Gold & Silver Digest: 5/13/13
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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5/13/13 8:11 PM EST US close metals price quotes from Finviz
Gold fell 1 percent on Monday, hovering near its lowest price in two weeks as stronger U.S. retail sales data inspired economic hopes and reduced the safe-haven bid for gold.
Bullion fell for a third session after the Commerce Department said U.S. retail sales unexpectedly rose in April, pointing to underlying strength in the economy.
Exchange-traded products liquidated more gold holdings on the data.
Gold prices could continue to struggle as investors digest the fact that the Federal Reserve is talking about developing an exit strategy for its quantitative-easing measures.
On Friday, the Wall Street Journal’s Fed-watcher, Jon Hilsenrath, wrote an article saying that the Fed has mapped out a strategy to wind down its “unprecedented $85 billion-a-month bond-buying program.” Hilsenrath interviewed both Richard Fisher, president of the Federal Reserve Bank of Dallas, and Charles Plosser, president of the Philadelphia Fed, to talk about an exit strategy.
Actually you should do both.
Buy Vancouver/Toronto and sit, sell Wall Street and sit.
We have had a major bottom in gold, silver and resource stocks. By all measures investors despise gold and won’t touch it with a ten-foot pole. That’s a really good thing.
In recent times, gold has become a key topic in the world’s media. Interest in this yellow metal is warming up reports about the plans of Germany and other countries to repatriate their gold reserves from the USA and Great Britain, to where they were moved at various times.
Heated debates have begun regarding how responsibly central banks and finance ministries are storing the gold reserves that have been entrusted to them. There are also suspicions that there is less gold there than is being officially reported. This article is going to put forward the theory that there is virtually no gold left in the vaults of central banks in leading economically developed countries…
1. Gold auctions, or the tip of the iceberg
Over a period of four decades, central banks have disposed of their gold reserves. Two types of «disposal» have been used: a) metal auctions; b) covert operations.
China’s National Bureau of Statistics just announced that Chinese investors bought 30.3 billion yuan ($4.93 billion) worth of gold, silver and jewelry sales (link in Chinese) in April, 72% more than than in April of 2012. For anyone but goldbugs, this piles on a couple more reasons to worry about the Chinese economy.
Capital outflows: a vote of “no confidence” against the Chinese economy
That surge in Chinese demand isn’t simply because gold is an inflation hedge—it’s also rooted in that fact that capital controls leave most Chinese people with few assets in which they can invest. This has created asset bubbles in everything from contemporary art to real estate. And gold has always been a fairly popular asset in which to invest—about 18% of global demand, by weight, came from mainland China in 2012, according to the World Gold Council (pdf).
Examining US trade data, we were surprised to see that South Africa’s $402 million trade surplus with the United States in January had turned into a $689 million deficit by March. Why?
It turns out the $1.1 billion swing is entirely due to unusual shipments of gold from the US to South Africa in February and March. So far this year, 20,013 kg of unwrought gold, worth $982 million, has left John F. Kennedy International Airport (JFK), in New York, for somewhere in South Africa, according to the US Census Bureau’s foreign trade division. (Unwrought gold includes bars created from scrap as well as cast bars, but not bullion, jewelry, powder, or currency.)
It is time for the discussion of the end game. The end game is the basis for the future.
The emancipation of physical gold from paper gold is in fact happening. I have always counseled that a return to convertibility is impossible because gold would convert out only. If gold is emancipated then by definition it is Free Gold.
Free gold is not new.
Free gold is the history of gold.
Free gold is the use of gold for savings.
Free gold is the use of fiat paper for transactions.
Free gold’s definition on Wikipedia has matured as the foundational thinking of a school of thought that I hold which says gold is going back to its original roll pre-convertibility.
A measure introduced in the U.S. Congress seeks to replace the base metal of most American coins with iron. The move would slash the nickel and copper content of U.S. coins to a fraction of today’s already reduced levels. Like past changes in metal content, the bill represents a logical continuation of currency debasement and calls into question the strength of U.S. fiat currency—yet another sign of the decline of the global monetary system.
Congressman Steve Stivers (R-OH) introduced the bill, H.B. 1719—the “Cents and Sensibility Act”—on April 24. It mandates that pennies, nickels, dimes and quarters be composed primarily of steel; specifically U.S. produced steel. He presents the bill as a budget measure, stating, “This legislation is a common-sense solution to decrease the cost of minting our coins. Not only will it cost less, but steel is an American resource that we have here at home and can be manufactured right here in our backyard.” His office asserts that, according to the House Financial Services Committee, the U.S. government would save up to $433 million over 10 years.
Unfortunately, there is not, that I can see, a simple pattern that predicts the next high or low in the price of silver. Markets seldom make it that easy. However, there are patterns that provide valuable information to help illuminate the “big picture” perspective of where the current price of silver lies in the up-down-up-down cycle of prices.
- Examine monthly prices since 1972 – over 40 years. Use monthly prices to see only the “big picture” with important lows and highs.
- List the dates for important lows, and determine the number of months between adjacent lows.
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