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10/27/2023 9:30 AM     Current Market Spot Prices:     Gold:  $1,984.26/ozt   Silver:  $22.89/ozt   Platinum:  $926.20/ozt   Palladium:  $1,168.05/ozt  

Friday, April 26, 2013

Sell in May and Miss a Chance to Buy Gold Stocks Cheap, Warns Bob Moriarty  What is up—the Dow Jones Industrial Average and Standard & Poor's 500—will come down and what is down—gold equities—will go up fast, predicts the ultimate contrarian investor, Bob Moriarty. In this interview with The Gold Report, the president of 321 Gold proclaims that while all gold stocks are cheap right now, he has some favorites that he expects to jump when the junior market turns. Those who turn their back on the market over the summer just might lose their best chance to get in at historic lows.
- JT Long of The Gold Report

Posted by Mike Gupton at 4:40 PM 0 Comments

Friday, April 26, 2013

The Hunger for (Cheaper) Gold Continues Unabated The U.S. Comex gold futures surged 4.76 percent to $1,462.0 on Thursday, about 6.6 percent below the closing level of 11 April before the rout occurred. During Asian Friday morning, the gold futures reached as high as 1,484.80.

Gold prices have recovered roughly half of what they lost. The Dollar Index barely budged this week and ended at 82.744 on Thursday. The S&P 500 index, the Euro Stoxx 50 index and the CRB Commodity Index rebounded 1.92 percent, 5.02 percent and 1.39 percent respectively this week.

Lining up to Buy Gold
After gold has fallen into a bear market on 12 April, physical demand has soared. According to Bloomberg, the U.S. Mint sold 196,500 ounces of gold coins this month through 24 April, more than three times the volume in March. Demand for gold is un-abating at both the U.S. Mint and the U.K.'s Royal Mint. The physical gold sold to India exceeded its highest record by 20 percent, reported by Standard Chartered.

The gold premiums in Hong Kong and Singapore reached $3 an ounce, an eighteenth-month high. The World Gold Council in the Far East remarked that the Asian's hunger for the cheaper gold has exceeded the expectation of global investors. In the past ten days in the Shanghai Gold Exchange, the daily volume of the benchmark contract was more than four times of the 2012's daily average. Before the latest rout in gold, Russia's central bank boosted gold by 4.7 metric tons in March while Kazakhstan bought 1.2 tons.

The emerging countries' central banks will likely take advantage of the gold price plunge to continue to add to gold, which is seen as an alternative currency and an inflation hedge. Bloomberg reported that hedge fund managers turned into buyers and net added gold for two consecutive weeks. As the global economic data have turned softer recently, central banks such as the ECB are likely to continue to ease rather than terminate the ease prematurely.

What to Monitor Next Week
Lots of events to watch next week including the April Germany unemployment change on 29 April, the U.S. April consumer confidence index on 30 April, the U.S. FOMC meeting decision and the April U.S. ISM manufacturing index on 1 May, the ECB interest rate decision on 2 May and the U.S. April non-farm payrolls on 2 May.
Posted by Mike Gupton at 8:57 AM 0 Comments

Wednesday, April 24, 2013

Jim Rogers: Once Gold Bottoms, We're Looking at a 'Multi-Year Bull Market' Gold soared 650% from August 1999 to August 2011.

But it's down 24% from the $1,885 peak and in recent days has whipsawed gold investors in a way they haven't experienced in 30 years.

The bear market has gold bugs reaching for the Dramamine. But we reached for the telephone instead and dialed Singapore—and legendary investment guru Jim Rogers.

Many of Wall Street's biggest investment banks are calling for additional blood-letting—meaning gold prices have a lot more room to fall. But in his usual contrarian manner, Rogers dismissed the consensus.

Indeed, the former hedge-fund manager and best-selling author believes this is a badly needed—even healthy—price correction.

And that will set the stage for a new bull market in gold—and a run to record prices that are sure to come in an era of cheap-money policies by the world's central banks, Rogers told Money Morning during an exclusive interview.

"Gold was setting us up for some kind of correction," Rogers said in a Sunday night telephone interview from his home. "Gold needed a correction—it still needs a correction—and I hope this is the proper correction which gold needs. Then gold—somewhere along the way—will make a bottom and we can all join in the bull market as [it] goes higher and higher."

And make no mistake: The shiny metal is going higher—much higher.

"Gold has to go a lot higher over the next decade or so, because [the world's central banks] keep printing money," he said.

Of course, it was just one week ago when gold suffered its worst two-day rout in 30 years. And even though that's been followed by a five-day winning streak that was capped off by a 2.3% gain yesterday, gold is still in bear-market territory.

