Tuesday, October 22, 2013

Gold World News Flash

Gold World News Flash


Weakening outlook for the US dollar is an excellent reason to buy gold and silver

Posted: 21 Oct 2013 02:00 PM PDT

by Peter Cooper, Arabian Money:

Currency traders are now expecting the US dollar to weaken with an end to QE money printing kicked into the long grass and new Fed chairperson Janet Yellen unlikely to pick up the ball and run. A short rally in the US stock market after the debt ceiling crisis last week and end to the government shutdown may also prove dollar negative.

Traders say there are a lot of dollar sell orders in the market from foreigners. Holding a currency that is falling is a quick and sure way to lose money.

Falling dollar

Insiders note that the euro/dollar market had found equilibrium around $1.33 on September 17th when the shocker news to 'no taper' on QE money printing came out. That sent the market into a one-month consolidation between $1.34-1.36. But the dollar had already been weakening since Larry Summers retired from the race to be the next Fed chairman.

Read More @ ArabianMoney.com

Marc Faber Blasts "We Are The Bubble... There Is No Exit Strategy"

Posted: 21 Oct 2013 01:43 PM PDT

"The question is not 'tapering'," Marc Faber exclaims to his hosts on CNBC's Squawk Box this morning, "the question is at what point will they increase the asset purchases to say $150 [billion] , $200 [billion], or a trillion dollars a month." QE-4-EVA is here to stay, as Faber explained "every government program that is introduced under urgency and as a temporary measure is always permanent." Simply put, "The Fed has boxed itself into a position where there is no exit strategy," and while inflation may not be present in the 'chosen' indicators, Faber blasts, there's been incredible asset inflation - "we are the bubble. We have a colossal asset bubble in the world [and] a leverage or a debt bubble." There will be massive wealth destruction, he concludes, "one day this asset inflation will lead to a deflationary collapse one way or the other. We don't know yet what will cause it."

 

The Fed is Boxed In....

 

The world is in a gigantic bubble...

 

Back in April 2012, Faber said the world will face "massive wealth destruction" in which "well to-do people will lose up to 50 percent of their total wealth."

In today's "Squawk" appearance, he said that could still happen but possibly from higher levels because of the "asset bubble" caused by the Fed.

Gold Daily and Silver Weekly Charts - Cap, Cap, Cap Ahead of Non-Farm Payrolls

Posted: 21 Oct 2013 01:28 PM PDT

Gold Daily and Silver Weekly Charts - Cap, Cap, Cap Ahead of Non-Farm Payrolls

Posted: 21 Oct 2013 01:28 PM PDT

Gold Breaks Out of Short-Term Downtrend

Posted: 21 Oct 2013 01:16 PM PDT

The news that dominated the week was the eleventh-hour decision by the Republican Party to back down from its game of chicken against the President over Obama-care, the budget and the debt ceiling. The debate now continues facilitated by the debt ceiling being temporarily abandoned until February, when presumably the game of chicken will be run for a second time if nothing has been agreed. Understandably gold, along with other markets, was victim to rumour and counter-rumour emanating from Washington with few traders prepared to commit themselves until Thursday morning.

Within this context, the previous Friday (11th Oct.) someone clumsily dumped a big sell order on the futures market ahead of the US opening, which drove the price down $25 to $1262. On Monday this price drop was fully reversed before the market drifted lower again under persistent selling of futures to a low point of $1252 on Tuesday. On Thursday morning, just before 9.00AM UK-time gold suddenly took off, gaining $40 as the US dollar moved sharply lower, in a considered response to the suspension of the debt limit the night before. That sale a week ago, insofar as it has not been closed out is now showing a large trading loss.

This could turn out to be a major turning point, illustrated in the chart below. There is little doubt that the bears, having failed to see selling materialise on the opening mark-down of $4 on Thursday, suddenly realised how exposed they were when the US dollar suddenly weakened.

Chart showing the gold trend since June 20th, 2013

The result is gold has now broken up out of its short-term downtrend (the dotted line). More importantly, the bears failed to push gold down below the June lows under $1200; so gold looks like it has established two rising low-points, confirming that gold is in an uptrend. This being the case, after a brief consolidation gold has the potential to move swiftly higher to challenge the $1350 level and above.

Behind this turn of events is a weaker dollar. There is little doubt that as a brand the US dollar has taken a beating. Not only did the US suffer the indignity of airing its washing in public, not only did a ratings agency threaten to downgrade US Government debt, but also the Chinese through their official news agency Xinhua are calling for an end to dollar and US supremacy. They have backed this up by freezing New York out of the internationalisation of the renminbi, choosing London instead. The full implications of all this have not yet been reflected in financial commentary and will no doubt be debated in the coming weeks.

This is generally bad for the dollar and good for gold.

Alasdair MacLeod

For The Daily Reckoning

Note: This originally appeared in GoldMoney News

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Hedgers Active As Stocks Languish (At All-Time Highs) On Low Volume

Posted: 21 Oct 2013 01:14 PM PDT

The high-beta honeys were not amused (despite another melt-up in NFLX into earnings) as the Russell 2000 underperformed (-0.25% on the day). The Dow and S&P ended practically unch, Nasdaq bid (helped by AAPL ahead of the product news tomorrow) and Trannies closed their highs of the day exuberating all the way... Treasury yields rose 2-3bps (steepening). FX was quiet with the USD very slightly higher (helped by JPY weakness) but AUDJPY was in charge of S&P 500 trading today. Oil dropped 1.6% closing back under $100 and Silver rallied 1.3%. Hedgers were active (6though clearly the selling was limited) as credit spreads and volatility markets saw protection buyers active.

 

Equity indices were quite notably divergent today...

 

But it was clear that macro overlays were being laid out once again in credit...

 

and in VIX...

 

Bonds quietly limped higher in yield but FX markets were dead...

 

with only AUDJPY (JPY weakness dominant) leading stocks...

 

Charts: Bloomberg

Bonus Chart: Apple catches up to Gold ahead of tomorrow's product announcement

China is now overtly pushing for the US dollar to be replaced as the world’s reserve currency

Posted: 21 Oct 2013 01:05 PM PDT

by Alasdair Macleod
21-Oct (ZeroHedge) — Xinhua, China's official press agency on Sunday ran an op-ed article which kicked off as follows:

"As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world."

China does have a broad strategy to prepare for this event. She is encouraging the creation of an international market in her own currency through the twin centres of Hong Kong and London, side-lining New York, and she is actively promoting through the Shanghai Cooperation Organisation (SCO) non-dollar trade settlement across the whole of Asia. She has also been covertly building her gold reserves while overtly encouraging her citizens to accumulate gold as well.

There can be little doubt from these actions that China is preparing herself for the demise of the dollar, at least as the world's reserve currency. Central to insuring herself and her citizens against this outcome is gold. China has invested heavily in domestic mine production and is now the largest producer at an estimated 440 tonnes annually, and she is also looking to buy up gold mines elsewhere. Little or none of the domestically mined gold is seen in the market, so it is a reasonable assumption the Government is quietly accumulating all her own production without it becoming publicly available.

…The West selling its stocks of gold has become the biggest strategic gamble in financial history. We are committing ourselves entirely to fiat currencies, which our central banks are now having to issue in accelerating quantities. In the process China and Russia have been handed ultimate economic power on a plate.

