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Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Over 8% on the Week

By: Chris Mullen, Gold-Seeker.com


-- Posted 5 December, 2008 | | Source: SilverSeek.com

 

Close

Gain/Loss

On Week

Gold

$752.05

-$12.75

-8.34%

Silver

$9.395

-$0.12

-8.87%

XAU

87.58

-0.14%

-13.79%

HUI

212.61

+0.77%

-14.06%

GDM

644.83

+0.88%

-11.98%

JSE Gold

1951.11

-31.26

-2.04%

USD

86.95

+0.40

+0.47%

Euro

127.37

-0.27

+0.34%

Yen

107.65

-0.83

+2.97%

Oil

$40.81

-$2.86

-25.02%

10-Year

2.657%

+0.087

-10.15%

Bond

134.625

-0.3125

+4.72%

Dow

8635.42

+3.09%

-2.19%

Nasdaq

1509.31

+4.41%

-1.71%

S&P

876.07

+3.65%

-2.25%

 
 

 

The Metals:

 

Gold rose about 1% to $772.70 in London before it fell in morning New York trade to $740.70 by about noon EST and then rallied back higher in afternoon trade, but it still ended with a loss of 1.67%.  Silver rose to $9.57 by late trade in Asia and fell to as low as $9.13 by lunchtime in New York before it also rallied back higher in afternoon trade, but it still ended with a loss of 1.26%.

 

Euro gold fell to about €594, platinum lost $12 to $783, and copper fell nearly 10 cents more to about $1.35.

 

Gold and silver equities fell roughly 9% by about an hour into trade, but they then rallied back higher into the close and ended mixed and near unchanged.

 

The Economy:

 

Report

For

Reading

Expected

Previous

Nonfarm Payrolls

Nov

-533K

-335K

-320K

Unemployment Rate

Nov

6.7%

6.8%

6.5%

Hourly Earnings

Nov

0.4%

0.2%

0.3%

Average Workweek

Nov

33.5

33.6

33.6

Consumer Credit

Oct

-$3.5B

$1.5B

$6.9B

 

Payrolls fell the most since 1974.  The BLS net birth/death adjustment added 30,000 payrolls.

 

All of this week’s other economic reports:

 

Factory Orders - October

-5.1% v. -3.1%

 

Initial Claims - 11/29

509K v. 530K

 

ISM Services - November

37.3 v. 44.4

 

Productivity - Q3

1.3% v. 1.1%

 

ADP Employment - November

-250K v. -205K

 

ISM Index - November

36.2 v. 38.9

 

Construction Spending - October

-1.2% v. 0.0%

 

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

 

The Markets:

 

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

 

Oil fell on more demand worries after jobs fell the most in 24 years.

 

The U.S. dollar index rose and treasuries fell as the Dow, Nasdaq, and S&P eventually rose despite the horrible jobs report as some seem to hope that it may signal the worst is over.

 

Among the big names making news in the market Friday were Merrill Lynch, Brown-Forman, Honda, General Motors, and U.S. Bancorp.

 

The Commentary:

 

Dear CIGAs,

 

Paper gold at the phony Comex continues its disappearing act as more and more longs throw in the towel and close things out for the year. I should note here that volume in the Comex is absolutely horrendous dropping under 100,000 per day over the last few days. Toss in a collapse in open interest and it is pretty easy to see that what we are witnessing is a destruction of liquidity which allows any relatively larger-sized order to move price pretty much wherever the “orderee” wishes things to go. There is simply no one to take the other side of the trade with the result that large air pockets are forming in this market into which prices may drop or, in the event that prices rise, may shoot sharply higher. The same thing is happening in every single commodity complex out there.

 

There are some fresh short sellers but these are minor compared to the selling originating from speculative longs bailing out in the face of disappointing price action. The fed’s crony pals cap the price on any rise and then stand back and cover those shorts as all the lemmings dutifully abandon ship. Presto – an ATM for the bullion banks courtesy of the weak-handed longs who still try to play the paper game against these insiders.

 

Technically, you could not get a more classic definition of a washout which is exhausting itself as both shrinking volume and collapsing open interest signal that this is NOT the beginning of a bear trend but rather a technical washout that is winding down. I especially like the fact that volume is so anemic – it indicates no particular enthusiasm for the downside but more of a general disgust type of trade. Every single technical analysis book that I have ever read over the years will tell the shorts to be very careful selling a market in which volume and open interest are falling off – you simply never know when the last long who is going to run has run – when they do, that is it and the shorts then lose since there is simply no one left to sell the market to. For now they are sitting pretty but I suspect many buyers are waiting in the wings and should this market move down to near the $730- $720 level in February, these will emerge and make their presence felt quite strongly. The risk/reward no longer favors the shorts at these levels. What do they have, maybe $60 on the downside at the absolute best?

