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Tuesday, January 14, 2014

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846m @ 0.39% Cu and 0.24 g/t Au - Solgold, Cornerstone drilling in Ecuador

Posted: 14 Jan 2014 06:52 PM PST

Solgold reports a long copper-gold intercept from Ecuador in an ongoing drillhole.

Silver coin premiums to climb as US Mint supplies ease

Posted: 14 Jan 2014 03:27 PM PST

Increasing demand for US silver coins is poised to send premiums to the highest since October even as banks predict more declines in futures.

Can't-miss headlines: Gold pulls back, BC area play drilling & more

Posted: 14 Jan 2014 02:18 PM PST

The latest morning headlines, top junior developments and metal price movements. Today the gold price pulls back after strong gains yesterday and Revolver area-play drilling produces first hole.

Are gold and silver prices ‘manipulated’, or not?

Posted: 14 Jan 2014 12:31 PM PST

It is unlikely that gold and silver prices are not 'manipulated', given that every other market is – but the question really is whether governments and central banks are part of the process, or not.

Fundamentals For Owning Physical Gold & Silver Have Only Increased!

Posted: 14 Jan 2014 12:30 PM PST

Fundamentals For Owning Physical Gold & Silver Have Only Increased!

Here is some very cogent rationale for owning gold and silver.  None pertain to the ever-ending reasons that demonstrate great demand.  Everyone has been hearing about them in a steady stream for the past year, and the impact on the market has been nil.  Often in tandem with the latest news, like record coin sales from…[pick a [...]

The post Fundamentals For Owning Physical Gold & Silver Have Only Increased! appeared first on Silver Doctors.

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  1. The Screaming Fundamentals for Owning Gold and Silver
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  3. Do Gold & Silver’s Fundamentals Matter?

Mercenary Links Jan 14th: Housing Bubble Eh

Posted: 14 Jan 2014 12:26 PM PST


Mercenary Links Jan 14th: Canada’s housing bubble threatens economy… investors’ hedge fund exodus… Google buys Nest for $3.2 billion… the Ukrainian Bitcoin takeover plot, what makes a football player smart, and more.

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Recent Mercenary Links (scroll for archives)




p.s. Like this article? For more, visit our Knowledge Center!

p.p.s. If you haven't already, check out the Strategic Intelligence Report!

Gold investors should bank on balance sheets - Lin

Posted: 14 Jan 2014 12:04 PM PST

Companies that can generate cash flow and acquire assets at fire sale prices today will likely be the winners in the next wave in gold, explains Chen Lin in a Gold Report interview.

Gold, silver mining shares and the economic mess ahead

Posted: 14 Jan 2014 11:47 AM PST

The availability of real money (gold and silver) is going to be curtailed dramatically in the future by a slow down in mine supply, suggests Kenneth J. Gerbino.

And... the next Day

Posted: 14 Jan 2014 11:43 AM PST

Here we go again - another day of yo-yo action from the day before...yesterday the sky was falling as Goldman noted stocks were expensive. Today... everything is okay once again and all is well with the world. I had the feeling that we were going to see another one of those bear traps in the equity markets. It basically boils down to the fact that if you have any profits from playing the S&P from the short side on a daily trade, TAKE THEM, while you can because the perma bulls are simply not going to stop buying every single dip. Why not? They keep getting rewarded for doing. Pavlovian? YEP!

With that, those safe haven trades that were scurried into yesterday... well, they are yesterday's news. As Yoda might say; "No longer needed, are they".

Down went the Japanese Yen and down went the bonds and up went interest rates. The Dollar ticked higher and with the combination of all the above, plus the more important fact that gold failed precisely at the bottom of the resistance zone noted on the chart, down went the yellow metal. Traders who had been long and played the short term recovery, wasted no time in bailing out once they realized that the market was not going any higher.

While the market has retreated from its first try at that very tough overhead resistance level, it is holding support near $1,244 - $1,240. I am noting that volume has picked up as the price has retreated whereas yesterday it was comatose in the gold pit.


If this support level gives way, I am most anxious to see how the metal reacts as it nears $1,225 - $1,220 again. If it bounces up and away from that, it would be constructive and would tend to confirm that recent bottom. If nothing else, it would at least set up a range trade for the short term with the big specs probably bidding it up to see if they can recapture $1240 - $1244.

I am unclear on what the next move or direction will be at this juncture. My position is very small consequently as I think any trader who wants to bet the farm on gold's next move is masochistic. You have to respect the larger term trend and that remains lower with the bears still holding the edge in this market but bulls are trying to flex their muscles.

Asian demand had better hold firm. I am going to be watching closely to Chinese demand once buyers have secured their inventories ahead of the Chinese New Year festivities. That demand has been strong but it was also very price sensitive. My concern is that once the festival buying is over, value based buyers are not going to be in a hurry to chase prices higher but will rather wait to see how sales were and whether or not to restock immediately or wait a bit for prices to recede.

It is unfortunate for the friends of gold that the gold mining shares are sinking once again, in spite of the stronger equity markets. GG is getting hurt by that takeover bid of theirs. I hope the hell they know what they are doing. Management in this gold sector scares the hell out of me.

Is now the time to ‘Back Up The Truck’?

Posted: 14 Jan 2014 11:41 AM PST

This article is a guest post from Peter Degraaf, with over 50 years of investing experience.

According to a famous trader of the past, W. D. Gann: "Time is more important (in markets), than price; when time is up, price will reverse."

It has now been 29 months since gold last reached a new high in its current bull market cycle. The downtrend lasted 22 months (top to bottom), having bottomed on June 28th 2013 at $1180. Confirmation of the bottom came on Dec 31 when gold briefly touched $1182, and left behind a double bottom, see chart #3.

There have been two other corrections that lasted 6 months or more, from top to bottom: In 2006 gold declined for 6 months, and in 2008 the pullback took 8 months to bottom.

Thus a 22 month down-cycle qualifies under the Gann definition as 'time is up'.

There have been 4 pullbacks of 16% or more since gold began its current bull market run in 2002.

In 2003 price dropped 16%;   in 2006 – 23%; in 2008 – 30% while the correction that began on Sept 7th 2011 and ended June 28th 2013 caused a decline of 38.5%.

This number is close enough to be a Fibonacci retracement (technically at 38.2%), to have run its course.    For some reason, the higher the price, the deeper is the eventual pullback.  By extrapolating these numbers, the next major correction could very well cause a 50% price reduction.  Possible numbers could be from a top at $3,850 down to support at $1,925.   That scenario is a few years down the road.

*Charts courtesy Stockcharts.com unless indicated.

gold price chart daily 2004 2013 investing

Featured is the weekly gold chart.  Despite the 22 month long decline (from top to bottom), the bull market is intact.  The short-term double bottom (June to December), is receiving positive confirmation from the supporting indicators.

gold US real rates 2000 2013 investing

This chart courtesy Bloomberg and the Tocqueville Letter, shows the US Real Interest Rate (TBIL – CPI), remains negative, even while the CPI understates inflation. Negative real rates provide energy for a gold price bull market.

gold price daily in 2013 investing

Featured is the daily bar chart for gold bullion.  The green arrows point to identical 'upside reversals'.  The first one came at $1180 and the second one at $1182 (see green arrows).  A double bottom does not come much better than that!  The blue arrow shows a breakout from a bullish falling wedge.  The supporting indicators are positive, including the all-important Accumulation/Distribution line at the bottom.  A breakout at the black arrow will confirm the double bottom formation and this in turn will cause a lot of bears to become bulls.

gold shanghai withdrawn 2009 2013 investing

This chart courtesy @KoosJansen shows the amount of physical gold withdrawn from the Shanghai Exchange (red bars), compared to the total amount of gold produced worldwide (yellow background). During a number of months in 2013 the Chinese bought every ounce that the mines of the world were producing.

COMEX gold 2010 2013 investing

This chart courtesy 24hgold.com shows the number of ounces of gold at the COMEX available for delivery, has dwindled to 416.56 thousand.  When this number nears zero, the COMEX will declare 'force majeure', and a number of traders who thought they owned gold bullion will have to settle for pieces of paper.

"But then, finally, the masses wake up.  They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The Crack- Up-Boom appears. Everybody is anxious to swap their money against “real” goods, whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them." by Ludwig von Mises.

market cap Gold vs financial assets 1934 2013 investing

This chart courtesy sources listed, shows the percentage of Total US Financial Assets that are concentrated on Gold at present, as compared to the times when the gold price peaked.

royal gold share price 2013 investing

Featured is the daily bar chart for Royal Gold.  It trades on the NASDAQ under RGLD, and on the TSX under RGL.TO.  Many traders and investors consider this stock to be a bellwether for the gold mining sector.  Since carving out a secondary, (ABC) bottom in December, there have already been a number of upside breakouts.  The supporting indicators are positive.  The next breakout, at the blue arrow, will set up a target at the green arrow.  RGL is setting a positive example for the rest of the gold mining industry.

silver to gold ratio 2013 investing

Featured is the index that compares silver to gold. The trend has favored silver since August. The supporting indicators are slowly turning positive again. A breakout at the blue arrow will set up rally similar to the one that started at the green arrow. This will be bullish for both metals but especially for gold.

people not labor force 2013 investing

This chart courtesy Zerohedge.com shows the number of people not in the Labor Force has reached an all-time high of 91.8 million. (Macy’s just announced that they are closing 5 stores and laying off 2,500 workers).

If the people who have given up looking for work were included with the BLS unemployment statistics, the unemployment rate would be at least 11.5%. FED chief Janet Yellen has expressed concern for the unemployed in some of her speeches.  The expectation is that she will opt for more QE rather than less, as her way of 'solving this problem'.  More QE represent more monetary inflation.  Gold and silver will benefit.

 

About the author: Peter Degraaf has over 50 years of investing experience.  He publishes a daily market letter for his many subscribers.  For a sample copy of a recent issue, send him an E-mail, or visit his website www.pdegraaf.com

Disclaimer:  Investing involves risk.  Please do your own due diligence.  Peter Degraaf is not responsible for your trading decisions.

Hostage Of Uncertain Mining Regulations. Medusa Mining

Posted: 14 Jan 2014 11:06 AM PST

The Nut Shell

Medusa Mining (OTC:MDSMF) is one of the lowest cost gold producers operating the underground Co-O mine in the Philippines. The company's share price has been lagging its peers as shown in the chart below despite the favourable economics of its asset. We believe that the reasons for this lag are twofold:

  1. the ongoing mine expansion has been hampered and delayed by various obstacles;
  2. mining legislation in the Philippines is in limbo and investors finding it hard to gauge the country risk exposure in the current state of uncertainty.

In the present article we will concentrate on these two points before summarizing the favourable metrics of Medusa's assets. The combination of these data points will lead to our investment thesis which is best summarized by stating our sentiment as "cautiously, yet curiously, watching from the sidelines".

N.B. Medusa's primary listing is in Australia. In order to

Silver on the threshold of moving out of medium term bearish trend

Posted: 14 Jan 2014 11:02 AM PST

Commodity Trader

The Number Of Working Age Americans Without A Job Has Risen By Almost 10 Million Under Obama

Posted: 14 Jan 2014 11:00 AM PST

The Number Of Working Age Americans Without A Job Has Risen By Almost 10 Million Under Obama

That headline is not a misprint.  The number of working age Americans that do not have a job has increased by nearly 10 million since Barack Obama first entered the White House.  In January 2009, the number of “officially unemployed” workers plus the number of Americans “not in the labor force” was sitting at a [...]

The post The Number Of Working Age Americans Without A Job Has Risen By Almost 10 Million Under Obama appeared first on Silver Doctors.

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  3. 33 Shocking Facts Which Show How Badly The Economy Has Tanked Since Obama Became President

Sold Out

Posted: 14 Jan 2014 11:00 AM PST

When you go to a store and see a sign that says “sold out,” what goes through your mind?  Something like “that must be a popular product or the price must have been too low?”  If it is a product that you need or really wanted you might even think “I should have bought it while I had the chance.”  You might even ponder deeper in thought and think to yourself what a great business it would be if you were making the product that “sold out.”

People in Russia, Argentina and recently Venezuela are familiar with the sign “sold out.”  Their governments decided to put in price controls that priced products below the true market price and in many cases below the cost of production…”sold out” was the immediate result.  Currently in Venezuela many products hit the shelves (or don’t even reach the shelves) …and they’re gone.  In fact, many products that are produced in Venezuela get bought and immediately smuggled across the border to Columbia in a form of arbitrage.  Goods that are produced and then “forced” to be sold below production costs will always be snapped up and hoarded, this is Mother Nature’s way.

OK so you know where I was going with this.  Gold and particularly silver are and have been for the last 8-9 months below the all in cost of production.  Their pricing structures are the reason why demand all over the world (particularly Asia) has expanded.  Since Jan. 1st, less than 2 weeks, we have already heard from the Perth mint and the Royal Canadian mint that various product have “sold out.”  The U.S. mint which shut down sales of Silver Eagles on Dec. 9th has already gone to “allocation” because 89% of what was produced for January has been sold.  Last year 43 million ounces were sold and over 3.2 million ounces in just the first 10 days of January.  They also announced that wholesale premiums may rise another 3% to 17%.  This is simply Mother Nature at work.

Are buyers gobbling up the supply because they know that they are being produced below the cost of production?  Maybe by some (the analytical types) but Mother Nature works much more broadly than this.  People see and feel inflation.  They know that money supplies have blown out and also know that debt levels are unsound, unstable and unsustainable.  In short, people either outright know, subconsciously know or innately know that “something’s not quite right.”  This is the “draw,” human nature if you will that has created the global demand for precious metals that we see.

I have written many times before regarding the “lack of supply” that should never be seen after such huge selloffs in gold and silver.  If it was real “holdable” metal that was sold then there should be plenty of it around right?  The fact that there is not is the “tell.”  The tell being that “price controls” have been implemented.  Price controls are a tool (that doesn’t work) that governments try to use to halt price increases.  They do this openly and publicly which of course ultimately leads to shortages.  In the case of silver and gold, these “price controls” have been implemented “secretly” and with the stamp of approval by the various regulatory agencies.

But we haven’t seen the signs “sold out” yet? …”Yet” being the operative word.  “Yet” because unlike toilet paper, rice and beans or beef, gold and silver had been hoarded for 100′s of years and “official stockpiles” exist, I do not know of any huge toilet paper stockpiles.  The point here is that most production has gone to “just in time inventory” to save on the cost to carry this inventory whereas central banks have (had) large stockpiles compared to “flow” (supply and demand).

Let me finish with a few questions.  If there was no toilet paper to be had, what would a roll be worth?  How much would you pay for a roll?  Would you pay $5 for a roll even if the government said that its price was 25 cents?  If someone had a roll for sale would you demand that they sell it for the “official price” of 25 cents?  What if they told you that their price just went up to $6?  Or more?  The answer is that if you really really want it you will pay whatever asking price the person who actually has it wants.  In a nutshell this is where the precious metals market will go to.  “Price controls” are already creating shortages and even some spotty “sold out” signs from various mints.  When the house of cards (that our global financial markets are) collapses, what will your ounce of gold or silver be worth?  When global fiat currencies are seen to be worthless what will gold and silver be worth?  Mother Nature’s market of true supply and demand will decide this, not some ill thought out government edict.Similar Posts:

TECHNICAL - R.J. OBriens Toth: $1,267.50 Pivotal Upside Level For Gold; $1,217.70 Key Support

Posted: 14 Jan 2014 10:55 AM PST

kitco

USD/CAD - U.S. Dollar Pushes Above 1.09 After Mixed U.S. Retail Sales Data

Posted: 14 Jan 2014 10:50 AM PST

By Kenny Fisher

The Canadian dollar continues to lose ground, as USD/CAD crossed above the 1.09 line in Tuesday trading. The currency has lost close to 300 points in January, and is trading at its lowest level against the US dollar since October 2009. In economic news, US Retail Sales dropped in December, while Core Retail Sales improved and beat the estimate. There are no Canadian releases on Tuesday.