[source]

PG View: If you personally are disinclined to commit yourself entirely to fiat currency, now is the time to get some gold…

Guest Post: China And Gold

Posted: 21 Oct 2013 12:31 PM PDT

Submitted by Alasdair Macleod via GoldMoney.com,

China is now overtly pushing for the US dollar to be replaced as the world’s reserve currency.

Xinhua, China’s official press agency on Sunday ran an op-ed article which kicked off as follows:

“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.”

China does have a broad strategy to prepare for this event. She is encouraging the creation of an international market in her own currency through the twin centres of Hong Kong and London, side-lining New York, and she is actively promoting through the Shanghai Cooperation Organisation (SCO) non-dollar trade settlement across the whole of Asia. She has also been covertly building her gold reserves while overtly encouraging her citizens to accumulate gold as well.

There can be little doubt from these actions that China is preparing herself for the demise of the dollar, at least as the world’s reserve currency. Central to insuring herself and her citizens against this outcome is gold. China has invested heavily in domestic mine production and is now the largest producer at an estimated 440 tonnes annually, and she is also looking to buy up gold mines elsewhere. Little or none of the domestically mined gold is seen in the market, so it is a reasonable assumption the Government is quietly accumulating all her own production without it becoming publicly available.

Recorded demand for gold from China’s private sector has escalated to the point where their demand now accounts for significantly more than the rest of the world’s mine production. The Shanghai Gold Exchange is the mainland monopoly for physical delivery, and Hong Kong acts as a separate interacting hub. Between them in the first eight months of 2013 they have delivered 1,730 tonnes into private hands, or an annualised rate of 2,600 tonnes.

The world ex-China mines an estimated 2,260 tonnes, leaving a supply deficit for not only the rest of gold-hungry South-east Asia and India, but the rest of the world as well. It is this fact that gives meat to the suspicion that Western central bank monetary gold is being supplied keep the price down, because ETF sales and diminishing supplies of non-Asian scrap have been wholly insufficient to satisfy this surge in demand.

So why is the Chinese Government so keen on gold? The answer most likely involves geo-politics. And here it is worth noting that through the SCO, China and Russia with the support of most of the countries in between them are building an economic bloc with a common feature: gold. It is noticeable that while the West’s financial system has been bad-mouthing gold, all the members of the SCO, including most of its prospective members, have been accumulating it. The result is a strong vein of gold throughout Asia while the West has left itself dangerously exposed.

The West selling its stocks of gold has become the biggest strategic gamble in financial history. We are committing ourselves entirely to fiat currencies, which our central banks are now having to issue in accelerating quantities. In the process China and Russia have been handed ultimate economic power on a plate.

 

WOW: Massive Find of Physical Silver Bars in Cincinnati Home: 19,400 One Troy Ounce Silver Bars

Posted: 21 Oct 2013 12:30 PM PDT

from CincinnatiGifts:

Someone had apparently been hoarding silver for years, perhaps decades, hiding individual one ounce silver bars in this chest until it contained 19,400 silver bars and weighed 1200+ pounds. At current silver prices in the $21 – $22 range, the silver is worth $417,000, give or take, but who’s counting?

Superficial Optimism Creates False Stock Market Gains

Posted: 21 Oct 2013 11:27 AM PDT

Since the deal in Washington the markets have celebrated. The stock market indexes have climbed higher than when the shutdown began. Optimism has paid off again in 2013.

"It has to be said that for most of the past three decades or so, optimism has paid off," bank analyst William Vincent opined in a recent column for SNL Financial titled "Where Are the Bears?"

But has it really?

Vincent's column looked at the lopsided consensus on a number of big stocks as a warning. (Apple, for instance, has 43 buys against just three sells.) In that column, he also rolled out the bullish refrain by citing the returns of various stock market indexes. The Dow is up 358% since 1984. The Nasdaq, though it remains below its 2000 peak, is still up 2,765%. The indexes deceive.

"If you really track the mortality of companies," says Carlo Cannell, "you'd conclude the market does not have the upward bias everyone thinks it does. The market is actually a well-tended garden."

"If you really track the mortality of companies, you'd conclude the market does not have the upward bias everyone thinks it does."

Cannell is one of those rare birds, an investor who has consistently made money on the short side betting against companies. (The quote comes from The Art of Value Investing, a collection of quotes from some very good investors, edited by Whitney Tilson and John Heins. Like a bag of chips and a jar of salsa, it's not a book you consume in one go. It's good for dipping.)

Cannell's analogy of a well-tended garden is perfect. The makers of the index weed out the losers. By doing so, they make the returns on stocks look greater than they appear.

"Most stocks lose money," is the way John Del Vecchio and Tom Jacobs start off their new book, What's Behind the Numbers? The authors want to help prevent you from getting snookered in the market. They start by making sure you understand Cannell's point.

They cite a study by Blackstar Funds that looked at the Russell 3000 from 1983-2007. This is a stock market index that represents 98% of the all the liquidity in the U.S. market. Blackstar's study, though, included all the stocks that qualified for inclusion in the index, even ones that de-listed. This universe of stocks had 8,054 names.

If you look at this population, most stocks lost money even though the index rose nearly 900% from 1983-2007. In fact, the top 25% — or roughly 2,000 names — provided all the gains. The worst-performing 75% — or about 6,000 names — collectively returned 0%.

Here is a chart from the study:

ReturnChart

Source: Blackstar Funds

All is to say a small number of stocks provide most of the returns. That also means there are a lot of losers.

This reminds me of a quip famous short seller, Jim Chanos, likes to use. Chanos is a guy who pokes around looking for stocks that are going to fall apart for one reason or another. Sometimes these reasons involve thievery and fraud, which Chanos cheerfully exposes. He is most famous as the guy who sniffed out Enron.

This doesn't make him popular among Wall Street's bulls. Short sellers never are. (If there was ever a Wall Street version of the old board game Clue, you could swap out Professor Plum and the gang with prominent short sellers. Then Chanos could be the guy in the library with the knife in his back, or maybe Cannell gets the lead pipe in the ballroom.)

Anyway, people like to poo-poo short selling because your upside is capped — you can only make 100% if a stock goes to zero — and your downside is theoretically infinite.

But as Chanos says, "I've seen more stocks go to zero than to infinity."

There is another reason the indexes are less dazzling than they appear. They do not account for inflation. A dollar today is not worth as much as a dollar in 1983. You must account for the deprecation of the currency.

Again, we turn to the useful Del Vecchio/Jacobs book. They cite the inflation-adjusted returns for the S&P 500 from 1950-2009. This has the effect of knocking down the total return on the index by about 40%.

The authors also note the arbitrary nature of cutoff dates. From 1968-83, for example, the stock market as a whole delivered an inflation-adjusted return of zero.

Besides this, investors are their own worst enemies. They tend to buy when stocks are high and sell when they are low. Del Vecchio and Jacobs cite another favorite study of mine by Morningstar, which I've cited before as well in my own Invest Like A Dealmaker. Morningstar looked at the best fund of the decade from 2000-2010. It was Ken Heebner's CGM Focus Fund. It returned 18% annually.

"I've seen more stocks go to zero than to infinity."

