Category: Silver Views

The Daily Market Report: Gold Extends to the Upside, Poised for 3rd Consecutive Higher Close


20-Mar (USAGOLD) — Gold heads into the weekend on a solid note, buoyed by renewed weakness in the dollar. The yellow metal appears poised for a third consecutive day of gains, nothing new 2-week highs.

The weekly chart looks particularly good from a technical perspective, showing a failed test of the November low at 1131.15 and a likely key reversal (lower low, higher high, close above the previous week’s high). That’s a pretty bullish setup, but further upside follow-through is needed to lend confidence.

Silver is actually leading the charge on this week’s rally, up more than 2.5% today, to gold’s 1.1% gain thus far. The gold/silver ratio had been hovering around 74 recently, but started to retreat on Wednesday. Today support at 70.23 gave way, putting the ratio at 5-month lows.

The major currencies, with the exception of the yen, are all up significantly against the dollar: EUR +175. CHF +160, GBP +210, AUD +120, NZD +140, CAD +80. Clearly the surprisingly dovish tenor of this week’s Fed policy statement has ignited considerable volatility in the FX market.

While the FOMC removed the word “patient” from the statement, the significant downward revisions to central tendencies suggests the central bank is now far less optimistic about growth and inflation prospects. Significant shifts in the “dots” show that when (if?) the Fed starts raising rates, FOMC members think they will climb at a far slower pace than previous expectations.

HSBC’s David Bloom warns us that “The U.S. economy is surprising to the downside aggressively. Don’t ignore it.” The Fed’s own outlook is suddenly reflecting that reality, and the recent dollar strength has likely been a contributing factor.

While the stock market is up significantly today, equity bulls should take heed of that reality as well. Former Dalls Fed President Richard Fisher chimed in with his own warning today on CNBC:

“Are we vulnerable in my personal opinion to a significant equity market correction? I do believe we are, and the reason for that is people have gotten lazy. They’ve depended totally on the Fed.” — Richard Fisher

“Depended totally on the Fed” to the exclusion of the fundamentals and the reality of the slowing economy. Now may the time to lock in some of your profits in shares and move those funds into the safety of gold and/or silver.

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2014 Silver Eagle Sales Break Annual Record at Over 43 Million!

12-Dec (MarketOracle) — Silver Eagle sales in 2014 have already broken the 2013 annual record with a few weeks of sales still left to be counted. As of December 11, the U.S. Mint reported that 43.1 million silver eagles have been sold so far in 2014. This compares to the 42.7 million during all of 2013, which was the previous all-time record.

Investor demand for silver clearly remains strong and people are taking advantage of discount prices. Why not? It isn’t too often that you can purchase an end product for less than the cost to produce it. Many miners are unprofitable at current silver prices as their all-in cost of production is closer to $20. I believe this is an excellent time to take advantage of the paper games that have pushed prices to such absurd lows. Silver at under $20 per ounce is not likely to last long.

[source]

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US Mint Sells Out Of Silver Eagles Following “Tremendous” Demand

05-Nov (ZeroHedge) — When it comes to buyers of physical assets as opposed to traders of paper representations of such assets, there is one key difference: the latter, more than anything, enjoy looking at “heatmaps”, chasing trends and jumping on momentum, the result being the most recent massive selloff in such “paper” representations of precious metals as the GLD and SLV ETFs, and various gold futures.

On the other hand, those who prefer to hold the metal in their hands, as well as others such as China whose ravenous apetite for gold over the past 4 years has been extensively covered here in the past, take every advantage of selloffs, and – inconceivably – demonstrate how Econ 101, namely supply and demand, really works, leading to ever greater demand the lower the price. Demand so high, in fact, that the underlying commodity that is being sold through paper conduits, sells out.

This is precisely what happened at the U.S. Mint, which just sold out of all silver American Eagle silver bullion coins, following “tremendous” demand in the past several weeks, according to Reuters reports.

This should hardly come as a surprise: over the weekend we reported that “Silver Coin Sales At US Mint Soar To Highest In Two Years.”

[source]

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October Silver Eagle Sales Best Ever…. And With 10 Days Remaining

22-Oct (SRSrocco) — While the Fed and Western Central Banks continue to prop up the entire market, investors took advantage of the manipulated low silver price by purchasing a record amount of Silver Eagles in October. Silver Eagle sales were also extremely strong last month as total sales reached 4.1 million in September.

