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Tuesday, August 14, 2012

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“Quiet Gold Market” Needs “Big Bang” from Policy”

Posted: 14 Aug 2012 11:55 AM PDT

"Quiet Gold Market" Needs "Big Bang" from Policy, Germany "Unable to Keep Whole Eurozone Afloat"

SPOT MARKET gold prices traded above $1610 an ounce Tuesday morning in London, slightly below where they started the week, while European markets edged higher following news of better-than-expected German economic growth.

Silver prices briefly rallied back above $28 per ounce before retreating, while other commodities were similarly flat on the day.

"Despite wide daily ranges for the past few weeks due to thin liquidity, the [gold] market remains pretty quiet," says a note from Swiss bullion refiner MKS.

A day earlier, gold prices fell 1% as the Euro edged lower towards the end of Monday's trading, after news of a second legal challenge to the creation of the Eurozone's €500 billion permanent bailout fund the European Stability Mechanism.

Berlin economics professor Markus Kerber submitted an argument that the German Constitutional Court should delay a preliminary decision on the ESM, currently due for September 12, until the European Court of Justice rules on a similar complaint referred to it by the Supreme Court of Ireland.

The German Constitutional Court issued a statement Tuesday saying it does not plan to delay its ruling.

Germany's economy meantime grew by 0.3% in the second quarter of the year – slower than in Q1, but stronger than many analysts expected – according to an initial estimate of gross domestic product published Tuesday.

"The German economy is fundamentally in good structural shape," says Commerzbank chief economist Joerg Kraemer.

"But [it] can't decouple from the recession in the Eurozone, plus the global economy has also shifted down a gear."

French GDP was flat at zero percent in Q2, although many analysts were forecasting a slight contraction.

GDP for the Eurozone as a whole meantime shrank by 0.2% in the second quarter, data from Eurostat show.

"We do not think that Germany on its own can keep the entire Eurozone afloat," says Aline Schuiling, senior economist at ABN Amro.

Here in the UK, consumer price inflation ticked higher last month to 2.6% – up from 2.4% in June – official figures published Tuesday show.

"It is important not to read too much into one month's inflation figures," says Howard Archer at IHS Global Insight.

"The overall trend in inflation currently remains down…nevertheless the move back up in consumer price inflation in July does raise concern that it may not come down as quickly as hoped for."

"Concerns over inflation and potential monetary easing bode well for gold," adds Barclays analyst Suki Cooper.

"[But] the metal is missing the support of a solid floor."

Over in India, traditionally the world's biggest gold buying nation, imports of gold bullion in 2012 could be down 30% compared to last year, according to Bombay Bullion Association president Prithviraj Kothari.

"Demand is very dull even though the festive season is just days away," says Kothari.

"Even jewelers are opting to keep lower inventory," adds one dealer in Mumbai.

"They are worried about slowing rural demand due to a drought."

"Gold prices are holding up very well in the light of weak demand from the jewelry sector and from investors," says Eugen Weinberg, head of commodities research at Commerzbank.

"That bodes well for a price increase that we expect for the end of the third quarter and the fourth quarter."

"Policy expectations will determine the bulk of gold's performance," adds a note from UBS.

"Gold needs a 'big bang' to reignite investor interest, the likely culprit to be policy response from central banks, with US action the key."

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Gold’s Road to Nowhere

Posted: 14 Aug 2012 11:44 AM PDT

From 'Road to Nowhere' by the Talking Heads:

We're on a road to nowhere  come on inside.  Takin' that ride to nowhere  we'll take that ride.  Maybe you wonder where you are  I don't care.  Here is where time is on our side   take you there.

From the US Federal Reserve's website and the sub-section The Federal Reserve's Response to the Crisis:


"On September 21, 2011, the FOMC announced that it would extend the average maturity of its holdings of securities–by purchasing $400 billion par of Treasury securities with remaining maturities of 6 years to 30 years and selling an equal par amount of Treasury securities with remaining maturities of 3 years or less–by the end of June 2012. The FOMC also announced that it will reinvest principal payments from its holdings of agency debt and agency MBS in agency MBS. In addition, the FOMC will maintain its existing policy of rolling over maturing Treasury securities at auction."
"On June 20, 2012, the FOMC announced that it would extend the maturity extension program by purchasing over the second half of 2012 an additional $267 billion in longer-term Treasury securities, and selling an equal amount of shorter-term Treasury securities." 
Gold blew out a year ago under the weight of its own momentum and suspect sponsorship as new buyers came into the monetary metal in a panicked, knee jerk fashion.  Gold should be bought on the QT, on the sly, while it is being sold off or ignored.  Rarely does panic buying work out well.  Here is the current state of the gold correction as it ambles along on a road to nowhere.

The corrective consolidation drags on, with weekly MACD on an up-trigger and a slower TRIX still in non-confirmation mode.  The chart above is kept simple so that it is self-evident.  Gold is dealing with resistance in the low 1600′s with the upper blue downtrend line a key level for serious discussion of the correction's end.

Gold was fated to correct due to the extreme momentum excess last year, but the two Fed entries quoted above are macro-fundamental road maps that allow gold market participants to a) have perspective on the seemingly endless correction and b) begin to strategize and prepare for its end.

The spread between "long-term Treasury securities" and "short-term Treasury securities" (30 year – 2 year shown above, with 30 – 3′s looking similar) has not surprisingly been in consolidation since the euro crisis blowout.  Gold has reliably followed this macro indicator in corrective consolidation; a consolidation that was created by the will of man, not natural market forces.

A rising yield curve signals stress within the financial system as investors come to favor short term Treasury bonds over long term bonds.  Among the reasons for this is the fear of inflationary response to crisis by monetary authorities.

