-- Posted 5 September, 2008 | Digg This Article |

The Metals:

Gold fell $6.40 to $792.25 by late trade in Asia before it spiked higher after the US jobs report and rose to see an over 2% gain at as high as $818.75, but it then fell back off for most of the rest of trade and ended with a gain of just 0.1%.  Silver fell $0.25 to $12.60 by late trade in Asia before it rose to $13.11 in early New York trade, but it also fell back off for most of the rest of trade and ended near its new session low of $12.06 with a loss of 4.79%.

Euro gold rose to about €560, platinum fell $41.50 to $1358, and copper fell over 17 cents to about $3.12.

Gold and silver equities rose roughly 2% at the open before they fell to see over 2% losses about an hour into trade, but they then chopped their way higher for the remainder of trade and ended about 0.5% higher.

The Economy:

The BLS net birth/death adjustment added 125,000 payrolls.  The Mortgage Bankers Association also reported today that “foreclosures accelerated to the fastest pace in almost three decades during the second quarter as interest rates increased and home values fell, prompting more Americans to walk away from homes they couldn't refinance or sell.”

All of this week’s economic reports:

Next week’s economic highlights include Consumer Credit on Monday, Pending Home Sales and Wholesale Inventories on Tuesday, Export and Import Prices, Initial Jobless Claims, the Trade Balance and Treasury Budget on Thursday, and PPI, Retail Sales, Business Inventories, and Michigan Sentiment on Friday.

The Markets:

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

Oil fell to a five month low on a resilient dollar and more worries over slowing demand as Tropical Storm Hannah started to make its way up the East coast and traders kept their eyes on Tropical Storm Ike that is forecasted to make its way into the Gulf of Mexico next Wednesday morning.  Traders were also looking forward to OPEC’s meeting on Tuesday and the monthly IEA report on Wednesday in addition to the weekly inventory report.

The U.S. dollar index fell and treasuries rose as the Dow, Nasdaq, and S&P dropped sharply in early trade in reaction to the poor jobs data, but all of those moves moderated as the day wore on and the Dow erased a 150 point loss to end with a small gain along with the S&P and dollar while the Nasdaq ended modestly lower and bonds closed flat.

Among the big names making news in the market Friday were Nokia, Pimco, Merrill Lynch, and National Semiconductor.

The Commentary:

“Even the most casual dollar watcher is amazed at the dollar's recent strength.  It's as if a starter pistol was fired, and up it went with no faltering, hesitating, or backfilling. Not only is this behavior uncanny in our view, but also highly suspicious as to its ignition. It's ascent is nearly vertical, and inconsistent with past performance.

You all know the horrible dollar fundamentals, so I won't belabor a repeat here. Also, we know it's the season for commodities, notably gold to correct. Furthermore, and paramount, it's election season. Additionally, we feel the banks are 'freezing-up' and unable to market derivative assets which is forcing them to curtail lending, even to each other.

But, the silence surrounding the introduction of the Amero gives me pause to reflect that perhaps this artificial dollar rally is a vital component of launching the Amero. Realize that the Amero/Dollar exchange rate will be decreed, and not to be determined by voluntary exchange. Political union under the NAU can come later. It's crucial that the Amero be introduced with the impotent congress we presently have. It's hard to imagine a better way for US banks to jettison all their illiquid debt, and prepare all us for the next era of debt money. The spoils are theirs to keep.”- Charleston Voice

“The entire minerals sector is presently under attack by organized short sellers who depend on demoralizing investors to achieve their profit goals. These are ruthless zealots who flaunt the law to achieve their devious objectives.

Go to www.failstodeliver.com and enter the symbol of any US-traded company to see the activity of naked shorting based on figures from the Securities Exchange Commission. 

As far as the gold market is concerned  we are in the middle of “Operation Keep the Hill” in which every stop has been pulled out to paint a picture of improving business conditions and permanent, declining inflation because of supposedly lower long term energy and food prices.

The big six investment banks are forecasting a 3% improvement in consumer demand as sentiment improves due to the supposed drop in inflation. The improvement in share value of some financials - based on nothing but hype - is held up as proof that the credit problems are behind us regardless of Lehman being busted while Fannie and Freddie are hopeless hulks in dire need of camouflage.

The Federal Deposit Insurance Corporation (FDIC) is getting to a point where they need recapitalization, with 199 banks on the troubled list and probably a lot more to come.

The Securities Investor Protection Corporation (SIPC) is a joke capitalized at $1.5 billion yet they are still quoted as the guarantor of all security values at all brokerage firms.

Fundamental factors remain in a downward spiral while black boxes, spinners, the big six and all financial TV and radio stations blare out that “all is well.”

I have lived through these major manipulations before but this time it is happening in every market, with shareholders feeling the heat no matter what kind of equities they are in. In my opinion, when the dust finally settles the last people standing will be those in gold equities.”- Jim Sinclair, JSMineset.com

“December Gold finished down 0.4 at 802.8, 20.3 off the high and 4.8 up from the low.

December Silver closed down 0.615 at 12.325. This was 0.135 up from the low and 0.53 off the high.

The gold market clearly managed to outperform the silver market in the trade on Friday. In fact, for the gold market to manage any form of bounce in the face of a rising Dollar, sagging oil and weakness in the rest of the metals complex was simply quite surprising. Given the high to low slide in the gold market this week of roughly $48 an ounce it certainly wasn't that surprising to see the gold market forge a short covering bounce. Given the overly disappointing US Non Farm payroll readings and the sharp slide in the equity market it is possible that flight to quality buying was seen at times during the trade Friday.

As mentioned in the mid day coverage the silver market just wasn't able to bounce like the gold market did in the morning action. However, the silver market seemed to be feeling its physical/industrial roots in the wake of another discouraging set of US economic readings. With the copper market under significant selling pressure and a number of base metals markets under pressure, it goes without saying that the fear of too much slowing continued to weigh on silver prices.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Toni Straka: Dichotomy in Western European gold and silver prices

Indian customers lured by gold's lower price

China's central bank is short of capital

Banks reel as ECB redraws funding rules

The Statistics:

As of close of business: 9/4/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

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

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)

Note: Change in Total Tonnes from yesterday’s data: 53.8 tonnes were added to the trust.

The Stocks: