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Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 2% and 5% on the Week

By: Chris Mullen, Gold-Seeker.com


-- Posted 8 October, 2010 | | Source: SilverSeek.com

Please Note:  Canadian markets will be closed on Monday for Canada’s Thanksgiving Day.  The bond market will also be closed in the US for Columbus Day, but the US stock markets will be open.

 

 

Close

Gain/Loss

On Week

Gold

$1343.60

+$8.90

+2.06%

Silver

$23.13

+$0.56

+5.13%

XAU

204.82

+1.75%

+2.28%

HUI

521.22

+1.25%

+1.32%

GDM

1577.83

+1.20%

+1.14%

JSE Gold

2533.77

+6.35

-0.92%

USD

77.25

-0.20

-1.08%

Euro

139.29

+0.04

+1.08%

Yen

121.68

+0.24

+1.39%

Oil

$82.66

+$0.99

-2.27%

10-Year

2.381%

-0.015

-5.74%

Bond

134.3125

-0.125

+0.70%

Dow

11006.48

+0.53%

+1.63%

Nasdaq

2401.91

+0.77%

+1.31%

S&P

1165.15

+0.61%

+1.65%

 
 

 

The Metals:

 

Gold fell over $10 to $1324.60 in London before it spiked up to $1345.25 after the release of the jobs report and then dropped back down to $1329.55 by about 9AM EST, but it then rallied back higher for most of the rest of trade and ended near its late morning high of $1379.52 with a gain of 0.67%.  Silver fell to as low as $22.28 in London before it rallied back higher for most of trade in New York and ended near its late morning high of $23.295 with a gain of 2.48% at a new 30-year closing high.

 

Euro gold rose to about €966, platinum gained $6 to $1700.75, and copper gained over 9 cents to about $3.76.

 

Gold and silver equities rose about 1.5% by late morning and remained near that level for the rest of the day.

 

The Economy:

 

Report

For

Reading

Expected

Previous

Nonfarm Payrolls

Sep

-94K

0K

-57K

Unemployment Rate

Sep

9.6%

9.7%

9.6%

Hourly Earnings

Sep

0.0%

0.2%

0.3%

Average Workweek

Sep

34.2

34.2

34.2

Wholesale Inventories

Aug

0.8%

0.4%

1.5%

 

The BLS net birth/death adjustment added 11,000 jobs to September’s payrolls.  Private payrolls rose 64,000.

 

All of this week’s other economic reports:

 

Consumer Credit - August

-$3.3B v. -$4.1B

 

Initial Claims - 10/03

445K v. 456K

 

ADP Employment - September

-39K v. 10K

 

ISM Services - September

53.2 v. 51.5

 

Factory Orders - August

-0.5% v. 0.5%

 

Pending Home Sales - August

4.3% v. 4.5%

 

Next week’s economic highlights include minutes from the fed’s last meeting on Tuesday, MBA Mortgage Applications, Export and Import Prices, and the Treasury Budget on Wednesday, Initial Jobless Claims, PPI, and the Trade Balance on Thursday, and CPI, Retail Sales, the NY Fed - Empire Manufacturing Survey, Michigan Sentiment, and Business Inventories on Friday.

 

The Markets:

 

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

 

Oil rose as the U.S. dollar index and treasuries fell on the unexpectedly large drop in payrolls.

 

The Dow, Nasdaq, and S&P found decent gains on today’s poor jobs data that increased the chances for quantitative easing by the fed.

 

Among the big names making news in the market Friday were 3M, Bank of America, BP, and American Apparel.

 

The Commentary:

 

Dear CIGAs,

 

So much for the anxiously anticipated payrolls report – it turned out to be an absolute dud with the economy shedding yet more jobs (try to think of this in human terms). Another 95,000 jobs disappeared. While private sector hiring did show a mild increase, government jobs (state, local and federal – census workers) showed another drop.

 

Further distressing news was that July and August numbers were revised DOWNWARD. If that were not depressing enough, preliminary estimates for the yearly benchmark revisions reveal that the government underestimated the overall number of job losses for the year and may erase another 366,000 off its books. Keep in mind that these are all “official” government numbers. The reality is even worse. By the way, the underemployment number is closer to 17.1%.  Nearly 1 out of 5 are either out of work or working part time being unable to secure full time employment.