Obviously, the Fed's control of the yield curve has the benefit of creating a painting that if believed, tells a story of little financial stress.  Hence, gold theoretically has no job to do in protecting people.  So as long as the man-made painting is adhered to by the majority, gold will remain in corrective consolidation right along with the curve.

But using this perspective to advantage, one wonders about such things as the limited supply of short term Treasuries the Fed has to sell and one wonders about concepts like slingshots and pent up energy.

Will the entirety of Operation Twist one day be looked at as the pulling back on a sling shot, slowly and agonizingly approaching the point where it can be stretched no more?  Will energy denied and finally released make the surge in summer of 2011 look mild?

These are questions for another time because as of now, players are looking in other directions.  With all the notoriety the metal got in the kickoff to the euro crisis, the current correction had to be; first because the initial momentum thrust had to blow out and then because Operation Twist saw to it that an important macro indicator was put in place to keep the metal under control.  Remember though that wise players get bullish on gold only when it is hated or at least well under control.

That control may last only as long as the Fed's supply of short term Treasury securities.

This is just a reminder about patience and perspective.  Do sign up for the free (and spam free) eLetter for ongoing perspectives on financial matters large and small.

http://www.biiwii.blogspot.com
http://www.biiwii.com/analysis.htm

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Standard Chartered Settles with New York State for $340 Million

Posted: 14 Aug 2012 11:37 AM PDT

As we predicted, Standard Chartered has settled rather than face an August 15 hearing with Benjamin Lawsky, New York's Superintendent of Financial Services over Iran-related money laundering charges. The amount agreed was less than he was initially rumored to be seeking, which was in the $500 to to $700 million range. However, as we also indicated, in a "good" settlement, neither side gets what it wants. And given that the Federal authorities were roused by the New York action and are also reported to be negotiating settlements, they will likely have to secure decent dollar amounts so as not to be perceived to be completely incompetent, which would have cut into what SCB would pay to New York. The benchmark here is HSBC's recent money laundering settlement, which led observers to contend that $700 million or even as much as $1 billion, would be what SCB might be forced to pay for this to go away. Put it another way: if the Feds together don't get at least as much as Lawsky did after he paved the way, it will prove a complete lack of seriousness on their part.

From the Wall Street Journal:

Standard Chartered STAN.LN +2.74% PLC agreed to pay New York's top banking regulator $340 million, averting a public showdown and ending a weeklong, trans-Atlantic regulatory drama.

After a harried week of debate, the U.K.'s fifth-largest bank by assets reached a settlement with New York's Superintendent of Financial Services, Benjamin M. Lawsky. The agreement came eight days after Mr. Lawsky accused the bank of illegally scheming over a decade to hide more than 60,000 financial transactions totaling $250 billion for Iranian clients.

Four other U.S. regulators that have been probing the bank's actions weren't part of the settlement. The U.S. Treasury Department, the Federal Reserve, the U.S. Department of Justice and the Manhattan District Attorney's office have been negotiating with Standard Chartered since 2011 to reach a settlement over its Iran-related transactions.

As part of the settlement, Standard Chartered agreed to install a monitor chosen by Mr. Lawsky's office to oversee its international transactions. The bank also agreed to appoint its own auditors in its New York office to oversee compliance with U.S. money-laundering laws. The bank acknowledged that the settlement covers $250 billion of transactions that the company handled for Iranian clients.

Note this settlement apparently does NOT cover transactions with Syria, Mynmar, and the Sudan that Lawsky flagged in his order, or at least if it did, the Journal did not mention that. However, given that SCB was handling Iran's foreign oil sale related payments, it's unlikely that the transactions related to the other countries the order indicated as troubling would approach the size of the Iran transfers.


Freeport-McMoRan: China Risks Outweigh Rewards

Posted: 14 Aug 2012 10:47 AM PDT

By Cris Frangold:

At the conclusion of a week that saw the price of precious metals strengthen, the real question for Freeport-McMoRan (FCX) is how the Chinese economy will impact its stock. The firming of commodities prices is a bullish sign for Freeport, although there is not always a direct correlation between the price of precious metals and the more industrial-focused copper price; the price of copper is still down on the year but rose marginally last week and appears firm. Given that 78% of the company's revenue is derived from copper, the pricing power of this metal will have a significant impact on the price of the stock.

In terms of the China issue, there are really two questions that need to be considered by potential investors: what is the likely economic future of China over both the near and longer-term, and what impact will this result have on the company? The


Complete Story »

Deer Consumer Products Shares Halted After Factories Idled

Posted: 14 Aug 2012 10:36 AM PDT

By Alfred Little:

Yesterday, August 13, 2012, the Nasdaq halted trading in Deer Consumer Products (DEER) until the company has "fully satisfied Nasdaq's request for additional information." I applaud the Nasdaq's decision, coming over a year after I first questioned DEER here, here, and here. In today's report, I will show the likely reason DEER was finally halted.

Background

Deer Consumer Products has reported spectacular growth in sales from its Chinese domestic kitchen appliance manufacturing business each of the last four quarters, as well as reiterated truly stunning 2012 sales guidance, as shown in the following table:

Click to enlarge

Unfortunately for investors, DEER's miraculous growth is completely contradicted by the simple fact that its two exclusive manufacturing facilities in Yangjiang (appearing adjacent to each other outlined in yellow in the picture below) are completely idle.

Most recently, on August 3, 2012, I had an independent third-party investigator visit DEER's two Yangjiang factories.


Complete Story »

The Death Of Paper Money And The Reemergence Of A Global Gold Standard

Posted: 14 Aug 2012 10:10 AM PDT

By Ben Mountifield:

In the years ahead, we will witness the death of paper money and the reemergence of a global gold standard. This article examines why this transition is inevitable, how it might occur, and how to protect yourself from it.

Why A Return To Some Form Of Global Gold Standard Is Inevitable

In the coming months and years, governments around the world will do everything in their power to prevent a global depression. They will do this by printing massive amounts of new money and pushing it out into the global economy - something which will result in a collapse in the value of paper money.

