Gold Seeker Closing Report: Gold and Silver Fall Over 1% and 2% While Stocks Drop 3%

	Close	Gain/Loss
Gold	$808.50	-$11.95
Silver	$10.44	-$0.22
XAU	104.25	-5.02%
HUI	251.02	-5.35%
GDM	775.24	-4.98%
JSE Gold	2149.13	-25.44
USD	84.45	+0.25
Euro	131.56	-0.28
Yen	112.20	+0.31
Oil	$37.28	-$0.50
10-Year	2.213%	-0.086
T-Bond	136.875	+2.046875
Dow	8200.14	-2.94%
Nasdaq	1489.64	-3.67%
S&P	842.62	-3.35%

Gold rose over 1% to $829.17 in Asia, but it then fell back off throughout most of trade in New York and ended near its low of $807.60 with a loss of 1.46%. Silver climbed over 2% to $10.89 in Asia before it dropped to as low as $10.33 by late morning in New York, but it then rebounded over 1% off that low in the last couple of hours of trade and ended with a loss of 2.06%.

Euro gold fell to about €614, platinum lost $12.50 to $924.50, and copper fell almost 6 cents to about $1.47.

Gold and silver equities fell over 6% about an hour into trade before they rebounded slightly into the close, but they still ended with about 5% losses on the day.

Report	For	Reading	Expected	Previous
Import Prices	Dec	-4.2%	-5.3%	-7.0%
Import Prices ex-oil	Dec	-1.1%	-	-1.8%
Export Prices	Dec	-2.3%	-2.0%	-3.4%
Export Prices ex-ag.	Dec	-1.9%	-	-2.9%
Retail Sales	Dec	-2.7%	-1.2%	-2.1%
Retail Sales ex-auto	Dec	-3.1%	-1.4%	-2.5%
Business Inventories	Nov	-0.7%	-0.5%	-0.6%

The fed’s Beige Book said economic activity continued to weaken along with retail sales, manufacturing, the real estate market, and lending activity. Tomorrow at 8:30AM EST brings PPI for December expected at -1.9%, Core PPI expected at 0.1%, Initial Jobless Claims for 1/10 expected at 501,000, and the Empire Manufacturing Index for January expected at -25.0. At 10 AM is the Philadelphia Fed survey for January expected at -35.0.

Oil fell as inventories grew more than expected overall. Crude inventories rose 1.2 million barrels, gasoline inventories rose 2.1 million barrels, and distillates rose 6.4 million barrels.

The U.S. dollar index and treasuries rose on cash raising while the Dow, Nasdaq, and S&P fell markedly as Retail Sales and earnings reports came in even worse than horrible expectations yet again. The Dow fell for the sixth straight session and all 30 Dow stocks were lower on the day.

Among the big names making news in the market today were Nissan, Tiffany’s, Citigroup and Smith Barney, Deutsche Bank, HSBC, Nortel, Barclays, Chrysler, Morgan Stanley, and Seagate.

Hints have been dropped repeatedly about the potential of the Federal Reserve issuing Federal Reserve Bonds along with less issuing of Treasury Bonds in order to sterilize (mop up) the new wobbling, out of control, universal monetary killer of “Galaxy Liquidity” the Fed and Treasury are creating. They had no other option facing this gargantuan and unprecedented crisis of CONFIDENCE called credit - a gift of the Western OTC derivative fabricators.

Letting Lehman collapse was a scheme with many proponents based on the assumption that the underlying debts, called assets, would recover in time, regardless of the implosion of the credit default derivatives thereupon.

Bankruptcy against these chains of obligations called ownership is their mistake.

Without trying to “geek you out,” the intellectual weapon of choice of those with large foreheads and sunken eyes, let me draw you a mental picture.

Any OTC derivative misnamed an asset, now in the inventory of the Fed, is a STRING with many knots.

This string, having been assumed to be as asset, has formed the basis for more and more transactions until one string with a few knots has become a toxic spider web obscuring the Earth’s financial from being seen from outer space.

Many of those knots are BANKRUPT. They are festering empty holes now unable to perform their specific performance duties, that being to hold together the web and therefore eternally preventing the string from holding if /when stressed one more time.

The stress is a crisis of confidence in the glue that has been applied to the failed knot which is now a gap.

The glue is the creation of huge numbers, called liquidity, that are like universe sized lumps of undulating maggot pie waiting for any pickup in economic volume to transmute themselves into the currency vermin of FLIES who carry the incurable Eastern Flu called HYPER-INFLATION, a currency event.

The end of economic days is game over hyperinflation, a currency event – not an economic event triggered by glue failure as above.

