-- Posted 30 November, 2005 | | Source: SilverSeek.com

Market Analysis from GoldSeek.com, SilverSeek.com & CapitalUpdates.com:

The prices paid component of Chicago PMI rose to a 26 year high of 94.1 and raised inflation fears.  The Fed’s Beige Book noted that the economy is strong and prices remain stable.  There were no clear indications hinting towards a change in language at the Fed’s next meeting in December.

More on the GDP report from Jim Willie CB:

“GDP is adding price inflation
its reported Q3 economic growth is final at +4.3% growth
it is more like 1%, if that, if done accurately

but then again, the USGovt engaged in consistent systematic deception

yes, my Republican friends, this is a deception

but under Clinton, the deceptions all began and became engrained

we have at least 3% cheated vig from pure price inflation
prices paid in Chicago PMI was up sharply
higher prices are across the board for energy and materials
the culprit mechanism is in the deflator, intended to remove price inflation
if that mechanism is turned off, then inflation is interpreted as growth !!!

the GDP Deflator is running a full percent below CPI
the CPI is at least 3% too low
the pre-Clinton CPI calculation formula shows +7.5%

now the spin is .....
the Gulf Coast hurricanes shaved 1% off GDP
add it in and you get over 5% GDP growth

THE ONLY PROBLEM IS THAT THE 1% REFERENCED SHOULD BE SUBTRACTED
IN FACT, PERHAPS 4% SHOULD BE SUBTRACTED
the GDP Deflator over 21 months shows +5.1%
the GDP Deflator is up only 2.86% from Q3 to Q3, yr over yr

an accurate GDP Deflator should be up 5% to 8% annually !!!

this is absurd, a real big untold story
the more price inflation we get, the more growth it is labeled
if energy prices come down in Q4 reports, then so will GDP

since the great majority of our economic growth is improperly adjusted price inflation, or rather GDP growth is purely price inflation not removed one iota

/ Jim”

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 11/26 expected at 325,000, Personal Income for October expected at 0.5%, and Personal Spending expected at 0.2%.  At 10AM is Construction Spending for October expected at 0.5% and the ISM Index for November expected at 58.0

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Gold initially traded back above $500 in New York Access trade late yesterday, but it then fell off markedly in Asia with further selling pressures in European trading before rebounding some in New York.  The yellow metal did settle the day off its lows, but it still ended the session with notable losses to fall from 17 and ¾ year highs.  Silver followed a similar pattern, but a spike upwards at the end of trading helped it to close with just minor losses.

Platinum lost $20 to $969 to fall from 25 year highs, palladium lost $5 to $257 to fall from recent 18 month highs, and copper climbed back above $2 to make new all-time highs.

Gold and silver equities dropped about 1.5% at the open and remained at about that level for most of the morning before falling off further in the afternoon and closing near their lows with about 3% losses.  Selling in the metal equities followed a similar pattern seen in the general US equity market with volume tapering off of recent days’ averages.

More Precious Metals Analysis:

“The precious metals markets remained under the profit taking tilt and were not necessarily pressured by strength in the Dollar. In fact, the market could have been supported by news from Japan that November retail gold demand was very strong but instead longs were content to bank profits. With the platinum market showing significant declines ($22) we have to think that gold and silver were mostly following the lead from platinum. Inflation news during the session was mostly mixed with the Chicago Purchasing Managers prices paid index rising sharply and the PCE Index reading showing a slight down tick.” - The Hightower Report, Futures Analysis and Forecasting

The U.S. dollar index gained slightly in morning trade on strong economic data, but it soon fell off to near unchanged as traders wait for a possible interest rate hike by the ECB tomorrow.  The yen fell to new 27 month lows.

Oil made new 5 month lows overnight before working back to near unchanged ahead of the inventory report that saw crude inventories drop 4.2 million barrels, gasoline inventories drop 500,000 barrels, and distillate stocks build 3.4 million barrels.  All three were expected to have slight builds so the large drop in oil inventories and the large build in distillates caught the market by surprise, but the 2 surprises cancelled each other out and oil remained mixed and near unchanged in choppy trade following the report before ending the day near its highs with a decent gain.

Treasuries traded slightly lower on strong economic data that sent interest rates higher.

The Dow, Nasdaq, and S&P opened higher on the strong GDP report, but all three indices fell off in afternoon trade and ended near their lows on fears that the fed will continue to raise interest rates.

Among the big names making news in the market today were Research in Motion, Apple and Intel, Delta, GlaxoSmithKline, Tiffany, GM, Ford, Toyota, Honda, Nasdaq and Instinet, TDC, Smithfield Foods, Yahoo, and Intel and TiVo.

Gold & Silver Stock News Update from GoldReview.com:

Kinross Gold’s filed financial statements, Gold Reserve’s Brisas quarry concession in Venezuela, and Apex Silver’s halted construction at a silver mine in Bolivia due to protests were among the big stories in the gold and silver mining industry making headlines today.

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- Written by Chris Mullen

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

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