It is pretty clear where the folks selling their share of the equities market yesterday put their cash. As investors look for a safe haven, the gold market is booming today.

Gold prices settled today at $978.50 per ounce, an increase of $22.20 from yesterday’s final figure. The action is a surefire sign that investors are getting nervous.

It was almost a year ago when the precious metal entered one of its most volatile periods. Over the span of several months, gold prices ran from $800 to $900, back down to $700 and then the whole back to the $1,000 mark and beyond.

As more and more analysts and investors claim the equities market is topped out, plenty of folks are beginning to wonder if we are in for another volatile autumn.

While a repeat of last year’s near-collapse is highly unlikely, investors are once again wondering about the health of the nation’s banks and what the economic future holds if unemployment remains high and grow stays stubbornly slow.

Ready for a repeat?

It’s the banking sector that holds the key to the gold industry’s short-term future. As shares of the companies deemed “too big to fail” by the American government dropped yesterday, investors in all sectors ran for the exits.

After a 45% surge from March’s lows, investors are locking in their profits and waiting for the inevitable correction to take place.

It is great news for gold investors and even better news for a handful of other metals.

Silver is getting plenty of attention these days. And why shouldn’t it? The economically important metal has surged by nearly 20% over the past few couple of months.

Of course silver is not the only metal surging in value. Palladium, which is used extensively in the auto-making business, got an added boost from the Cash-for-Clunkers program. Its price has risen by more than 30% since mid-July.

If we are seeing such drastic swings while the value of the dollar remains fairly static, imagine what will happen as global interests rates begin to fluctuate and money pours into countries other than ours.

It won’t be pretty.

With just a couple more days of high-volatility and bearish trading, the gold bugs that predicted a run through the $1,000 level will get their vindication.

Better late then never, I suppose.

If you want to read more about the commodities market and what China is doing to protect itself from a downturn in the American dollar, read my latest report here.

Source: What’s Next for Gold Prices?

Spot gold dropped to $925.60 an ounce at 1207 GMT, having earlier hit a intraday low of $921.30. That compared with $933.80 quoted late on Friday in New York. The price was fixed or set in London earlier on Monday at $924.00.

The dollar gained at the expense of higher-yielders normally associated with risk seeking behaviour, reflecting investor concern about global growth prospects and jitters ahead of the U.S. Federal Reserve’s rate setting meeting — a factor that was seen supporting gold at the lower levels.

“This whole rebound in sentiment has run into concerns over the extent of real improvement in the economy,” Calyon analyst Robin Bhar said.

“I don’t really see too much more downward movement (in gold) from here, as physical demand will reappear at these levels.”

The Fed was not expected to adjust monetary policy at its meeting this week, but investors will keep a keen eye on its statement for clues on the economic outlook and progress of its debt buyback programme.

In early June, a weakening dollar and increasing demand for gold-backed funds helped bullion hit a three-month high of $989.80 an ounce. But the dollar has since pared its losses, dulling some of gold’s allure as an alternative investment.

Easing crude prices also helped diminish appetite for gold as a hedge against oil-induced inflationary concerns.

INVESTMENT TAILS OFF

In other metals, silver followed gold lower , falling to $13.83 from $14.19 late on Friday in New York. Platinum was bid at $1,188.50 per ounce , while palladium stood at $239 .

Gold’s three-week decline, partly due to selling related to the unwinding of long positions in U.S. gold futures, has discouraged fresh buying, traders said.

U.S. gold futures for August delivery fell 1 percent to $926.70 per ounce from Friday’s settlement on the COMEX division of the New York Mercantile Exchange.

A weekly report by the U.S. Commodity Futures Trading Commission showed noncommercial net long U.S. gold futures positions fell 7.5 percent to 175,543 lots in the week to June 16 from 189,674 lots the week before .

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD), said its holdings stood at 1,132.15 tonnes as of June 19, unchanged since June 5.

ETF Securities also said on Monday the amount of gold it holds to back its Gold Bullion Securities exchange-traded commodity fell around 45,000 ounces on June 19.

