Spot gold hit a high of $961.00 an ounce, its firmest level since Aug. 7, and was bid at $955.10 an ounce at 1434 GMT, against $946.75 an ounce late in New York on Thursday.

Prices rose after heavy selling of the dollar late on Thursday, particularly against the Swiss franc, knocking the U.S. currency to multi-week lows versus the euro.

“In the near term is it still predominantly the currency that is in the driving seat,” said Saxo Bank senior manager Ole Hansen.

“That has managed to tip (gold) through a technical level where new buying and short covering has been triggered this morning, and that has given us a bit of momentum on the upside.”

Gold typically moves in a close inverse relationship with the dollar, as it becomes cheaper for holders of other currencies as the U.S. unit softens. Gold was also being bought as an alternative asset to the falling dollar.

“We touched these highs yesterday in the euro-dollar, and we haven’t really come back from that,” said Hansen. “The euro has elevated to slightly higher levels now, and that has given (gold) the support that’s needed now to test higher.”

The U.S. unit was little changed on Friday versus a currency basket, but lifted from lows against the euro after data showed consumer confidence fell to its lowest in four months in August, denting interest in currencies seen as higher risk.

Oil climbed after Thursday’s better-than-expected U.S. GDP and jobs data boosted interest in nominally higher-risk assets like equities and commodities.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $9.70 to $957.00 an ounce, off a high of $964.60.

SILVER RISES

Silver was also helped by gains in base metals, with copper up more than 4 percent. Silver, also used as an industrial metal, rose to $14.70 an ounce from $14.24.

On the wider markets, European shares rose more than 1 percent on Friday, while U.S. stocks were higher, though they also pared gains after the consumer sentiment data.

Platinum was supported by a strike at South Africa’s Impala Platinum and news that a union had rejected the latest wage offer from Anglo Platinum , the world’s largest producer of the metal.

Platinum was at $1,242 an ounce against $1,240.50, and palladium was at $286 against $284. South Africa is the source of four-fifths of the world’s platinum.

The National Union of Mineworkers said Implats, the world’s number two platinum producer, had failed to secure a court order to stop the strike. Some workers at its Rustenburg mine have been on strike since Wednesday.

But a rise in platinum stocks after demand fell for the autocatalyst material, news of capacity cuts from Toyota earlier this week, and hopes industrial action will be resolved quickly are limiting gains, analysts said.

“The market reaction to these supply interruptions help confirm our view that this is not an attractive tactical entry point into new long platinum positions,” said UBS analyst John Reade in a note.

Aug 28 (Reuters)

If you fire enough bullets, eventually one of them is bound to hit the bull’s eye. After spending a trillion dollars on an array of stimulus packages, the Obama administration is scrambling to “enhance” a billion-dollar program that actually hit its mark.

By now, we have all heard of the popularity of Washington’s Cash-for-Clunkers initiative. Drive, push or tow any old gas hog into a local dealer and Uncle Sam will give you a check for $3,500 or even $4,500 if you buy a new car.

In the short-term, the plan appears to be nothing but success. Car dealers actually have a reason to turn on the lights each day. Thanks to the program, inventories are no longer measured by months of supplies, but days or even hours.

For now, we are going to overlook the long-term detrimental ramifications of free money, including inflation and disruptions throughout the nation’s auto market. Prices could be brutally different in six months, even less, if the free markets still exist by then.

But, as of this writing, there is at least a semblance of capitalism in America and that means somebody is getting rich.

Is it you? It should be.

In an article yesterday, I wrote about some of the more obvious investment possibilities created by the Cash-for-Clunkers plan. Today, it is an even better, much less talked about chance to make some money.

Thanks to the weakening American dollar and Obama’s free money for new wheels, the nation’s platinum sector has had a fantastic week. Yes, platinum.

Like usual, a strong equities market weakens the greenback and increases demand for precious metals like gold, silver and platinum. The latter of the three is critical in the auto manufacturing industry as it plays a key role in exhaust gas management.

This single piece of legislation is a double-whammy for the sector.

With nearly 250,000 cars sold through Cash-for-Clunkers, savvy investors realize manufacturers are going to have to increase their production in order to replace the inventory.

That means platinum demand is on the rise.