In the beginning of October as the price of silver was clobbered below $17, investors purchased more silver eagles in one week than in any other week throughout the year. This trend continues as sales in October are the strongest ever compared to previous years.

If we look at the chart below, we can see that investors only bought 550,000 Silver Eagles in October 2007. Then in the next few years, purchases of Silver Eagles increased dramatically to 1,425,000 in Oct 2008 and 2,939,000 in Oct 2009. However, since 2010…. October sales were relatively flat–between 3.0 to 3.1 million.

[source]

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Gold & Silver Hit Multi-Month Highs As ETF Inflows Surge Most In 21 Months

02-Jul (ZeroHedge) — The last 2 days have seen something ‘odd’ happen in gold markets. As the China commodity finance deals are unwound and massive futures positions squeezed, Gold ETFs have seen the biggest inflows since September 2012 (and are their highest in 2 months). Whether this is the start of trend is unclear (as perhaps the conspiracy ‘fact’ proof of manipulation and rigging in the gold markets stalled the hollowing out of the gold complex). Ironic that this considerable rise should occur shortly after rumors of Germany’s end to repatriation calls. Gold (and silver) has broken out once again this morning after the early dump on ADP ‘good’ news is well bid to 3-month highs.

[source]

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Gold Hits $1300, Silver Surges To 3-Month Highs As China Ponzi Unwinds

19-Jun (ZeroHedge) — But, but, but… Janet Yellen didn’t say precious metal valuations were within historical norms? Gold and Silver are surging today (and have done since the FOMC press conference all-clear) with the latter having its best day in months and back at 3-month highs… Intriguingly, just as we warned, gold and silver have been on a significant tear since the Qingdao CCFD probe began (as synthetic hedges are unwound – which dominate pricing in PMs) while copper and iron ore and so on have all fallen (as the reality of no real demand leaks into these commodities).

[source]

PG View: A Chinese trading company is being investigated for securing loans from foreign banks with collateral they did not own and/or pledging the same collateral multiple times. The concern is heightened by the fact that if one trading company was doing it, perhaps many were. Where there’s smoke there’s fire.

What ZeroHedge is suggesting, is that part of unwinding these dubious Chinese Commodity Finance Deals (CCFDs) would likely include buying in short hedges in the paper gold market.

if we are right that somehow China managed to push gold lower via gold CFDs, then the unwind pushes gold higher. — ZeroHedge 09-Jun-14

ZeroHedge notes today, that gold and silver prices have been on the rise since the Qingdao CCFD probe began. Perhaps the great unwind has now begun in earnest…

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Silver imports soar 180% in India

21-Mar (MineWeb) — Though India ceded its position as the world’s largest gold consumer to China in 2013, it is not ready to let go of its top position with regards to silver. Even as gold imports fell substantially last year, those of silver soared to a new high in 2013.

India imported around 5,500 tonnes of silver, 180% more than the previous year, a sectoral analysis of the white metal has shown. As of 2012, India had brought in 1,900.39 tonnes of silver. This was however, a massive drop from the 4,087 tonnes of silver imported in 2011.

In 2009, India imported just 1,284 tonnes of silver, which then shot up to 3,029 tonnes the next year.

[source]

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Could 2014 be the year for gold bugs?

05-Jan (CNBC) — Andrew Su, CEO of Compass Global Markets says he sees a lot of bullish factors ahead for gold this year.

[video]

PG View: Su says “precious metals are a buy for us this year,” making note of the three failed attempts to break below $1180, which is the “average production cost of gold around the world.” He says however they are playing silver, having begun accumulating positions late last year below $20. He thinks silver is heading back to $25.

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Silver Set to Double, According to… Apple?

by Peter Krauth
10-Dec (MoneyMorning) — We all have our reasons for following Apple. I track it because this tech behemoth is a massive global consumer of metals – base, rare earth, and precious.

And right now, Apple is giving us some surprising indications that the demand for silver is much higher than its current price would have us believe.

Actually, the first “sign” came to us back in January when Apple had to delay new 27-inch iMac deliveries by up to four weeks.

Of course, the company never specified exactly what was causing the delay… but the rumors flew.

The most intriguing rumors centered on a possible shortage of industrial silver in China.

Regardless, the Apple “indicator” is just one reason silver could double over the next 12 months.

