Gold Seeker Closing Report: Gold and Silver Surge Higher in Late Trade and End With Roughly 1% Gains

	Close	Gain/Loss
Gold	$864.75	+$8.40
Silver	$11.42	+$0.175
XAU	121.45	+2.25%
HUI	293.89	+2.28%
GDM	897.79	+2.56%
JSE Gold	2201.31	+41.77
USD	82.85	+0.10
Euro	135.10	-1.23
Yen	106.60	-0.60
Oil	$48.58	-$0.23
10-Year	2.505%	+0.017
T-Bond	132.6875	-0.328125
Dow	9015.10	+0.69%
Nasdaq	1652.38	+1.50%
S&P	934.70	+0.78%

Gold and silver fell as much as 2.06% and 4.31% to $838.70 and $10.76 by late trade in Asia before they steadily climbed higher in London and morning New York trade to see just slight losses by about noon EST, but they both then soared even higher in the last hour and a half of trade and ended near their session highs of $866.00 and $11.453 with gains of 0.98% and 1.56%.

Euro gold rose to about €642, platinum gained $14.50 to $960.50, and copper gained over 12 cents to about $1.57.

Gold and silver equities traded slightly lower in morning action before they surged higher in early afternoon trade and saw over 4% gains by about 3PM EST, but they then fell back off into the close and ended with only a little over 2% gains.

Report	For	Reading	Expected	Previous
Factory Orders	Nov	-4.6%	-2.3%	-6.0%
ISM Services	Dec	40.6	36.5	37.3

“The index of pending home resales fell 4 percent to 82.3, the lowest level since the series began in 2001, from a revised 85.7 in October, the National Association of Realtors said in a report today in Washington. Pending sales fell in all four regions.”

FOMC minutes showed “Federal Reserve policy makers saw “substantial” risks to the slumping economy last month as they cut the benchmark interest rate to a record low and pledged to expand emergency loans if necessary.”

Oil rose to over $50 in early trade on continued geopolitical concerns in the Mideast and Russia, but it ultimately ended slightly lower on more demand concerns after mostly worse than expected economic data and comments.

The U.S. dollar index ended with just a fraction of its early substantial gains and treasuries closed lower again after mixed economic data was trumped by the fed’s defense of their decision to lower interest rates to near zero with their release of last meeting’s minutes that shows fed members see a longer economic decline than earlier forecasts and indicates that they will keep rates at record low levels for an extended period of time.

The Dow, Nasdaq, and S&P traded mostly modestly higher and ended with decent gains on the likelihood that the fed will do all it can to keep interest rates low.

Among the big names making news in the market today were Macrovision and Lions Gate, Logitech, Toyota, Dow Chemical, and McGraw-Hill.

“Without a doubt 2008 can be seen as the year of investment silver and thus it is no wonder that the total holdings of the various Silver ETFs increased by 38.79% year-on-year. According to the official data as of December 12, the total silver inventory in this asset category amounted to 8187.48 mt or 263,233,567.54 oz silver. Measured against the annual world silver mine production the demand for ETFs reached a record level of 10.9% or 73,564,494.52 Oz.

The experts of silberinfo assume that in course of the ongoing financial crisis demand will continue to soar 2009, and it seems very likely that at least one new Silver ETFs will be launched. (06.01.2009 si/as/tw)” - silberinfo

It is difficult to get an accurate read on today’s price action because it was dominated by front running of index fund rebalancing to conform to changes being made in some of the major commodity indices. Copper was up 7% at one time today based solely on a heavier weighting of the metal in two of the indices. There was no fundamental news that I was aware of but that does not matter for these players – they have to take on positions in accordance to the percentage weightings that they are given in the index. If the composition of the index is raised to 6% from 4% in copper for example, then the funds have to take an additional 2% of their monies and stick it in a long copper position, regardless of what the fundamentals might or might not be. If the composition of gold is lowered from 8% to 6%, then they have no choice but to sell enough gold long positions to bring their holdings back down to a 6% weighting in the yellow metal. Obviously, the makeup of these indices determines a great deal of the price action across the various commodity markets.

Frankly I find the idea of reducing the weighting of gold in the indices for 2009 to be very odd. Gold was one of the very few items that showed a gain for 2008 – yet its weighting is lowered? What we see in the US equity indices is the exact opposite. Poor performing stocks are gotten rid of out of the index as quickly as possible while the best performing stocks are added to the index. That way the bureaucrats can attempt to keep the index levitating. Yet here we have a case where the index managers made a deliberate decision to lower the weighting of the best performing commodity for all of 2008. Let’s see someone come up with a rational explanation for this – don’t hold your breath because there is none.

