Gold Seeker Closing Report: Gold and Silver Fall Over 2%

	Close	Gain/Loss
Gold	$1106.40	-$28.85
Silver	$17.20	-$0.44
XAU	164.53	-5.14%
HUI	420.70	-5.87%
GDM	1245.30	-5.94%
JSE Gold	2462.32	-41.38
USD	77.73	+0.85
Euro	143.43	-0.83
Yen	111.15	-0.20
Oil	$72.65	-$0.01
10-Year	3.487%	-0.109
T-Bond	120.0625	+1.40625
Dow	10308.26	-1.28%
Nasdaq	2180.05	-1.22%
S&P	1096.09	-1.18%

Gold and silver steadily dropped throughout most of world trade and gold ended near its noontime low of $1100.95 with a loss of 2.54% while silver ended near its low of $17.08 with a loss of 2.49%.

Euro gold fell to about €772, platinum lost $20 to $1426, and copper fell roughly 6 cents to about $3.13.

Gold and silver equities fell about 5% by midday and remained near their lows into the close.

Report	For	Reading	Expected	Previous
Initial Claims	12/12	480K	465K	473K
Leading Indicators	Nov	0.9%	0.7%	0.3%
Philadelphia Fed	Dec	20.4	16.0	16.7

Oil fell as the U.S. dollar index and treasuries rose on worries over higher interest rates, poor company reports, and bad debts around the world that sent the Dow, Nasdaq, and S&P over 1% lower on the day. Today’s latest debt scare came after Standard & Poor's downgraded Greece's rating from A-minus to BBB-plus.

Among the big names making news in the market today were Morgan Stanley, FedEx, Citigroup, Rite Aid, General Mills, Bank of America, Discover, Goldman Sachs, and Calpers.

“Gold's open interest rose 4,470 contracts on Tuesday. Most of that would have occurred during New York trading, as there was quite a price surge during that period. For the second day in a row, volume wasn't particularly heavy... only 167,797 contracts traded... and gold o.i. is now back over the 500k mark at 504,368 contracts. Silver had a good price increase on Tuesday as well, but it's open interest went the other direction... it fell 569 contracts. It's impossible to tell whether it was short covering or new longs being placed and spreads being lifted... but at least the o.i. went down. Volume was a very smallish 27,004 contracts... with total o.i. now down to 121,787... which is still obscenely high.

Yesterday's CME Delivery Report showed that 69 gold and 43 silver contracts are due for delivery on Friday. The SLV ETF reported no changes yesterday... but over at the GLD ETF, they reported an increase of four tonnes... 127,412 troy ounces. I'm sure that the SLV is owned tens of millions of ounces more than the 29.6 million they received during the last couple of months... but they, like everyone else buying silver in quantity, has their truck parked at the refinery door waiting for their shipment.

The U.S. Mint had some news yesterday. They reported selling another 55,500 troy ounces of gold eagles in various sizes... including 44,000 of the one-ounce variety. It's been almost a month since the Mint has had any one-ounce gold eagles to sell. The U.S. Mint will have it's biggest month of the year in December... and has already sold 146,500 ounces of gold eagle bullion coins in various sizes. Year-to-date the Mint has gone through 1,340,000 troy ounces of gold in their gold eagle program alone... along with another 200,000 troy ounces in their 24K gold buffalo bullion coins.

The Mint also had an update in silver eagles as well... up another 103,500. Month-to-date, the Mint has sold 1,790,000... and year-to-date it's 27,783,000. That's two thirds of the United States entire silver mining production going into one product... the silver eagle bullion coin. My suggestion to my American readers is to buy as many as you can afford... while they're still making them.

The Comex-approved warehouses reported receiving a rather large 1,180,667 ounces. All of it was received at the Brink's depository.”– From Ed Steer’s Gold & Silver Daily, read the full report here.

With the Dollar continuing to strengthen, gold is facing strong headwinds as carry trades are being unwound today. Chatter out of Europe about Greece’s dire straits (their credit rating was downgraded by Standard and Poors) has traders shunning the Euro and moving into the "safety" (please pause here for a moment and allow me to stop laughing long enough to finish writing this) of the US Dollar and away from leveraged risk trades. That is bringing selling into the entire commodity complex and gold is not escaping it.

