-- Posted 11 February, 2009 | | Source: SilverSeek.com

The Metals:

Gold held near yesterday’s close of $911.60 in Asia, rose over 1% to the $920s in London, and surged even higher in midmorning New York trade to as high as $946.50 by about 11M EST before it dipped back near $940 by about noon, but it then surged to a new session high of $947.42 in the last minutes of trade and ended near that high with a gain of 3.38%.

Silver traded mostly slightly higher from yesterday’s close of $13.11 in Asia and climbed to over $13.40 in London before it dipped back under $13.30 in early New York trade, but it also exploded back higher in midmorning trade and ended near its session high of $13.68 with a gain of 3.13%.

Euro gold rose to about €733, platinum gained $40 to $1068, and copper fell a few cents to about $1.53.

Gold and silver equities rose over 8% by early afternoon before they pared their gains a bit as the major indices briefly turned gains into losses, but the miners then turned back higher in the last couple of hours of trade and ended with gains of over 7%.

The Economy:

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 2/7 expected at 610,000, Retail Sales for January expected at -0.3%, and Retail Sales excluding auto sales expected at -0.4%.  At 10AM is the Business Inventories report for December expected at -0.6%.

The Markets:

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

Oil fell as the IEA reported continually falling demand and the EIA reported a greater than expected 4.7 million barrel increase in crude inventories.  Gasoline futures rose as gas inventories surprisingly fell 2.6 million barrels. 

The U.S. dollar index “was little changed against the euro in a volatile session on Wednesday amid news the U.S. Senate and House of Representatives will be able to bridge their differences on economic stimulus plans.”

Treasuries rose on worries over whether or not the government’s rescue plans will be able to stimulate/save the economy/financial system.

The Dow, Nasdaq, and S&P rebounded slightly from yesterday’s huge losses in morning trade before they dipped to see small losses by mid-afternoon, but they then rebounded to end with modest gains as traders debated the details and/or lack of details about Geithner’s banking plan and Obama’s stimulus plan.

Among the big names making news in the market today were Reynolds American, ArcelorMittal, Caterpillar, Credit Suisse, RIM, Sirius, News Corp., and Marsh & McLennan.

The Commentary:

“Dear CIGAs,

Hats off to the longs who finally showed some mettle and refused to be stampeded out by the efforts of the bullion banks to keep gold bottled up under the $920 level. As trading opened in New York, sellers showed up near and above $920 and pushed the market back down below that level in an obvious attempt to induce short term longs to liquidate. The first hour of pit session trading was an offensive by the bears but the longs quite uncharacteristically, I might add, dug in and did not budge. When the sellers realized that the line would not break, they began covering and as they did so, the bulls moved in and began to press their advantage. The realization dawned upon the bears that they could not absorb the amount of bids flooding the screen and they headed for the hills. That hit the batch of stops that had been building over the last few days above the $930 level and once those were reached, up she went, all the way to just shy of $950.

The breach of this upper resistance band is highly significant from a technical perspective as it puts the market in a position to make a run to $956-$960 if bulls can keep the pressure on. That is the last significant barrier before the $990 level.  It also puts the market above the downtrending slope line on the weekly chart which is drawn off the 1033 high in March of 2008 and the 989 high made in July of last year, which as you might recall was the high water mark of gold before the meltdown occurred which took it all the way down to the $680 level in October. That breakout on the weekly chart is strongly bullish as this market has been trading below that trendline for almost a year now.

I should also note that alongside of the technical breakout of Dollar priced gold, gold priced in Euro terms racked up another all-time record high at the London PM Fix as it came in at €727.583 besting the old high of €719.199 made early last week. Also, gold priced in terms of the British Pound just missed setting an all time high as it came in at 653.795. Seeing gold making all time highs in terms of other major currencies or trading up near those levels just as gold priced in US Dollar terms is breaking out technically is extremely bullish for the yellow metal. It shows a worldwide devaluation of paper currencies is occurring simultaneously and that the move up is not just a Dollar-based phenomenon.