The Bank of Canada released its quarterly Business Outlook Survey on Monday, and the report showed that Canadian businesses were more optimistic in Q4 about investment and hiring compared to Q3. At the same time, companies dealing with the domestic market were less confident than those that rely on the global economy, which has shown improvement. Meanwhile, Canadian employment numbers looked awful last week, as Employment Change tumbled to -45.9 thousand, erasing a strong gain of 21.6 thousand a month

Gold, UK Inflation & Mark "Miracle" Carney

Posted: 14 Jan 2014 10:03 AM PST

Gold in Sterling rightly sank in 2013. But can Mark Carney walk on water...?
 
INFLATION in the UK ended 2013 at a four-year low of 2.0% on the official CPI measure, writes Adrian Ash at BullionVault.
 
Gold priced in British Pounds meantime had a worse year than even gold in Dollars. Falling near 4-year lows as 2013 gasped its last on New Year's Eve, gold priced in Sterling dropped nearly 30% from 12 months before.
 
Inflation matters, of course. And with 2013 costing UK gold investors 32% all told, only two years come close, as our Annual Asset Performance Table shows...
  • 1981 saw the GBP gold price drop 28% in real terms, after you account for inflation;
  • 1975 saw gold priced in Pounds do even worse, losing 38% of its real value.
So which did poor British gold investors suffer in 2013 – a repeat of 1975's way-station in a long bull market? Or a crashing end to gold's bull run, just like 1981 marked the start of a 20-year bear market?
 
The answer lies, we think today, in three variables. First, the UK and other Western stock markets. The FT-30 leapt in 1975, more spectacularly than even 2013, giving investment capital a much more exciting home than boring old gold. Second, the rate of inflation. But third, only when inflation is judged against interest rates. Meaning the return on cash (and bonds) after you account for inflation.
 
This real rate of interest pointed higher in 1981, dragging real returns to UK bank accounts and gilt-holders further away from the mid-70s' floor. It has pointed higher since the Sterling price of gold peaked in late-summer 2011 as well.
 
We have written many times on the impact of real interest rates on gold prices. But it wasn't until 2013 that we figured out how the direction of real rates affects gold prices, not the absolute level. You can see the inverse relationship, most especially at key turning points, on the chart of real gold vs. real rates above.
 
Now, real interest rates edged higher in 2013, albeit not enough to make any difference to the miserable returns to cash being paid to UK savers. The stock market also rose. In the face of these two improving competitors, gold crumpled.
 
The outlook for gold, inflation and UK shares from here? Your newspaper was no doubt filled with pundits (and stock brokers) sharing their view on equities as 2014 began. But for interest rates, and with the Bank of England's nominal rate held at 0.5% since the start of 2009, it's becoming plain that "the only way is up." Thing is, UK inflation is also near its floor of the last 20 years (and barely one-third its 4-decade average in fact). So irony, if not history, says there's a very real risk the cost of living will rise sharply as well, if not first and faster.
 
Meantime, and with a record-high peacetime national debt still to service, the UK government needs the Bank of England to repeat the blinding game it played in 2013. We doubt it's possible, George Clooney in charge or otherwise.
 
As an import-heavy economy (whose trade deficit remains entirely unfixed), a good deal of the UK's inflation comes via the Pound's exchange-rate value. The Pound rose in 2013, buoyed by expectations that improving GDP growth (led by retail spending, not capital investment, again unfixed) will force the Bank of England to raise interest rates sooner than later.
 
Maybe, maybe. But teasing the forex market into buying the Pound whilst deterring the gilt market from selling off on the same expectation of higher interest rates will prove a big ask. Pulling off that gambit for more than six months, Mark Carney would next be walking on water. Which is just what his annunciation by the British press suggested when he started in June 2013. But if interest rates don't rise (and the Bank of England's forward guidance says they won't), then the 2013 rally in Sterling might well keel over one or two US cents north of here.
 
Weak rates and rising inflation? UK investors and savers might want to revisit the late 1970s for a glimpse at what those factors meant for the Pound, government debt, and for gold.

Coin shortage and rationing: A Possible threat to gold buyers!

Posted: 14 Jan 2014 09:36 AM PST

Caught by a number of factors, the global minting industry is experiencing coin shortage crisis together with the possible threat of rationing. The Central Bank of India in 2013 had imposed various restrictions and norms over the gold import and trading which had considerably hindered gold purchases in the country.

USDA Moves Forward With GMO Corn/Soy Seeds That Resist Agent Orange!

Posted: 14 Jan 2014 09:30 AM PST

USDA Moves Forward With GMO Corn/Soy Seeds That Resist Agent Orange!

Doc’s note: Eating only 100% organic food may soon be an absolute necessity as the USDA moves forward on introducing GMO corn and soybean seeds resistant to 2,4-D, the extremely toxic chemical used in Agent Orange. The commercial use of new herbicide-resistant, genetically modified corn and soybean seeds moved one step closer to reality on [...]

The post USDA Moves Forward With GMO Corn/Soy Seeds That Resist Agent Orange! appeared first on Silver Doctors.

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Get your gold coins while you can, U.S. mint sees strong sales

Posted: 14 Jan 2014 09:10 AM PST

Coin demand remains strong, the U.S. Mint yesterday reported coin sales of 63,000 ounces, 9,000 more than sold in December 2013. Similar demand has been seen here at the Royal Mint where 'exceptional demand' has run stocks of the 2014 Sovereign gold coins dry.

Lawrence Williams: The power of gold and currency market manipulation is moving East

Posted: 14 Jan 2014 09:03 AM PST

GATA

The Bulls Are Close To Gaining Control of the Market

Posted: 14 Jan 2014 09:00 AM PST

There is an article in the Featured Articles section below by Larry Edelson titled Why Rising Rates Will Be Good for Your Investments.  He is now looking for gold to bottom around $1000 in May.

Edelson has been waffling on his timing since last fall.  It was November, then January and now May.  Actually, the reason his yardstick is changing is because gold hasn't hit "his" bottom yet.  He won't relent until gold falls to around $1000.  On that, he is consistent.  Will he be proven right?  Don't know, but he isn't alone in predicting $1000 for gold – before it explodes by thousands of dollars.

What would stand in the way of Larry being wrong?  A black swan event.  Inability to deliver the required amount of physical gold to India and especially China.

Can these events be ruled out? No they can't.  That's why waiting on a hypothetical bottom when the prediction also calls for $5000 or $10000 gold is also part of the same predictions.  Don't bottom fish.  It's a winning trade at the current level, or lower.

I am a big fan of Ted Butler.  Ted indicts JPMorgan as the force behind the manipulation of silver (and gold).  He is angry that they make billions while working outside the (commodity) law.  There is no question that they control the markets.  Their positions are so large that they set the price.

But hey, they do illegal things in virtually every market and are constantly being fined for their illegal manipulative actions, so this is nothing new.  Just more blatant – but as long as they can get away with it, they will.

If you want to be angry, be angry at the regulators who are NOT doing the job they were paid (by us) to do.  All of the Wall Street money center banks push the envelope in the name of profit.  If they can get away with it, do it and do it well.  That is their mantra.  So we should simply face the fact that naked-shorting, front-running and painting-the-tape are a fact of life in the gold and silver arena.

The only pressure we can count on comes not from the CFTC but from the Peoples Republic of China.  It comes in the form of the dollars-for-physical gold trade.  The paper manipulation will (be allowed to) continue until there is not enough physical gold to send to Asia.

