Spot gold was bid at $912.50 an ounce at 1417 GMT, against $908.45 an ounce late in New York on Wednesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $3.50 to $912.80 an ounce.

Gold sold off on Wednesday in line with other commodities, slipping to an eight-week low, after the U.S. Commodity Futures Trading Commission said it was considering a clampdown on excessive speculation in commodities.

Afshin Nabavi, head of trading at MKS Finance in Geneva, said the slip was met with some light physical buying in the Far East and Europe.

“We saw some small demand out of the Far East this morning,” he said. “But India and the Middle East is still very quiet.”

“Also, the U.S. dollar is a bit weaker today,” he added.

The dollar gave back some of the previous session’s gains on Thursday as equities firmed in Europe and U.S. stock futures rose, denting interest in the currency as a haven from risk.

A recovery in stock markets after a five-day losing streak, gains in industrial commodities such as oil and base metals and a less cautious tone to currency markets suggested recent sessions’ heavy risk aversion may be abating.

Oil’s tick higher also helped support gold, which can be bought as a hedge against oil-led inflation.

Demand for gold investment products such as exchange-traded funds — a major support of prices earlier in the year amid volatility in other markets — remained sluggish, however.

Holdings of the world’s largest gold ETF, the SPDR Gold Trust , declined more than 10 tonnes on Wednesday, while those of ETF Securities’ ETFS Physical Gold product slipped 12,500 ounces 0.4 percent.

OUTPUT FALLS

In supply news, South Africa, the world’s third largest gold miner after China and the United States, said its output of the metal fell 10.5 percent in May from a year ago.

Among other precious metals, platinum was at $1,104.50 an ounce against $1,096, while palladium was at $235 against $231.50. Both metals are primarily used in car manufacturing as a component in catalytic converters.

Traders of palladium in particular were cheering news from China that its passenger car sales rose 47.7 percent in June from a year earlier.

Chinese cars are usually petrol-fuelled, meaning they use a higher proportion of palladium than platinum, which is a primary component in diesel catalysts.

Dealers say as palladium is still relatively expensive, it is unlikely to immediately post significant new gains, although platinum has met some interest.

“Even though there is very little obvious buying taking place right now, platinum is still managing to hold its head above $1,100,” said one analyst, adding strong turnover in Shanghai suggests good Chinese buying at these levels.

Elsewhere silver was at $12.85 an ounce against $12.84.

LONDON, July 9 (Reuters)

Good day… And a Tub Thumpin’ Thursday to you! It was 95 here yesterday, and forecast to be even warmer, or should I say hotter, today! WOW! Like overnight, it turned to summer, after the coldest, most wet, spring I can ever recall… I know, I’ll get 100 emails reminding me that summer doesn’t officially start until next week… I’m just talking about the summer-like weather!

The currencies remained in that range I talked about yesterday, with a slight bias to sell dollars, but not much of one. Crude Oil prices moved higher on the day and overnight, which doesn’t play well with a dollar rally, and therefore, has pushed the dollar down a bit… But again, we’re talking minor moves. It’s as if someone (traders) are waiting for something BIG to happen with data, the Fed, the Treasury, before taking one direction.

Did you hear about the Gold vending machine in Germany? I saw this yesterday morning, and thought it to be a hoax… Then someone in the office brought me a print out of a story in the U.K. Telegraph… OK, so maybe it’s not a hoax… Any way… Here’s the skinny… In Germany, they’ve come up with a vending machine that can update prices of Gold every few minutes, and… Dispense 1 gram Gold wafers, 10 gram Gold bars, or coins… There’s about a 30% increase in the market price! WOW! Imagine that, you need some Gold in your pocket just for GP, and you simply walk up to a vending machine and buy some, as simple as getting that Zero bar, or Snickers!

OK… What gives a guy this kind of idea to make a vending machine that disperses Gold? It’s all about taking advantage of the times, folks… I may have told you this in the Pfennig before, I don’t recall, but I use it in my presentation for Gold… Investment in Gold increased 427% last year… To put it into Tonnes of Gold, retail investment purchases of Gold reached approximately 108 Tonnes of Gold in 2008, up from 36 Tonnes in 2007, and 28 Tonnes in 2006!