 

Still, all things considered, even paper gold is holding very well compared to the carnage in the rest of the commodity markets. For instance, crude topped out near $150/ barrel. Today is dropped below $41. That is nearly a 73% price collapse. December corn hit $8.00 bushel this past summer. Today it broke below $3.00 – the first time in two years it has been below the $3.00 level. That is a price drop of 62%. Platinum peaked at over $2200/ounce earlier this year. Today it was trading at $790 – a drop of a “mere” 64%. Copper is 67% off its peak. Silver is down 56% off its best levels seen this year. Yet gold is only down 27% off its peak price. Even with all the paper selling at the Comex, gold has withstood the orgy of redemption related selling pretty doggone well. And we know that demand for the real deal, the actual yellow metal is phenomenal, paper games at the Comex notwithstanding.”- Dan Norcini, JSMineset.com

 

“February Gold closed down 13.3 at 752.2. This was 10.2 up from the low and 12.8 off the high.

 

March Silver finished down 0.09 at 9.43, 0.01 off the high and 0.305 up from the low.

 

The gold market was clearly disappointed by the latest cycle of bad news on the US economy. As in a number of other commodity markets the overhanging fear of deflation seemed to dominate the trade and it probably goes without saying that strength in the Dollar is serving to turn up the liquidation pressure in most physical commodity markets. It also seemed as if the weakness in the US equity markets and concern that US auto makers might be left to fail served to weaken gold prices. With talk of liquidation of holdings in various Gold derivative instruments, it was clear that sentiment was deteriorating toward all kinds of gold instruments.

 

Relatively speaking the silver market ended up holding up better than the gold market in the face of the initial reaction to the US data flow. With both copper and platinum prices under noted pressure and the Dollar stronger the outside market forces could have easily applied additive pressure to silver during the trade Friday. Perhaps some supply side threats to Mexican silver production and fresh off labor issues provided the silver market with some support that was not important to the gold market.”- The Hightower Report, Futures Analysis and Forecasting

 

GATA Posts:

 

 

John Crudele: Market intervention is top financial story of our generation

ECB cuts rates to 2.5% and mulls 'printing money'

James Turk's recommended reading on gold investing

China's sovereign wealth fund won't save Western banks

 

The Statistics:

As of close of business: 12/04/2008

Gold Warehouse Stocks:

8,519,868

-

Silver Warehouse Stocks:

129,074,924

-6,952

 

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 

 

Product name

Total Tonnes

Total Ounces

Total Value

New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchage (TSE) AND Hong Kong Stock Exchange (HKEx)

SPDR® Gold Shares

757.89

24,366,840

US$ 18,249m

London Stock Exchange (LSE) AND Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse )

Gold Bullion Securities

117.01

3,761,900

US$ 2,848m

Australian Stock Exchange (ASX)

Gold Bullion Securities

11.51

369,020

US$ 280m

Johannesburg Securities Exchange (JSE)

New Gold Debentures

26.94

866,038

US$ 669m

 Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 0.23 tonnes.

 

COMEX Gold Trust (IAU)

Profile as of 12/4/2008

 

Total Net Assets

$1,583,233,842

Ounces of Gold
in Trust

2,072,932.322

Shares Outstanding

21,050,000

Tonnes of Gold
in Trust

64.48

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

 

Silver Trust (SLV)

Profile as of 12/4/2008

 

Total Net Assets

$2,048,665,146

Ounces of Silver
in Trust

213,860,065.800

Shares Outstanding

216,650,000

Tonnes of Silver
in Trust

6,651.79

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

 

The Stocks:

 

Barrick’s (ABX) plans in Tanzania, Ivanhoe’s (IVN) talks with the Mongolian government, and a strike in Mexico that has stopped work at mines run by Fresnillo and Penoles were among the big stories in the gold and silver mining industry making headlines Friday.

 

WINNERS

1.  Allied Nevada

ANV +11.72% $2.86

2.  Tanzanian Royalty

TRE +9.77% $2.92

3.  Aurizon

AZK +8.29% $2.35

 

LOSERS

1.  Minefinders

MFN -8.88% $2.77

2.  Jaguar

JAG -8.02% $1.95

3.  Western Goldfields

WGW -7.27% $1.02

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:

Lounor Exploration Inc. - Private placement - More
- December 05, 2008 | Item | E-mail


Geoinformatics Announces Management Change - More
- December 05, 2008 | Item | E-mail


James Bay Resources Announces Drill Results From McFauld's Lake Property - More
- December 05, 2008 | Item | E-mail


Constellation Copper Default Status Report - More
- December 05, 2008 | Item | E-mail