There are five other compelling clues that indicate silver’s price has temporarily decoupled from what the demand data dictate…

[source]

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Silver coin supplies buckle on fever-pitch retail buys

15-Nov (MarketWatch) — Silver prices have dropped more than 30% year to date and demand for the physical metal has reached a fever pitch: United States Mint sales of the American Eagle Silver Bullion Coins have already hit a record this year.

But as supplies of the coin tighten, analysts and bullion dealers said there are still many options for those interested in buying silver. Many predicted all along that sales of those coins would reach a record this year — and they expect the metal’s popularity to continue to grow.

“Private investor demand for physical silver in 2013 has been staggering,” said Adrian Ash, head of research at BullionVault, an online physical gold-and-silver exchange headquartered in London.

In fact, it’s amazed the industry, he said. “Refiners can’t mint enough product and they’re seeing none of it come back for melt.”

[source]

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American Eagle silver coin sales hit a record: U.S. Mint


12-Nov (MarketWatch) — Sales of the American Eagle one-ounce silver bullion coins hit an annual record on Tuesday, according to the United States Mint.

Authorized purchasers of the coins ordered their full weekly allocation of 500,000 coins, bringing the total sales to date this year to a record 40.175 million ounces, the Mint said.

That sales figure topped the previous annual record of 39.869 million ounces seen in 2011.

“Retail demand for physical silver, in the form of AE coins, remains strong as a result of lower but now stable silver prices,” said Jeffrey Wright, managing director at H.C. Wainwright LLC.

[source]

PG View: See our CLIENT ALERT! from Monday, regarding tightening Silver Eagle supplies and our current availability.

Silver Eagles premiums rose another 26¢ per ounce at the wholesale level overnight, but we still have a limited amount of inventory secured at a lower premium. Once that is sold, we’ll be forced to follow the market. If you’re thinking about making a Silver Eagle purchase before year-end, weigh your price expectations against the realities of tightening supply and rising premiums.

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Year End Availability and 2014 Release Details for US Mint Bullion Programs


06-Nov (Coin Update) — The United States Mint recently provided authorized purchasers with information on year end ordering procedures and the availability of 2014-dated releases for the American Eagle and American Buffalo bullion programs. Based on the details provided, it seems that the American Silver Eagle bullion coins will experience roughly one month of unavailability between the final allocation of 2013-dated coins and the release of the first 2014-dated coins.

…The situation for American Silver Eagle bullion coins differs from the prior year. Authorized purchasers will be offered the last weekly allocation of 2013-dated coins on Monday, December 9, 2013. With demand continuing to run ahead of the available supplies, the allocation will likely be quickly depleted.

The 2014-dated Silver Eagle bullion coins will not be available to order until Monday, January 13, 2014. The initial release will be subject to the US Mint’s allocation program, which rations supplies amongst the authorized purchasers.

Last year, the US Mint had unexpectedly sold out of 2012-dated Silver Eagles on December 17, 2012. Orders were first accepted for the 2013-dated coins on January 7, 2013. The roughly three week void in availability contributed to an opening day sales total of 3,937,000 coins, which seems to have been the highest ever one-day sales for American Silver Eagles. This was followed by another temporary sell out with sales resumed under the allocation program, which has remained in effect throughout the year.

[source]

PG View: We’re already seeing premium pressures on silver eagles amid mounting expectations of supply issues going into year-end. However, we presently have about 5000 coins in inventory. Once that supply is depleted, almost assuredly eagles will come at a higher price relative to spot. Get in touch with your broker today!

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With gold scarce, India’s festival season loses its shine

01-Nov (Reuters) — A scarcity of gold and high prices are pushing Indians to look to silver or diamond jewellery as alternative gifts this festive season, adding to the gloom in the gold trade after government measures to restrict imports.

Indians are the biggest buyers of gold in the world and many believe that buying and giving it on holy days brings good fortune. Friday marks Dhanteras, a huge festival associated with Lakshmi, the goddess of wealth, and another festival, Diwali, falls on Sunday.

“So far, we have sold just two gold rings today. It’s a far cry from what it was during Dhanteras last year,” said executive Sanjay Kumar at Chawla Jewellers in New Delhi. Saleswomen in bright traditional sarees sat idle.

…Given high inflation and low real interest rates, many Indians see gold as an investment. If demand is being displaced anywhere this year, it is to silver and diamonds, which hold their value in the same way.

