-- Posted 21 May, 2009 | | Source: SilverSeek.com

The Metals:

Gold and silver climbed roughly 1% in Asia to as high as $943.65 and $14.41 before they fell back off in London to see slight losses at $936.20 and $14.095 by about 11AM EST in New York, but they then rallied to new session highs in the last few hours of trade and ended near those late peaks of $950.80 and $14.483 with gains of 1.5% and 1.26%.  Both metals have risen to new highs in after hours access trade as well.

Euro gold rose to about €684, platinum remained at $1140.50, and copper fell over 5 cents to about $2.05.

Gold and silver equities fell about 3% by about an hour into trade, but they then rallied back higher for the rest of the day and ended with almost 2% gains at new 8 or 9 month highs.

The Economy:

Greenspan Says Banks Still Have a ‘Large’ Capital Requirement  Bloomberg

Fed Unconvinced Economy’s ‘Stabilization’ to Persist  Bloomberg

Geithner Says TARP Can't Help U.S. States Solve Budget Crises  Bloomberg

There are no major economic reports due out tomorrow.

The Markets:

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

Oil fell on worries over weak demand from a stagnant economy, but it did end well off its early lows as the dollar dropped off rather markedly in late trade and fell to its lowest level of the year on preferences for other world currencies.  S&P downgraded Britain’s debt outlook to negative, and many feel that the US may be next in the announcement of downgrades with a possible loss of its current AAA credit rating.

Treasuries reversed early gains and ended markedly lower after it was announced that the fed bought less bonds than expected this week.  “Results of the last Fed Treasury purchase this week were somewhat disconcerting for market participants. The Fed bought $7.398 billion in four- to seven-year notes as part of its plan to buy up to $300 billion in Treasurys by fall, out of $45.694 billion submitted.  The amount submitted was the largest since the program kicked off in late March. The amount the Fed bought was only about 16% of that compared to the average purchase of about 25%, said Chris Ahrens, rates strategist at UBS Securities in Stamford, Conn.”

The Dow, Nasdaq, and S&P fell almost 2% on renewed worries over jobs, the economy, and America’s debt rating.

Among the big names making news in the market today were the UAW and GM, Hormel, GMAC, Barnes & Noble, and Microsoft.

The Commentary:

“Dear CIGAs,

It was a very volatile day in the markets today with the gold, Forex, and bond markets making big swings. The Bond market in particular utterly collapsed during the session as looming supply fears rattled bond bulls even as equities dissolved.  As the bonds dropped through support, the Dollar was smashed lower and gold catapulted higher forcing a wave of short covering and attracting more new buying. That momentum took it easily through yesterday’s session high with price also besting round number psychological resistance at $950. The move is most impressive and the charts are showing an acceleration higher which is coming out of a period of grinding consolidation. I have noted that the RSI is also confirming the upward move with that indicator finally bettering horizontal resistance drawn off the last swing high.

Volume in yesterday’s breach of resistance at $930 was very high and accompanied by a strong surge in open interest. Both are technically bullish, especially the volume reading. Today’s session is showing good volume as well which is serving to confirm the upward thrust. Traders are slowly beginning to roll out of June and into the August contract ahead of the delivery period.

The weekly charts of the HUI and the XAU both look very strong technically. The HUI has finally bested the difficult 50% retracement level drawn off the March 2008 peak near 520 and the October 2009 low near 150. It has had trouble with that level since the beginning of this year so yesterday’s achievement is very significant. It now has a clear shot at the 61.8% retracement level that comes in near the 379 level. If it can conquer that, technically it will be in position to make a run to near the 455-460 level. Most importantly from a trending perspective, the HUI took out the 100 week moving average yesterday which came in near the 359 level. That is no small feat. All of the major moving averages on the weekly chart are either moving upwards or are getting ready to turn higher.

The XAU also has taken out stiff resistance at its 50% retracement level on the weekly drawn off the peak and bottom made in the same months as denoted for the HUI. It has 153-154 standing in front of it which if that can be bested, sets it up for a run to near 200. I should also note that the 100 week moving average is at 150 for the XAU. Unlike its counterpart HUI, the XAU has yet to take out that 100 week moving average.

The Dollar – what more can be said about it other than the fact that it is finally reacting to the spendathon coming out of Washington DC. Violent selling of the nature hitting the Dollar is the result of long liquidation by the trading funds which according to the most recent Commitment of Traders report were net long by over 6,000 contracts. Quite simply- they got trapped long and wrong playing the safe haven game and getting snookered in the process. Now that so many important downside technical support levels have been violated, their algorithms are taking them out with the result that they will be positioning on the short side. Interestingly enough, the small specs have correctly played the Dollar as they were net shorts going into this week.