But how did the average investor in fund do? Poorly. This is because most investors piled in after the fund was up 80% in 2007 — right before it fell 48%. Morningstar looked at the flow of funds in and out of CGM and concluded that the typical investor lost 11% annually, while Heebner was racking up gains of 18% annually.

What is true at the mutual fund level is surely true at the stock market level. I bet the typical investor has never made any money in stocks.

To conclude: The posted returns of stock market indexes show only a superficial triumph of optimism. Instead, most stocks are losers. I don't regret being picky. And I don't regret being fearful as the rest of the market plows higher on such superficial reasons as a temporary debt deal.

I turn again to The Art of Value Investing. I put little stars by some of my favorite comments in my copy. I noted that Seth Klarman, who leads the Baupost Group, had the most stars in my book. From the neck up, there is no one better as an investor. Here is one comment apropos of today's discussion:

"We are big fans of fear, and in investing, it is clearly better to be scared than sorry."

I agree and urge you to stay cautious

Regards,

Chris Mayer
for

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U.S. debt explodes a record $328 billion in just one day

Posted: 21 Oct 2013 11:15 AM PDT

21-Oct (USAGOLD) — The debt of the United States is one of the most consistent points of concern amongst our clients here at USAGOLD. While most investors were relieved that the debt ceiling was raised and a potential default was averted, our clients were keenly aware that suspension of the debt-ceiling until February 7, 2014 meant that our national debt was about to go up dramatically.

In commentary last week we reminded our clients that the debt went up a record $238 bln the day after the 2011 debt ceiling deal was struck. This time around they weren’t disappointed: On Thursday last week, again just a day after the deal was struck, the U.S. debt exploded by a record $328 bln. That sent the national debt above $17 trillion.

Gold soared more than $40 dollars that day. While the yellow metal has been treading water since, the debt will continue to rise during the suspension period, which is likely to keep a bid under the yellow metal as well.

See:

US debt surges $328 billion in single day, surpassing $17 trillion for first time

U.S. debt jumps a record $328 billion — tops $17 trillion for first time

It's Dead Out There, But...

Posted: 21 Oct 2013 11:07 AM PDT

Newsflow is weak to non-existent. S&P futures volume is 40% below average for this time of day; and ranges across all asset classes are low. Is this the calm before tomorrow's jobs report storm or the calm before storming even higher... The S&P 500 tested new all-time highs earlier (just after the US open) but is fading back. The Nasdaq and Trannies are outperforming with a notable drift lower in the almighty Russell (as momo names stutter - ahead of NFLX earnings maybe?). Treasury yields are modestly higher; the USD in unchanged (back from higher earlier); and Oil is down 1.4% from Friday's close. Silver is up 1.5% while gold and copper are unchanged. Thera er two things of note: VIX remains divergent from stocks... and credit markets are not happy.

 

Stocks behaving quietly...

 

As VIX is well bid ahead of tomorrow' potential angst...

 

and commodities are diverging...

 

and credit markets are rather notably not buying what stocks are drinking..

 

Charts: Bloomberg

“The Financial System Was Within Hours Of Absolute Collapse”

Posted: 21 Oct 2013 11:02 AM PDT

Today KWN is pleased to share an incredibly powerful piece which exposes the frightening fact that "the financial system was within hours (and a few phone calls) of an absolute collapse." This masterpiece from 50-year veteran Art Cashin, who is Director of Floor Operations at UBS ($650 billion under management). Not only does Cashin write about how close the system was to complete collapse, but he also describes his firsthand experiences from that frightening moment in time.

This posting includes an audio/video/photo media file: Download Now

ANALYSTS AGREE: Gold Is Poised For A November Rally

Posted: 21 Oct 2013 10:43 AM PDT

21-Oct (BusinessInsider) — Analysts at BofA Merrill Lynch and Morgan Stanley are telling clients that gold is set to rally as Indian festival season gets underway.

…”Indian festival season could provide a lift to gold,” writes Misra in a note. “Traditionally, the Diwali festival (specifically, Dhanteras, the two days before Diwali) is the biggest gold buying period of the year in India. In the last 10 years, gold has risen an average 2.5% in the one month around Diwali.

[source]

China Moves Closer To Ending Dollar Hegemony

Posted: 21 Oct 2013 09:56 AM PDT

The prequel to this commentary summarized the anti-climactic ending of the U.S. Debt-Ceiling Farce, and the fraudulent non-reaction to this circus by the Western financial system in general, and Western credit-rating agencies in particular.

By its own admission; the world's largest economy, with the world's largest debts and largest deficits came within hours of defaulting on payments to its creditors (otherwise known as bankruptcy), and there was essentially no reaction at all from Western credit-rating agencies to this latest exercise in brinksmanship – other than mild applause.

This comes despite the fact that absolutely nothing was resolved in this episode of The Farce, and the exact same parameters have been set up by the Puppets in Washington for an exact repeat of the latest episode, in only three months time. No reaction, that is, in the West.

There was, however, reaction elsewhere in the international financial community. One (as yet) quiet Voice raised a note of discord, in contrast to the usual, expected chorus of "Don't Worry, Be Happy" coming from the Western credit-rating agencies. A Chinese credit-rating agency, Dajong Global Credit Rating immediately cut the U.S.'s credit rating by one notch.

Naturally the (Western) Corporate Media paid minimal attention to this ratings cut, being too busy hyping the fraudulent non-reaction of Western agencies. However, this news out of China is highly significant in two respects.

First of all; the rating cut by Dajong Global did not take the U.S.'s credit rating one notch below the entirely absurd "AAA" rating bestowed upon it by the West's charlatan-agencies. It was a reduction from "A" to "A-", about a half-dozen notches below its lofty perch in the West. Indeed, by the time the Washington Puppets finish staging their repeat of this Farce in January/February; U.S. sovereign debt could have an international credit rating near (or at) "junk" – even if there is no default next time the Puppets play their Russian Roulette.

So first of all we see reality reflected in the credit rating of Dajong Global, and with China's openly/official "centralized economy"; it's widely understood that Dajong Global is speaking with the voice of China's government.

The world's largest debtor, with the world's largest debts shows not the slightest inclination to even reduce its deficits (let alone reduce debt), and now it is displaying increasing and (highly-public) reticence to simply continue making payments on all that debt. Obviously a near-junk rating is the only rational rating for such a debtor.

But there is also a second, even more important facet to this melodrama which correlates to the reality/honesty reflected in the U.S. sovereign credit rating from Dajong Global (and China): increased international legitimacy (and prestige). There is an obvious agenda as Beijing slowly-but-steadily ratchets up the volume of its own international credit ratings (system) – its quest to relace the dollar as global reserve currency with the yuan.

There are three, obvious prerequisites in attempting to execute such a transition:

1) Sufficient economic mass to be able to practically supply/support a monetary base large enough to encompass most international global commerce.

2) Sufficient international financial infrastructure to regulate the flow of this currency into (and around) the global economy in a sound and orderly manner.

3) Perceived legitimacy.

The Daily Market Report

Posted: 21 Oct 2013 09:31 AM PDT

Gold Holding Firm as Taper-Talk Creeps Back to Fore


21-Oct (USAGOLD) — Gold remains narrowly confined. While last week’s post-can-kick gains have been sustained, the yellow metal hasn’t been able to extend higher thus far.

