Gold & Silver Digest: 2/27/13

Adam Taggart
By Adam Taggart on Wed, Feb 27, 2013 - 5:46pm

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.

2/27/13 5:11 PM EST US close metals price quotes from Finviz

Reuters: Gold down 1 pct on U.S. Fed policy and budget cuts

NEW YORK, Feb 27 (Reuters) - Gold fell 1 percent on Wednesday, nearly erasing all of the previous session's gains, hit by disappointment over a lack of new Federal Reserve stimulus and deflation worries over across-the-board deep U.S. spending cuts.

A rally in U.S. equities also weighed on gold's safe-haven appeal, as bullion snapped a four-session winning streak a day after Fed Chairman Ben Bernanke defended the central bank's bond-buying stimulus policy.

On Wednesday, Bernanke said the U.S. jobless rate is unlikely to reach more normal levels for several years, but there were few surprises in his second day of testimony to  the Congress. 

Forbes: Gold Sentiment Sour Like 1976, 1999 Dream Buys

“To hoarders and speculators,” says Time magazine, “gold lately has had about as much luster as a rusty tin can.”

Rings true here in February 2013, but this clanging bell – entitled The Great Gold Bust, and drowned out as a signal to fill your boots only by the New York Times‘ infamous Who Needs Gold When We Have Greenspan? of May 1999 – was rung back in August 1976, right at the very nadir of a 50% pullback in the 1970s’ long bull market in gold.

Bloomberg: Gold Miners Come Clean on Costs After Six Lost Years

The gold-mining industry, which has underperformed the precious metal for each of the past six years, is pledging to report costs more accurately as part of its efforts to win back investor confidence.

Barrick Gold Corp. (ABX) and Goldcorp Inc. (G), the two biggest producers by market value, have begun reporting “all-in sustaining costs” for the first time. The new measure averaged $941 an ounce between the two companies in the fourth quarter. That’s 50 percent higher than the $626 average so-called cash cost they disclosed in the preceding three months.

El Blog de Guillermo Barba: Mexico's Federal Audit Demands Physical Inspection of Sovereign Gold Holdings

Today we have an exclusive note on this blog, but hopefully this can be known through the “mainstream media” too: the Mexican Superior Audit of the Federation (“ASF” in Spanish), in its Report of Supreme Audit Results of the 2011 Public Account” delivered last week to the Chamber of Deputies, gave a stern “recommendation” to the Bank of Mexico (Banxico).

The reason is one of the most important issues we have addressed here: the gold reserves of our country.

As you may recall, last year we informed that after four months of legal wrangling with Banxico, it was forced to give us the information we wanted (that of course they did not want to disclose), about the supposed physical location of Mexico’s sovereign gold holdings.

GoldSeek: Commodity Selloff Gives Fed Room and Reason To Increase QE

The FOMC minutes are propaganda which the Fed tailors to manipulate the markets in the direction it wants at the time of the release. In early January, it raised the specter of an early end of QE in the minutes of the December meeting. The Fed released its minutes of the January FOMC meeting last week. It played the same game in this release, highlighting a split among FOMC members on the issue of how and when to end QE. That’s a far cry from the QE that the market thought was open ended and would remain in force until employment came down to 6.5% or inflation rose above 2.5%. The Fed wanted to put the fear of god into speculators to keep them from buying commodities, particularly crude oil and the monetary metals. The tactic worked in spades last week as commodities got crushed (charts below).

The release was fortuitously timed to coincide with huge Treasury issuance and the ECB’s LTRO repayment, both of which were going to require that dealers and banks liquidate some things anyway to raise the cash to buy the Treasuries and to repay the LTRO loans. It all came together in a mini-meltdown in most commodities. Santelli - ETFs and the Creation of 'Gold Paper'

CNBC's Rick Santelli talks wiht Frank Lesh, FuturePath Trading, about the way ETFs have changed the way investors trade the precious metal

Merk: Buyer’s Remorse at the Fed: Investor Implications

A couple trillion dollars ago the Federal Reserve (Fed) decided quantitative easing (QE) is what the U.S. economy needed. Now, as an increasing number of Federal Reserve Open Market Committee (FOMC) members caution about the dangers of QE, are we seeing a classic case of buyer’s remorse? More importantly, will it return its merchandise and what are implications for the economy and the U.S. dollar?

Silver Bear Cafe: Silver Price Backwardation, Corrections and Perception Shifts

The price of silver futures contracts have been regularly flirting with a state of backwardation ever since the 2008 Financial Crisis, which is a sign of a growing physical silver shortage.

A state of backwardation occurs when the front month silver futures contract commands a price premium to the subsequent months' contracts.

On one hand, this situation could actually provide larger traders who own the physical silverwith an opportunity to simultaneously sell it and purchase futures contracts to recover their metal holdings for a net profit.

Silver Bear Cafe: An Old Issue Of Playboy, And A Crap-Ton Of Silver

"For him, hoarding silver is not just his way of hedging inflation: It is also part of his attempt to create his own independent economy, his own money." - Harry Hurt III

Dear Resource Hunter,

What if I told you, by January 2014, the price of silver is set to jump 525%.

From its current price around $28/oz, the metal will subsequently rise to $175/oz. - and yes, in less than 12 months.

You'd think I was crazy, right? Today I want to show you why history says I'm not…

SilverSeek: Silver: Buy Now! Update #25

In 1980, the price of one ounce of silver reached $50. Today, the purchasing power of the US dollar is substantially less than in 1980.

The price of one ounce of silver would have to rise to $ 150 to reflect the value of the US dollar thirty years ago, assuming an average annual inflation of 3.5%.

During the financial crisis of 2008, the silver price corrected 57% from the high of $20.79 down to $8.95. This correction was followed by a spectacular rise of more than 400% to $48.42. A correction was inevitable and a drop of 42% followed that phenomenal rise.

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