The spider web collapse reveals the real world, the failed universal reserve currency, the pug-ugly dollar!”- Jim Sinclair, JSMineset.com

It was another one of those mass long liquidation days by index funds and hedge funds as nearly everything that remotely resembled a commodity or was associated with commodities was jettisoned in favor of paper IOU’s (also known as US bonds). About the only commodities that I could see that were in the plus column today were the grains, particularly the soybean market which found buying on drought fears out of South America and wheat which found support out of hard freeze fears. Corn went along for the ride. Other than that the continued idiocy in the futures markets continues with panic buying one day giving way to panic selling the next.

I know I risk sounding like a scratched CD but the hedge funds and index funds have created near chaos in the markets with no clear, durable signals being generated- the result is confusion and volatility that gives the lie to the efficient market theory. How can markets be the least bit efficient when commercial end users and legitimate hedgers cannot even use them because of the massive amounts of price foam being churned up by these out of control funds? You’ll remember that it was just a few days ago when near euphoria reined in the markets over the upcoming new stimulus plan – that euphoria sent the funds tripping and drooling all over themselves to establish longs – now we are back to manic depression and they are tripping and drooling over themselves running for the exits. Now imagine a bona fide commercial hedger attempting to formulate some sort of hedging plan to offload his risk and lock in profits while at the same time attempting to limit huge margin calls on that same hedge. My point is quite simple – the futures markets came into being as a mechanism to allow producers and end users to manage risk – that advent of speculators was designed to facilitate that end – we have now reached the point in my opinion where the entire purpose of the futures market has to be questioned. Either the regulators get off their butts and institute serious reforms in these markets, notably being a drastic curtailing of the position size of these players, or they risk having commercial end users begin to look at serious alternatives to using these markets for hedging purposes. If that were to happen in size (it is already occurring), all that will be left in the futures markets is funds playing against other funds. Then we will have nothing but casinos left. The biggest problem I see standing in the way of these reforms might very well be the commodity exchanges themselves who are now public companies and love the extra volume being generated by the incessant trading activity of the funds. That is good for exchanges SHORT term as it increases profits and makes members and shareholders happy. The problem is, like so much in the West these days, such an attitude sacrifices LONG term viability for short term gain. But enough of my little soap box rant for now.

Gold was caught in the crosswinds stirred up by the funds as this liquidation clashed with safe haven buying. It did not help paper gold any to see the technical breakdown in the HUI and the XAU whose charts have turned decidedly bearish. I have been mentioning the 260 level on the HUI and the 107 level on the XAU – those are well behind us now with the only hope the bulls now have is for support to emerge near the 50 day moving averages which come in near 241 for the HUI and 100 for the XAU. Failure there and we could see the HUI back down near the 200 level. The HUI and XAU must quickly get back above 260 and 107 respectively to turn the selling tide.

The commodity currencies, the Australian, Canadian and New Zealand Dollars, were all weaker against the US Dollar today although the Aussie managed to work upwards at one point and move into the plus column. Surprising strength was seen in the British Pound. The Swiss Franc was higher while the Euro came well off its worst levels of the session although is still lower against the greenback. Ongoing concerns over Europe’s economy and the downgrading of several member countries’ sovereign debt continue to weigh on the Euro. The Japanese Yen continued its ridiculous rise as further carry trade unwinding occurs there. One has to wonder when the apparently sleeping Japanese monetary officials are going to saunter out of their dens and inflict their vengeance on the specs who have done this to their yen. Having been on the receiving end of their forays into the market, all I can say is heaven help the yen bulls when this tiger finally comes forth. For now they continue to press their advantage against the monetary lords of Japan.

Bonds are back in full bubble mode after having bounced, stabilized and then said, “Let’s go back to the stratosphere where the air is cleaner”. They are currently trading between the 10 day and 20 day moving averages with the 40, 50 and 100 day all moving solidly higher. Whether the top is in will be seen if we can set up a retest of those recent highs above the 140 level. We may or may not get there; I simply am not sure and with the bonds’ behavior lately, who knows?

Technically gold bounced off of horizontal support just below the $810 level which also closely corresponds to the 100 day moving average. That level has to hold firm to prevent even more spec selling which could potentially take the market down below the $800 level. Resistance remains in place near yesterday’s high ($830) followed by $860.

Pulling back and looking at the weekly continuous chart, the 100 period moving average comes in near $798 with gold bouncing off of the 20 week moving average at $807. This serves to reinforce the technical significance of the region where today’s lows in gold were made.” - Dan Norcini, More at JSMineset.com

“February Gold closed down 11.9 at 808.8. This was 0.8 up from the low and 16.2 off the high.

March Silver finished down 0.205 at 10.475, 0.085 off the high and 0.135 up from the low.

