Gold & Silver Digest: 1/14/13

Adam Taggart
By Adam Taggart on Mon, Jan 14, 2013 - 5:52pm

The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.

If you have articles to submit for the next digest, please email them to me by clicking here.

1/14/13 5:26 PM EST US close metals price quotes from Finviz

Reuters: Platinum hits 3-month high on supply worry, gold up

NEW YORK, Jan 14 (Reuters) - Platinum rose to a three-month high on Monday, and is on the brink of being on parity with gold, as the prospect of further supply outages in South Africa
triggered strong buying by commodity funds.

Gold edged up, but trailed platinum's rise, helped by gains in agricultural and energy prices.

Platinum prices received a boost on news that South Africa's Anglo American Platinum is likely to sell or shut its Union mine as part of a review of its platinum business by parent Anglo American.

Wall Street Journal: Gold Rises Ahead of Bernanke; Platinum Climbs on Supply Woes

NEW YORK--Gold rose on Monday in quiet trade as investors bet that upcoming remarks from the Federal Reserve chief would signal a continuation of current U.S. monetary policy.

The most-actively traded contract, for February delivery, rose $8.80, or 0.5%, to settle at $1,669.40 a troy ounce on the Comex division of the New York Mercantile Exchange.

The euro rose to a 10-month high against the U.S. dollar early Monday as a European Central Bank economist was quoted saying there is a "good chance" that the worst of the euro zone's debt crisis was over. Dollar-denominated gold and the U.S. currency tend to move inversely. Europe's debt woes, and the resulting flight into U.S.-dollar-denominated assets, has pressured gold prices at times during the debt crisis.

Gold Core: Does Bank Of England Hold €235 Million Of Irish Gold Reserves?

Today, at 2100 U.S. Federal Reserve Chairman Ben Bernanke speaks and answers audience and online questions at the University of Michigan regarding monetary policy, recovery from the global financial crisis and the many long term challenges facing the American economy.

A poll of London Bullion Market Association members said gold prices will rise between 5.1% and 14% this year, continuing the yellow metal’s bull run into the 13th year.

The euro rose to its highest against the dollar since April 2012, after ECB head Mario Draghi set a bullish tone by not giving any indication the bank would ease monetary policy. Although with ultra loose monetary policies set to continue gold looks set to continue eking out gains in the “single currency”.

MineWeb: Public U.S. gold audit petition hits White House website

The Gold Anti-Trust Action Committee (GATA) and other advocates--who argue the quantity of gold held by the world’s central banks, international bullion banks, and future exchanges is overstated--are backing a petition demanding an assayed public audit of the U.S. gold reserve, published Wednesday on the White House petitions website.

CBSNews: Ignore the "buy gold now" crowd

(MoneyWatch) Last July, Merrill Lynch predicted gold would hit $2,000 an ounce by the end of the year. Money manager Peter Schiff has predicted gold will hit $2,300 by next year and within a few years hit $5,000. These kinds of predictions seem to be driving investor interest in gold.

It's no surprise that so many investors pay attention to such forecasts, despite all the evidence that there are no good forecasters. It's also no surprise that gold seems to defy one of the basic laws of economics as the investment demand for gold has increased along with its price. Prior to 2003, when gold was under $300 an ounce, I don't recall any investors asking if they should include an allocation to gold in their investment plan. Yet today, after a more than five-fold increase, it's one of the most frequent questions I get. In fact, a CNBC survey from last year showed that gold was most often cited by investors as the "best investment," topping even real estate and stocks.

FT.com: India tackles its costly gold addiction

It was no surprise that a deliberate threat at the start of this year by Palaniappan Chidambaram, Indian finance minister, to make gold “a little more expensive to import” sent shudders through the international gold market.

India is the world’s largest gold importer and accounts for more than a fifth of global demand. Last year, a drop in Indian gold imports of about 20-25 per cent – due perhaps to a previous increase in import duty but also to the slowdown of the domestic economy – was one of the main reasons for gold’s relatively lacklustre performance.