It also means shares of companies like North American Palladium (AMEX:PAL) and Polymet Mining (AMEX:PLC) are increasing in value.

In just the last five days, shares of these miners surged by as much as 40% and 25%, respectively.

Even better, one of my favorite mining stocks – if you are a TFN Strategic Trader subscriber, it is already in your portfolio – is leading the charge.

While I am not about to anger my loyal paying customers by giving away the stock for free, I will tell you it is the month’s top performer, with gains of over 24%.

Of course, thanks to the leverage of options, our gains are significantly larger than that.

Thanks Obama!

As an American, I cannot possibly give my support for reckless subsidy spending, like Cash-for-Clunkers. It is unfair to taxpayers and the countless other individuals and companies that could benefit from similar handouts.

But as an investor, hey, you can’t beat free money. We are making plenty of that.

Source: Mining Stocks: The Surprising Cash-for-Clunker Winners

They might as well signed their autograph on gold and silver charts all over the world…”da boyz were here!” Here’s the gold graph…which looks like the silver graph.

click to enlarge

As for silver, it did manage to ‘lose’ 20 cents in overnight trading before the bids got pulled at 9:30 a.m. Eastern time. Here’s the silver graph…which looks like the gold graph.

click to enlarge

Even yesterday’s platinum graph has the same pattern. Check it out below.

click to enlarge

Yesterday’s low in gold…$905.70 for the April contract…came within $10 of the 50-day moving average. In silver, the low was $12.43…and the 50-day moving average is at $12.12…so we’re getting close. They just have to engineer one more waterfall decline during Comex trading today and it will be “mission accomplished”. That’s if they can do it…or if they want to do it. So far, the U.S. bullion banks [JPMorgan and HSBC USA (NYSE:HBC)] are following their usual script to the letter…what GATA and Ted Butler call the “same old, same old” drill. Hey…it’s worked for them for decades, and the CFTC is protecting them…so why should they change their modus operandi now?

Open interest for Monday showed a decline in gold o.i. of 2,211 contracts to 367,342. For silver, the decline was 1,066 contracts to 93,036. There were 141 gold contracts delivered yesterday, with the big issuers being Prudential Bache [100 contracts] and Fortis Clearing [40 contracts]. The big stopper was JPMorgan [95 contracts]. In silver, there were 404 contracts delivered…with the big issuers being JPMorgan [286] and Prudential Bache [78]. The big stoppers were Goldman Sachs (NYSE:GS) [215] and JPMorgan [113]…and, yes, you can be both an issuer and stopper at the same time…as is the case with JPMorgan here. GLD was unchanged, and the SLV was down 100,000 ounces. Comex warehouse stocks in silver were basically unchanged. I was very encouraged by the performance of the HUI yesterday. Is someone sensing a bottom?

The usual N.Y. gold commentator had the following to report…”This week’s European Central Bank statement of condition showed an €214 million decrease in ‘gold and gold receivables’ which ‘reflected the sale of gold by one Eurosystem central bank’. This is 10.86 tonnes, and compares to 8.3 tonnes the previous week and 7.76 tonnes the week before that. As noted previously, it looks as if a captive CB has started a gold sales prorgram. This is the first time in many weeks that the sales volume has exceeded the notional 9.6 tonnes which is the implied average…if the WAG2 quota were to be sold evenly…not that that is obligatory.”…”Deplorably, the Istanbul Gold Exchange web site cryptically notes ‘import Data: The gold and silver import not figures for February 2009.’ The same was said for January…the fact is that the IGE has never reported zero imports for either metal in the almost 15 years of data it carried…let along both for two months. One suspects this value window into Middle Eastern gold imports has been closed.”

This commentator also mentioned that The Gartman Letter sold another unit of gold and proposed to “return as aggressive buyers of gold” in the $880-$905 zone. [Note to Dennis: If your friends at JPMorgan pull their usual trick...that could be today. - Ed]

In other news…in a Bloomberg story, the headline reads “Hidden Pension Fiasco May Foment Another $1 Trillion Bailout”. In another Bloomberg story “Bernanke Says U.S. May Need to Expand Bank Rescue”. If that’s the case, why was he so “outraged” about the AIG rescue yesterday? Maybe he has personal problems. I have a friend who is a photographer for the National Enquirer, and he sent me their front-page photo of Ben B. that they’re running today…which is below. I suppose it’s legal in most states to kiss animals…but once it gets past that stage…everything is pretty much illegal just about everywhere. Isn’t that right, Ben?

click to enlarge

An interesting mix of news items today…and all about gold and silver. The first is a video from TheStreet.com which notes Ted Butler’s complaints about the manipulation of the silver market. It happened in a rather flippant report by TheStreet.com’s Debra Borchardt. But at least they spelled the metal’s name right. You can view the report under the headline “$35 Silver in 2 Years”. The link to the video is here.

