Gold & Silver Digest: 4/8/13

Adam Taggart
By Adam Taggart on Mon, Apr 8, 2013 - 8:59pm

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.

4/8/13 8:58 PM EST US close metals price quotes from Finviz

Reuters: Gold falls on US equities gain, Soros comment

Gold fell on Monday as a stronger performance in U.S. equities and a dollar rise prompted investors to take profits after its rally in the previous session.

Bullion market sentiment was also weakened after billionaire financier George Soros said gold has been destroyed as a safe-haven asset, even though central-bank buying should support prices.

With a lack of major U.S. economic indicators on Monday, investors turned to buy riskier assets such as U.S. equities at gold's expense. The S&P 500 was up around 0.3 percent and has sharply outperformed gold year to date.

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Forbes: Speculators Continue To Sell Gold, Silver Futures, Options -- CFTC

For the second week in a row, speculators shed bullish gold and silver futures and options contracts traded on the Comex division of the New York Mercantile Exchange, according to U.S. government data, with funds turning net-short silver in one of the reports.

For the week ended April 2, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report chopped the net-long position in gold, returning to levels seen in early March. That essentially wiped out most of the newly established bullish positions built during late March.

CNBC: Gold Slides as Stocks and Dollar Rise

Gold fell on Monday as a stronger performance in U.S. equities and a dollar rise prompted investors to take profits after its rally in the previous session.

Bullion market sentiment was also weakened after billionaire financier George Soros said gold has been destroyed as a safe-haven asset, even though central-bank buying should support prices.

Wall Street Journal: Gold Showing Some Technical Signs Of Tracing Out A Bottom

Gold’s recent weakness has given bulls reason to worry about the precious metal’s long-term outlook, but there’s still a number of technical reasons to believe a short-term bounce may be right around the corner.

Last Thursday, the SPDR Gold Trust GLD -0.43% exchange traded fund (GLD) closed at the lowest level since May 2012, as recent strength in the U.S. dollar, and the equity market hovering just below record highs, lowered demand for the precious metal, which many view as a haven asset.

BBC News: How much gold is there in the world?

Imagine if you were a super-villain who had taken control of all the world's gold, and had decided to melt it down to make a cube. How long would the sides be? Hundreds of metres, thousands even?

Actually, it's unlikely to be anything like that size.

Warren Buffett, one of the world's richest investors, says the total amount of gold in the world - the gold above ground, that is - could fit into a cube with sides of just 20m (67ft).

The Globe and Mail: Sprott: French megabank SocGen is dead wrong on gold

French megabank Société Générale certainly isn’t a friend of the gold bugs. Earlier this month, it released a report proclaiming the end of gold’s long bull market and predicting the yellow metal could crash to only $1,375 (U.S.) an ounce by the end of the year.

Now, Toronto’s Sprott Asset Management has weighed in, and to nobody’s surprise, is denouncing the analysts at SocGen as not knowing what they’re talking about.

GoldSeek: Gold price suppression: the game goes on

The slide in precious metal prices has done much to undermine investor confidence, yet the indications are that demand for the physical metals remains strong. This leads many observers to comment that paper gold and silver and not bullion are driving prices. The current sell off is a combination of long paper positions capitulating, new short positions being opened by trend-chasers, and importantly, bullion banks squaring their books.

A better way to differentiate between futures and forward markets and physical demand is to regard the former two as used by speculating investors and the latter by buyers seeking financial protection from systemic risk. In the middle there are those who buy futures to take delivery, but they are a minority. This divergence of motive explains why paper markets seem to be playing a different tune from the physical market.

ZeroHedge: 80% Chance Of 40% Silver Short Squeeze

In the last 20 years, Silver shorts (in Silver futures, based on the Commitment of Traders data) has only been as high as it is currently for five periods. Four of those five periods were followed by considerable rallies in silver prices. The one period where prices flatlined (fell modestly) was a slow and steady rise in shorts (as opposed to the spike-like move currently). Of course, with near record amounts on the short side of the boat, it would seem clear where Silver should go next but this time is different we will be told.

  • Jul 1997: +70% rise over 29 weeks,
  • Nov 2000: -13.5% in 53 weeks,
  • Oct 2002: +13.2% in 12 weeks,
  • Apr 2003 +19% in 24 weeks,
  • Aug 2005 +114% in 37 weeks,

Average +40.5%

SilverSeek: The State Of Silver and Other Anomalous Events

From a technical perspective, the price of silver is obviously breaking down. The market has been 'trading heavy' for a while. Furthermore, the entire commodities complex is trading in a downward trending channel, except for oil. The U.S. Dollar is also stronger because of the Euro aftermath.

Nevertheless, lots of silver longs are still holding their positions since open interest has remained high despite the move down from the 32 region. Open interest will usually fall on big declines like this, but many longs have hung on and some believe the big shorts want to force a real washout before covering a large portion of their positions.

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