Good Morning,

Precious metals values recovered some of the ground they lost in previous sessions, following a retreat to near 80 on the index by the US dollar, and on the heels of an initial $1.30 bounce in crude oil prices. This morning's initial jobless claims data did little to bring the greenback up from its 0.64 point loss on the trade-weighted index, albeit gold gave up some of its initial gains after the nine o'clock hour saw a decline in oil values back towards the $60.50 level. At last check, oil was on the negative side on the day, trading a nickel under the $60 mark.

Spot gold prices added $5.20 on the open, climbing to $914.30 per ounce. Participants remain aware (and wary) of this week's breach on first-line support in and around this value zone, but opinion remains somewhat divided as to whether or not significant bargain hunting will emerge in this price neighborhood.

More than a few of those traders and analysts we surveyed believe there will be additional summertime gold 'on-sale' tags attached to the metal and that we might see the high $800s once again. For the moment, the weekly tally in exchange traded funds compiled by reveals a rather sizeable drop in such holdings as having taken place yesterday. Make that 9.1 tonnes worth of 'sizeable.' In Citigroup's words, investment flows into gold are 'moderating.'

Silver rose 8 cents at today's market opening, trading at $12.94 per ounce. Subsequently, the market turned lower, and silver was seen posting a loss of 4 cents at $12.81 basis spot bid. The white metal is still thought to have the potential to offer some superior-to-gold rewards to those who pick it up around these (or lower) price levels. Marketwatch indicates that silver is set to outperform gold, argued Citigroup in a note published Thursday, with the broker saying investment flows into gold are moderating while the outlook for silver is improving. The ratio of gold-to-silver prices should return to its historical norm between 55 and 60 from the current 69, it said.

Platinum clawed back to $5 above the $1100.00 mark with an $8 gain. Palladium was $4 higher this morning, quoted at $236.00 per ounce. Finally, one bit of bright(er) news for the noble metals complex. Dire as the auto situation may be in the US, China's auto sales in June rose at their fastest monthly rate so far in 2009, putting the country on track to overtake the US as the world's biggest auto market this year. reports the Wall Street Journal this morning.

Well, we cannot say we did not tell you so, but nothing substantive regarding the US dollar's reserve status has emerged from the G-8 summit in Italy. If anything, the greenback got some good 'press' from...the White House Press Secretary. He had this to say about that, according to Bloomberg:

The U.S. dollar will remain the world's main reserve currency, White House Press Secretary Robert Gibbs said at the Group of Eight summit today. Despite whatever talk you might have heard, I don't see that there is movement away from the notion of the dollar being that currency, Gibbs told reporters at a briefing at the start of the second day of the three-day meeting in L'Aquila, Italy. There are a lot of people that have talked about it, but we don't think that's really serious, U.S. Commerce Secretary Gary Locke said in an interview with Bloomberg Television outside Moscow yesterday.

What else has made its way into the public domain from L'Acquila? The fact that it is too early to ring the 'all clear' signal on the world economy, the markets, or the here's what's next' signal as regards policies by various countries as they try to navigate through the slump, or emerge from it in due course. For now, the mantra is 'stimulate, stimulate, wait, and then...stimulate some more.' End-game plays are still only on drawing boards, and they might just sit there until well into next year if current trends persist. Bloomberg brings us up-to-the-minute:

We've been advocating stimulate now, consolidate later, Angel Gurria, secretary general of the Organization for Economic Cooperation and Development, told Bloomberg Television today from the summit. You're not going to remove the stimulus now. It's too early.  The International Monetary Fund echoed that skepticism, upgrading its 2010 growth forecast while saying the rebound will be sluggish and urging governments to stay the economic- stimulus course.

Emerging countries like China will lead the way, expanding 4.7 percent next year, the IMF said yesterday, up from an April prediction of 4 percent. The Washington-based lender forecast growth of 0.6 percent in the advanced economies, up from expectations of stagnation. It's a very volatile situation, European Commission President Jose Barroso said in a Bloomberg Television interview in L'Aquila. We are not yet out of the crisis, but it seems now that the free fall is over.