Needless to say, with all this as a backdrop, gold was promptly clocked at the opening of pit session trading at the Comex as yesterday’s weakness coupled with Dollar strength brought in more selling overnight which continued into today’s session. The metal traded down into the 20 day moving average before rebounding sharply as dip buyers surfaced in a large way especially late in the morning. The spike well off the session low has to be encouraging for the friends of gold for that occurred even with frontrunning of upcoming forced selling in gold by way of index fund rebalancing. The recovery in the Euro from its worst levels did not hurt matters any for gold bulls.

To build on today’s nice spike we need to see a higher close tomorrow. That will inspire confidence among the gold bulls that the reaction is finished and unnerve some of the weaker-handed shorts whose covering can be expected to push prices back closer to $880 once again. I am still a bit leery about the upcoming index fund rebalancing as that will commence in a couple of days time so we need to be alert to actions coming off of that front.

Technically gold will need to maintain its footing above the $825- $830 area to keep the technical chart picture from deteriorating. That should prove to be a strong area of support if this uptrend is going to continue into the new year. The fact that it managed to close back above psychological round number support at $850 is very friendly. Resistance still lies over head at the $880level which is clearly being defended by our “friends”, the bullion banks who work for their monetary masters in a mutually symbiotic relationship (don’t you love the free markets we have here in the USA). The 10 day moving average is still moving upwards which is a positive and gold’s ability to recapture that level in today’s spike action no doubt unnerved many of the shorts whose covering near the close could easily be observed from the near vertical rise in the last 5 minutes of pit session trading.” - Dan Norcini, More at JSMineset.com

“February Gold closed up 8.2 at 866. This was 22.5 up from the low and 0.5 off the high.

March Silver finished up 0.175 at 11.445, 0.025 off the high and 0.465 up from the low.

The gold market managed to recover from another downside extension early in the trading session but the reversal seemed to come off a setback in the Dollar and not necessarily because hope for economic recovery or inflation were put into the spotlight. However, generally positive equity market action, higher energy prices and strength in the industrial metals probably prompted some gold shorts to exit and in turn might have prompted some fresh buyers to return to the gold market. In retrospect, the scheduled economic data was a mixed bag with the Factory orders report weak enough to foment renewed economic uncertainty and undermine the Dollar, while the ISM Non Manufacturing report could have provided support for the Dollar and decrease macro economic uncertainty. In the end, the gold market seemed to shake off the negative impact of the Dollar and seemingly benefit from a quasi rising tide in a number of physical commodity markets.

The silver market showed initial weakness but attempted to recover throughout the trading session. However, the silver market seemed to under perform the gold market in the attempt to bounce and for a large portion of the trade Tuesday March silver was content to hold inside of the Monday trading range. Clearly silver, gold and a host of physical commodity markets were attempting to build a positive correlation with US equity prices, which in turn seem to be telegraphing ongoing optimism toward the US economy.”- The Hightower Report, Futures Analysis and Forecasting

Note: Change in Total Tonnes from yesterday’s data: 0.75 tonnes were added to the trust.

Note: Change in Total Tonnes from yesterday’s data: 2.63 tonnes were removed from the trust.

US Gold’s (UXG) drill results, Allied Nevada’s (ANV) gold production, and Eldorado’s (EGO) drill results were among the big stories in the gold and silver mining industry making headlines today.

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

Matamec Closes a Private Placement - More
- January 06, 2009 | Item | E-mail

Colossus Minerals Inc. Announces the Commencement of Phase II Drilling and a Corporate Update - More
- January 06, 2009 | Item | E-mail

Cardero Acquires Longnose Titanium Deposit, NE Minnesota, USA - More
- January 06, 2009 | Item | E-mail

Etruscan announces repricing of warrants - More
- January 06, 2009 | Item | E-mail

Moneta Completes Flow-Through Financing - More
- January 06, 2009 | Item | E-mail

Denison Mines Corp. Announces $41.25 Million "Bought Deal" Financing - More
- January 06, 2009 | Item | E-mail

Eurasian Minerals Inc. Signs Agreement for the Akarca, Elmali and Samli Projects in Turkey - More
- January 06, 2009 | Item | E-mail