Investors are in a period of re-adjustment, analysts said, as earlier bets on riskier assets including global share markets  may been overdone in light of persistent global growth concerns.

“Anyone expecting a rapid v-shaped recovery is in for a bit of a disappointment,” said Simon Weeks, director, precious metals sales at Scotia Mocatta in London.

LONDON, June 22 (Reuters)

Platinum touched its highest in six months as dollar weakness over the past couple of days prompted industrial and bargain-hunting buying, lifting palladium by nearly 6 percent to its highest in over four months.

But analysts said with sales sharply down in the auto sector, the main consumer of platinum, the rally lacked fundamentals to support it and was seen short-lived.

Spot gold rose to $938.00 per ounce at 1541 GMT, up from $933.15 an ounce late in New York on Wednesday. Oil hit its highest in four months while copper surged 3 percent.

“Money keeps pushing into commodities on concerns over the money supply in the United States,” said John Meyer, head of resources at Fairfax. “Gold is a popular place to be right now.”

Gold is used as a hedge against financial uncertainty and against inflation, which is expected to soar because of the vast amounts of money being piped into the global economy by central banks and governments.

The U.S. plan to buy long-dated Treasuries further raised those inflationary concerns and have also dented the outlook for the dollar, which in turn is supportive for bullion.

But on Thursday, the dollar was up against the euro , but trade was volatile. After earlier falls, it was up 0.28 percent against a basket of major currencies

NO BOUNCE IN CONSUMPTION

The U.S. economy contracted slightly more than previously estimated in the fourth quarter, pulled down by falling consumer spending and exports, while corporate profits plunged by the biggest margin since 1994.

With this gloomy picture of the world economy and the automotive sector among the hardest hit, analysts see little change to the grim fundamentals for platinum.

“There seems to be every week an announcement of carmakers cutting production. I can’t really see any positivity on the consumption side,” David Wilson, director of metals at Societe Generale, said.

Spot platinum touched $1,159.00 an ounce, its highest since Sept. 26 and was last at $1,1149.50 an ounce versus $1,120 an ounce late in New York on Wednesday.

“The euro being stronger against the dollar has encouraged some industrial buying,” said Commerzbank trader Rory McVeigh, referring to the dollar weakness over the last couple of weeks. “Not much but enough in a very thin market to lift it.”

Platinum’s strength lifted sister metal palladium nearly 6 percent higher to $226.50 an ounce, its highest since Nov. 11. It was at $220 an ounce versus Wednesday’s $208.50 an ounce.

Spot silver firmed to $13.66 an ounce from Wednesday’s $13.45 an ounce.

The poor state of the global economy has boosted investment appetite for gold since the start of the year, with holdings in the world’s largest exchange-traded fund hitting consecutive record highs.

But analysts said the pace of the rise was beginning to slow. “Demand for investment gold is still there, but relatively slower over the last couple of days,” Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, said.

The SPDR Gold Trust , said its holdings remained at 1,124.99 tonnes on March 25, unchanged from the record hit the previous day.

March 26 (Reuters)

For the tale of the tape, the TSX Exchange fell 1.88%, while the TSX Gold Index gave back 0.8% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, dropped 0.58% with the declining issuers once again outpacing the advancers, this time by a 644 to 430 margin on big volume of nearly 262 million shares traded.

Kadywood Capital increased its C$200 million financing to C$260 million. The private placement will fund the purchase of 50% of the contained gold, platinum and palladium metal in ore mined and shipped from multiple FNX Mining operations in Ontario. Kadywood intends to change its name to Gold Wheaton. Kadywood ended the day down C$0.09 at C$1.10, while FNX added C$0.43 to close at C$25.70.

Largo Resources continued to benefit from its exploration exposure to vanadium as well as news that it has launched a scoping study over the Northern Dancer tungsten-molybdenum project in the Yukon. Largo can earn a 70% stake by issuing 4 million shares and spending C$5 million on exploration. Largo can then purchase the remaining interest from Strategic Metals for C$5 million in cash or stock at Strategic’s election. Largo ended the day up C$0.19 at C$1.40, while Strategic gained C$0.01 at C$0.52.

