Gold & Silver Digest: 3/6/13

Adam Taggart
By Adam Taggart on Wed, Mar 6, 2013 - 7:06pm

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.

3/6/13 5:34 PM EST US close metals price quotes from Finviz

Reuters: Gold up, faces headwind from Wall Street rally

NEW YORK/LONDON, March 6 (Reuters) - Gold rose on Wednesday, but analysts expect the breakout in Wall Street stocks to new highs and data showing an improving U.S. economy to pressure the precious metal's safe-haven appeal.

News of another gold purchase by South Korea's central bank last month and hopes that outflow in gold-backed exchange-traded funds will peter out soon gave support. Bullion has now risen for a second day after its four-session losing streak.

The U.S. equities market resumed its climb into uncharted territory, with the Dow setting an intraday record for a second session on encouraging jobs and factory data. An extensive survey by the Federal Reserve's regional branches showing continued economic growth in January also boosted the stock market. 

Peak Prosperity: Obscenely High Concentrated Short Positions in the Precious Metals

Sometimes, a picture is worth a zillion words. 

The chart above (source) shows the ridiculously high contrated short positions in gold, silver, platinum and palladium. For example, it would take nearly 150 days of world production of silver to cover the short position held by the top 8 traders.

Casey Research: Yesterday In Gold & Silver

The gold price rallied about seven bucks by 3:00 p.m. during the Hong Kong trading session on their Tuesday afternoon...and then hung in there until the London p.m. gold fix at 10:00 a.m. Eastern time in New York.

From there, gold got sold down below it's Monday closing price about ten minutes before the Comex close.  That was the low of the day at $1,571.10 spot...and from that point it rallied back about four bucks or so in pretty short order before trading sideways into the 5:15 p.m. electronic close.

Acting Man: Gold Caught With Its Backwardation Showing

With all the discussion on the Internet, some of it confusing, we thought a picture would be worth a thousand words.

Backwardation is when there is a profit to decarry the metal.  This is the simultaneous sale of metal in the spot market and purchase of metal in the futures market. Selling is on the bid and buying is at the ask. So the spread one could earn is the decarry: Spot(bid) – Future(ask).

Forbes: Dow Not At New Highs Priced In Gold Or Cost Of Breakfast

Forget about the Apple effect. Not including Apple in its 30 constituents is just one of the Dow Jones Industrial Average’s many quirks. So, too, is its ever-changing Dow divisor, a number seemingly picked at random to smooth out the math in the DJIA.

Neither of these oddities changes the fact that this oddest of equity averages is hitting new all-time highs right now, signaling, if you ever doubted it, that the United States’ economy is being re-forged as well.

The Gold Report: Eric Sprott: Central Bankers Are Gaming Gold

The Gold Report: The price of gold has dipped under $1,600/ounce ($1,600/oz); silver is below $30/oz. Is this a case of living by the sword and dying by the sword, where precious metals prices only go up in a bad economy and are doomed to languish when things go well?

Eric Sprott: That is an interesting question because I do not know what it means to go well these days. I see things going from bad to worse economically, and so do many others. Walmart just announced that January 2013 was a lousy month and its start to February was its worst in years. Apple's iPhone manufacturer Foxconn just announced a hiring freeze in China because of a decline in iPhone production. Italian industrial production new orders were down 15%. You can feel the recessionary malaise setting in.

Safe Haven: Where To Go as Swiss are Shutting Out U.S. Taxpayers

Swiss Banks Fear U.S. Monetary Authorities

 

For some years now, Swiss Banks have not been willing to take on U.S. clients because of the aggressive tactics of the U.S. IRS. Since they hauled UBS over the coals for harboring U.S. tax evaders and continue to investigate many Swiss Banks, the IRS has posed a threat to Swiss companies operating in the United States.

No matter where they live in the world, fear of being involved with a U.S. tax evader has put the wind up Swiss companies, and understandably so.

GoldSeek: Raging Gold Bull & Disputed Propaganda

The propaganda has turned openly laughable. On the popular major financial news networks, the recent decline in the so-called Gold price has prompted quite the parade of clowns on the ship of fools to trumpet nonsense. The widely published and posted Gold price is dominated by futures contracts, and thus as corrupted as meaningless. The entire global financial structure is crumbling before our eyes. The gang of central bankers has applied their monetary policy for four and a half years since the implosion of Lehman, Fannie Mae, and AIG. The first is dead, while the second has transformed into a sanctioned subprime lender again, and the latter is a sinkhole. The deceptive messages are shrill, acute, and motivated from desperation. The West cannot solve its problems, hardly properly described as a financial crisis anymore, under the current framework bound to the fiat paper currencies. The global monetary war is heating up notably. The heavy liquidity has caused unfixable distortions in every conceivable bond market niche. The new and better debt devices have been exposed for their shams. The leading central bankers lost their credibility long ago. The weakness is as broad as it is deep, a reliance upon paper wealth and paper structures and paper contracts, during a time of zero bound interest rates and unfettered hyper monetary inflation to cover the debts. Almost no foreign USTreasury Bond buyers exist anymore. The US has become Weimar Amerika, a fascist enclave.