On the weekly Dollar chart, it has now closed solidly below the 50 week moving average. The ten week moving average has made a downside bearish crossover of the 20 week and is threatening a downside crossover of the 40 week moving average. The 100 week moving average is 79.20, which corresponds exactly to the last swing low made back in December 2008. Should the Dollar make two consecutive weekly closes below this level, gold will be at $1,000 + and the Dollar will be headed down towards 78.45 and then 76.00. The Greenback is very oversold so a blip upward cannot be ruled out but it is hard to envision it moving too far north before eager sellers step back in.

Something I find quite interesting is the strength in the Japanese Yen. Normally yen strength has been synonymous with gold weakness as it has denoted risk aversion. However, the Yen has rallied even as gold and the rest of the commodity complex as indicated by the CCI has moved higher. It would appear that the Dollar is so tainted, that even the lowly Yen is moving higher against it. That bears watching because a move higher in the Yen alongside of the Euro will shove the USDX down even harder because the Yen makes up approximately 13% of the basket weighting that comprises the USDX. It has tended to move lower alongside of the Dollar until recently and if this pattern is breaking down, it will mean an acceleration in the dollar’s rate of descent.

With crude oil breaking out above the $60 level and with index funds pouring money into the entire commodity sector, it is very difficult for the commodity bears to gain much downside traction. The sum of money flowing into tangibles is enormous as a great deal of those funds were sitting in cash on the sidelines and waiting for a signal to get long. That they have done and are now doing and that is where the buying pressure is originating from across the entire commodity complex. Keep in mind that they will buy until they get their allocation done irrespective of any particular fundamental factors. Technical money flows more and more dominate the world of trading and investing and arguing against that kind of money is worse than spitting into the wind. Just like when they are blindly selling – these guys blindly buy and very few are willing to step in front of such a freight train whether it is coming or going.  When it comes to gold we know that the bullion banks, thanks to the largess of the US monetary authorities, are among the few participants who will fight such buying but even they cannot take on the entire world of index and hedge funds without the buying momentum pushing them back. I still often wonder what it would be like to see gold trade freely without their constant interference.

I am a bit surprised to see that the reported holdings of GLD have only increased a relatively minor amount these last few days. Perhaps that will change with the technical breakout above $930 and the sharp move higher today.  We’ll see.

Silver has its 2009 peak targeted – that comes in near the 14.61 – 14.63 level. If it can best this level convincingly, there looks to be a lot of air between it and 16.25.”- Dan Norcini, More at JSMineset.com

“June Gold closed up 13.8 at 951.2. This was 15.4 up from the low and 0.6 off the high.

July Silver finished up 0.165 at 14.445, 0.065 off the high and 0.355 up from the low.

The gold market surprised the trade with the capacity to regain its legs in the face of broad based deflationary type selling and a renewal of flight to quality mentality. Apparently seeing more discussions of a possible US or UK credit downgrade inspired some of the buying in gold on Thursday. However, with another big down day in the Dollar, the gold market could have been lifted by a number of themes. With the Treasury market getting dumped aggressively, it is possible that even default fears were being tossed around in the wake of the credit ratings talk.

Like gold, silver was also able to see a strong recovery after initially pulling back in reaction to the scheduled US economic report flow. Silver didn't seem to be undermined by the economic doubts being raised by the Fed and being reflected in losses in both the equity and copper markets. In fact, rising macro economic concerns seemed to stir up fresh safe gave buying demand in the metals. Silver also seemed to benefit from inflation worries tied to the possibility that the Fed will step up its asset purchases and further flood the system with more Dollars. It also appears that silver was lifted by the sinking Dollar which tends to raise the appeal of physical commodities as an alternative asset. With July silver reaching the highest price level since February and the market pushing through a key level it looks as if part of the gains were chart based.”- The Hightower Report, Futures Analysis and Forecasting

The Statistics:

As of close of business: 5/21/2009

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: Change in Total Tonnes from yesterday’s data: The JSE added 0.24 tonnes.