Imports of silver – which costs just 500 rupees per 10 grams – are likely to hit a record this year after reaching 4,073 tonnes from January to August, more than double the 1,921 tonnes in the whole of 2012.

[source]

PG View: Perhaps not surprisingly, silver is holding steady today, while gold has come under additional pressure.

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The Daily Market Report

Gold Surges Back Toward July Highs


12-Aug (USAGOLD) — Gold surged in Asian trading and again early in the New York session, pressuring the 1348.50 peak from mid-July. The initial round of gains came on the heels of Japan’s Q2 preliminary GDP miss, and despite a rebound in the dollar.

Japan’s initial Q2 GDP print was just +2.6%, well below expectations of +3.6%. Q1 GDP was revised lower from +4.1% to 3.8%. This is suggestive that Abenomics is not working as well as previously thought and it heightens concerns that Abe/Kuroda will dial up the stimulus further, or at a minimum forestall next year’s planned sales tax hike that was supposed to start chipping away at Japan’s massive ¥1 quadrillion plus debt load.

Reports that the Chinese government has been covertly providing stimulus for key cities and provinces is also being linked to firmer gold prices. It seems that the “hardline” anti-stimulus stance espoused early in the summer may not be so “hardline” after all.

Gold is gaining even as the dollar rebounds. The greenback attracted interest as a drop in the NIKKEI weighed on European and U.S. shares. Additionally, the dollar has been boosted by expectations of some decent U.S. data this week, beginning with July retail sales on Tuesday. Good economic data, along with indications of still tepid inflation, are likely to heighten Fed taper expectations further.

It’s nice to see that gold and silver seem to be dismissing the taper scenario today. Perhaps the market’s focus has now shifted to worries over the looming budget/debt ceiling debate. Gold ETFs saw inflows in excess of $44 bln in July, the biggest of which — the SPDR Gold Trust — recorded its first inflows in two-months on Friday. Are the paper players finally returning?

Note also that silver is leading the PMs higher today. The gold/silver ratio, which stalled shy of the 70 level two-weeks ago, is now engaged in a much needed correction and has traded as low as 62.59 today.

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Gold-Silver Ratio Seen Rising to 70 Amid Rout

28-Jul (Bloomberg) — An ounce of gold, which bought a three-year high of 66.6 ounces of silver on July 19, will be worth 70 by the end of the year as demand fails to soak up an excess of the cheaper metal, according to UBS AG.

“The silver market is in fabrication surplus, and the only thing that’s keeping it alive is investment demand and there is no meaningful increase in ETFs,” said Dominic Schnider, head of commodities research at UBS’s wealth-management unit in Singapore. “In an environment where gold falls, silver simply just does more, it’s more volatile.”

[source]

PG View: Silver tends to get a smaller allocation from most of our clients because of that additional volatility. Our clients tend to be wealth preservation minded investors. Silver can be complimentary to their core gold holdings, we recommend it be a fairly small percentage of the total allocation to precious metals.

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U.S. Mint’s Sales of Silver Coins Reach 1H Record in 2013

17-Jun (The Wall Street Journal) — The U.S. Mint’s sales of silver coins have set a record high in the first half of 2013 as lower prices and limited availability of coins fanned investor appetite for bullion coins.

The Mint has already sold 23.3 million ounces of silver coins so far in 2013, with two more weeks of June to go.

The Mint’s first-half sales were buoyed by record high sales in January and April, totalling 7.5 million and 4.1 million ounces of silver respectively. But more recently, sales of silver coins have tailed off, with 3.5 million ounces sold in May and just 1.6 million ounces so far in June.

[source]

silvereaglesales

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The Daily Market Report

Gold & Silver Snap-Back from Sharp Losses


20-May (USAGOLD) — Gold fell in overseas trading on Monday, led by silver which plummeted to new 2-1/2 year lows. There were indications from Asia that an “unidentified investor” sold a large amount of silver when the CME’s Globex platform opened. The CME Group later confirmed that silver trading was halted four times overnight.

So another big sell-off, perhaps perpetrated by a single large seller in the paper market. Sounds hauntingly familiar.

The following was posted at the ZeroHedge blog early in Asia:

Not a moment after someone was slammed with a massive margin call following the hit of 102 USDJPY stops as we noted moments ago, was that same someone(s) forced to dump a whole lot of silver in thin, no volume trading taking out the entire bid stack on what can only be described as “get me the hell out and pay me anything” liquidation, sending the precious metal to just over $20, before yet another round of buying programs kicked in, and sent it right back up, allowing those quick enough to capitalize on some foolish macro trader’s blowing up to pocket a huge profit before Japan has even woken up.

