Gold & Silver Digest: 5/16/13

Adam Taggart
By Adam Taggart on Thu, May 16, 2013 - 7:18pm

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.

5/16/13 8:46 PM EST US close metals price quotes from Finviz

Reuters: Gold slides to 4-week low as investors sidestep bullion

Gold dropped to a four-week low on Thursday, as renewed liquidation in gold-exchange traded funds and its recent drop below the $1,400-per-ounce level spooked bullion investors, prompting them to favor other assets.

Traders said the fall below $1,400 in the previous session triggered heavy selling and that the yellow metal might retest two-year lows of $1,321.35 touched on April 16, when it recorded the worst daily loss for 30 years.

Market Watch: Gold tallies a loss of 6% in six sessions

Gold futures took another tumble on Thursday to tally a 6% loss in six trading sessions and close at their lowest level in a month.

The decline followed news of a decline in the U.S. inflation rate as well as a recent string of gains in U.S. equities that has drawn attention away from gold.

Gold for June delivery GCM3 +0.01%  shed $9.30, or 0.7%, to settle at $1,386.90 an ounce on the New York Mercantile Exchange. Including Thursday’s loss, prices have fallen 5.9% in six straight trading sessions. They settled Thursday at their lowest since April 17.

CNBC: Even Bargain Hunters Don't Want to Buy Gold

Beaten-down gold just can't find any love.

The metal bungee jumped Thursday—first to a sharply lower $1,368, then to a higher low in the mid-$1,380s—as the dollar sold off. Gold ended lower for a sixth day, at $1,386.90 an ounce, a decline of $9.30. But it could drop further, according to analysts.

"I'm not seeing any bargain hunters in there right now, and I don't see any reason why we won't test" test the April lows of $1,321, said Kevin Grady, president of Phoenix Futures and Options. "This is a bear market, and normal corrections are commonplace in bear markets," "The fact that gold rallies back $20 off the lows I don't think is signaling anything."

Business Week: Soros Joins Gold-Stake Cuts Before Bear Market Drop

Billionaire investor George Soros joined Northern Trust Corp. and BlackRock Inc. in cutting holdings of exchange-traded products backed by gold before a bear market in prices last month, while John Paulson maintained a stake that lost about $165 million in the first quarter.

Soros Fund Management LLC lowered its investment in the SPDR Gold Trust, the biggest such fund, by 12 percent to 530,900 shares as of March 31, compared with three months earlier, a Securities and Exchange Commission filing showed yesterday. Funds run by Northern Trust and BlackRock showed reductions of more than half, according to earlier filings. Paulson & Co., the largest investor in SPDR, held 21.8 million shares, while Schroder Investment Management Group bought 2.1 million.

Bull Market Thinking: Soros Reports Over $239mm In Gold Positions, Buys $25mm In Call Options On Juniors

In a 13-F release issued by the SEC after market close yesterday, it was reported that Soros Fund Management LLC, founded and chaired by billionaire financier George Soros, significantly increased its gold related holdings, most notably, through the purchase of over $25 million dollars worth of call options on the GDXJ Junior Gold Miners index.

This stunning move by one of the world’s top performing hedge funds, suggests a powerful surge ahead for gold equities. It should be noted, that in the forty years prior to 2010, the Soros Fund averaged a 20% annual rate of return.

Global Research: The Central Banks’ Gold: A Story of Silent Expropriation. Part II

5. The calculations of Eric Sprott: the theft of gold from central banks continues

Erik Sprott, a billionaire and well-known investor with 35-years of experience working in financial markets and a great connoisseur of the intricacies of the gold trade, believes that official statistics clearly do not fully take into account the actual demand for gold on the world market (typically estimated to be between 4,000 and 4,500 tonnes per year). According to his calculations, the actual demand for this precious metal over the last decade was an average of 2,300 tonnes higher than the official figures cited by the World Gold Council and other reputable organisations8. The supply of gold through new mining operations and scrap gold is clearly not enough to cover the world’s actual gold demand. Some kind of secret source of gold exists which is covering an unaccounted-for demand of approximately 2,300 tonnes per year. According to Eric Sprott, the volumes of gold coming onto the market from the vaults of central banks are not enough. Since the beginning of the 21st century, additional supplies have been provided by the central banks of economically developed countries – the US, Western Europe, Japan – as well as international organisations with their own gold reserves – the International Monetary Fund and the European Central Bank. In the first decade of the 21st century, the total gold reserves of these central banks and international organisations, according to official figures, have remained very much unaltered and stand at a level of 23,000 tonnes.

Seeking Alpha: The Future For Gold Supply Looks Grim: An Opportunity For Gold Investors

Recently, we published a true all-in costs article that gave investors insight into the true all-in costs that miners are spending to produce each ounce of gold. After removing write-downs and exceptional costs, gold companies spent almost $1300 per ounce to extract gold in 2012. Even with these high expenditures, the industry is actually producing less gold in 2012 than in 2011 - rising costs and lower production is not a recipe for a healthy industry.

If these cost figures sound high to you, they are affirmed by Jamie Sokalsky, President and CEO of Barrick Gold (ABX), in a November 2012 speech [pdf] in Hong Kong. Mr. Sokalsky says:

MSN Money: Why gold won't stay down

Something curious is happening in the precious metals market.

Fundamentally, there couldn't be a better time to own gold and silver. But technically, the shiny stuff has just been hammered, inexplicably suffering a 1987-style plunge last month. Did a hedge fund blow up? Are policymakers pushing on prices to keep inflation expectations down? Are computer trading algorithms causing problems? We just don't know.

Now the question for investors is: Has the best buying opportunity we've seen in decades arrived even as most of the market focuses solely on stocks, or is gold a lost cause?

Market Watch: Physical gold demand shines in first quarter: WGC

Investors didn’t buy enough physical gold to offset outflows from gold-exchanged traded funds in the first quarter, but total ETF gold holdings were still higher than a year ago, and demand for jewelry, bars and coins grew a lot thanks to China and India, a report from the World Gold Council released Thursday shows.

The report helps shed light on demand during the period just before April’s plunge in gold-futures prices and steep outflows from gold ETFs.

Forbes: Silver Finds Short-Term Support, But Some See Big Picture As Down

Silver prices bounced soundly from Thursday’s session lows as the U.S. dollar weakened and U.S. economic data was less-than-stellar.

There’s debate, though, regarding the action in Thursday’s session by silver market participants. Some market watchers said silver’s bounce off support at $22 is a positive short-term sign for those who want to see higher prices, but others said this week’s break below $23 is an omen for further weakness longer term.

At 12:52 p.m. EDT, July silver prices on the Comex exchange were down 8.3 cents to $22.575 an ounce. They bounced from a session low of $22.06 that was the weakest level since April 16.

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