SeekingAlpha: Sell Some Gold, Buy Some Timber

No question that gold has had a nice run. It has been up 12 consecutive years and during this period gold prices are up around 500%. This is probably why in 2012, 84% of new cash invested in commodities went into gold funds. But these investors would have done far better if they had invested in another commodity that we use every day and that beat gold by 567% in 2012. While gold was up 6.6% last year - timber was up 37.4% and timber future prices were up 49%.

I’m not surprised. I grew up around a lot of trees and vividly remember our annual family camping trips in the north woods of Wisconsin. It seemed that millions of towering trees – some more than 200 feet tall – closed in on us from all sides for hours on end. But the best part of these trips by a long shot was the pancake breakfast specials and all the stories about the lumberjacks and timber barons.

Silver Bear Cafe: Silver Demand set for Dramatic climb to Historic High in 2013

Silver Investment has so far been one of the most popular market moves of 2013. Silver seems set to achieve a new all-time price record in 2013 on a relentless and historic climb reaching as high as $55 to $64 an ounce. The out-of-proportion Gold to Silver ratio which should move back down is one of the best reasons why Silver will rise faster than Gold. Higher investment demand as paper money loses value & at the same time Gold Prices lose their biggest support – the Ultra loose monetary policy of many central Banks, especially the US Federal Reserve, namely the QE. Higher industrial demand will give Silver a double sided edge as it’s used for solar panels, lighting, electronics and much more.

Bull Market Thinking: Don Coxe: “The Next Time People Make Serious Money On Gold, It Will Come Amidst A Major Kind Of Shock”

These topics included: the sustained delivery of “financial heroin” into global markets, the “rigged” environment of government growth, and the utility of gold as a weapon during dark financial times.

Starting out with, Don spoke to the growing symptoms which one could interpret as the death of capitalism, in saying, “When you’ve got a situation of governments that are running monstrous deficits, are able to borrow at zero…the basic bloodstream mechanisms of capitalism are seriously at risk.” He further added, The basic system is being rigged in favor of expanding [the] size of government. If you expand the size of government at a time when the economy is not growing, what that means is, that the socialist forces are gaining strength. There’s something that’s got to happen to change that.”

Jesse's Café Américain: Gold Daily and Silver Weekly Charts - Fire Up the Crazy Train

This entire 'platinum coin' discussion was a bit surreal.  I was entirely disappointed with many of the arguments in favor of it. 

Be prepared to hear very conflicting views of the economy and the monetary system from various and so-called 'authoratative' sources.  Especially unsupported assertions and somewhat hysterical forecasts of doom and gloom, and just blatant talking of books.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

10 Comments

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 2938
Today's Gold & Silver Digest is now available

See above

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
Speaking of Gold... WOW

If this story holds up... it has huge implications on the ability of entities like the FED to play games with Gold leasing... 

 

http://www.zerohedge.com/news/2013-01-14/it-begins-bundesbank-commence-r...

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 2938
Agree - wow

Jim -

That is a very important development, if indeed true. One that would show that we're entering a new inning in this game.

Overnight PM futures haven't budged, so I'd wait for further evidence before making any decisions based on this news.

 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2379
No reaction?

I looked at the Gold chart when I posted and didn't see it either.. although Gold looks to be fighting its way up a bit now.  Look at the Pt chart though... the small ($8) spike is perfectly aligned with the ZH article posting time. Sympathetic I would say... 

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
kein Gold fur die Deutschen
Jim H wrote:

If this story holds up... it has huge implications on the ability of entities like the FED to play games with Gold leasing... 

 

http://www.zerohedge.com/news/2013-01-14/it-begins-bundesbank-commence-r...

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

When the news story about the repatriation of German gold hit a while back, my basic thoughts were that the Germans will never see that gold.  They have no leverage ... no military muscle, no trade leverage, nothing.  The worse they can do is threaten to kick our military installations out of their country and even that will hurt their economy.  They won't cut off their nose to spite their face.  My bet is they will be put on hold, indefinitely, just like a Fed audit.  Whether the postponement will be done diplomatically or through a false flag event or some other means remains to be seen. 

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
Perhaps the Germans do have leverage.