The dive in silver pulled the gold market down to within striking distance of the mid-April low at 1321.22. However, as ZeroHedge suggested, prices didn’t stay down there for long.

Both silver and gold snapped back sharply. By mid-session in New York, silver had staged nearly a 10% rally from the $21.16 low set overseas, regaining the $23 level. Gold losses stalled shy of the 1321.22 support level and then rallied all the way back to $1399.60, an intraday rally of more than $60 (4.6%).

This comes on a day when the U.S. debt ceiling is put back in place, following a brief suspension. While Treasury thinks that they can get us through the summer by employing extraordinary measures, the gold market has fared pretty well generally speaking as the world has limped from debt crisis to debt crisis. Perhaps today’s volatility is the metals market acknowledgement that we still have a major debt problem on our hands, and it simply is not going to go away.

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Silver falls; gold heads for longest slide in four years

20-May (Reuters) — Silver hit a 2-1/2 year low on Monday, prompted by heavy fund liquidation in Asian trade, while gold was on track for its longest run of losses since March 2009 weighed by speculation that the U.S. Federal Reserve might rein in its economic stimulus programme.

Investors have been dumping gold and silver, which are down 20 percent and 30 percent respectively this year, while stocks and the dollar have risen on an improving global economic outlook.

…Yuichi Ikemizu, branch manager for Standard Bank in Tokyo said an unidentified investor sold off a big chunk of silver holdings on Monday morning.

“The drastic move lower happened pretty much after the Chicago Mercantile Exchange’s (CME) electronic platform Globex opening,” MKS head of trading Afshin Nabavi said.

“The move was exacerbated by the fact that it happened when liquidity was very thin in Asian trade,” he added. “If the same happened in London or New York hours, the size of the liquidation might have been cushioned by higher volumes.”

[source]

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Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day

20-May (Bloomberg) — Silver slid to the lowest since September 2010, sending its ratio to gold to the highest in almost 33 months, while bullion extended the longest slump in four years as investment holdings contracted and stocks rallied.

Silver slumped 28 percent this year, making it the worst-performing precious metal, on concern that industrial use isn’t strong enough at a time when demand is waning for a protection of wealth. Silver held in exchange-traded products dropped to a four-month low on May 17, while hedge funds increased bets on lower prices by the most since March in the week to May 14. Global equities reached the highest since June 2008.

“Silver is essentially a poor man’s version of gold,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “It’s a precious metal and precious metals are under pressure. Secondly, it’s an industrial metal. There are too many concerns about slowing growth.”

[source]

PG View: Gold has snapped back into positive territory, albeit just slightly. Silver remains negative, but is nearly 7% off the intraday low.

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The Fed’s Big Lie, Gold, Silver & The Reality Of Inflation

25-Apr (KingWorldNews) — On the heels of the Fed saying inflation is tame, today acclaimed money manager Stephen Leeb told King World News the that the Fed is lying and demonstrated the tremendous inflation the average family faces today vs the 1990s. Leeb also spoke about gold and silver.

[source]

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Sinclair – Full-Blown Panic As People Ask “Where Is The Gold?”

24-Apr (KingWorldNews) — Today legendary trader Jim Sinclair warned King World News about the full-blown panic that has erupted in both the financial world, and the gold market as well, as people ask, “Where is the gold?” Below is what Sinclair, who was once called on by former Fed Chairman Paul Volcker to assist during a Wall Street crisis, had to say in this remarkable interview.

…So the correlation between the Hunt [Brothers] situation and the present situation, both have to do with the key word, ‘supply.’

it’s become obvious to anybody who understands the gold market that the paper market is a total fraud.

…Key market participants also understand that the Western central bank gold has been leased out and it is gone.

[source]

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U.S. Mint Silver-Coin Sales Gain to All-Time High in January

30-Jan (Bloomberg) — Sales of American Eagle silver coins by the U.S. Mint jumped to a record this month on increased demand for an alternative to currencies as the U.S. central bank presses on with unprecedented stimulus.

Sales surged to 7.42 million ounces so far in January, the biggest monthly total since 1986, when the Washington-based Mint began the transactions, Michael White, a spokesman, said in a phone interview yesterday. The figure compares with the 1.635 million ounces sold in December, according to mint data.

