Gold & Silver Digest: 4/16/13

Adam Taggart
By Adam Taggart on Tue, Apr 16, 2013 - 6:44pm

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.

4/16/13 7:37 PM EST US close metals price quotes from Finviz Why Did Silver & Gold Collapse? Mike Maloney and Chris Martenson

In a review of the reasons the gold and silver prices collapsed, Mike Maloney spoke with Chris Martenson of Peak Prosperity. 

Dr. Martenson is a scientist at his core. His Ph.D. is from Duke University, and his MBA in Finance was earned at Cornell. For Dr. Martenson, reaching conclusions simply results from the data, and when it comes to gold and silver, the data is shocking.

Reuters: Gold ekes out gain after extending slide to 2-year low

Gold recovered almost 2 percent on Tuesday after buyers of physical bullion jumped in at cheaper prices following Monday's historic plummet, but the market had trouble sustaining gains and there was little confidence that gold was out of the woods.

Gold extended its decline to a two-year low overnight before steadying. The metal's historic sell-off in the last two sessions prompted investors to assess the damage to bullion's status as a hedge against inflation and currency depreciation.

Time Business & Money: What’s Behind the Crash in the Gold Market?

One of the more interesting phenomena to take place in the markets in recent memory has been the seemingly invincible rise in the value of gold. In the decade between 2001 and 2011, the price of gold rose from $256 per ounce to a high of $1,920 — a whopping 650% return for those lucky enough to have timed the trade perfectly.

But since 2011, the gold market has shown signs of weakness, culminating in a multi-day crash that began Thursday and continued into Monday.

Fox Business: Gold Bugs 'Panicking,' Selloff To Continue: Analysts

Gold bugs thrive on a sense of panic to push their view that gold is the safest investment of all. But who’s panicking now?

“Everybody wants out,” said Darin Newsom, senior analyst at commodities research firm DTN. “They’re all running for the door at the same time.”

Newsom said commodities as a whole are under pressure as the 2008 financial crisis has receded in the minds of investors, many of whom are now turning their attentions to stocks. The influx of cash into equities has pushed the major indexes -- the Dow Jones Industrial average and S&P 500 -- to record highs in recent weeks.

Bloomberg: Gold’s a Hedge Against the Apocalypse. So’s Canned Food.

Yesterday, gold futures fell 9.3 percent, the biggest one-day drop in 33 years. With two-day losses of 13 percent, gold’s steady decline since October 2012 has turned into an almost unprecedented rout.

Is there an explanation for this? You bet. Actually, there’s no shortage of explanations. The Wall Street Journal and Bloomberg Businessweek‘s Peter Coy point to lowered inflation expectations. Commodities brokers see a broad drop in metals driven by a weakening China. Goldman Sachs & Co. analysts, who presciently cut their gold forecasts last week, cite fears that central banks will cut their gold reserves. If you want more, John Cassidy has a list over at the New Yorker.

Yahoo! Daily Ticker: As Gold Prices Collapse, Investors Seek Answers

It's the oldest market pattern in the book.

A long-ignored asset finally gets hot, and its price rises for a while. The rising price of the asset attracts new investors, which drives prices even higher. And as the price rises, investors develop compelling explanations for why that's happening, only some of which may have a solid basis in fact.

ETF Daily News: CME Group Destabilizes Gold and Silver Markets

eff Nielson: For those who don’t know it, the CME Group is the operator of the U.S.’s paper-fraud markets for commodities. The role of this crime syndicate is an important one: to keep commodity markets generally depressed, in order to hide the extreme/excessive currency dilution resulting from the out-of-control money-printing of the Western central banks.

The currency-dilution is a matter of record: official government policy for every government on the planet – “competitive devaluation.” The consequences of our governments competing to see who can drive the value of their currency to zero the fastest are obvious and unequivocal: allprices for all hard assets should be steadily (and rapidly) rising…except for real estate.

The Gold Report: Tungsten Enters the Limelight with Bullish Fundamentals: Ken Chernin

The Metals Report: Tungsten is used in many applications—to make tools, drill bits, glass bottles, aluminum cans, steel and wire—because it has a high melting point and is very dense. It's a very useful metal, but the British Geological Survey called it an endangered substance in a 2012 report. Why is that?

Ken Chernin: Tungsten ranked second behind rare earths in the British Geological Survey's 2012 supply risk index based on a number of factors like location and concentration of production and reserves, but the report highlighted that tungsten (as well as rare earths) has lower recycling and low substitutability. The supply risk for tungsten stems from China's role in the industry. China accounts for approximately 83% of global tungsten concentrate production and about 62% of global tungsten reserves. China became a significant player in tungsten production in the mid-1980s. By the late 1990s, it had flooded the global market with tungsten causing concentrate prices to plunge below most western producer's variable cost. As a result, the vast majority of western mines were closed.

Wall Street Window: Why The Gold Bear Attack Crash Really Happened - Mike Swanson

You have just witnessed a historic crash in gold.

This is a quote from the Yahoo Message Board for gold mining stock GSS posted yesterday at 6:19 PM:

"Terrible, terrible, terrible and tomorrow will continue, unfortunately
I am out. I will sell at opening."

On Friday there was an article on with the title "Shares of GSS Oversold."

King World News: Richard Russell - Gold Plunge, Billionaires & A Market Crash

With gold and silver rebounding after a 2-day cascade of selling, today the Godfather of newsletter writers, Richard Russell, weighs in on the metals downdraft, billionaires, and a stock market crash.  But first, King World News published a piece in mid-February in which Russell made this stunningly accurate prediction:

“Just before the huge 1979-80 surge, we saw a big ‘clean out’ correction in gold.  I believe history is about repeat.  This is the correction that will scare out all the in-and-out traders and the newcomers.”

Now you can read what Russell is saying in the aftermath of the devastating gold smash he predicted:

Jesse's Café Américain: Market Manipulation, News, and Leverage

This piece on leverage and market manipulation came out a few weeks ago. Philip Byrne reminded me about it, and he is right.

Using leverage in these markets is a dangerous strategy.

I was also reminded of this because of the recent 'leak' of the FOMC minutes by the Fed that demonstrated that they had a 'preferred recipients' list who receive the information ahead of the markets, although normally not by a day.

SilverSeek: The Price Smash – Who, What, How and Why?

There is no doubt that we are at a critical juncture in gold and silver and the first order of business is to drill down to how and why prices plunged so much Friday and Monday. Certainly, more commentary (mostly on gold) is being written about the precious metals currently in regards to the price weakness than I can remember. Unfortunately, much of the analyses and commentary is wide of the mark, in my opinion. But the great thing is that everyone interested in what just took place with gold and silver prices can decide for themselves from the multitude of opinions offered as to what makes the most sense.

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.

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