But there is an awful lot of gold out there, so how can we run out of gold to send to Asia?  We can't.  It's just a matter of price.  How many dollars will it take for the owners to part with it and send it to China?  Since the demand now far exceeds the annual supply, this is bound to happen.  The normal excess supply, in London, the Comex and GLD is running very low.  Once those sources of supply are exhausted (soon, I expect), the only thing that will draw out enough gold to satisfy Asian demand will be MUCH higher prices.

They may be able to push gold and silver a bit lower, but the unintended consequence is lower prices equals higher demand.  Checkmate!

I can't see how these low prices can continue much longer.  The only question is will the move up be gradual and linear or explosive.  I'm betting the later – especially because there is a huge short position that has to be covered and that adds fuel to the fire.  It should be something to see, better yet as a holder of gold and silver so the fireworks are not merely intellectual, but financial.

At the close on Monday, both gold and silver closed up against their 50-day moving averages, a key indicator that most traders watch closely. Gold hasn’t crossed that line since late October, and even then, it only managed to hold its gains for five days before succumbing to another bout of selling.

The bulls are close to gaining control of the market but they’re not there yet.

Doug Davenport (Money and Markets) and Ed Steer both discuss the importance of gold and its 50-day moving average charts in the Featured Articles Section that follows.  Both gold and silver were down (as usual) coming into NY but by 8:00 A.M., both gold and silver are still above their key 50-day moving average. I will be interested to see if they both can finish today above the MA.Similar Posts:

Silver coin premiums set to climb on reduced supply

Posted: 14 Jan 2014 09:00 AM PST

The premium charged by wholesale dealers for American Eagle coins from the U.S. Mint may rise from 14%. The mint has said that weekly allocations will be reduced despite very strong demand so far this month.

Thompson Creek moly output up 34%, sales by 27%

Posted: 14 Jan 2014 08:05 AM PST

Thompson Creek Metals' Mt. Milligan operation in British Columbia expects its second production of gold and copper concentrates to ship later this month.

Anatomy of an MSM Hit Piece

Posted: 14 Jan 2014 07:45 AM PST

Anatomy of an MSM Hit Piece

So I logged-on to the Yahoo finance page the other day and I came across a main page headline that was a genuinely perfect specimen.  No, it wasn't the "Eight Hottest NFL Wives" or "Superfood that boosts your sex drive" that caught my eye.  The headline I read, carefully placed in the dead-center of the [...]

The post Anatomy of an MSM Hit Piece appeared first on Silver Doctors.

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Genetically Modified Currencies: A Bumper Crop

Posted: 14 Jan 2014 07:00 AM PST

Andy Hoffman joins Kerry Lutz of the Financial Survival Network  to discuss that gold and silver break through their cartel imposed limits, Venezuela, Greece and other stock exchanges hyperinflate, Obamacare, inflation and the COMEX.  To download the audio, please click on the link below:

Andrew Hoffman – Genetically Modified Currencies: A Bumper Crop

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Doc’s Deal: 2014 Silver Eagles As Low As $2.99 Over Spot!

Posted: 14 Jan 2014 06:35 AM PST

Doc's Deal: 2014 Silver Eagles As Low As $2.99 Over Spot!

Wholesale Pricing at SDBullion- 1 Day Only!! 2014 Silver Eagles As Low As $2.99 Over Spot! Click or call 614-300-1094 to place your order!

The post Doc’s Deal: 2014 Silver Eagles As Low As $2.99 Over Spot! appeared first on Silver Doctors.

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Why Gold Can Never Be In A Bubble

Posted: 14 Jan 2014 06:33 AM PST

Perth Mint

Perth Mint: Gold Coin And Bar Shortages Likely To Lead To Rationing

Posted: 14 Jan 2014 06:00 AM PST

Perth Mint: Gold Coin And Bar Shortages Likely To Lead To Rationing

The extraordinary demand for precious metals coins following the 2008 global financial crisis caught the minting industry by surprise, resulting in never before seen coin rationing and shortages. It seems not much has changed, with recent reports that the UK Royal Mint ran out of 2014 Sovereign gold coins due to “exceptional demand”, as well [...]

The post Perth Mint: Gold Coin And Bar Shortages Likely To Lead To Rationing appeared first on Silver Doctors.

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  3. Silver Down 36% In 2013 Despite “Skyrocketing Demand” – Perth Mint Sales Surge 41%

Silver spot price coughs up some of post-payrolls gains

Posted: 14 Jan 2014 05:20 AM PST

invezz

Gold is nearing a type of endgame

Posted: 14 Jan 2014 05:20 AM PST

insidefutures

Gold Prices January 14, 2014, Technical Analysis

Posted: 14 Jan 2014 05:20 AM PST

fxempire

TECHNICAL - Gold: Bullish Breakout Ahead

Posted: 14 Jan 2014 05:20 AM PST

investing

GOLD Elliott Wave Analysis: Intraday Resistance At 1260-1270

Posted: 14 Jan 2014 05:20 AM PST

invezz

Silver Coin Premiums Set To Climb On Reduced Supply

Posted: 14 Jan 2014 04:33 AM PST

gold.ie

Silver Coin Premiums Set To Climb On Reduced Supply

Posted: 14 Jan 2014 03:54 AM PST

Increasing demand for U.S. silver coins is set to send silver premiums higher. The premium charged by wholesale dealers for American Eagle coins from the U.S. Mint may rise from 14%. The mint has said that weekly allocations will be reduced despite very strong demand so far this month and record sales in 2013.

Today's AM fix was USD 1,248.75, EUR 913.10 and GBP 760.97 per ounce.
Yesterday's AM fix was USD 1,246.00, EUR 911.89 and GBP 757.86 per ounce.

Gold climbed $7.70 or 0.62% yesterday, closing at $1,254.80/oz. Silver rose $0.32 or 1.59% closing at $20.45/oz.

Gold is marginally lower today but remains near its highest in a month. Safe haven buying has increased after a drop in equities globally due to concerns over the U.S. economy after a disappointing jobs report last week.


Gold in U.S. Dollars, 5 Year – (Bloomberg)

Increasing demand for U.S. silver coins is set to send premiums to the highest since October according to Bloomberg.

The premium charged by wholesale dealers for American Eagle coins from the U.S. Mint may rise from 14%. The mint has said that weekly allocations will be reduced despite very strong demand so far this month.

Yesterday, the U.S. Mint said 89% of this week's quota of 3.58 million silver eagles were sold following sales that were stopped on December 9th because of a lack of supply.

Sales of silver American Eagles rose to an all-time high of 42.675 million ounces in 2013. Purchases jumped to a monthly record in January 2013, and the mint suspended business for a week because of a lack of inventory.

The silver bullion coin market is tight with strong hands refusing to sell and mints rationing supplies. Silver’s sharp fall is seeing the smart money continue to accumulate silver coins while supply is available and premiums still relatively low.

Separately, the Perth Mint has announced that they have sold out of their silver bullion coin – the one ounce 2014 Australian Kookaburra.

Silver has climbed 8.9% from a five-month low at the end of 2013.

Gold may be forming a double bottom near $1200 level: ETFS

Posted: 14 Jan 2014 02:41 AM PST

Gold prices can sustain the US$1,200/oz. key support level, the majority of the 2014 year could very well remain within the US$1,200-1,400/oz. range.

Eric Sprott: Western Central Banks Don’t Have Much Gold Left

Posted: 14 Jan 2014 02:25 AM PST

"As Ted and I mentioned on Saturday, the 50-day moving averages are now in play"

¤ Yesterday In Gold & Silver

The gold price popped five bucks or so at 9 a.m. Hong Kong time on their Monday morning, but by 9:45 a.m. GMT in London, that gain [and a bit more] had disappeared.  From that point gold traded more or less sideways up until the low tick at 7:15 a.m. in New York, five minutes before the Comex open.  Then gold began to rally quietly, hitting it's high tick of the day around 4 p.m. in electronic trading in New York.  It sold off a hair after that, but not by a lot.

