Good morning ...

Precious Metals

Gold trended slightly higher in Hong Kong and hit its intraday high above $960 in London then hit its intraday low below $930 at noon in New York before leveling off slightly, finishing at $939.60/oz., down $5.90. For the week, gold is down 5.25%.

Platinum, the only precious metal in the black over the past few days, tacked on $20 yesterday, ending at $1072.00/oz. For the week, platinum is down a mere 0.28%.

Silver followed a similar path to gold but showed less volatility, closing at $13.11/oz., down 1 penny. For the week, silver is down an eye-popping 9.02%.

So, gold is down again... if you're an investor you should be fired up. Trying to call the daily or weekly fluctuations is impossible and dangerous. All that matters is gold will go way up from where it is now... probably in the short-term, but certainly in the medium- and long-term. And the team at Casey Research is not the only group that knows this.

Here's a quote from the well-known Peter Spina: This is not a bubble [in gold]. The only bubble that is ongoing is the fantasy land that all is okay. Gold is undergoing a healthy pullback, backfilling after rising from $750 to $1,000 over the past couple months. The $900 area exhibits excellent support and a continued influx of investment capital will continue to support the market. $1,000 was a strong technical barrier and it was played by many trader-technicians. I believe that we will be building a firm support in the $900 area from where gold can then make another assault on the $1,000 area. It is my belief that gold is heading for $1,200 and higher in the coming months. Record investment inflows will overwhelm this market and send it significantly high as the economic, financial and soon to be monetary crisis unfolds further.

Rock on Peter...

Currencies and Economic News

In the currency market, the dollar gained against the euro. Late Friday, the euro was trading at $1.2668 vs. $1.2735 on Thursday.

Today the dollar is once again emerging as the ultimate fantasy island survivor as more currency traders cast their votes against any remaining contenders, said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Conn.

While Mr. Wilkinson's comment is true for now, there's no telling how long this will last given the expansion of the monetary base we've seen recently.

Now, here's some economic news from Friday... and you probably guessed, it's bad.

The nation's economic slide during the last three months of 2008 was even sharper than previously estimated, with the broadest gauge of economic activity suffering its worst decline in 26 years, the government reported Thursday.

Gross domestic product, which measures the output of goods and services produced in the United States, fell at an annual rate of 6.2% in the fourth quarter, adjusted for inflation, according to a preliminary report from the Bureau of Economic Analysis.

Unfortunately, Citigroup was back in the news on Friday... oh no!

The banking giant announced a stock swap that if successful will leave the government owning 36% of the company and wipe out almost three-quarters of existing shareholders' stake.

Kevin Kingsbury and Maya Jackson Randall of the Wall Street Journal correctly remarked, the move is an acknowledgment that more than $50 billion in government capital and a backstop on more than $300 billion in troubled Citigroup assets haven't been enough to stop the bank's slide.

Perhaps the most amazing tale to tell about the Citigroup situation is that CEO Vikram Pandit is expected to keep his job after an overhaul of the company's board of directors.

Energy

In the energy market on Friday, crude for April delivery fell $0.46 to close at $44.76/barrel. April reformulated gasoline finished at $1.3725/gallon.

Despite Friday's loss, crude ended the week with a gain of 12%, and was 1.5% higher in February.

We've commented recently in this column about this, but just to recap: the UAE, OPEC's third-biggest producer, said that it will cut its April production by 15% to 17%. And OPEC will meet in March to discuss whether to further reduce member nations' quotas. The cartel has already announced a reduction of 4.2 million barrels a day since September, equivalent to about 5% of global oil demand.

Well-known MF Global analyst Edward Meir had this to say, We think oil prices will likely test the $50-$52 resistance band heading into the OPEC meeting.

We have our doubts that the price advance will continue much beyond that, as participants will eventually have to come to terms with the fact that we are still mired in global recessionary conditions, Meir said.

Base Metals

The base metals were slightly down on Friday. Copper lost a little over 2 cents from yesterday's close to $1.5381/lb. Nickel lost 9.08 cents to finish at $4.4051/lb. Zinc fell three-fourths of a penny, ending at $0.4967/lb. Aluminum dropped one cent and a little change, closing at $0.5877/lb., while lead moved to $0.4715/lb., little changed from the previous day.

Dismal economic news was enough to snap copper's four days of gains on Friday.

The U.S. economy shrank in the fourth quarter at the steepest rate since 1982, the Commerce Department said yesterday. Consumer spending fell at the fastest pace in almost 30 years. Japan's manufacturers cut production by a record last month and economic growth slowed in India and Malaysia last quarter. Copper, used in homes and cars, fell as much as 6.5%.

People will see the world really continue to suffer from the slowdown for some time, said Gijsbert Groenewegen, of Gold Arrow Capital Management in New York. Copper will really break down.

Today's U.S. economic data is a wake-up call for those expecting a recovery in 2009, Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd., said. Copper has plunged 60% in the past 12 months as slumping housing markets, mounting job losses and declining manufacturing strangled global economic growth.

The metal will average $1.275 a pound this year as production outpaces demand, Deutsche Bank AG forecasts. That's 60 percent lower than last year's average price of about $3.18 in New York.

We believe copper is the most exposed of the industrial metals in an environment where real-economy data deteriorates further, analysts at Deutsche said in a report Friday.

Have a great weekend... see you on Tuesday!



NEWS YOU CAN USE:

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