Gold & Silver Digest: 5/2/13
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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5/2/13 8:01 PM EST US close metals price quotes from Finviz
Gold rose on Thursday as the European Central Bank cut its interest rate for the first time in 10 months, affirming the metal's inflation-hedge appeal a day after the Federal Reserve said it would keep up its bond purchases to spur growth.
The metal was lifted by the ECB's decision to lower its key rate by a quarter percentage point to a record low 0.5 percent, and it held out the possibility of further policy action to support the recession-hit euro zone economy.
Gold is likely to head sideways for most of 2013, but deflation could eventually force prices higher, Jim Rickards of Tangent Capital said Thursday on CNBC.
"To me, what's going on is there's a transition from weak hands to strong hands," he said, adding that sellers have included "Comex traders who have margin calls and stops, hedge funds that have non-permanent capital" and gold exchange-traded fund GLD. "They're all wrung out now."
Elliott Management Corp., the $21.8 billion hedge-fund firm founded by Paul Singer, said gold, a money-losing position for the firm this year, remains the best store of value in an uncertain global economy.
“Although our gold position lost money in the quarter and afterward, we remain unconvinced that anything resembling a genuine normalization of global economic and financial conditions has been achieved,” Elliott wrote in an addendum accompanying a first-quarter letter to investors. “There is only one store of value and medium of exchange that has stood the test of time as ‘real money’: gold. We expect this dynamic to assert itself in a large way at some point.”
Intraday commentary on the Chinese gold rush and the ongoing currency war here. It might be well to read this if you have not so already. What the People's Daily Online has to say about the Chinese market for physical gold is stunning.
It correlates heavily with the gold and silver market action and represents a kind of summary of what I think might be going on.
Stocks are in a bubble. A lot of the stock market action is reminiscent of the tech bubble with overtones of the housing bubble.
Europe is in trouble. Draghi is considering negative interest rates to force the Banks to lend.
Gresham's law is an economic principle that states, "when a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." It is commonly stated as: "Bad money drives out good" – Gresham's Law.
Doesn't that sound like the situation in the United States and globally? Paper money is being printed by the trillions and the recent price takedown of gold/silver unleashed an unexpected frenzied scramble for physical gold and silver that the buyers will tuck away, out of the sight and from the grips of any government.
Investment company Physical Gold said there were waiting lists of three weeks for some coins, and four to six weeks for gold bars. "Previously all would have been available within a few days," the company said.
The company said that it had seen a 50pc increase in enquiries about purchasing gold and a 35pc increase in sales, with people buying tax-free gold coins. "We are now starting to experience physical gold shortages," said Daniel Fisher, CEO of Physical Gold.
Such a high level of buying interest among officers and directors within their own businesses in the resource sector has correctly foreshadowed a recovery in share prices in the past: That high point of nearly five years ago came about six weeks before the Venture market bottomed on Dec. 5, 2008, points out Ted Dixon, INK Research CEO.
The Venture indicator is based on insider transactions over the past 60 days. But INK also has a Venture indicator that covers just the past 30 days of transactions. It’s more volatile, but gives a better sense of the more recent insider activity.
In the article, Mr. Krauth stated that:
"Interestingly, silver was not targeted by Executive Order 6102. Now, we can't know if there will ever again be anything akin to this Oval Office edict – much less what it might cover and might say.
But going on the past, and considering the size of the silver market relative to gold, silver could be a way to own a precious metal that just might sidestep any risk of future confiscation."
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