The low and high ticks were $1,243.00 and $1,255.30 in the February contract.

Gold closed in New York on Monday at $1,252.40 spot, up $3.80 from Friday's close.  Volume, net of roll-overs, was a very light 87,000 contracts, with a big chunk of that coming before the London open.  London volume was almost non-existent yesterday.

The price path in silver was much the same as gold's.  The only real difference was that most of silver's gains were in by 2 p.m.  After that, the silver price didn't do much.

The CME recorded the low and high ticks at $19.955 and $20.47 in the March contract.

Silver finished the Monday trading session at $20.405 spot, up 23.5 cents from Friday's close.  Gross volume was pretty decent at 39,000 contracts and, like gold, a healthy chunk of that came before the London open as well.

Both platinum and palladium rallied a bit in Far East trading on their Monday---and hit their respective lows at the 10:30 a.m. GMT London morning gold fix.  Both then chopped higher, but platinum finished up on the day---and palladium closed with a small loss.  Here are the charts.

The dollar index closed late Friday afternoon in New York at 80.62---and then proceeded to trade in a very tight range either side of that number all through the Monday session.  The index finished the day at 80.57---which was down a whole 5 basis points.  Nothing to see here.

The gold stocks sagged a bit at the open, but by shortly after 10:30 a.m. EST they were back in the green---and never looked back.  The HUI finished virtually on its high tick, up 3.04%.

The silver stocks followed a similar price path, but didn't rally nearly as much, as Nick Laird's Intraday Silver Sentiment Index closed up only 2.01%.

The CME's Daily Delivery Report showed that zero gold and 16 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday.  JPMorgan issued all 16 contracts out if its in-house trading account---and Canada's Bank of Nova Scotia stopped 15 of them.  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD yesterday, but over at SLV an authorized participant withdrew a chunky 1,924,796 troy ounces.  It would be my guess, based on the recent price movement in silver, that this was not [as Ted Butler would call it] a "plain vanilla" withdrawal, but was probably silver that was more desperately needed elsewhere.  The possibility also exists that it was withdrawn in order to prevent an entity that already owns a big chunk of SLV shares from exceeding the reporting requirement limits of the SLV ETF.  JPMorgan comes to mind.

Well, the U.S. Mint hasn't fixed their website yet, but thanks to Ted Butler---and Joshua Gibbons the "Guru of the SLV Bar List"---I have the latest sales figures for the U.S. Mint as of the close of business yesterday.  So far in 2014, the mint has sold 63,000 troy ounces of gold eagles---32,500 one-ounce 24K gold buffaloes---and 3,180,500 silver eagles.

The silver eagles were no surprise at all, but the gold sales are quite something.  It will be interesting to see how the rest of the month unfolds.

Over at the Comex-approved depositories in gold on Friday, they reported receiving 32,096 troy ounces---all of it into the HSBC USA warehouse.  Only 675 troy ounces were reported shipped out.  Here's the link to that activity.

It was a monster day for silver movements on Friday, as 1,373,081 troy ounces were shipped in---and 1,747,967 troy ounces were shipped out. BUT---and it's a big but---of that in/out movement, 1,277,666 troy ounces was a transfer from Scotia Mocatta's vault directly into JPMorgan's vault.  The link to that action is here---and it's worth a look.

Here's some eye candy for you.  It was a photo taken inside the vaults of Switzerland's Zürcher Kantonalbank a few years back---and I found it while I was "housecleaning" my computer on the weekend.

With some rather ruthless editing, I managed to get the list of stories down to what I consider a reasonable number, and I hope there are some in here that you like.

¤ Critical Reads

Inflation, Strangely Low, Holds Key to 2014 Fed Policy

Stubbornly weak inflation is shaping up as the wild card for U.S. monetary policy makers this year, with top Federal Reserve officials stumped by why it has lingered so low for so long and at odds as to what to do about it.

By last month, policy makers had grown confident enough in the job market to dial back on the program. Figures released Friday showed the jobless rate fell to a five-year low of 6.7 percent in December, despite the smallest monthly job gains in three years. With much of the hiring slowdown attributed to bad weather, however, many analysts say the Fed will stay on track with plans to end bond buying by late this year.

But there is a hitch: inflation has been drifting down for much of the last two years, measuring a feeble 1.1 percent in November by the Fed's preferred gauge.

The longer it lingers well below Fed's 2-percent goal, the more at least a few policy makers worry it is a sign that the recovery might not be as strong as it looks. In theory, inflation should rise as the job market heals.

First of all, the unemployment numbers, as you already know, are bulls hit.  If you also add in the discouraged workers who are no longer looking, you're staring at a double-digit unemployment rate.  This isn't rocket science.  But the Fed is scared stiff of deflation---and rightfully so.  Today's first story from the moneynews.com Internet site is courtesy of West Virginia reader Elliot Simon.

Dr. Dave Janda interviews your humble scribe

This past Sunday I had a 25-minute chat with the good doctor over at all-talk radio station station WAAM-AM in Ann Arbor, Michigan.  It was all about international finance, monetary policy---and the precious metals as well.  If you're interested, the link is here.
 

U.S. FATCA tax law catches unsuspecting Canadians in its cross-hairs

A Calgary woman's developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future.

"He's entrapped," said Carol Tapanila, the 70-year-old mother. "There's no way out. He is entrapped into U.S. citizenship."  Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for the Tapanila family.

Starting in July, a new U.S. tax law, the Foreign Account Tax Compliance Act (FATCA), goes into effect. It requires banks around the world to sift through client accounts to find anyone with U.S. connections and send that information to the U.S. Internal Revenue Service.

The law is aimed at Americans who are hiding offshore accounts, but the information sharing is likely to unearth many unsuspecting Canadians with U.S. citizenship, like Tapanila's son, who didn't realize they were required to file U.S. taxes. Tax law expert Allison Christians calls the Tapanila case "ridiculous" and a "classic example of why the law is unjust."

This incredible story was posted on the cbc.ca Internet site yesterday...and I thank reader Sean McLaren for sliding it into my in-box in the wee hours of this morning.

Federal Reserve Said to Probe Banks Over Forex Fixing

The Federal Reserve is investigating whether traders at the world’s biggest banks rigged benchmark currency rates, raising the risk that firms will be penalized for lax controls as regulators look for wrongdoing.

The Fed, which supervises U.S. bank holding companies, is among authorities from London to Washington probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market to maximize their profits, said a person with direct knowledge of the matter, asking not to be named because it’s confidential. The central bank’s involvement in the probe hasn’t been previously reported.

“The Fed has discretion whether to and how much to fine the banks if deficient controls or lack of supervision resulted in traders at these banks manipulating currency rates,” said Jacob S. Frenkel, a former federal prosecutor and now a lawyer at Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland.

I don't know whether to laugh or cry.  The big U.S. banks own the Fed, so they're investigating themselves.  If this sounds incestuous---you would be right about that.  This "news" item was posted on the bloomberg.com Internet site late yesterday morning MST---and it's the second offering of the day from Elliot Simon.

Basel Regulators Ease Leverage-Ratio Rule for Banks

Global regulators diluted a planned debt limit for banks amid warnings that the rule would penalize low-risk financial activities and curtail lending.

The measure, known as a leverage ratio, was adjusted after “thoroughly analyzing bank data,” the Basel Committee on Banking Supervision said in a statement following a meeting of regulators in the Swiss city yesterday. The group also modified a liquidity rule to make it easier to count a certain type of central bank loan against regulatory standards.

Changes to the leverage rule give lenders more scope to use an accounting practice known as netting to calculate the ratio, and ease proposals on how lenders determine the size of their off-balance sheet activities. Other amendments avert the risk that banks end up double-counting some derivatives trades, the regulators said.