"Gold is going to shake out the mystics—there are still a lot of mystics in the market," Rogers said. "I have guys writing me saying this couldn't be happening. I say, "Well, get out your quote machines, it is happening'."

Pundits have identified a litany of catalysts for the metal's decline.

One was Cyprus. When reports surfaced that the tiny country was planning to sell some of its gold reserves to help finance its bailout, they immediately sparked fears that the similarly troubled Portugal, Ireland, Greece, Spain and Italy might follow suit and dump their own gold holdings—no small worry given that those five countries have an aggregate $145 billion in reserves.

Wall Street was also identified as a culprit. Big investment banks such as Goldman Sachs Group Inc. (NYSE: GS) were already forecasting much-lower gold prices, and had even urged customers to "short' the metal. When the sell-off strengthened, many of those institutions slashed their target prices anew—and intensified the decline, the pundits said.

While those were certainly contributing factors, they weren't the root cause, Rogers told Money Morning.

With the advent of exchange-traded funds (ETFs), it's become much easier for individual investors to "buy" gold. As Rogers noted, "people just switched from the miners to the real stuff, [creating] another reason it went up so much [and] set the base for what's happening now."

Exacerbating the situation was the fact that the run-up hasn't been offset by any type of pressure-relieving correction.

"Gold was up 12 years in a row, which is extremely unusual," Rogers said. "I don't know of any asset that's gone up 12 years in a row without a down year. . .equally important is the fact that gold has one correction of 30%—as much as 30%—in 12 years. Now that's very strange. Most [assets] correct 30% every year or two. That's just the way markets work. The peculiar action in gold has been the 12 years [without that correction]. So it was certainly setting us all up for some kind of correction."

The last down year for gold was 2000, when the yellow metal fell 2.8%. The last correction of any magnitude before this one was in Sept. 2011, when it declined 14.7%. That followed a July-September rally of 28.4%, according to our Real Asset Returns research service—and was less than half of the 30% correction that Rogers quantified as being meaningful.

There's obviously no way to predict where gold will bottom, Rogers has said. He's often cited $1,200 an ounce since that would represent a 30% decline. But even if it's more, investors need to keep in mind the inflation-fueling policies the world's central banks seem intent on pursuing. They're bullish for long-term gold prices.

At some point, then, gold becomes too cheap to ignore, Rogers said—displaying the mix of wit, analysis and insight that results in a steady flood of interview requests.

"If it gets to $1,200, I hope that I'm smart enough to buy even more," he said. "If it gets to $1,100, I hope I'm smart enough to buy even more. Speak to the chartists. . .the technicians. . .and [look at] the retracements, or whatever they call them. A 50% retracement is not unusual. A 60% retracement is not unusual. You can do the same math that I can. You can figure out what a 40%, 50% or 60% retracement would mean for someone."

Here's his key point. With declines that steep—taking gold prices down to $1,150, $950 or $750 an ounce—a lot of would-be gold investors will literally throw in the towel, and will abandon gold. That's when negative sentiment will have been maximized, and gold will have bottomed.

"Until people start accepting reality instead of denying reality, we're not going to make the bottom," he said. "Until a lot of people just pack it in and throw gold out the window. . .then gold will make a beautiful bottom and we can all participate in a multi-year bull market."

One of the allures of gold as an investment is that there are so many available options.

"There's ETFs, there's coins, there's bars," Rogers said. "There are many, many ways to invest. But please don't do so unless you've done your homework."

That's especially true of some of the other investment vehicles—including futures contracts and miners.

"Some of the gold-mining stocks are extraordinarily beaten down," he said. "Many of them deserve to be beaten down. I think more money has been lost in buying gold-mining shares over the past 100, 150 years than any other sector, including airlines and railroads. If you know the right ones, or right one, buy it, or them - because somebody will make a lot of money."

Rogers achieved legendary Wall Street status with The Quantum Fund, a hedge fund that's often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor's 500 Index climbed about 50%.

It was after Rogers "retired" from Wall Street in 1980 that Main Street investors got to see him in action-and benefit from his acumen.

Rogers traveled the world (several times), and penned such bestsellers as "Investment Biker" and the "Bull in China." And he made some historic market calls: Rogers predicted China's meteoric growth a good decade before it became apparent, and he subsequently foretold of the powerful updraft in global commodities—an investment category that he continues to favor.

And with both China and commodities, he introduced America's retail investors to profit opportunities that were once the sole purview of Wall Street.

Those prescient calls, his best-selling books, and his regular appearances on popular investment programs on CNBC and elsewhere have made Rogers into a household name.

