Gold & Silver Digest: 5/1/13
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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5/1/13 8:09 PM EST US close metals price quotes from Finviz
A commodities selloff sent gold prices more than 1 percent lower on Wednesday, the biggest daily drop since bullion's historic decline in mid-April, although the metal pared some losses after the Federal Reserve stuck to its monetary stimulus plan.
Silver and platinum group metals also trimmed losses after the U.S. central bank said it would continue buying $85 billion in bonds each month to keep interest rates low and spur growth, but added it could lift or taper this pace of purchases depending on the economy's path.
Gold fell the most in two weeks as the Federal Reserve signaled it is ready to curb a bond-buying program as needed and inflation remained in check, eroding demand for the precious metal as a hedge.
The Federal Open Market Committee said in a statement it is “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.” Exchange-traded funds backed by gold plunged 174 metric tons last month, the biggest drop on record, according to data compiled by Bloomberg. Equity and commodity markets fell after a report showed China’s manufacturing expanded at a weaker pace in April.
Analysts are describing the post-meeting statement from the Federal Open Market Committee as supportive for gold since it is maintaining quantitative easing; a subtle wording change might even be construed as a hint that the FOMC would increase monetary accommodation further if economic conditions remain soft.
As of 2:55 p.m. EDT, Comex June gold had risen to $1,461.10 an ounce from $1,448.80 two minutes ahead of the Fed statement. Earlier, the contract had finished the pit session with a loss of $25.90 to $1,446.20.
As expected, the Federal Reserve left the federal funds target rate between 0% and 0.25% and also maintained the $85 billion-per-month purchases of Treasury and mortgage-backed securities known as quantitative easing. That left traders scrutinizing the post-meeting statement for clues on how policymakers view the economy and therefore how they might act down the road.
Did you leave your wallet at home?
It could be no big deal if you live in Arizona, where you may soon be able to pay for goods and services with gold and silver.
The Arizona state Senate on Tuesday approved a bill that would make gold and silver legal currency in the state. The bill, previously approved by the Arizona state House of Representatives, is headed to Gov. Jan Brewer's desk, and if she signs it, the measure would take effect in 2014, making Arizona the second state in the country to recognize precious metals as legal tender. Brewer, a Republican, has yet to weigh in on whether she supports the proposal.
We came across an interesting article published by renowned Prof. Fekete. In the article he elaborates the current backwardation in the gold markets and explains what effects a prolonged and continuing backwardation could have not only on the gold markets, but on the economy as a whole. We would like to quote two sections from his paper, to give you a taste of the effects this could have:
"But no sooner had gold futures trading stopped after the advent of permanent backwardation than gold was no longer to be had in exchange for U.S. Treasury debt. The entire outstanding debt of the U.S. was worth not one ounce of gold. Not one gram of it. It is insane to pretend that this would make no difference in world trade, as pretended by official doctrine."
"In fact, delivery of gold will be suspended under the force majeure clause. Short positions will have to be settled in cash, to be made available by the Fed’s printing presses. Gold futures trading will be a thing of the past."
Year-to-date, the U.S. dollar is up; does that mean we are in a rising dollar environment? Or is it an opportunity to diversify out of the greenback?
Last year, with all the turmoil in the Eurozone, the euro was up 1.79% versus the dollar; that appeared to be the best the U.S. dollar could do in times of turmoil. Of the major currencies only the Japanese yen was down versus the U.S. dollar:
While the 2016 presidential election is still far off, one hopeful is getting a head start on fundraising by accepting unorthodox forms of campaign donations.
In an open letter to the Federal Election , Libertarian Party presidential candidate Darryl Perry declared that his campaign will use Internet currencies like Bitcoin wallet and Litecoin wallet as well as precious metals to finance his bid for the White House.
“The Darryl W. Perry for President (2016) campaign will not be accepting donations in currencies recognized by the federal legal tender laws,” the letter states.
Fight back and buy Silver on May 1st 2013.
With gold and silver giving back some of the recent gains off of the lows, today acclaimed money manager Stephen Leeb spoke with King World News about what may really ignite gold and silver to the upside. Leeb also said investors should be aggressively buying silver right now. Below is what Leeb had to say in his interview.
Leeb: “This is not going to end in a happy Goldilocks scenario, I can promise you that. This is going to end in some sort of hideous depression, and who knows what it’s going to do to our society and our civilization.
A depression is a very tough thing to survive. Or it’s going to end, and believe me I hate inflation, but that is the lesser of two evils, that’s what we are headed for….
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