Here’s a piece on Chinese gold demand from The Telegraph in London. The headline reads…”Postcards from the Edge: China turns to gold in hard times”…”Beijing’s gold markets are reporting record sales for the one thing that with currencies being devalued and governments taking on ever bigger debts seems sure to rise in value.”…and the link is here.

The next story is from my friend James Turk over at goldmoney.com. In his latest commentary entitled “Another Good Month for Gold”, he reports that gold did well in February, making record highs against the euro and British pound. Turk expects gold to make a record high against the U.S. dollar soon. The link is here.

And lastly, here is the latest commentary from silver analyst Ted Butler. In it, Butler says that based on the latest data from Friday’s Commitment of Traders report…“the concentration in the short position in silver is now the greatest concentration in any U.S. commodity market, long or short, in history.” The essay is entitled “The Smoking Gun: Part II” and the link is here.

We can’t expect the American People to jump from Capitalism to Communism…but we can assist their elected leaders in giving them small doses of Socialism, until they awaken one day to find that they have Communism. — Nikita Khrushchev (1894-1971)

I’m glad I don’t watch CNBS, CNN or FOX…as I gave up watching television over ten years ago. I find out what’s really going on, on the Internet. As far as I can see into the near future, I see the continuing destruction of the world as we know it. If you ask me what I see five years down the road…I don’t see anything…nothing at all. Whatever’s left of our world when it does hit bottom, I want to be watching it [as Doug Casey says] on a big screen TV somewhere far far away from North America.

So…’till Thursday….

Source: And Then There’s This…Wednesday, March 04th, 2009

The bearish camp is pointing towards Japan and claiming that asset prices will not rebound for many years. According to these folks, corporate earnings will continue to decline and unemployment will rise to much higher levels. So, the bears have concluded that global financial markets will stay depressed for the foreseeable future. It is my observation however that in post-war history (with the exception of the previous recession when stocks were grossly overvalued) stock markets have always commenced a new bull-market prior to the end of each recession.

The current U.S. recession commenced late last year, so it has already lasted for more than a year. The average post-war US recession lasted 10 months making this downturn more severe. With the exception of the Great Depression, the worst post-war recessions occurred in 1974 and 1982. Both of these lasted for 16 months, making them the worst recessions since World War II. Now, if we were to assume that the current recession continues well into 2009, this would imply that stock markets will probably bottom out over the coming months.

We must remember that the financial markets are a discounting mechanism and with prices down significantly from their highs, most of the negative news seems to be already factored in today’s prices. In the past few months, some nations have been brought to their knees, the entire investment banking industry has been decimated, homebuilders have taken huge losses and now auto-makers are facing bankruptcy! For sure, such circumstances are not signs of a major top; rather they are usually associated with the bottom of the business cycle. So, liquidating positions and taking losses during such a pessimistic environment would be a big mistake. On the contrary, the ongoing liquidation of all assets is providing long-term investors with a fantastic buying opportunity. Accordingly, over the past couple of months, I have deployed all of my personal surplus cash reserves into the markets. Now, I concede that it is possible that prices may continue to drift lower in the short-term, but the recent market action suggests that we may have reached an important low. Unfortunately, I cannot state with certainty as to whether or not last quarter’s low will turn out to be the ultimate low for this bear-market. However, I do know that investors who deploy capital in commodity stocks and bullion today, will probably be sitting on huge profits in 5 years from now.

At present, the markets are extremely oversold relative to their moving averages and investor sentiment is awful. In this environment, I anticipate a multi-month rally in commodities, related stocks and precious metals. Conversely, at the same time, I expect a decline in the U.S. dollar, Japanese yen and U.S. Treasuries. All of these assets appreciated considerably during the liquidation phase and they will come under pressure when the tide changes.

