June 15: Gold Gains 2% on the Week

The Metals:

Gold spiked up to $1633.42 by a little before 8:30AM EST before it fell back to $1619.87 in the next 20 minutes of trade, but it then chopped its way back higher into the close and ended with a gain of 0.12%. Silver surged to $28.844 before it dropped back to $28.538 and then rallied back higher at times, but it ended at just unchanged on the day.

Euro gold fell to under €1285, platinum lost $8.50 to $1482.00, and copper gained 5 cents to about $3.41.

Gold and silver equities traded mostly slightly lower and ended mixed.

The Economy: [6]

All of this week’s other economic reports:

Next week’s economic highlights include the NAHB Housing Market Index on Monday, Housing Starts and Building Permits on Tuesday, a FOMC rate decision on Wednesday, and Initial Jobless Claims, Existing Home Sales, the Philadelphia Fed, Leading Economic Indicators, and the FHFA Housing Price Index on Thursday.

The Markets:

Charts Courtesy of http://finance.yahoo.com/ [15]

Oil [16] ended just slightly higher as worries about poor economic data were offset by hopes for more stimulative measures from the world’s central banks.

The U.S. dollar [17] index fell on poor economic data.

Treasuries rose along with the Dow, Nasdaq, and S&P on speculation about more stimulative measures from the world’s central banks in response to this weekend’s upcoming Greek elections.

Among the big names making news in the market [18] Friday were Goodrich, Facebook, and Pfizer.

The Commentary:

"Heads - I Win; Tails - You Lose" - “That's the attitude that gold bulls have apparently adopted heading into this weekend's crucial Greece vote. Whereas yesterday seemed to be a day of caution among traders, today seems to have morphed into a day of expectations of the punch bowl, complete with accompanying hard liquor, being filled to capacity by the Central Banks of the West.

If the Greece vote turns out to be one which threatens the stability of the Euro and sends shock waves through the foreign exchange markets, traders are convinced that a large bouquet of liquidity is coming their way early next week. If the Greece vote turns out to be one in which the party favoring the austerity measures imposed upon the country, then the market will give a collective sigh and the RISK ON trades will be back in vogue - at least until Spain or Italy go kaput.

Either way, we seem to have generated buying in the gold [19] market. Not that I am complaining, being a friend of gold, but I must honestly admit, the entire scenario seems repugnant to me in just stepping back and observing what our economic system, not only nationally, but globally, has degenerated into.

I know the drug addict comparison is old and worn out by now, but it sure as hell seems to me to be the best description of today's financial markets. The problem for the druggie is not that he or she is showing withdrawal symptoms - that is the evidence of an addiction. Their body has grown so accustomed to the presence of this substance that it can no longer functionally normally without it. In other words, the withdrawal symptoms, the shakings, the convulsions, the pain, the distress, are merely the outward evidence of an internal problem - addiction.

So it is in the case of today's financial markets - the symptoms of distress may perhaps be ameliorated by the infusion of additional liquidity - but those are merely the symptoms of an internal problem. That problem is EXCESSIVE DEBT.

For far too long many of the governments of the Euro Zone have lived way beyond their means, spending money with reckless abandon, borrowing more and more, spending more and more, until they have now reached the point at which, just like the addict, more of the drug will eventually kill them. Yet that is EXACTLY what the financial markets want - more of the drug - in essence absolving them of the consequences of their stupidity for spending money they never had in the first place.

Consider the folly of this - the worse the economic news becomes, not only in the Euro Zone, but also here in the US, the better the equity markets perform. Is that not madness? What unbiased observer in the future reading about this insanity will not shake his or her head in astonishment as they marvel that otherwise clear-headed human beings could have been conditioned to behave in such a manner?