Eventually, as their actions fail to produce lasting economic growth, people will lose faith in governments' ability to resolve the crisis. Crucially they will also begin to lose faith in the paper money these governments issue, and ultimately it is this loss of faith in


Complete Story »

Nigel Farage on 'BBC HARDtalk' - and More

Posted: 14 Aug 2012 09:23 AM PDT

A fascinating, at times combative conversation between Nigel Farage (MEP) and Stephen Sackur of the BBC radio/TV show 'HardTalk' from August 6.  Clearly Sackur is in the tank for the status quo and just as clearly Nigel Farage is up to the challenge.  No wonder Farage's popularity is on the ascent in the U.K. 

 
Source:  YouTube
http://www.youtube.com/watch?feature=player_detailpage&v=qetEtP4RWWQ


Many thanks to Grant Williams for the excellent link.  


Comment:  For a small taste of the very clueless, self-important and arrogant Sackur, consider this interview from May of 2011 with Jim Rogers.  Ignore the sycophantic description of this video which gets it 180 degrees wrong.  There are other, similar HardTalk interviews of Rogers which will show in the line up once this one ends.  

 

Source:  YouTube 
http://www.youtube.com/watch?feature=player_detailpage&v=R5Gs3RqsoMU    

Cash Out Of Gold And Send Kids To College?

Posted: 14 Aug 2012 09:08 AM PDT

Investor Silver Hoard Near Record but Funds Recoil

Posted: 14 Aug 2012 08:38 AM PDT

After selling 812 tons of silver from exchange-traded products last year, investors have bought 797 tons through silver-backed ETPs this year and now hold the equivalent of eight months of mine supply and just under the record 18,639 reached in April 2011.

Daily Pfennig: Attempting Another Run At The Dollar…

Posted: 14 Aug 2012 08:25 AM PDT

from caseyresearch.com:

In This Issue…

* Currencies fade on Monday…
* N.Z. Retail Sales print strong…
* Aussie Business Confidence pushes higher…
* Retail Sales today… The Big Kahuna this week…

And, Now, Today's Pfennig For Your Thoughts!

Attempting Another Run At The Dollar…

Good day…. And a Tom Terrific Tuesday to you! The fingers are still pretty sore, but the feeling in the tips of the fingers has returned, so I've got that going for me! It was like the "old days" here yesterday for me, a very long day… After my doctor's appt. I returned to finish the job I had left, which normally my long time colleague, Jen picks up and takes care of, but Jen is on vacation, so there was no one left to do it but little old me! HA! Little old me… now that's funny.

Keep on reading @ caseyresearch.com

Syrian Humanitarian Crisis – As Food, Fuel Prices Soar al-Assad Desperately Attempts To Get Gold

Posted: 14 Aug 2012 08:18 AM PDT

from goldcore.com:

Today's AM fix was USD 1,614.50, EUR 1,305.60, and GBP 1,028.34 per ounce.
Yesterday's AM fix was USD 1,622.25, EUR 1,317.30 and GBP 1,035.33 per ounce.

Silver is trading at $27.91/oz, €22.70/oz and £17.86/oz. Platinum is trading at $1,408.75/oz, palladium at $575.60/oz and rhodium at $1,060/oz.

Gold fell $12.10 or 0.75% in yesterday in New York and closed at $1,608.30/oz. Silver fell to a low of $27.73 and finished with a loss of 1.28%.

Keep on reading @ goldcore.com

Pent Up Silver Demand and The CFTC Linchpin

Posted: 14 Aug 2012 08:09 AM PDT

from silverseek.com:

As scandal after financial scandal take their toll on public confidence in the economic morass curiously called the financial system, what will be the trigger for a short covering panic in the metals markets?

With countries the size of Spain lining up to get bailed out and a lagging global economy, the United States is not that far behind Europe as individual states and local governments find it harder to stay afloat. Consequently, what you can purchase with a U.S. Dollar will continue to diminish.

The inventories for precious metals are dwarfed in relation to the amount of paper silver contracts used to keep prices controlled. When the eventual covering of contracts occurs, heavy buying will come from the large entities that unofficially represent or are literally the working arms of the central banks, exacerbating the panic.

Keep on reading @ silverseek.com

Chris Powell: If There’s Ever Journalism About Gold, Ask Central Banks These Questions

Posted: 14 Aug 2012 07:54 AM PDT

from caseyresearch.com:

Yesterday in Gold and Silver

The 'dog days' of summer are in full cry…and I certainly wouldn't read much into gold's price action anywhere on Planet Earth on Monday. The price hung in there pretty good until the 3:00 p.m. BST London p.m. gold fix…10:00 a.m. Eastern…and it was touching to see a not-for-profit seller drop gold about ten bucks going into the close of Comex trading.

Gold closed the New York trading session at $1,609.90 spot…down $10.60 from Friday's close.

Gross volume was pretty enormous…around 125,000 contracts. But most of that was probably spread related, because about 30,000 contracts were traded in the Dec 2013 to December 2016 time frame. Once those spread are removed, net volume was around 74,000 contracts, which is vapour.

Keep on reading @ caseyresearch.com

Strange Bedfellows: More Authoritarian Linkages to Paper Money…

Posted: 14 Aug 2012 07:50 AM PDT

from thedailybell.com:

A New Book … Three authors [Prof. Dr. Margrit Kennedy, Bernard LIETAER and John Rogers] with decades of experience have teamed up to provide an up-to-date, state-of-the art field guide to the emerging movement of regional currencies. People Money describes a global movement of people creating their own currencies to support regional business and strengthen their communities. These currencies operate legally alongside Bank Money and Government Money, giving people new choices in an age of transition from outworn financial structures to an era of sustainable abundance … The currencies profiles include: Brixton Pound in London; The Business Exchange in Scotland; Blaengarw Time Centre in South Wales; Community Exchange System in South Africa; Chiemgauer in Germany; BerkShares, Equal Dollars, Ithaca HOURS and Dane County Time Bank in the USA; and many others. – Amazon

Dominant Social Theme: It is the era of alternative money schemes and only supporters of totalitarianism would suggest the free-market circulation of gold and silver.