Over the past five years, he's also helped develop roughly a dozen commodities-based funds—making that once-arcane asset class accessible to a much broader audience of investors.

Posted by Mike Gupton at 2:18 PM 0 Comments

Wednesday, April 24, 2013

The Shorts in Gold are Exiting After rebounding for three consecutive days, the U.S. Comex gold futures fell 0.87 percent on Tuesday and ended at $1,408.08. As of Wednesday Asian morning, the gold futures surged close to one percent. The Dollar Index traded above 83 on Tuesday and was up 0.40 percent in the past two days.

The S&P 500 index and the Euro Stoxx 50 Index shot up 1.51 percent and 3.41 percent this week after falling 2.11 percent and 2.21 percent respectively last week. The CRB Commodity Index continued to fall in the past two days by 0.77 percent after dropping 1.40 percent last week.

Grimmer Global Growth Outlook
China kicked off with a weaker-than-expected April flash manufacturing PMI at 50.5 compared to 51.6 in March. According to Deutsche Bank, the slower growth is related to the anti-corruption campaign, the policy tightening in the real estate sector and the onset of the bird flu crisis. However, investment should reaccelerate in 2H of 2013. The April Eurozone composite PMI contracted for the fifteenth month at 46.5, likely pressuring the ECB to boost stimulus.

The Bundesbank also projects that Germany's recovery will be delayed past Q1 due to the weaker industrial production growth and the extreme weather. The April U.S. Markit Preliminary PMI also was weaker than expected at 52 compared to the projected 53.9.

Commodities' Actions
Weaker growth data from the U.S., China and Europe have caused the commodities to sell off. Industrial commodities were particularly hard hit. The market also fears a further slowdown in China, which does not bode well for the demand for gold. Year-to-date, the CRB Commodity Index dropped 4.75 percent. Goldman Sachs lowered its expectation on commodities in the next three and twelve months although it closed its well-timed recommendation to short-sell gold. Barclays pointed out that the net gold-backed ETP redemptions have reached 117 tonnes in April, the weakest month on record. Barclays calculated that about 270 tonnes of gold holdings were bought above the current prices, posing further downside risks on gold prices.

However, the net short positions in gold have decreased, indicating that short-covering has taken place. India and China's physical demand has also responded very well to the cheaper gold prices. Gold volumes in the Shanghai Gold Exchange broke record for three consecutive days. High inflation, growing wealth and the gold culture in these emerging countries mean that gold will continue to be bought for the longer-term. In the words of Grant Williams, a fund manager, you have to distinguish between "the gold price", which reflects the paper gold futures prices and has collapsed, and "the price of gold", which represents the physical price of gold and has remained well-supported.
Posted by Mike Gupton at 9:14 AM 0 Comments

Wednesday, April 24, 2013

Is EUROPE Running Out Of Investment Gold Bars ? There an oddity about GOLD at the moment with phenomenal physical demand in Asia, US and Europe, while the actual spot prices languishes. We have written before about the strange disconnect between paper and physical demand - with the former bearish yet the latter bullish - but rarely has there been such a clear divergence.

Over the last few days on we have many run stories about this ... Dubai running short of physical, US Mint selling out of smaller denomination bars, coins and bars flying off the shelves in India and China and queues outside leading gold sellers such as Degussa in Germany. The effect has been a massive drawdown in physical metal which has, by and large, caught the gold refineries and some stockists by surprise. It seems that the current buying in Europe is a delayed response to the Cyprus crisis, prompted by the price correction.

Quite evidently it has been the sharp sell off on the gold futures (COMEX) a week ago that precipitated the price decline and drew out the physical buyers. While there remains stock of the traded inter-market London 'good delivery' bars weighing in at 400 ounces each (with a purity of 99.5%+), these would set an investor back about $570,000 each. However, for investment sized bars the market is drying up rapidly. Amongst the coins, the maples and Krugerrand are moving fast with premiums having just doubled and now typically trading at about 8% over the spot price. Meanwhile the wait for new 9999 kilobars from the refineries (cost about $48,000 each) would entail a wait of over 1 month - there are however some modest stocks of second-hand kilobars.

While much of the buying in Europe has centered on Germany and Switzerland, there are also encouraging signs of good interest from UK retail investors who seem to be awakening to the notion of having gold in their savings. Google searches for the keyword "gold price" is rising to near record levels confirming what we are seeing in the markets (see below).

Google Gold Price

So, what does this tell us about gold ? To us, this is firstly a clear signal that the price correction has sparked latent interest for those who have wanted to enter the market - the current price represents an excellent entry point. Secondly, the fact that investors are going for physical over paper gold extends the argument that investors are increasingly wary of financial institutions, just as they are of the debasement of currencies.