COMEX Gold Trust (IAU)

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

Silver Trust (SLV)

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

The Miners:

Rubicon’s (RBY) warrant exercise proceeds, Claude’s (CGR) additional drill rig, Silverstone’s (SST.V) completed arrangement with Silver Wheaton (SLW), SNS Silver’s (SNS.V) clarified mine status, Minefinders’ (MFN) metallurgical results, ECU’s (ECU.TO) mill update, and U.S. Silver’s (USA.V) first quarter production costs 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:

ICS Acquires 49% of Luapula Minerals Ltd - More
- May 21, 2009 | Item | E-mail

Acadian Mining announces that ScoZinc has received creditor approval of plan of arrangement - More
- May 21, 2009 | Item | E-mail

Radius Assigns Nueva California Property to Focus Ventures - More
- May 21, 2009 | Item | E-mail

VMS Ventures Inc.: Tower Zone Exploration Plans - More
- May 21, 2009 | Item | E-mail

ICS Acquires 49% of Luapula Minerals Ltd - More
- May 21, 2009 | Item | E-mail

Cardero Receives USD 10 Million Deposit for Pampa de Pongo Iron Ore Deposit, Peru - More
- May 21, 2009 | Item | E-mail

Southwestern Resources Corp. and Hochschild Mining Plc Joint News Release: Plan of Arrangement to Close Today - More
- May 21, 2009 | Item | E-mail

Klondike Gold Corp.: Drilling Intersects 155 Meters of 'Sullivan Horizon' at Irishman Project - More
- May 21, 2009 | Item | E-mail

KWG files an application to extend life of warrants - More
- May 21, 2009 | Item | E-mail

SNS Silver Clarifies Status of Sunshine Mine in Idaho - "SNS Silver Corp. (CDNX:SNS.V - News) remains confident of its long-term goal to operate the legendary Sunshine silver mine near Kellogg, Idaho, adjacent to SNS Silver's Crescent silver mine. A lease of the mine held by Sunshine's former operator, Sterling Mining Co., was held re-assumable pursuant to applicable bankruptcy law on May 15, despite Sterling's vacation of the property on February 19. A May 27 hearing is now scheduled to determine Sterling's ability to cure defaults under the lease and reimburse SNS costs expended for the care and maintenance of the mine." More
- May 21, 2009 | Item | E-mail

AXMIN Update - More
- May 21, 2009 | Item | E-mail

Amador Gold Corp. Drilling Discovers new Near-Surface Nickel-Copper Zone 400 Meters From Cominco Zone - More
- May 21, 2009 | Item | E-mail

Kinbauri Announces Proposed Closing of Private Placement - More
- May 21, 2009 | Item | E-mail

Alamos Gold Inc. Presents Findings of Escondida Mill Technical Report and Announces Results of Annual General Meeting of Shareholders - More
- May 21, 2009 | Item | E-mail

Rocmec Signs MOU to Operate and Option to Acquire Rocmec 3 in Peru - More
- May 21, 2009 | Item | E-mail

Castle Gold Intersects 109.7 Metres Grading 0.7 Grams Per Tonne Gold as Part of El Castillo Mine Resource Expansion Drilling Program - More
- May 21, 2009 | Item | E-mail

Glass Earth Gold Limited: Exploration Update - More
- May 21, 2009 | Item | E-mail

Galantas Further Upgrades Mining Equipment and Increases Production - More
- May 21, 2009 | Item | E-mail

Unico, Inc. Director Files Form 4 Regarding Acquisition of Approximately 4 Million Shares of Common Stock - More
- May 21, 2009 | Item | E-mail

Lund Gold Ltd.: Blackfox Property Update - More
- May 21, 2009 | Item | E-mail

Focus Confirms Property Option and Arranges Financing for Graduation to TSX Venture - More
- May 21, 2009 | Item | E-mail

Andina to Double Mineral Concession Area Around Volcan Project Through Share Transaction With Barrick - More
- May 21, 2009 | Item | E-mail

Quaterra Receives NYSE Amex Notification - More
- May 21, 2009 | Item | E-mail

Matamec Completed a Drill Hole on its Matheson-Pelangio Property Reissuing Stock Options to Two Directors - More
- May 21, 2009 | Item | E-mail

Gold Resource Corporation Intercepts High-Grade Gold and Silver, Including 1m of 37.2 g/t Gold and 1.8m of 15.7 g/t Gold, Expanding the La Arista Deposit - William W. Reid, President of Gold Resource Corporation, stated, "The series of high-grade holes outside our initial mineralized material envelope appear to be indicating a potential significant expansion and one that might allow Gold Resource, in the near term, to double our previously stated mineralized material estimate of 1.6 million gold equivalent ounces*. We are particularly pleased with the continued high-grade gold intercepts." More
- May 21, 2009 | Item | E-mail

Gold Resource Corporation Intercepts High-Grade Gold and Silver, Including 1m of 37.2 g/t Gold and 1.8m of 15.7 g/t Gold, Expanding the La Arista Deposit - More
- May 21, 2009 | Item | E-mail

Red Pine Exploration Commences Exploration Program on Abitibi-West Property Near Timmins - More
- May 21, 2009 | Item | E-mail