Free-Market Analysis: Since we started looking, we keep coming up with linkages between those who espouse Greenbackerism, fiat credit systems, Georgism, etc. and various sorts of green eco-facilities and the United Nations in particular. You can see some of our articles here:

Keep on reading @ thedailybell.com

Heightened Expectations and the Collapse of Credibility

Posted: 14 Aug 2012 07:47 AM PDT

from oftwominds.com:

As the Status Quo manages perceptions to maintain the illusion that lofty expectations can still be met, it widens the gap between reality and those expectations. The inevitable snapback to reality will destroy institutional credibility and fatally undermine the Status Quo.

Yesterday we outlined the interwined dynamics of credibility and expectations ( The Keys To Understanding the Collapse of the Status Quo: Credibility and Expectations). To grasp the inevitability of this collapse, we need to explore the heights expectations have reached globally.

Let's begin with yesterday's observation that expectations are like debt-money claims on the real world: the claims can expand to near-infinity, but the real world remains stubbornly limited. In other words, expectations are inner states constructed by media and Central State imagery, propaganda and promises, both implicit and explicit. As such, these expectations are claims on the real world.

Keep on reading @ oftwominds.com

Africa Just Says “Nein” To The US Dollar: Time To Go Short The USDZMK And USDGHC?

Posted: 14 Aug 2012 07:38 AM PDT

from zerohedge.com:

Last week we presented the aftermath of the very much unannounced "Conference of Beijing" as a result of which Africa has been slowly but surely converting to a continent controlled almost exclusively by China. However, there was one thing missing: even as China has been virtually the sole source of infrastructure funding in Africa, the continent has long been a legacy dollar preserve, which obviously means renminbi penetration and replacement would be problematic to say the least. As it turns out, this too is rapidly changing: as the WSJ reports, Africa is increasingly just saying "nein" to the USD. "African countries are trying to shoo the U.S. dollar away, even if it means threatening to throw people who use greenbacks in jail. Starting next year, Angola will require oil and gas companies to pay tax revenue and local contracts in kwanza, its currency, rather than dollars. Mozambique wants companies to exchange half of their export earnings for meticais, hoping to pull more of the wealth in vast coal and natural-gas deposits into the domestic economy. And Ghana is seeking similar ways to reinforce "the primacy of the domestic currency," after the cedi plummeted more than 17% against the dollar in the first six months of this year. The sternest steps come from Zambia, a copper-rich country in southern Africa where the central bank has banned dollar-denominated transactions. Offenders who are "quoting, paying or demanding to be paid or receiving foreign currency" can face a maximum 10 years in prison, the central bank said in a two-page directive in May." Is it time to dump the EUR in hopes of a short covering rally that continues to be elusive (just as Germany wants) and buy Zambian Kwachas instead? We will wait for Tom Stolper to advise Goldman clients to sell the Zambian currency first, but at this rate the USDZMK may well be the most profitable currency pair of the next 3-6 months.

Keep on reading @ zerohedge.com

Syrian Humanitarian Crisis – As Food…

Posted: 14 Aug 2012 07:29 AM PDT

gold.ie

Silver Hoard Near Record as Hedge-Fund Bulls Recoil: Commodities

Posted: 14 Aug 2012 07:12 AM PDT

Reporting for Bloomberg, Nicholas Larkin writes:

At a time when hedge funds are the least bullish on silver in almost four years, investors' holdings are near a record, siding with the analysts predicting a rally as central banks move to bolster growth.

Speculators cut bets on higher prices by 72 percent since the end of February, mirroring changes in their copper wagers, which turned bearish in May, U.S. Commodity Futures Trading Commission data show. Silver held in exchange-traded products climbed for three months and is now valued at $16.2 billion, according to data compiled by Bloomberg. Prices will average $33.02 an ounce in the fourth quarter, 18 percent more than now, the median of 13 analyst estimates compiled by Bloomberg show.

Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Photographer: Akos Stiller/Bloomberg

Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Investors and analysts are bullish on expectations central banks will do more to stimulate economies, expanding consumption and increasing the allure of precious metals as a store of value. Prices tripled as the Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011.

"Since the beginning of the year it has reacted more like a base metal than a precious one," said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. "The main negatives are still in industry. We're waiting for more quantitative easing, and that would be really positive."

Comex Bourse

After tumbling 29 percent in the four months to the end of June, silver is now little changed for the year at $27.865 on the Comex bourse in New York. The LMEX index of six industrial metals from aluminum to zinc fell 5.5 percent as gold advanced 3.2 percent. The Standard & Poor's GSCI gauge of 24 commodities rose 1.9 percent since the start of January and the MSCI (MXWD) All- Country World Index of equities gained 7.9 percent. Treasuries returned 2.1 percent, a Bank of America Corp. index shows.

Silver is the most volatile metal tracked by Bloomberg and the price swings are masking what are already historically high prices. While the metal is trading 44 percent below the 31-year high of $49.845 set in April 2011, it averaged $30.37 since the start of January, on track for the second-highest annual level after last year's $35.27. The two-decade average is $9.97.

For Coeur d'Alene Mines Corp., which gets about 65 percent of its revenue from extracting the metal, that will mean a 35 percent jump in profit to a record in 2012, according to the mean of six analyst estimates compiled by Bloomberg.

