-- Posted 7 May, 2008 | Digg This Article |

The Metals:

Gold rose to $878.60 in Asia before it fell over 1% to as low as $863.55 by late morning in New York, but it then rallied back higher into the close and ended with a loss of just 0.78%.  Silver rose to $16.89 and fell to $16.45 before it also rallied back higher into the close and ended over 1% off its low with a loss of just 1.1%.

Euro gold rose to about €565, platinum gained $3 to $1956, and copper fell nearly 5 cents to about $3.86.

Gold and silver equities fell nearly 2% at the open before they rallied back near unchanged by early afternoon, but they then fell back off along with the major indices in the last couple of hours of trade and ended with a little over 1% losses.

The Economy:

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 5/03 expected at 375,000 and at 10AM is the Wholesale Inventories report for March expected at 0.5%.

The Markets:

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

Oil basically ignored a higher dollar and a bearish inventory report as concentration remains on supply threats in Nigeria, Iran, and Iraq.  Possible strikes in France and Russia and declining output in Mexico were also contributing factors to oil rising to a new record high of $123.80.  Crude inventories built a much bigger than expected 5.7 million barrels, gasoline inventories built 800,000 barrels, distillates fell 100,000 barrels, and refinery utilization fell 0.4% to 85.0%. 

The U.S. dollar index rose after Kansas City Federal Reserve President Thomas Hoenig cited inflation as his main worry while U.S. Productivity came in higher than expected and also pushed U.S interest rates higher in early trade.  European economic data also came in weaker than expected and weakened the euro ahead of tomorrow’s Bank of England and European Central Bank meetings that are expected to keep rates unchanged, but today’s weak data did bring about some speculation that the BoE may now be influenced to lower rates while the ECB may voice a less hawkish than previously expected tone.

Treasuries fell in early trade on strong Productivity data and inflation concerns, but they rose to find decent gains by the close as the Dow, Nasdaq, and S&P eventually fell markedly after Pending Home Sales fell to a new low and oil climbed to a new record high.  A new measure introduced late in the day from SEC Chairman Cox requiring more transparency over liquidity and capital requirements may have also had something to do with the late day sell off.

Among the big names making news in the market today were MBIA, Cablevision, DirecTV, Total, Dr Pepper Snapple, the SEC and Bear Stearns, Sprint Nextel and Clearwire, and Legg Mason.

The Commentary:

“Fed mouthpiece Hoenig says the Fed might increase interest rates to fight inflation.

The dropping of rates has had no impact yet, but an increase in rates would have an IMMEDIATE impact called an IMPLOSION.

There is no chance in hell that the Fed will raise rates.

"Hoenig's Illusion" is another spin device to say all credit problems are behind us so the Fed can go hawk with no downside.

Food and fuel are the main ingredients of inflation so the Fed will have to stop people from eating and decrease fuel use in Asia in order to be effective. Rates will not do that. People may starve, but for other reasons.

All markets are casinos so the euro and gold drops, but let’s see if "Hoenig's Illusion" has legs. I rather doubt it.”- Jim Sinclair, JSMineset.com

“June Gold finished down 6.5 at 871.2, 0.5 off the high and 5.7 up from the low.

May Silver closed down 0.163 at 16.617. This was equal to the low and equal to the high.

When it rains it pours for the bull camp as some Press outlets on Wednesday were reporting Indian sales into a key festival period were not overly impressive. With the market somewhat in need of a distinct positive, to offset the threat of currency related long liquidation tilt, it is possible that some traders were disappointed in the Indian demand news. As suggested in the mid day coverage the Dollar didn't seem to be dented by the news of another contraction in US Pending Home sales figures and that in turn left the gold market under indirect pressure from the bullish action in the Dollar. It should be noted that gold did see some minor support off the mid-day/early afternoon recovery in energy prices. The US Consumer credit figures jumped sharply and that didn't seem to undermine the Dollar, even though the figures did seem to undermine the US stock market. In short, developments that could sink the Dollar don't seem to be having any impact and that probably discouraged some gold players.

Like the gold market, the silver market was mostly weak throughout the trading session Wednesday. Not surprisingly a strong Dollar and initial weakness in oil prices provided the market with its negative bias. However, a recovery in oil prices and renewed strength in grain and livestock prices seemed to provide a slight short covering bounce in silver just after mid session. In the end, the Dollar strength seemed to be the dominating force with oil price action secondary. With a marked weakening of the US equity market in the face of afternoon US Consumer Credit numbers, it is possible that silver and other industrial metals markets were undermined by renewed US slowing fears.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Vince Byfield: Why is Canada's mint doubling its gold and silver debts?

AngloGold to reduce hedge book by 45%

Is IMF trying to recover its gold by pretending to sell it?

The Statistics:

As of close of business: 5/6/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: No change in Total Tonnes from yesterday’s data: StreetTRACKS added 3.99 tonnes.

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)

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

The Stocks:

Paramount’s (PZG) plans to complete a resource estimate, Kinross Gold’s (KGC) opportunities seen in the credit crunch, Apollo Gold’s (AGT) first quarter results, Aurizon’s (AZK) first quarter results, Gammon Gold’s (GRS) first quarter results, Silver Eagle’s (SEG.TO) increased resources, Aquiline’s (AQI.TO) private placement, and Hecla’s (HL) halted operations in Venezuela were among the 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.

All of today's gold and silver stock news:

Mesa Uranium Conducts Radon Survey at Moonshine Springs, Arizona - More
- May 07, 2008 | Item | E-mail

Silver Eagle Mines Announces Increased Resources - "Silver Eagle Mines Inc. (Toronto:SEG.TO - News) is pleased to report an increase in Indicated and Inferred Resources at its wholly-owned Miguel Auza Property in Zacatecas, Mexico. Since the filing on SEDAR of its most recent technical report in respect of the Miguel Auza Project, dated January 18, 2008 (the "Technical Report"), an intensive diamond drill campaign has resulted in an increase in the Indicated Resource from 21.3M oz Ag Eq(1) to 24.3M oz Ag Eq(1) while the Inferred Resource has increased, from 8.9M oz Ag Eq(1) to 11.7M oz Ag Eq(1)." More
- May 07, 2008 | Item | E-mail

Chapleau Confirms 85% to 94% Gold Recovery From Preliminary Metallurgical Studies at the Coringa Gold Project, Brazil - More
- May 07, 2008 | Item | E-mail

Ucore Announces Board Appointee - More
- May 07, 2008 | Item | E-mail

Royal Roads discovers new mineralization at Tulks North - More
- May 07, 2008 | Item | E-mail

Kinbauri Drills 15.8m Grading 4.4g Au/t, 22.3g Ag/t and 0.41% Cu, Including 1.0m Grading 24.0g Au/t, 135g Ag/t and 1.81% Cu - More
- May 07, 2008 | Item | E-mail