Gold & Silver Digest: 7/2/13

Adam Taggart
By Adam Taggart on Wed, Jul 3, 2013 - 1:05am

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.

7/2/13 8:11 PM EST US close metals price quotes from Finviz

Reuters: Gold lower as dollar strengthens

Gold was lower on Tuesday as the dollar strengthened and investors looked for further indications that the Federal Reserve may soon end its U.S. stimulus program.

One indication may be on Friday with a U.S. employment report.

The precious metal was higher early on Tuesday on short covering after its biggest quarterly loss since at least 1968. But those gains were brief as some money managers used the opportunity to sell out of long positions.

Casey Research: Yesterday In Gold & Silver

The gold price certainly didn't do much of anything during Far East trading on their Monday…and that pattern didn't change until shortly after Comex trading began in New York.  Then once the gold price broke through the $1,260 spot mark, either the buyer disappeared…or a willing seller showed up.  After that, the gold price traded down a bit into the close.

Kitco recorded the high tick as $1,263.40 spot.

Gold finished the Monday session at $1,262.60 spot…up $17.30 on the day.  Net volume was pretty decent at around 178,000.  A big chunk of that was high-frequency trading in the Far East.

Gold Scents: IS THE BUBBLE PHASE ABOUT TO BEGIN?

I think the manipulation after QE4 has accelerated the bull market. We now have the necessary conditions for the bubble phase in gold to begin. I was expecting the second phase correction (the correction that separates the second phase of the bull market from the bubble phase) to occur at the next 8 year cycle low due in 2016. However I think the manipulation of the precious metals markets over the last 8 months has probably shortened the bull market. 

Contrary to what many believe manipulation doesn't delay a market. Manipulation accelerates and intensifies the secular trend as it creates supply and demand imbalances. Once the market breaks free of the manipulation the trend reverses and ultimately goes much further and much more violently in the secular direction than would have occurred normally.

Seeking Alpha: Why Tapering Is Good For Gold

In spite of the bounce in the gold price, gold has suffered its worst quarter in over 30 years and many hedge funds and retail investors are scrambling for the exits on the gold trade or even increasing their short position. This drop in the gold price has primarily been attributed to fears that the Fed will taper down its Quantitative Easing (QE) program.

The argument goes that by tapering off its purchases the Fed will be printing less money via QE, that means less inflationary new dollars into the system and thus it is bad for gold. The second argument is that Fed tapering will signal that the US recovery is at hand, so investors will no longer need gold as a hedge against financial stress.

GoldSilverWorlds: Lower Gold Prices Continue to Spur Demand for the Physical Metal

Gold prices advanced on Tuesday for a third straight session after prices suffered another massive sell-off on the paper market of Comex last week. The price of spot gold hit an intra-day high of $1268.70 an ounce on Tuesday in early trade London trade, but then backed off before the second fix.

Forbes: How Gold Miners Became A Terrible Investment

It’s tough to find an entire investment sector that has tumbled by 50% this year, but that’s how far the shares of gold mining companies have fallen in 2013. The price of gold, of course, has also plunged in 2013 by some 25% to $1,240 an ounce. But gold mining stocks have performed much worse than broader market indices and even gold itself.

The Economic Times: Gold at a huge premium as imports dry up; survival of small jewellers at stake

KOLKATA: India's gold imports in June are estimated to have fallen drastically to 35-40 tonne, less than a quarter of what the purchases in May were because of state restrictions, triggering a sharp rise in premiums in the local market and raising a question mark on the survival of small jewellers. The acquisition cost of the yellow metal has shot up as bullion dealers are now charging a premium of up to Rs 350 per 10 grams over and above the metal's international price, up from only Rs 40 two weeks ago.

The premium, along with the increase in landed price of gold because of the rupee's depreciation, has denied Indian buyers the benefit of the fall in international prices last month.

SilverSeek: Indian Silver Imports on Pace for New Record in 2013

If the present trend of large monthly silver imports continues, Indian may be setting up for a record year in 2013. According to industry sources, Indian has already imported 2,400 tonnes of silver in the first 5 months of 2013 compared to 1,900 tonnes for the entire year in 2012.

If we look at the chart below, we can see that India imported a record 5,048 tonnes of silver in 2008. This was the year that silver hit a record high of $21 and record low at the $9 level. The Indians were importing record amounts as the price rose to its high in March that year, and they bought even more when it fell all the way to $9 in Oct. 2008.

SilverSeek: Silver finally sees the good flush in the Weeky timeframe, possible bottom being marked.

The Exchange Traded Fund for Silver symbol SLV, had the "Measured Rule" target of a large "Rectangle" pattern fulfilled this week in the Weely timeframe. Pricing patterns, or Support and Resistance levels in the Weekly timeframe are the strongest from a chart perspective in my experience. There is also a potential reversal pattern developing now as well. First the measured rule takes the distance from the top to the bottom of a given pattern and adds that onto the breakdown point. Quite often the supply ends here in a bearish pattern as the weak handed longs have finally been flushed out by this point.

The Rectangle is similar to a "Balance Area" using Auction Market Principles. The rectangle or balance area is a horizontal phase of development, or a picture of value among market participants in a given degree of timeframe. Value is a market that is two sided, or balanced between supply and demand. When the lower extreme of the balance area is no longer seen as an unfair low price to do business, market participants can make the initiative move to sell, and that is when you go from a phase of horizontal development to vertical development, or a market that is "seeking value". Vertical development is one sided price action or a market dominated by either supply or demand.

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1 Comment

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3200
Singapore physical exchange

http://www.scrapregister.com/news/1082/worlds-first-physical-gold-silver-exchange-starts-in-singapore

To me this is interesting news as Singapore is the hub of new wealth and physical PM movement in the world.  The immediate questions that come to mind are:

1.  Will it be open to retail buyers and sellers?

2.  How will it affect the apparently huge volume of physical PMs flowing from west to east?

3.  Assuming this will increase the trade in physical, will there also be a tendency to increase prices?

4.  Will metals stored there be subject to hypothecation?

This could be an interesting topic for an expert interview.

Doug

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