Our financial markets are supposed to be a means of allocating precious capital towards segments or industries where goods or services that better our lives can be produced. Instead, they seem to have taken on a life of their own with the roles reversed - in essence the slave has become the master. No attempt can be judged to be incorrect or misguided as long as it serves to resuscitate the price of equities in general. Credit markets must not be allowed to lock up, equity prices must not be allowed to fall sharply, large banks must not be permitted to pay the price for their poor investment decisions - nope - the show must go on, even if in the process we are making fools out of ourselves and deluding ourselves into thinking that Central Banks are the ENGINES of PROSPERITY instead of entrepreneurs and risk takers.

Enough of this display of contempt for now - back to the gold price action - Gold has moved higher on hopes of this aforementioned liquidity coming soon next week. It has pushed through the top of the resistance zone between $1620 - $1630 and is attempting to power past the bullion bank capping efforts at today's high of $1635. Clearing this level will set the market on a path to $1650.

Notice the following 8 hour chart [19] where you can see that it is flirting with the downtrend line formed within the recent congestion zone as well as having moved into the bottom of that zone which was carved out by a top between $1680-$1700 and a bottom near $1625.

If the liquidity punch bowl does indeed come next week in a BIG WAY, look for gold to move initially to $1650 and then, if it can best that level, on to $1680 for a test of that region.

Downside support remains near and just above the $1600 mark.”- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/ [20]

“This Sunday’s Greek elections should be center stage for most markets. Keep in mind that it’s not uncommon that whatever the initial reactions are to the news end up reversing not soon after.

U.S. Stock Market – Torn between poor overall fundamentals (and of course Europe) and the belief another FED QE is a sure-fire major plus, the market is (and should remain for a while) quite volatile.

U.S. Bonds – After a very long wait, I finally established a short position in Treasuries in my “Tracking List”. Because another QE is still quite possible and the economy is in the crapper yet again, I didn’t take leverage short positions. I most likely will if and when QE is enacted and we make new lows in yields (around 1.25% on the 10-yr T-Bond).

U.S. Dollar – We know there’s a record short Euro position for many weeks now. The news has only been bad and could be perceived horrific come Monday morning. Yet, the Euro has found major support around 1.25 to the U.S Dollar. If whatever takes place in Greece doesn’t cause a sell off towards $1.20, we could see a dramatic short squeeze. Longer term the U.S. dollar is toast.

Gold – Hello boatload of bears? Whatever happened to your sell-off? Despite almost daily bear raids in the paper market, the gold price is moving higher, not lower. Hmm…. Two closes above $1,700 and its curtains for the bears – again!

Oil and Natural Gas – Eying getting long oil but holding out to see if $75 can be tested. Natural gas remains an avoid.

Junior Resource Stocks – Sucks! Any questions? The only good news the sucking may finally be getting behind us.”- Peter Grandich, Grandich Letter [21]

GATA Posts:

[22]

Ted Butler realizes that silver market rig is U.S. government operation [23]

The Statistics:

As of close of business: 6/13/2012

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

[24]

Note: Change in Total Tonnes from yesterday’s data: SPDE added +3.018 tonnes.

COMEX Gold Trust (IAU) Total Tonnes in Trust: 180.79: +0.88 change from yesterday’s data.

Silver Trust (SLV) Total Tonnes in Trust: 9,696.23: No change from yesterday’s data.

The Miners: [25]

Newmont’s (NEM) clearance to export copper ore concentrate in Indonesia, Royal Gold’s (RGLD) priced notes, and Huldra Silver’s (HAD.V) priced private placement were among the big stories in the gold and silver mining industry making headlines Friday.

WINNERS

LOSERS

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

Please see Yahoo’s Mining/Metals News Wire [26] for all of today’s mining news.

- Chris Mullen, Gold Seeker Report [27]

- Would you like to receive the Free Daily Gold Seeker Report in your e-mail? Click here [28]

Additional Resources for today’s Gold Seeker Report can be found:

• http://www.capitalupdates.com [29]
• http://www.goldseek.com [30]
• http://www.silverseek.com [31]
• http://www.goldreview.com [25]

© Gold Seeker 2012

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