The main reason why I do not foresee deflation (decrease in the supply of money) is due to the fact that the contraction in credit arising from deleveraging is being more than compensated by the money-pumping actions of the various governments. In the past year alone, the Federal Reserve has expanded its balance-sheet by a whopping US$1.2 trillion! Moreover, thanks to Mr. Bernanke’s cash injections (quantitative easing), reserve balances have sky-rocketed from roughly US$5 billion to almost US$600 billion in roughly 3 months (Figure 1)!

Figure: Lift off in bank reserves – helicopters being primed?

Source: Federal Reserve Bank of St. Louis

Furthermore, it is interesting to note that the Federal Reserve (money-printer extraordinaire) has now started to inflate the supply of money. Over the past few weeks, the Federal Reserve has injected roughly US$300 billion into the banking system without a proportionate increase in its non-banking liabilities via deposits by the US Treasury. In simple terms, what this means is that the Federal Reserve is now increasing bank reserves without the US Treasury removing an equivalent amount of money from the system. Usually, when the Federal Reserves provides surplus reserves to its member banks, the US Treasury borrows this money from the market by issuing bonds; thereby offsetting the inflationary impact of the Federal Reserve’s monetary injections. However, this is not what is happening now and this has inflationary implications. Essentially, the Federal Reserve is now creating money ‘out of thin air’, debasing its currency and sowing the seeds for sky-high inflation.

At present, commercial banks are hoarding this cash, but I expect this newly created money to seep through the economy over the following months. When that occurs and credit starts flowing again, business activity will pick up and prices will start appreciating.

In the past few weeks, we have received numerous queries from anxious investors who want to know if we are heading into deflation. Obviously, we don’t know what will happen in the future, but for now, data shows that all the deflation hype is absurd. If you have any doubt whatsoever as to whether we are facing inflation (expansion in the supply of money) or deflation (contraction in the supply of money), you need to look no further than Figure 2 which highlights the rate at which various nations are inflating the money supply. There is no doubt in this writer’s mind that deflation is out of the question when the money supply is expanding at such a frantic pace. For the sake of clarification, I must state that what we have witnessed over the past year is not deflation but a contraction in asset prices due to forced liquidation (non-availability of credit).

Figure 2: Inflation is the problem

Source: The Economist

Now, you may be wondering why there is so much talk about deflation these days when inflation (expansion in the money-supply) is the real issue at hand. There are two reasons for this:

First and foremost, you must remember that banks are in the business of lending and the central banks’ prime objective is to manage inflationary expectations. So, Mr. Bernanke and his comrades are paid to keep a lid on the public’s inflationary fears. Accordingly, a ‘deflation scare’ is engineered ever so often, so that they can continue with their long-term stealth inflation agenda without raising too many eyebrows. Secondly, the establishment needs to advertise a ‘deflation scare’ so that the central banks can slash interest rates. If inflation rather than deflation was perceived as the legitimate threat, then the Federal Reserve would not get away with near zero interest-rates.

In summary, I am of the view that the set-backs in our preferred areas (energy, miners, agriculture and bullion) will prove to be temporary and these assets should outperform the broad market once the recovery commences. Finally, it is worth noting that silver and platinum are now unbelievably oversold and they should rally hard and outperform gold over the following months. Accordingly, I would recommend buying some silver and platinum bullion at these levels.

Source: Sowing the Seeds

Platinum traded up during the NYMEX session, reaching a high of $862.50/oz., before slipping during afternoon trading. Platinum ultimately finished just off its intraday low at $848/oz., down $3.

Silver rose sharply during Far East trading, but posted steady declines for the rest of the day to finish in the red. Silver ended at $10.81/oz., down just $0.01 from Friday’s close.
(Click here for charts)

Gold’s rise was largely the result of weakening dollar and declining equities.

Gold’s trading off the dollar,” wrote Frank Lesh of FuturePath Trading. “A weak economy and all-time low interest rates don’t call for a strong dollar.”

Gold saw further support from investors looking for a safe haven during these troubled economic times.

We’re not going to get any revelations on the economy soon,” Lesh continued. “Those who want to hold gold are still looking at a shaky equity market worldwide.”