I have mentioned in previous posts that the selling in gold did not appear to be carry trade unwinding but rather the usual price retracement tied to long liquidation in a bull market. The reason was that many commodities were actually moving higher even as gold was moving lower. That has changed with today’s intense selling as can be seen by the near unanimous wave of selling that is washing over the entire commodity complex. Only a few markets have been exempt from that deleveraging, notably Natural Gas and to a certain extent, sugar and cattle, which are holding reasonably well all things considered.

Some of these hedge funds and managed money accounts have huge profits on their books from playing this carry trade, especially over the last few months, and are now apparently deciding to book those profits before year end. That is a reasonable thing to do considering the fact that they want to show their clients some nice gains for the year. The fear is that if they wait they lose more of those paper profits and thus we get a general stampede in one direction and that is down with commodities and up with the Dollar.

The Dollar’s picture has turned friendly from a technical perspective on the weekly chart as it is now firmly above the 10 week and 20 week moving averages, both of which have turned higher and are moving up. The longer term 40 week average, which is closely watched by the fund community is still moving lower and comes in near the 79.50 level. A weekly close above that level would give the Dollar room to move to as far as 82.00 – 82.50 before encountering serious technical opposition. Keep in mind that I am not advocating a bullish fundamental viewpoint for the Dollar; I am only relaying what the price chart is saying technically. We have seen these periodic moves higher in the Dollar over and over again even as it continues its long term decline. It is just part of the markets and there is really not much more to say about it other than every time it has rallied, it has been met with strong selling that sent it plummeting back to earth as those nations with huge Dollar holdings use the strength in the Dollar to diversify out and move towards other assets or bonds of different nations.

With the US following political policies designed to turn it into a third world banana republic, the Dollar’s days are numbered and its decline is inevitable unless it is linked to some sort of gold backing which of course would require a substantially higher gold price due to the gargantuan sums of US indebtedness; indebtedness I might add that NECESSITATES a dollar devaluation since it has now become mathematically impossible to ever clear that debt. While traders have to take a somewhat myoptic view of things because of the damn hedgies, long-term oriented INVESTORS have to keep their eye on the ball of macroeconomics and make their decisions for wealth allocation accordingly. Personally, you could not PAY ME to hold US Treasuries – they will end up being nothing but scraps of paper without value by the time the government’s printing presses run out of ink in conjuring them up to pay for all the crap they are throwing money at (now we have the brainless “cash for caulkers” program). I am still waiting for my government purchased and supplied 4 wheeler. I really do need one of those things and want the feds to buy me one. After all, I deserve one.

Look for Central Banks to become more active on the sly in acquiring the yellow metal as they take advantage of the lower price to secure it. We have to remember that Central Banks out of Asia are not hedge funds and do not manage their assets like momentum traders. They do not chase prices higher, ever. They are like the old fashioned traders (we are a dying breed) who used to try to buy low and sell high. When the hedgies got their fancy algorithms cooked up, that went out the window for the “investing” community but there remains those who look to buy gold on weakness and not strength. Also, India will become more active in general in the physical market as gold priced near current levels begins to look like a bargain considering we are now nearly $110 lower than we were a mere two weeks ago.

It will therefore be interesting to see how much lower gold might drop before it shrugs off the rally in the Dollar and trades on its own merits as a safe haven instrument. That brings me to the bond market which is seeing a safe haven flow today.

If you will note, bonds are sharply higher reflecting the panic back into the “security” of US debt. Once again, for the umpteenth time, the bonds bounced right off the bottom of their 5 month long trading range. Quite simply, a surging economy is not compatible with a bond market that is moving higher and falling long term interest rates. Again, at the risk of being redundant, what we are seeing is leveraged trades being unwound; nothing more, nothing less. Try not to read too much into it. It is just a cacophony of market noise. One thing is certain however, bonds do not get a bid when traders and investors are feeling upbeat about the prospects of the economy. That is a rather stubborn fact, protestations and rose colored glasses comments by the FOMC notwithstanding. After all, what did people expect them to say in their comments – that we are going to hell in a handbasket and losing our economic clout to the far Eastern rising powerhouses? Bernanke and company want to keep their jobs.

