The Price of Things Resource Last 1 Week Ago 3 Months Ago 1 Year Ago Gold 929.30 939.30 903.80 944.80 Silver 13.31 13.99 12.91 18.33 Platinum 1183.00 1187.00 1156.00 2067.00 Palladium 248.00 243.00 221.00 463.00 Copper 2.28 2.30 1.87 4.10 Nickel 7.44 7.03 4.70 9.55 Zinc 0.50 0.50 0.50 0.83 Uranium 52.00 54.00 42.00 59.00 Oil 66.00 70.00 52.42 143.50 Gas 3.65 3.87 3.78 13.40

In Today's Edition

Gold was flat until just before the London open on Thursday, then commenced a long, slow slide that continued until the noon hour in New York, with a bottom at $926 before some uninspired late day buying pushed it to a finish at $928.80/oz., down $11.50. For the week, gold lost 1%.

Platinum tightly rangebound all day, bouncing between $1180 and $1190, finally coming to rest at $1183/oz., down $16. For the week, platinum dropped 1.2%.

Silver was virtually unchanged two hours into London trading, but fell off into the first hour in New York, briefly dipping below $13.30 before inching back over it and going flat as a pancake the rest of the day to close at $13.35/oz., down 35 cents. For the week, silver skidded 5.1%. (Click here for charts)

The precious metals ended the abbreviated holiday week by stepping back in their recent one-step-forward, one-step-back pattern, with all three taking a licking out behind the woodshed.

If anything, it was probably surprising that they didn’t slide more in a day of grim economic news, a rising dollar, and falling oil prices. But they likely benefited from the early departure of some traders getting a jump on the long weekend.

How do you keep any kind of perspective in this yo-yo market? The irrepressible Dan Norcini, writing on jsmineset.com, comments:

“There is really not much to say about any of this – deflation is battling inflation and until one side gets a clear advantage and dethrones the thinking in the other camp, we are going to see no trends, no orderly markets, no sanity and nothing but idiotic volatility and casino-like markets.

“The markets have been completely taken over by the day trading, one minute bar chart geeks who wouldn’t know a pork belly from a brisket cut or a grain of wheat from a cocoa pod but who are enamored with lots of squiggly lines and dream of coming back from their bathroom break and discovering that they have traded in and out of the same market 15 times during that period and made $100,000 on each turn.

“The rest of us normal people who actually have lives to lead and families to raise, etc. are better served keeping a longer term perspective and understanding that the Dollar’s days of supremacy are forever over and that the rise of the BRIC nations means that America is beginning to go the same path as the once mighty and proud British Empire. Its leaders too spent it into oblivion and destroyed its currency in the process.”

Indeed they have, and gold will one of the few things that ultimately benefits.

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In the currency market, the dollar climbed higher against the euro. Late Thursday, the euro was trading at $1.4027 vs. $1.4156 on Wednesday.

The day’s data was about as bad as it could be. Primary was the Labor Department’s report on nonfarm payrolls, which showed the loss of 467,000 jobs in June. That was in line with ADP figures from Wednesday, and far above the 325,000 contraction predicted by economists.

The unemployment rate edged up to 9.5% from 9.4% in May, not quite as bad as the 9.6% expected. All told, the data “strongly suggest that consensus forecast for a second half recovery is overly optimistic,” said Steve Ricchiuto, chief economist at Mizuho Securities in New York.

Some analysts tried to pretty things up by pointing out that the job loss trend is improving, but Millan L. B. Mulraine, of TD Securities in Toronto, wasn’t having any. “On the whole, this was a very ugly labor market report, and there is no amount of lipstick that can improve its image,” Mulraine said.

Across the pond, the ECB left unchanged its key lending rate, as expected, and stuck with the amount of covered bond purchases in its plan. At the same time, the statistics agency Eurostat reported that the unemployment rate in the 16-nation zone matched the US, rising more than expected to a 10-year high of 9.5% in May from 9.3% in April.