Silver Bear Cafe: Gold Prices Are Being Manipulated and Here's What To Do About It

If you've ever suspected gold prices are being manipulated, you're not alone--and you're right, they are.

Against the backdrop of fiscal mismanagement, political incompetence, and failed austerity measures, the world's biggest traders have all bet heavily on gold. Lately, they've been pulling out all the stops to get what they want while laughing all the way to bigger bonuses.

Silver Seek: Hope is Fear Gone Bad for Paper Silver Shorts

The price pattern in silver and gold remains intact. It shows that each time these precious metals are pushed below a key technical moving average, new buyers come into the market.

Most are weak hands, speculators or amateur traders who have fallen in love with the idea of a futures contract, although the original longs have still refused to trade their valuable metal for intrinsically worthless paper dollars.

Market Watch: For silver, being cheap is a good thing

SAN FRANCISCO (MarketWatch) — Silver’s free fall may be coming to an end.

After a nearly 9% dive in silver prices this month, investors should be able to breathe a sigh of relief as growth in industrial and investment demand gains pace, and calls of “oversold” conditions and “bargain” prices for the precious metal intensify.

“Silver is grossly oversold at current levels, more so than any time in the past five years,” said James Carrillo, senior portfolio adviser for precious-metals investment firm Swiss America Trading Corp.

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.

7 Comments

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3102
Mining stock reversal

I've been working with a mentor who has been teaching me the basics of trading options (I'll do an "options for beginners" post shortly).

We've been watching the indexes for the PM miners, GDX and GDXJ, looking for an attractive entry point for buying call options. Apparently, the behavior over the past few days indicates a technical pattern called “3 inside up”, as the "inside" day is followed by a bullish engulfing. For those not fluent in TA jargon (which I barely am), this is supposed to be a very positive buy signal.

I'm still skeptical that TA is mostly mumbo-jumbo (especially in an era where an HFT algo is on the other side of your trade instead of a live person), but I plan to by my first call options (ever) tomorrow.

I'll report back how the trade fares over the next few weeks if folks are interested in tracking.

reflector's picture
reflector
Status: Gold Member (Offline)
Joined: Aug 20 2011
Posts: 269
options

i will be interested to hear what you are up to with options, adam, i'll check back.

i've bought PM call options over the last couple years, and mostly done very poorly, as the calls expired out of the money.

my belief was, how could gold and silver not continue to go up, with the current macro economic situation, with ZIRP, with endless QE, etc?

but, the market manipulators are currently in control.

for the most part i've given up on any kind of paper trading and just stack physical now.

 

 

 

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3176
ditto

Thanks Adam, I'm also very interested in your option trading experience.

Doug

kevinoman0221's picture
kevinoman0221
Status: Silver Member (Offline)
Joined: Sep 25 2008
Posts: 144
I'd be interested too. It

I'd be interested too.

It seems I often hear that using options is what savvy traders do. I don't consider myself a savvy trader but would like to hear how it goes. 

jcat3022's picture
jcat3022
Status: Bronze Member (Offline)
Joined: May 9 2012
Posts: 78
Just seems like this market

Just seems like this market can get no momenteum going?!?

janb's picture
janb
Status: Bronze Member (Offline)
Joined: Mar 11 2008
Posts: 61
How to capitalize on dips

Is there any way I could work with an experienced trader to boost my holdings in Bullion Vault?  Or find someone to help me figure out when to buy inverse ETF 's in precious metals?  With all those concentrated short positions, surely there'll be a hit.  Or has it happened already?  I notice that the date on Adam's  chart is Jan. 6. 

Also, did you guys see the tfmetals report today?  Turd has posted a warning about a possible bullion market collapse.  Thanks,   Jan

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2387
Hi JanB

Really, I would not play with the inverse ETF's... because they are levered (3X in the case of the DUST:NUGT pair).  I have talked about using them here... but only as a hedge when I am holding miners and get to a point where I just can't sustain any more losses... I could either sell the miners at that point, or add the inverse ETF (DUST).  These things move fast and I never hold them unless I am watching the market like a hawk.  

If you want to play cycles, or at least the more predictable beat downs... Jesse points to options expiry as one sign post to use;

   

http://jessescrossroadscafe.blogspot.com/2013/02/comex-metals-option-expiration-for.html

But really, if any of us could predict these things.. we would all be rich already, right?  Someday, Gold and Silver will let loose, and the miners will go with them.  Turd's site is down right now.. coincidence?  

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