It looks like some of us gold folks are not going to be able to buy our kids that GI Joe with the Kung Fu grip after today. Then again, the ZHU-ZHU hamsters or rats, whatever they are, are now the in thing, so maybe we can get those instead. At their current price they are equivalent to 1/24 of an ounce of gold so maybe we can shave some of that off a bullion coin and take it to Ebay and keep the kids happy after all.

There is nothing that I see on the horizon with our current Administration, political leadership or Federal Reserve officials that inspires the least bit of confidence in their ability to do the right thing for the long term prosperity of the nation. That makes me quite comfortable with gold for if I had to choose between trusting the current crop of bozos and the yellow metal, right now there is no competition whatsoever.”- Dan Norcini, More at JSMineset.com

This morning when the opposing members of the Chairman of the Federal Reserve confirmation committee were speaking, their faces were shown with lips moving but no sound. There were over-spoken by the F-TV so the net result is you did not hear one word.

Well that should go some distance to tell you the smoke and mirrors that underlies the dollar rally that money managers and F-TV have talked themselves into. Once the gossip gang had decided that the unknowable Carry Trade had become as the professor said, the Mother of All Carry Trades, luncheon discussions turned to when and how high the New Year’s rally in the US dollar is going be.

The euro has been talked down from the $1.52 level by those that had established very large shorts in the same manner that we are all used to. The employment figures changed a statistically insignificant amount and the MOPE machine went to work.

The question now that the USDX has appreciated above the .77 level is what fundamental legs are left after the weak hands are ejected? You need to know that FOREX houses have come on to that focus on Gamma’s account at 500 to 1 leverage.

The rub in the conclusion that there are little to modest legs in this short squeeze is because the Fed is dedicated to maintaining low short terms rates as they definitely understand the Peanut Brittle recovery. The highly professional and well financed money managers will not abandon the utilization of the dollar as a carry currency, having once again gotten the Fed’s green light.

Fundamentally 10% unemployment would delight the markets, but what a hell of weak basis upon which to anticipate any major recovery in a consumer driven Western economy.

If you can stand the heat in the gold kitchen it will protect you from the madness of monetary mismanagement, rulership of the banksters and capitulation of FASB. The alternative is to buy the dollar and get a spiritual experience without the need for a guru in the not too distant future.

To answer the many calls and emails I am receiving, please understand that it is my opinion that the dollar market is the most fundamental of all markets.

I will never deny that the dollar can experience contra-trend positive experiences, but I foresee no bull dollar market, nor even firmness for months.

My view is based on the fundamental disaster that the dollar is, especially with the deceleration of foreign demand for the ever increasing size of Treasury auctions.

Supply from the desire for diversification and from the ever-growing size of Treasury auctions is dollar supply that will not be offset by increasing demand, except for the brief moments of Management of Perspective Economics.

When rates rise, which they will, it will be a product of a disdain for dollar instruments and not positive for the US dollar outside of a few days.

This business recovery is MOPE, smoke and mirrors, and is therefore totally brittle, locking the Fed into near zero rates and unlimited QE.

Hyperinflation is a currency event, not an economic event. When it occurs it will be super bullish on general equities in the currency of the entity whose mismanagement caused it in the first place.

Note: Change in Total Tonnes from yesterday’s data: SPDR added 3.963 tonnes.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 81.77 - No change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 9,514.35 - No change from yesterday’s data.

Crystallex’s (KRY) claim dismissal, Golden Star’s (GSS) share offering, Barrick’s (ABX) Executive Vice-Chairman passing, and Silver Quest’s (SQI.V) acquired claims 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.

Crocodile Gold Announces Uranium Drill Results Up to 12 Metres of 0.62% U3O8 - More
- December 17, 2009 | Item | E-mail

Olympus: Zedex Shareholders Approves Amalgamation with Olympus - More
- December 17, 2009 | Item | E-mail

Cameco Updates Progress at Cigar Lake - More
- December 17, 2009 | Item | E-mail

Puget Ventures Norpax Drilling Demonstrates Larger Deposit Size Potential in Werner Lake Belt - More
- December 17, 2009 | Item | E-mail

Silvore Fox Minerals Corp. Announces Signing of Formal Agreement With Sino Minerals Corp. (formally China Nonferrous Metals Exploration Corp.) - More
- December 17, 2009 | Item | E-mail

