Gold & Silver Digest: 7/19/13

Adam Taggart
By Adam Taggart on Fri, Jul 19, 2013 - 5:51pm

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.

7/19/13 8:12 PM EST US close metals price quotes from Finviz

Reuters: Gold up 2nd straight week on Fed stimulus reassurance

Gold rose on Friday to notch its second weekly gain after many investors were soothed by the Federal Reserve's assurance this week that it will be careful in tapering its economic stimulus, although some braced for another decline in bullion.

Gold emerged as an alternative to the softer dollar and U.S. stocks, which retreated on Friday from record highs.

The spot price of bullion hovered near $1,295 an ounce by 3:00 p.m. EDT (1900 GMT), up 0.8 percent on both the session and the week.

MarketWatch: Gold futures climb to highest close in a month

Gold futures climbed Friday to score a gain of more than 1% for the week and finish the session at their highest level in a month.

Prices drew support from weakness in the U.S. dollar and equities and concerns in the wake of Detroit’s bankruptcy filing as investors continued to digest comments this week from the Federal Reserve’s chairman.

Jesse's Café Américain: COMEX Registered Gold Falls To Another New Low Ahead of Option Expiration and August Delivery

Registered gold on the COMEX falls to another new low for this bull market, to below 30 tonnes.

I enjoyed the perspective Harvey Organ put on it this evening.

"Tonight, the Comex registered or dealer inventory of gold lowers again and remaining below the 1 million oz mark to 950,441.152 oz or 29.56 tonnes.

This is dangerously low especially when we are coming up to the August delivery month.  Remember in June we had almost 31 tonnes of gold stand for delivery."

Perhaps I am missing something but one has to wonder what goes through someone's mind who is short into a market structure such as this, wherein the ability to deliver into demand appears to be increasingly impractical. Do they think that they are operating on insider information? Are they?

Reuters: Gold futures hiccup indicates demand outpacing supply

A dislocation in the gold futures market indicating that demand for physical delivery of the metal is now far outweighing supply has intensified in recent weeks, increasing concern in the market that the change may not be a momentary blip and participants may have become over-leveraged.

Gold went into backwardation in comparison to the three-month futures contract in early January, meaning the spot price rose above the short-dated future contact. Now that process looks set to creep out the futures curve to longer-dated maturities, signalling some cause for alarm.

Forbes: Gold Survey: Survey Participants See Higher Gold Prices Next Week

A majority of participants in the Kitco News Gold Survey see higher prices next week for the metal.

In the Kitco News Gold Survey, out of 36 participants, 19 responded this week. Of those 19 participants, 11 see prices up, while six see prices down and two see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

321Gold: Gold Short Squeeze

Futures speculators have responded to this year's extreme bearishness plaguing gold by amassing wildly-outlying record short positions in it. These huge and highly-leveraged bets can only be unwound by buying gold futures to cover the shorts. As gold continues rebounding out of its recent hyper-oversold lows, the futures traders on the short side will have to buy. This will likely fuel a massive short squeeze. 

Major short squeezes are the stuff of market legends, rare and extreme events. Whenever a price falls particularly far and fast, traders wax exceptionally bearish on it. They extrapolate the downside action continuing indefinitely, and some want to play that momentum. So they reverse the usual trade of buying low then selling high. They effectively borrow the asset from someone else to sell it in the open market.

GoldSeek: The Shanghai Gold Surprise

The physical gold market continues to develop in the most wonderfully counterintuitive way. While the paper gold price languishes below US$1,300 per ounce, physical demand out of China is now reaching previously unforeseen levels. If you’ve heard this story before, it’s more of the same, except that the demand tonnage is now so high as to be almost comical.

According to data released by the Shanghai Gold Exchange, the amount of gold contracts settled for physical delivery on its exchange reached a staggering 1,098 metric tonnes year-to-date as of the end of June.1 This is an astoundingly large amount of physical gold. For perspective, 1,098 tonnes represents approximately 40% of the entire estimated global gold mine production in 2013. It also represents roughly 1/8th of the US Treasury’s official gold reserves, and over 100% of China’s stated official gold reserves. If the rate of physical delivery on the Shanghai Gold Exchange continues at current levels, it will deliver the equivalent of over 100% of global mine production by the end of this year… all through one exchange.

Silver Investing News: Fed Chairman Bernanke Blocks Silver’s Bounce

After climbing the charts last week to hit a six-week high, since Monday silver’s sailing has been less smooth. Though the white metal began the week strongly, trading between $19.69 and $20.09 per ounce on Monday and Tuesday, it hit a roadblock Wednesday and closed at $19.38 Thursday. 

As is often the case, that roadblock was US Federal Reserve Chairman Ben Bernanke. On Wednesday, the white metal rose to $20.05 after he said in a prepared statement before congressional committees that the central bank’s stimulus exit plans could change if the economic outlook in the US shifts, CNBC reported. However, the metal’s rise was fleeting. Soon after, Bernanke explained that the Fed is still on track to reduce quantitative easing later this year and end it entirely midway through 2014. On that news, silver quickly sank to $19.35.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

1 Comment

Rob P's picture
Rob P
Status: Bronze Member (Offline)
Joined: Oct 8 2008
Posts: 85
Oh -- My --- God!

What is this new color on the chart this morning. I don't think I can remember what it is called, it's been sooo long.  Is it possibly Gureeen?  Oh my goodness could it be Greeeeeen??

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments