Gold & Silver Digest: 5/24/13
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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5/24/13 7:17 PM EST US close metals price quotes from Finviz
It didn't take much to bring beleaguered gold traders back from the brink. Jitters in Japan and fear over the Fed have stoked a reversal in gold that follows a seven month, 25% slump.
While the most widely traded metal is still only about $25 away from the two and a half year low it hit in April, Paul Schatz, president of Heritage Capital, thinks there's currently a lot more upside than downside in gold.
"This is probably only half or three-quarters of the way done," Schatz says in the attached video of the long-term rally in gold. In fact, in a recent note to clients he wrote, "I do not believe there is enough evidence at this time to conclude that the secular bull market in gold has ended."
The drop in gold prices since the beginning of the year has broken the spirits of investors seeking it as a safe haven for their wealth.
However, Citi's Tom Fitzpatrick sees some hope in his charts.
Gold traders are the most bullish in a month after Federal Reserve Chairman Ben S. Bernanke signaled record stimulus will continue until the economy improves.
Twelve analysts surveyed by Bloomberg expect prices to rise next week, with nine bearish and eight neutral, the highest proportion of bulls since April 26. Prices rose 58 percent since 2008 as the Fed led central banks in debt purchases. Bullion is poised for its first weekly gain in three and trading and investment company Degussa Goldhandel GmbH said demand this month will be double the first-quarter average.
Holdings in gold exchange-traded funds fell to fresh four-year lows yesterday but demand from central banks for bullion coins and bars, plus store of wealth jewellery demand is supporting gold.
SPDR Gold Trust, the world's largest exchange-traded gold fund, said its holdings fell 0.15% to four-year lows of 1,018.57 tonnes on Thursday.
Gold held by gold-backed ETFs, which in 2012 accounted for just 6% of the world's gold demand, fell by 177 tonnes in the first quarter according to the World Gold Council data.
- By late April, the US T-bond had become technically overbought, and the price has now declined for several weeks. The right shoulder of an inverse head and shoulders pattern appears to be forming. That could trigger a strong rally to 124, and maybe all the way to 134.
- Volume patterns indicate that professional investors are buying T-bonds, in size.
In his latest alert to subscribers, legendary gold trader Jim Sinclair asks rhetorically where all of JPM’s gold has gone, and whether the gold banks are in the process of executing the COMEX. Sinclair states that COMEX is experiencing a death rattle, and that they will soon per-emptively raise margins in gold and silver to 100% cash to prevent a full default.
A subscriber recently commented that the Oligarchs who rule Russia only wish they got to run things as efficiently as how JPMorgan and the big banks control our financial markets, particularly in the trading of precious metals. Based upon the last few days, it’s hard to argue with that. On Sunday evening shortly after 6 PM, the price of silver was taken down 10% within a few minutes on an insignificant number of contracts (1600), evoking memories of the infamous 13% ($6) decline on the May 1 Sunday evening of 2011. If the Russian criminals oversaw silver trading and not the CME Group and the CFTC they could not possibly have rigged prices more corruptly.
Silver has suffered horrendously in 2013’s opening months, plunging dramatically to miserable lows. This exceptional weakness has naturally kindled extreme bearishness. Predictions abound for silver to continue selling off indefinitely. But amidst this severe carnage, the silver bullion held by the flagship silver ETF has remained flat. This is an extraordinary bullish divergence in the face of rotten sentiment.
Silver is almost certainly the most volatile of the world’s more-popular markets. When silver starts moving, it often moves fast. Fortunes are won and lost in a matter of months, a very exciting or terrifying prospect depending on which side of the trade you are on. The key to silver’s price action has always been gold. Silver follows gold, usually dramatically leveraging the yellow metal’s fortunes. Silver is a gold play.
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