Source: Gold Rises on Dollars Weakness

Platinum was rangebound through most of the New York day, but rallied strongly after the Comex closed, ending at $825/oz., up $44. Overnight, platinum has fallen off.

Silver went on a very wild ride, pushing to near $9.30 in the far East, jumping off a cliff once London opened, falling below $8.50, shooting back above $9.10 at the New York open, then getting slammed back below $8.60, and finally rising again from late morning through the Globex, to close a most tumultuous day at $9.19/oz., up 14 cents. Overnight, silver is trending higher. (Click here for charts)

It was a volatile day for the precious metals yesterday, but in the end all ended with at least modest gains. Soaring equities probably served to cap any advances somewhat, and falling oil also worked against them, while a weaker dollar helped out.

Extreme unpredictability remains the order of the day, equally with gold as with the stock market. The bull is not quite ready to stampede as yet.

As James Moore, of TheBullionDesk.com, put it, “with volatility still at record levels and hedge funds still seeing large scale redemptions, the metal remains at risk to a bout of selling.”

Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago, states flatly that, “Any big rallies are going to be sold.”

However, Zeman adds, “If and when the credit markets are functioning normally again, they’re going to start talking about inflation, and gold can spike $100 in a day. But now, the biggest reason gold is suffering is that all this money is staying in cash or flocking to Treasuries.”

Zeman believes that if equities markets turn around, that will be positive for metals, rather than drawing money away from them. “You get a bit more risk appetite when equities are doing better,” he notes. “If sentiment is positive, we will see money come back into commodities.”

Meanwhile, the SPDR Gold Trust, the largest gold ETF backed by bullion, stood at 749.21 tons Monday, up 2.15 tons from Friday. It was the first rise since gold held by the fund hit a record high of 770.64 tons on October 10.

Source: Metals rise with stock market -  Silver has wild up and down day.

Platinum followed the same pattern, hitting $780 at its low point, then climbed through both the rest of the COMEX and the Globex to end at $813/oz., down $30. Overnight, platinum has fallen further.

Silver had a day of sudden and very steep ups and downs, falling to $9.20 early in New York, busting back to $9.80, crashing to $9.30 in the Globex, and finally rallying yet again to close at $9.66/oz., up 17 cents. Overnight, silver has dropped off steeply. (Click here for charts)

Again the precious metals diverged, with platinum taking another heavy hit, gold fighting back to end with only a modest loss, and silver actually posting a nice gain on the day.

Gold’s fans were likely a bit disappointed the metal didn’t do better, in light of the dollar pulling back against the euro and the price of crude rising. However, it was certainly a positive development to see the metal bounce decisively off of $700.

The struggle between gold’s traditional safe haven status in a crisis like this one, and the need of overleveraged hedgers for liquidity, is obviously still playing itself out.

Right now, “The name of the game is to raise dollars,” said Frank McGhee, of Integrated Brokerage Services in Chicago. “People will sell their winners to fund their losers. The best performer since the financial crisis began has been gold.”

There is a lot of unwinding to do. And, while gold’s strength yesterday afternoon was a good sign, it may not be able to resume its bull run until those who are sitting on dollars begin to feel the pinch of the rising inflation that is sure to come with the astonishing infusion of cash into the system by governments.

The bright side, if there is one, is that, “For the moment, gold is holding its relative strength,” says Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. “Gold is falling more slowly than everything else but everything is falling. In a credit crisis, people don’t want anything.”

Those with strong gold positions can take some comfort in knowing that gold will always hold value better than any ‘asset’ made of paper.

Source: Gold Slides, but Silver Gains

Platinum managed to push past $1400 in Hong Kong, but was unable to hold there, sliding for the better part of the day and ending just off its intraday lows at $1370/oz., down $13. Overnight, platinum is sharply higher.

Silver fell below $13 in the far East, managed to claw its way back over it in the first hour of New York trading, but hang onto the mark, sliding to close at $12.87/oz., down 18 cents. Overnight, silver has moved higher.

(Click here for charts)

Although the precious metals all finished in the red, fanciers were probably somewhat relieved that the damage wasn’t worse than it turned out to be, as oil continued to slide and the dollar spent most of the day sharply higher against the euro.
Again, none of the money exiting the equities markets seems to be finding its way into gold, silver or platinum.