What makes today’s move strongly suggestive of the beginning of a solid trending move higher is the fact that the mining shares are showing, as of the time I write this,  technical breakouts as indicated on both the HUI and the XAU price charts. The XAU is attempting to put in its best closing level since September 2008. The 130-131 level has proven to be formidable resistance in the XAU and should it fall on today’s close, the bears will be very hard pressed to make any kind of technical case. Ditto for the HUI should it be able to take out the 310-311 level on a closing basis. Both indices are currently trading above those levels as of this hour.

I continue to receive emails asking me about the gold ETF, GLD. Let me attempt to state here why I reference it on occasion and chart its reported gold holdings. I use it ONLY as a gauge of investor sentiment towards gold. When reported gold holdings are rising, it shows money is flowing into gold from the investor class. The inverse is true when gold is out of favor – money flows out and reported gold holdings fall. This is NOT a recommendation to buy the thing as I have come to believe that GLD is a Trojan Horse that siphons real gold demand away from the bullion market and into paper instead. For traders and very short-term oriented investors who want to trade in and out of it and are looking for a liquid entity to trade gold, (I prefer the futures market), it is just fine. But make no mistake – owning shares of paper gold is NOT THE SAME as holding the metal in your possession. Gold is insurance against paper – why would you want to own paper as insurance against paper??? Do not make the mistake of thinking you have protected your assets by buying shares of GLD as if that was the same as buying gold bullion. There is NO SUBSTITUTE for physical gold.

Open interest readings from yesterday confirm some weaker shorts were run out even as the bullion banks dug in. I still remain amazed at the incredibly low open interest levels with gold a mere $50-$60 away from the $1000 level, 350,000 to be precise. If the bulls can continue to stand behind their convictions, it would not be difficult for them to push gold over that level quite quickly should they decide to stand firm. As mentioned previously, the only thing standing between them and $1000 is bullion bank selling.

I want to point out something that has been rather interesting on the delivery front for the February contract (Lo and behold – we actually had some take place today for a change!). It has been going on since the delivery period began but I have not mentioned it until now as I wanted to monitor it a bit more closely before commenting on it. What I am referring to is who is doing the majority of the stopping of delivered gold this month. Out of the 2,456 deliveries this month, JP Morgan and Goldman Sachs have taken 1,683 of them combined. That is 68% of all the gold delivered this month. Respectively, Morgan has taken 1,305 with Goldman taking 378. Now, we have no idea who these firms are taking the gold for – it could be for some of their clients or it might even be in house but it is noteworthy. I have seen Morgan being a decent size stopper in times past but really have not noticed Goldman doing a whole lot.  For comparison’s sake, Goldman and Morgan took only 7.5% of all the gold delivered back in December 2008. I will be keeping an eye on this throughout the rest of the delivery period to see if they retender or not. Keep in mind that the delivery process will always remain shrouded in secrecy because of the nature of the process. The brokerage firms that traders do business with know when their customers take delivery but that only shows up under the name of the firm listed as one of the stoppers – it does not show who actually took the gold. That is all internal to the broker and between them and the warehouse that they use to ship the product or take delivery of the warehouse receipt from. That information does not need to be released to the public nor should it be to respect the privacy of all involved but we can watch to see the names of the firms involved and look to see if there is anything that is out of the norm and then do some guessing based on any pattern that might be developing.

February 2009 Comex gold showed an increase of 29 contracts yesterday so it is likely that is new buyers who intend to stand for delivery. That brings the total remaining open interest in the contract to 3,129 or the potential for 312,900 ounces of gold. We’ll track this to the end of the delivery process.

