Gold & Silver Digest: 7/15/13

Adam Taggart
By Adam Taggart on Mon, Jul 15, 2013 - 7:36pm

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.

7/15/13 8:16 PM EST US close metals price quotes from Finviz

Reuters: Gold inches down, Bernanke eyed for stimulus clue

Bullion investors now focus on Bernanke's semi-annual testimony to Congressional committees this Wednesday and Thursday, which will be watched for further signs about the timing and speed of any reduction in bond purchases.

Gold gained 5 percent last week, its biggest weekly gain in nearly 2 years, after Bernanke said the U.S. central bank needed to keep a stimulative monetary policy in place given an uncertain job market and low inflation.

Bloomberg: Hedge Funds Bought Gold in Biggest Rally Since 2011: Commodities

Hedge funds raised bets on higher gold prices for a second week as comments from Federal Reserve Chairman Ben S. Bernanke damped expectations for an imminent tapering of stimulus. Futures rose the most since 2011.

Speculators increased their net-long position by 4.1 percent to 35,691 futures and options, U.S. Commodity Futures Trading Commission data for July 9 show. Net holdings expanded even as speculators increased short bets to a record. Net-bullish wagers across 18 U.S.-traded commodities retreated 3.4 percent as investors became the most bearish ever on corn. They were more bullish on silver and palladium.

Forbes: Technical Trading: Gold Bulls Eye $1,300, 'Green Light' Level For Another Rally Leg

While gold prices firmed overnight in Asia and European action, pre-New York trading has seen August Comex gold futures erase gains and push to slightly weaker levels, on the heels of a stronger U.S. dollar index.

August gold futures have posted a solid near term rally in recent days, climbing from the June 28 low at $1,179.40 to $1,297.20 on Thursday. The minor uptrend pattern is bullish.

But, for now, the bulls are being turned away by a stiff psychological resistance ceiling at $1,300—and that will remain the key near term zone for traders to monitor.

CNBC: History shows gold could fall another $500

The price of gold could fall below $800 an ounce over a long-term horizon, a drop of some $500 from its current level of $1,294 an ounce, Duke University's Campbell Harvey told CNBC on Monday.

Harvey, who works at Duke University's Fuqua School of Business,said that over 2,500 years of history, the real price of gold (the nominal price adjusted for inflation) had remained roughly the same. “Oh That Negativity Over Gold!”

There’s no doubt about it: anyone who has stayed the Gold Course these last two years has been summarily whacked; anyone who has added en route has been further whackered; and anyone who has bailed out along the way only to find themselves in the future re-entering above their exits points -- or stubbornly not at all -- ought well end up being the whackedest, (and the Shorts with one-way fares to the looney bin for having become the whackiest).

To be sure, there is not enough lip gloss and makeup in the entire combined empires of Chanel, Dior et LVMH to cover the boils and blemishes in Gold’s porker pen these many months. But per this week’s missive as we put perspective to that which has been deemed so negative, I’ll think you’ll find that the former trumps the latter. Gold versus the money supply

In a recent article I introduced the concept of allowing for the increased quantity of aboveground gold and the expansion of the quantity of dollar currency over time when trying to value gold. The purpose of this article is to explain why such an obvious adjustment is rarely contemplated and why it should be applied.

The reason no one adjusts the dollar quantity is we want to think of the dollar as having a constant value when we buy assets or goods. We describe prices of goods as rising or falling, and never the currency falling or rising. When we construct an index of house prices or stocks we do not take into account the debasement of the currency.

Zeal: Gold’s QE3 Anomaly

Gold’s biggest psychological overhang this year has been the fate of the Fed’s third quantitative-easing campaign.  Gold futures traders hang on every word of Fed officials, extrapolating them into a timeline for ending QE3.  This consuming obsession fueled unprecedented selling that spawned a stunning gold anomaly.  But as QE3’s nature becomes more apparent, gold is due for a massive mean reversion higher.

It probably already started.  Just this week, the Fed Chairman Ben Bernanke aggressively backtracked on his recent timeline for slowing and then ending QE3!  At a speech in Massachusetts, he said the Fed is failing on both sides of its dual mandate with unemployment too high and inflation too low.  Therefore the Fed ought to keep maintaining zero interest rates and buying bonds until both areas greatly improve.

Pacific Standard: The New Bronze Age

Worries about oil and gas hog the airwaves. But copper is also essential to keep the world running: It threads through your house, your computer, your eco-correct hybrid car. And it’s getting just as difficult, expensive, and environmentally menacing as oil to extract. We have entered the era of tough ore.

In 2001, the giant mining firm Rio Tinto made a momentous decision: Its Bingham Canyon Mine—the oldest and richest open-pit copper mine in the world, in operation since 1906 and the largest man-made excavation in history—would be shut down.

GoldSilverWorlds: Silver Fundamentals Are Strongest Ever

Peter Schiff just released his new research report entitled “The Powerful Case for Silver” (pdf format). In it, he explains why the upside potential of silver is greater than the one of gold. Peter Schiff believes that the fundamentals for silver are the strongest they have ever been and that silver is massively undervalued at today’s prices.

The fundamentals of silver explores three key fundamentals of silver:

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1 Comment

sand_puppy's picture
Status: Diamond Member (Online)
Joined: Apr 13 2011
Posts: 2089
Gold Summary by Grant Williams


Grant Williams provides an all-encompassing collection of the facts, explanations, charts, and data of the whats and whys of recent gold price action that we have been discussing:

  1. Central banks have, over the years, leased out an undetermined amount of their gold.
  2. In January, Germany demanded repatriation of a large amount of gold from the NY Fed.
  3. That repatriation will take an extraordinary (and unexplained) seven years to complete.
  4. The price of paper gold futures contracts has been hit incredibly hard since April.
  5. Physical gold is being withdrawn at a phenomenal pace from multiple custody locations.
  6. Rumours have been rife of shortages at LBMA and COMEX warehouses.
  7. Investors & central banks are buying physical in record amounts.
  8. In the face of massive physical buying, "the gold price" continues to fall.

A nice summary article posted at zerohedge this morning.  A great summary of this complex "game" of wealth and wealth transfer.

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