In 2008 and 2010 the physical markets dried up and deliveries were extended out to about 2 or 3 months at the retail level - if the current buying persists there is every reason to expect a recurrence... or worse.
Posted by Mike Gupton at 9:11 AM 0 Comments

Friday, April 19, 2013

Shifting the Attention from Gold to Equities The U.S. Comex gold futures rose on Thursday by 0.71 percent to $1,392.50. Week-to-Thursday, the gold futures are down 7.25 percent while year-to-date, the prices are down 16.91 percent. Gold has returned 17 percent per year in the previous ten years. However, the gold futures entered into a bear market on 12 April as the big sell-off began. The S&P 500 index fell 2.09 percent in the past two days while the Euro Stoxx 50 index also dropped 2.06 percent. The Dollar Index rose 0.30 percent this week with the Euro/Dollar dropping 0.47 percent and the Yen rising 0.20 percent against the Dollar. The CRB Commodity index suffered a loss of 1.50 percent this week.

Stocks Declined as Gold Rebounded
Market's concerns have shifted to equities after the gold's downturn. Bloomberg highlighted that the U.S. stocks peaked in April in the past three years and declined for the next two to six months. The sentiment towards stocks and commodities has been weak as economic data from the U.S. and China were weaker than expected while some earnings results were disappointing. The U.S. leading indicators index, a gauge for the economy in the next three to six months, dropped 0.1 percent in March compared to an expected increase of 0.1 percent. The expansion at both the Philadelphia and the New York regions cooled in April with inventories plunging.

Debates on Gold
After the gold price plunge, the Chinese, Indian and Thai retail buyers rushed to buy gold. The April U.S. Mint sales more than doubled from March to April while the Australia's Perth Mint saw its sales doubled in one week. Central banks are watching closely the price level to re-enter even though some bank analysts are calling for gold prices to go towards $1,000. The gold-backed ETP holdings declined by 2.41 percent this week to 2,348 metric tons and dropped 10.8 percent this year. A stronger dollar remains a danger for gold.

What to Watch
The important events and data to watch next week will include the April "Flash" manufacturing PMI from China, the E17 and the U.S. on 23 April, the April Germany IFO business climate index and the March U.S. durable goods orders on 24 April, and the Bank of Japan policy rate meeting on 26 April.
Posted by Mike Gupton at 8:28 AM 0 Comments

Thursday, April 18, 2013

While Paper Gold Crashes - Physical Demand Sees Unprecedented Demand The monumental short selling on COMEX on Friday and Monday had the desired effect - it took out key technical levels and precipitated a cascade of further selling as traders who were long the June contract capitulated. The selling begat more selling and the rest is history. A classic short squeeze executed to perfection.

The trading decision to short gold was taken, we think, after successful smaller attempts by a few hedge funds in January and December who had 'cased the joint' following what appeared to be a 'normalizing economy', an argument strengthened by golds apparent failure to rally on Cyprus, Bank of Japan QE and of course North Korea. It was then a question of timing... On the gold futures exchange the traders have a gearing of about 20:1 over the physical traders aided in great part by a reduction in the margin requirements by CME last November (they have since reversed that position).

Since then, the Q1 economic growth story has faded fast, but the trap had already been set. The selling on COMEX was large and fast - a really spectacular display of shock and awe. There is no other way.

With gold falling to a low of $1335, physical demand started slowly but has picked up momentum. The Indian market was the first to respond as prices bottomed (no surprise there - they are always adept at spotting bargains), followed soon after by Dubai, Japan, Europe and now China. Sourcing small denomination bars is now proving difficult as stocks evaporate and dealers can expect to wait between 4 and 6 weeks for fresh stocks from the gold refiners. Premiums on bars, as one might expect, are rising fast.

Rarely has the gold market seen such a clear split, with the paper traders heading south while the physical heads north. The former has the advantage of leverage (via the futures) while the latter has scale.

Most encouragingly for gold bulls has been the resoluteness of gold ETF buyers - a hybrid if you will of physical and paper - who are the real investors and appear to be largely unshaken by the decline ; in the week to Apr 17th ETF holdings have fallen by only 1.8 moz to 80.21 moz in holdings - a decline of about 2%. Figures from the CFTC have not yet been released but we would expect futures selling to outweigh this by a factor of about 300-fold.

Disappointingly on the other hand for gold bulls has been the price reaction to the decline which again can only be described as lacklustre - we would have expected prices to rise to $1450 (a 50% retracement on the move lower) and then the key technical level of $1540.

