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This week’s economic reports:

Next week’s economic highlights include Personal Income and Spending on Monday, Consumer Confidence and the FOMC policy statement on Tuesday, the ISM Index on Wednesday, Productivity on Thursday, and jobs data, Michigan Sentiment, and ISM Services on Friday.  The OPEC meeting and State of the Union Address on Tuesday may also have an impact on the markets.

Gold fell off in Asia before climbing higher in London to up around $563 in early New York trade, but it then fell off into the close and ended near its lows of the session with a slight loss.  Silver followed a similar rollercoaster ride and climbed up near $9.80 in London before falling off in New York, but its still ended slightly higher to close at a new 18 and ½ year high.

Gold and silver equities jumped about 2% at the open before falling of to near unchanged, but they then held mostly slightly higher into the close to leave the XAU at new 9 and ½ year highs and the HUI and GDM at new all-time highs.  The XAU is now just 8.95 points away from joining the HUI and GDM at new all-time highs.  Its all-time high is 155.74 and was set in September 1987.  A close second to that high is the high of 155.61 made in February 1996.

Euro gold held near €460, platinum gained $5 to $1,060 to make a new 26 year high, palladium gained $2 to $273, copper made new all-time highs above $2.20, and the CRB Index made new all-time highs by gaining 3.5 points to 346.96.

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More Precious Metals Analysis:

We start with a new contributor today, Jim Willie CB of GoldenJackass.com

“The main theme domestically for the USA in 2006 will be the gradual erosion of the housing market. Don't look to national realtor agencies for accurate forecasts. All indicators are pointing toward slower sales, less speculation, more difficult financing, and upward adjustments in monthly costs. The "wild card" is bankruptcy of Fanny Mae, which is the reality in my view. The Q4 GDP data came in a shocking +1.1% today, with the consumer slowing down, Detroit carmakers cratering, and the hurricane damage finally felt.

In the corporate world, story after story point to the pain of absorbing higher internal costs, both from materials (including energy) and from workers. We are approaching the end of the incredibly disastrous Greenspan Era, where all economic theory has been transformed through either lies in statistics or engrained mythology (crazy thinking) to support high asset prices. The final report card for Sir Greenspasm is a current account deficit (trade gap plus investment difference) over 7% of GDP, yet experts proclaim the US Economy is strong and healthy. Apparently a 300-lb man on an all fat (debt) diet who bleeds a quart (liter) of blood (trade gap) weekly is healthy, even though it is a major challenge for him to avoid a heart attack to rush upstairs to void his bowels, or to rush to the dinner table for his next feeding. When Greenspan started his tenure, it took less than $2 in new debt to create $1 in new GDP (business). Now it takes over $4 to generate $1 in new GDP economic activity.

This is a monetary failure, fully required since the rising US Dollar from the 1990 decade to promote US financial assets worldwide led to the departure dispatch of much of our national legitimate wealth apparatus, namely manufacturing. The US is horribly dependent upon cheap money, easy credit, and often 0% finance deals to move inventory. We resemble Japan more than we might realize. The last few years has forced the world to adjust to a declining US Dollar, and a major threat to the central bank reserve holdings.

The world now faces the prospect of the decaying Petro-Dollar system, which is a defacto US$ oil standard. The world's major players are no longer interested in a world monetary system which gives the United States a free ride. They are also not interested in permitting the United States to squander most of the energy supplies available, when Asia seeks a renaissance.

The Iran "problem" entails much more than a nuclear threat. It involves a process wherein most of Central Asia is embracing the Shanghai Coop Group partners, led by Russia, China, and India. They do not want to be dominated by the USA in either commerce or banking. Their resources (like oil and natural gas) are not going to be for the US market to purchase, like first in line. Asia also wants eventually to create a credit market, and not be subject to force feeding into the US Treasury Bond market for all their so-called "savings". These savings are actually exported US monetary inflation.

Big time changes are coming in 2006. The US-centric world must adapt to more Asian influence. Iran is a focal point for that shift in power. During this epic struggle, monetary inflation breeds higher gold and crude oil prices. During this struggle, bank stress from movement away from a US$ domination breeds higher gold and crude oil prices. Watch Russia, the unspoken enemy cloaked in friendship, whose actions are hostile above board and behind the scenes. The Iran threat is really a Russian threat.” - Jim Willie CB of GoldenJackass.com

“The gold market diverged from the generally strong action in the silver and platinum markets. Some traders suggest that the weakness in gold was primarily the result of the rising Dollar but we also think that some players were banking profits ahead of the weekend, while others might have banked profits off the disappointing US GDP reading. There continues to be a significant amount of talk about ETF interest in gold and silver and that would seem to be pulling in fresh buying. Some news stories on Friday morning suggested that the ETF potential demand in silver could be as high as 4,500 tons and that is a very significant and potentially overstated figure.” - The Hightower Report, Futures Analysis and Forecasting

“Gold managed to fight back through the $560 level and in the U.S. this time ahead of the weekend.  The driving force behind the gold price this week has been lack of selling combined with the steadily growing investment demand, particularly from the Exchange Traded Funds.   These forces should continue to push the gold prices, next week.  

Lack of acceptance of these price levels is prompting what selling there is, plus newly mined gold supplies, but this has been insufficient to cause a fall in the gold price.   The longer these prices hold present levels, the quicker the market will come to accept these as sustainable prices, which could bring in the pent-up demand that had been hoping for a fall.” - Julian D.W. Phillips of www.goldforecaster.com

“Funds continued to pile into the silver markets in Europe and early New York trade before some profit taking hit the metal after reaching nearly $9.80.  The main driver continues to be the silver ETF and this is taking to fresh 19-year highs.  Technicals for silver remain overbought, but momentum is keeping the run alive.  Profit taking should be expected as silver approaches the $10 mark with pullbacks finding willing buyers.  Expect volatility to continue.

