Dr. Jeff Masters gives us the latest on monster hurricane Ike …

Ike’s long-term fate has two main possibilities:

1) Ike may hit eastern Cuba,
as forecast by the latest (12Z, 8am EDT) runs of the GFDL and ECMWF
models, and a number of ensemble members of the latest 12Z GFS model
(Figure 2). A hit on Cuba would severely disrupt the storm, weakening it to a Category 1 or 2. Ike could then move on into the Gulf of Mexico and re-intensify, as forecast by the ECMWF model.

2) Ike may plow through the Bahamas and come very close to South Florida
(the consensus of the HWRF, NOGAPS, and GFS models). A trough of low
pressure may then pull Ike to north. This turn to the north might occur
over Florida, or over the western Bahamas, within 200 miles of the Florida coast. In the latter case, North Carolina
might be at risk. The recent model trend has been to depict a weaker
trough, resulting in Ike getting stranded, like Fay and Gustav did. Ike
would resume a slow motion to the west as ridge of pressure builds in, potentially crossing Florida into the Gulf of Mexico.

XX
Sean’s note — I think the potential for Ike to cross into the Gulf of
Mexico is not reflected in oil’s price right now, which is why I
hesitate to add a hedge on oil at this time.

And then there’s OPEC. They meet on Tuesday. What the heck are they going to do? …

OPEC Is Unlikely to Cut Production at Vienna Meet, Goldman’s O’Neill Says OPEC
is unlikely to cut supply at next week’s meeting in Vienna because of
the hurricane season, Goldman Sachs Group Inc. Chief Economist Jim
O’Neill said.

XX Sean’s note – I disagree. I think OPEC is going to cut either official or unofficial production. Stay tuned.

GOLD

I’m about to show you some bullish fundamentals. The fact that gold keeps falling in the face of bullish fundamentals is quite bearish for the short term.

South Africa gold production falls 10 percent

JOHANNESBURG, South Africa (AP) — Gold production in the world leading supplier South Africa
fell more than 10 percent in the second quarter compared to the same
period last year, the industry said Thursday, blaming electricity
shortages since the beginning of the year.

A
dire fuel shortage caused by poor government planning forced rolling
power cuts across the country in the first couple of months of the
year. Since February, industries have been limited to 90 percent of
their normal power usage.

Weak India Gold Prices Attract More Buyers

Indian gold demand rose on Friday as buyers and sellers kept themselves busy ahead of the peak festive season due to a fall in prices, dealers said.

“The demand is rising significantly as we are heading for a peak festive season,” said Rahul Gupta of Delhi-based P P Jewellers.

XX Sean’s note — but this bullish news matters not when the traders are ready to sell.

Gold Heads for First Weekly Drop in Three in London as Dollar Strengthens Gold
headed for its first weekly drop in three as the dollar strengthened
against the euro, curbing demand for the metal as an alternative
investment.

AGRICULTURE

Agriculture Prices to Stay High on China, India Demand Global
agricultural prices will probably remain higher than in the previous
decade as strong demand from China and other developing nations
outstrips gains in production, a U.S. agriculture official said.

Australian Wheat Crop May Be Below Forecast on Dry Weather, JPMorgan Says Australia,
the world’s sixth-largest wheat exporter, may produce less of the grain
than forecast because of dry weather, JPMorgan Chase & Co. said.

US ECONOMY

U.S. Payrolls Fell 84,000 in August; Unemployment Rate Increases to 6.1% The
U.S. lost more jobs than forecast in August and the unemployment rate
climbed to a five-year high, heightening the risk that the economic
slowdown will worsen.

U.S. House Price Decline Could Be Worse than Great Depression, Economist Shiller Says

*
Home price declines are already approaching those in the Great
Depression, when they plunged 30% during the 1930s. With prices already
down almost 20%, it’s not a stretch to think we might exceed that drop
this time around.

*
There are about 10 million homeowners whose debt is higher than their
home value, which has broad implications for how Americans feel about
their wealth and spending habits (read: more pressure on consumer
spending).

GLOBAL ECONOMY

Global Wealth May Fall 10% This Year Due to Markets, Financial Post Says Global
wealth may decline 10 percent this year because of volatility on
financial markets, the Financial Post reported, citing a study released
by the Boston Consulting Group.

Australia, New Zealand Dollars Decline to Lowest in Two Years Against Yen The Australian and New Zealand dollars slumped to the lowest levels in more than two years against the yen as a decline in U.S. stocks prompted traders to sell higher-yielding assets financed in Japan’s currency.

Australia’s S&P/ASX Falls to 2-Week Low; James Hardie, BHP Billiton Drop Australia’s
stocks fell for the fifth day, with the benchmark index heading to its
lowest in two weeks, after rising jobs claims in the U.S. and declining
metal prices heightened concerns of a global economic slowdown.

Last 5 posts by Sean Brodrick

• The Golden Phoenix - February 25th, 2009
• Blessing in Disguise - February 4th, 2009
• What I'm Reading Today - January 7th, 2009
• Gold and Oil Short-Term Trends - January 7th, 2009
• Is Gold Poised for a Pullback? - January 6th, 2009