Gold & Silver Digest: 7/24/13

Adam Taggart
By Adam Taggart on Wed, Jul 24, 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.

7/24/13 9:31 PM EST US close metals price quotes from Finviz

Reuters: Gold drops 2 percent on improved economic outlook

Gold fell more than two percent on Wednesday as signs of continued economic recovery both in the United States and Europe prompted funds to exit the bullion market after reaching a one-month high earlier in the day.

A combination of a sharp rise in the U.S. dollar, tumbling crude oil futures and a rally in U.S. Treasury yields - seen as U.S. short-term interest rates - hit bullion's appeal as a hedge, added to gold's biggest one-day loss in a month. 

DailyFinance: Gold's Comeback: Why Prices May Head Even Higher

The price of gold has surged 13 percent -- its biggest gain in more than a year -- from a late-June low of $1,211.60 as recent signals from the U.S. central bank of continued money-printing hold down the value of the dollar and the recently depressed price sparks Asian bargain-hunting.

The yellow metal's July bounce may continue, vindicating the small number of bullish forecasters still keeping faith with the precious metal, or the slide that began in late October could resume, vindicating the many sell-side analysts working for giant investment banks who are happy to see gold get what they see as well-deserved comeuppance.

The Economic Times: Goldman Sachs sees gold above $1,400 this year; bearish on many metals

NEW YORK: Goldman Sachs is sticking to its average forecast of $1,413 for an ounce of gold this year as it does not see sharp reductions in US Federal Reserve stimulus, after fears of such cuts drove bullion prices to near three-year lows recently.

In a note issued on Wednesday, Goldman said it also expected gold to average $1,165 an ounce in 2014 as previously forecast, although the price could reach $1,050 by the year-end.

Bloomberg: Gold Scrap Supply to Drop Up to 25% as Lower Prices Deter Sales

Gold supply from recycled materials may fall by as much as 25 percent this year as lower prices deter holders from selling the metal at a time when physical demand is strengthening, according to the World Gold Council.

Scrap bullion supply may fall by 300 to 400 metric tons in 2013 from about 1,600 tons last year, according to Marcus Grubb, managing director of investment research at the gold council in London. Recycling accounted for 37 percent of total supply last year, according to Barclays Plc, which forecasts recycled sales of the metal to fall by 174 tons this year.

CNBC: Gold bugs: Time for 'ugly duckling' to shine?

The recent rebound in gold prices has injected bullishness back in the market, as gold bugs call for further gains in the months ahead, with one analyst expecting bullion to hit $1,600 per ounce by year end.

David Lennox, resources analyst at equity research firm Fat Prophets, told CNBC he's not ruling out another 20 percent upside for gold by December, as the expected robust recovery in the U.S. economy remains elusive.

Hard Assets Alliance: Gold Continues to Move from West to East: Is Yours?

It's no secret that demand for gold has always been strong in the East. But since gold's mid-April correction, the move from Western economies to Eastern ones has picked up steam. It's not because vaults in North America are less secure; part of the reason is that Western governments own more gold than their Eastern counterparts, especially as a percent of total reserves. But the Eastern world is also seeing more inflation and is, generally speaking, more wary of political promises and assurances.

This trend is increasing, and carries with it a message for investors.

First, here's what has occurred in just the past 45 days in the Eastern parts of the globe…

MarketWatch: Gold prices will top $3,000 per ounce in five years

The monetary policies of major economies are diverging for the first time since 2008. The euro zone, Britain and Japan are sustaining quantitative easing, while the United States, China and other major emerging economies are on a tightening path.

The divergence is creating trends in some markets, volatility and confusion in others.

The U.S. dollar DXY -0.03%  is on a strong trend, as the expectation of the Fed’s tightening is driving deleveraging of dollar-financed carry trades. On the other side of the strong dollar are a weak pound GBPUSD +0.02% , euro EURUSD +0.00%  and yen USDJPY -0.16% .

Outside Club: Why Is Silver Manipulation So Absurd?

Every time someone in America buys electronics or a car — or even cracks open a can of beer — Goldman Sachs gets paid.

A breaking story from the New York Times has all the details...

Three years ago, this too-big-to-fail bank capitalized on special rules created by the Federal Reserve and authorized by Congress by buying an obscure company called Metro International Trade Services. It is one of the largest warehousing companies for aluminum in the country.

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1 Comment

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5740
FOFOA: end of the gold futures market?

FOFOA who has his own theories about how gold will eventually act, postulates that the recent crash in gold is simply the death throes of the gold futures markets itself.

Whether or not you believe or disbelieve, the article has a pretty good description of how futures markets operate, and why gold really is different than some of the others - its all about the size of above-ground supply.  There is 174k tons of gold out there, and demand runs about 4k tons per year; that means there is always some available, we will never have a shortage as we might with oil, corn, or wheat, but that supply just may not be available at the current price.  Anyhow, its dense material, but possibly interesting.

...I explained that the fundamental purpose of what he was doing back when he was buying sugar contracts, whether he understood it or not, was to be kind of a "shock absorber" between the producers and the users of the actual physical commodity. Anyone who invests in, trades or speculates in the paper proxies for these commodities, contracts in particular, is ensuring relative price and supply stability for those who deal in the real item, both the hard working producers and the hungry consumers.

Using my hands I showed him how we have the sugar growers and producers on one side, and we have the sugar consumers on the other side. And then in the middle we have the traders and speculators like he was doing who absorb any shocks in the supply line by claiming the profits and losses from volatility for themselves. These speculators deliver price stability to the producers on one side (by giving them a financial market in which to hedge their production income) and supply stability to the consumers on the other side (by keeping the price to the end user commensurate with the current supply flow).


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