I was talking with the Big Boss, Frank Trotter, who, by the way scored a goal from about 30 yards out in his soccer match the other day… Ty Keough, our one-time national team player, and long time pro, was quite impressed, and that says a lot, because Ty has seen some soccer in his years… You may know Ty or heard of him… But do you know his dad? His dad is a soccer legend, playing on the U.S. national team that beat Great Briton in the World Cup in the 50’s, and then went on to be the winningest college coach, with multiple national championships at St. Louis University…

Oh, I digress, there, I’m so sorry… But once I got talking about soccer, of which I played a ton of in my youth, I just started typing… UGH! Any way, I was talking to the Big Boss, Frank Trotter, the other day, and Frank mentioned that he was concerned that Gold could be the next bubble… I assured him that I didn’t see it that way, not until my neighbors are asking if they can buy Gold at $1,200 oz! (I tried to get them to buy it at $800 oz, to no avail!)

Remember when we were kids? No wait, we wouldn’t all have been kids at the same time you dufus Chuck! OK, when I was a kid… We used to have these bomb shelters in our schools, and we would practice going into them… It was a different time, the cold war was strong, and the fear was put in all of us toward Russia… I had a teacher, many moons ago, that told the class that it was a good thing that Russia and China didn’t see eye-to-eye… Well… I wonder what he thinks about the news that China and Russia have agreed to use each other’s currencies and eliminate the use of dollars in their trade?

It kind of feels like Russia and China are ganging up on the dollar!

The other “new kid on the block” Brazil, is joining in with Russia and China… But that news didn’t help the Brazilian real yesterday, as it saw one of its worst days in weeks! But that’s the real… I watch it trade some days, and your eyes grow very wide open in amazement of the wild swings in this currency. It will move 2-3% in a day, either way, in a heartbeat! Which tells you that the “number of players” in real, is smallish when compared to the second most liquid currency in the world… The euro! So… If you’re going to own reals, you need to be aware that it has these wild swings!

Speaking of the euro… It’s getting a boost this morning from an improved outlook for risk today, as U.S. stock futures are stronger. The “Big Dog” looks a little tired of chasing the dollar, and then being pulled back on to the porch over and over again recently… But, as always, always I tell you tutor turtle, be yourself… No wait! I always tell you that all this is “noise”… Investment portfolio diversification into currencies and precious metals is a long-term relationship… The dollar didn’t lose over 90% of its value overnight! The euro didn’t gain over 50% VS the dollar overnight! These things are long sweeping moves, and you have to drown out the “noise”… Otherwise, you’ll become a currency and metals “trader”, and chasing these assets all over the board!

Pound sterling is getting hit on the chin this morning, as retail sales fell in May, which was the first drop in 3 months… Retail Sales fell .6% in May, and pretty much squashes those so-called “green shoots” that have been talked about for the U.K. economy… I think you can expect to see stuff like this for the next year… Up and down, in and out, green and brown shoots… And… Like I’ve said before, if it’s happening in the U.K. it won’t be long before we experience the same, as the U.K. just seems to be ahead of the U.S., time-wise…

The Swiss franc is stronger this morning than recent trading sessions as the Swiss National Bank (SNB) met, left rates unchanged, and made a statement that has given a green light to franc traders to buy… The SNB announced that they were not targeting a specific exchange rate for the currency. You may recall that the SNB had previously stated that they were not happy with franc strength, and had intervened on occasion to keep the currency from strengthening… I would be careful here, as this could be a “trap” Oh, you don’t think Central Banks set traps for traders? OK, well, maybe they don’t really set a “trap”, but they do send mixed messages that cause losses!

Big Al Greenspan was famous for these “mixed messages” that were called “Greenspeak”… After reading two books on Big Al, I can tell you that I personally think that “Greenspeak” was gobble-de-gook! Confuse everyone so they think you are some sort of messiah! Right Big Al? When… In reality, he was just “a guy”, who really screwed things up!

Today, we will see the Weekly Initial Jobless Claims, which for me has turned into watching the “Continuing Claims”… This part of the data tells me if unemployed people are being re-hired… I haven’t see that happening, as Continuing Claims have continued to grow larger in numbers… We’ll also see the Philly Fed Index, (manufacturing)…

The real meat (where’s the beef?) will come from a testimony before the Senate Banking Committee by U.S. Treasury Sec. Geithner, on the President’s plan to overhaul the U.S. Financial regulatory system… I doubt these Senators will understand what Geithner is talking about, and will “rubber stamp” the plan… Which means, folks… That the Gov’t gets its foot in the door further…

I know, I know, I get quite a few emails from people that take exception to me getting upset with the Gov’t getting more involved in the markets, etc. as they say, “Yeah, Chuck, and you think the “markets” have done a better job?” Well… The markets are the markets, folks… If left alone, they will act as markets should… What? You didn’t like the fact that the Mr. Market, as my friend, Bill Bonner, calls it, turned the whole credit, and deficit spending on its ear? Mr. Market was just trying to correct what was wrong… Getting the Gov’t involved is just plain, wrong! One foot in the door… Then next it’s the next thing, and the next, and pretty soon, the Gov’t is completely in the door, and hanging out on your couch!