Ktico’s Jon Nadler, always ready with his bear claws, declared that gold “appears poised to retest the $775 zone as oil has now slipped under $108 and as dollar strength is sapping the confidence among remaining” buyers.

Even so, not all analysts are ready to throw in the towel.

UBS metals strategist John Reade said that, “There is no doubt in our mind that gold-market fundamentals are extremely supportive for the metal at the moment, but that doesn’t matter as long as the dollar is strong.”

Nadler also weighed in on the PGMs after Ford (F) and General Motors (GM) reported that domestic demand, especially for trucks, continued to plunge in August.

“We have car sales shrinking significantly on top of the problems that platinum is already having,” Nadler said. In his opinion, platinum may fall as low as $1,250, and that “is a question of hours or days, not months,” he said.

Source: Precious metals still fighting headwinds -  Platinum tanking as auto orders plunge.

Platinum got hammered and, though it rose off its low of $1360 in the New York morning, still kissed last week’s rally goodbye, giving up $80 to end at $1383/oz. Overnight, platinum has been flat.

Silver took a terrible thrashing, plunging nearly 70 cents in the first hour of New York trading, to $12.50, but then shot higher, reaching $13.10 by the end of the NYMEX and holding near there to close at at $13.05/oz., down 54 cents. Overnight, silver has fallen off.

(Click here for charts)

It was a sorry return from the holiday for the precious metals, as falling equities sent little money the metals’ way after Gustav proved far less severe than feared, driving down the price of crude and lending support to the dollar. Commodities were weak across the board yesterday.

The bears could be in for a short-lived turn in the sun, though, as two and possibly three more potential hurricanes lined up at sea, and as international tensions tightened with reports that the U.S. and E.U. are considering joint sanctions against Russia over the Georgia situation.

The war of words between the bulls and bears continued.

“In the present environment, with a strong and rising U.S. dollar, and with wheat, sugar, and crude oil under pressure, gold cannot stand up on its own and be counted bullishly,” wrote Dennis Gartman, author of the Gartman Letter. “For the gold bulls times are hard and getting harder.”

Hard, no doubt. But getting harder?

Mark O’Byrne, of Gold and Silver Investment, doesn’t think so. “It will be interesting to see how long gold can remain at these depressed levels especially with physical demand so robust in India and internationally,” O’Byrne said.

Look for gold to bottom at $790 in the next three weeks, and to attract buyers from there, analysts at Société Générale wrote.

Source:  Precious metals slammed -  Succumb to general commodities selloff.

Platinum was up for the third day in a row, albeit modestly, and ended at $1463/oz., up $8. For the week, platinum was up 3.2%.

Silver was higher to the mid-point of London trading, then sagged for the rest of the day, closing at $13.59/oz., down 7 cents. For the week, silver was up a shade under 2%.

(Click here for charts)

It was a day of little consequence for the precious metals, which was to be expected pre-holiday, and the session’s results were unsurprising in the light of a rallying dollar and slipping crude prices.

The bears were loping out of their dens as gold headed for its biggest monthly loss since April of 2004.

At one extreme was Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois, who declared flatly: “Gold is cooked … Sell every rally. The Fed is not going to raise rates, but that doesn’t matter. Rates in other countries are going to come down.”

And Tom Hartmann, a commodity analyst at Altavest Worldwide Trading in Mission Viejo, California, chipped in with: “Any pullback in the dollar is going to be seen as a correction and not a resumption of a bear market, so people are still going to sell gold.”

On the other side, Deutsche Bank analysts said that fragile housing, banking and consumer sectors in the U.S. could push the dollar lower again. “While we expect headwinds for precious metals prices to persist, we are not convinced that the U.S. dollar can stage a meaningful rebound,” they said.

The question of sustainability will likely involve what’s behind the dollar’s rally. Is it intervention to support the buck?

Analyst Dan Norcini, writing on jsmineset.com, thinks so. “Foreign Central Banks are behind the rally in US Treasuries,” he writes, “and as a consequence, the rally in the US Dollar. How much longer they remain willing to ply this gambit is unclear but one is not at all murky, someone is going to get stuck holding the bag.”

Source: Precious Metals Little Changed