Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 3% on the Week While Dow Drops Over 5%

Note:

Markets are closed on Monday in observance of President’s Day. The Gold Seeker Report will return on Tuesday.

	Close	Gain/Loss	On Week
Gold	$940.20	-$7.50	+3.06%
Silver	$13.63	+$0.13	+3.85%
XAU	130.88	-1.54%	+0.89%
HUI	311.16	-1.82%	+1.36%
GDM	983.03	-2.05%	+0.98%
JSE Gold	2712.86	-19.57	+8.49%
USD	86.02	-0.17	+0.80%
Euro	128.80	+0.21	-0.50%
Yen	108.73	-1.32	-0.03%
Oil	$37.51	+$3.53	-6.62%
10-Year	2.882%	+0.155	-3.26%
Bond	126.28125	-3.00	+0.35%
Dow	7850.41	-1.04%	-5.20%
Nasdaq	1534.36	-0.48%	-3.60%
S&P	826.84	-1.00%	-4.81%

Gold fell as much as $15.30 to $932.40 by about 10AM EST, but it then rallied back higher into the close and ended with a loss of just 0.79%. Silver dropped as much as $0.27 to $13.23 by about 9AM EST, but it then surged higher in the last four and a half hours of trade and ended near its high of $13.712 with a decent gain of 0.96%.

Euro gold fell to about €728, platinum lost $9.50 to $1057, and copper rose slightly to about $1.54.

Gold and silver equities fell roughly 2% in the first half hour of trade and remained near their lows for most of the rest of the day.

Next week’s economic highlights include the Empire State Manufacturing Index and Net Long-Term TIC Flows on Tuesday, Building Permits, Housing Starts, Export and Import Prices, Capacity Utilization, and Industrial Production on Wednesday, Initial Jobless Claims, PPI, Leading Economic Indicators, and the Philadelphia Fed on Thursday, and CPI on Friday.

Oil jumped over 10% higher on hopes that the $787 billion stimulus plan that is due to pass through Congress will help spur demand in the short term at least.

The U.S. dollar index fell slightly while treasuries plummeted on worries about being able to fund the massive stimulus plan set to be passed by Congress.

The Dow, Nasdaq, and S&P traded mostly lower and ended with modest losses as it became almost certain that the stimulus plan will pass, but uncertainty remains high as to whether or not it will be effective.

Among the big names making news in the market Friday were Bank of America, Abercrombie & Fitch, Lloyds Banking, Toyota, and PepsiCo.

Don’t you think it is about time GLD and all the other popular international gold ETFs told its owners exactly what kind of gold they claim to own?

Can you imagine a situation where a person buys a gold ETF to own “non-gold” but finds out that they in reality own OTC derivatives on gold? That would be an investment in the same type of financial instrument (not gold) that one owns gold bullion to protect against.

The failure to unearth the Madoff scandal becomes incredible when one understands that the returns from the market claimed on the size of the hedge fund were logically impossible.

The exact same reasoning screams bloody murder when applied to the many Gold EFTs in terms of what it is they really own.

This begs one major question: From where did all the gold claimed to be owned by all the gold ETFs come from?

We certainly can forget about that gold coming from the Comex. 12 deliveries would stand out like a sore thumb.

This concept and record keeping eliminates all exchanges around the globe as the source of bullion delivery in any size to all Gold ETFs.

The physical market is so tight that coin minting has all but closed down compared to what it was one year ago. It is hard to accept that the Gold EFTs can buy what the mints can’t.

A read of the original prospectus removes any thought that the gold is leased, but leaves one to invite probability.

That probability is that the claimed gold can only be OTC derivative long positions. If that is so then the financial reliability of the paper stands on the foundation of the balance sheet of the granting counter party to the OTC derivative. This is true regardless of whether it is a mine or naked speculator.

Don’t you think it is about time the gold ETFs told their owners exactly what kind of gold it is that they claim to own?

If I am correct then there is no clearinghouse guarantee for the OTC derivative to function.

Like so many other surprises of the last two years the Gold ETF shareholder may actually have no gold at all.

A perfect Ponzi scheme would allow you to surrender shares for bullion. You need only think about it.”- Jim Sinclair, JSMineset.com

Japanese Yen down hard; Euro up strongly; US Dollar sharply lower and Bonds absolutely obliterated – translation – risk is back in for today even with the broad equity markets down once again.. Under the current market psyche, risk being in means gold is not needed and so the usual chatter about profit taking becomes the explanation for today’s weakness at the Comex.

From a technical perspective, gold ran just shy of very strong resistance at $960 yesterday before encountering heavy selling pressure which took it down late yesterday and into today’s session. You will note on the chart that it bounced right off of the top of the uptrending channel but it did find buying coming back in near the top of the former resistance zone between $930-$920 which is now serving as initial support.

