Gold & Silver Digest: 3/11/13

Adam Taggart
By Adam Taggart on Mon, Mar 11, 2013 - 6:48pm

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.

3/11/13 5:50 PM EST US close metals price quotes from Finviz

Market Watch: Gold futures log highest close of month

Gold futures finished with a minor gain Monday, finding little reason to break out of their recent trading range but scoring the highest settlement so far this month.

Gold for April delivery GCJ3 +0.20% climbed $1.10, or 0.1%, to settle at $1,578 an ounce on the Comex division of the New York Mercantile Exchange, after trading between $1,574.50 and $1,582.50.

That was the highest settlement for a most-active contract since Feb. 28, according to FactSet.

Yahoo! Finance: Gold Is an Investor’s Paradise: iiTrader’s Baruch Says

With so much attention being given to the record highs being set in the stock market, not to mention the jitters that accompany that, it only seems fitting that other asset classes might currently be worth a look. In fact, aside from the 30% drubbing that has been unique to Volatility (^VIX) lately, Gold stands almost alone in terms of its conspicuous under-performance, and that suits Bill Baruch, market strategist at iiTrader just perfectly.

"Right now, this is an investor's paradise for gold," the Chicago-based trader says in the attached video. "We haven't seen (gold) below $1500 since 2011, and right now we're pressing the lows on the year and I think it's a great buying opportunity."

Barron's: Gold: Loss of ‘Stickier’ ETF Investors Is Greatest Risk: Barclays

Exchange-traded funds have a reputation for fast money flows. But when it comes to gold, Barclays Capital’s commodity strategists are more worried about the loss of investors who tend to sit on their money.

Barclays’ Suki Cooper writes recently that gold exchange-traded product flows turning negative pose the “greatest downside risk for gold prices.” Gold-fund ownership “has tended to reflect longer-term, ‘stickier’ investor interest,” Cooper writes. Presumably the argument would be that, once the buy-and-hold crowd leaves, the fast money is that much likelier to depart.

The Daily Reckoning: How to Go Gold

Central banks have become net buyers of gold for the first time in 20 years. There is uneasiness within the United States and among its trading partners with exotic Federal Reserve policies such as quantitative easing (QE), QE2, QE Infinity, and Operation Twist. The value of the dollar has eroded by about 85% since Nixon, breaking the dollar’s last link to gold, declared on Aug. 15, 1971, that “Your dollar will be worth just as much tomorrow as it is today.” Some argue that the Fed caused the housing bubble, the housing bust, the crash of 2008, and the Great Recession.

The Washington Post’s Ylan Q. Mui recently published a piece about a perfectly sensible proposal being entertained by the Virginia legislature to put together a joint subcommittee to study linking the U.S. monetary unit to precious metals. This modest piece received over 1,300 reader comments. Monetary policy is on the minds of voters.

The Gold Report: Eight Companies Swiss Money Manager Joachim Berlenbach Gives High Grades

In an environment of rising capital expenses, gold producers big and small are left with little or no free cash flow. Instead of investing in exploration to maintain production, too many companies are cutting costs and high-grading their current resources. Joachim Berlenbach, fund adviser with Switzerland's Earth Resource Investment Group, believes this kind of short-term thinking will lead to decreased production and a higher gold price. In this Gold Report interview, Berlenbach shares his ideas on how to succeed in this stock-picker's market.

Gold Silver Worlds: Gold Price “Weakness” Explained By The Ongoing Currency War

The bearish sentiment against gold (and silver) is almost unprecedented. The mainstream media is using every piece of news “against” the metals. Take for instance Soros who sold a large part of his GLD ETF holding. The news was blown up as being evidence of the bearishness of Soros vis-à-vis gold. Obviously we did not find any interview or written piece from Soros, proving he expects gold to underperform. As noted by contributor K. Xeroudakis, precious metals strategist, it is a fact that trading the GLD requires an official submission to the SEC. In contrast, Soros can remain entirely anonymous when trading the gold futures in the COMEX or buying physical gold to store it in a vault. The truth of the matter is that nobody knows the real gold holdings of Soros; so concluding that he is bearish without knowing all his positions is simply unacceptable. Read more in our article Gold price takedown: noise vs facts.

Back to the facts. The dollar gold chart does not look very rosy in the short term. For the time being, from a chart point of view (see below), the gold price in dollar terms is in a major support area. Suppose it would not hold, then (much) lower prices can be expected. The positive message that comes out of the price chart is that the every retest of this major support area is taking much longer time (see first of the four charts below).

GoldSeek: Gold Still Appears To Be the Ultimate Currency

The Dow Jones Industrial Average climbed a steep wall of worry and last Tuesday returned to its all-time high from late 2007. The Dow finished at 14253.77, topping the previous record set in October 2007 and is already up 8.8% for the year. The Fed’s expansive monetary policy to prop up the economy has kept stocks climbing higher despite a less than glowing global economy. By pumping trillions into the financial system, the Fed has convinced investors it will provide a safety net for future shocks. In addition, by keeping interest rates extremely low, the Fed is forcing investors to seek higher returns in the stock market.

The financial press is hailing it a historic day.

SilverSeek: A Moment of Clarity

This is excerpted from the weekly review of March 9, 2013 -

Every once in a while, someone utters a statement that suddenly galvanizes the issue at hand. In the fable “The Emperor’s New Clothes,” Hans Christian Andersen tells of two weavers who convince the emperor that their special clothing for him is invisible only to those unworthy. When the emperor parades in front of his subjects wearing the special clothing, a child cries out the obvious, “he isn’t wearing any clothes at all.” That’s the first thing that came to my mind when I read of the US Attorney General’s words before a Senate hearing this week.

Deviant Investor: Silver – Keep It Simple!

  • Nixon dropped the link between the dollar and gold in 1971. Thereafter, the money supply rapidly expanded, consumer price inflation went wild, and both silver and gold increased in price by over a factor of 20 in early 1980.
  • Volcker raised interest rates, killed both inflation and inflationary expectations, and changed the economic landscape to allow for a nearly 20 year bull market in stocks. Silver and gold dropped below their long-term up-trend. Why put money into silver from 1982 – 2000 when it was easy to make money in stocks?

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