Vanstar Mining Resources Inc.: Announcement - More
- December 17, 2009 | Item | E-mail

High Desert Gold Corporation Completes $595,000 Financing - More
- December 17, 2009 | Item | E-mail

Chip Samples Assayed 21.3 g/t Gold and 2,210 g/t Silver at Golden Goliath's Las Bolas Property - More
- December 17, 2009 | Item | E-mail

Union Securities Initiates Analyst Coverage of Corex Gold Corp. - More
- December 17, 2009 | Item | E-mail

Panoro Minerals Ltd.: Kusiorcco Permit and Cotabambas Community Agreements Received - More
- December 17, 2009 | Item | E-mail

Ecometals Announces Diamond Drill On Site at Rio Zarza Gold Project, Drilling to Start Early January - More
- December 17, 2009 | Item | E-mail

First Gold Starts Drilling on its Pivert/Rose Lithium Property - More
- December 17, 2009 | Item | E-mail

Klondex Secures BLM Permits for Confirmation Program at Fire Creek - More
- December 17, 2009 | Item | E-mail

International Wayside Gold Mines to Purchase QR Mine and Mill - More
- December 17, 2009 | Item | E-mail

Avanti Mining files final Preliminary Feasibility Study for Kitsault Molybdenum property - More
- December 17, 2009 | Item | E-mail

Golden Predator intercepts 31.55 gpt gold along with 76.5 gpt silver across 4.72 meters at Adelaide Project, NV; Appoints Travis Schwertfeger VP Exploration - More
- December 17, 2009 | Item | E-mail

Bravo Venture Group Announces Record Date for Bravada Spin-Out - More
- December 17, 2009 | Item | E-mail

Dia Bras Pours the First Silver Dore Bar From Cusi Rock - More
- December 17, 2009 | Item | E-mail

Puma Exploration Inc.: Metallurgical Testing for Turgeon and Drilling at Nicholas-Denys - More
- December 17, 2009 | Item | E-mail

Luiri Gold Releases Further Assay Results of the 2009 Drilling Programme at the Luiri Hill Project - More
- December 17, 2009 | Item | E-mail

Pershimco Resources Announces the Closing of Its Flow-Through Private Placement - More
- December 17, 2009 | Item | E-mail

North Atlantic to Commence Trading on TSX Venture Exchange - More
- December 17, 2009 | Item | E-mail

Unico, Inc. Announces Changes to the Company's Board of Directors - More
- December 17, 2009 | Item | E-mail

Industrial Minerals Corporate Update - More
- December 17, 2009 | Item | E-mail

Mesa Uranium Green Energy Lithium Project Update - More
- December 17, 2009 | Item | E-mail

Colossus Minerals Announces Approval of the Final Exploration Report for the Serra Pelada Project - More
- December 17, 2009 | Item | E-mail

Mexivada Samples High Grade Gold-Silver-Tellurium Zone at Gold Jackpot Property, Nevada - More
- December 17, 2009 | Item | E-mail

Rare Earth Metals Inc. Completes Merger and Begins Trading Under the Symbol RA - More
- December 17, 2009 | Item | E-mail

Copper One Inc. Updates Shareholders: Alan Edwards Appointed President, CEO and Director; Drill Program at Lone Mountain Permitted-Drilling to Commence - More
- December 17, 2009 | Item | E-mail

Red Dragon to Change Name to Brazilian Gold Corporation - More
- December 17, 2009 | Item | E-mail

Nevada Gold Holdings Inc. Provides Drilling Update at Tempo - More
- December 17, 2009 | Item | E-mail

Orebodies Completes Purchase of 100% Interest in 5 Lithium/Rare Metals Properties and Provides Project Update - More
- December 17, 2009 | Item | E-mail

PBX Files 43-101 Preliminary Assessment Report on Its Copaquire Copper-Molybdenum-Rhenium Project in Chile - More
- December 17, 2009 | Item | E-mail

Animas Resources Reports Assay Results from Toro-Gregorio Gold Target - More
- December 17, 2009 | Item | E-mail

MPM Technologies Inc. Subsidiary Begins Mining Work - More
- December 17, 2009 | Item | E-mail