Interest Rates

Industrial demand for silver may strengthen as economic growth accelerates. The International Monetary Fund said July 16 it expects the global economy to expand 3.9 percent next year, from 3.5 percent in 2012. The European Central Bank and the Federal Reserve are already holding interest rates at record lows and the People's Bank of China cut rates in June and July, the first reductions since 2008.

They may need to do more to bolster growth because U.S. factory output contracted in July for a second month, the Institute for Supply Management said Aug. 1. Manufacturing in the euro area shrank for a 12th consecutive month, a Markit Economics report showed the same day. China's industrial-output growth was the slowest in three years in July, according to government data released Aug. 9.

Silver imports by China, the second-biggest user after the U.S., declined for three consecutive months through June, customs data show. Global fabrication demand, a measure that includes coins, jewelry and photographic film, will be little changed in 2013, Barclays Plc estimates. The bank expects supply to beat consumption for a fifth year, leaving a glut of 4,148 tons as mine production expands to a record 25,835 tons.

'The Gap'

"Industrial demand may remain weak at least for another six months," said Jochen Hitzfeld from UniCredit SpA in Munich, the fourth most-accurate precious metals forecaster tracked by Bloomberg in the past two years. "This makes the gap that investors have to absorb even higher," said the analyst, who anticipates a fourth-quarter average of $28.

Investors bought 797 tons through silver-backed ETPs this year and now hold 18,093 tons, equal to more than eight months of global mine output, data compiled by Bloomberg show. They sold a net 812 tons from ETPs last year. Total assets are now 2.9 percent below the record 18,639 tons reached in April 2011. Investors probably will buy another 500 tons in 2013, Barclays and Morgan Stanley predict.

There are also signs that industrial demand is improving. Stockpiles in warehouses monitored by Comex fell 6.5 percent since July 3, reaching a four-month low on Aug. 8, bourse data show. Inventories had expanded every month since November to 147.1 million ounces (4,575 tons), the most since 1997.

More Bullish

Hedge funds may be getting more bullish, more than doubling their net-long position, or bet on higher prices, to 9,323 futures and options in the two weeks to Aug. 7, CFTC data show. That's still 58 percent below the five-year average. Wagers fell to 2,888 contracts on June 26, the lowest since October 2008.

Options traders are divided. The most widely held contract confers the right to buy silver at $50 by November 2013 and the next two biggest allow holders to sell metal at $20 by the same time and November 2012, Comex data show. The five biggest gold options are all for purchases at prices higher than today.

Some investors may be deterred by silver's price swings. The 100-day historical volatility for futures is at 30.8 percent, more than in gold, platinum, palladium and the main industrial metals traded on the London Metal Exchange, data compiled by Bloomberg show.

Analyst Forecasts

Coeur d'Alene will report net income of $126.6 million this year, from $93.5 million in 2011, the analyst estimates show. Shares of the Coeur d'Alene, Idaho-based company slid 18 percent to $19.80 this year. They will rally 35 percent to $26.74 in 12 months, according to the average of seven analyst forecasts.

Pan American Silver Corp. (PAAS), based in Vancouver, will make $302.5 million next year, from $234.8 million in 2012, the mean of six analyst estimates shows. Shares of the company, which got 51 percent of its revenue from silver in 2011, fell 28 percent to $15.64 in New York trading since the start of January. They will rise 45 percent to $22.63 in the next 12 months, the average of 14 forecasts compiled by Bloomberg shows.

Fed policy makers pledged to do more if needed on Aug. 1 and ECB President Mario Draghi said July 26 he would do whatever it takes to preserve the 17-nation euro. Lower interest rates increase the allure of precious metals because they generally earn investors returns only through price gains.

"People like me who have tremendous confidence in silver and are invested in the market see it rising once the easing begins," said Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management, who helps oversee about $1 billion of assets. "I expect an acceleration in the fear trade. Most of the hedge funds who sold will be back once the market gathers momentum."

August 14, 2012 (Source: Bloomberg)

http://www.bloomberg.com/news/2012-08-13/silver-hoard-near-record-as-hedge-fund-bulls-recoil-commodities.html 

SP 500 “E” Wave to rally market to bull cycle highs

Posted: 14 Aug 2012 06:20 AM PDT

SP 500 "E Wave" ready to rally to Bull Market Highs

Aug 14 2012

David Banister- www.markettrendforecast.com

In recent updates I have been projecting a series of ABCDE waves to take the Bull market to post March 2009 highs in the 1425-1445 ranges.  The recent pullback was expected as what I was calling a "D wave" pullback, with an E wave to come.  These final 5th waves or E waves can be extension waves or relatively benign, hence causing difficulty in forecasting the upper ranges.

In the case of the SP 500 index, we have had a strong rally from the 1267 lows in early June to 1409 highs so far (The C wave highs) and recently a pullback into the 1390's (The D wave). This next leg up should carry the market indices towards the 1440 2008 interim highs which begat the last 5 wave down leg of the Bear cycle that ended at 666 on the SP 500.  A case of down the mountain and up the mountain if you will since the 2008 highs to current pricing conditions at 1404.

Once this E wave completes in the 1425-1445 ranges (With an outside shot at an extension blast to 1495) we should expect a fairly significant correction of the entire move from March of 2009.  This final rally leg could top anytime between Aug 13th and August 22nd as I last updated, with potential to spill over into early September.

A close over 1409 will confirm the "E wave" has begun in earnest and you may want to buckle up, as it could be the final blast before some rains begin to pour in the fall.

If you'd like to be up to date on the daily and weekly views of the SP 500 and GOLD and Silver, get a discount at www.markettrendforecast.com or sign up for our free weekly reports

Amid Humanitarian Crisis Assad Desperately Seeks Gold

Posted: 14 Aug 2012 05:52 AM PDT

Gold began to recover losses from yesterday and is being supported by concerns of another global economic downturn, potentially a sharp one. Central banks in the US, Europe and China look set to unleash further ultra-loose monetary policies.