And Marketwatch.com reported that, “China hopes for diversification of the international currency system in the future, and this topic could be addressed at the Group of Eight leaders' summit next week in Italy, Chinese Vice Foreign Minister He Yafei said …

“The international financial crisis has fully exposed weaknesses in the international currency system, He reportedly said, and China hopes that the system can diversify.”

In the energy market on Wednesday, crude for August delivery fell again, closing at $66.73/barrel, down $2.58. August reformulated gasoline lost 6.82 cents, to $1.7908/gallon.

Oil posted its third straight weekly loss as the lousy economic numbers piling up have driven much of the recovery optimism from the field.

The jobs report “is confirming what we saw earlier in the week with the dropping consumer confidence,” said Phil Flynn, of PFG BEST Research. “This reinforces the outlook for weak petroleum demand and should put downward pressure crude prices.”

Flynn added that, “On the fundamentals level, high levels of inventories, low demand and sufficient supply continue to point to lower prices.”

The only bright note was sounded by the Commerce Department, which reported orders for U.S.-made factory goods rose by the biggest amount in close to a year in May, climbing 1.2% on a big jump in orders for transportation equipment.

In the natgas arena, the fuel continued to languish, posting a loss on the week, with August futures shedding 8.5% to finish at $3.615 per million British thermal units.

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The base metals were mostly lower on Thursday. Copper sank from the pre-dawn hours to mid-morning, bottoming at $2.24, but rallied back from there to finish at $2.2754/lb., down more than 3½ cents. Nickel had a pair of jagged ups and downs to mid-morning, but blazed higher from there, closing just off its intraday highs at $7.4382/lb., up 13 cents. Zinc was also choppy, ending little changed at $0.6994/lb., down a half-cent. Aluminum was weak, dropping more than a penny, to $0.7267/lb., while lead also sagged, shedding more than a penny and three-quarters, to $0.7626/lb.

Copper led all the industrial metals but nickel downward yesterday, as traders heeded the strengthening dollar and were spooked by bad economic data from both the U.S. and Europe that served notice a global economic recovery could be a long time in coming.

“When you have these continued weak employment reports, yes, they show maybe we are bottoming out, but there is no turn in any of the data,” said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey.

In addition to the grim unemployment numbers domestically and in the eurozone, the market also reacted to comments from the ECB about the length of the recession. However, the better-than-expected orders for manufactured goods helped keep a cap on the metals’ losses.

O’Neill added that, “If you take China out of the buying side of the market, you wouldn't have a lot there. It's going to be difficult for the market to break out of the current trading range in the third quarter because of the fact that we don't really see the kind of demand outside of china that the market needs to extend these levels.”

In company news, Rio Tinto did a massive re-financing. The world’s third-largest mining company sold about 97% of the London-listed shares (508.6 million) on offer in a $15.2 billion sale to reduce debt.

Rio rejected a $19.5 billion investment proposal from its biggest shareholder, Aluminum Corp. of China, last month, and went with the share sale and an iron ore joint venture with BHP Billiton.

Current Market Indices:

Investors came off the Canada Day holiday in a selling mood as profit taking dominated the resource sector during Thursday trading on the Canadian Markets. For the tale of the tape, the TSX Exchange was down 1.24%, while the TSX Gold Index rebounded 0.9% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, added a modest 0.06% with the decliners edging out the advancers by a 400 to 316 margin on a weak 118 million shares traded.

Consolidation in the junior exploration sector continued with Canadian Gold Hunter looking to take over African-focused Sanu Resources. Under the offer, Canadian Gold Hunter will issue 0.5725 of its shares for every Sanu share. At the end of the day, Canadian Gold Hunter will have 134,161,066 shares outstanding and Sanu shareholders will own about a 17.8 per cent stake. Canadian Gold Hunter ended the day up C$0.02 at C$0.385, while Sanu closed up C$0.025 at C$0.19.

Mano River Resources is offering 1.57 of its shares for every one African Aura Resources share. In this marriage proposal, the combined entity will have nearly C$10 million in cash, an advanced stage, high-grade gold project and a well-funded iron ore project, both in Liberia, and some promising gold and iron exploration projects in Cameroon. Mano ended the day flat at C$0.07, while African Aura closed unchanged at C$0.08.

