The Hightower Report

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OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Europe were mixed during the overnight session, early indications are that US equity markets would open with moderate losses later on this morning. The US Dollar is near unchanged levels against most of the major currencies this morning, although posting a gain versus the Pound. Greek unions will stage large-scale protests in Athens today, demonstrating against proposed new austerity measures for their nation. Japanese Retail Sales during May were down 1.3%, a smaller decline than market forecasts. A private survey of German Consumer Sentiment during June was 5.7, roughly in line with expectations. UK GDP during the first quarter was up 1.6%, weaker than forecasts. Major US economic numbers to be released this morning include a private survey of US Housing Prices at 8:00 AM, a private survey of US Consumer Confidence at 9:00 AM, and private surveys of store sales released during the session. The second leg of this week’s Treasury refunding, the 5-year Note Auction, will have results announced at 12:00 PM.

GOLD MARKET FUNDAMENTALS: The gold market might be getting some minor flight to quality lift this morning, as protests and a work stoppage in Greece have rekindled uncertainty again. Apparently the vote on the latest austerity package is extremely close and with a 48 hour strike now underway, the political and economic pressure is set to rise dramatically on the Greek Parliament members. Many members of the Greek Parliament think they have to vote for the austerity package and that they will be voted out of office for their efforts. With some physical commodity markets rebounding today, that could provide some minor spillover support to gold but that support might be mitigated in the event that the Case-Shiller home price report rekindles concerns of slowing again. There is also a US Consumer Confidence reading due out this morning which is generally expected to soften and that in turn might contribute to fresh US slowing concerns. Some gold traders think the lackluster 2 Year note auction yesterday could provide gold with a lift, especially if there is a measure of doubt levied toward Treasuries as a safe haven instrument as a result of the last two auctions this week. In the end, it does seem as if the gold bulls want Greece to pass the austerity package and that angle isn’t that surprising considering the gold markets negative reaction to any news of slowing over the last two weeks. Some players suggest that gold remains a physical commodity that can be expected to slide in the wake of slowing news and therefore flight to quality interests aren’t as pronounced as many bulls would have hoped. Comex Gold Stocks were 11.392 million ounces down 323 ounces.

SILVER MARKET FUNDAMENTALS: September silver has managed a bounce in the early Tuesday US trade and that is partly a function of a technically overdone status and that might also be partly the result of hopes that Greece will ultimately pass the current austerity package offering. While exchange stocks of silver increased overnight, those stock levels have remained below the psychological level of 100 million ounces. Actually Comex Silver Stocks were pegged at 98.928 million ounces for a rise of 1,067,960 ounces. Silver stocks have declined in 12 of the last 20 days, but so far the trade hasn’t seen much of a reaction to the stocks readings. Like gold, silver bulls seem to want to see Greece accept the latest austerity package and since that vote doesn’t technically take place until Thursday, the silver market is likely to see back and forth trade action in the near term. In the face of violent protests in Greece that could undermine silver instead of support it, as silver recently has acted like a classic physical commodity market facing ongoing evidence of slowing. At least in the early Tuesday US trade, the action in the currency markets wasn’t giving off a definitive track and it is possible that currency traders are also set to balk at fresh positions into the Greek vote window and also into the quarter end.

PLATINUM: Apparently platinum prices to the prior session’s lows were seen to be too cheap. However, platinum has managed a noted recovery attempt overnight and that action might be the result of reports of a shut down of operations at a South African platinum mine. It is somewhat surprising to see platinum manage to rise off a minor supply side threat, especially in the face of an environment fraught with broad based slowing fears. Therefore, the bounce in platinum prices might be the result of supply side issues or it might be the result of simple end of quarter technical balancing. Initial resistance is seen at $1,700, with some potential pivot point action seen around the $1,694 level.