A Melman Minute By: Leonard Melman   NOTE: In order to complete Mr. Melman's forthcoming book on the essential fundamentals of the developing international financial crisis and its relationship to gold and silver, new "Melman Minutes" will be posted only three times per week, each Monday, Wednesday and Friday. Since the work has been expanded to include potential solutions to the growing list of seemingly insoluble dilemmas, the working title of the book has been revised to 'REVERSING THE WAY IN!"   NOTE:  Mr. Melman will be participating in an investment panel discussion Sunday at 1:00 PM and presenting a workshop entitled "The Greatest Gamble of All - Updated" at 3:30 PM on Monday at the forthcoming Cambridge House Vancouver Conference to be held at the Vancouver Convention Center Sunday, June 6 and Monday June 7.  He will also be introducing his now-completed book, "Reversing the Way In" at booth number 725. The lineup of speakers and exhibitors for this conference is impressive and we encourage anyone in the Vancouver area this coming Sunday-Monday to attend. - - - - - MELMAN MINUTE - June 4, 2010 - - - - - As always, it was a pleasure to visit new mining exploration and development projects and the tour we just completed in west-central Quebec province was no exception.  In fact, it was particularly timely given the growing pressures on the world petroleum markets from both an environmental and practical point of view. After reviewing some of the news highlights during the past four days, several stand out as being of particular note, with the Israeli/relief boat confrontation topping the list.  For those who have been asleep or otherwise out of communication, during recent days a team of Israeli soldiers attempted to commandeer a naval vessel from Turkey, sponsored by a "humanitarian organization" which was threatening to violate the Israeli blockage of the Gaza Strip.  During the subsequent confrontation, Israeli soldiers were attacked and they engaged in small arms fire with nine of the vessel's passengers being killed.  The public standing of the State of Israel then came under particularly vitriolic direct attack from many international countries and bodies. Our concept of the 'short version' is simply that Israel has come to the conclusion that: 1 - Hamas is a terrorist organization dedicated to the violent abolition of the State of Israel.  Israel also believes Hamas is either controlled by or strongly influenced by Iran, a nation utterly hostile to Israel and one which is on the verge of acquiring nuclear weapons capability. 2 - Hamas now controls the Palestinian Gaza territory and has used that control to attack Israel with mortars, rockets and a variety of suicide bombers. 3 - Israel, therefore, has taken measures to limit the flow of arms into Gaza, including naval blockades. 4 - Within this concept, they believed the vessel at the center of the controversy could have been carrying weapons, either instead of or mixed with 'humanitarian aid' and had to be intercepted. Whether the degree of intervention was justified is something the world will debate for a while, but our prime consideration is that clearly a new and higher level of instability has entered the world's political scene and, because it involves one presumed existing nuclear power, Israel, and one on the verge of becoming a nuclear power, the stakes could be immeasurably high.  To heighten the level of tension even further, it has just been reported that another such vessel is heading toward Gaza today.  Aside from other considerations, we believe that this increased level of tension could be a positive for the precious metals. ....................... Spain is apparently entering a period of deep difficulty, similar in nature but substantially larger than those which have garnered the world's attention from Greece.  Spanish national debt dwarfs that of Greece; her economy is vastly larger and, if anything, her financial difficulties in terms of national debt and state unemployment are even more severe.  Since many believe that the European monetary authorities 'shot their wad' in attempting to resolve the Greek dilemma, the Euro is now coming under renewed pressure and, as can be seen from the accompanying chart, that currency has just crashed to a four-year low this morning and appears on the verge of falling further to the downside. As we have noted previously, a falling Euro will tend to increase the cost (in Euros) of everything imported into Europe, thereby raising visible inflation and, as a consequence, we believe pressure will soon build to drive interest rates higher in Europe. And, we cannot ignore the fact that financial troubles are also brewing near term in Ireland, Italy and Portugal while major European Economic Community nations such as France, Poland and Germany are also facing enormous fundamental difficulties as well. .............. This morning's U.S. Department of Labor contained both "good news" and "bad news".  The good news was that the number of non-farm jobs created during the month of May rose to 431,000, the largest gain since March of 2000.  The bad news was that this number turned out to be virtually meaningless since the U.S. government hired 411,000 temporary census workers, meaning little to no job gains resulted from economic activity at large.  It also means that when the census work is over within the next few months, those jobs will be lost.  There were other negatives as well.  Despite the large growth in jobs, the Unemployment Rate improved to only 9.7%, the same as two months ago and the number of people on long-term unemployment in the USA remained at over 15,000,000.  The performance of the construction industry, which had been counted on to rebound sharply, was of particular concern as 35,000 net construction jobs were lost in May.      Securities markets are apparently not pleased with either the Euro situation or the jobs numbers as the Dow Industrials, S&P 500 and NASDAQ as well as Canada's TSX Index are all headed sharply lower this morning, with the Dow Industrials off by around 250 points at their early-morning lows, having fallen once again, at least momentarily, below the psychologically important 10,000 level.  In our op9inion, the Dow Industrials chart has traced out a pattern with particularly negative implications.  We are referring to the recent series of declining highs including 11,200 in late April; 10,900 in early May and 10,300 at the beginning of June.  Today's declines are also threatening to drive the Dow below clear support in the 9,700 to 9,800 range. These important news events are sending tidal waves of buying and selling this morning, resulting in several substantial moves.  Gold opened about $10 per ounce lower, but as of 9:30 AM PDT, the yellow metal had recovered from such selling and was trading near $1,218, up by over $7.00 on the session.  However, silver, platinum and palladium, having a more substantial industrial component to their prices, are reflecting renewed economic uncertainty and are down by about 40 cents, thirty dollars and twelve dollars respectively.  The U.S. Dollar is showing remarkable strength as investors flee the Euro and the DX Index has just crossed above the 88 level, the highest in over one year while the Euro has fallen to just below the 1.20 mark.  Crude Oil is off by over $2.00 while base metals are falling steeply with copper and zinc showing quite dramatic weakness.  Mining share indexes are relatively unchanged with gains in the gold shares offsetting losses in the base metals. - - - - - All quotes US$ unless otherwise noted. Due to the upcoming Cambridge House Resource Conference (see note) this coming Sunday-Monday, our schedule for Melman Minutes next week will be Tuesday, Wednesday and Friday.       ◄  Previous Minute                                                                                                        Next Minute  ►
		DISCLAIMER The information presented above is based on data which we believe to be from reliable sources, but the accuracy of which cannot be guaranteed.  Any opinions or predictions contained herein are those of the editor and are likewise offered also for information purposes only. Any investment decisions should be made only following consultation with registered investment professionals.