-- Posted 14 December, 2005 | | Source: SilverSeek.com

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

Import Prices dropped the most since April 2003 and Export Prices had their largest drop since December 1991.  The trade deficit rose to yet another record high despite near record exports and showed record deficits with China, Canada, Mexico, OPEC, and the European Union.  The trade deficit for the year now stands at $598.3 billion and stood at $503.9 billion at this point last year.  The U.S. now stands just $19.3 billion short of the record high trade deficit of $617.6 billion set last year, putting the country on track to set a new record high at about $718 billion.

Tomorrow at 8:30AM EST are CPI for November expected at -0.4%, Core CPI expected at 0.2%, Initial Jobless Claims for 12/10 expected at 320,000, and the New York Empire State Index for December expected at 18.5.  At 9AM are Net Foreign Purchases, at 9:15AM are Capacity Utilization for November expected at 79.8% and Industrial Production expected at 0.5%, and at 12PM is the Philadelphia Fed manufacturing index for December expected at 15.0.

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Gold started off immediately lower in Asia around $515 before falling near $510 in London and then dropping even further in New York to end near its lows of the day with a 2.65% loss.  Silver also fell off in Asia and London, but in then rebounded in New York trade and actually found small gains for a brief period before it fell off into the close and ended near its lows with a 1.53% loss.

Platinum fell further from 25 year highs and lost $27 to $958, palladium fell further from 19 month highs and lost $9 to $259, and copper fell down near $2 per pound.

Gold and silver equities traded about 1% lower Wednesday morning before falling further in afternoon trade and ended near their lows of the session with over 2% losses.

More Precious Metals Analysis:

“A big range down slide in prices seemed to foster wave after wave of stop loss selling. Surprisingly an up tick in the US Trade Deficit failed to inspire the buyers in gold from a flight to quality perspective. Furthermore, a sharp slide in the US Dollar failed to inspire the buyers and that is an equally disappointing development for the bull camp. However, all the metals were significantly overbought and in need of a major profit taking. As long as the outlook for the global economy remains positive we would not think that the bull market in metals have run its course.” - The Hightower Report, Futures Analysis and Forecasting

The U.S. dollar index fell off markedly and had the biggest one day drop against the yen in 5 years.  Factors for the sell-off included further selling after yesterday’s fed statement, Japan's Tankan report that showed increased business confidence, and the record high U.S. trade deficit reported this morning that “suggests the dollar needs to weaken in order to make imports more expensive to adjust the balance.”  The U.S. dollar index fell to 6 week lows as the euro index and yen both rose to 6 week highs.

Oil held near unchanged ahead of the inventory report that saw crude inventories build 900,000 barrels, gasoline inventories build 1.8 million barrels, and distillates fall 100,000 barrels.  Oil initially fell to around $61 following the report, but it soon gained back to reach new highs on the session before falling back off and ended near its lows of the session.

Treasuries made impressive gains on the record high trade deficit and on further reaction to the fed’s statement.

The Dow and S&P rose on lower oil and positive company news while the Nasdaq was held lower on Apple downgrades.  The S&P closed at a new 4 and ½ year high.

Among the big names making news in the market today were General Dynamics and Anteon, Honeywell, Qantas and Boeing, Hollinger, Kohlberg Kravis Roberts, Constellation Energy and FPL Group, Winnebago, and Wal-Mart.

Gold & Silver Stock News Update from GoldReview.com:

Vista Gold’s acquired F.W. Lewis properties, Agnico-Eagle’s production guidance for 2006, Banro’s drilling results from the Company's wholly-owned Namoya project, and Hecla’s additional drilling in the Hugh Zone were among the big stories in the gold and silver mining industry making headlines today.

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- Written by Chris Mullen

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