This leaves the market with a large long and large short position - and they cannot both be right - gold is therefore set up over the next few weeks as specs take on investors - place your bets please ...

Posted by Mike Gupton at 10:09 AM 0 Comments

Wednesday, April 17, 2013

When The Rest of the World Sells Gold, Should You? The number of news articles on gold has more than doubled in the past two days as the U.S. Comex gold futures plunged 4.06 percent last Friday and fell even more spectacularly on Monday by 9.34 percent. The Monday's percentage fall was the largest since 1983. The gold futures traded at a record high of 751,058 contracts at the CME. On Tuesday in New York, the gold futures rebounded 1.93 percent to end at $1,387.40 although they reached $1,404.20 at one point. The CRB Commodities index dropped 2.19 percent on Monday, the largest percentage drop since 14 December, 2011.

The S&P 500 index rebounded 1.43 percent on Tuesday after selling off 2.30 percent on Monday while the Euro Stoxx 50 index fell in the past three consecutive days by 2.43 percent. The Dollar Index went up slightly by 0.13 percent on Monday, but dropped 0.81 percent on Tuesday as the Euro/Dollar surged 1.08 percent.

What Has Happened?
Market analysts have offered the following reasons for the "unexpected" plunge in the gold prices. The equity markets and the broader commodities have reacted negatively to China's 7.7% yoy Q1 GDP figure compared to the median Bloomberg forecast of 8 percent. Last week, the news that Cyprus might sell 10.4 tonnes of its gold holdings has triggered the fear that the other European sovereigns would sell a higher amount to raise funds.

The market also believes that the chance of a "tail-risk" event has been significantly reduced with the ECB, the Fed and now the BOJ taking some actions to boost economic recovery and prevent the worse-case economic scenarios. This has prompted some shifting of money from the defensive assets such as gold back into equities although the recent weakness in the U.S. data has prompted some movements back into the U.S. Treasuries, a traditional safe haven.

Global gold-backed ETF holdings have declined about 9.5 percent this year. The important support level at $1,540 has also been broken. When gold price breached $1,430, the selling became indiscriminate. Given that the longer-term supportive fundamentals for gold have not changed in just three days, a stronger argument for the vicious sell-off is the short-selling by funds and dealers. Our CEO Ross Norman pointed out that the selling of 400 tonnes was timed to get the maximum impact especially with the sentiment towards gold already being weak.

What Can We Expect from Here?
The CME has subsequently raised the margin for gold by 19 percent which will likely dampen the speculators' interests to short more. However, some funds may look to sell further to reduce risks. The Chinese and Japanese retail investors have been seen to scoop up the cheaper gold. The central banks including Sri Lanka and Korea still look to add gold on a longer-term basis.

The North-American gold miners may need to cut back on spending and exploration if their all-in-cost level of $1,300 is breached. While a trading range will take time to be re-established and the physical buyers will re-assess carefully before buying, the gold market will likely find a level where the longer-run fundamentals will re-assert themselves in the next few months.
Posted by Mike Gupton at 8:30 AM 0 Comments

Friday, April 12, 2013

Bloodbath in the GOLD Markets - Key Levels Collapse After gold slipped gently below the important technical level of $1540 this afternoon, it appeared that short sellers and heavy long liquidations had done their worst - but more was to come. $1540 was the market low in 2012, a level it tested and held in October
2011 and May 2012.

Gold investors have been noticeably absent and are perhaps now fully desensitized to bad news as the lacklustre price action in the wake of Cyprus, North Korea and weakening US data proved.

Shorting gold will remain a popular sport while there is money in it and there has been a noticeable absence of bounce in the price after each sell-off, prompting repeat attacks to the short side. Next support levels seen at $1470 then $1340.

For those seeking a haven in equities that have been trading at all time highs, we suggest you refrain from schadenfreude - and be careful what you wish for.

Underpinning gold are attractive fundamentals with the price floor in the form of mine costs rising sharply (gold prices rose 6% last year and costs 12%). More of this and a little below the current price and the gold-shorters will be butting up against production cut-backs - this wheeze will run its course.

Meanwhile the total US national debt rises in 2013 from 16.8 to 17.8 trillion dollars - before number blindness creeps in a translation is perhaps in order - that is equivalent to more than 330,000 tonnes of gold, or over twice all of the gold ever produced in history or total gold mine production for the next 120 years - fat chance that is going to be paid down through the fruits of economic labour.

Gold will remain on the ropes until it engenders higher levels of investment demand - for that it will require more sales channels, more product innovation and more education. It is a tiny lifeboat in a sea of economic trouble - this boat ain't sunk yet !
Posted by Mike Gupton at 10:49 AM 0 Comments