The United States markets are closed on Friday, so expect very weak trading on the Canadian bourse. We will see what Monday trading has in store.

From Ed Steer:

I'd forgotten that Thursday was the day for the release of the U.S. jobs report for June. If I'd know that when I wrote my commentary yesterday, I could have predicted [with 95% certainty] that gold would have been down...and it was. It happens every time that there's a crappy jobs report. It was no surprise that the Dow got creamed...but along with a rising U.S. dollar as well??? Something doesn't smell right...or is it just me?

I could also tell even without the jobs report that it wasn't looking good for gold yesterday, because at 4:00 p.m. in Hong Kong in their afternoon...3:00 a.m. in New York...the prices for both gold and silver rolled over. I don't know what it is about that [one hour and change] stretch of time between the Sydney close and the London open...but if there is going to be a down day...it starts right there a large percentage of the time. Here's the Kitco gold chart for the last three days. Note that the two down days...Tuesday and Thursday... where the top was in for both metals during that time period. This phenomenon has been going on for years.

click to enlarge

Not much to say about yesterday's activity. As I mentioned, the top was in at 4:00 in the afternoon in Hong Kong...and most of the damage was done between the London a.m. gold fix [10:30 a.m. in London...5:30 a.m. in New York] and twenty minutes after the Comex opened...when gold and silver hit their lows of the day. I believe the low occurred the moment that the jobs report was released...and someone can correct me if I'm wrong about that. From that point on, both metals traded sideways until electronic trading was through at 5:15 p.m. Eastern Daylight Time.

Open interest changes in gold and silver for Wednesday's big up day were [once again] counterintuitive to the price action...as open interest fell as prices rose. Gold o.i. fell 840 contracts to 378,359...on pretty big volume; 104,120 lots. In silver, o.i. fell a huge 3,625 contracts to 100,969...on 24,265 contracts. It's very possible it could have been a short covering rally in both metals that drove the price higher on Wednesday...as the gold price rose at 8:00 a.m. and 12:00 p.m. in two vertical $8 price spikes. This action would not only cause the price to rise as it did...but open interest to fall as well. However, the silver price was nearly comatose...so that theory doesn't hold water for it. Part of silver's drop in o.i. had to do with deliveries, as once a contract has been delivered...the open interest drops by that amount...and there were 1,885 silver contracts delivered on Wednesday. It's also possible that 'da boyz' are not reporting the open interest numbers in a timely manner...further distorting the o.i. numbers.

The Comex Delivery Report for Thursday showed that 15 gold contracts were delivered and 474 silver contracts as well. Let me make this point about deliveries and open interest one more time...and I should have made this clear ages ago. When a delivery is made, a long and a short cancel each other out [as the long takes delivery of physical bullion from the holder of the short position], so open interest drops by the appropriate number of contracts. So, using today's Comex Delivery Report as a guide...total gold open interest dropped 15 contracts and total silver open interest dropped 474 contracts. This is a mechanical process that occurs automatically on delivery. I hope that makes things a little clearer.

In other precious metals news, I note that there were no changes to the alleged holdings of either the GLD or SLV. And there were big changes reported by the U.S. Mint eagles program as well...and if Ted [Hawkeye] Butler hadn't seen it...I would have missed it entirely. Here's what happened. When I reported the new mintings for July 1st...I failed to notice that the Mint had increased their June gold and silver eagle production at the same time! I wasn't even looking for that. Anyway...here are the increases I missed. The U.S. Mint added another 3,000 one ounce gold eagles to June production, bringing the total up to 116,000...and in one ounce silver eagles they upped the total by a whopping 300,000...bringing the grand total for the month of June to 2,245,000. There were no changes reported in silver inventories over at the Comex-approved warehouses.

