich Letter

 

GATA Posts:

 

 

Inflation not as low as you think, American Institute for Economic Research says

Probability of central bank intervention against gold rattles Gartman Letter

Kevin Michael Grace and J.S. Kim on gold market manipulation

James Turk: Mining stocks -- still on the runway

Brazil declares new 'currency war' against foreign devaluations

Sharps Pixley's Norman blames gold smashing on single seller 'out for effect'

 

The Statistics:

Activity from: 3/1/2012

Gold Warehouse Stocks:

11,461,276

-

Silver Warehouse Stocks:

130,439,118

+21,758

 

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 

Product name

Total Tonnes

Total Ounces

Total Value

New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchange (TSE) AND Hong Kong Stock Exchange (HKEx)

SPDR® Gold Shares

1293.676

41,592,971

US$70,970m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra)

Gold Bullion Securities

118.63

3,813,918

US$6,523m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra) AND NYSE Euronext Amsterdam

ETFS Physical Gold

126.23

4,058,350

US$6,985m

Australian Stock Exchange (ASX)

Gold Bullion Securities

14.21

472,708

US$782m

Johannesburg Securities Exchange (JSE)

New Gold Debentures

39.76

1,278,231

US$2,191m

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

 

COMEX Gold Trust (IAU) Total Tonnes in Trust: 181.54: No change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 9,767.00: +27.2 change from yesterday’s data.

 

The Miners:

 

Tanzanian Royalty’s (TRX) drilling contract, Franco-Nevada’s (FNV) update on its corporate activities, Banro’s (BAA) closed debt financing, Barrick’s (ABX) Corporate Social Responsibility (CSR) Advisory Board, and Silver Bull’s (SVBL) appointment of George Rawsthorne P.Eng. to the role of Vice President of Metallurgy were among the big stories in the gold and silver mining industry making headlines Friday.

 

WINNERS

1.  Jaguar

JAG +2.08% $6.38

2.  Banro

BAA +1.87% $5.45

3.  Eurasian

EMXX+1.16% $2.60

 

LOSERS

1.  Midway

MDW -6.67% $1.68

2.  Golden Minerals

AUMN -5.87% $7.86

3.  New Gold

NGD -4.63% $10.92

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

 

- Would you like to receive the Free Daily Gold Seeker Report in your e-mail? Click here

Additional Resources for today’s Gold Seeker Report can be found:

© Gold Seeker 2012

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

 

 

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

 


-- Posted Friday, 2 March 2012 | Digg This Article | Source: GoldSeek.com

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