It can always be said that the banking system looks after its own best interests first.  This, along with a watered-down Volcker Rule, fits right into that pattern.  This is another story from Bloomberg.  This one was filed from Brussels and posted on their website very early yesterday morning Denver time.  It's third and final contribution to today's column from Elliot Simon.

Syria Rebels Turn Against Most Radical Group Tied to Al Qaeda

As a government warplane soared over the northern Syrian city of Raqqa recently, a fighter from the Islamic State of Iraq and Syria, the country’s most radical group linked to Al Qaeda, watched from behind an antiaircraft gun mounted on a pickup truck. Fighters and activists from rival insurgent factions urged him to fire. He did not.

The others were incredulous, recalled one, who supports the Nusra Front, a rival group that has Al Qaeda’s official stamp of approval as its representative in the fight against President Bashar al-Assad. But the man on the truck replied, “We are here to establish the Islamic state, not to fight Assad.”

Such disputes helped set off the infighting that has swept insurgent-held northern Syria for the past week, leaving more than 500 dead, as a broad array of factions have turned against the Islamic State of Iraq and Syria, known as ISIS, in a showdown over tactics, power and ideology within a Sunni jihadist movement that has drawn fighters from across the world.

The dispute has reverberated far beyond Syria’s borders, analysts say, for instance carving the same divisions in the jihadist movement in Egypt between pragmatists and ideological purists from the austere Salafist movement.

This is another Middle East story where you almost need a program to keep track of all the players---but it certainly falls into the must read category for all students of the New Great Game.

Negotiators Put Final Touches on Iran Accord

Iran and a group of six world powers completed a deal on Sunday that will temporarily freeze much of Tehran’s nuclear program starting next Monday, Jan. 20, in exchange for limited relief from Western economic sanctions.

The main elements of the deal, which is to last for six months, were announced in November. But its implementation was delayed as negotiators worked out technical details.

The agreement faced opposition from Iranian hard-liners and Israeli leaders, as well as heavy criticism from some American lawmakers, who have threatened to approve further sanctions despite President Obama’s promise of a veto.

It comes as Tehran has sought to expand its influence in the Middle East by providing weapons and sometimes members of its own paramilitary Quds Force, in what Western nations view as destabilizing activities in countries including Syria, Bahrain and Yemen, according to interviews with intelligence, military, diplomatic and government officials. However, both the United States and Iran have sought to insulate the nuclear negotiations from the tensions over Iran’s regional policies.

This longish news item was posted on The New York Times website on Sunday sometime...and it's the first and only offering of the day from Roy Stephens.  Ulrike Marx sent along a Reuters story on this as well---and the link to that is here.

Iran, Russia negotiating big oil-for-goods deal

Iran and Russia are negotiating an oil-for-goods swap worth $1.5 billion a month that would enable Iran to lift oil exports substantially, undermining Western sanctions that helped persuade Tehran in November to agree to a preliminary deal to curb its nuclear program.

Russian and Iranian sources close to the barter negotiations said final details were in discussion for a deal under which Russia would buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.

"Good progress is being made at the moment with strong chances of success," said a Russian source. "We are discussing the details, and the date of signing a deal depends on those details." The Kremlin declined comment.

"Our desire is to sign the deal as soon as possible," said a senior Iranian official, who declined to be named. "Our officials are discussing the matter with the Russians and hopefully it will be inked soon, regardless of whether we can reach a (nuclear) agreement in Geneva."

This Reuters story, co-filed from London and Ankara, was posted on their website on Friday afternoon EST---and it certainly worth reading, especially for all serious students of the New Great Game.  I thank reader Bill Busser for sending it our way.

Eight King World News Blogs/Audio Interviews

John Embry: "Mega-Bubbles and the Disastrous End Game".  2. Robert Fitzwilson: "Stunning Chart Shows Gold Will Skyrocket In 2014".  3. William Kaye: "Absolutely Shocking Developments in the War on Gold".  4. Michael Pento: "This is Why the U.S. Economy is Set to Crumble in 2014".  5. James Turk: "

Eight King World News Blogs/Audio Interviews

Posted: 14 Jan 2014 02:25 AM PST

Eight King World News Blogs/Audio Interviews

John Embry: "Mega-Bubbles and the Disastrous End Game".  2. Robert Fitzwilson: "Stunning Chart Shows Gold Will Skyrocket In 2014".  3. William Kaye: "Absolutely Shocking Developments in the War on Gold".  4. Michael Pento: "This is Why the U.S. Economy is Set to Crumble in 2014".  5. James Turk: "Global Chaos, Turmoil and a Gold and Silver Spike in 2014".  6. Richard Russell: "People Terrified and Depressed as the U.S. Collapses".  7. The first audio interview is with William Kaye...and the second audio interview is the David Stockman.

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]

Historic 1oz gold coin goes for $4.6 million at auction

Posted: 14 Jan 2014 02:25 AM PST

Historic 1oz gold coin goes for $4.6 million at auction

The first gold coin ever made in the United States fetched a record $4.58 million on auction last week, while a nickel made at the Philadelphia Mint in 1913 raised $3.3 million.

The so-called Brasher Doubloon, the country's first gold coin denominated in dollars, has been off the market since it was bought by a Chicago resident in 1979 for $430,000.

"The legendary Brasher Doubloon is one of the most important coins in American history because it's the first gold coin struck for the young United States and it's one of only a handful that exist," according to Todd Imhof, executive vice president of Heritage Auctions.

This very short story put in an appearance on the mining.com Internet site on Sunday sometime...and I thank reader M.A. for sending it along.

Silver-Coin Premiums Poised to Climb as U.S. Mint Supplies Ease

Posted: 14 Jan 2014 02:25 AM PST

Silver-Coin Premiums Poised to Climb as U.S. Mint Supplies Ease

Increasing demand for U.S. silver coins was poised to send premiums to the highest since October even as banks including Goldman Sachs Group Inc. predicted more declines in futures after the biggest annual slump since 1981.

The premium charged by wholesale dealers for American Eagle coins from the U.S. Mint may rise to 17 percent from 14 percent yesterday, said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. The mint has said that weekly allocations will ease.

Goldman has said precious metals will slump 15 percent this year with silver dropping to $17.50 an ounce in 12 months. Yesterday, the mint said 89 percent of this week’s quota of 3.58 million 1-ounce silver coins were sold following a halt in sales on Dec. 9 because of a lack of supply. Futures have climbed 8.9 percent from a five-month low at the end of 2013.

“The market is tight,” McGhee said in a telephone interview. “The drop in prices has made silver coins very attractive.”

This Bloomberg article was posted on their website late yesterday afternoon MST...and I thank reader Ken Hurt for bringing it to our attention.

 

Contrarians’ Wildest Dream Coming True

Posted: 14 Jan 2014 02:25 AM PST

Contrarians' Wildest Dream Coming True

As most readers know, Doug Casey's most notable characteristic as an investor is his highly successful contrarian nature. It's how he bagged some of his biggest wins—not just doubles and triples, but 10- and 20-fold returns.

There's only one way to realize these kinds of gains: You must buy when the asset is out of favor. Buying an investment that has already run up is at best chasing momentum and at worst a portfolio wrecker.

At the end of 2013, the sector with the highest level of pessimism, as measured by SentimenTrader, was the gold industry. It actually registered "zero" in mid-December.

Meanwhile, price-to-earnings ratios of the 15 largest gold producers are at their lowest level in 14 years, and less than half what they were when the bull market got under way in 2001.

This commentary, with some excellent charts embedded, is to be found in yesterday's edition of the Casey Daily Dispatch.

Western central banks can't have much gold left, Eric Sprott says

Posted: 14 Jan 2014 02:25 AM PST

Western central banks can't have much gold left, Eric Sprott says

Interviewed for the Sprott Money weekly wrap-up on Friday, Sprott Asset Management CEO Eric Sprott described what he sees as the increasing difficulty experienced by Western central banks in their policy of gold price suppression. The central banks can't have much gold left, Sprott said, and the new year should be good for gold investors. The interview is 13 minutes long and is posted on the Sprott Money website.  I thank Chris Powell for wordsmithing "all of the above."