IAMGOLD Corporation: Press Release and Early Warning Report - "On August 29, 2008, IAMGOLD filed with the Autorite des Marches Financiers (the French financial services regulator) an offer to purchase (the "Offer") all of the issued and outstanding common shares of Euro Resources S.A. ("Euro Resources") at a purchase price of EUR 1.20 per Share. The Offer was made pursuant to French securities laws and is exempt from take-over bid requirements of Canadian securities laws. The Offer opened on October 6, 2008 and ended on November 21, 2008. The Offer results (before reopening of the Offer, as described below) were announced by the French Autorite des Marches Financiers on December 2, 2008. In connection with the Offer, IAMGOLD acquired today 40,397,360 common shares of Euro Resources." More
- December 05, 2008 | Item | E-mail


Liard Resources Ltd.: Proposed Acquisition Announced - More
- December 05, 2008 | Item | E-mail


High Desert Gold Corporation Reports Significant Increase in Gold Grades Based on Large Sample Re-Assays at Canasta Dorada - More
- December 05, 2008 | Item | E-mail


Capella Resources Special Meeting Results - More
- December 05, 2008 | Item | E-mail


Murgor Resources announces final closing of $403,800 private placement - More
- December 05, 2008 | Item | E-mail


Corriente Master Fund Demands Response to Complaints About HudBay Deal With Lundin Mining Corporation - More
- December 05, 2008 | Item | E-mail


Copper Reef Restarts Drill Program at Gold Rock - More
- December 05, 2008 | Item | E-mail


Silver Shield Proposes $600,000 Non-Brokered Private Placement - More
- December 05, 2008 | Item | E-mail


Thompson Creek cuts capex, delays Endako expansion - More
- December 05, 2008 | Item | E-mail


Altius Reports Additional Iron Ore Drill Intercepts From Labrador - More
- December 05, 2008 | Item | E-mail


Grandview Gold Inc. Announces Closing of Private Placement - More
- December 05, 2008 | Item | E-mail


Raytec Metals Corp.: Drilling Completed on the 'El Sol' Iron Ore Property - More
- December 05, 2008 | Item | E-mail


Thompson Creek provides update on capital expenditure plans - More
- December 05, 2008 | Item | E-mail


Svante Nilsson new President of Business Area Market at Boliden - More
- December 05, 2008 | Item | E-mail


Uruguay Mineral Exploration Inc.: Production for the Quarter Ended November 30, 2008 - More
- December 05, 2008 | Item | E-mail


Denison Mines Corp. Announces Bought Deal Flow-Through Private Placement - More
- December 05, 2008 | Item | E-mail


Barrick says no plans to pull out of Tanzania - "Barrick Gold (ABX.TO: Quote, Profile, Research, Stock Buzz) has no intention of pulling out of Tanzania, a company spokesman said on Friday, contradicting a media report that had said the gold producer was considering halting operations in the East African country.

"Barrick has been and will remain committed to Tanzania. We have no intention of pulling out of Tanzania," Barrick spokesman Vince Borg said. The story was published in the Tanzanian Guardian." More
- December 05, 2008 | Item | E-mail


Ivanhoe Mines Welcomes Initiative by Mongolia's Parliament to Finalize an Oyu Tolgoi Draft Investment Agreement - "John Macken, President and CEO of Ivanhoe Mines (Toronto:IVN.TO - News)(NYSE:IVN - News)(NYSE:IVN - News), today welcomed the decision by Mongolia's national Parliament, the State Great Khural, to establish a deadline for completion of a draft Investment Agreement for Ivanhoe's Oyu Tolgoi copper-gold project." More
- December 05, 2008 | Item | E-mail


Mexico strikes hit Fresnillo - "Illegal strike action in Mexico has stopped work at the Fresnillo and Ciénega mines run by Fresnillo, the world's largest primary silver producer.

The company, also Mexico's second largest gold producer, said the trouble came about after authorities arrested two union leaders from Mexico's Mining and Metal Workers Union." More
- December 05, 2008 | Item | E-mail


Strike closes Penoles silver, zinc mines in Mexico - "Mexican miner Penoles (PENOLES.MX: Quote, Profile, Research, Stock Buzz) said on Friday striking workers had halted operations at two major zinc mines, Madero and Sabinas in the state of Zacatecas, after two union officials were arrested by the government.

The world's largest silver mine Fresnillo, operated by Fresnillo Plc (FRES.L: Quote, Profile, Research, Stock Buzz), the precious metals subsidiary of Penoles, was also shut by the strike but two other silver mines La Cienega and La Herradura were operating normally, a Penoles spokesman told Reuters." More
- December 05, 2008 | Item | E-mail


 

- Chris Mullen, Gold Seeker Report

 

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© Gold Seeker 2008

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

 

 

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

 


-- Posted 5 December, 2008 | |


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