Gold & Silver Digest: 3/6/13
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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3/6/13 5:34 PM EST US close metals price quotes from Finviz
NEW YORK/LONDON, March 6 (Reuters) – Gold rose on Wednesday, but analysts expect the breakout in Wall Street stocks to new highs and data showing an improving U.S. economy to pressure the precious metal's safe-haven appeal.
News of another gold purchase by South Korea's central bank last month and hopes that outflow in gold-backed exchange-traded funds will peter out soon gave support. Bullion has now risen for a second day after its four-session losing streak.
The U.S. equities market resumed its climb into uncharted territory, with the Dow setting an intraday record for a second session on encouraging jobs and factory data. An extensive survey by the Federal Reserve's regional branches showing continued economic growth in January also boosted the stock market.
Sometimes, a picture is worth a zillion words.
The chart above (source) shows the ridiculously high contrated short positions in gold, silver, platinum and palladium. For example, it would take nearly 150 days of world production of silver to cover the short position held by the top 8 traders.
The gold price rallied about seven bucks by 3:00 p.m. during the Hong Kong trading session on their Tuesday afternoon…and then hung in there until the London p.m. gold fix at 10:00 a.m. Eastern time in New York.
From there, gold got sold down below it's Monday closing price about ten minutes before the Comex close. That was the low of the day at $1,571.10 spot…and from that point it rallied back about four bucks or so in pretty short order before trading sideways into the 5:15 p.m. electronic close.
With all the discussion on the Internet, some of it confusing, we thought a picture would be worth a thousand words.
Backwardation is when there is a profit to decarry the metal. This is the simultaneous sale of metal in the spot market and purchase of metal in the futures market. Selling is on the bid and buying is at the ask. So the spread one could earn is the decarry: Spot(bid) – Future(ask).
Forget about the Apple effect. Not including Apple in its 30 constituents is just one of the Dow Jones Industrial Average’s many quirks. So, too, is its ever-changing Dow divisor, a number seemingly picked at random to smooth out the math in the DJIA.
Neither of these oddities changes the fact that this oddest of equity averages is hitting new all-time highs right now, signaling, if you ever doubted it, that the United States’ economy is being re-forged as well.
The Gold Report: The price of gold has dipped under $1,600/ounce ($1,600/oz); silver is below $30/oz. Is this a case of living by the sword and dying by the sword, where precious metals prices only go up in a bad economy and are doomed to languish when things go well?
Eric Sprott: That is an interesting question because I do not know what it means to go well these days. I see things going from bad to worse economically, and so do many others. Walmart just announced that January 2013 was a lousy month and its start to February was its worst in years. Apple's iPhone manufacturer Foxconn just announced a hiring freeze in China because of a decline in iPhone production. Italian industrial production new orders were down 15%. You can feel the recessionary malaise setting in.
Swiss Banks Fear U.S. Monetary Authorities
For some years now, Swiss Banks have not been willing to take on U.S. clients because of the aggressive tactics of the U.S. IRS. Since they hauled UBS over the coals for harboring U.S. tax evaders and continue to investigate many Swiss Banks, the IRS has posed a threat to Swiss companies operating in the United States.
No matter where they live in the world, fear of being involved with a U.S. tax evader has put the wind up Swiss companies, and understandably so.
The propaganda has turned openly laughable. On the popular major financial news networks, the recent decline in the so-called Gold price has prompted quite the parade of clowns on the ship of fools to trumpet nonsense. The widely published and posted Gold price is dominated by futures contracts, and thus as corrupted as meaningless. The entire global financial structure is crumbling before our eyes. The gang of central bankers has applied their monetary policy for four and a half years since the implosion of Lehman, Fannie Mae, and AIG. The first is dead, while the second has transformed into a sanctioned subprime lender again, and the latter is a sinkhole. The deceptive messages are shrill, acute, and motivated from desperation. The West cannot solve its problems, hardly properly described as a financial crisis anymore, under the current framework bound to the fiat paper currencies. The global monetary war is heating up notably. The heavy liquidity has caused unfixable distortions in every conceivable bond market niche. The new and better debt devices have been exposed for their shams. The leading central bankers lost their credibility long ago. The weakness is as broad as it is deep, a reliance upon paper wealth and paper structures and paper contracts, during a time of zero bound interest rates and unfettered hyper monetary inflation to cover the debts. Almost no foreign USTreasury Bond buyers exist anymore. The US has become Weimar Amerika, a fascist enclave.
If you've ever suspected gold prices are being manipulated, you're not alone–and you're right, they are.
Against the backdrop of fiscal mismanagement, political incompetence, and failed austerity measures, the world's biggest traders have all bet heavily on gold. Lately, they've been pulling out all the stops to get what they want while laughing all the way to bigger bonuses.
The price pattern in silver and gold remains intact. It shows that each time these precious metals are pushed below a key technical moving average, new buyers come into the market.
Most are weak hands, speculators or amateur traders who have fallen in love with the idea of a futures contract, although the original longs have still refused to trade their valuable metal for intrinsically worthless paper dollars.
SAN FRANCISCO (MarketWatch) — Silver’s free fall may be coming to an end.
After a nearly 9% dive in silver prices this month, investors should be able to breathe a sigh of relief as growth in industrial and investment demand gains pace, and calls of “oversold” conditions and “bargain” prices for the precious metal intensify.
“Silver is grossly oversold at current levels, more so than any time in the past five years,” said James Carrillo, senior portfolio adviser for precious-metals investment firm Swiss America Trading Corp.
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