Caledonia Mining Corporation (TSE:CAL)

[NYBob]

Gold came under intense selling pressure this morning as the IEA
announced its members would release 60 million barrels
of stockpiled oil over a 30-day period that is slated
to begin around the end of next week.
Fully half of that total dump will come from the US strategic
petroleum reserve.
The stated rationale for the drastic move is to offset MENA
supply disruptions.
I assume they're talking about Libya's approximate average
of 1.8 mln bbl/day in recent years.

Put another way; 2 mln bbl/day is about 2.2% of the IEA's
estimated global consumption rate of 89.3 mln bbl/day
for this year.
The supply dump essentially offsets the daily consumption
of Mexico.
Or perhaps more relevant; for a US family driving 1,000 miles
for a family vacation this summer -- if the IEA action
optimistically drops prices at the pump by 50¢ --
they'll save about $25.00.
That won't even cover half the price of a daily ticket
to SeaWorld.
If as Christopher Helman of Forbes suggests, this is
the Administration's feeble attempt at QE3, it's a
pretty weak effort.

As for the real QE3;
Fed Chairman Bernanke left the door open yesterday, saying
that the Fed would be “prepared to take additional action,
obviously, if conditions warranted,” including the purchase
of more Treasury securities.
While Fed purchases of new Treasuries through QE2 will
apparently indeed terminate at the end of the month,
the NY Fed announced yesterday that it will conduct
7 POMOs beginning 01-Jul as part of ongoing
reinvestment operations (QE-lite).

The FOMC and Bernanke expressed heightened concerns about
the pace of the recovery.
The Fed scaled back their GDP forecast for 2011, while
raising their expectations for both inflation and unemployment.
Stocks fell on this news and have extended sharply lower today,
turning up the pressure on the Fed to provide further
accommodations.
Perhaps tapping IEA and US strategic petroleum reserves
is simply a feeble attempt to bridge the accommodation
gap between the end of QE2 and the needed justification
for QE3.

Evidence of faltering economic growth from both China
and the eurozone played in to the double-dip scenario
today, adding further weight to gold on moderating
inflation worries.
A very weak June UK CBI distributive sales survey added
insult to injury.
The July expected sales component was particularly
troubling, suggesting UK consumers are tightening their belts.
The BoE has already been discussing the potential need
for additional QE.
by Peter A. Grant

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