Labrador Iron Mines acquires an additional 50 million tons of DSO iron ore in Quebec and initiates manganese development - More
- December 17, 2009 | Item | E-mail

Garibaldi Commences Drilling of the Rembles Gold Prospect on Its 100% Owned Tonichi/Onovas Property in Sonora, Mexico - More
- December 17, 2009 | Item | E-mail

CBR Gold Corp.: New High-Grade Discovery Expanded at Niblack - More
- December 17, 2009 | Item | E-mail

Quaterra and Goldcorp Join Forces to Explore Central Mexico - More
- December 17, 2009 | Item | E-mail

Southern Arc Granted IUP License for Its Sabalong Property - More
- December 17, 2009 | Item | E-mail

Geodex Minerals Announces a 31% Increase in the Measured and Indicated Resources at Its Sisson Brook Tungsten-Molybdenum Project, Pre-Feasibility Program - More
- December 17, 2009 | Item | E-mail

Etruscan's Youga Gold Mine reports positive cash flow in fourth quarter - More
- December 17, 2009 | Item | E-mail

Detour Gold Reports Drill Results From Its Detour Lake Gold Project in Ontario - More
- December 17, 2009 | Item | E-mail

Elray Resources, Inc.'s Picacho Property Contains Continuation of a Historically Prolific Vein System - More
- December 17, 2009 | Item | E-mail

Capstone Reports Production Guidance for 2010 - More
- December 17, 2009 | Item | E-mail

Black Hawk Exploration's Wholly Owned Subsidiary Golden Black Hawk Overview of Gold and Silver Dun Glen Mine Project in Pershing County, Nevada - More
- December 17, 2009 | Item | E-mail

Bolero announces $1,260,000 flow-through financing - More
- December 17, 2009 | Item | E-mail

Greystar Resources Appoints Richard Robinson to Board of Directors - More
- December 17, 2009 | Item | E-mail

Crystallex Reports Noteholder Claim Dismissed - "Crystallex International Corporation (TSX:KRY - News) (AMEX:KRY - News) reported today that Justice Newbould of the Ontario Superior Court has dismissed all of the noteholders' claims against Crystallex and ordered the noteholders to pay Crystallex its costs. In detailed reasons released late on December 16, 2009, Justice Newbould held that Crystallex has acted reasonably and in accordance with its obligations to the noteholders. The noteholders have 30 days to consider whether they wish to appeal Justice Newbould's decision to the Ontario Court of Appeal. Crystallex is of the opinion that if an appeal were launched, Justice Newbould's decision would be upheld." More
- December 17, 2009 | Item | E-mail

Golden Star Announces Successful Completion of US$75.0 Million Common Share Offering - "Golden Star Resources Ltd. (AMEX:GSS - News)(TSX:GSC - News)(GSE: GSR) announced that it closed today its previously announced offering of 20 million common shares at a price of US$3.75 per share resulting in US$75.0 million in gross proceeds, or approximately US$71.6 million in net proceeds to the Company. As stated in our press release of December 4, 2009, the underwriters have an over allotment option, exercisable for a period of 30 days following today's closing, to acquire up to an additional 3.0 million common shares at a price of US$3.75 per share for additional gross proceeds of up to US$11.25 million, or net proceeds of up to approximately US$10.7 million." More
- December 17, 2009 | Item | E-mail

Barrick Gold Corporation Executive Vice-Chairman Gregory C. Wilkins Passes Away at 53 - "Barrick Gold Corporation (NYSE:ABX - News) (TSX:ABX - News) is deeply saddened at the passing of the company's Executive Vice-Chairman, Greg Wilkins." More
- December 17, 2009 | Item | E-mail

Silver Quest Acquires Strategic Claims in the Dawson Range, Yukon - "Silver Quest Resources Ltd. (TSX VENTURE:SQI - News; the "Company") is pleased to announce that it has entered into a Mineral Claims Sales Agreement (the "Agreement") to acquire 11 claim blocks, comprising 234 quartz mineral claims (49 square kilometres) from ATAC Resources Ltd. ("ATAC") located in the Dawson Range, Yukon Territory. See www.silverquest.ca for property locations and further information." More
- December 17, 2009 | Item | E-mail

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