Gold & Silver Digest: 1/29/13
The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.
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1/29/13 6:25 PM EST US close metals price quotes from Finviz
NEW YORK, Jan 29 (Reuters) – Gold rose on Tuesday, snapping a four-day losing streak, lifted by short-covering and expected continuation of loose U.S. monetary policies.
Platinum and palladium also rebounded after Tuesday's drop as supply worries and hopes for demand recovery triggered strong fund interest.
Bullion climbed a day before a Federal Reserve policy statement in which the U.S. central bank is expected to keep short-term interest rates exceptionally low until the U.S. unemployment rate falls to 6.5 percent, inflation permitting.
With last week’s announcement by the Bundesbank of the repatriation of 674 tons of German gold from Paris and NY over the next 7 years, we predicted that an avalanche of gold repatriation requests would soon be made to the BOE and the NYFed.
It appears that Switzerland may be next to the game, much to the dismay of the SNB. The Swiss gold initiative, an initiative to Secure the Swiss National Bank’s Gold Reserves, launched in March 2012 by four members of the Swiss parliament, has grown to 90,000 supporters
NEW YORK–Central banks continued to buy more gold than they sold in November, with preliminary data for December showing Russia and Kazakhstan leading the charge.
Central banks have been net buyers for nearly two years, as most countries seek to diversify their currency reserves. According to the International Monetary Fund, central banks bought 1.02 billion troy ounces of gold in November, up 1.4% from the same month in 2011.
Gold is widely considered a currency alternative and central banks have historically bought the precious metal as a way of mitigating the risk of holding too much of a particular currency.
Gold probably will stay above $1,630 an ounce in the next several months and may rally to at least $1,800 before starting a decline in the second half of this year, according to technical analysis by Societe Generale SA.
The $1,630 area consists of the highs reached last summer, support levels from a declining trend channel since October and a rising support line since May, the bank said. If prices climb above the $1,703-$1,706 area, they’ll probably rally and peak between $1,800 and $1,921 in the second half, before starting a gradual decline to as low as $1,500 by next year, it predicts.
Why are central banks buying gold, the opposite of their own creation, paper money?
Money is the opposite of gold and silver. Fiat money is based on ordinance and credibility and is not self-limiting (can be printed infinitely) whilst gold and silver is commodity based and physically limited to the amount of physical gold and silver available and mined, you choose either one or the other. One is purely based on credibility hence why notes need to mention the nominal value in order to give the piece of paper value. American paper money is backed by only the size and strength of the American economy. The other money is based on real value, the value of the gold itself. And especially for that reason investors should be warned considering the fact that more and more central banks are buying gold, the opposite of their own creation: paper money. This is so contrarian.
The fashionable talk in financial markets these days is of a ‘Great Rotation’ from bonds into equities, a smooth transition from the largest bond market bubble in history to a more normal balance between equities and bonds.
It is certainly far from usual to have bonds yielding two per cent and equities twice that amount in many cases. That makes it look attractive to shift from the so-called safe haven of bonds back into the supposedly more risky world of equities.
As a metals broker I am always asked about storage. I have rather strong feelings about this topic and I always advise people the following:
- Always store outside of the financial system. This means no ETF’s (Even though they are easy you should exercise caution & read the prospectus and zoom in on the custody section – if you can stay awake long enough to read it). Also this means no bank safe deposit box storage. Safe deposit boxes are the worst of both worlds. They ARE NOT insured by the bank but yet they are subject to banking regulations. It also means no commodities contracts held by financial firms like MF Global. (Jon Corzine seemed like such a nice fellow before he got into trouble betting house money and hypothecated private accounts to cover his losses.)
Gold mines are reopening in California, some dating all the way back to the Gold Rush. Soaring gold prices are drawing mining companies back into the Sierra Nevada foothills. But some communities fear the effect on local environments.
Dan Boitano, a fifth-generation miner, has been working as a tour guide in the Golden State's historic gold country. His family has been around since the Gold Rush.
Up until a few years ago, he was still guiding tours for visitors.
The U.S. Mint resumed sales of American Eagle silver coins after being suspended for more than a week because of a lack of inventory.
The Mint sold 1.123 million ounces of the coins yesterday, Michael White, a spokesman in Washington, said in a voice mail left late yesterday in response to questions from Bloomberg News. Before the suspension, sales this month totaled 6.01 million ounces, according to data on the Mint’s website. That compares with 6.107 million ounces in January 2012. White did not respond to e-mails or a voice mail left today.
Sprott Asset Management's chief investment strategist, John Embry, said Tuesday there is “a powerful entity” battling the powers that be in the silver market.
In an interview with King World News, the expert spoke about the increase in net-long contracts in the face of the declining silver price, the silver shortage, as well as the gold market.
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