 

Obviously this is not what the stock market was hoping for (it is also the last report before the upcoming November election) but it is what bond traders were hoping for as this sets the stage for another round of Fed Quantitative Easing. Bonds moved higher in anticipation of more purchases next month or certainly in December.

 

The rest of the markets were somewhat torn by the news. Commodities in general were moving higher on the reflation play (QE2) but some of the individual markets such as crude oil were caught in a tug of war between the rotten jobs number, the subsequent continued slow growth and slow demand, and the notion that more funny money will punish the Dollar. Crude was higher but its gains were subdued as it is thus far unable to stay above $83. Should it be able to better than market as of today’s close, it will be poised for a run towards $87.

 

It was not so in the grains where a stunningly bullish corn number from USDA caught that market by surprise. That market has been on a real roller coaster of late. It was just a week ago when a USDA report caught everyone by surprise but on the opposite side. Then the numbers show corn stocks larger than most were expecting and the market went limit down. At the time there was a great deal of suspicion regarding USDA’s numbers. Those fears were confirmed today and the doubters vindicated as the release showed a substantial drop in the overall corn yield with the result – the market went limit up and will probably do so again when it reopens Sunday evening. Can anyone say, “whiplash?” Wheat and soybeans were both pulled higher by corn with both markets locking limit up on the open of pit session trading; however, wheat has faded a bit but still remains sharply higher moving back occasionally hitting the limit again.

 

The Dollar moved lower but weakness in the Euro keep it from falling sharply. I am not certain why the Euro was relatively weak considering the payrolls number. A European official was attempting to jawbone the Euro lower saying that it was overvalued based in current fundamentals but his words do not really carry all that much weight. Still, some looked at it as revealing that the Europeans are very uncomfortable with the Euro near 1.40. There are also increased grumblings from various quarters of the world about what is being viewed as a deliberate devaluation of the Dollar by the US. The BRIC nations are becoming rather vocal and who can blame them? One wonders if perhaps there are some smoothing operations taking place to slow the Dollar’s descent and quiet some of the critics. Whatever the reason it kept the greenback from falling below the 77 level.

 

The hesitancy of the Dollar to break 77 is probably what kept gold from taking out its record high from yesterday’s overnight session. Looking at the charts however a close above $1,350 would be strongly bullish heading into next week. This goes back to what we have been repeatedly saying – as long as the market remains convinced that the Fed is going to engage in yet another round of Quantitative Easing, gold is going to move higher. You cannot create trillions in paper confetti Dollars and not have the ultimate currency respond accordingly. Even the most obtuse has to realize at some point that this will break the “back” of the greenback.

 

Historians will point to three factors when they analyze the events leading to the downfall of the Dollar from its global reserve status. First – an out of control Federal government spending binge which plunged the nation into an unsustainable debt abyss. Second – a binge of massive Quantitative Easing which resulted in an excess supply of the currency in a period of weakening demand. Third – the modernization and industrialization of the economies of Asian and Latin America.

 

But enough of that for now…

 

After seeing a bit of chart weakness surface in yesterday’s price action, gold bulls failed to run en masse forcing fresh short positions that were established yesterday to be covered. That took price higher before new selling originated near $1,350. For gold to continue moving higher it will need to take out $1365 to set up a push towards the next target level near $1,380. The key to $1365 appears to be the 77 level on the USDX. If it goes, so too goes $1,365. Initial chart support on the downside has been established near $1,325 with better support down near $1,315 – $1,312. The weekly close in Gold is yet another all time best.

 

Silver’s ability to recapture 23 is most impressive and should it manage to maintain its footing above this level early next week, it looks set for a run to $25.

 

The HUI managed to clear that 520 level once again. It is early in the day as I write this but IF the HUI can put in a weekly close above 520, it will be its best close ever and portends higher prices ahead. This 520 level is being fiercely contested with mining share short sellers pressing hard to avoid the level being violated. Why these boneheads continue to fight the trend escapes me but it is obvious that they are attempting to impose their will on the sector. It would be so much more profitable to just buy the mining shares and short the broader equity markets but combine huge paper losses and big egos and you get a combination that generally ends poorly. Regardless, 520 is the key that technicians are watching. If the HUI closes below 520 for the week but above 500, it will still look quite strong on the charts but will more than likely set the market up for some range trading for a period of time.