The gold market managed a range down extension again today and one could point to a number of bearish themes behind the washout. Clearly the fear of slowing, the fear of deflation and a rise in the Dollar are at the top of the list for the bears but one could also point to noted weakness in the energy complex as another force behind the slide in gold prices. Surprisingly the weakness in the equity market wasn't significant enough to rekindle flight to quality buying interest in gold and that was probably because deflationary concerns were front and center after an extremely weak retail sales report.

After forging an outside day on the charts, it was clear that March silver was really buffeted by the economic developments in the US. Just as in the gold market, the list of bearish factors in silver was somewhat long with additional pressure coming from the overt weakness in the copper market. In fact, weakness in a host of physical commodity markets seemed to weigh on silver and since the moderate weakness in equity prices failed to translate into a flight to quality condition for either gold or silver, the trade seemed to settle on the deflationary angle. However, the bull camp will suggest that the silver market was at least able to recoil from the initial fresh new low for the move and that was taken by some as a positive sign.”- The Hightower Report, Futures Analysis and Forecasting

Note: Change in Total Tonnes from yesterday’s data: The LSE added 0.84 tonnes.

Crystallex’s (KRY) comments on market activity, Tanzanian Royalty’s (TRE) completed private placement, Aurizon’s (AZK) production, Banro’s (BAA) updated independent Mineral Resource estimates, Goldcorp’s (GG) extended tax election deadline, Rusoro’s (RML.V) gold production, Keegan’s (KGN) drill results, Gold Fields (GFI) appointed CFO, Northgate’s (NXG) production, Yale’s (YLL.V) work program, and Fresnillo’s (FRES.MX) production 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.

Golden Peaks Resources Ltd. Closes $585,000 Financing - More
- January 14, 2009 | Item | E-mail

Tiomin Announces TSX Approval of Normal Course Issuer Bid - More
- January 14, 2009 | Item | E-mail

Eaglecrest Samples 16.2 Grams Per Tonne Gold on Surface at the Buriti Gold Zone, San Simon Project, Bolivia - More
- January 14, 2009 | Item | E-mail

StrataGold increases the Dublin Gulch Eagle Zone Deposit indicated gold resource by 37% to 2.7 million ounces - More
- January 14, 2009 | Item | E-mail

Crystallex Comments on Market Activity and Las Cristinas - "Crystallex International Corporation (Toronto:KRY.TO - News) (AMEX:KRY - News) reported today that it is aware of certain comments related to the Las Cristinas gold project attributed to President Chavez in Venezuela. Outside of the media coverage, the Company has not been notified of any changes in position by the Venezuelan Government regarding the Las Cristinas Project or the Mine Operating Contract ("MOC"). Crystallex staff and representatives are in continual communication with Senior Venezuelan Officials and the comments attributed to President Chavez regarding Las Cristinas have not been raised with the Company." More
- January 14, 2009 | Item | E-mail

Yale and Enviro Energy Start Work Program at Zacatecas - "Yale Resources Ltd. (CDNX:YLL.V - News) (Frankfurt:YAB.F - News) is pleased to announce that its partner Enviro Energy Capital Corp. (CDNX:GEC.V - News) has started its first phase work program on the Mina San Jose, Zacatecas and Salvador claims that form the Zacatecas Venture." More
- January 14, 2009 | Item | E-mail

Tanzanian Royalty Chairman Completes $375,000 7th Tranche of $3 Million Dollar Private Placement - "Tanzanian Royalty Exploration Corporation (Toronto:TNX.TO - News) (AMEX:TRE - News) announces that the seventh tranche of the $3,000,000 private placement with Mr. James E. Sinclair announced January 2, 2009 has closed. Mr. Sinclair purchased 69,832 common shares at a purchase price of $5.37 per share." More
- January 14, 2009 | Item | E-mail

Anaconda Mining Inc. Announces Financial Results Ending November 30, 2008 - More
- January 14, 2009 | Item | E-mail

Dia Bras Provides Clarification - More
- January 14, 2009 | Item | E-mail

Diamond Discoveries Reports a New Chromium Discovery on Caribou Property, Thetford Mines, Quebec - More
- January 14, 2009 | Item | E-mail

Melkior Resources: Drilling Extends Timmins Gold Bearing Structures - More
- January 14, 2009 | Item | E-mail

Nord Resources Appoints Randy Davenport as VP and COO - More
- January 14, 2009 | Item | E-mail

Wits Basin Provides Update on China Transaction - More
- January 14, 2009 | Item | E-mail

New Guinea Gold Corporation: Gold Production at Sinivit Increases to 3,560 Ounces in Q4 Triple Q3 Production Levels - More
- January 14, 2009 | Item | E-mail

Nevada Sunrise Intercepts 0.571 oz/ton Gold and 6.791 oz/ton Silver - More
- January 14, 2009 | Item | E-mail

TVI Pacific granted extended maturity date on bridge financing - More
- January 14, 2009 | Item | E-mail