With the latest government shutdown and debt-ceiling crisis already fading into memory — and the next one now months away — talk of Fed tapering is once again creeping back to the fore. However, Fed tapering seems even less likely now than it did back in September.

The Fed has always said that tapering would be based on the economic data. I didn’t see anything in the data leading up to the September FOMC meeting that was remotely sufficient to warrant a taper. The government shutdown took additional wind out of an already flagging economy.

Chicago Fed dove Charles Evans doesn’t believe that an October taper is appropriate for that very reason. This is a sentiment shared by The Wall Street Journal’s FedWatcher Jon Hilsenrath. Additionally, Evans believes a December taper would be difficult because the next U.S. fiscal crisis will be right around the corner at that point.

The fact that Janet Yellen will be taking over as the new Fed chairperson early next year is yet another reason not to taper any time soon. After all, Yellen is arguably more dovish than Ben Bernanke.

Additionally, a Bloomberg article this morning points out that foreign demand for U.S. debt has dropped in recent months to levels not seen since 2001. Demand for Treasuries was negatively impacted by the recent debt ceiling crisis. With another crisis queued up for early-February, foreign demand for bonds is likely to remain tepid.

If foreigners are not buying our debt, who do you suppose will step up to fill the demand void? The answer of course is the Fed. In fact, if foreign demand for Treasuries remains weak and so does the U.S. economy, a Yellen Fed may look to increase QE rather than taper.

We Are Looking At A Frightening End Game

Posted: 21 Oct 2013 09:15 AM PDT

As the world continues to face great uncertainty, today a man who has been involved in the financial markets for 50 years, and whose business partner is billionaire Eric Sprott, told King World News that he believes "one way or another we are looking at a frightening end to all of this." He also discussed strange events taking place in the gold and silver markets, but he particularly focused on a particularly an odd situation in silver. Below is what John Embry had to say in this tremendous interview.

This posting includes an audio/video/photo media file: Download Now

Silver’s Message: The Bull Is Alive and Well

Posted: 21 Oct 2013 09:15 AM PDT

Dear Reader,

I'm off to kick rocks in the snow as you read this, so I'll keep it brief. Bears are goring investors left and right—even some of our most stalwart readers are beginning to have doubts about the outcome of our precious metals speculations. I could write a sort of gold-warrior's St. Crispin's Day speech to counteract this, but I believe that solid data are always a more compelling argument. And BIG GOLD's Jeff Clark has that for us this week, along with an amusing presentation.

I encourage you to give the article below a good read, even if you've grown skeptical yourself—perhaps especially if you've grown skeptical yourself.

Also, if you're in the Boston area, Naples, Florida, or Salt Lake City and are interested in joining the Casey Phyles setting up shop there, please send an email to phyle@caseyresearch.com and we'll connect you.

Sincerely,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats
Last
One Month Ago
One Year Ago
Gold 1,317.40 1,307.70 1,744.70
Silver 21.96 21.51 32.87
Copper 3.27 3.28 3.74
Oil 100.81 107.28 92.53
Gold Producers (GDX) 24.38 28.25 51.52
Gold Junior Stocks (GDXJ) 36.89 47.55 95.76
Silver Stocks (SIL) 12.92 15.18 24.57
TSX (Toronto Stock Exchange) 13.136.09 12,931.40 12,466.12
TSX Venture 950.97 952.79 1,312.34

Silver’s Message: The Bull Is Alive and Well

Jeff Clark, Senior Precious Metals Analyst

Some readers may want to toss a verbal rotten tomato at the second part of that headline, given stubbornly weak metals prices, but let's see if the data we've uncovered below will lower that cocked arm…

As of last Friday, silver is down 26.6% on the year, and down a whopping 55% since its $48.70 high on April 28, 2011. The bear market cycle is now two and a half years old—and no one can say with absolute certainty that the bottom is in.

Sounds like an investment to avoid.

For now, let's ignore the fundamental argument for silver—an alternative currency that, like gold, will sooner or later respond to the historic levels of currency dilution throughout much of the developed world—and consider the behavior of investors. In response to the price drubbing, have they abandoned the silver market? If that were so, it might be a warning sign that we've overstayed our welcome.

Silver on Trial

If I were on trial for claiming the bull market were alive and well, here are some of the exhibits I would present to the court…

Exhibit #1: SLV Holders Defy GLD Sellers

"Your honor, I first present the following chart. Check out the metal holdings of SLV (iShares Silver Trust) vs. GLD (SPDR Gold Trust) year-to-date."

Very curious. SLV is down 28.1% YTD, and was off as much as 39% on June 27. Normally, you'd expect to see significant outflows of metal from the fund in such a downdraft—but that didn't happen, in spite of the exodus that did occur in the major gold ETF, GLD.

To be sure, there are some ownership differences between the two funds. For example, institutional investors comprise roughly 40% of GLD, but only 14% of SLV.

However, if the bull market in precious metals were over, one would think both funds would see massive selling and outflow of metal from the crash in prices. That hasn't happened, and this lack of selling by retail and even institutional investors shows just how confident they are in the long-term prospects for the metal.

Some investors may be buying silver because they believe the economy is improving, since roughly half of silver's use is industrial. But the low fluctuation in fund holdings implies the make-up of investors hasn't shifted that much—i.e., most of the investors that bought earlier for monetary reasons remain invested. If they believed those selling their GLD shares were correct, they'd be selling their silver too. They're not.

Exhibit #2: India Defies Gold Restrictions and Loads Up on Silver

"Your honor, the data coming out of India regarding silver imports demand attention. Here's the picture since 2008."

Through August of this year, India has imported 128.6 million ounces (Moz) of silver, more than double the 61 Moz brought into the country in all of 2012. Put another way, in just eight months, Indians have already imported 16% of the 787 Moz of silver mined globally in 2012.

There are strong reasons to believe the trend will continue…

  • The Diwali festival, one of the most favorable events for purchasing precious metals jewelry and gifts, gets under way in early November
  • A strong monsoon season boosted agricultural harvests this year, increasing disposable incomes

It is thus reasonable to suggest that India will import more than 20% of last year's total worldwide silver production, and that imports will exceed 2008's record year of 161.6 Moz.

It's true that some of the jump in silver demand is a result of the anti-gold steps taken by the Indian government. Their interventions have squeezed supplies and made gold more expensive and more difficult to obtain—and some citizens have naturally turned to silver as a substitute.

It's for this reason that many analysts expect India to continue on this torrid pace of silver imports over the coming years.

Exhibit #3: Bullion Buyers Defy ETF Sellers

"Last, your honor, bullion investors see ongoing concerns about the fiscal and monetary state of many developed countries and in response to weak bullion prices have stepped up their silver purchases."

Here's a chart of the annual sales of American silver Eagles from the US Mint since 2008. The data for 2013 are through October 16.

The US Mint has sold 37.7 million silver Eagles so far this year, an amount that already exceeds all of 2012 by 10%. It's just 7% below 2011's record year, so, like Indian silver imports, we'll almost certainly see a new record by year-end.

Notice also how sales increased in response to the price crash this year. Why would investors buy more metal when the price was halved? Only if they believed there were very strong reasons it would go back up.