In the U.S., a jump in the jobless rate to a 26-year-high of 9.5 percent in June and a 6.9 percent drop in the Standard & Poor's 500 Index in the past month raised questions whether Obama's $787 billion stimulus package is turning the world's largest economy around. Democrats in Congress are split over whether to spend more, adding to a deficit that the IMF puts at 13.6 percent of gross domestic product in 2009, the highest since World War II.

President Obama has straddled the issue, telling ABC News this week that spending more borrowed money is potentially counterproductive. A G-8 statement yesterday embraced options ranging from the second U.S. stimulus package some lawmakers and economists are advocating to Germany's emphasis on shifting the focus to deficit reduction.

Exit strategies will vary from country to country depending on domestic economic conditions and public finances, leaders of the eight economies -- the U.S., Japan, Germany, Britain, France, Italy, Canada and Russia -- said in the statement. There is still uncertainty and risk in the system, Mike Froman, deputy U.S. national security adviser, told reporters in L'Aquila. While exit strategies can be drawn up, it's not time to put them into place. Bank bailouts and recession-fighting measures will explode the debt of the advanced economies to at least 114 percent of gross domestic product in 2014, the IMF forecasts.

German Chancellor Angela Merkel is the leading opponent of additional stimulus, pushing through a statement at last month's European Union summit that called for a reliable and credible exit strategy. Merkel, campaigning for re-election in September, has warned against billowing budget deficits, which will rise in the EU to an average of 6 percent of GDP in 2009 from 2.3 percent last year, the EU forecasts. We have to get back on course with a sustainable budget, but with the emphasis on when the crisis is over, Merkel said. The 16-nation euro economy has shown some signs of resilience since shrinking 2.5 percent in the first quarter, the most since the currency's birth in 1999.

Well, thank heaven for responsible women, we say. Most of them have no qualms telling the guys of the world how to run a proper budget. Be that of the average home, or one of the world's largest economies. Something else the G-8 summit's leadership agreed upon, is that devaluing one's currency for the sake of buoyant exports is not necessarily a sound policy to insist upon. Or, in Bloomberg-speak:

Leaders of the world's biggest developed and emerging nations agreed to avoid devaluing their currencies to promote their exports at the expense of others, according to a draft statement. With officials from Brazil, India, China and Russia pushing consideration of alternatives to the dollar as the world's dominant reserve currency, the draft called for a stable monetary system, according to a German official who read the language to reporters today.

The leaders agreed to refrain from competitive devaluations of our currencies, according to the draft of a statement to be released after they meet at the G-8 summit n L'Aquila, Italy. They also agreed to promote a stable and well-functioning international monetary system. The global financial crisis and the surge in U.S. borrowing have prompted Russian President Dmitry Medvedev to advocate diversification away from the dollar. Russia and its counterparts have yet to come up with a viable alternative.

We need to improve the international currency regime to have a better foreign exchange issuing and reserve currency system so that we can have relative stability in the reserve currencies' rates and so that we can have a diversified and rational international reserve currency regime, Foreign Ministry spokesman Ma Zhaoxu said today in L'Aquila. Brazil's President Luiz Inacio Lula da Silva wants the biggest developing nations to use their own currencies in settling trade accounts, India's Foreign Secretary Shivshankar Menon told reporters yesterday.

The so-called Group of Five -- Brazil, China, India, Mexico and South Africa -- discussed looking at the use of alternate currencies, not so much as reserve currencies, Menon said. But Brazilian President Lula suggested that we should consider using our own currencies to settle our own trading accounts with each other. Menon said everyone recognizes that the idea of a new reserve currency is a long-term goal.

Long-term as in three-to-five decades. Stable as in status quo. Misinformed newsletter scribes (still) waiting for and predicting the imminent final bucket-kick by the greenback might well see themselves being outlived by the allegedly terminal-diagnosis currency. Good try, anyway. We've been reading and hearing such cocksure crystal-ball Nostradamisms since...oh, 1979?

 Back to Freedom Fest and more brain stimulus emanating from same. We can assure you, this particular stimulus package works. And, it only cost $495.00 -

Happy Trading.