Arab shoppers buy into gold as asset theory

Posted: 14 Jan 2014 02:25 AM PST

Arab shoppers buy into gold as asset theory

Dubai's jewellery trade is striking a rich vein of demand from a relatively new shopper demographic -- the non-Gulf Cooperation Council Arab -- during the ongoing Dubai Shopping Festival sales cycle. The increased buying activity from this consumer base, both resident and visitors, is also translating into higher value purchases on their part, market sources say.

"There is a clear spike in gold and jewellery related purchases from non-GCC Arab shoppers -- and particularly Syrians, Iranians, and Egyptians -- in recent weeks, a trend that first became evident in November but since January 2 is becoming quite significant," said Shamlal Ahmad, director of international operations at Malabar Gold.

"The impression is that these shoppers are buying into gold as a sort of defensive asset against social or economic uncertainties in their home countries. In particular, they are going for 22-carat, which was never their preference earlier."

This article, filed from Dubai, was posted on the gulfnews.com Internet site on Saturday---and I found it on the gata.org Internet site yesterday.

A golden corridor

Posted: 14 Jan 2014 02:25 AM PST

A golden corridor

Smuggling is back at Kerala airports as hiked import duty and restrictions make the yellow metal even more precious. With a 400 per cent jump in arrests, 300 per cent in the value seized, Shaju Philip reports on another phenomenon — flights laden with gold.

It’s raining gold at Kerala’s Kozhikode international airport. Every plane landing from the Middle East here now carries 40-80 kg of the precious metal, translating into Customs duties between Rs 86.8 lakh and Rs 1.74 crore. That’s just one flight, one airport. The state has two other international airports, at Kochi and Thiruvananthapuram, and the quantity of gold being brought in there is just slightly lower. Kerala gets an average of 120 flights from the Middle East a week. Do the math.

The UPA government first hiked the import duty on gold in January 2012, raising it to 2 per cent, from Rs 300 charged per 10 grams earlier. It was raised to 4 per cent in the budget for 2012-13, 6 per cent in January 2013, 8 per cent on June 5 and finally 10 per cent in August. The government hoped that the steps would check India’s rush for gold — and hence its burgeoning current account deficit.

The rush, obviously, continues. What is being seen at Kerala airports, officials suspect, is smugglers using passengers as legal carriers of gold since the last month, ever since the Directorate of Revenue Intelligence (DRI) busted a few gangs, caught bringing in gold using mainly young women. Indians who have stayed abroad for at least six months are allowed to legally bring in up to 1 kg of gold, with import duty paid in foreign currency. Indians travelling abroad can get in gold jewellery worth up to Rs 50,000 in case of men, and Rs 1 lakh in case of women, duty-free.

This longish...and very in-depth essay, was posted on the indianexpress.com Internet site on Sunday morning IST...and I thank reader Dennis McCutcheon for sending it our way.  It's worth your while if you have the interest...and the time.

Goldcorp CEO: China gold demand strong

Posted: 14 Jan 2014 02:25 AM PST

Goldcorp CEO: China gold demand strong

Goldcorp CEO Charles Jeannes appeared on CNBC for 3:05 minutes yesterday...and had the usual positive things to say about gold, including repeating the Pavlovian response about strong Chinese gold demand...but not a word on the real reason why the precious metal prices are in the dumpster.  I thank Ken Hurt for his final offering in today's column.

China's gold output rises 7 pc in first 11 months of 2013

Posted: 14 Jan 2014 02:25 AM PST

China's gold output rises 7 pc in first 11 months of 2013

Gold production in China, the world's top producer of the bullion, rose 7.01 percent from a year ago to reach 392.141 tonnes in the first 11 months of 2013, data from the China Gold Association showed on Monday.

November's output was 44.48 tonnes, compared with 39.844 tonnes in October, the association said on its website.

The above two paragraphs is all there is to this tiny Reuters story, filed from Shanghai, that was posted on their website early yesterday afternoon IST.  It, in turn, was gobbled up and re-posted on the Economic Times of India website.  I thank Ulrike Marx for sharing it with us.

Wolf Richter: How the Fed’s “Wealth Effect” Quack Medicine Hurts Renters and With Them, Consumption

Posted: 14 Jan 2014 01:23 AM PST

Yves here. I have a small quibble with Wolf’s claim that QE is equivalent to “printing money”. Marshall Gittler walks through the transactions at the Fed and at the banks and in the private sector accounts (you should look at his charts) and concludes:

Bank ABC has only shuffled the composition of its portfolio around. It’s exchanged bonds for reserves in what is no more than an asset swap. There is no increase in the size of its balance sheet.

The central bank’s balance sheet, on the other hand, grows substantially. On the asset side it gains 40 bonds and on the liability side, reserves increase by the same amount. Note though that there is no change in cash in the hands of the public—what we know as money.

The whole operation leaves the Treasury’s balance sheet unchanged. No new bonds are issued, no revenues received.

So we can see that while the central bank’s balance sheet does expand, the only impact in the private sector is to change the composition of the banks’ balance sheets, exchanging bonds for reserves. The total assets of the private sector don’t change. Hence no money is being created any more than, say, if someone sold their stocks and put the money into bonds.

But aside from that wee bit of nails on the chalkboard, Wolf describes accurately how the Fed’s misguided efforts to use the wealth effect (trickle down theory in new clothes) have backfired, literally enriching the rentiers at the expense of a large swathe of low and even ordinary wage earners.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Testosterone Pit.

The "wealth effect" was held up by the Bernanke Fed as a pretext for printing money and creating asset bubbles. As prices were ballooning, those who owned the assets would feel wealthier and spend some of their gains, the theory went. This would somehow stimulate the broader economy, not just luxury retailers and Michelin-rated restaurants. But it didn't work for everyone.

Prices for housing have jumped and rents have jumped too, yet renters – there are 38.7 million of them, 34% of all households, according to the Harvard Joint Center for Housing Studies (PDF) – well, they saw their real wages decline by 7.6% between 2007 and 2012.

An analysis of wage and housing data by the National Low Income Housing Coalition found that for someone earning the federal minimum wage of $7.25 per hour, an "affordable rent" of 30% of income would max out at $377 per month. But the average "zero-bedroom" apartment now goes for $680 per month. For a household to be able to afford that "zero-bedroom" apartment, it would need an annual income of $27,200. And it would need $39,080 a year to upgrade to their dream two-bedroom palace.

At the same time, cheaper, older housing units are torn down to make room for more expensive condos and apartments – 12.8% of the units that had rented out for less than $400 a month met that fate between 2001 and 2011. It's all part of urban renewal, but where the heck are the low-income renters supposed to go?

"It's an ongoing problem that is made more important against the backdrop of increasing demand for those units," Chris Herbert, research director at the Harvard Joint Center, told Bloomberg. "At a time when we have a growing number of low-income renters struggling to find units they can afford, the fact that these low-cost units are the ones most likely to be lost from the stock is a concern."

The toxic mix of declining real incomes of renters and rising rents has had an impact: In 2011, about 11.3 million households were spending over half of their income on rent, according to the Harvard Joint Center, a 28% jump from 2007. And given what has happened over the last two years to real wages and rents, the ratio must have gotten even worse.

"The private market doesn't build housing that low-income people can afford anymore," Sheila Crowley, CEO of the National Low Income Housing Coalition, told Bloomberg.

Hence the idea of subsidized housing as a solution. There are a slew of options. Among them, developers may have to stick a few token "affordable" units into their developments, in return for some kind of benefit from the local government, and ultimately the taxpayer. Other affordable housing units are built outright with taxpayer funds. Then there are the federal programs, such as the Section 8 vouchers that subsidize rent in private housing to bring it down to 30% of income.

