Gold & Silver Digest: 4/18/13

Adam Taggart
By Adam Taggart on Thu, Apr 18, 2013 - 8:29pm

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.

4/18/13 7:43 PM EST US close metals price quotes from Finviz

Reuters: Gold up in roller-coaster trade, sentiment stays uneasy

Gold rose on Thursday on better physical demand but buyers stayed cautious following the metal's historic sell-off earlier in the week.

Bullion rebounded sharply after falling almost 3 percent in Asian trade on news that holdings of the world's largest exchange-traded fund, the SPDR Gold Trust, had dropped 1 percent to their lowest level in three years.

Signs of improving physical demand at lower prices, including a spate of buying of gold bars, coins and nuggets in Asia, and very strong U.S. gold coins sales, lifted the market. 

BusinessWeek: Gold Burns, From Singed to Scorched

Investing in gold during the metal’s rally was a little like wandering into a jewelry store with a number of different counters.

Straight ahead, you could buy physical gold itself. Off to one side, you might be tempted by gold exchange-traded funds, which seek to mirror the metal’s performance, with more liquidity and none of the hassles of storing the stuff. Yet another offering: shares in companies that mined gold, which offer the potential for leverage returns but also exposure to the stock market. In the back, you might buy silver or platinum, which have historically moved in the same direction as gold, with added exposure to certain industrial factors.

bullionbullscanada.com: Paper-Gold Holders Flee To Real Metal

During the recent, massive slaughter in the (paper) gold market, investors have been bombarded with a million-and-one “explanations” by the mainstream media as to why people are “fleeing gold”. The problem is that not one of them is consistent with the known facts.

It has been widely reported that holdings of gold-ETF’s have plunged (by the largest amounts on record). At this point analysis becomes simple: if these people were “fleeing gold” there would be massive stacks of gold piling up in warehouses – as people discarded all of this “unwanted” yellow metal.

The Economic Collapse: 10 Signs The Takedown Of Paper Gold Has Unleashed An Unprecedented Global Run On Physical Gold And Silver

The crash of the price of paper gold on Monday has unleashed an unprecedented global frenzy to buy physical gold and silver.  All over the planet, people are recognizing that this is a unique opportunity to be able to acquire large amounts of gold and silver at a bargain price.  So precious metals dealers now find themselves being overwhelmed with orders in the United States, in Canada, in Europe and over in Asia.  Will this massive run on physical gold and silver soon lead to widespread shortages of those metals?  Instead of frightening people away from gold and silver, the takedown of paper gold seems to have had just the opposite effect.  People just can't seem to get enough physical gold and silver right now.  Those that wish that they had gotten into gold when it was less than $1400 an ounce are able to do so now, and it is absolutely insane that silver is sitting at about $23 an ounce.  If the big banks continue to play games with the price of gold, we are going to see existing supplies of physical gold and silver dry up very quickly.  And once reports of physical shortages of gold and silver become widespread, it is going to absolutely rock the financial world.  But this is what happens when you manipulate free markets - it often has unintended consequences far beyond anything that you ever imagined.

The following are 10 signs that the takedown of paper gold has unleashed an unprecedented global run on physical gold and silver...

Slate: Ron Paul Isn't Worried About Falling Gold Prices

It was the steepest two-day decline in gold prices in 33 years, a 13 percent fall in two days of trading. After years of surging value, of investors hedging against inflation, there was a sudden sell-off that might have been a reaction to... well, to inflation not actually increasing. Over at Business Insider, Walter Hickey looked at Ron Paul's portfolio and estimated that America's best-known goldbug was "personally losing a fortune."

On Wednesday I joined the Paul movement for the launch of the Ron Paul Institute for Peace and Prosperity, at the Republicans' Capitol Hill Club, right near the House offices formerly used by the congressman's staff. I asked Paul: What was behind the gold tumble? Was he worried?

Forbes: Gold Will Get The Last Laugh On Central Banks

Intense recent selling of gold and other precious metals resulted from a confluence of factors. Gold plunged 10% Monday, ending the session at about $1,350—down nearly 30% (and more than $500) from its highs, to its lowest level in more than two years.