 

The Yen has now gone nearly straight up vertically for the last three weeks after dropping sharply on that round of BOJ intervention.  Amazing stuff. They either intervene on Sunday evening or Monday after this weekend’s big meeting or the Yen is going to accelerate higher. Everyone is sitting around wondering if they are going to be able to convince their counterparts that they are only wanting to engage in smoothing operations to prevent a “disorderly” rise in the Yen and thus get broad acceptance for an intervention or are instead attempting to engage in a currency devaluation at the expense of others. This continued rise in the Yen is killing Japanese GDP but apparently there is nothing that they can do any more to prevent it.  The stronger the Yen, the more downward pressure on the Dollar and the more upward pressure on commodities priced in Dollar terms. One has to wonder if the BOJ might make that argument to their counterparts to justify another round of intervention. “We are just trying to avoid a bubble in commodity prices so please let us bomb the speculative long yen crowd”.

 

The dollar is hanging by a thread above 77 on the USDX. Should it fail early next week, it will immediately head down towards 76.20 or so. A lot depends on what the BOJ might do coming out of the weekend. If they do nothing it will break the 77 level.

 

Platinum is over $1700 and palladium continues knocking on the door of $600. Copper totally negated yesterday’s bearish chart pattern and went on to make a 26 month high. It is within striking distance of psychologically important $4.00. As said several times here within the past two weeks, all that is lacking in seeing commodity prices managing to reach the former 2008 peaks based on the CCI (Continuous Commodity Index) is for the energy sector to spring to life. With today’s abysmal jobs number reminding us how many Americans are in terrible financial straits, any price rises in energy costs, particularly as we head into the winter months, is the WORST possible development at the WORST possible time for many of these families who are barely hanging on.- Dan Norcini, More at JSMineset.com

 

GATA Posts:

 

 

Ralph Benko: Time for a 21st-century gold standard

Fed officials mull inflation as a fix

Turkey, China to shun dollar in trade with each other

I'll speak on silver if CFTC doesn't, Commissioner Chilton says

At IMF meeting, finance ministers may plot comprehensive currency market rig

 

The Statistics:

Activity from: 9/07/2010

Gold Warehouse Stocks:

10,962,004

+2,411

Silver Warehouse Stocks:

112,547,660

+48,468

 

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 

 

Product name

Total Tonnes

Total Ounces

Total Value

New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchange (TSE) AND Hong Kong Stock Exchange (HKEx)

SPDR® Gold Shares

1288.542

41,427,916

US$55,570m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra)

Gold Bullion Securities

126.85

4,078,489

US$5,484m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra) AND NYSE Euronext Amsterdam

ETFS Physical Gold

129.30

4,157,031

US$5,593m

Australian Stock Exchange (ASX)

Gold Bullion Securities

14.21

475,411

US$614m

Johannesburg Securities Exchange (JSE)

New Gold Debentures

49.34

1,586,201

US$2,136m

NASDAQ Dubai

Dubai Gold Securities

0.155

4,968

US$7m

 Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 13.371 tonnes and the LSE added 0.29 tonnes.

 

COMEX Gold Trust (IAU) Total Tonnes in Trust: 100.16 - No change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 9997.39: +53.25 change from yesterday’s data.

 

The Miners:

 

Gold Fields’ (GFI) closed bond debut was the only big story in the gold and silver mining industry making headlines Friday.

 

WINNERS

1.  Gold Reserve

GRZ +6.90% $1.55

2.  Nevsun

NSU +6.77% $5.36

3.  Banro

BAA +6.61% $2.58

 

LOSERS

1.  DRDGOLD

DROOY-1.14% $5.21

2.  ITM

THM -0.78% $6.43

3.  Northgate

NXG -0.68% $2.93

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:

Bearclaw Announces Airborne Survey on Lov Property - More
- October 08, 2010 | Item | ShareThis


Metanor Resources Inc. Announces the Closing of a Non-Brokered Private Placement - More
- October 08, 2010 | Item | ShareThis