Pediment Exploration got a modest boost after reporting a 13.7 metre drill intercept running 16.3 grams gold per tonne at its Los Planes deposit in Mexico. Pediment closed out the day at C$1.54, up C$0.03.

Inflationary pressure continues to be a concern to the equity markets with rising interest rates typically bad for stocks. We will see what Friday trading has in store.

Source: Resource Stock Roundup: Friday, June 20th, 2008

Silver gained about a dime in Far East trading, but got sold off hard the second that Hong Kong closed…but began to rise (along with gold) around 7:00 a.m. NY time. From there, it oscillated either side of $16.50 until New York closed for the weekend. It’s obvious (at least to me) that someone didn’t want any excitement in the precious metals today…at least not in gold and silver…although platinum and palladium seemed to do OK.

Open interest on Thursday was once again of the strange variety. Gold o.i. only dropped 891 contracts on a price fall of about eleven bucks…not a lot. And even though silver was down a bit on Thursday, the o.i. was up again…for the third day in a row! This time by 1,157 contracts. Is this shorting…new spreads??? It will, of course, be in next week’s COT. It seems like we’re always waiting for the next report, as the current one never provides us with what we really want to know…like what’s happening right now.

However, we do have the latest Commitment of Traders report. There weren’t a lot of changes in silver, but the bullion banks did improve their position by about 1,500 contracts as the tech funds pitched their longs. The tech funds (in the Non-Commercial category) only added 161 longs to their position, but went short 1,193 contracts. The bullion banks in the Commercial category added 3,643 contracts to their long position, but also added another 2,087 contracts to their short position…which nets out to the 1,500 contracts mentioned above.

But the big story is in gold. I guess I was wrong this time, as everything that should have been reported, obviously was. The COT showed about a 19,000 contract improvement in the bullion banks’ short position, as the tech funds in the Non-Commercial category not only pitched a pile of longs, but went short by a bunch too. To be precise, the tech funds tossed 11,369 longs and put on a whopping 7,594 short contracts! That’s a lot…and they’ve added more since the Tuesday cut-off. The bullion banks hiding in the Commercial category not only added 1,731 contracts to their long position, but covered a more than impressive 17,359 contracts in their short position. There’s your 19,000 contract improvement right there.

I feel that the Thursday/Friday time period was the absolute bottom…but I’ll wait to see what the G8 has up their respective sleeves this weekend before I break out the bubbly.

I note the following headlines in John Williams’ latest commentary over at shadowstats.com…and they are as follows: 1) Inflationary recession and banking crisis continue to intensify, 2) Market fantasies of contained crisis begin to fade, 3) Severe inflation surge in offing, 4) Evidence mounts for manipulation of key headline economic numbers.

The first story today is from The Telegraph out of London and is another offering from Ambrose Evans-Pritchard. Does this guy ever sleep? If you think that the $US has its problems, the Euro doesn’t seem to be much better off these days. The story is entitled “Support for euro in doubt as Germans reject Latin bloc notes”. It’s well worth the read and is linked here.

The second story is also from The Telegraph and is entitled “Russia plans Arctic military build-up”. This story is certainly no surprise to me, as the rush to claim whatever oil and gas reserves may be left on this planet is now on in earnest. The link is here.

I didn’t attend the funeral, but I sent a nice letter saying I approved of it. – Mark Twain

Despite the enormous influence that the Beatles had on music in Britain and around the world, this rock tune is still #1 in Britain, and will probably remain so until long after I’ve left this world. The youtube.com video in question is linked here.

I see in a Bloomberg story that foreclosures were up 48% in May and repossessions have doubled. “One in every 483 U.S. households either lost their home to foreclosure, received a default notice or were warned of a pending action.” But, hey…the Dow was up…so everything is fine.

