Gold & Silver Digest: 5/27/13
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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5/27/13 6:49 PM EST US close metals price quotes from Finviz
Gold’s recent ups and downs are simply keeping with its tradition of being volatile, said former U.S. congressman Dr. Ron Paul in an exclusive Interview with Kitco News.
“It is up and down, and it has been doing that a lot lately,” Paul said. “If (investors) are in gold for a short time to make a quick killing that ought to make them very nervous,” he said of gold’s recent correction in April. Prices plunged 14 percent in the two sessions to April 15, the most since 1983, and hit a low of $1,321.95 an ounce on April 16.
The excitement and the concern surrounding gold is greater than the need to be so excited and concerned he said on the sidelines of the recent Metals and Minerals Conference in New York.
Hedge funds are the least bullish on gold in more than five years as speculation about the pace of money printing by central banks whipsawed prices, driving volatility to a 17-month high.
Money managers cut their net-long position by 9 percent to 35,686 futures and options as of May 21, the lowest since July 2007, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 6.7 percent to a record 79,416. Net-bullish wagers across 18 U.S.-traded commodities slid 2.1 percent, as investors became more bearish on coffee and wheat.
A week ago, when the brand new Hong Kong Mercantile Exchange suddenly shuttered after being in operation for only two years , urgently settling what little contracts were outstanding, many questions were left unanswered.
Such as: how it was possible that the exchange, expected by many to become the new preferred trading venue for Asian precious metals and to steal the CME's crown, could close on such short notice, without barely having been given a fair chance at being profitable, let alone dominating Pacific rim metals trading.
This mystery deepened further after reports that the exchange barely had seen any volume, with allegedly only a tiny 200 open contracts remaining to be settled upon shuttering.
The price of gold recently plunged against a backdrop of increasing global money printing (“quantitative easing”) and increasing demand for physical gold. On the face of it, this is odd. It is however quite rational, due to some perverse incentives in the structure of the gold market that are not well understood.
Whirl ‘Round Wednesday may well have been the writing on the wall, or at least the precursor, for a return to market normalcy as FRB Chairman Bernanke waxed eloquent to Congress in defending the Fed's record stimulus program, declaring that were it to end prematurely, ‘twould endanger the economic recovery, (his word, not mine). Per this week’s opening graphic, as Big Ben spoke on Wednesday into the 07:00 hour (Left Coast Time), both Gold and the S&P initially climbed in earnest, overjoyed at the insistence of continued stimulus…
…only to then whirl right back ‘round down, given:
GoldSeek Radio's Chris Waltzek talks to James Turk of GoldMoney and John Williams of Shadowstats. Video.
‘Should I be buying silver now? No I will wait until the stock market tanks and silver becomes even cheaper.’ This is a fairly typical comment from an ArabianMoney reader these days. The problem with following the lazy consensus, as any good contrarian investor knows, is that it is frequently wrong.
Why’s that? Well for one thing it means too many people sit on one side of the trade and not enough on the other, so the tendency is for a small movement to produce disproportionate price swings. Spot the legendary volatility of silver as an asset class.
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.
A luxury lingerie brand has produced a collection of undergarments made from 24-Karat gold thread.
Rococo Dessous, made by former Victoria's Secret designer Breanna Lee, features gilded bras, underwear and nightgowns that all incorporate the thread, which comes from a special Swiss gold fabric.
The lavish collection, which takes its inspiration from royal women in history including Cleopatra, Marie Antoinette and Tsarina Alexandra, ranges in price from $3,000 to $6,000 for a set.
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