Gold & Silver Digest: 6/10/13

Adam Taggart
By Adam Taggart on Tue, Jun 11, 2013 - 2:00am

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.

6/11/13 12:29 AM EST US close metals price quotes from Finviz

Reuters: Gold up slightly after S&P raises U.S. credit outlook

Gold edged up in light trade Monday after dropping the most in a month in the previous session, as markets digested a decision by Standard & Poor's to revise the sovereign credit outlook for the United States to stable from negative.

Bullion's reaction to the announcement by the credit rating agency was largely muted. In August 2011, S&P downgraded the sovereign U.S. credit rating from top-rated AAA to AA-plus, heightening economic uncertainty that helped lift gold to a record high $1,920 a month later.

Bull Market Thinking: US Bank Gold Positions Explode By Highest Rate On Record; Short Positions Collapse

In a fascinating reaffirmation of the fundamentals of the gold bull market, US Banks & Large Traders as defined by the CFTC as being, “commercially engaged in business activities hedged by use of the futures or option markets,” have quietly flipped from being tremendously short gold in late 2012, to now being tremendously long.

Furthermore, the speed of this change in positioning has occurred at the fastest rate since the data set began in mid-2000.

As shown below, on a month over month basis, US Bank & Large Trader long positioning has increased dramatically, with short positions being covered at the greatest rate of speed ever recorded:

Jesse's Café Américain: CFTC Gold and Silver Bank Participation Report - Ted Butler's Comments

The US Banks have gotten net long of gold in this last report.

The charts below are from Sharelynx.com.

Here is what Ted Butler had to say about this report today:

"Since the BPR of February 5, the US bank category position (in effect, almost exclusively JPMorgan) has swung by a net 100,000 contracts, from net short 70,000 contracts to net long 30,000 contracts (all rounded). There has never been a move of such magnitude before. Over that same time, the total net commercial short position (in the COT) declined by 113,000 contracts, meaning that JPMorgan accounted for almost 90% of the entire commercial decline. It is not possible for that extreme degree of concentration and market share not to be manipulation, pure and simple.

Bloomberg: Gold Bear Market Seen Extending to $1,303: Technical Analysis

Gold’s recovery to a three-week high last week is over and prices that entered a bear market in April may fall another 5.5 percent to about $1,303 an ounce, according to technical analysis by UBS AG.

The $1,303 level would be the 50 percent retracement of bullion’s rally from October 2008 to its record in 2011, one of the levels singled out in so-called Fibonacci analysis. A “cross lower” in Stochastic momentum indicators would be a bearish signal, UBS said in a report June 7, when prices dropped the most in three weeks.

CNBC: Gold’s Secret Enemy: The Yen

People have blamed gold's 18 percent decline this year on many different factors: a lack of fear in the market, a bubble that has burst, talk that the Federal Reserve will soon end qualitative easing. But some market participants say the single biggest factor could be the Japanese yen.

"It is difficult to deny the strong correlation between the yen's decline and the consequent collapse in gold," said Jim Iuorio, TJM Institutional Services managing director and contributor to CNBC.com's "Futures Now."

Slate: The Shine Is Off

The run-up in gold prices in recent years—from $800 an ounce in early 2009 to above $1,900 in the fall of 2011—had all the features of a bubble. And now, like all asset-price surges that are divorced from the fundamentals of supply and demand, the gold bubble is deflating.

At the peak, gold bugs—a combination of paranoid investors and others with a fear-based political agenda—were happily predicting gold prices going to $2,000, $3,000, and even to $5,000 in a matter of years. But prices have moved mostly downward since then. In April, gold was selling for close to $1,300 per ounce—and the price is still hovering below $1,400, an almost 30 percent drop from the 2011 high.

Bullion Street: Silver can only collapse along China

Most analysts are agreed on one point, as long as China remained a strong economy with lot of manufacturing, silver is the best investment and will surpass gold soon as the number one choice among investors.

Silver is one of the major topics of talks during Xi Jinping's recent visit to Mexico as China’s quest to gather silver from the Americas continued in to the 500 th year.

China began its silver trade with the Americas, especially Mexico and Peru in the sixteenth century. China was buying nearly 40% of all silver produced in the world then.

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