In some other news, the balance of trade numbers for the month of December 2008 were released this AM showing a trade deficit of -$39.93 billion. That is the lowest number since February 2003. Also, the entire yearly trade deficit for 2008 came in at $677.10 billion against $77.26 billion for 2007. I should note that a significant portion of the lower number can be attributed to the US-OPEC trade deficit which was $4.66 billion. That was the lowest number since December 2003 which was $4.6 billion. To give you some sort of comparison to show just how much the drop in crude oil prices has helped alleviate the US-OPEC deficit – back in July of this same year it was $24.18 billion. That is a six-fold reduction in 5 months time! Just goes to show how much a slowing economy can alleviate an out of control trade deficit.”- Dan Norcini, More at JSMineset.com

“April Gold closed up 30.3 at 944.5. This was 24.7 up from the low and 2.3 off the high.

March Silver finished up 0.39 at 13.52, 0.1 off the high and 0.24 up from the low.

The gold market stayed strong despite the Dollar managing to rise back into positive grounds at times during the trading session. Gold also remained strong in the face of periodic strength in the US equity market and another decline in the US Trade Deficit. The gold market managed to reach the highest level since July 23rd and that clearly suggests that anxiety toward the US situation is still running pretty high in the marketplace. The US Treasury auction for 10 Year notes was somewhat less favorable than the 3 year note auction seen on Tuesday but seeing the Treasury market manage to gain in the wake of the second leg of the refunding cycle would seem to suggest that the US will be able to continue borrowing at an aggressive pace and to some gold traders that is an inflationary signal.

The silver market tracked right along side the gold market with a clear pulse up in prices. The March silver contract managed to reach the highest level since September 26th and like the gold market it was clear that flight to quality anxiety was running to a markedly higher level. While the Dollar was weaker at times the Greenback flopped around both sides of unchanged and the currency influence probably wasn't that important of an outside market force for the silver market. Like the gold market, seeing the US get beyond another refunding wave of supply would seem to suggest that the US will continue to take on debt and in turn continue to implement programs that could ultimately be inflationary.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Banks' toxic debts risk overwhelming EU governments

Russia's biggest bank notes surging demand for gold

Bank of England pledges to cover country with cash

Anybody seen the IMF's gold?

China said to need guarantees for Treasuries

Scenes from Cambridge House's reception for GATA in Vancouver

Commissioner Chilton seeks criminal authority for CFTC

The Statistics:

As of close of business: 2/10/2009

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: Change in Total Tonnes from Friday’s data: SPDR added 27.53 tonnes to a new record high holding, the LSE added 0.32 tonnes, and the JSE added 0.73 tonnes.

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)

 Note: Change in Total Tonnes from Friday’s data: 76.69 were added to the trust.

The Stocks:

Penoles’ continuing strike, Rubicon’s (RBY) drill results, Richmont’s (RIC) sold option interest, Minco’s (MGH) drill results, Gold Fields’ (GFI) plans for layoffs, Endeavour’s (EXK) exploration review and outlook, and Silver Standard’s preliminary short form base shelf prospectus and retention of the San Agustin property 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:

Hawthorne Assays 2.21 Metres Averaging 17.92 g/t Au at Cassiar Gold Camp - More
- February 11, 2009 | Item | E-mail

Largo Provides an Update on the Status of the Maracas Project, Brazil and Northern Dancer Project, Yukon - More
- February 11, 2009 | Item | E-mail

Copper Fox provides an update of Corporate Activities - More
- February 11, 2009 | Item | E-mail

Globex Partner Announces Magusi Mineral Resource - More
- February 11, 2009 | Item | E-mail

Inmet Mining presentation at CIBC World Markets 12th Annual Institutional Investor Conference - More
- February 11, 2009 | Item | E-mail

Eureka Moly and Mt. Hope Mines Announce the Creation of the Harold L. Drimmer - Mt. Hope Educational Foundation - More
- February 11, 2009 | Item | E-mail

Shoreham Appoints Mr. James Norris to the Board of Directors and Appoints New Auditors - More
- February 11, 2009 | Item | E-mail

Victoria Gold Corp. and StrataGold Corporation Announce Business Combination - More
- February 11, 2009 | Item | E-mail

StrataGold announces business combination with Victoria Gold Corp. - More
- February 11, 2009 | Item | E-mail

Minera says will consider bids after conditions improve - More
- February 11, 2009 | Item | E-mail

Trelawney Appoints New President - More
- February 11, 2009 | Item | E-mail

Trinity Mining Holdind A.G. Appoints New VP Exploration - More
- February 11, 2009 | Item | E-mail

Metal refinery strike continues at Mexico Penoles - "Mexico's Penoles said on Wednesday it was exploring alternatives to refine silver and gold, including options to send metal abroad, after workers on strike shut down part of its massive metals processing plant.