AO - I certainly see your point. However, what if the Germans threatened to go public with the fact that the US would not or could not return their gold. Would that not start a sequence of events that may just cause the gold/financial situation to spiral out of control. Who then would trust the US with any assets? It may just make all other rational actors try to get their gold back.

 

In other words - Mutually Assured Financial Destruction

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Ken C wrote: AO - I certainly
Ken C wrote:

AO - I certainly see your point. However, what if the Germans threatened to go public with the fact that the US would not or could not return their gold. Would that not start a sequence of events that may just cause the gold/financial situation to spiral out of control. Who then would trust the US with any assets? It may just make all other rational actors try to get their gold back.

 

In other words - Mutually Assured Financial Destruction

Unfortunately Ken, I doubt it would do anything.  Countries all over the world have gone public about the US doing this or doing that and reactions have remained muted to non-existent or have simply been suppressed.  It is public knowledge that the Fed refuses to allow an audit, that the feds refuse to allow an audit of Fort Knox, that the feds refuse to prosecute people like Jon Corzine, that people like Tim Geithner cheat on their taxes without consequence, that the SEC and CFTC refuse to prosecute blatant market manipulations, that we've been behind what I call "the march through the Middle East" (i.e. Iraq, Egypt, Tunisia, Yemen, Libya, Syria, etc.), etc.  See what I mean? 

Here's another example.  The Germans make a threat trying to get their gold back.  US counters with a threat regarding increased tariffs on the importation of German cars.  What are the Germans going to counter with?  Threaten to put tariffs on the cars they're importing from us?  So what.  As I said, from what I can see, they have no leverage.

 

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 728
Two Comments

First, I got a kick out of reading CBS News Money Watch article.  The entire article is founded on the premis that nothing drastic is happening, that the investment environment is within normal parameters and therefore backward comparisons are reasonable.  CBS ignored negative real interest rates and the current risk/return level of the stock market.  The article assumes that there are reasonable alternatives to investing in commodities like precious metals.  Historic comparisons that ignore the realities we face today are less than useless.

Second, if you take a retirement pool of money that would have been considered adequate 5 or 10 years ago and do a 30+ year projection using realistic (non government) inflation estimates and any sort of safe investment strategy return... things look really ugly, especially if you discount the possibility that the government will return YOUR OWN PERSONAL social security dollars as promised.

Unless you are one of the few bullet proof super wealthy, you will be forced to take a risk in some form or other, or chance running out of money at some point.  

Your current choices are the stock market or real assets.  Bonds are out, since they have a negative real interest rate.  

Am I gambling?  Yes.  Would I prefer to be in stocks today? No.  Do I risk running out of funds, if my gamble fails? Yes.

Let's call it like it is.  The US Government has backed us into a corner.  Our choices are limited and risks of any decision are high.

 

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
Repatriation of gold could unwind this ponzi
ao wrote:

Unfortunately Ken, I doubt it would do anything.  Countries all over the world have gone public about the US doing this or doing that and reactions have remained muted to non-existent or have simply been suppressed.  It is public knowledge that the Fed refuses to allow an audit, that the feds refuse to allow an audit of Fort Knox, that the feds refuse to prosecute people like Jon Corzine, that people like Tim Geithner cheat on their taxes without consequence, that the SEC and CFTC refuse to prosecute blatant market manipulations, that we've been behind what I call "the march through the Middle East" (i.e. Iraq, Egypt, Tunisia, Yemen, Libya, Syria, etc.), etc.  See what I mean? 

Here's another example.  The Germans make a threat trying to get their gold back.  US counters with a threat regarding increased tariffs on the importation of German cars.  What are the Germans going to counter with?  Threaten to put tariffs on the cars they're importing from us?  So what.  As I said, from what I can see, they have no leverage.

 

 

At some point this Ponzi is going to collapse. It only remains to be seen what the trigger is. A big scamble to repatriate gold is one possibility. So when does it start in earnest?

Who knows but maybe the Germans could start it.

 

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 2938
Platinum's price exceeds gold's

Months after dropping below the price/oz of gold, platinum has regained price superiority

(source: FInviz)

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