Trelawney Proposes Issuance of Shares in Lieu of Payments - More
- January 06, 2009 | Item | E-mail

Melkior Resources Inc.: More Land Acquired and More Exploration at Timmins - More
- January 06, 2009 | Item | E-mail

Golden Band Resources - Development update - More
- January 06, 2009 | Item | E-mail

Drilling Extends Mineralization at Geoinformatics' Falcon Prospect - More
- January 06, 2009 | Item | E-mail

GWR Arranges $470,000 Hard Dollar Private Placement - More
- January 06, 2009 | Item | E-mail

Normabec Intersects 11.52 g/t Au Over 5 Metres and 9.13 g/t Au Over 11 Metres on Pitt Gold - More
- January 06, 2009 | Item | E-mail

Two Private Placements Closed to Fund Romaine Iron-Titanium Project - More
- January 06, 2009 | Item | E-mail

Luna Gold renegotiates Aurizona Goldfields share purchase agreement - More
- January 06, 2009 | Item | E-mail

Inter-Citic Releases New Drill Hole Results From Dachang Gold Project - More
- January 06, 2009 | Item | E-mail

Capital Gold Announces Record Gold Production Totals for December 2008 - More
- January 06, 2009 | Item | E-mail

Advanced Explorations Inc. Intersects 66 Metres of 31.7% Iron - More
- January 06, 2009 | Item | E-mail

Mineralogy to take up additional Waratah shares and prepares for compulsory acquisition - More
- January 06, 2009 | Item | E-mail

American Bonanza Completes Sale of Taurus Property - More
- January 06, 2009 | Item | E-mail

Hill Zone Drilling Continues to Yield Large Near-Surface Oxide Gold - Silver Mineralization Including 175 Feet Grading 0.034 Opt Au Equivalent - More
- January 06, 2009 | Item | E-mail

Canada firm abandons Mozambique gold mine project - More
- January 06, 2009 | Item | E-mail

US Gold Corporation-El Gallo: Two New High-Grade Areas Discovered - "US GOLD CORPORATION (Toronto:UXG.TO - News)(NYSE ALTERNEXT US: UXG)(Frankfurt:US8.F - News) announces more exciting results from its El Gallo project in Sinaloa, Mexico. High-grade mineralization has been encountered at four separate locations." More
- January 06, 2009 | Item | E-mail

Gold Reserve Files Investor Presentation - "Gold Reserve Inc. (NYSE Alternext:GRZ) (TSX:GRZ - News) today announced that it has filed an investor presentation with Canadian securities regulatory authorities and the Securities and Exchange Commission (“SEC”), in connection with Rusoro Mining Ltd.’s (“Rusoro”) (TSX-V: RML.V - News) unsolicited offer to acquire Gold Reserve. The presentation will be available on SEDAR at www.sedar.com, on the SEC’s website at www.sec.gov, and on Gold Reserve’s website at www.goldreserveinc.com." More
- January 06, 2009 | Item | E-mail

Allied Nevada Announces Its First Gold Production - "Allied Nevada Gold Corp. (Toronto:ANV.TO - News)(NYSE ALTERNEXT US: ANV) announced its first production from its run-of-mine, heap leach property, the Hycroft Mine. Total production for December 2008 was approximately 1,000 ounces of gold and 3,000 ounces of silver which was a combination of dore and carbon. As dore is produced, it will be refined into gold and silver bullion which will then be sold in the normal course of business." More
- January 06, 2009 | Item | E-mail

Eldorado Gold Corporation: Efemcukuru North Ore Shoot Drilling Continues to Grow Deposit - "Paul N. Wright, President and CEO of Eldorado Gold Corporation ("Eldorado" the "Company" or "we") (Toronto:ELD.TO - News)(AMEX:EGO - News), is pleased to announce results from our first 5 holes testing the North Ore Shoot (NOS) at the Efemcukuru Project in Western Turkey. The program is designed to test the lateral and down plunge extension of this poorly defined third ore shoot in the Efemcukuru system. Drilling is planned to continue throughout the first quarter 2009." More
- January 06, 2009 | Item | E-mail

Yellow metal will soar above $1,000 per ounce, says mining chief - "The price of gold will go above $1,000 per ounce this year, according to Peter Hambro, chairman of Russian gold producer Peter Hambro Mining, writes William MacNamara." More
- January 06, 2009 | Item | E-mail

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