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By Jon Nadler       Printer Friendly Version Bookmark and Share
Aug 7 2009 9:32AM

Good Morning,

Gold opened under only mild selling pressure on this last trading day of the first week of August. Overseas (read: Chinese) stock market developments helped push oil prices lower and the US dollar somewhat higher this morning, while New York was gearing up for what could turn into an unpleasant day in the wake of US unemployment statistics. Bullion started Friday's session off with small losses on the order of $1.50 per ounce, quoted at $961.60 as participants hung on for the release of the jobs data.

Silver opened with a 14-cent gain this morning, quoted at $14.69 per ounce, while platinum resumed its sharp sell-off, which brought it down to $1244.00 an ounce (off $17) after literally just hours following its near-$1300 achievement in price. For once (not), we do not have to point to any automotive world news in order to explain the past 48 hours in platinum. We could just offer up the names of the profit-taking sellers in the noble metal. We won't.

The jobless numbers offered up a bit of a surprise this morning, declining to a national US rate of 9.4% in lieu of the climb to 9.6% that many an analyst had expected/dreaded. The dollar remained above 78 on the trade-weighted index following the news release, but gold turned positive shortly thereafter while oil was down but 50 cents per barrel.

A bit of nervousness and pre-weekend book-squaring  has participants not so sure which way to aim this morning. Prices were darting around either side of the unchanged mark in various pits. We suspect that profit-taking could become the order of the day in gold as well, following the run to just above $970 earlier this week. The jobs news cannot be interpreted as dollar-negative, no matter what anyone says.

Chinese authorities made interesting noises about the creation of a mysterious 'internal mechanism' with which they expect to study share prices and try to bring about stability in the same. I think we've seen such a machine before: it is called a credit contraction contraption. By any other name. Indices in China fell for a fourth day, heading for their worst weekly loss since February.

But, hey, few seem to mind too much - not after a 79% year-to-date gain has yielded a lot of inebriated-on-profit players. Maybe the government is working on a market breathalyzer. In any case, the official posturing has given rise to uncertainties among investors, as they no longer see an additional $1 trillion coming their way, any time soon. So, now we will just have to live with tiny bubbles.

One element of potential uncertainty was removed from the gold market overnight, following the announcement by

the European Central Bank, the Swiss National Bank, and Sweden's Riksbank to agree total gold sales to 400 metric tonnes per year, with total sales over the next five-year period to be capped at 2,000 metric tonnes.

The agreement becomes effective late next month, and is still designed to allow for the upcoming sale of the IMF's 403 tonnes of gold in what is expected to be an orderly manner. It is not a given that the announcement will now open the path for a gold moonshot, but it at least offers a bit of protection at the lower end of the price scales in gold.

The fresh pact should underpin gold prices up to a point, as the body language it exhibits reveals a degree of new-found respect for the asset of last resort among institutions which have had to watch the past two years unfold. Barring surprise or nasty economic or geopolitical events or a structural break within the EU, the agreement helps factor in a stable official sector gold equation.

At the very least, the pact will engender glowing reviews of central banks from the same pens that have vilified them for many years. Let's just say that if sinister forces were indeed conspiring to undermine your investment in the yellow metal, they are surely posturing in the opposite direction right about now.

Yesterday, we took a trip around the world. The world of mints, that is. At the ANA World's Fair of Money, we visited The Austrian Mint, The Royal Canadian Mint, The US Mint, The British Mint, and our good friends at the Perth Mint. Each one of their representatives was overjoyed with the year-to-date sales results and while dealers and distributors indicated that they sense a bit of a 'calmer' sales environment than has been seen circa early this year, they remain hopeful that the public gold/silver buying spree could continue into the coming year.

Yesterday's highlight was the evening launch of the Perth Mint's 2010 bullion coin series. Whilst we will not show you pictures of the coins just yet, it is safe to say that the series are stunningly designed and should ensure solid sales and a warm reception by investors. Something the Perth Mint has proven in previous years, and not only in the form of coin sales. Perth Mint Certificates lead the way when it comes to safe, liquid, and value-laden precious metals custodial products.

They know what they're doing, Down Under. They also know how to throw a darned party, these folks. Complete with the iconic Crocodile Dundee himself in attendance, and an Aussie 'country' band that had supposedly stolid business types kicking up their heels and doing 'the Roo' - total digital image blackmail material. Guaranteed.

This is all we have time for. Time to fly. Again. No closing article. Again.

Look for us on Bloomberg Radio near 6:30 NY time on Monday. Central banks will be on the hosts' minds, if we had to guess...

Pleasant weekend to All.

Jon Nadler
Senior Analyst
Kitco Bullion Dealers Montreal



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.