Gold & Silver Digest: 5/6/13
The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.
If you have articles to submit for the next digest, please email them to me by clicking here.
5/6/13 8:03 PM EST US close metals price quotes from Finviz
Gold eased in quiet trade on Monday on continued outflows in bullion-backed exchange-traded funds, and investors were still weighing the metal's inflation-hedge appeal after last week's encouraging U.S. jobs data.
Trading volume was much lower than usual as London markets were closed due to the Bank Day holiday.
The metal largely ignored comments by European Central Bank President Mario Draghi affirming ECB's readiness to cut interest rates again if the euro zone economy deteriorates further. Last week, the central bank cut rates to a record low.
In mid-April we saw gold plummet to just below $1400 an ounce, its lowest price since March 2011. The precipitous drop in April put the yellow metal technically in bear market territory, with people trying to figure out where it’s headed next.
Fast-forward to last Friday when gold closed above $1470.
Marcus Grubb, managing director of investment at the World Gold Council, told The Daily Ticker at the Milken Institute’s 2013 Global Conference it's headed in one direction: up.
Hedge funds increased bets on a gold rally by the most in three weeks as central banks signaled no end to economic stimulus, driving prices higher just as analysts and traders turned the most bearish in three years.
The funds and other large speculators raised their net-long position by 19 percent to 54,762 futures and options as of April 30, U.S. Commodity Futures Trading Commission data show. Holdings of so-called short contracts retreated 9.2 percent, the most since March 19. Net-bullish wagers across 18 U.S.-traded raw materials jumped 28 percent to 550,182, the biggest increase in seven weeks, led by gains in soybeans, cocoa and crude oil.
Bullish positions in gold futures and options on Comex division of the New York Mercantile Exchange stabilized in the latest count of speculative activity from Commodity Futures Trading Commission following reductions by large speculators in the previous report tracking their activity.
These traders also boosted net-long positions in the platinum group metals in both the legacy and disaggregated reports, according to the CFTC’s weekly commitment of traders report for the week ended April 30, released late Friday. Activity in silver was mixed, while funds added to net-short positions in copper.
Gold-buying fever continued unabated among the untutored masses worldwide last week. Imports to India, the biggest gold consumer by far, were running at five times average levels, according to investment bank UBS. Chinese smallholders used their May Day holiday not to head for the beach, as this column naively suggested last week, but to flood the gold dealers in Hong Kong. Turkey bought more gold in April than in any month since the fateful days of August 2008. And so on.
Were the financial pros back in New York and London impressed by this spontaneous outpouring of gold love? Not a bit.
We have spent more than 12 years working to educate you on the subject of gold. I only ask in return that you consider these three videos carefully. These presentations sum up where we are, why gold was bombed, why technical analysis is in gold a major waste of time and the direction we are without any doubt going.
If you will devote time to watching each video carefully you will see how the recent operation to help the dollar by depreciating price of gold was not a short play but a play to keep a system alive.
Free Gold is an interesting school of thought with which I agree on the emancipation of gold from paper gold as natural development and its implication, but not the entire thesis which runs in various directions in application of their basic and correct thesis.
Singapore is poised to become the main gold hub in Asia, even though much work remains to be done.
The Republic, which has stated that it aspires to be a physical gold hub like London and Zurich, now has most pieces of the puzzle in place to do so, say industry players.
"These are the things we need to consider before you can even have a hub idea: goods and services tax (GST); refinery; storage; and government endorsement," said Albert Cheng, managing director of the Far East at World Gold Council.
Every morning in Africa, a Gazelle wakes up knowing it must outrun the fastest lion, or
it will be killed and eaten. Every morning a lion wakes up knowing it must outrun the
slowest Gazelle, or it will starve to death. It does not matter if you are a lion or a
Gazelle…when the sun comes up each morning, you’d better be running. African Proverb
We see the lions as issuers of fiat, Gazelles as owners of gold, and if you are uncertain as to
which you are, the issuers of fiat will financially eat you alive. Cyprus was an overt wake
up call. Many people in the U S think it will not happen to them. It already has. Each
morning, when the sun comes up, you must decide if you want fiat or specie. One will
slow down your ability to “run,” the other will give you the ability to “outrun.”
In the “Battle For Investment Survival,” you have a choice to make, and your ability to
survive depends on it. As Gerald Loeb recommended, “Put all you eggs in one basket,
and watch that basket very carefully.”
The COT reports which we look at each week provide a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.The weekly reports for Futures-and-Options-Combined Commitments of Traders are released every Friday at 3:30 p.m. Eastern time.The short report shows open interest separately by reportable and Non-reportable positions.For reportable positions, additional data is provided for commercial and non-commercial holdings, spreading, changes from the previous report.
Futures and Options Combined
What does this title mean? A future is a standardized contract traded through regulated exchanges where an investor buys or sells a contract at a specified price for a specific date in the future.The price includes the interest charge due to the seller by the buyer from the date of the contract to the due date.An option is the ‘right to buy or sell’ a contract at a fixed date in the future at a specific [strike] price.The difference is that a futures contract is an agreement to buy or sell, whereas an option gives the holder the right to buy or sell.An option holder can decide not to take up that right and will only lose the cost of buying the option.His loss is therefore definable at the start of his investment, while the potential profit has not limit to it.A futures contract is usually leveraged [a loan provided] up to 90% of the contract.However, with the owner liable to top up his ‘margin’ to maintain this 10% his potential losses can rise far higher than his investment.A ‘long’ [buying] contract limits its loss to the full price of the item, whereas the ‘short’ [selling] contract has no limit except the height that the price of the item can rise to.
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