So-called loose monetary policies and rising industrial consumption will support silver demand, according to Morgan Stanley, which described the metal as a “cheap gold proxy” in a Jan. 24 report. Prices have more than doubled since 2008 as the U.S. Federal Reserve, which concludes a two-day policy meeting today, boosts stimulus to spur a recovery. Investment holdings of silver reached an all-time high this month.

[source]

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The Daily Market Report

Silver Regains $32 as Gold Consolidates Below $1700


23-Jan (USAGOLD) — This week, the precious metals are being underpinned by fresh monetary easing by the Bank of Japan, amid heightened worries about central bank independence. The BoJ doubled its inflation target to 2% on Tuesday and pledged to buy an additional ¥13 trillion in assets each month beginning in 2014. This move was widely expected in light of the intense political pressure applied by the new Prime Minister, prompting Bundesbank President Jens Weidmann to call out Japan specifically for “alarming violations” of central bank autonomy. I presume Weidmann was referring in part to Abe’s threat to nationalize the BoJ if they didn’t see things his way.

BoJ governor Shirakawa categorized the new policy as “a resolute advance” toward easier money. In fact, the BoJ policy rate has been 0.0-0.1% for four-years now; money can’t get much easier than that. It’s amusing that the 2007 high in the call rate at 0.5% would now be considered extremely tight policy. Rates haven’t been above 1% in Japan since the mid-1990s.

So as Japan advances resolutely toward easier money, it’s worth noting that this strategy has been a pretty decisive failure since the BoJ began cutting rates more than twenty-years ago. Ah, but easier monetary policy is the path of least resistance, requiring little effort (save a little arm twisting) on the part of politicians. In fact, it frequently allows those politicians to avoid — or perhaps more accurately forestall — painful fiscal reforms. I suspect that when PM Abe gets to install his own man to head the BoJ in April, we’ll see those new asset purchases sooner rather than later.

Mohamed El-Erian, CEO and co-CIO of bond giant PIMCO, wrote yesterday that “Japan is not the first country to go down [the path of actively trying to weaken its currency]. Several advanced and emerging economies preceded it, and I suspect that quite a few will follow it.”

The prospect of a currency war seems be an overarching theme at this year’s World Economic Forum in Davos as well. If the world’s financial, political and academic powerhouses are concerned about beggar-thy-neighbor currency devaluations, perhaps you should be as well.

Gold of course is the classic hedge against currency debasement, but hard assets in general should benefit as investors seek shelter from currency devaluation. As we noted in commentary a week ago, the white metals (led by platinum) have been outperforming so far this year. Silver is up an impressive 7.1% so far in 2013. By comparison, gold is up a scant 1% since the first of the year. So, let’s take a quick look at silver:

Silver has pushed convincingly back above $32.00 this week, establishing new five-week highs and threatening the 100-day moving average at $32.57. As the near-term technical picture brightens, it’s important to remember that silver has been confined to a broad — nearly $24 dollar — range since 2011. To provide a little perspective, the midpoint of that range is presently well protected at $37.93.

Weekly Silver Chart

While recent tests below the 200-day moving average warrant a measure of caution, these losses could not be sustained and silver is now comfortably 5.5% above this important longer-term indicator of trend. While the volatility in recent years has been considerable, action since the high just below $50 was established in April 2011 has the characteristics of a continuation pattern. When you consider that silver was trading in the <$4-$8 range from the mid 1980s until 2005, I'm going to say the underlying trend is still positive. Inflows into derivatives indexed to the price of silver have been very strong in recent weeks, but more significantly demand for physical silver has been nothing short of robust. The U.S. mint sold out of the new 2013 strikes of the popular silver Eagle within the first two weeks of the year, resulting in a suspension of sales that continues to this day as the mint works to replenish its inventory. The supply dearth has driven premiums significantly higher on one ounce bullion coins. Chinese demand for silver is living up to expectations for a 10% increase this year. Many Chinese are viewing silver as a less expensive alternative to gold as a means of wealth preservation. GoldCore reported today that HSBC has been quietly "acquiring large amounts of silver bullion." HSBC reportedly has purchases $876 million (PLN3.65 bln) worth of silver from Polish producer and refiner KGHM in the past twelve-months alone, with a contract in place to provide PLN1.67 bln worth of silver in 2013.

