Apocalypse Now? Apocalypse Nigh? Apocalypse Nah!

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Good Afternoon,

The first half of Thursday proved to be a better day for gold as morning dollar weakness and oil strength kept the number of additions to open interest growing nicely. We even saw a hint of de-coupling today, as oil briefly touched $129 during the day while bullion kept rising. The metal tried for the $980 mark once again and stalled for the second time this week, at $979.50 - some $10 under its previous turning point a few days ago. Some support for gold buyers (in the form of higher euro rate expectations) came from expressions of wage spiral/ inflation concerns by Mr. Trichet over in Europe.

The afternoon however, presented a different set of conditions as oil started to fall towards $130 (or worse) once again, and the greenback climbed towards 72.25 on the index. Gold found itself ahead by only $4.00 at last check, quoted at $963.50 per ounce, trying to hang on to this value area - the alternative being a visit to $945/$925 zone. Numbers appear to be converging (72/ 130/ 965 ) for the dollar, oil, and gold but conditions remain fragile enough that just about any of them could break on the next news headline. Like the one about crude oil having just violated its 50-day moving-average line.

One news headline that did not come as a shocker to many was the one about UBS today. The bank is completely exiting the offshore banking business and is not taking on any further US clients. Existing ones have been politely shown the door and will need to take their billions elsewhere within 24 months. UBS: "You and Us Have to Part Ways." As to the 19,000 US clients who allegedly may have tried to elude Uncle Sam in some way, their mailboxes will be a dreaded place to visit in coming months.

Global geopolitics cooled a bit, as signs that Iran could be open to possible deal-making in the wake of international sanctions taking their toll on the country. The US responded to the new sign language by sending a senior official to Switzerland to hold high-level talks with Iran on Saturday. Little in the way of gold buying manifested itself in Asia as the night wore on. Indian buyers remain thigh-pursed as they feel prices are overheated at the moment and could give way to the $925 area as a first buying opportunity zone.

As far as today's jobs numbers and housing starts were concerned, the former came in under expectations, while the latter was above consensus. The Philly Fed Survey however revealed a contractive trend now in its eighth month. Silver lost 18 cents to $18.59 in another de-couple (likely driven by the manufacturing activity shrinkage) and platinum dropped another $26 to $1874 while palladium fell $5 to $421 per ounce. One small correction to make to yesterday's auto sector comments: "shrinking auto production and of a shift towards small cars with small engine displacements" should read: "shrinking auto sales...etc."

The Dow, on the other hand, had another shiny day for a change, rising to 11,430 in a 190-point rally. Folks who dared buy airline and (some) financial shares recently, made some money this week. Our analyst friends over at RBC opine that trying to trade these wacky summer markets is turning out to be nothing more than a crapshoot for many. Odds are all over the spectrum. We hope you have better luck. Chinese investors certainly cannot boast about any such fortune, as the Shanghai stock market has shown a near-49% loss on the year - this after being the world's top performer last year. Never say never. The country's growth rate has cooled to 10.1% if we can call that a cooling. Or, you could have done equally bad, or worse, had you invested in the world's top 40 mining and oil companies - the group of which has lost over $1.4 trillion (with a T) over the past year.

Speaking of some bad luck, as bad as thing appear to be in the US markets, at least someone is now openly talking about issues and some initial action has been undertaken to address the situation. A reader's comments about the issues we focused on in yesterday's comments prompted us to bring you this quote for a what-if scenario to ponder: "Pakistan investors stormed out of the Karachi Stock Exchange, smashed windows and cursed regulators after the benchmark index fell for a 15th day, the worst losing streak in at least 18 years. ``I have lost my life savings in the last 15 days and no one in the government or regulators came to help us,'' said Imran Inayat, 45, a protester and a former banker who retired early and said he lost 300,000 rupees ($4,175) on the market."

Speaking of good news/bad news and continuing on an optimistic note, we bring you today's focus story from Minyanville's Kevin Depew. Just some things to think about...

"Chaos and fear never sleep. This morning the first news story I read was a piece from the Los Angeles Daily News about police threatening to beat down and arrest any "disorderlies" trying to get their money out of a failed IndyMac bank branch in Pasadena, CA. Apparently, after being turned away Monday, customers began lining up at 1:30 a.m. the next morning to take out any cash they had in excess of the $100,000 maximum insured by the FDIC. The scene was reportedly emotional and tense. At another IndyMac branch in Encino, the police were called in after line jumpers threatened to turn an ordinary bank run into a full-on riot.