Gold, Silver, Metal Prices Commentary – April 23, 2010


Bullion update ...

Good Morning,

The operative word in the markets this morning was ‘resolution." After much guessing and second-guessing about what has been said and done thus far about Greece, the issue appears headed for (some kind of) a resolution this morning. Greece will formally ask the EU for a rescue package. Not coincidentally, the ‘give’ on Greece’s part came after its rating was downgraded by Moody’s rating agency yesterday…The rescue package request news lifted the euro off of one-year lows, as it also caused Greek bonds to rally, various stock indices to rise, the US dollar to retreat a bit, and commodities to stage a comeback as risk appetite reignited.

A resolution of sorts was also apparently in the making as regards the Goldman case –just one week after the news roiled market like a spring storm. Securities laws experts are suggesting that the firm simply cut its losses and settle with the SEC. There is much at stake for the most profitable firm in Wall Street history here. Getting on with business –at the expense of a settlement rather than a protracted court battle-may well be the simplest, most expedient resolution to the messy situation, legal scholars opine.

No clear resolution for the tack the US economy may be on was on offer in this morning’s durable goods orders. New orders plummeted by a net 1.3% on account of a 67% freefall in aircraft orders. If one takes that (important) component out of the Commerce Department’s equation, then the conclusion would be that durable goods orders actually rose at the fastest rate in over 24 months (the US recession is commonly thought to have commenced in December of 2007). Crude oil and gold (but not so the dollar) remained lower after the hot/cold news release.

Equally unclear this morning, were the trends in precious metals spot markets. Gold opened steady-to-higher, but then slipped to $1135.00 once again –showing a $5.20 decline at last check- as the durable goods numbers made a durable impression on speculators. As things were lining up for next week –based on Bloomberg’s weekly surveys-some traders expected the dollar to gain next week and commodities to not do so well in the wake of same. Some of this may have to be reassessed, now that the Greece factor appears to have been somewhat neutralized.

Silver fell 9 cents to trade at $17.89 while the noble metals were the subject of some profit-taking following their recent, uninterrupted string of heady gains. Platinum was off by $15 at $1725.00 and palladium lost $5 to ease to the triple-five level. No change once again, in rhodium. It remained at $2900.00 the troy ounce. The recent low near $1130 might offer support for the yellow metal on the precious team, should prices head further towards that direction later on today.

In the broader market picture for gold, the fact that there is still no resolution in sight for the outcome of the upcoming UK General Election might make a difference as to which direction prices head towards. reports that ‘a hung parliament could lead to increased economic uncertainty and lower confidence among savers." Such conditions would be conducive to favourable nods coming in gold’s way. Of course, we must not lose sight of the fact that the report featured on TheStreet came via a PR Newswire citing the opinion of online bullion dealers GoldMadeSimple.

While not mentioning hard figures for the period, the World Gold Council said this morning that Indian gold demand preliminary reports ‘suggest a continuing improvement…supported by seasonal festivities." Also possibly helping matters for gold offtake in India, a stronger rupee (up 3.6% on the quarter) which made the yellow metal cheaper in local terms. The formal Q1 report by the WGC is not due until mid-May.

Well, it’s Friday. If the financial news flow is slow on content, one can always resort to…sex. Some, apparently, have resorted to just that, and exclusively. While on the job. Naughty to the max. This might be funny, if it were not actually sad.

In a sure sign that either the End is Near, or that Rome is burning, or that human nature is not about to do a 180 when it comes to certain obsessions, CNN reported this morning that 33 employees and/or contractors at the SEC OIG were busy watching or downloading porn during the height of the financial crisis. All on government time and money. Nice job, if you can get it. Many did, and got paid from 100 to 220 large per year to…have fun. Maybe it was the stress of watching the world melt down that led these folks to head for You say you want reform in the financial industry and/or on Wall Street? Well, yes, President Obama said as much yesterday. He might even get such reform to become reality.

In fact, the US Senate is working on a bill that contains items such as an ‘early warning system’ intended to detect signs of an impending crisis. We suggest a similar ‘early warning system’ for the regulatory offices that are supposed to carry out such radar supervision on Wall Street. Such a system might include having to hand in your work laptop every Friday for a ‘routine sex check’ and installing a low-tech ‘sex sniffer’ for any DSL lines coming into the offices of employees who routinely walk around with "bedroom eyes."

We leave you now with a quote from a speech to ponder over the weekend:

"Yesterday, we learned of the real deficit figures. It reminded us of all the mistakes … that we inherited from the previous government. We inherited a boat ready to sink; a country without credibility; a country that had lost the respect of its friends and its partners; an economy exposed to the mercy and the appetite of the speculators. From day one, we have rolled up our sleeves and begun the difficult work to change this gloomy situation. We prepared a plan with difficult and painful measures, but we regained our credibility." — Quick; guess who said this? Don’t look yet!

While the statement could have just easily been made by Mr. Obama as he addressed a crowd in lower Manhattan, the words actually belong to Greek Prime Minister Papandreou. Rumour has it that the passage will be saved to serve as a generic template for any official who finds himself having to explain his country’s situation. All you have to do is insert your country of choice in the last sentence:

"Our inspiration, our faith, is this land … Our wonderful people, our youth, our possibilities, our visions. I’m absolutely sure we will make it.  Xxxxxx needs to believe in its possibilities, its values, and in itself."

Happy Trading. Wipe those tears of emotion away now. The home sales data brought risk appetite (and gold) back already.

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America 

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In addition to bullion 2010 American Silver Eagles that are already available, the United States Mint this year will also issue the bullion America the Beautiful Silver Coins. Click on the link to visit a sister CoinNews’ site and learn about the coin and the new bullion series.

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