'Quiet Gold Market' Needs 'Big Bang' from Policy

Posted: 14 Aug 2012 05:33 AM PDT

Spot market gold prices traded above $1,610 an ounce Tuesday morning in London, slightly below where they started the week, while European markets edged higher following news of better-than-expected German economic growth.

A Silver Coin to Save the Common Man

Posted: 14 Aug 2012 04:10 AM PDT

For most of recorded history, the preponderance of people held whatever savings they managed to accrue in the form of physical coins. A gold or silver coin is the hardest form of money to degrade.

More Buying Ahead

Posted: 14 Aug 2012 03:35 AM PDT

It looks like a slow market up tread with a major down coming later in the year.

Dow Jones Industrial Average: Closed at 13165.19 -10.45 on 90% of normal volume and gradually rising but nearing a peak momentum.  Just above 13250 we previously posted four highs that all stopped there on resistance. We have more buying ahead, probably through next Monday, followed by a pause at that resistance number. I can see this followed by a few days of mild correction then we could get higher market prices. New support is 13,000 and price is above moving averages, which is bullish. The Post-Labor-Day holiday will make markets peak and sell somewhat. As we near the last week of September, we think a major correction (-23% to 38%) is due but not a big crash. The really negative stuff should come after November 6, probably in the first quarter of 2013. For this Friday and Monday, expect to add another 75 points or so.

S&P 500 Index: Closed at 1402.80 +0.58 on 90% of normal volume and rising but peaking momentum. We touched new resistance and support at 1400. Price is above moving averages and still has some room to rise to touch previous higher resistance. Look for more buying by the traders on Friday and Monday with a small correction next Tuesday. After that we can see a normal selling mild correction for a few days followed by one more small rally before the September Post-Holiday selling begins. I would expect the next higher price to touch 1450 and then resist. Early September selling low could be 1325-1350 near the 200-day moving average. Watch out for the last week of September with some serious selling, but no crash arrives.

S&P 100 Index: Closed at 644.66 +0.05 on rising momentum and 90% of normal volume. This market, unlike the Dow and S&P 500, has, in my view hit the top for now. We just touched near 650 where the 100 market had previous top in March and April earlier this year. Technically, we see three small trading bars resisting and going nowhere against 650.  For now we can do a mild ABC correction sideways next week followed by some light selling-profit-taking. The 20-day average at 623.79 is support, and resistance is the all important 650. For Friday and Monday, expect a sideways move, then profit-taking beginning next Tuesday.

Nasdaq 100 Index: Closed at 2719.61 +5.59 on strongly rising momentum and normal volume. When the price got above 2700, it found stronger support. Price is above all moving averages. There is some technical upside room for this market to 2750 and maybe even 2800 before new selling begins on the cycles and calendar. We forecast more buying as an index leader with a peak near the middle, or end of August. September can correct mildly in the first ten or fourteen days. Then the selling could kick-in with new power dropping the price to 2400-2450 as a minimum. The tech stocks are getting toppy, and long in the tooth to the high side. Expect more buying on Friday and Monday.

30-Year Bonds: Closed at 148.57 -0.14 and is continuing to sell-off as the Euro currency recovered and the bonds were strongly over bought. Momentum continues to fall as the 20-day average at 150.55 is resistance along with the very important 50-day average at 149.69.  Support is 148.50. While the bonds are soft and correcting for now, we can more upside to 150 resistance this month. When the Euro currency and bonds get serious about more selling in September, the US Dollar and related bonds will rise on the inverse trade. If and when the Euro and European bonds begin to sell with strength, we could see some new 2012 record highs in the US Dollar and related bonds. Expect more selling ahead on Friday through next Tuesday.

Gold: Closed at 1617.20 +4.70 with a firm nearby support at 1615.50. Gold is above the 20 and 50 day moving averages, but is resisting against the stronger 200-day average at 1622.72. The chart pattern is showing a long bull flag with price pressuring up and against that 200-day average. Once the breakthrough is solid above 1622.72 and 1626.50, we should see a strong gold rally to 1,736.50 on a full 50% retracement. We can expect a gold breakout above 1,622.50 before the middle of August. Related gold and silver shares on our recommendations were mostly in the green week-over-week. This signals the whole sector is moving to the buy side.

Silver: Closed at 28.14 +0.10 on gradually rising momentum and a very wide, inverse head and shoulders chart price pattern over the last 100 days. Since this is so wide and long, we technically expect silver to take-off in a hard rally once it can break-up and through the 200-day moving average at 30.42. Currently the price is above the 20 and 50 day averages, showing a good bull trend. The price of 30.00 to 30.48 is very hard resistance but will break out, we think after mid-month. The next two dollars to the upside should be posted by the second or third week of August.

XAU: Closed at 157.44 +1.94 on rising momentum and more importantly a moving average bull crossover in the metal to shares ratio giving a 90% accurate trend forecast. Most of our stocks were in the green this week and this chart reflects that kind of trading. The price is now above the 20 and 50 day moving averages heading toward the 200-day average at 172.06. There is interim resistance at 160 on the price followed by 170 near the 200-day moving average. We can see a precious metals stocks' rally from now all the way to just past Labor Day before a correction.  Our XAU goal for an early September top is 180.

US Dollar: Closed at 82.63 +0.26 as this market remains above the 50 day average at 82.43 support and the 200-day hard support average at 80.42.  Resistance is 82.77 on the 20-day average. The dollar corrected on being over bought. The rising Euro currency caused the dollar to back-up and correct from a nearby high of 84.00. There is a lot of dollar support at 82.00, which is firm.  Momentum is still up. Expect the dollar to trade in a tighter trading range in a choppy market for the rest of this month. A new dollar rally could begin after Labor Day as the Euro begins to sell again on negative credit news from the continent.