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2013 Silver Price Forecast: Silver Will Perform Like Gold on Steroids

By Peter Krauth
29-Nov (MoneyMorning) — This past March, I asked a highly successful investment advisor what he thought about gold. Since he deals almost exclusively with very high net-worth individuals, his point of view was especially intriguing.

He confided to me that many of his clients had been asking for gold and gold-related investments over the past few years. I can’t say that I was surprised.

But what he told me next simply shocked me.

“Gold’s much too volatile, it’s too risky”, he said. “Sure it’s up, but I try to discourage my clients from investing in it.”

It simply floored me that he thought gold was too volatile. Gold is only up 580% since it bottomed in 2001, without a single losing year to date.

That’s not something you can say about the stock market or any other type of investment.

I can hardly imagine what he must think of silver, as silver prices are up by 725% since 2001.

…For 2013 I think silver, like gold, will set a new all-time nominal price record, likely reaching as high as $54 an ounce.

[source]

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The Daily Market Report

Silver Leads Rebound in PMs


29-Nov (USAGOLD) — Gold is slowly recovering from yesterday’s sharp sell-off, underpinned by bargain hunting and fresh hopes of a deal to avert a drop over the fiscal cliff. The White House has dispatched Treasury Secretary Geithner and senior White House aide Rob Nabors to meet with Congressional leaders, presumably with the hope of moving the debate along. Optimism, and therefore risk appetite, have been buoyed somewhat by the move.

Silver has taken the lead in precious metals, retracing all of the recent short-term losses and setting a new high for the month at 34.40. With gold better, but continuing to lag, the gold/silver ratio is being driven back toward 50. Presumably, the disparity springs from the upward revision in Q3 GDP from 2.0% to 2.7%. Silver being primarily an industrial metal would tend to benefit more from improved economic growth.

However, the upward revision actually missed expectations of 2.8% and is largely attributable to inventory building. Inventories are now seen as adding 0.8% to Q3 GDP, versus -0.1% in the preliminary read. There is now heightened risk of inventory draw-down weighing in Q4. In fact, Goldman Sachs immediately nudged their Q4 forecast modestly lower from +1.7% to +1.5%. I suspect the latest gains in silver — at least relative to gold — may prove fleeting.

Nonetheless, the new seven-week highs in silver may bolster confidence in the gold market in the wake of yesterday’s aggressive selling in the paper market. Rather than silver dropping back toward gold, the yellow metal may instead catch-up to silver.

The market is still searching for answers as to why there was so much selling at the COMEX open on Wednesday. Reportedly, 7800 future contracts — the equivalent of 24 tonnes of gold — were sold right at 8:20am. CME Group spokesman Damon Leavell confirmed later in the day “There were no fat finger trades or technical errors. This was a market-driven sell-off.”

CNBC speculated that it was the result of momentum driven funds liquidating, which caused a cascading affect as sell stops were triggered. There certainly was a lack of momentum and follow-through in the wake of last Friday’s gains, but funds generally don’t exit positions in quite that way. There may have been additional short selling from computer driven algorithms.

But whatever the reason, we’ve seen physical buyers step in time and time again to support this bull market in the face of paper selling. The latest bout of paper selling may once again prove to be a gift — an early Christmas gift if you will — to physical buyers.

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Posted in Daily Market Report, Gold News, Gold Views, Silver News, Silver Views |

The Daily Market Report

Silver Was the Best Performing Asset in President Obama’s First Term

14-Nov (USAGOLD) — Since last week’s US election, the following chart from Deutsche Bank economist Jim Reid has been making the rounds. It clearly shows the silver and gold were the best performing assets during the President’s first term in office.

Based on the LBMA spot fix, silver rose a remarkable 211% between November 04, 2008 and November 05, 2012; from $9.95 to $30.91, to lead all asset classes. If measured from Mr. Obama’s actual inauguration day on January 20, 2009, silver still leads the pack at +173%.

Just as remarkable perhaps, is that as the President’s first term wound down, silver was 38% off its high set in April of last year at $49.78. So at one point in that first term, silver was up 340% from inauguration day and 400% basis election day.

Chart by NetDania

The prevailing sense is that a second term for President Obama has bullish implications for the precious metals, premised on expectations that the next four-years are likely to look a lot like the last four-years. As we pointed out last week, who sits in the Oval Office is of little real consequence; yet I think it is fair to conclude that with the same captain at the helm, the same contentious division of power in Congress and the same super-accommodative Fed, the ship is likely to remain on the same general course.

