Breaking Wall Street Market News & Reports

U.S. stocks finished a lackluster session little changed on Tuesday but finished the month with their worst August performance since 2001 as concerns about the economy continued to pile on. The DJIA closed on Tuesday to end at 10,014.72.  Stocks still posted steep losses for the month as investors lowered their expectations for economic growth in response to a flood of weak data in August. The Dow shed 4.3% this month, its first down August in five years and the blue-chip measure’s worst August since 2001. The S&P 500 and the NASDAQ also posted their worst August performance since 2001, down 4.7% and 6.2% respectively. Small-capitalization stocks, seen as leading indicator of the economy, have taken an even bigger hit this month. Amazingly to the unfortunate, the Russell 2000 index of small-cap stocks posted its worst August performance in 12 years.

Indices and stocks weren’t the only losers. Natural-gas futures, wrapping up their worst month in more than two years, are entering the historically weak month of September dogged by confusion over production. Prices for the most active contract have lost nearly 23% in August, as investors sold off the futures on estimates of abundant gas output.

Oil too has its share of losses for the month. October delivery ended down 3.7% at $71.92 a barrel on the New York Mercantile Exchange Tuesday, with declines accelerating toward the close of the session. Oil finished the month of August with a loss, down 8.9%, its first monthly decline since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over.

And now onto our winner for the month (honestly the best performer year over year for the last 10 years) the shiny metal we’ve been touting ever since 2001 when President Bush entered 2 wars and lowered the tax rate for the last 9 years – Gold & Silver.

Gold rallied 5.6% in August. That compares to a decrease of 5% in July and is gold’s largest advance since April. Gold futures rose Tuesday, pushing August gains past 5%, and silver hit a three-month high as investors sought out both metals to protect against signs the economic recovery is faltering. Gold for December delivery added $11.10, or 0.9%, to $1,250.30 an ounce. It closed less than 1% from bullion’s record high of $1,266.50 an ounce on June 21.

Silver for December delivery added 36 cents, or 1.9%, to $19.43 an ounce, its highest close since mid-May. Silver has gained nearly 8% in August.

Gold and silver took advantage of investors’ growing concerns about the pace of the anemic economic recovery. Investors have become so optimistic that they’re accumulating enough bullion to fill Switzerland’s vaults twice over as gold’s most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.

Analysts raised their 2011 forecasts more than for any other precious metal the past two months, predicting a 10th annual advance. The most widely held option on gold futures traded in New York is for $1,500 an ounce by December, or 18 percent more than the record $1,266.50 reached June 21. Holdings through bullion-backed exchange-traded products are already at more than 2,075 metric tons, within 0.1 percent of the all-time high. As the economy stays weak or gets worse, then investors will be looking for a safe haven.

Buyers accumulated almost 278 tons of gold in 2010 across 10 ETPs, worth $10.4 billion at this year’s average price. Total holdings are almost twice Switzerland’s official reserves of 1,040 tons, data compiled by the World Gold Council show. ETP holdings reached a record 2,078 tons July 19.

One of the biggest buyers has been Soros Fund Management LLC, which oversees about $25 billion. George Soros, who made $1 billion breaking the Bank of England’s defense of the pound in 1992, described gold as “the ultimate asset bubble” at the World Economic Forum’s January meeting in Davos, Switzerland. Buying at the start of a bubble is “rational,” he said.

Bullion gained 13 percent since January, beating an 8.4 percent return on Treasuries, an 8 percent decline in the MSCI World Index of shares. Investors are concerned the recovery is weakening.

People fear another crisis and so they will diversify into gold. Gold will continue to be the safe haven especially when Bernanke confirmed they’re open to a QE 2.0 (Quantitative Easing, Stimulus)

Let’s not forget the IMF’s 400 tons of Gold they’re looking to sell. The International Monetary Fund said July 7 China, the second-biggest bullion buyer after India, will expand 10 percent in 2010, compared with 9.1 percent last year. Gold imports by India this year may total 600 tons to 625 tons, compared with an estimated 480 tons to 485 tons last year.

Stocks to Buy

Earnings at Newmont Mining Corp.,(NEM) the largest U.S. gold producer, may increase 47 percent to $1.93 billion in 2010.

Eldorado Gold: (EGO) Shares of EGO closed at $19.31 in the previous trading session and opened today at $19.49. EGO is trading above the 50 day moving average and higher than the 200 day moving average. The stock’s 52 week low is $9.74 and 52 week high is $19.72.

Goldcorp Inc: (GG) Shares of Goldcorp traded 2.2% higher

Barrick Gold: (ABX) are up 2.0% on Tuesday. So far this year, the stock jumped over 17%

Hecla Mining Company: (HL) Up 16% in one week. Over the past 52-weeks, the stock has been trading within the range of $2.85-$7.47. At current market price, the market capitalization of the stock stands at $1.40 billion.

Silver Wheaton Corp (SLW) gained 0.70% to $22.96 on over 2.18 million shares. Today, the stock made its new 52-week high of $23.18. After opening the trade at $22.84, the stock is trading within the range of $22.73-$23.18.

Pan American Silver Corp (PAAS) $24.76; During the quarter ended June 30, 2010 the Company recorded sales of a record $147.3 million, a 32% increase compared to the second quarter of 2009.

We believe Gold will head $2,000 within the next 5-10 years. This will be a long term hold. Any weakness in Gold I recommend buying on the dips.

The remaining of the week prior to the Labor weekend, there is a heavy calendar for economic reports this week, including July employment numbers, manufacturing, productivity, and factory orders. I believe the results will be close to mediocre.

Tags: abx, August, ego, gg, gold, HL, NEM, PAAS, silver, slv, slw

This entry was posted on Tuesday, August 31st, 2010 at 5:43 pm and is filed under Commodities, Contributors, Stock Market News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.