The Royal Canadian Mint reported that "year-to-date, we've had record volume for silver Maple Leafs, the greatest we've had in the over 25 years that we've produced them." This is interesting, the spokesperson added, because "the Northern Hemisphere summer is traditionally a slow time for coin and metal sales, but that's not the case this year."

The Verdict

"Your honor, the evidence clearly suggests that the bull market in precious metals is far from over—in spite of the mainstream media ignoring the strong trends underpinning this market. If it were time to exit this industry, we wouldn't see SLV holders refusing to sell, Indians buying record amounts of silver, and retail investors hoarding silver bullion at historic levels.

"As a final piece of evidence, your honor, we even arranged for a generous discount from one of our recommended bullion dealers on silver Maple Leafs—a discount you won't find anywhere else. Just sign up for a risk-free trial subscription to BIG GOLD, and you may be able to pay for your subscription from the savings.

"The silver price has not responded to this undercurrent of activity yet, but the ongoing stampede for silver clearly signals many investors around the world believe there is strong reason to continue buying precious metals."

I look up and see the judge smile. She asks, "What's the name of that dealer, Mr. Clark?"


Gold and Silver HEADLINES

Gold Price Drop Boosts Gold and Silver Coin Sales (Mining.com)

The drop in precious metals prices has spurred coin sales of both gold and silver. A total of 22,000 American gold Eagles were sold halfway through the month of October, hitting a three-month high. Dealers bought 13,000 ounces in September and 11,500 in August. A major US coin dealer told Reuters that business boomed when gold hit a near three-month low a week ago Friday.

As Jeff's article notes, silver coins are even more popular: 1.6 Moz have been sold so far in October and 37.7 Moz since the beginning of the year.

Bullion buyers don't believe this is the time to give up on precious metals—just the opposite, in fact.

Russia's First Gold ETF Lists in Moscow (Reuters)

At a time when most gold ETFs have seen strong outflows, Russia is bringing its first gold-backed ETF to market. The fund has been launched as part of a bid to transform Moscow into an international financial center. The ETF is listed on the Irish Stock Exchange and cross-listed on the Moscow Exchange; it tracks the gold price as calculated using the London daily gold fix. Shares will be available in USD and rubles.

The ETF founders say they expect significant demand for their product, stating "there is a substantial appetite among investors for gold now and going forward."

In spite of the downtrend for gold, Russia is not alone in launching a gold ETF this year. Two new gold ETFs opened in China, and India has made an application as well, though it remains to be seen if it will be approved due to the government's fears of gold demand adding to the country's current account deficit.

But it remains clear that in spite of the precipitous drop in holdings of GLD, interest for gold-backed ETFs is high in "gold-oriented" countries.

Gold Premiums in India Touch Record $100 per Ounce; Soar 150% over the Week (Scrap Monster)

Indian bullion dealers have reported gold premiums in excess of $100 per ounce, a sharp 150% increase compared to $40 premiums charged the previous week. The severe supply shortage caused by the government's import curbs and slowdown in recycled gold have pushed gold premiums to as high as 8% above the London price.

According to local traders, "Demand is strong, but there is no gold." Premiums thus might go even higher, especially considering the Dhanteras and Diwali seasons are about to get under way.


This Week in International Speculator and BIG GOLD—Key Updates for Subscribers

International Speculator

BIG GOLD

De-Crowning The Dollar

Posted: 21 Oct 2013 08:09 AM PDT

The gradual erosion of the U.S. dollar's status as the world's reserve currency has been greatly hastened of late. This is due not only to the perpetual gridlock in D.C., but also our government's inability to articulate a strategy to deal with ... Read More...

U.S. Debt De-Crowning the Dollar

Posted: 21 Oct 2013 07:30 AM PDT

The gradual erosion of the U.S. dollar’s status as the world’s reserve currency has been greatly hastened of late. This is due not only to the perpetual gridlock in D.C., but also our government’s inability to articulate a strategy to deal with the $126 trillion of unfunded liabilities.

Terminating the “American-Made Financial Problem”

Posted: 21 Oct 2013 07:26 AM PDT

You should stock up on gold and silver while you can — in particular, physical precious metals and high-end mining shares.

In the short and medium terms, prices of precious metals will do whatever they do. Up a little, down some and sideways for a while. Day to day, you just never know. The price chart bounces around. But long term? Hold gold. Hold silver.

In fact, today there’s more reason to hold precious metals …

Why buy gold and silver, especially after the sell-down of the past year or so? Start with the fact that Chinese are buying lots of gold. Lots! Here’s the latest chart of Chinese gold imports from Hong Kong, showing strong, steady accumulation over the past two years:

China Gold Holdings By Month 2013

Since September 2011, China imported 2,116 tonnes (metric tons) of gold. So in just two years, China has imported just under the equivalent of the entire gold reserves of France (2,435 tonnes) or Italy (2,451 tonnes).

Or look at it this way. While Western buyers and monetary players disdain gold and sell it — for example, while large Western stakes like SPDR Gold Shares (GLD) are liquidating gold holdings — the Chinese are buying gold, and then some.

Evidently, the People’s Bank of China (PBOC) is making good on its quietly stated long-term goal of creating a gold-backed national currency. That, and China is making all manner of bilateral trade deals with a host of nations, in which nations trade with China using their own national currencies and the Chinese renminbi. This cuts the U.S. dollar out of the cycle.

"The destinies of others are in the hands of a hypocritical nation," meaning the U.S., of course.

So why are the Chinese so eager to buy and import gold? Why make bilateral trade deals? Why don’t the Chinese want to use the dollar? Don’t the Chinese know that yellow metal is just a so-called “barbarous relic” in the eyes of many Western economists and political gurus?

Recently, we had a stunning glimpse of how the highest levels of policymakers think in Beijing. Basically, top echelons in China are worried about the overall security of the U.S. dollar and, by extension, China’s vast holdings of dollar-based assets.

We live in “alarming days,” according to an article this week in Xinhua, China’s absolute news agency of record — in that it represents the views of the ruling Communist Party.

Apparently, the Chinese chose an opportune time to float a trial balloon that we’ve been awaiting for quite some time. Communist Party leadership wants to get a sense of what the world thinks about taking down the U.S. — and the almighty dollar — a few notches. As I said, buy gold and silver. Beat the rush.

Indeed, Xinhua minces no words: “The destinies of others are in the hands of a hypocritical nation,” meaning the U.S., of course. And that’s just the start. There’s more, and it plays out like a barbed-wire back rub.

Chinese editors at Xinhua come down hard on “cyclical stagnation in Washington” over the federal budget. The U.S. government has repeatedly failed to bring spending and debt under control. This has, according to Xinhua, “left many nations’ tremendous dollar assets [China's, certainly] in jeopardy and the international community highly agonized.”

Overall, states Xinhua, the world has an American-made financial problem that must “be terminated.” Wow. When Chinese communists use the word “terminated,” my instinct is to drop what I’m doing and clean my collection of assault rifles. That, and stock up on precious metals like gold, silver and… brass, if you know what I mean.

This China thing is not heading in a good direction for the U.S. Don’t take my word on it. Here are numerous other excerpts to ponder from Xinhua:

“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world.”

*****

“With its seemingly unrivaled [sic] economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.”

*****

“Meanwhile, the U.S. government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks and spying on world leaders.”

*****

“A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing… For starters, all nations need to hew to the basic principles of the international law, including respect for sovereignty and keeping hands off domestic affairs of others.”