The sprawling MetMex complex in northern Mexico is Latin America's largest metals processor and receives all the gold and silver produced by the company's precious metals unit Fresnillo (FRES.L), which trades on the London Stock Exchange." More
- February 11, 2009 | Item | E-mail

Community Open House meetings receive overwhelming support - More
- February 11, 2009 | Item | E-mail

Rubicon Hits New High-Grade Gold Northeast of F2 Zone, Phoenix Gold Project, Red Lake, Ontario - "Rubicon Minerals Corporation (RMX.TSX: RBY.NYSE Alternext US) is pleased to announce new results from ongoing drilling at its 100%-controlled Phoenix Gold Project, located in the heart of the prolific Red Lake gold district of Ontario. The Company is conducting drilling around the F2 Gold Zone from which significant high-grade and bonanza-grade gold intercepts have been reported laterally over 580 metres and to depths of up to 1101 metres below surface (see news releases from March 12, 2008, onwards)." More
- February 11, 2009 | Item | E-mail

Absa urges SAfrica to save black empowerment deals - "South Africa's push to sell equity stakes in mining firms to black investors to redress their exclusion under apartheid has been hit by the financial crisis and needs help, a top banking official said on Wednesday.

Corporate deals under the programme, known as Black Economic Empowerment (BEE), have been adversely affected by the credit crunch, falling metal and stock prices and some of the assets could be lost unless the government, the mining industry and the financial institutions step in to save the day." More
- February 11, 2009 | Item | E-mail

Endeavour Silver Announces 2008 Exploration Review and 2009 Exploration Outlook - "Endeavour Silver Corp. (Toronto:EDR.TO - News)(AMEX:EXK - News)(Frankfurt:EJD.F - News) announces that for the fifth consecutive year, the Company's exploration drilling programs in Mexico met with continued success, highlighted by the discovery of several new, high grade silver-gold mineralized zones near Endeavour's two mining operations, Guanacevi in Durango State, and Guanajuato in Guanajuato State." More
- February 11, 2009 | Item | E-mail

Strateco Resources Inc./Matoush: Beginning of a 30,000-Metre Drilling Program - More
- February 11, 2009 | Item | E-mail

Acadian pursues asset sales and seeks strategic partner to develop advanced gold properties - Acadian announces change of date for Court application - More
- February 11, 2009 | Item | E-mail

Inmet to seek strategic partner for Petaquilla-CEO - More
- February 11, 2009 | Item | E-mail

Royal Roads releases security - More
- February 11, 2009 | Item | E-mail

Santa Fe Gold Begins Mining and Stockpiling Ore at Summit Silver-Gold Mine - More
- February 11, 2009 | Item | E-mail

Unico, Inc. Announces Additional Improvements at the Mill and Processing Facility at the Deer Trail Mine - More
- February 11, 2009 | Item | E-mail

Soho Resources Corp. Closes $1,000,000 Private Placement Financing - More
- February 11, 2009 | Item | E-mail

U3O8 Corp. Cuts 26 Metres at 0.124% (2.48 Pounds Per Short Ton) U3O8 at Aricheng West - More
- February 11, 2009 | Item | E-mail

Sirios Resources Inc.: Drill Program to Commence in March on Aquilon Gold Project - More
- February 11, 2009 | Item | E-mail

Vangold Resources Ltd. Receives Update From International Beryllium Corporation - More
- February 11, 2009 | Item | E-mail

Star Gold Corp. Appoints Corporate Secretary - More
- February 11, 2009 | Item | E-mail