Full Metal Options Tanacross Copper-Gold-Molydenum Porphyry Targets, Eastern Alaska to Georgetown Capital - More
- October 08, 2010 | Item | ShareThis


AndeanGold Announces Closing of First Tranche of $1.5 Million Non-Brokered Private Placement - More
- October 08, 2010 | Item | ShareThis


Champion Minerals Inc. Closes $3.0 Million Financing - More
- October 08, 2010 | Item | ShareThis


Riverstone Announces Stock Options - More
- October 08, 2010 | Item | ShareThis


Blue Note Mining Inc. - Press Release Under the Early Warning System - More
- October 08, 2010 | Item | ShareThis


Ecometals Announces Withdrawal from Completion of Joint Venture re The Los Alonsos Project in Jalisco State, Mexico - More
- October 08, 2010 | Item | ShareThis


SLAM UNCOVERS ADDITIONAL MINERALIZATION AT SILVERJACK - More
- October 08, 2010 | Item | ShareThis


Victoria Announces Grant of Stock Options - More
- October 08, 2010 | Item | ShareThis


Centurion Minerals Appoints Mr. Fred Tumbuan to Its Board of Directors - More
- October 08, 2010 | Item | ShareThis


General Moly Announces Hanlong's Receipt of Key Chinese Governmental Approval - More
- October 08, 2010 | Item | ShareThis


European Goldfields Long Term Incentive Plan Update - More
- October 08, 2010 | Item | ShareThis


Otis Initiates Environmental Scoping Study at Kilgore Gold Project - More
- October 08, 2010 | Item | ShareThis


Silvore Fox Minerals Announces Exercise of Warrants for Proceeds of $591,000 - More
- October 08, 2010 | Item | ShareThis


Auryx Gold Corp. Announces Updates at the Otjikoto Gold Project and its Namibian Subsidiary - More
- October 08, 2010 | Item | ShareThis


Northland Signs Term Sheet with Caterpillar Financial for Mobile Equipment Lease Facility - More
- October 08, 2010 | Item | ShareThis


Abcourt Mines Inc.: Excellent Results Obtained in Surface Diamond Drilling on Elder Gold Property - More
- October 08, 2010 | Item | ShareThis


New Jersey Mining Company to Expand Mill - More
- October 08, 2010 | Item | ShareThis


La Quinta Resources Announces Assays of Its Initial Drilling Program at Easter Project - More
- October 08, 2010 | Item | ShareThis


Vantex Discovers a New Gold-Bearing Structure on Galloway - More
- October 08, 2010 | Item | ShareThis


Gold Canyon Intersects 305 Meters at 1.03 Grams Per Tonne Gold at Its Springpole Gold Project - More
- October 08, 2010 | Item | ShareThis


Paladin Energy Bid for NGM Resources Ltd-Extension of Offer Period - More
- October 08, 2010 | Item | ShareThis


Rare Earth Metals to Be Featured on 21st Century Business Television Series October 9th, 2010 on Fox Business Network - More
- October 08, 2010 | Item | ShareThis


Medoro Retains Investor Relations Services of The Capital Lab Inc. - More
- October 08, 2010 | Item | ShareThis


U.S. Precious Metals Southern Extension of the Main Zone Continues to Intercept Gold, Silver and Copper - More
- October 08, 2010 | Item | ShareThis


Pure Nickel Reports Operating Highlights and Results for the Nine Months Ended August 31, 2010 - More
- October 08, 2010 | Item | ShareThis


San Gold Announces Conditional Toronto Stock Exchange (TSX) Listing Approval - More
- October 08, 2010 | Item | ShareThis


Gold Fields Closes Debut US$1bn Bond - "Gold Fields Limited (Gold Fields) (JSE, NYSE, NASDAQ Dubai: GFI), last week announced a 10-year, US$1 billion bond offer to international investors. The transaction was successfully completed yesterday." More
- October 08, 2010 | Item | ShareThis

- Chris Mullen, Gold Seeker Report

 

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© Gold Seeker 2010

Note: This article may be reproduced provided the article, in full, is used and mention to Gold-Seeker.com is given.

 

 

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Gold-Seeker.com has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond Gold-Seeker.com’s control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

 


-- Posted 8 October, 2010 | |


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