Today’s weak GDP report, which also showed higher than expected inflationary data, continues to add to the list of negatives for the U.S. Dollar.  It is just a matter of time before we have another leg down in the U.S. Dollar and this will just add to the luster of gold and silver. 

The HUI surged at the open, just shy of the lower end of the 330-340 target level, with gold back above $560 an ounce and silver nearing the $10 mark. With the reversal of early gains in the metals, equities are seeing profit taking after booking nearly a 30 point gain since Tuesday’s lows.” - Peter Spina of GoldSeek.com

The U.S. dollar index fell on GDP data and then rebounded on New Home Sales, with strong inflation data reflected in the Chain Deflator also supporting the index as it may influence the fed to continue to raise interest rates.

Oil traded about $1 higher on worries over the situations in Iran and Nigeria.  Next week’s OPEC meeting was also a dominant topic on the trading floor.

Treasuries started higher on the economically disappointing GDP figure, but record New Home Sales soon turned those gains into losses.  Those losses were short-lived, however, as bonds soon turned back higher and ended near unchanged.

The Dow, Nasdaq, and S&P rose on strong earnings despite weak GDP data.

Among the big names making news in the market Friday were Black & Decker, Arcelor, Chevron, P&G, Gannet, and Microsoft.

Gold & Silver Stock News Update from GoldReview.com:

Metallica’s progress on the Cerro San Pedro project and Apollo Gold’s closed private placement with Jipangu and corporate officer changes were among the big stories in the gold and silver mining industry making headlines Friday.

WINNERS

LOSERS

All of Friday's gold and silver stock news:

SAGE announces grant of options - More
- January 27, 2006 | Item | E-mail

Labor shortage clouds Canadian mining boom - "According to the Colorado School of Mines, there used to be 24 mining-engineering programs across North America. Now there are 14. A decade ago, there were 300 to 400 students graduating from mining-engineering schools. Today there are about 100." More
- January 27, 2006 | Item | E-mail

Colibri Resource Corporation - News Release - More
- January 27, 2006 | Item | E-mail

Lakota Strengthens Board of Directors - More
- January 27, 2006 | Item | E-mail

Brookmount Explorations Positions Company to Benefit From Surging Gold Prices Through Drilling Program on Mercedes 100 Property - More
- January 27, 2006 | Item | E-mail

Olympus-Ivanhoe Debt To Be Acquired By Zedex - More
- January 27, 2006 | Item | E-mail

Franklin Mining, Inc. Hires Bolivian Branch of PKF to Audit Franklin Mining, Bolivia - More
- January 27, 2006 | Item | E-mail

Rare Element Resources Receives $793,000 from Exercised Warrants - More
- January 27, 2006 | Item | E-mail

Northwestern completes airborne survey at Waterbury uranium project in Athabasca Basin, Saskatchewan; Commences geophysics program - More
- January 27, 2006 | Item | E-mail

PolyMet Completes Final Drilling Campaign on NorthMet Deposit - More
- January 27, 2006 | Item | E-mail

Cream Minerals Defines Inferred Mineral Resource for Dos Hornos North Zone - More
- January 27, 2006 | Item | E-mail

Alberta Star Signs a Historic '5 Year Cooperation and Benefits Agreement' with the Sahtu Dene & Metis - More
- January 27, 2006 | Item | E-mail

Metallica Resources Continues to Progress on the Cerro San Pedro Project, Mexico - "Metallica Resources Inc. today reports that its Mexican subsidiary, MSX, has received the required annual renewal of its explosives operating, or blasting, permit from SEDENA (Secretaria de Defensa National) for the Cerro San Pedro (CSP) project for the calendar year 2006. All explosive operating permits in Mexico are required to be renewed annually. The explosives operating permit received in 2005 and the renewal for 2006 restricts the use of explosives to ground owned by MSX, which includes the processing site." More
- January 27, 2006 | Item | E-mail

Apollo Gold Closes Previously Announced US$3.5 Million Private Placement with Jipangu Inc. - "Apollo Gold Corporation is pleased to announce the closing of the US$3.5 million private placement with Jipangu Inc. on January 26, 2006, which the Company previously announced in its press release issued November 21, 2005. After giving effect to the closing, Jipangu owns 21,650,000 Apollo common shares, representing 18.2% of Apollo's issued and outstanding common shares, based on 119,106,451 common shares outstanding as of the close of business on January 26, 2006." More
- January 27, 2006 | Item | E-mail

Apollo Gold Announces Corporate Officer Changes - "Apollo Gold Corporation announced today a series of corporate officer changes that will help streamline the Company's operations and reduce operational expenses. As a result of these changes, which will be in effect on February 18, 2006, the number of corporate officers will be reduced from seven to three." More
- January 27, 2006 | Item | E-mail

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- Written by Chris Mullen

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

The Gold Seeker Closing Report is a free edition providing a daily wrap-up of gold & gold-related news.  For more in-depth analysis of the gold markets, subscribe to The Gold Forecaster.

All sources are given within the report and most articles can be found as they are released at http://www.capitalupdates.com/, http://www.goldseek.com/, http://www.silverseek.com/, and http://www.goldreview.com/.

© Gold Seeker 2006

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