*****

“Furthermore, the authority of the United Nations in handling global hot-spot issues has to be recognized. That means no one has the right to wage any form of military action against others without a U.N. mandate.”

*****

“Apart from that, the world’s financial system also has to embrace some substantial reforms.”

*****

“What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant U.S. dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

*****

“Of course, the purpose of promoting these changes is not to completely toss the United States aside, which is also impossible. Rather, it is to encourage Washington to play a much more constructive role in addressing global affairs.”

Note that last item, about not “completely” tossing the U.S. aside. Gee, thanks… I think. Then again, the Chinese have reason to worry about U.S. finances. China is the biggest foreign holder of U.S. Treasury bonds, worth a total of $1.28 trillion, according to public American data.

And note that second-to-last item about “a new international reserve currency” to replace the dollar. Here at Agora Financial we’ve been on that story for many years.

Chinese leaders are uncertain about the monetary security of U.S. bonds, and they fear a massive loss of value over time.

In general, a commentary such as this in Xinhua means that powerful political factions in Beijing — Communist Party and/or military — hold the expressed opinions. Oft-times, a strong Xinhua piece means that the entire Chinese leadership holds the opinion and seeks to determine how it plays out around the world. (The news article has gone viral.)

Looking back, Chinese leadership has never been bashful about criticizing the course and wisdom of U.S. policy. Still, over many years, top Chinese echelons have usually limited severe criticism of the U.S. to lower-level players — academics, midlevel ministers, retired military officers or well-regarded business people.

No senior Chinese agent has ever made a comprehensive, point-by-point refutation of the pillars of U.S. policy, accompanied by the suggestion to rebuild the entire system of global trade and relations between nations. Until now.

This new “official” Chinese commentary — from the top level — utterly deconstructs U.S. policy in ways that go back to the end of the Cold War. Reading between the lines, one can see jabs at U.S. policy as far back as Desert Shield and Desert Storm of 1990 and 1991. Or U.S. intervention in the Balkans, and certainly bombing Serbia in 1999. The Middle East wars of the past decade — to include the Arab Spring coups and Libya takedown — are doubtless in the Chinese cross hairs as well.

U.S. policymakers love to change labels on what they do, from time to time, because it supports the myth that the nation is doing things differently under new presidents with “new ideas,” implemented by new stables of diplomats, generals and admirals. For example, the idea of so-called “nation building” (at the point of a gun, some say) is now labeled “responsibility to protect” (R2P). Either way, in Chinese eyes, it’s just garden-variety old U.S. imperialism.

The Xinhua article criticizes how the U.S. stakes out moral high ground to justify illegal detentions, summary executions by drones and torture of prisoners. At another point, the author claims that the so-called “Pax Americana” is a subterfuge to foment instability, American meddling, wars and worldwide chaos justified by lies. No sugarcoating here.

Also implicit in the article is the idea that Chinese leaders are galled at the uncertainty of return on their trillion dollars and more of U.S. bonds. Apparently, Chinese leaders are uncertain about the monetary security of U.S. bonds, and they fear a massive loss of value over time.

There are several critical items to note here. The Xinhua article is the first in which senior Chinese players have dared go public with a bitter, sharp-edged denunciation of the U.S.-managed international system.

The Xinhua article does not “just” stop there, either. The authors label American policies as destructive moral failures. The article openly calls on other nations across the globe to restructure politics and economics. The next version of global economy will be a dramatic reduction in the role of the U.S. and its dollar as the world reserve medium of exchange and measure of value.

The Chinese are clear that their eventual aim is to topple the U.S. from its position of global leadership in most respects. The rhetoric betrays intense Chinese frustration with the U.S. Things have reached the boiling point. From the Chinese perspective, the U.S. government is toxic for world business, while American military power is unleashed at political whim to promote global instability.

Now what? Well, we wait. Chinese leadership will let the Xinhua article have its day in the sun and then gauge whether other national leaders share these views. Stand by to see a flood of proposals from across the world about alternatives to U.S. hegemony.

We’re looking at tough days ahead for the U.S. position in the world. Here at home, we’re fortunate to have the shale energy revolution going on and a rebirth in technology and manufacturing. But can this counter the chronic mismanagement of the country that comes out of Washington, D.C.? We’ll likely all live long enough to find out.

These are interesting times. Or as Xinhua states, “alarming days.” Meanwhile, buy gold and silver.

That’s all for now. Thanks for reading. Have a good weekend.

Byron W. King
for The Daily Reckoning

Ed. Note: The “alarming days” ahead may not end well. But regardless of how the story progresses, there are ways for you to protect yourself. The Daily Resource Hunter email edition offers readers specific ways to do just that. Sign up for FREE, right here, and find out for yourself.

Original article posted on Daily Resource Hunter

Gold Flat, Silver Jumps as Fed and Physical Demand Back in Focus

Posted: 21 Oct 2013 07:25 AM PDT

The PRICE of gold was unmoved Monday morning in London, trading barely 25c higher at $1317.50 per ounce as European stock markets also halted their rise, holding global equities near 5-year highs. Gold traded in Shanghai today pulled back to $7 per ounce above London benchmarks, with Australian bank ANZ saying trading looked "subdued" as a result.

Indian gold traders struggle to get supplies

Posted: 21 Oct 2013 07:21 AM PDT

21-Oct (Reuters) — Gold importers in India, the world’s biggest buyer of the metal, struggled to get supplies on Monday, paying record premiums just ahead of the peak festival season next month.

[source]

Obamacare: A Parasite Intent on Killing Its Host

Posted: 21 Oct 2013 07:00 AM PDT

As the health care debate rages on, there is one reality that even the proponents of this hostile takeover of health care by government cannot ignore — and that is money. The government simply does not have the money for a new, expansive, public health care plan.

There are limits to how much government can tax before it kills the host.

The country is in a deep recession. The last thing we need is for government to increase and expand taxes to pay for another damaging, wasteful program.

Foreigners are becoming less enthusiastic about buying our debt, and creating another open-ended welfare program when we cannot pay for what is already in place will not help. Champions of socialized medicine want to tax the rich, tax businesses that already cannot afford to provide health plans to employees and tax people who don't want to participate in the government's scheme by buying an approved health care plan. Presumably, all these taxes are to induce compliance. This is not freedom, nor will it improve health care.

There are limits to how much government can tax before it kills the host. Even worse, when government attempts to subsidize prices, it has the net effect of inflating them instead. The economic reality is that you cannot distort natural market pressures without unintended consequences. Market forces would drive prices down. Government meddling negates these pressures, adds regulatory compliance costs and layers of bureaucracy and, in the end, drives prices up.

The nonpartisan CBO estimates that the health care plan will cost almost a trillion dollars over the next 10 years. But government crystal balls always massively underestimate costs. It is not hard to imagine the final cost being two or three times the estimates, even though the estimates are bad enough.

It is still surreal that in a free country, we are talking only about how government should fix health care, rather than why government should fix health care. This should be between doctors and patients. But this has been the discussion since the '60s and the inception of Medicare and Medicaid, when government first began intervening to keep costs down and make sure everyone had access.