Low-income renters who actually received federal support inched up from 4.4 million in 2007 to 4.6 million in 2011, the Harvard Joint Center found. But in a sign of our times, the number of potentially eligible households, such as low-income families, seniors, and the disabled, soared from 15.9 million to 19.3 million.

In high-cost places like in my beloved city of San Francisco, these trends have reached absurd levels: housing is getting too expensive even for people with good incomes. Renters are being evicted in record numbers from more affordable rental units – "affordable" by San Francisco standards – that will then be redeveloped and converted into condos. For developers, it's a deal: the average price per square foot rose 16.6% year over year to an all-time high of $778, according to Trulia. It's now almost 20% higher than during the prior bubble in 2007! The average listing price of a one-bedroom apartment rose to $791,884. The average listing price for all homes hit $1.8 million.

The rental market took its cues. In December, rents were up 10.6% from prior year, putting San Francisco in the number one spot of the 25 cities on Trulia's list. Average rents now exceed $3,000 per month. And they aren't for gold-plated palaces but for rental apartments.

That's the wealth effect. The many trillions of dollars, euros, yen, yuan, and pounds that central banks have printed have found their home, so to speak. Real estate in Manhattan, London, San Francisco, and other trophy cities around the world is becoming too expensive for middle-class families to live in. Paris is on that list as well, but the higher end of that market is in turmoil; prices are skidding as rich people, in an effort to escape French taxation, are selling, but suddenly there aren't a lot of buyers.

Chairman Bernanke padded himself amply on the back. His heroic multi-trillion dollar manipulation of asset prices has been successful; among other consequences, it's pushing the cost of rental apartments beyond the reach of people with even decent jobs. With households stretching more and more to pay rent, they have to tighten their belts elsewhere. The crummy holiday shopping season was one of the signs. Yup, the wealth effect.

But it seems even the Fed is getting nervous about the wealth effect. Hidden in the middle of the 25-page minutes of the last meeting, under the most wooden and convoluted prose, the Fed issued a doozie of a warning: it fretted about financial stability. Read…. Plagued By QE Indigestion, Fed Issues Asset-Bubble Warning

Gold And Silver Outlook 2014 by David Morgan

Posted: 14 Jan 2014 12:36 AM PST

This is an excerpt from David Morgan’s latest update to his subscribers. In it, he describes his gold 2014 forecast. David Morgan is the editor of the highly respected The Morgan Report which offers 16 specialized reports for free for new subscribers, as well as a free trial of one month (more info here).

It is always difficult to forecast a year out what we expect from gold, silver and especially the mining shares. As many of our more recent interviews have discussed we do think the bottom has been obtained in silver (June 28th 2013) and gold may test the $1179 level but for all practical purposes gold has made its bottom as well.

We certainly are aware that many of the major banks are forecasting gold to continue to move down in 2014 and reach levels of one-thousand dollars per ounce or even lower. In our view this is fear mongering and designed to keep the majority of investors away from the precious metals but additionally shake out the last of the weak hands by giving up their positions.

Going back into the past when silver was at the $20 level and that was breaking into new high ground, we saw the $21 level achieved on a spike and silver gave up its price from that point in 2008 until August 2010. This was about 2 ½ years before the price of silver finally made it back to the $21 level. Once the level was achieved at this later date silver kept going all the way to the $49 level.

Although not huge believers in cycle work, the point is not so much that we are due to start an upward cycle but the way silver trades our work indicates silver is gaining strength.  Certainly, we think not only have long term silver investors been here before, but if we were to repeat the last cycle silver moved up almost 600% once it completed the bottoming process. This type of move, suggests the $100 level which is our long term forecast from the beginning of this bull market and it may be conservative.

Not only has silver moved in this manner previously but that gain was achieved in approximately nine months. This time however our view is that silver needs to work its way back to the $30 level and at this time (More frequent updates are given to Basic Plus Members) it may take nine months or so just to achieve that price level.

However, most of the awake and aware know the financial system is nearing the breaking point basis the demonstrations in Europe, the Middle East, and even some areas of South America. Japan is certainly quietly straining under the current Abe-o-nomics. Basically, we think that the black swan event is possible at any time in 2014. Yet, based on the extraordinary ability of the powers at large to spin and manipulate the masses we are most inclined to see a “Gray” Swan.

Our idea of a gray swan is that regardless of the mainstream media propaganda many more people become aware of the true circumstances of governments at large on a global scale and seek solutions. The most proven strategy is individual action which involves parking money into precious metals. Therefore we fully expect the next leg up to begin in 2014 as new buyers come into the market motivated by their own discovery of the current control mechanisms and their evolution to do something about it on a personal level.

This of course is where silver has an advantage over gold, as it is far more affordable to the average person, yet it is much more difficult to obtain in Europe due to the Value Added Tax, and also difficult in Asia as the inroads to invest in the physical metal is not as robust as it is for gold. India is the exception as silver has been the traditional store of value for most of the population up until the last decade where gold has been so prominent. Silver of course did come on strong in India after the government of India decided to tax gold purchases and the population went for a massive amount of silver. It will be interesting to see if there is any follow through in 2014. We know the physical silver supply is much tighter than the current price suggests. Once there are premiums in some of the physical holding funds such as Sprott Physical Silver Trust (PSLV) or Central Fund of Canada, we think additional purchases could take place.

Gold has a different following than silver in many ways. First and foremost gold is traded and bought by nation states for a variety of reasons but the primary one is of course monetary stability/hedging against the U.S. dollar demise. The ongoing move of physical gold is given almost no mention in the main financial circles, yet the gold bugs are well aware that China especially continues to build their gold inventory.

Gold although mentioned often by the elites as having very little real “value” in a modern financial system by such notables as Warren Buffet, really is coveted by the highest echelons of the global banking empire. This is critical to understand as we mentioned in an earlier The Morgan Report (TMR) that there is “fight” going on between the Anglo-American empire which has dominated the global financial scene for so very long, and the emerging BRICS that know gold ownership is vital to being on top of the global banking system.

It is our view that the great unraveling could take place where things are much less centralized and moved to a local level. However, you can rest assured that the megalomanias see it differently and wish to maintain power over everyone’s lives.

Need we mention again-”Interesting times…”

The PGM’s (Platinum Group Metals) have done the best over the 2013 year, and we still expect a breakout of palladium to be a subtle clue that the whole complex is finally done consolidating and higher prices will begin. We favor palladium slightly over platinum and only those that are content with their gold/silver holdings could consider these metals. In our view the best way to gain exposure is through the mining shares with the Wellgreen Platinum project being one we have followed and still like having received shares for “free” due to our Prophecy Coal investment.

In summary we fully expect the precious metals to strengthen and the mining shares at some point to begin to lead. We will know a great deal after the first quarter of the New Year, as the precious metals have a strong historic trend of moving up during the first quarter.

Why Gold Can Never Be In A Bubble

Posted: 14 Jan 2014 12:26 AM PST

I have a post up on the corporate blog discussing a Harvard Business Review blog which attempts to get to the bottom of what constitutes a bubble.

If a bubble is when price exceeds an asset's fundamental value, and according to people like Barry Ritholtz gold doesn't have a fundamental value, then its price doesn't have anything to exceed and hence it can never be in a bubble.

That is a bit of a flippant argument and and click baitish, but it was an intro in a quote by Eugene Fama from the HBR blog that I was more interested in:

"During the dot-com era … the high prices of startups like Amazon.com and Pets.com could be justified as rational gambles in the face of great uncertainty. It wasn't crazy to think that a couple of these companies might end up as big and as profitable as Microsoft, and since it was hard to tell which ones it would be, high prices across the board made some sense."

Isn't gold just a "rational gamble in the face of great uncertainty" about whether a country (or the world) can get itself out of its financial mess without unintended inflation or some other economic blow up?

Therefore arguing that gold is in a bubble is just arguing that people are paying too much for the insurance against uncertainty as they see it. That IMO is just a judgment call and who can claim they know their judgment is right and another's is not?
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