Enjoy what’s left of your weekend and I’ll see you early on Tuesday morning.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And Then There’s This…Saturday, June 14th, 2008

For the tale of the tape, the TSX Exchange rallied 1.2%, while the TSX Gold Index tacked on 0.8% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, added 0.2% with the advancing issuers out pacing the decliners by a 561 to 491 margin on good volume of 276 million shares traded.

Kadywood Capital and FNX Mining have inked a deal that has Kadywood buying for C$400 million 50% of the contained gold, platinum and palladium metal in ore mined and shipped from multiple FNX operations in Ontario. Kadywood intends to change its name to Gold Wheaton and is looking to raise C$200 million. The company also announced a deal to purchase 100 per cent of the life-of-mine gold production from the Tulsequah Chief mine in British Columbia from Redcorp Ventures. Kadywood ended the day up C$0.31 at C$0.90, Redcorp added C$0.025 to close at C$0.23 and FNX added C$1.66 to close at C$25.11.

Potash remained hot, as evidenced by investor reaction to Alix Resources and Geo Minerals news that the pair has acquired the exclusive potash rights to a total of 84 assorted locations of freehold minerals in Saskatchewan. Geo ended the day up C$0.225 at C$0.49, while Alix added C$0.18 at C$0.50.

The junior bourse may well be heading into its traditional summer slumber but the trading volumes suggest that we could have a rather active next few months. We will see what Monday trading has in store.

Source: Resource Stock Roundup: Saturday, June 14th, 2008

Sweden’s Riksbank said the global credit crisis increased the sensitivity of banks to other shocks, adding that it had warned that growth in the Baltic states could slow down more suddenly than expected.

Dominic Frisby in Money Week reckons the spread of the global credit crisis will benefit gold and precious metals.

And all these meaningless statements from central bankers about fighting inflation do is present us with another opportunity to buy them.

Given that we are now in a seasonally a weak time of year and given also the move it has made since last August, I am impressed with gold’s resilience. I am even more impressed with silver, which quickly retraced much of yesterday’s losses. I will write more on this in the coming weeks, but it seems that silver’s time may finally be coming.

Another retest of $850 is possible for gold, even likely. But the technical support at this level makes it such an obvious buy-point, I really don’t see it slipping much below there for any significant period, except perhaps to shake out a few weak hands. $850 is where I have some buy orders. Perhaps you should have some there too.

Silver for immediate delivery fell 24 cents, or 1.4 percent, to $17.19 an ounce in London. The metal will trade at $17.20 in one month and $16 in three months, UBS forecast.

“Rising supplies are forecasting a sizable silver correction,” says Eric Roseman in The Offshore A-Letter.

“Thus far in 2008, gold prices have risen just 8% while silver has rallied 15%. The fundamentals, however, don’t support silver’s higher returns this year. Silver remains a viable long-term speculation. But it’s not primarily a monetary metal and worse, supplies are no longer in deficit.”

However, the outlook for platinum is much brighter, says Roseman: “Platinum is by far the only precious metal threatened by a severe shortfall in production in 2008. Prices could double over the next 12-24 months.

“South Africa, where most of the word’s total platinum supply is mined, continues to suffer from severe production bottlenecks. Strikes, power outages, a plunging rand and soaring input costs have hammered platinum production since 2007.”

Silver investors shouldn’t panic, however, says Doug Casey in Casey Research.

“The beginning of another correction? No, says Mark O’Byrne, of Gold and Silver Investments Ltd., who wrote that, ‘Gold was up 3% last week and silver surged nearly 8%, and thus profit-taking would be expected in the early part of this week.’”

For half an hour or so after that, silver refused to follow suit and continued to rise, so it too had to be convinced that it should go down…and then it got creamed too. Give ‘da boyz’ a 9/10 on that pretty waterfall decline on the Kitco chart. This time, platinum and palladium followed suit. Once the bullion bank(s) got the avalanche started, sell stops got hit all the way down…and Bob’s your uncle!