The result of Medicaid and Medicare price controls and regulatory burden has been to drive more doctors out of the system — making it more difficult for the poor and the elderly to receive quality care! Seemingly, there are no failed government programs, only underfunded ones. If we refuse to acknowledge common-sense economics, the prescription will always be the same: more government.

Make no mistake, government control and micromanagement of health care will hurt, not help, health care in this country. However, if for a moment, we allowed the assumption that it really would accomplish all they claim, paying for it would still plunge the country into poverty. This solves nothing. The government, like any household struggling with bills to pay, should prioritize its budget.

Our system has certain democratic elements, but… our most important protections are decidedly undemocratic.

If the administration is serious about supporting health care without contributing to our skyrocketing deficits, they should fulfill promises to reduce our overseas commitments and use some of those savings to take care of Americans at home, instead of killing foreigners abroad.

The leadership in Washington persists in a fantasy world of unlimited money to spend on unlimited programs and wars to garner unlimited control. But there is a fast-approaching limit to our ability to borrow, steal and print. Acknowledging this reality is not mean-spirited or cruel. On the contrary, it could be the only thing that saves us from complete and total economic meltdown.

Democracy is majority rule at the expense of the minority. Our system has certain democratic elements, but the Founders never mentioned democracy in the Constitution, the Bill of Rights or the Declaration of Independence. In fact, our most important protections are decidedly undemocratic.

For example, the First Amendment protects free speech. It doesn’t — or shouldn’t — matter if that speech is abhorrent to 51% or even 99% of the people. Speech is not subject to majority approval. Under our republican form of government, the individual, the smallest of minorities, is protected from the mob.

Sadly, the Constitution and its protections are respected less and less as we have quietly allowed our constitutional republic to devolve into a militarist, corporatist social democracy. Laws are broken, quietly changed and ignored when inconvenient to those in power, while others in positions to check and balance do nothing. The protections the Founders put in place are more and more just an illusion.

This is why increasing importance is placed on the beliefs and views of the president. The very narrow limitations on government power are clearly laid out in Article 1, Section 8 of the Constitution. Nowhere is there any reference to being able to force Americans to buy health insurance or face a tax or penalty, for example. Yet this power has been claimed by the executive and astonishingly affirmed by Congress and the Supreme Court.

Because we are a constitutional republic, the mere popularity of a policy should not matter. If it is in clear violation of the limits of government and the people still want it, a constitutional amendment is the only appropriate way to proceed. However, rather than going through this arduous process, the Constitution was, in effect, ignored, and the insurance mandate was allowed anyway.

This demonstrates how there is now a great deal of unhindered flexibility in the Oval Office to impose personal views and preferences on the country, so long as 51% of the people can be convinced to vote a certain way. The other 49%, on the other hand, have much to be angry about and protest under this system. We should not tolerate the fact that we have become a nation ruled by men, their whims and the mood of the day, and not laws.

It cannot be emphasized enough that we are a republic, not a democracy and, as such, we should insist that the framework of the Constitution be respected and boundaries set by law are not crossed by our leaders. These legal limitations on government assure that other men do not impose their will over the individual, but rather, the individual is able to govern himself. When government is restrained, liberty thrives.

Regards,

Ron Paul
for The Daily Reckoning

Ed. Note: In today’s issue of The Daily Reckoning email edition, we offer more insight on the likely effects of Obamacare and the market movements that are likely to result from it. Get the full story by signing up for a FREE subscription to The Daily Reckoning, right here.

[This essay is a compilation of Dr. Paul's writings during his time in Congress.]

Gold: Monitor The Resistance at 1331

Posted: 21 Oct 2013 06:44 AM PDT

Gold's bounce is challenging the resistance at 1331. Another resistance stands at 1354. A further short-term bounce is favoured as long as the initial support at 1304 (intraday low) holds. Another support can be found at 1290 (16/10/2013 high). Read More...

Inflation in Asia will drive demand for gold: HSBC

Posted: 21 Oct 2013 06:40 AM PDT

21-Oct (Times of Oman) — Gold demand across Asia will keep expanding as inflation spurs investment purchases, said HSBC Holdings, estimating that the region’s share of worldwide consumption jumped in the past decade.

Demand for jewellery, bars and coins in India, Greater China, Indonesia and Vietnam increased to about 60 per cent of the global total compared to 35 per cent in 2004, economists including Frederic Neumann wrote in a note yesterday, citing data from the World Gold Council. Bullion is mostly used in the region as a store of value, Neumann wrote.

While gold is heading for its first annual loss since 2000 as the United States recovers and the Federal Reserve weighs tapering stimulus, the slump spurred increased demand among coin and jewellery buyers across Asia. Since 2008, demand for gold in India more than doubled, while consumption in China rose almost 350 per cent, Neumann said. The two countries — India and China are the largest buyers.

“With inflation still elevated in many markets and interest rates not offering adequate compensation, expect Asia’s voracious appetite for gold to persist,” Neumann wrote. “Asia is going for gold. Over recent years, demand has soared.”

[source]

Gold Holds Near Highest in a Week as Investors Weigh Stimulus

Posted: 21 Oct 2013 06:23 AM PDT

21-Oct (Bloomberg) — Gold held near the highest in more than a week in New York as investors weighed speculation the Federal Reserve will delay slowing stimulus. Palladium reached a seven-week high.

Gold surged 3.7 percent last week, the most in two months, as the dollar weakened on speculation that the Fed won't start tapering until 2014. The Fed will delay cutting its bond buying until March, according to the median estimate of 40 economists in an Oct. 17-18 Bloomberg survey. A poll last month forecast the first reduction would be in December.

…"The debacle of the last couple of weeks in the U.S. will have pushed the 'recovery' back a bit and as such, most participants doubt that the Fed will want to begin tapering this year," David Govett, head of precious metals at Marex Spectron Group in London, wrote today in a report. "This should keep a level of support in the precious metals markets."

[source]

China, gold prices & US default threats

Posted: 21 Oct 2013 06:13 AM PDT


by William Engdahl
21-Oct (RT Op-Edge) — In the very days when a deep split in the US Congress threatened a US government debt default, the gold price should normally jump through the roof, yet the opposite was the case. It is worth a closer look why.

Since August 1971, when US President Richard Nixon unilaterally tore up the Bretton Woods Treaty of 1944 and told the world that the Federal Reserve 'gold window' was permanently closed, Wall Street banks and US and City of London financial powers have done everything imaginable to prevent gold from again becoming the basis of trust in a currency.

…the recent buying of gold reserves by several central banks including Russia, Turkey and especially China, are notable. The short-term derivative gold price manipulations by JP Morgan and Goldman Sachs are creating smiles at the Peoples' Bank of China and the Russian Central Bank among other buyers of physical gold. Since 2006 Russia's central bank has increased its gold reserves by 300 percent.

Now, the Chinese central bank has just revealed data showing that China imported 131 gross tons of gold in the month of August, a 146 percent increase compared to a year prior. August was the second highest gold importing month in its history. More impressively, China has imported more than 2,000 tons of gold in the past two years. According to a 2011 cable made public by WikiLeaks, the Peoples' Bank of China is quietly seeking to make the renminbi (the yuan) the new gold-backed reserve currency.

