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Good morning ...

Precious Metals

Gold was strong in the overseas markets, peaking at $975 at the mid-point of the London session, but once New York opened it got taken down in a big hurry, dropping $30 in a near-straight line into the noon hour, then easing more slowly to finish at $944.00/oz., down $25.80. Overnight, gold is sharply lower.

Platinum hit $1880 in Hong Kong, but it too endured a savage beating in New York, falling straight through before leveling off in the Globex and ending at $1797/oz., down $35. Overnight, platinum has fallen off.

Silver mimicked gold's trajectory very closely, trading at $18.78 just before New York opened, then crashing as low as $17.84 before rising slightly to close at $17.93/oz., down 48 cents. Overnight, silver has declined further.

It was a bleak Tuesday, as gold and silver gave back all of Monday's gains and then some, and platinum just prolonged its freefall. The usual suspects all lined up in opposition to the metals, with oil slipping, the dollar strengthening, and equities bouncing back.

"Conditions changed as soon as Paulson and Plosser injected a fresh dose of adrenaline into the U.S. dollar with their comments," said Kitco's Jon Nadler.

"We saw oil and the commodity complex undergo a bout of selling on the news, and quite promptly," Nadler said. "No one wants to fully bet on an imminent rise in the greenback; however, the official statements did manage to overcome the dollar weakness that was seen early in the day."

But for Mark O'Byrne, executive director at Gold and Silver Investments Ltd., it was more about oil.

However, O'Byrne said that, "While oil remains an important factor in influencing the gold market, we remain confident that there will be a gradual decoupling between oil and gold in the coming months."

Gold will outperform oil, O'Byrne maintains, since oil is a commodity that is "far more subject to demand destruction in the face of a sharply deteriorating global economy than gold."

And Credit Suisse analysts wrote that gold prices are taking direction mainly from the euro/dollar exchange rate and U.S. bond yields. Since gold is a non-yielding asset, rising bond yields are a negative for the metal.

But Credit Suisse believes that a renewed test of $1,000 an ounce is "increasingly likely during the third quarter," and that "the rally will likely start turning into a consolidation as we move into the fourth quarter."

Currencies and Economic News

In the currency market, the dollar moved sharply higher against the euro. Late Tuesday, the euro was trading at $1.5784 vs. $1.5923 on Monday.

Top officials were out jawboning to beat the band in an effort to talk up the buck yesterday.

Philadelphia Federal Reserve Bank President Charles Plosser said in a speech that the accommodative monetary policy is coming to an end and that rate hikes are on the way.

Plosser, a voting member of the Federal Open Market Committee this year, said that, "We will need to reverse course -- the exact timing depends on how the economy evolves, but I anticipate the reversal will need to be started sooner rather than later."

Treasury Secretary Paulson chipped in, saying that a strong dollar is "very important."

He also said that, "I believe that the United States is on the right path to resolving market disruptions and building a stronger financial system," but that "working through the current turmoil will take additional time," and there will be more "bumps in the road."

Paulson called on Congress to pass this week his proposal to back stop Fannie Mae and Freddie Mac. The two companies need a world-class regulator, he said, adding that Federal Reserve must have a role in setting their capital standards.

Energy

In the energy market Tuesday, crude for August delivery finished up as front-month contract by dropping sharply, closing at $127.95/barrel, down $3.09 after rebounding from an intraday low of $125.63. August reformulated gasoline shed 7 cents, to $3.15/gallon.

Traders backed away from the possibility that Tropical Storm Dolly would damage any energy facilities in the Gulf of Mexico.

"The oil market has passed its first test of the hurricane season," said John Kilduff, of MF Global. "No output had been disrupted and the zone of possible landfall is too far south and west to affect output."

Eyes will be on the Energy Information Administration today, as it reports weekly inventory numbers. Analysts' projections are for crude stocks to fall by some 1.9 million barrel, while gasoline should be up about a half million.

Base Metals

The base metals were mostly in the red on Tuesday. Copper peaked shortly after the New York open, but sagged from there, only to rally late in the day to return from whence it came, finishing at $3.7923/lb., down two-tenths of a cent. Nickel fell, but not that dramatically, as it closed just off its intraday low at $9.1822/lb., down less than 4 1/4 cents. Zinc pushed to near $0.86 in the pre-dawn hours, but faded, ending at $0.8263/lb., down just over a penny. Aluminum slipped to $1.3505/lb., also off just over a penny, while lead shot straight up in the pre-dawn hours, then held its gains, adding better than 4 cents, to $0.9708/lb.

Copper was sluggish, but held its ground amid supply worries.

Demand exceeded output by 108,000 metric tons through April of this year, as mine production fell in Australia, Indonesia and Chile, the International Copper Study Group said.

Additionally Freeport McMoRan, the second-biggest producer, said copper sales this year will be 2.4% less than projected in April, citing output declines. The company cited production delays at its new Safford mine and output at the Morenci pit that trailed expectations. Both sites are in Arizona.

Richard Adkerson, Freeport's CEO said that the "copper market continues to be tight" and that mining companies are "challenged" to meet production targets. Adkerson claimed that higher production costs, especially for fuel, have created a "barrier" to increasing mine output.

Small wonder that analysts at Barclays Capital in London were writing that, "The picture for copper supply growth remains bleak."

Meanwhile lead, which had been in the doghouse for ever so long, has been showing definite signs of new life on supply concerns and some sentiment that the selloff may have been overdone. Lead inventories monitored by the LME fell 650 tons yesterday, to 91,375 tons. They're down about 10% since July 9.

Chinese exports of refined lead dropped 96% in June and 80% over the first half. "Net lead exports to the west from China were at their lowest this decade in June," said Nick Moore, of ABN AMRO. "China is the largest producer and consumer of lead so anything out of there tends to feed in quite quickly."

And Alex Heath, of RBC Capital Markets noted that, "Lead consumption is growing on demand for batteries in both India and China ... The car industry as a whole, in terms of western producers, is flagging, but people still need new batteries for their old cars."

That's what's happening ... see you tomorrow!

High Ridge Resources Inc. is in the business of evaluating, acquiring and developing natural resource properties. High Ridge properties are located in British Columbia and Peru with a mix of commodities; gold, silver, copper and zinc. The properties have been acquired by staking as well as optioning to earn 100% interest. The properties are chosen because of their significant past histories and expenditures. In some cases in addition to excellent drill targets already defined, near term production is possible.

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