Please… These are just my opinions… If you don’t like them, you have that right! It is still a free country for speech! Just delete it and go on with your life! OR… You didn’t pay anything for all this, that I’ve been giving to people since 1992…

In Norway yesterday, the Norwegian Central Bank, The Norges Bank, surprised me and the markets by cutting rates 1/4% of 25 BPS… I did say the other day that the Norges Bank was the only Central Bank that was meeting this week, that had some room to cut rates… The Norges Bank did say in their press conference after the rate announcement that rates were at the “bottom” and that they were looking toward the first quarter 2010 as the timing on the first rate hike!

Well, with traders so forward looking, this was good news for the krone, as the rate cuts was quickly put in the rear view mirror, and now everyone is looking forward to higher rates!

And under the heading of “dirty float”… The Reserve Bank of Australia (RBA) is reported to have sold the most A$’s in the month of May, since February 2004! Now, go back to May and recall the move in A$’s… The currency gained almost 10% in the month… So, the A$ would have gained even more if the RBA had not sold A$1.4 Billion A$’s in the month! I personally think the RBA was just trying to smooth out the trading the A$, which given this information would have been moving up the charts with a bullet in May!

I don’t think the RBA would get involved if the move was a slow, general appreciation of the currency… So, I don’t look for future intervention to keep the A$ from gaining the ground I believe it will gain rest of this year, as inflation fears grow stronger and stronger…

And on that positive note… I think I’ll head to the Big Finish!

Currencies today 6/18/09: A$ .7945, kiwi .6355, C$ .8835, euro 1.3935, sterling 1.6260, Swiss .9280, rand 8.1380, krone 6.37, SEK 7.8725, forint 204, zloty 3.26, koruna 19.16, yen 95.80, sing 1.4570, HKD 7.7503, INR 48.25, China 6.8350, pesos 13.46, BRL 1.97, dollar index 80.42, Oil $71.30, 10-year 3.69, Silver $14.25, and Gold… $938.20

That’s it for today… That’s a pretty interesting story about the Gold vending machine, eh? Here in the office we have one of those “honor snack trays”, where people pay for what they take… Can you imagine one of those that had Gold coins in it? HAHAHAHAHA! Another good win for the Cardinals VS the Tigers last night… Of course I can only watch 5 innings or so, before it’s bed time. I get up the next morning, and watch the highlights! This weekend is Father’s Day… Don’t forget your dad! More on that tomorrow… I just love this time of year when the daylight lasts until 9 pm… The daylight lifts spirits, I believe, and now spirits get lifted longer each day! HA! OK… How about making this a Tub Thumpin’ Thursday, eh?

Source: Gold Vending Machines!

But what most investors don’t realize is that it’s the second type of company, the small gold “explorers,” that always produce the biggest gains in gold bull markets.

These are the companies that send geologists around the world, scouring for the next gold discovery. They find a promising deposit and get samples of the rock beneath the surface using drill rigs. If the samples indicate there may be enough gold to profitably mine, they either sell the rights or do the work themselves.

What’s interesting about gold bull markets is that these exploration companies explode in price after the price of gold has already jumped.

In the late 1970s, for example, the price of gold skyrocketed, from around $200 in 1979 to over $800 in January 1980. But it wasn’t until after the price of gold peaked that the best exploration companies saw their biggest gains.

What kind of profits are we talking about?

• Carolin Mines up 1,739%

• Lincoln Resources up 2,464%

• Copper Lake Expl. up 13,025%

• David Minerals up 1,726%

• Eagle River Mines up 3,479%

• Silverado Mines up 3,987%

• Wharf Resources up 2,779%

A simple $500 invested in just 11 of these companies would have given you $172,585. $1,000 invested in each would have given you about $350,000.

Doug, who was also recently down in Buenos Aires visiting us here at Notes, has written a special report about today’s gold exploration companies, which he calls Toronto’s Secret Gold Investment. You can get the details here.