Minera Andes responds to Hochschild Mining plc - More
- February 11, 2009 | Item | E-mail

Golden Tag Resources Ltd.: Winter Drill Program to Commence Early March Aquilon Gold Project, James Bay, Quebec - More
- February 11, 2009 | Item | E-mail

High Desert Gold Announces Positive Copper-Silver Drill Hole Intercepts at the "Spar Lake Type" Bluebird Property - More
- February 11, 2009 | Item | E-mail

Orvana Minerals Corp. Announces Data Collection for Environmental Studies Commenced at Copperwood Project in Michigan - More
- February 11, 2009 | Item | E-mail

Colossus Minerals Assays 7.88 Metres @ 98.4 g/t Platinum, 115.7 g/t Palladium, 2.74 g/t Rhodium, 1.52 g/t Iridium and 406 g/t Gold From Serra Pelada - More
- February 11, 2009 | Item | E-mail

Mexoro Minerals Ltd. Retains Consulting for Strategic Growth 1 for Strategic Counseling and Investor Relations - More
- February 11, 2009 | Item | E-mail

Yorbeau Summarizes 2008 Results on its Rouyn Property, Quebec - More
- February 11, 2009 | Item | E-mail

Japanese companies take stake in Uranium One - More
- February 11, 2009 | Item | E-mail

Strateco Re-Commences Drilling Pacific Bay's Otish, Quebec, Uranium Claims - More
- February 11, 2009 | Item | E-mail

First Uranium posts surprise Q3 profit - More
- February 11, 2009 | Item | E-mail

Mountain Lake Options 70% Interest in Valentine Lake Gold Project From Richmont Mines to Consolidate 100% Ownership - "Mountain Lake Resources Inc. (CDNX:MOA.V - News) ("Mountain Lake") and Richmont Mines Inc. (Toronto:RIC.TO - News) (AMEX:RIC - News) ("Richmont") report that they have entered into an agreement granting Mountain Lake an option to purchase (the "Option") Richmont's 70% interest in the Valentine Lake Gold Property (the "Property") located in Central Newfoundland. Mountain Lake currently owns a 30% interest in the Property." More
- February 11, 2009 | Item | E-mail

Minco Announces Initial Changkeng Drill Results and Extension of Mineralization - "Minco Gold Corporation (the "Company" or "Minco Gold") (Toronto:MMM.TO - News)(AMEX:MGH - News)(Frankfurt:MI5.F - News) is pleased to report the assay results of the first 22 diamond drill holes completed for the Changkeng Gold Project located in Guangdong Province, China. The Company conducted a comprehensive exploration program on the project including approximately 12,000 metres of combined step out and in-fill diamond drilling in 61 holes. The first 22 holes mainly tested the wider spaced drill targets throughout the entire property." More
- February 11, 2009 | Item | E-mail

Silver Standard Resources Inc.: San Agustin Option Expires - "Silver Standard Resources Inc. (Toronto:SSO.TO - News)(NasdaqGM:SSRI - News) reports that Geologix Explorations Inc. has elected not to exercise its option to acquire a 100% interest in the San Agustin property." More
- February 11, 2009 | Item | E-mail

Silver Standard Files Preliminary Base Shelf Prospectus - "Silver Standard Resources Inc. (Toronto:SSO.TO - News)(NasdaqGM:SSRI - News) has filed a preliminary short form base shelf prospectus with the securities commissions in each of the provinces of Canada, other than Quebec, and a corresponding registration statement with the United States Securities and Exchange Commission under the U.S.-Canada multi-jurisdictional disclosure system." More
- February 11, 2009 | Item | E-mail

Union says Gold Fields to make big staff layoffs - "South Africa's National Union of Mineworkers says that the world's fourth largest gold miner - Gold Fields - is making plans to reduce its workforce by 10% through voluntary layoffs." More
- February 11, 2009 | Item | E-mail

- Chris Mullen, Gold Seeker Report

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