Good morning …

Precious Metals

After edging higher in the far East, gold had an uneventful day on Thursday, barely straying outside a range between $940 and $950, and finishing in the middle at $947.20/oz., up $8.10. Overnight, gold has fallen off.

Platinum also traded tightly, locked inside a band between $1060 and $1080, ending at $1068/oz., unchanged. Overnight, platinum has been flat.

Silver peaked above $13.70 at the London open, then declined for the next three hours before turning north again and inching its way back to close at $13.50/oz., down 3 cents. Overnight, silver.

It was clearly a day of consolidation for the precious metals after two straight days of strong upmoves, and there was nothing among the usual suspects to motivate buyers, as equities ended mixed, crude continued to decline, and the dollar clawed out a small gain against the euro.

That gold managed to notch even a small gain on such a blah day was probably something of an encouragement to fanciers.

The markets are all about finding safe haven at the moment. Investors' skepticism is sparking flight-to-quality buying, with dollars, U.S. Treasuries and gold picking up most of the action.

While many are opting for paper gold in the form of the SPDR Gold Trust, the largest bullion-backed ETF, increasing numbers of investors are demanding delivery of the physical metal.

“We see substantial buying with people putting it in their backyards,” said Frank McGhee, of Integrated Brokerage Services in Chicago. “The fear purchasers are going to scoop up gold and keep it rising.”

Dan Norcini, writing on, noted that the flight is near-universal: “Once again gold scored brand new record all time highs when priced in both Euro terms and British Pound terms at the PM Fix. Euro gold was fixed at €740.094 while BP gold was set at

£663.746. Canadian Dollar priced gold notched another all time high [Wednesday] over $1,170 and is on course to score yet another [on Thursday]. Aussie priced gold is perched just below its record all time high. Ditto for Russian ruble priced gold. Can someone say world-wide currency devaluation?”

Yes. We can.

Currencies and Economic News

In the currency market, the dollar edged higher against the euro. Late Thursday, the euro was trading at $1.2858 vs. $1.2894 on Wednesday.

Earlier in the session the dollar was much higher, as traders concluded that the Congressionally-approved stimulus package will fail to stimulate.

The buck had risen early because doubts about the U.S. government bank bailout plan continued to encourage flows into safe-haven currencies.

Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Conn., summarized by writing that many “investors perceive the banking bailout package and the stimulus spending bill to be poorly designed and too little.”

Thus, Wilkinson added, “This risk aversion theme is not entirely the path we had expected the dollar to take, yet the potential for global fallout means that the prospects for the dollar are more rather than less positive.”

However, the buck gave back most of its gains later in the day, as equities came off their lows to make a surprising comeback.

Among the day’s hard numbers, the Commerce Department reported the largest increase in retail sales in more than a year during January. After a six-month string of sharp declines, sales rose 1% on a seasonally adjusted basis last month, marking the first increase since June and the largest percentage increase since November 2007. The result handily beat economists’ expectations for a decline of 0.4%.


In the energy market on Monday, oil continued to crater, with crude for March delivery closing at $33.98, down $1.96. March reformulated gasoline dropped 1.15 cents, to $1.2583/gallon.

Crude is now just barely above where it bottomed last December 19, $33.87, which was itself a four-year low. It has lost 17% in just the past week.

Michael Fitzpatrick, of MF Global, now sees the ongoing economic recession as a “calamity,” and believes that “$30 oil now seems realistic.”

A lot of consumers are now scratching their heads, wondering why the cost of a barrel of crude has been in freefall, yet the price of gasoline at the pump keeps rising. The answer probably has something to do with the fact that many traders are stockpiling crude in anticipation of future price hikes and, with refineries operating at a flagging percentage of capacity, the oil glut has yet to result in a gasoline surplus. Quite the contrary.

Base Metals

The base metals were mostly lower on Thursday. Copper’s ups and downs virtually cancelled each other out yesterday, as the metal finished at $1.5249/lb., up a half-cent. Nickel declined to the late morning, but then rallied back a bit to close at $4.6138/lb., down 5 2/3 cents. Zinc slid lower through most of the day, ending at $0.5061/lb., down a penny. Aluminum was weak, shedding more than a penny, to $0.6065/lb., while lead also edged lower, falling less than 2/3 of a cent, to $0.5112/lb.

Copper managed to eke out a small gain after three straight days of losses, but the other industrial metals all posted small declines as traders were underwhelmed by the stimulus package hacked out by Congress.

Commerzbank analysts were among the unimpressed, writing that, “In the medium term, the package should also revive the demand for base metals … in the short term, however, the effects on demand should be limited.”

The red metal’s recent strength represents the triumph of “hope over reality,” commented analyst Robin Bhar at Calyon. “Hope is that things are improving, reality is they are not,” he said, referring to the demand outlook.

On the stockpile front, yesterday’s addition was small but not non-existent. Copper inventories monitored by the LME advanced by 225 metric tons, to 516,675 tons.

Underscoring the weak demand in the eurozone, Norddeutsche Affinerie, Europe's biggest copper producer, said it may shorten working hours in its copper processing division in Hamburg after posting a first-quarter pretax loss and announcing it expects its full-year profit to be down sharply.

Meanwhile, nickel prolonged a four-day slide on speculation demand will deteriorate as stainless-steel makers deplete inventories of the metal until they get some sign that economic growth is returning.

Demand for nickel will fall 15% this quarter from a year earlier and 10% in the next quarter, according to estimates from Barclays Capital. And Posco, Asia’s biggest stainless-steel maker, cut prices last week for the first time since August, in an effort to up demand.

“We are clearly anxious over the coming quarters, and the market is remaining quite weak,” said Philippe Smits, of stainless-steel warehouse company Contisteel NV/SA in Belgium. “I’m not getting signs things are improving.”

That’s what’s happening … see you tomorrow!


Almaden Minerals Ltd. is an exploration company specializing in the generation of new minerals projects with world-class potential. The company's business model is to option their properties to other companies which then carry the cost of all further exploration in order to earn a share in the projects. By building such partnerships and maintaining a carried interest in a large number of properties, Almaden significantly reduces the risk and cost of exploration while exposing shareholders to the greatest opportunity for wealth creation from discovery. Using the management's technical acumen, geologic database and state-of-the-art exploration technology and methodologies, Almaden has created a significant track record of identifying prospective mineral properties. Almaden currently has over 40 properties in our portfolio, 14 of which are currently optioned. Learn more about Almaden Minerals.

The Daily Resource has been brought to you by our friend's at Casey Research.
For a great overview of the commodity sector we offer the 'Casey's Daily Resource Plus'.
Inquire Here