Gold gained about $26 for the week in the process of its $62 range from low to high. The price gain pulled the 10 week moving average above the 40 and 50 week moving averages and was the highest weekly close since early August of last year. The climb higher and the strong close also put it above the weekly swing high from October 10 which puts the market firmly in a technically bullish posture to begin the following holiday-shortened week.

As far as I am concerned, the big market news today is not so much gold, but is the bond market. Its price action is horrendously bearish and is signaling a collapse could very occur if the 125^00 level gives way next week. The bonds had experienced a bit of a bounce to relieve the very oversold condition of the market. In the process they ran exactly to the 20 day moving average and abruptly puked. They are now sitting right on the 100 day moving average again just as they were last Friday. You might recall that Monday of this week, they violated that 100 day average intraday but managed to close back above it which was taken as a short term buy signal by some traders. Now all of those short covering related gains have evaporated and they are perilously poised right on top of that same moving average once again. It is evident that bond bears are deadly serious about attempting to take this market sharply lower. And why shouldn’t they? Who in their right mind would want to lock up their money for 3.5% for 30 years given what we know is coming down the pike? Bonds are signaling that rates must move higher to compensate buyers. Whether or not the safe haven buyers who mindlessly rush into the things at the release of every single bit of bad economic news will be sufficiently large enough buyers to offset the supply-minded sellers who are seeing a tsunami of paper flooding the market in the days, weeks and months ahead remains to be seen but judging from the bearish chart action, it does not appear to be so. If the Fed is going to actually follow through on their talk of buying out along the long end of the curve to keep long term rates artificially low, they are going to be put to the test quite soon it would appear.

I am not sure what percentage of the gargantuan sized, humungous, indeed obscene amount of indebtedness that the reckless spenders in Washington DC are going to foist upon the next two to three generations is going to be financed from issuing long term debt but the rising rate of interest that they are going to have to fork over to potential buyers is just going to make paying down this debt all the more impossible. I guarantee you that we will see a massive attempt to inflate away this debt by a devaluation of the dollar and that devaluation is going to occur with gold being officially revalued at upwards of $1,650 quite easily. There is simply no other way except outright default and that is not going to happen. Devaluation is the only way out short of scrapping the Dollar altogether. Heaven help us for we have been ruined by these short-sighted fools parading as statesmen in Washington D.C. Indeed one of the New York Senators at the middle of this had the audacity to state that Americans do not care about “pork” and welcome the spending orgy. And people wonder why the bond market is collapsing! I am sure the Chinese are reassured that all will be well with their dollar-denominated reserves with this kind of statesmanship.”- Dan Norcini, More at JSMineset.com

“April Gold closed down 7 at 942.2. This was 8.4 up from the low and 1.1 off the high.

March Silver finished up 0.115 at 13.625, equal to the high and 0.26 up from the low.

Given that the gold market managed a low to high pulse this week of almost $65.00 an ounce it wasn't surprising to see prices forge at least a modest correction setback early Friday morning. While some weakness in the Dollar might have provided some support to gold in the past, the Dollar action today didn't seem to be of that much interest to the trade. It certainly seemed like the anticipated passage of the US stimulus package, the potential for US mortgage assistance and the weekend G7 meeting all served to knock down the flight to quality interest in the gold market. In fact, talk of coordinated G7 easing is usually something that serves to tamp down macro economic anxiety.

Like the gold market, the silver market saw a moderate initial correction off the Thursday highs. Also like gold, silver might have been a little short term overdone after the low to high gains this week of roughly almost $1.00 per ounce. Some traders suggested that the potential passage of an enlarged US stimulus package was seen as a development that downgraded the flight to quality status of the silver on Friday. From another angle talk of a US foreclosure/mortgage assistance plan might also have prompted some silver longs to bank profits and move to the sidelines. In the end, weakness in US equities, weakness in energy prices and weakness in the grain markets seemed to foment a deflationary mentality in a number of physical commodity markets.”- The Hightower Report, Futures Analysis and Forecasting

Note: Change in Total Tonnes from Friday’s data: SPDR added 35.48 tonnes to a new record high holding and the LSE added 0.63 tonnes.

Note: Change in Total Tonnes from yesterday’s data: 1.07 tonnes were added to the trust.

NovaGold’s (NG) amended funding agreement with Teck Cominco, Apollo’s (AGT) update on its project financing, First Quantum’s (FM.TO) update on its 2009 operating plans, and Silvercorp’s (SVM.TO) dividend were among the big stories in the gold and silver mining industry making headlines Friday.

