Gold & Silver Digest: 7/17/13

Adam Taggart
By Adam Taggart on Wed, Jul 17, 2013 - 8:49pm

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.

7/17/13 9:35 PM EST US close metals price quotes from Finviz

Reuters: Gold tumbles as Bernanke sees Fed tapering later this year

Gold fell more than 1 percent on Wednesday after Federal Reserve  chief Ben Bernanke said the U.S. central bank still expects to start scaling back its massive bond purchase program later this year.

Bullion briefly rose above the $1,300 mark after Bernanke said in testimony before a congressional committee that he left open the option of changing stimulus exit plans if the economic outlook grew worse. 

Bloomberg: Gold Backwardation Seen by SocGen Prompting ‘Corrective Rally’

Gold’s biggest backwardation since 1999 prompted a “corrective rally” and negative investor sentiment means the outlook is still bearish, according to Societe Generale SA.

Physical gold demand is strong and “nearby tightness” will persist for the “foreseeable future,” Robin Bhar, a London-based metals analyst, said in a report e-mailed today. Gold will average $1,150 an ounce in 2014, according to the bank, which predicted the rout in April when prices entered a bear market, having fallen 20 percent from the high last year.

Forbes: Why John Paulson Still Believes In His Gold Bet

John Paulson was quick to mention that his firm’s struggling gold fund is only a modest 2% of his eponymous hedge fund firm’s total assets Wednesday, but even with the metal having an awful year the billionaire money manager still made the case to be bullish.

“The consequences of printing money over time will be inflation,” he said at the CNBC/Institutional Investor Delivering Alpha conference in New York, “[it's] just difficult to predict when.”

MarketWatch: The real threat to gold is digital, like bitcoin

You could argue it is rising interest rates, which will push up the cost of holding an asset that doesn’t earn any kind of return. You could argue that it is deflation: If prices start to fall, then paper money will look a lot more valuable. Or you could argue it is a resurgent dollar DXY +0.06%  . As the American currency grows in strength — as seems likely given its relative performance compared with the rest of the world — then gold will be less valuable as an alternative.

In the short term, those factors will all have an impact, and may well explain the huge drop in the gold price GCQ3 -0.24%  over the last three months.

Jesse's Café Américain: Gold Daily and Silver Weekly Charts

Benny made it perfectly clear in his Humphrey Hawkins testimony today that QE, in whatever forms and permutations, is here to stay at least for this year. And when the Fed expands its Balance Sheet, it is most certainly 'creating money,' although as I have said often enough 'printing' is a colloquial expression of the same sentiment.

Thank you very much for clarifying that for all the learned economists Ben.  Your occasional honesty in Congressional testimony is a nice change of pace for a disgraced profession.

SilverSeek: The Game of Silver

Begin with what we know:

  • Death and taxes.
  • Political influence affects almost everything including most markets and much of the economy.
  • MSM news is NOT a reliable source of information upon which to make decisions regarding silver investments.
  • Certain very large financial institutions regularly supply trusted employees to fill important positions in the US government, such as Secretary of the Treasury. If those same institutions are active in the silver markets we can reliably assume they have the “inside track.”

The Market Oracle: Silver the Resilient Commodity Ready for a Big Comeback

John Paul Whitefoot writes: For many investors, 2013 was supposed to be the year that silver regained its luster. Most economists thought silver would climb as a hedge against inflation and be a devalued dollar on the heels of continued economic turmoil. Or, assuming the economic rebound was in full swing, it would grow due to industrial demand for everything from solar panels to electronics, batteries to the automotive industry.

Strangely, none of that happened. Silver benefits by being both a precious metal and an industrial metal. As an industrial metal, investors need to actually see enough economic growth before they can ride that bandwagon. As a precious metal, silver is being taken along for the ride by investors fleeing gold.

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