Thursday, May 31, 2007

Tickets? Tickets Please.

GDP revised lower to 0.6% in first quarter
Corporate profits growing at slowest pace in five years

WASHINGTON (MarketWatch) -- The U.S. economy slowed to a crawl in the first quarter, held back by falling investments in homes, shrinking inventories and a large trade gap, the Commerce Department reported Thursday.

The economy grew at a 0.6% annualized pace in the quarter, revised down from the initial estimate of 1.3%, the government said in its second estimate of quarterly gross domestic product. It was the slowest growth since late 2002.

Corporate profits before tax increased $20.3 billion, or 1.2%, to $1.67 trillion after falling $4.9 billion in the fourth quarter. Before-tax profits are up 6.3% in the past year, the weakest year-over-year growth since the fourth quarter of 2001.

Abysmal news to be sure... That is unless you're invested in Precious Metals or short the US Dollar. Strangely enough, the stock markets thought it was good news. LOL, go figure. Following this headline this morning came this:

More gains at open
Stocks chart a course higher, taking weak GDP data in stride, weighing jobs, more.

The GDP report "is being overlooked as it is backwards looking and likely represents a bottom," said Michael Woolfolk, senior currency strategist at The Bank of New York. "A weaker [first-quarter] figure will provide a more advantageous base for the strong results expected" in the second quarter, he said.

Likely represents a bottom? That's pretty wishful thinking...

Taking weak GDP data in stride? Somebody please explain to me how this data is good for the general stock market. Corporate profits are rising at their slowest pace in five years, so I should run out and buy some more stocks? Sure! Don't you get it? This means the Fed will have to cut interest rates and that means the Stock Market will go higher. LOOOOOOOOOOOOOOOL. I'm sorry, I doubt it. Stocks are very expensive. Gold and Silver are very cheap. I think I'll buy some more of the cheap stuff, and take my chances...thank you very much.

Need another good reason to own Gold and Silver? Read this story from the USA Today:

Taxpayers on the hook for $59 trillion

The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.

Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.

The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.

Very nice moves in Gold and Silver today...and with some significant volume. Silver has cleared its 20 day moving average and is on the cusp of clearing it's 20 week moving average. This has the shorts in a panic and is encouraging real buyers to step back into Silver. More real buyers will put the squeeze on the shorts mightily. Gold closed above 658 to confirm it's downtrend break and now sets it's sights on cracking 664. A close above 664 could set up a rapid short squeeze to 675. But let's not get ahead of ourselves...let's see how we close the week in Gold and Silver, and take a look at The Big Picture over the week end.

We have May Nonfarm Payroll numbers Friday morning...I suspect the number will be weaker than expected. We will also get a peak at how well American consumers are doing at holding up 70% of the economy. I suspect they are spending a lot on Food and Energy.

Oh my, Oil is up again? Surprised by the draw down in crude inventories? I'm not. Come on...for the past two weeks the blah-blah was all about increased refining capacity. What do oil refiners do? They r-e-f-i-n-e oil. And if you're refining oil, there will be less left over than when you started. 5th grade math. I seriously doubt there is an economist out there that is Smarter Than A 5th Grader.

Silver Resistance: 13.49 / 13.55 / 13.75

Silver Support: 13.37 / 13.23 / 13.11
__________________________________All prices SPOT

Gold Resistance: 664 / 667 / 672

Gold Support: 658 / 656 / 652

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