Gold Seeker Closing Report: Gold and Silver Fall Slightly For First Day in Four
The Metals:
Gold rose another $11 to $878.45 in early London trade before it fell off rather markedly in morning New York trade and dropped to as low as $848.65 by a little before noon EST, but it then rallied over $10 from that low in the last hour and a half of trade and ended with a loss of just 0.95%. Silver rose 5 cents to $11.46 in early London trade and dropped to as low as $10.972 in New York before it also bounced back higher in late trade, but it still ended with a loss of 2.54%.
Euro gold fell to about €600, platinum lost $2.50 to $856.50, and copper fell over seven cents to about $1.27.
Gold and silver equities fell for most of the day and ended with about 7% losses.
Oil fell over 9% to a new four and a half year low at as low as $35.98 as traders continue to worry about further demand destruction and question whether or not OPEC will actually cut production as much as they have pledged. The January crude futures contract expires tomorrow.
The U.S. dollar index rebounded from recent huge losses. “The dollar jumped against the euro Thursday after the European Central Bank cut its deposit rate and lifted lending rates, in the wake of the U.S. Federal Reserve's easing earlier this week. The ECB cut its official deposit rate by 50 basis points to 1% below the key rate and raised its marginal lending rate by 50 basis points to 1% above the key rate. Its benchmark repo rate remains unchanged at 2.5%.”
Treasuries rose yet again as the Dow, Nasdaq, and S&P eventually fell rather noticeably on worries over the economy and whether or not the fed’s recent amazing actions will be effective.
Among the big names making news in the market today were Rite Aid, Chrysler, Ford, GM, Discover, FedEx, and Lennar
The Commentary:
“Dear CIGAs,
I mentioned yesterday in my commentary that it would not be unexpected to see a bit of a respite in the savage Dollar mauling that has been taking place over the last week. Markets rarely tend to continue in moves of such extent without a bit of a pause for players to pocket profits unless they are in a parabolic blow off phase such as what we are seeing in the bond market. It should come as no surprise then to learn that last evening the monetary authorities of Japan began to surface after having been in hibernation for some time now only to make their usual noises about “excessive movements in the Forex markets”. That is code speak for “we do not like the strong yen”. Of course, that was enough to send yen buyers to the sidelines in a big hurry. I personally love the Japanese monetary authorities because they are so predictable. When you do not hear from them you begin to wonder if something is wrong with the universe.
Either way, their “verbal intervention” served to temporarily derail the yen which also seemed to take the steam out of most of the major currencies as well taking some off their best overnight levels and actually bringing some into negative territory. That was the signal for short-term oriented gold day traders to use the $880 level hit to go ahead and exit and book some paper profits. The selling there confirms $880 as the resistance level which will need to be bettered in order for gold to run to $900 or above. For now it is serving to cap upward momentum. My guess is that the bullion banks have surfaced at that level and some guys decided not to press them without a much weaker dollar especially with crude oil crashing down through the $40 level. OPEC had better attempt something fast or crude will be at $30 in a heartbeat. The good thing for the rest of us is that we can go out and buy some gas guzzlers again ( you know – those vehicles which actually can seat a normal family without shaping them into something resembling a can of packed sardines). Maybe this cheap gasoline can be the new bailout package for the auto industry.
The bond bubble continues expanding with no end in sight as traders are convinced that the Fed is going to be buying along the outer end of the curve. With support like that below the market, the path of least resistance is higher. Whether or not the Fed actually does such a thing is immaterial at this point – the very suggestion that they are going to do so is enough to actually accomplish their intentions. Doesn’t it amuse you how easily grown, “sophisticated” investors can be herded around by these pestilential central bankers? That crowd prides themselves on being able to decipher obtuse financial and economic signals unlike the rest of the ignorant peasants and dolts who constitute the mere working class. Yet it is this same smug and oftentimes arrogant crowd that are rounded up like witless sheep and sent off in the direction that their shepherd masters intend them to go. Oh well, it really doesn’t matter much as long as they can make money off of it so I suppose the image of being driven around like mindless idiots doesn’t particularly prove troublesome to them.
December gold deliveries continue with another 127 being issued and stopped this morning. That brings the total for the month to 13,170 or 1.317 million ounces. Warehouse supplies showed a sizeable drop yesterday which is nice to finally observe. Registered was down to 2.8 million ounces. Keep in mind that playing the paper gold game and expecting to beat the bullion banks at it is a fool’s dream. Unless the gold is removed and taken out of the warehouses, the Comex will never be a freely traded market. We know full well that the CFTC has been asleep at the wheel for a long time now so do not expect any help from that quarter. The only thing that the paper shorts fear and respect is a lack of physical metal –everything else is blithely and I might add, safely ignored. Hedge funds looking for a way to beat these parasites have the strategy laid out in front of them do so – the question is will they actually leave their black box algorithms long enough to think about this and implement it. Another Fifteen to Twenty thousand contracts taken and stopped would put an end to the bullion bank reign over the sand box. That is chump change in today’s markets especially when you consider that at one time the hedgies had well over 240,000 long positions early this year. The margin necessary to carry positions of such size is proof that the financial resources necessary to take delivery of the physical gold exists – the only question is whether or not the will do so does. The down side of things is that the hedgies have never proved to be resourceful or clever – how can they be when they have long ago delegated their thinking to their computers?
Many of you have no doubt seen the article about unprecedented gold demand in Europe – demand so great that the refiners in Switzerland cannot keep up with it. Reports like this, of which we have seen so many in recent weeks, just serve to underscore how completely disconnected from reality the Comex paper gold market has become. Gold bulls – are you listening….” Dan Norcini, More at JSMineset.com
“February Gold closed down 7.9 at 860.6. This was 10.2 up from the low and 12.4 off the high.
March Silver finished down 0.3 at 11.12, 0.23 off the high and 0.04 up from the low.
The gold market forged a rather wide trading range on Thursday, but the February gold contract was initially unable to forge a fresh new high for the move. In fact, by the time the Dollar recovered this morning gold prices were already in the midst of noted setback. Clearly the market was undermined by the recovery in the Dollar but in retrospect seeing the weak US data and seeing fresh new contract lows in the energy complex seemed to rekindle some deflationary fears again. Perhaps the gold market was simply overbought and in need of a corrective setback as the overall level of flight to quality anxiety seems to remain pretty high.
The silver market initially tried to extend on the upside but apparently the market was unable to add to the gains forged early in the week. Clearly the silver market was undermined by the reversal in the Dollar but as in the gold market, the silver market might be somewhat overbought from a technical perspective. Since the early December lows, the March silver contract has managed a low to high run up this week of roughly $2.49 per ounce and that certainly hints at some measure of overbought status.”- The Hightower Report, Futures Analysis and Forecasting