Latin American Minerals Retains TRU Group Inc to Accelerate Development of Salares Potash-Lithium Project in Argentina - More
- January 14, 2009 | Item | E-mail

Andean Resources 2009 Planned Activities - More
- January 14, 2009 | Item | E-mail

Freegold Financing Update - More
- January 14, 2009 | Item | E-mail

Abacus Announces Ajax Deposit Resource - More
- January 14, 2009 | Item | E-mail

Skygold Drilling Intersects High-Grade Gold at Spanish Creek - More
- January 14, 2009 | Item | E-mail

Tiomin Extends Freegold Ventures' Bridge Loan - More
- January 14, 2009 | Item | E-mail

Mexoro Minerals Announces Inferred 15.25 Million Tons Grading 2.62 g/t Gold Equivalent at Its Cieneguita Project in Mexico - More
- January 14, 2009 | Item | E-mail

Uruguay Mineral Exploration Inc. Announces Results for the Second Quarter of Fiscal Year 2009 - More
- January 14, 2009 | Item | E-mail

Aurizon announces 2008 gold production and plans for 2009 - "Gold production from Aurizon's 100% owned Casa Berardi mine for the year ended December 31, 2008, totalled 158,830 ounces from the processing of 654,397 tonnes at an average grade of 8.2 grams of gold per tonne. Recoveries for the year averaged 92.5%. Gold production was in line with the most recent guidance of 155,000 to 160,000 ounces." More
- January 14, 2009 | Item | E-mail

Banro increases Measured and Indicated Mineral Resources at Twangiza by 49.7% to 5.6 million ounces of gold - "Banro Corporation ("Banro" or the "Company") (NYSE Alternext US - "BAA"; TSX - "BAA") is pleased to announce updated independent Mineral Resource estimates for its wholly-owned Twangiza project in the Democratic Republic of the Congo (the "DRC")." More
- January 14, 2009 | Item | E-mail

Urex Announces Plans for Continued Exploration on Argentine Uranium Projects - More
- January 14, 2009 | Item | E-mail

Goldcorp Extends Tax Election Deadline for Former Gold Eagle Shareholders - "GOLDCORP INC. (Toronto:G.TO - News)(NYSE:GG - News) announced today that it will extend the deadline date for former shareholders of Gold Eagle Mines Ltd. to make a joint tax election with Goldcorp. The deadline for providing the tax information to Goldcorp is April 30, 2009. However, any Tax Election information received after April 15, 2009 by Goldcorp cannot be assured of processing and return to the shareholder by April 30, 2009." More
- January 14, 2009 | Item | E-mail

Rusoro Reports Record Gold Production and Record Low Cash Costs for Q4 2008 - "Rusoro Mining Ltd. (CDNX:RML.V - News) ("Rusoro" or the "Company") is pleased to report that it has reached record quarterly gold production (38,868 ounces) in Q4 2008 and record low cash costs (US$358 per ounce) for the same period at the Choco 10 operations which the Company acquired as of November 30, 2007." More
- January 14, 2009 | Item | E-mail

Keegan Continues to Receive Excellent Results From Esaase Resource Gold Project - "Keegan Resources Inc. ("Keegan") (Toronto:KGN.TO - News)(AMEX:KGN - News) is pleased to announce results from the resource conversion program at its Esaase property. Highlights include 11 m @ 6.5 g/t Au, 18 m @ 2.77 g/t Au, 59 m @ 1.43 g/t Au, and 74 m @ 1.16 g/t Au. All infill drilling has returned intercepts with as good or better grade widths as the surrounding holes confirming good consistency to mineralization." More
- January 14, 2009 | Item | E-mail

Gold Fields Appoints Paul Schmidt as Chief Financial Officer - "Gold Fields Limited (Gold Fields) (NYSE, JSE, DIFX: GFI) is pleased to announce the appointment of Paul Schmidt CA (SA) as chief financial officer of the Group, a position in which he has acted since May 2008." More
- January 14, 2009 | Item | E-mail

Fresnillo sees 2009 gold silver production at 2008 levels - "Fresnillo PLC expects the global economic slowdown to represent a challenge to the mining industry in 2009 and forecasts gold and silver production levels in line with those achieved in 2008.

In a production and operations update, it said total silver production for the full year 2008 reached an all time high for the group at 34.8 million ounces, however only slightly above the 2007 figure of 34.68 million." More
- January 14, 2009 | Item | E-mail

Northgate Minerals Reports Record Gold Production in the Fourth Quarter 2008 - "Northgate Minerals Corporation (TSX: NGX, NYSE ALTERNEXT/AMEX: NXG) today reported record gold production in the fourth quarter of 2008, as well as the 2009 production forecast and exploration plans for its Canadian and Australian operations." More
- January 14, 2009 | Item | E-mail

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