Crude Oil: Closed at 93.50 +0.01 after rising to the new trading range of 92.50 to 96.50. Momentum is up but the price is stalled on 200-day moving average resistance and support. Price is above the 20 and 50 day moving averages. Oil has reached the 50% retracement price today. This will cause a stall in more buying but we are seeing reserves slowly burn-off and unleaded gasoline is going higher on a major west coast refinery fire. Natural gas is firm but is not expected to rise much more after trading above 3.00.  For now the Middle Eastern violence and war premium has abated. Price now goes sideways in chop for about ten days.

CRB: Closed at 304.81 +0.49 as the price has broken-up and through major resistance at 300.00 on price alone, and above the 200-day moving average at 301.87.  We got a big stall at 300.00 resistance. That is a major, major number for the CRB.  Now that we are above it, those hard resistance prices are new supports. The larger funds have been buying with both hands setting-up for the next CRB rallies in  precious metals, grains and some others. Crude oil is the dominant factor and is stalled for now but we see the inflation factor stepping-up next that should drive the entire sector. The next objective is 310-312 as the CRB continues to rise through the entire month. -Traderrog


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Gold & Silver Market Morning, August 14 2012

Posted: 14 Aug 2012 03:00 AM PDT

On Greek ‘Crisis,’ the World’s Reserve Currency & Gold

Posted: 14 Aug 2012 02:54 AM PDT

Frankly, I don't get it. The euro, the currency without a country, has been nothing more and nothing less than an abject fiat fiasco since April 30, 2010 when the first Greek panic attack hit the stock markets.

Chris Powell: If There's Ever Journalism About Gold, Ask Central Banks These Questions

Posted: 14 Aug 2012 02:35 AM PDT

¤ Yesterday in Gold and Silver

The 'dog days' of summer are in full cry...and I certainly wouldn't read much into gold's price action anywhere on Planet Earth on Monday.  The price hung in there pretty good until the 3:00 p.m. BST London p.m. gold fix...10:00 a.m. Eastern...and it was touching to see a not-for-profit seller drop gold about ten bucks going into the close of Comex trading.

Gold closed the New York trading session at $1,609.90 spot...down $10.60 from Friday's close.

Gross volume was pretty enormous...around 125,000 contracts.  But most of that was probably spread related, because about 30,000 contracts were traded in the Dec 2013 to December 2016 time frame.  Once those spread are removed, net volume was around 74,000 contracts, which is vapour.

Silver was under pressure the entire trading day...and it, too, got sold off a bit going into the Comex close.  But I wouldn't read a whole heck of a lot into that price action, either.

Silver finished the Monday trading session at $27.83 spot...down 30 cents.  Once all the roll-overs out the September contract were removed, the net volume in silver was around 17,500...which is fumes.

The dollar index opened on Sunday night around the 82.75 mark...and rallied a bit from there.  But mid-afternoon Hong Kong time, the index began to roll over...and the index hit its nadir at the London p.m. gold fix at 10:00 a.m. in New York.  From there it rallied a hair into the close...and finished around the 82.43 mark...down a bit over 30 basis points.

There was obviously no co-relation between the dollar index and the precious metal prices yesterday.

The gold stocks peaked just a few minutes before the gold price...and then immediately headed south.  Most of the decline was in by noon Eastern time...and the stocks traded more or less sideways from there.  It's interesting to note the big sell-off in the gold price that came just before the Comex close, had little impact on the share prices.  The HUI finished down 1.29%.

With the odd exception, the silver shares were down across the board again...and Nick Laird's Silver Sentiment Index closed down 1.10%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 207 gold contracts were posted for delivery tomorrow inside the Comex-approved depositories.  JPMorgan was by far the biggest short/issuers with 197 contracts...and HSBC USA and Deutsche Bank were the two largest long/stoppers with 113 and 64 contracts respectively.  The Bank of Nova Scotia was a distant third with 22 contracts stopped.  There was nothing to report in silver.

There were no reported changes in either GLD or SLV...and the U.S. Mint sold another 475,000 silver eagles.

I noticed that the Sprott Physical Silver Trust reported adding another 227,000 troy ounces to their stash yesterday...and there's still a bit more to come...at least 600,000 troy ounces as a minimum would be my guess.

It was a very quiet day over at the Comex-approved depositories on Friday.  They reported receiving 38,268 troy ounces of silver...and shipped 46,604 ounces out the door.

I have the usual number of stories for a Tuesday...a lot...and, as always, the final edit is in your hands.

As Ted Butler is wont to say, it was "just another day off the calendar".
Return to gold is inevitable, Gold Standard Institute founder Barton says. Ron Paul: Legalize competing currencies. John Embry: Gold to Spike as Physical Market is Shockingly Tight.

¤ Critical Reads

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Sentinel ruling may hurt MF Global clients

A ruling in the case of failed futures brokerage Sentinel Management Group could make it more difficult for customers to recoup money lost in the much larger collapse of MF Global, according to Sentinel's bankruptcy trustee.

A federal appeals court on Thursday upheld a ruling that puts Bank of New York Mellon ahead of former customers of Sentinel in the line of those seeking the return of money lost in the 2007 failure of the suburban Chicago-based futures broker.

The appeals court affirmed an earlier district court ruling that the bank had a "secured position" on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money.

Futures brokers are required to keep customers' funds in dedicated accounts to protect them from being used for anything other than client business.

However, Thursday's ruling suggests that brokerages can use customer funds to pay off other creditors, Sentinel trustee Fred Grede told Reuters.

"I don't think that's what the Commodity Futures Trading Commission had in mind" with its requirement that brokers keep customer money separate from their own, he said.

"It does not bode well for the protection of customer funds."

This Reuters story was posted on their website late Thursday evening...and is definitely worth reading.  I thank Paul Laviers for bringing it to our attention...and the link is here.