Europe launched the rout by pressuring Cyprus last week to sell the bulk of its gold reserves to help repay €9 billion in European Central Bank emergency aid. Alas, the markets see the Mediterranean island as a model for future bailouts. The ECB’s eagerness to force the sale of gold reserves to cover soaring bail-out costs eliminated its role as a currency—at least for now.

Gold Switzerland: Gold Entering a Virtuous Circle

Fundamental and technical factors for gold are now in total harmony and gold is entering a virtuous circle that will drive the price up at its fastest pace since this bull market started in 1999.

  • It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualised.
  • It is a fact that the US dollar has declined 80% in value against gold since 1999.
  • It is a fact that the dollar and most other currencies have gone down 98-99% against gold since 1913 when the Federal Reserve Bank of New York was created.
  • It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
  • It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.

Gold trend

We expect gold to start a substantial rise now which will continue for 5-10 months before any major correction...

321Gold: Merk Gold and Currency Outlook

Anyone who’s ever had a brick fall on one’s feet knows how much it can hurt. It’s little consolation if that brick is made of gold. What’s happening to the price of gold? And has our outlook changed, be that for gold, the U.S. dollar or currencies more broadly?

With regard to gold, the primary change is in its price. That’s not a very good reason to be more positive or negative on the fundamentals of the yellow metal. Since the market appears to be in a “glass half-empty mood”, let’s list some of the negatives:

Silver Bear Cafe: Gold and Silver Sell-Off a Nonevent

Precious metal expert Rick Rule is not worried about the recent smack down in gold and silver prices. Rule is motivated by wealth protection. So, the price decline is a "nonevent." Rule asks, "What are the alternatives? Perhaps you'd like to buy a 30-year U.S. Treasury, something Jim Grant famously described as a return-free risk." Rule thinks the financial world is far from healthy and says, "I have extreme nervousness in regards to a collapse. . . . The only way we could avoid collapse is if we inflate away the net present value of our obligations. In both sets of circumstances, I am personally more comfortable owning precious metals than not." Cyprus is a stunning example of why people should store some wealth in precious metals. Rule contends, "If you were a Cypriot citizen and you had stored your wealth in gold and silver as opposed to having your money on deposit in a Cypriot bank, the Cypriot banking crisis, for you, would be interesting but not relevant." If there is war in Korea, Rule predicts, "If a nuke goes off on the Korean Peninsula, the first move in precious metals would be down. . . . The second move would be higher. I also believe precious metals would hold their value over time UNLIKE most other asset classes." Join Greg Hunter as he goes One-on-One with Rick Rule, Chairman and founder of Sprott USA.

Chicago Business: CME takes on U.S. rival with smaller silver contract

CME Group Inc. said on Thursday it will launch a smaller 1,000-ounce physical silver futures contract that will compete with rivals in attracting more retail demand and hopefully boost flagging trading volumes in the metal.

CME's new product will go head-to-head with NYSE Liffe's 1,000-ounce mini silver futures contract. Mom-and-pop investors like trading in smaller increments than the CME's main 5,000-ounce contract, which is a global benchmark.

Seeking Alpha: Silver Hits Costs Of Production: Opportunity For Courageous Investors

Long time commodity investors are stunned by the recent events in the precious metals markets. Gold's 2-day drop of 10%, after a year and a half long consolidation, had commodity specialist Dennis Gartman saying that in his 40 years of trading commodities "he has never seen anything like this." "Panic is everywhere," Gartman told CNBC. We completely agree - recent trading in gold and silver show signs of panic liquidation in the paper markets, while bullion dealers are reporting extremely strong physical sales.

Silver Opportunity for Investors

Silver hit an intraday low of $22.92 in late Asian trading, and is currently trading in the $23 range. We believe the silver price is unsustainable on the long term at these levels as the costs of mining silver are in the mid-$23 dollar range (as we showed in a prior article) and the spot price is currently at or below these levels. This screams buy for patient investors since commodities that are priced at the same level as their costs of production offer a rare opportunity for investors to buy up the physical commodity for less than it costs producers to produce it.

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