Uranium Star Engages Engineering Group for its Green Giant Vanadium Project in Madagascar - More
- May 21, 2009 | Item | E-mail

Sage Gold and Consolidated Puma Announce Merger Agreement - More
- May 21, 2009 | Item | E-mail

Osisko Discovers New Mineralized Zone Adjacent to South Barnat - More
- May 21, 2009 | Item | E-mail

Uruguay Mineral Exploration Inc: Change of Nominated Adviser and Broker - More
- May 21, 2009 | Item | E-mail

African Copper PLC: Issue of Shares and Compromise Agreement With RSV - More
- May 21, 2009 | Item | E-mail

PTQ Board of Directors Approves Spin-Out of Petaquilla Infraestructura Ltd. - More
- May 21, 2009 | Item | E-mail

Southwestern Resources Corp.: Plan of Arrangement Update - More
- May 21, 2009 | Item | E-mail

Lexam Baca Project Update - More
- May 21, 2009 | Item | E-mail

Kinbauri Announces Legal Actions Against the Company - More
- May 21, 2009 | Item | E-mail

Mantra Mining Completes $5 Million Private Placement and Alaska Property Acquisition - More
- May 21, 2009 | Item | E-mail

Minefinders Reports Column-Leach Metallurgical Results and Commencement of La Bolsa Pre-Feasibility Study - "Minefinders Corporation Ltd. (Toronto:MFL.TO - News)(AMEX:MFN - News) reports that final results from recent metallurgical tests confirm high amenability of La Bolsa ores to standard heap-leach recovery of gold at moderate to coarse crush sizes. Column-leach gold recoveries average 78.8% for the 9.5mm (-3/8 inch) crush, 74.3% for the 15.8mm (-5/8 inch) crush and 73.1% for the 25mm (-1 inch) crush size. Overall reagent consumptions were moderate to low. These metallurgical results and results from current drilling will be incorporated into an updated resource model and pre-feasibility study of Minefinders wholly-owned La Bolsa gold and silver property in Sonora, Mexico. Results will be reported in a National Instrument 43-101 compliant technical report." More
- May 21, 2009 | Item | E-mail

Silverstone Completes Arrangement With Silver Wheaton - "Silverstone Resources Corp. ("Silverstone") (CDNX:SST.V - News) is pleased to announce the closing of the previously announced acquisition of Silverstone by Silver Wheaton Corp. ("Silver Wheaton") by way of plan of arrangement under the Business Corporations Act (British Columbia) (the "Arrangement"). The Arrangement was approved by the shareholders of Silverstone on May 19, 2009 and the Supreme Court of British Columbia on May 20, 2009." More
- May 21, 2009 | Item | E-mail

Rubicon Increases Treasury by $16 million on Exercise of May 2007 Warrants - "Rubicon Minerals Corporation (RMX.TSX; RBY.NYSE-AMEX) is pleased to announce it has received proceeds of $16,024,265, pursuant to the exercise of May 2007 warrants, priced at $1.50, which expired May 19th, 2009. As a result of these exercises, the Company has issued 10,682,843 new common shares and has a cash position as of the date of this release of approximately $68.6 million. As of May 20th, the Company had no remaining warrants outstanding." More
- May 21, 2009 | Item | E-mail

ECU Silver Provides Update on Mill Operations - "ECU Silver Mining Inc. (TSX:ECU - News) is pleased to report that it has poured a total of 78 silver/gold dore bars in the past month. The silver/gold dore bars have a total weight of 1,575 kilograms (kg). Assays indicate that these dore bars contain a total of 626 ounces of gold and 30,544 ounces of silver." More
- May 21, 2009 | Item | E-mail

Claude Resources Adds Second Drill Rig at Madsen, Red Lake - "Claude Resources Inc. (TSX-CRJ; NYSE Amex-CGR) today announced that it will add a surface exploration rig at the Company's Madsen property located at Red Lake, Ontario." More
- May 21, 2009 | Item | E-mail

U.S. Silver Announces Q1 2009 Production Costs - "U.S. Silver Corporation (TSX-V:USA - News) (“US Silver” or the “Company”) is pleased to announce that the Galena Mine was successful in managing its cost structure during a period of increased production. As a result, the cash cost per ounce of silver produced totaled $10.59 for the quarter ended March 31, 2009. This cash cost was 35% lower than the fourth quarter 2008 ($16.27) and 29% lower than the first quarter of 2008 ($14.88). Calculations of cash cost per silver ounce produced are based on guidance provided by the Gold Institute and utilize the by-product method." More
- May 21, 2009 | Item | E-mail

- Chris Mullen, Gold Seeker Report

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