The bartender bent down real close to my face so that I could not miss him, and since that is never a good sign, I decided that I would let him get a good whiff of my breath to show him the folly of his ways.

So I brightly said, “Hi!”

He immediately backed up a couple of feet and said to me, “This is the last time I am going to tell you about keeping your voice down, and to stop insulting the customers and Democrats by calling them idiots. The idiots who are not customers or Democrats are complaining about being insulted by the association.”

I instantly laughed out loud at the joke, although being funny is very uncharacteristic of him, as he is mostly “all business”, throwing me out of the bar long, long before I am so sloppy drunk that other bartenders finally throw me out, too.

So I said, “My apologies to the idiots for lumping them with Democrats, who are so stupid and corrupt that they actually think that government exists to ‘help’ people by giving them money or services!! Hahaha! And don’t get me started on the stupidity and corruption that has bid up the prices of short-term Treasury debt so that it yields exactly zero! Zero! Hahaha!”

At this, the bartender walks away, muttering something under his breath that sounded like “Oh, hell. Here he goes with that economic crap again.”

Turning to the other customers, I say, my words slurring slightly, “Putting words into the mouth of Bill Bonner at The Daily Reckoning, he says ‘The Mogambo is right; you’re all morons!’ Hahaha!!”

The bartender started walking towards me with his eyes narrowing to slits and his hands clenching into fists, so I hurriedly say, “Okay, okay! Sorry about that! Obviously, Mr., Bonner did not say that, but he almost did when he wrote that ‘investors imagine that U.S. government debt, and the currency in which it is denominated, will be good forever. At the present nominal rate of return on T-notes, an investor would have to wait 50 years to earn back his investment. At the real rate – adjusted for the current rate of consumer price inflation – people will ice skate in Hell first. The real rate of return on T-notes is negative.’”

Apparently, the horrifying news of negative interest rates does not register with these morons; the bartender went back to talking to the pretty girl at the end of the bar, and the other barfly customers were flipping those little beer-stained cardboard coasters at me saying, “Shut up!”

So I shout back, “No, YOU shut up” and they shout back at me “No, YOU shut up!”, and then I shout back at them, louder than before “No, YOU shut up, shut up, shut up!”

It was about the tenth time that they screamed “No, YOU shut up!” at me that I decided to, you know, shut up, and I said, “Okay, I’ll shut up, but only so that you can listen to Mr. Bonner, who has generously gone on to inform you that bond prices are going to fall into the toilet because bond prices are so insanely high right now, and that it makes the imputed yield insanely low, and if you think that the nation’s houses losing value at 18% a year is bad, wait until a few zillions of dollars of debt loses half its value in a few months, weeks, days, hours or even minutes!”

Working backward through time like that made me dizzy and dreading impact, so I calmed myself down by reading to them directly from Mr. Bonner’s piece. “The supply of U.S. government debt,” he writes, “is soaring; surely, you might imagine that it would go down in price. Sometime in the future, interest rates are bound to go up. When they do, investors in Treasury bonds are going to be disappointed. But when that disappointment will come, we don’t know.”

Disappointment! I marvel at his cool understatement! But at least he is trying to be helpful by alerting you to get the hell out of government bonds at your earliest opportunity, and you would think that Barron’s, if they truly were trying to be likewise helpful, would have used the front of their magazine to use the quote from their own “Gold Performance” chart, which is that “February Comex gold finished at $897.50 last week, up 5.5% for the year – its eighth consecutive annual gain”, whereas bullion itself gained, too, according to Doug Noland at PrudentBear.com, who writes that “Gold added 0.7% this week to $875 (’08 gain 5.7%)”.

And then Barron’s could tidily sum things up with, “Gold went up versus stocks, non-government bonds, housing and damned near everything else, which all took a clobbering! Go gold!”

Or they could have quoted their own Alan Abelson, in his Up & Down Wall Street column, who noted that, while most everything is down, “The lucky quartet that bucked this sorry tend to post gains included cocoa, sugar, gold and, most interestingly, hogs.”

Or they could have even quoted The Mogambo, who said, “Buy gold, or you’re a freaking moron who is ignorant of history, and who doesn’t understand economics even basic math, and I hate you all for your stupidity and treachery!”

At which my daughter says, “You forgot to mention to also buy silver and oil! So who’s the moron now, old man?”

Okay, you take care of buying the gold, silver and oil, and I’ll take care of the smart-aleck kid.

Source: Interest Rates Have “One Too Many”