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

African Gold Group, Inc.: Financing Update - More
- February 13, 2009 | Item | E-mail

Richview Resources Inc. Completes Private Placement for Gross Proceeds of $250,000 - More
- February 13, 2009 | Item | E-mail

Sheltered Oak Resources Corp. - Completion of Third Tranche of Private Placement - More
- February 13, 2009 | Item | E-mail

Quest Uranium Grants Stock Options - More
- February 13, 2009 | Item | E-mail

Shareholders of TEAL approve plan of arrangement with ARM and Vale - More
- February 13, 2009 | Item | E-mail

UCR Announces Significant Corporate Developments - More
- February 13, 2009 | Item | E-mail

Orvana Reports New Drill Results and Historical Core Reassays From Copperwood Project, Michigan - More
- February 13, 2009 | Item | E-mail

Hawthorne Gold Retains Grandich Publications - More
- February 13, 2009 | Item | E-mail

Orvana Reports Operating Results for the First Quarter Ended December 31, 2008 - More
- February 13, 2009 | Item | E-mail

Mega Uranium Ltd. Releases Unaudited Results for the Three Months Ended December 31, 2008 - More
- February 13, 2009 | Item | E-mail

Boliden: Full-Year Report 2008 - More
- February 13, 2009 | Item | E-mail

Centamin Egypt Reports Mining Commences at Sukari Gold Project - More
- February 13, 2009 | Item | E-mail

Crowflight Ships First Concentrate From Bucko Lake Nickel Mine to Become Canada's Newest Nickel Producer - More
- February 13, 2009 | Item | E-mail

Paladin Energy Ltd: Financial Report for the Second Quarter and Half Year Ending 31 December 2008 - More
- February 13, 2009 | Item | E-mail

Paladin Energy Ltd: Second Quarter/Half Year Conference Call and Investor Update-Feb. 17, 2009 - More
- February 13, 2009 | Item | E-mail

Mirabela Announces New Drilling Results - More
- February 13, 2009 | Item | E-mail

NovaGold and Teck Amend Funding Arrangement on Galore Creek Project - "NovaGold Resources Inc. (the "Company" or "NovaGold") (Toronto:NG.TO - News)(AMEX:NG - News) announced today that it has entered into an agreement with Teck Cominco Ltd. ("Teck") to amend certain provisions of the Partnership Agreement relating to the Galore Creek Project ("Galore Creek"). The agreement confirms that NovaGold and Teck each continue to hold a 50% interest in the Galore Creek Partnership ("the Partnership"). Under the amended agreement Teck will now fund 100% of Galore Creek costs until the aggregate amount contributed by Teck after November 1, 2008, together with approximately $15.8 million previously contributed by Teck on optimization studies equals C$60 million." More
- February 13, 2009 | Item | E-mail

Apollo Gold Provides Update on Project Financing Facility for the Black Fox Project - "As previously announced (see Apollo press release dated December 11, 2008), Apollo retained Macquarie Bank Ltd. ("Macquarie") and RMB Resources Inc. ("RMB") as joint arrangers and underwriters (the "Banks") for the Black Fox Project finance facility ("Project Facility"). On December 10, 2008, Apollo and the Banks completed a US $15 million bridge facility ("Bridge Facility") to ensure that development of the open pit mine and the upgrade of the mill would continue on schedule. At this time, Apollo has utilized US $13.8 million of the Bridge Facility to advance the Black Fox Project. As a part of such Bridge Facility, Apollo issued to the Banks an aggregate of 42,614,254 warrants to purchase common shares at a price of Cdn. $0.221 per common share, exercisable until December 10, 2012 (the "Bridge Warrants")." More
- February 13, 2009 | Item | E-mail

First Quantum cuts 2009 capex, sees higher production - "Canada's First Quantum Minerals Ltd (FM.TO) slashed its 2009 capital expenditure by more than half, and said its senior management and board will take a 20 percent cut in salary and fees as it tries to save cash amid falling copper prices." More
- February 13, 2009 | Item | E-mail

First Quantum Minerals Provides Update on Its 2009 Operating Plans, Outlook and Current Financial Position - "Following the sharp fall in commodity prices in the second half of 2008, First Quantum initiated a review of all parts of its business to identify prudent measures to protect the Company's core activities and financial resources, improve its operating cost profile through this period of low copper prices and emerge stronger when economic conditions improve. This update details the actions implemented and those planned to take effect during 2009. Also included are updates on the Company's current financial position, including the impact of provisional pricing and the extent of asset impairments and recent developments in Zambia and the Democratic Republic of Congo ("DRC")." More
- February 13, 2009 | Item | E-mail

Silvercorp Announces Declaration of Quarterly Dividend-CAD$0.02 - "Silvercorp's third quarter dividend has been declared at CAD$0.02 per share and will be paid on April 21, 2009 to shareholders of record at the close of business on March 31, 2009. The declaration and amount of any future dividends will remain at the discretion of the Board of Directors and may be adjusted in the future based on fluctuations in metal prices and the Company's cash flows." More
- February 13, 2009 | Item | E-mail

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