Gold & Silver Digest: 5/31/13
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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5/31/13 7:02 PM EST US close metals price quotes from Finviz
Gold fell almost 2 percent on Friday after U.S. data showing low inflation and improving consumer confidence dampened investor interest, with bullion notching sharp losses for a second consecutive month.
A combination of decreasing fund interest, option expiration and squaring of books after investors covered short positions also sent open interest in U.S. gold futures to its lowest in almost four years, traders said.
Data showing a six-year high in consumer sentiment weighed on gold, a traditional safe haven.
Gold futures settled below $1,400 Friday to cap a decline for May, the seventh monthly drop in the last eight months.
Gold for August delivery GCQ3 -1.70% fell $19, or 1.4%, to settle at $1,393 an ounce on the New York Mercantile Exchange’s Comex division. Gold futures rose 1.5% Thursday to close at $1,412 an ounce.
Gold futures fell 5.4% in May, compared with the settlement of $1,472.10 for the most-active contract on April 30.
Gold traders are divided in their outlook for prices on signs the rush for coins and jewelry that followed the start of the bear market last month is slowing, at a time when hedge funds are the least bullish in five years.
Fifteen analysts surveyed by Bloomberg expect gold to rise next week while 13 are bearish and five neutral. Premiums paid by jewelers in India and Hong Kong to secure metal are tumbling and sales of coins by the U.S. Mint in May are about one-third of what they were in April. Investors sold more than 123 metric tons held in exchange-traded products this month, valued at about $5.6 billion, data compiled by Bloomberg show.
Gold demand in the mainland, the world's largest consumer after India, may slow in the second half of this year after surging in April, said Zhang Bingnan, secretary-general of the China Gold Association.
"The kind of frenzied buying in late April and early May won't be repeated," Zhang said. Some of the jewellery demand earmarked for festivals or weddings later this year may have been brought forward to April and May after prices fell, he said.
Gold has declined 16 per cent this year on concern the US Federal Reserve may rein in stimulus that helped bullion cap a 12-year bull run in 2012 and as some investors lost faith in the metal as a store of value.
When last I wrote, it was from my favorite place in the world, Cafayate, Argentina, as I prepared to return to the United States for the Northern Hemisphere summer. Leaving off, I was positively brimming with the health and vigor of life lived large in the big-sky country of the Argentine outback.
Unfortunately, immediately upon arriving back in the US, I was laid low by a high fever, exacerbated by a week-long absence of the sun, and topped off with a spell of freezing temperatures and even snow… this at the end of May!
Today, a week and a bit later, I'm mostly recovered though still periodically hacking like a TB patient. Other than a single afternoon, the sun has put in sporadic appearances, and the forecast for the next three days is more of the same.
Gold and silver were hit by the usual contrived selling today as I suggested they might be, since this is what they do on Fridays.
The total open interest for gold on the Comex is fallen shockingly low. I am wondering if everyone but the rats are leaving that ship.
And it was the end of month to boot, so the funds and Banks needed to polish up the mark to market on those big short positions.
Short squeezes often create unstable markets, although a short covering rally based on sudden and consensus buying can also create a major boost to liquidity. This can have the effect of lighting the match that will ultimately detonate the bomb for markets already accustomed to substantial amounts of real or artificial liquidity.
From a technical standpoint, silver is currently consolidating in a tight trading range as the market recovers from an oversold situation. The 14-day RSI currently reads at the 39 level as it hovers above the critical 30 point that it dipped below in April, which could significantly impede additional downside price action.
GoldSeek.com TV presents an exclusive interview with the President of SilverSeek.com and GoldSeek.com, Peter Spina. He discusses several topics with interviewer Vanessa Collette of GoldSeek.com, including:
- Is it time to buy Gold and Silver Stocks?
- QE, Money Printing, Fiat Currencies and Alternative Currencies (bitcoin)
- George Soros' Recent Gold-Silver Stock Purchases
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