In other gold news, the usual New York commentator passed along the following comments that Richard Russell made last evening..."Gold is now fluctuating just above its 10-week moving average. But what's so interesting is that the rising blue 10-week m.a. is above the rising red 40-week m.a. [That's the 50 day and 200 day moving averages - Ed], and gold is trading bullishly above both rising m.a.'s. Does gold have the strength to attack the $1,004 resistance level again? That's what we're going to find out in this fateful month of July." [Richard, I couldn't agree more - Ed]

click to enlarge

Al Korelin of Korelin Economics was kind enough to interview me about a week ago...and, for whatever reason...I just got the link yesterday. So here it is...better late than never, I suppose. Click here.

Since it's a long weekend [for my American readers], and you probably have a little more time on your hands than normal, I'm going to run a few extra video and audio clips...and a few extra stories...plus the main feature...and it's a monster! Anyway, the first story made my jaw hit the floor. If this isn't the best reason I've heard of lately to rush out and buy all the gold and silver you can afford, I don't know what is. It's courtesy of Craig McCarty [so what else is new?] and was posted in The Guardian out of London. The headline reads "Banking system like South Sea bubble, says senior Bank of England official"..."The Bank's executive director for financial stability, Andy Haldane, compared the banking system over the last 20 years to the South Sea bubble of the early 18th century and said bankers had merely 'resorted to the roulette wheel' to keep up with each other." Wow! The link is here.

The next item is a really good interview with Nassim Taleb on CNBS, author of the world-famous book "The Black Swan". It lasts about nine minutes and is worth listening to. Craig McCarty slipped me this story as well. [Don't you have a job, Craig?] The link is here.

In a story out of the Financial Times in London comes this headline..."China moves to cut reliance on dollar". "China has taken another step towards internationalizing its currency and reducing reliance on the US dollar with the announcement of new rules to allow select companies to invoice and settle trade transactions in renminbi." The link is here.

And in a GATA release yesterday comes this headline "Austrian bank's gold report cites market manipulation". The entire report's comments on this subject appears to be taken directly from the years of work done by GATA ...and silver analyst Ted Butler. The most stunning comment comes from the CEO of Freeport McMoRan, James Mofett. He is quoted as saying "The central banks are the OPEC of gold. They will control the price of gold by selling until they change their minds." It nearly goes without saying that I think this is worth reading, and the link is here.

And while I still have my gold-plated tin-foil GATA hat on...here's another interview worth your time. GATA Chairman Bill Murphy, GATA secretary treasurer Chris Powell, and your humble scribe were interviewed about the gold and silver markets for a half hour yesterday by Eric King of King World News. The link is here.

And lastly, is the biggie I spoke of earlier. The quote I used yesterday came from this essay and went like this...The world's most powerful investment bank [Goldman Sachs] is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. Here's the full article by Matt Taibbi of Rolling Stone magazine. It's entitled "The Great American Bubble Machine". This particular copy of the essay [and there are lots around] is posted at correntewire.com. I thank Don Hagema for this sending me this version. Pack a lunch, blow the froth off a cool one, then click here.

Cautious, careful people, always casting about to preserve their reputation and social standing, never can bring about a reform. Those who are really in earnest must be willing to be anything or nothing in the world's estimation, and publicly and privately, in season and out, avow their sympathy with despised and persecuted ideas and their advocates...and bear the consequences. - Susan B Anthony [1820-1906]

Today's blast from the past is another well-known chestnut from the 1960s. I have a purloined DVD of their last concert appearance in Edmonton in 1992...which I was fortunate to get tickets for...and someday I'll get around to putting up some of the songs on youtube.com. Anyway, you might know most of the words to this, so feel free to sing along if you wish. Turn up your speakers and click here.

I see that the FDIC reported yesterday that it closed another seven banks...one in Texas and seven in Illinois. I keep asking myself how long can this insanity continue without the world's economic, financial and monetary systems collapsing into a smoldering ruin. If you believe some of what the above commentators are saying, it shouldn't be too long. That's why I feel you should still be buying all the physical gold and silver you can afford.

But there's nothing that can be done about it over the [long] weekend, so I suggest that you make like this squirrel below, and forget about everything until the world opens for business on Monday.

click to enlarge

See you 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.