[source]

Gold steadies as post-U.S. shutdown rally peters out

Posted: 21 Oct 2013 05:59 AM PDT

21-Oct (Reuters) — Gold steadied on Monday, struggling to build on its biggest weekly rise in two months, as a rally sparked by expectations that the Federal Reserve will postpone tapering its monetary stimulus programme ran out of steam.

Gold climbed nearly 4 percent last week on expectations the Fed would have to maintain stimulus measures after a two-week government shutdown hurt growth expectations. But strong gains in other assets have dampened gold’s appeal to investors, while physical demand remains lacklustre.

…”The move last week was largely driven by short covering and renewed dollar weakness,” VTB Capital analyst Andrey Kryuchenkov said, adding “Buying had already dried up with little follow-through investment.”

[source]

Gold steady at 1316.62 (+0.50). Silver 22.15 (+0.27). Dollar better. Euro lower. Stocks called better. US 10yr 2.59% (+1 bp).

Posted: 21 Oct 2013 05:55 AM PDT

Gold Prices "Mildly Bullish" on Charts as Focus Turns to Fed Tapering & Physical Demand

Posted: 21 Oct 2013 05:03 AM PDT

GOLD PRICES were unmoved Monday morning in London, trading barely 25c higher at $1317.50 per ounce as European stock markets also halted their rise, holding global equities near 5-year highs.
 
Gold prices in Shanghai today pulled back to $7 per ounce above London benchmarks, with Australian bank ANZ saying trading will "likely be subdued" as a result.
 
Imports of silver bullion to China meantime fell 5.5% in September from August to 243 tonnes, new data showed.
 
That was 13.9% lower from September last year, says Reuters.
 
With the US debt ceiling resolved until January, says Jonathan Butler at Japanese trading conglomerate Mitsubishi, "Attention [in gold prices] should return to the strength of the US economy, Fed tapering (now less likely to start this year, in our view) and physical demand.
 
"On a technical level, last week's moves point to a mildly bullish outlook."
 
Calling last week's action in gold prices "a bullish engulfing pattern," the latest chart analysis from Scotiabank says it offers "an encouraging sign that the bear channel of the past 2 months may be about to turn, though it is still early."
 
The US Dollar stemmed its response to last week's 3-month fix to the US debt ceiling, finding a floor against the Euro at $1.3675.
 
US jobs data in the Non-Farm Payrolls report – seen as key for the Federal Reserve's monetary policy – will now be released Tuesday after being delayed by the debt-ceiling shutdown in Washington.
 
Weekly data on gold and silver positioning in the US futures market remain delayed, meantime, as regulator the CFTC re-opened with other government departments.
 
Like gold, US debt prices also capped their rise early Monday, holding 10-year US Treasury bond yields at a 9-week low of 2.58%.
 
That compares to the two-year high of 3.00% reached in mid-September.
 
"[The debt ceiling deal] may not be clean and neat," Bloomberg today quotes Kit Juckes, global strategist at French investment bank Societe Generale, "but there's still perception out there that Treasuries are risk-free."
 
"The hard truth for China," says Li Jie, head of foreign reserves research at the Central University of Finance & Economics in Beijing, "is that there's no alternative to US Treasuries."
 
Despite trimming $95 billion off their total $4 trillion position in US debt since July, foreign central banks know that "whatever happens, undertaking a massive selloff of US bonds is not an option," says Li. 
 
In contrast to gold prices on Monday, silver rose sharply, adding 1.7% to near 2-week highs at $22.29 per ounce.
 
Platinum meantime rose to 4-week highs, extending its spread above gold prices to a two-month high of $120 per ounce.
 
Palladium recorded its best AM London Fix since the end of August.
 
"We maintain our fairly pessimistic outlook for gold," says a note from US investment bank Morgan Stanley, "as we believe gold prices have fully factored in a turn in the US interest rate cycle.
 
"Gold's tepid response to the recent positive events confirms our view that tapering [of the Fed's quantitative easing] has been postponed, not cancelled, and is expected by year-end."
 
Saying that gold prices have "run out of steam", analysis from Baclays Capital in London adds that "More worrisome has been the lack of physical demand support amid the seasonally strong period for consumption in India, making the floor for prices fragile."

The Fundamentals of the Silver Market

Posted: 21 Oct 2013 02:48 AM PDT

Brett Chattz writes: All that Glitters is not Gold, it may be Silver! The global financial crisis that began around 2008 sent investors into a tailspin. As the value of stocks plummeted, so the urgency to seek investment safe havens grew. The ongoing volatility in global financial markets is a natural catalyst for alternative investments such as precious metals. Among the most well-known precious metals is gold. However, silver is not to be underestimated in any way. As traders seek to limit their losses and grow their net worth, alternative investments in precious metals become more attractive. Not only do these types of investments add variety and depth to a portfolio, they also act as safe havens against rising economic uncertainty. The silver market is one of the most heavily traded markets in the world, and the relative stability of this market is well noted.

U.S. Dollar Diamond Top Pattern Implications for Gold and Silver and Mining Stocks

Posted: 21 Oct 2013 01:30 AM PDT

In this Weekend Report I would like to show you some charts as to why I have made an abrupt short term move out of our short positions in the precious metals complex. I know some of you think I have lost my mind but I can assure you that isn't the case. Regardless if I'm bullish or bearish I'm always looking at both sides of the market looking for clues for either direction. This week we got a major clue when the US dollar finally finished its third backtest to the bottom rail of the 11 point diamond top. It's possible that gold and US dollar can trade in the same direction for awhile but I don't think that will be the case longer term. So lets look at some charts for the US dollar first as that's where the biggest clues lie.

Three Essentials to Look for in Junior Mining Equities: Derek Macpherson

Posted: 21 Oct 2013 01:00 AM PDT

Underappreciated companies and companies with management teams that have disappointed in the past can be opportunities to buy, not sell, says Derek Macpherson of M Partners. Don't be dazzled by flashy drill results, he advises. In this interview with The Gold Report, Macpherson says that investors are better to look for junior explorers with long-term vision, high grades and simple operations in good jurisdictions, and names eight companies that make the grade.

Three Essentials to Look for in Junior Mining Equities: Derek Macpherson

Posted: 21 Oct 2013 01:00 AM PDT

Underappreciated companies and companies with management teams that have disappointed in the past can be opportunities to buy, not sell, says Derek Macpherson of M Partners. Don't be dazzled by flashy drill results, he advises. In this interview with The Gold Report, Macpherson says that investors are better to look for junior explorers with long-term vision, high grades and simple operations in good jurisdictions, and names eight companies that make the grade.

Gold price in a range of currencies since December 1978 XLS version

Posted: 21 Oct 2013 12:54 AM PDT

Excel file of gold price charts and data - Updated weekly in 19 curriences: US dollar, Euro, Japanese yen, Pound sterling, Canadian dollar, Swiss franc, Indian rupee, Chinese renmimbi, Turkish lira, Saudi riyal, Indonesian rupiah, UAE dirham, Thai baht, Vietnamese dong, Egyptian pound, Korean won, Russian ruble, South African rand, Australian dollar

Precious Metals – Week of 10.20.13

Posted: 20 Oct 2013 09:15 AM PDT

China's London-Zurich-Hong Kong Gold Conduit — a Major Financial Coup D'etat
USA Gold | 18 October 2013
The United Kingdom's gold exports to Switzerland jumped from 85 tonnes to 1,016 tonnes…

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