The Metals: Gold fell as much as $19.40 to $807.35 in Asia before it rallied back higher in London and morning New York trade to see a $1.90 gain at $828.65 by about 11AM EST, but it then fell back off slightly into the close and ended with a loss of 0.92%. Silver saw a 44 cent loss at $9.99 at about 8:30AM EST before it rallied to as high as $10.355 by late morning in New York, but it also fell back off into the close and ended with a loss of 2.2%. Euro gold fell to about €614, platinum lost $16.50 to $813.50, and copper fell over 8 cents to about $1.41. Gold and silver equities opened up about 2% lower before they rebounded to see over 4% gains by about and hour and a half into trade and then fell back off a bit by early afternoon, but they still ended with roughly 3% gains. The Economy: Report For Reading Expected Previous PPI Nov -2.2% -2.0% -2.8% Core PPI Nov 0.1% 0.1% 0.4% Retail Sales Nov -1.8% -2.0% -2.9% Retail Sales ex-auto Nov -1.6% -1.8% -2.4% Business Inventories Oct -0.6% -0.2% -0.4% Michigan Sentiment Dec 59.1 55.0 55.3 The Senate rejected the auto bailout plan late last night, but it now seems likely that the White House and Treasury will use TARP funds to prevent an automaker collapse for the time being. All of this week’s other economic reports: Trade Balance - October -$57.2B v. -$56.6B Initial Claims - 12/06 573K v. 515K Import Prices - November -6.7% v. -5.4% Import Prices ex-oil - November -1.8% v. -0.9% Export Prices - November -3.2% v. -2.0% Export Prices ex-ag. - November -2.9% v. -1.3% Treasury Budget - November -$164.4B v. -$98.2B Wholesale Inventories - October -1.1% v. -0.4% Pending Home Sales - October -0.7% v. -4.3% Next week’s economic highlights include the NY Empire State Index, Net Foreign Purchases, Capacity Utilization, and Industrial Production on Monday, CPI, Building Permits, Housing Starts, and the FOMC policy announcement on Tuesday, and Initial Jobless Claims, Leading Economic Indicators, and the Philadelphia Fed on Thursday. The Markets: Charts Courtesy of http://finance.yahoo.com/ Oil fell as much as 7% in early trade on worries over the demise of the auto bailout plan before it cut its losses on renewed hopes that something will be arranged, but it still ended with an over 3% loss on the day. The U.S. dollar index ended slightly lower and treasuries closed with a small gain while the Dow, Nasdaq, and S&P eventually found marginal gains on hopes that something will be worked out to save the automakers. Among the big names making news in the market Friday were the automakers and Alcatel-Lucent. The Commentary: “Dear Friends, Once again another week passes and once again foreign Central Banks unload US Agency debt. This week they dropped another $17 billion worth, bringing the total of agency debt that they have unloaded since the credit crisis began in July of this year to an almost unfathomable $138 billion. Were it not for the fact that they were buying US Treasuries in its place apparently, the bottom would have fallen out of the Dollar even sooner, repatriation from abroad notwithstanding. Look at the chart of the Treasury holdings and ask yourself if it the least bit difficult to see why we have a bubble forming in the Treasury market. Click here to view this week’s Custodial Holdings charts with commentary from Trader Dan Norcini” – Dan Norcini, More at JSMineset.com “February Gold closed down 6.1 at 820.5. This was 3 up from the low and 7.4 off the high. March Silver finished down 0.195 at 10.23, 0.01 off the high and 0.01 up from the low. The gold market managed to throw off a fairly negative bias early in the trading session but it seemed as if the bounce in gold was largely the result of a recovery bounce in the US equity markets. With the Dollar remaining weak for a large portion of the trading session there certainly wasn't the typical currency market pressure that was persistently present in the July through mid November time frame. While the US economic readings released on Friday morning were discouraging, the market seemed to suggest that the readings were as bad as some players feared and that seemed to be another reason for shorts to cover positions. For the stock market to have to climbed back into positive ground in the wake of the initial hard down action Friday morning, clearly seemed to temper the pressure on silver and other physical commodity markets. In fact, a distinct recovery bounce in the corn market this morning and a recovery attempt in the crude oil market also seemed to drawn down the pressure hanging over silver prices. However, in the end the US retail sales figures were discouraging and even in the face of an indirect US auto sector bailout effort the ills of the US economy remain in place.”- The Hightower Report, Futures Analysis and Forecasting

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