View full GSD edition

Fair Game: Breaking a Buck, Maybe, but Not Taxpayers' Backs

Mark August 29th on your calendar. It's the day all of us could end up on the hook for a big future bailout.

The Securities and Exchange Commission is expected to vote that day on a proposal that would limit taxpayers' exposure to the $2.6 trillion world of money market mutual funds. The plan would reduce the odds of having to rescue teetering funds when the next financial crisis comes — and it will.

Money market funds are a huge cog in the nation's financial machinery. Many people think that these funds are as safe as federally insured bank deposits. In most cases, they aren't. But then, in the dark days of 2008, a run on one fund, Reserve Primary, reverberated in the industry.

Investors fled, and the Treasury stepped in. It earmarked $50 billion to protect money market funds and to prevent them from "breaking the buck," or having their shares fall below the sacrosanct $1 net asset value. Of course, if the government rides to the rescue once, the thinking goes, it will surely do so again.

This Gretchen Morgenson offering showed up in The New York Times on Saturday...and it's worth reading as well.  I thank Donald Sinclair for sending it...and the link is here.

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White House offers drought relief, feels heat to waive ethanol mandate

Drought conditions plague much of the United States after a summer of scorching temperatures and a lack of rain. The dryness is affecting America's farmland, threatening crops like soybean and corn.

President Barack Obama announced emergency measures Monday to ease the impact of the worst drought in half a century, but stopped short of waiving the government's requirement that a large portion of the now-shriveled corn crop be diverted to make ethanol.

Obama announced that the Department of Agriculture will buy up to $170 million of pork, lamb, chicken and catfish to help support farmers suffering from the drought. The food purchases will go toward "food nutrition assistance" programs, like food banks.

This story was posted on the nbcnews.com Internet site around noon Eastern time yesterday...and I thank Casey Research's own Dennis Miller for sharing it with us.  The link is here.

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Why Central Banks May Never Allow LIBOR To Be Fixed

The Federal Reserve and the world's other central banks have good reason to want control of lending—the primary purpose of central banks is to impact lending via monetary policy, thus easing or tightening the supply of credit to the real economy.

That said, allowing central banks to control this so closely does remove the "invisible hand" that governs markets so well.

If regulators want to replace LIBOR, then they'll have to effectively wrest it from the control of central banks. They will have to let lending rates rise and fall on their own to accurately reflect tensions in financial markets.

That's not a power central banks are likely to give up so easily, particularly not when they are doing all they can to flood the system with cheap money and keep floundering economies alive.

"The real problem is a government that thinks it can solve it," Burghardt remarked.

This story showed up on the businessinsider.com website last Friday...and I thank Donald Sinclair for his second offering in today's column.  The link is here.

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Sir David Walker: I will change Barclays

Sir David Walker, the new chairman of Barclays, is to undertake a wholesale review of the way the bank operates and has admitted that he agrees "in principle" with customers paying to use current accounts and the end of the free banking model.

In his first interview as chairman, Sir David told The Sunday Telegraph that he wanted to see significant change at Barclays and revealed that he was not committed to any of former chief executive Bob Diamond's business plan "except getting it right".

Setting a 24-month deadline by which time he hopes the bank will be back on a firmer footing, Barclays' incoming chairman said his first priorities in the role would be the three Cs – a new chief executive, reformed compensation and a changed culture. He also wants to strengthen the board so it is better able to challenge the new chief executive.

It's a good bet that "Sir David" will do everything in his power to make sure that there are no changes worth mentioning ever implemented at Barclays.  This story appeared on the telegraph.co.uk Internet site late on Saturday night...and I thank Roy Stephens for sending it.  The link is here.

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Debt crisis: ECB buying Spanish and Italian debt 'makes no sense' says Belgian bank governor

Luc Coene told Belgian newspapers De Tijd and L'Echo that buying the bonds of these countries would only serve to weaken the ECB and do nothing to resolve underlying issues of competitiveness.

"It makes no sense for the ECB to start financing those countries," said Mr Coene, "It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet," he said.

"That would in turn weaken the ECB and do nothing to resolve the underlying problems...as it will take away the pressure on politicians to act."

This story was posted on The Telegraph's website at 11:00 a.m. BST on Saturday morning...and it's Roy Stephens second offering in today's column.  The link is here.

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Debt crisis: Germany ready to block Greek aid if country misses targets

The deputy head of Chancellor Angela Merkel's conservative parliamentary bloc, Michael Fuchs, told business daily Handelsblatt that Berlin was ready to use its veto if it is unhappy with findings from the Greece creditors "troika".

"You can quote me: even if the glass is half-full, that is not enough for a new aid package," he said in an interview to appear in the paper's Monday issue. "Germany cannot and will not agree to that."

Germany, Europe's biggest economy, is waiting with eurozone partners for the report on Greece from a so-called troika of inspectors from the European Union, International Monetary Fund and European Central Bank.

Their verdict, which is expected by mid-September, will determine if Athens receives the next installment of €31.5bn in rescue funds.

This story was posted on the telegraph.co.uk Internet site on Sunday afternoon BST...and I thank Roy Stephens for bringing it to our attention.  The link is here.

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Greek economy shrank 6.2pc in second quarter

The economy contracted 6.5pc in the first quarter, worse than the initially given 6.2pc, according to revised figures issued in June.

The Bank of Greece expects the economy to shrink 4.5pc for 2012 as a whole, following a 6.9pc drop last year, according to AFP.

The country is relying on two financial rescue packages backed by the EU, the International Monetary Fund and the European Central Bank worth around €240bn for its economic survival.

Last year, private creditors agreed to write-off more than €100bn in debt, roughly half the amount they were owed, as part of a second bailout programme.

This is another story courtesy of Roy Stephens.  It's from The Telegraph late yesterday morning...and the link is here.

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