Philip Klapwijk, the global head of metals analytics at GFMS, summed up some of the driving forces behind silver demand at the LBMA conference in Hong Kong this week. He expects “strong investment demand, higher gold prices on the back of monetary easing, rising inflation expectations and the persistence of ultra-low interest rates,” to continue attracting buyers to the silver market. Klapwijk went on to make a prediction: “We are thinking prices will trend higher next year. I’m not convinced that we are going to $50. I think we will definitely see $40 to $45 prices.”

Gold by comparison was up 124% between November 04, 2008 and November 05, 2012; from $751.20 to $1683.50; +97% basis inauguration day. It was the second best performing asset class during President Obama’s first term.

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The Daily Market Report

Metals Improve as US Markets Move Back Toward Normal Operations


31-Oct (USAGOLD) — Precious metals firmed in overseas trading on Wednesday in anticipation of US markets moving back toward normal operations in the wake of Hurricane Sandy. Gold neared the high for the week at 1718.78, but this level remains intact.

Silver firmed to establish new highs for the week, resulting in a violation of the upper limits of the small triangle pattern that had emerged since last week. Silver’s gains also led to another pullback in the gold/silver ratio from the recent highs around 54.00, but today’s Chicago PMI miss has tempered the bid for the largely industrial metal somewhat. Additionally, investors may be reluctant to take the market decisively one way or the other in advance of Friday’s nonfarm payrolls report and Tuesday’s elections.

Incidentally, the employment gauge in this morning’s Chicago PMI data fell to a 33-month low of 50.3 in October, versus 52.0 in September. I wouldn’t be surprised to see some scaling back of payrolls expectations ahead of the jobs report. Consensus for payrolls is presently running around +118k, and an uptick in the jobless rate to 7.9%.

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Silver Swoons on Rising Growth Risks

26-Sep (USAGOLD) — Silver is retreating in the face of rising growth risks and heightened civil unrest in the eurozone, which are prompting safe-haven flows into the perceived safety of the dollar. Silver is down more than 5% from last Friday’s high at $35.187, having pulled back to retest the 20-day moving-average at $33.396 today. This leaves the high for the year from 29-Feb at $37.501 well protected for the time being.

With nearly half of global demand for silver attributable to industrial applications, waning growth expectations can weigh heavily on the white metals. By comparison, gold is off about half as much as silver from the recent highs on a percentage basis. Of course, silver also led the recent charge higher as central bank actions over the last several weeks stoked inflation expectations; so silver is still more than 20% higher on the year, compared to gold’s 11% YTD gains.

This week’s riots in Spain and Greece are testimony to the reality that unprecedented and controversial action by the ECB, in saying they are prepared to buy an unlimited amount of periphery debt, were nothing more than a delaying action. They succeeded in buying about three-weeks of relative market and civil calm, but the underlying issues — debt and austerity — remain and are once again bubbling to the surface.

Additionally, I think their is a growing realization that the Fed, ECB and BoJ et al are pushing on a rope in their efforts to generate inflation; or perhaps more accurately, their efforts to fight deflation. In other words, QE3, unlimited ECB periphery bond purchases and expanded BoJ asset purchases may simply not be enough to reinvigorate global growth and create jobs.

This may prompt one of three responses: They can simply except moribund growth and high joblessness until markets clear. They can concede that the experiment with ZIRP and extraordinary monetary and balance sheet expansion has been a failure, forcing politicians to make meaningful fiscal reforms. Or they can push back even harder against deflationary pressures, fully utilizing the open-ended nature of some of their latest promises.

The latter seems the most likely scenario in my opinion, given how far down the path we already are. I therefore believe that the latest retreat in the precious metals is corrective in nature.

However, rising growth and geopolitical risks, along with political uncertainty in some of the major western countries has me thinking gold may play a little catch-up with silver in the coming weeks. The inability of the gold/silver ratio to sustain recent downticks below 51, and the subsequent rise above the 20-day moving average may be an early indication of this. Near-term potential in the ratio is back to the 54.00 area, where the 38.2% retracement level of the recent decline corresponds closely with the 200-day moving average.

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Posted in all posts, Daily Market Report, Economy, QE, Silver News, Silver Views, U.S. Dollar |