It’s been a few weeks since the boys had to intervene this violently, but the 20-day moving average in gold was only a handful of dollars away…and silver’s 20-day m.a. had been broken once on Monday, and again yesterday morning just before the take-down. This is when some of the black box tech funds start getting interested in laying on some longs, but those moving averages are safely above the current gold and silver prices for the moment. Make no mistake, there was nothing free market about anything in the precious metals yesterday. As GATA’s secretary treasurer, Chris Powell, has said on many occasions…”There are no free markets anymore, only interventions.”

On Monday’s substantial price rise in silver, the open interest was only up a scant 469 contracts, and gold o.i. rose a substantial 6,929 contracts. The open interest numbers for Tuesday should be interesting when they’re released later this morning.

Yesterday was the cut-off for the COT report on Friday. Will all of Monday’s and Tuesday’s ‘action’ be in it? Knowing these crooks the way I do, I wouldn’t bet on it. It always seems like we have to wait until the following Friday before everything is reported…and by that time the market will have probably changed substantially and there will be no way of telling.

As per usual, I’ve got a couple of stories today, the first one being silver analyst Ted Butler’s latest commentary which is less than 24 hours old…completed shortly after the brutal take-down in both the gold and silver price yesterday. Needless to say, it’s my opinion that anything that he writes is more than worth reading. This commentary is entitled “A Critical Point?” and is linked here.

As if more proof were needed that the whole financial world is an overwhelming fraud, here’s a Bloomberg story about the credibility of the LIBOR (London Inter-Bank Offered Rate). “The LIBOR numbers that banks reported to the BBA were a lie,” said Tim Bond, head of global asset allocation at Barclays Capital in London. The story is linked here.

While markets have improved, they remain far from normal….we stand ready to increase the size of the (term) auctions if further warranted by financial developments. – Ben Bernanke, 13 May 2008 (Bloomberg)

Gee whiz…and I seem to remember Paulson at the Treasury Department, and the CEO of Citigroup saying on the weekend that the “worst of the credit crisis is over.” As Bill Murphy over at lemetropolecafe.com said today…”We are entering the Twilight Zone!” From Alice in Wonderland to the Twilight Zone…from the sublime to the ridiculous! It was ever thus.

I hope your Wednesday goes well, and I’ll see you here tomorrow.

Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.

Source: And then there’s This…Wednesday, May 14th, 2008

Take a look at this chart…

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Palladium made an enormous run higher when it broke out above $400 an ounce back in February. As you can see, though, the chart went parabolic, gaining almost 50% in just one month. Moves like that never end well… Sure enough, the ensuing correction wiped out almost all of the gains and left investors feeling like they’d just stepped off the Giant Drop ride at a Six Flags amusement park.

Now, however, as most investors are grabbing their airsickness bags and swearing never to ride that roller coaster again, we can take a fresh look at the chart and explore the opportunity it presents…

The blue support and resistance lines are converging to form a consolidating-triangle pattern. When a chart breaks out of this pattern, the move is often quite large and usually equals the height of the triangle itself.

In the case of palladium, we’re looking at the potential for a $125 per ounce move. So we could see the metal challenge its recent highs up around $580 per ounce… or we could see it collapse down to last September’s low at $325.

Of course, we can’t know for sure which way the price of the metal is going to break, but I’m betting on the upside.

Palladium’s breakout over $400 back in February establishes solid support at that level. Odds are, if the price breaks down from the consolidating-triangle pattern, then buyers will step up, at least temporarily, at $400. So traders can take a position at current prices and keep a stop just under $400 per ounce.

The best way to play this trade is through shares of North America’s only two palladium mining companies, Stillwater Mining (SWC) and North American Palladium (PAL).

Neither of these companies is a good investment on its own merits. Management stinks. Their fundamentals are shaky. And they both seem to be plagued by bouts of periodic bad news that keeps a lid on their share prices.

But in the short term, the stocks correlate well with the price of palladium. So if the metal is ready to make a run higher, then perhaps these stocks are ready to run higher, too.

Best regards and good trading,

Jeff Clark