Gold & Silver Digest: 5/8/13
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5/8/13 10:08 PM EST US close metals price quotes from Finviz
Gold was up over 1 percent on Wednesday, rising for the first time in three sessions as a drop in the dollar and strong physical bullion buying helped offset pressure from a continued decline in gold-backed exchange-traded fund holdings.
The precious metal and industrial commodities were supported by dollar's sharp fall against the euro. An unexpected rise in German industrial output pared back prospects of a near-term interest rate cut in the euro zone.
Hopes of surging demand from China in coming months, after net gold inflows from Hong Kong hit a record in March, might further support bullion prices, which have been hurt by sagging investor confidence this year, analysts said.
Just as there are many variations on democracy, there are also various–and legitimate–types of gold standards. The U.S. political system is absolutely unique. Canada’s system is a hybrid of ours and Britain’s. Britain’s is very different from that of France, which, in turn, is very different from Germany’s. And so it goes, all around the democratic world. Yet the bedrock of all of these countries’ systems is consent of the governed.
There have been permutations of the gold standard. Some like the idea of having 100% gold coverage for currency. Others prefer something similar to the classical gold standard of the late 19th century, which was different from the bimetallic (a combination of gold and silver) systems that preceded it. With the gold-exchange standard of the 1920s and early 1930s countries could use the U.S. dollar and the British pound–both tied to gold–as well as gold itself, as reserves to back their currencies. Under the Bretton Woods monetary system, which emerged from World War II, all currencies were fixed to the dollar, and only the dollar could be converted to gold. Bretton Woods was another type of gold-exchange standard.
After the gold rush is thought to have waned, and the two tons of gold American Eagle coins sold by the U.S. Mint (in one day alone), has faded from the headlines, we find the simply shocking news:
223.519 metric tons (mt) of gold was imported into mainland China for the month of March. Compare that to the 51.3mt and 97mt imported in January and February, respectively. When was the last time China even came close to importing gold on this scale?
Things are upside down in the gold market. Valuations are irrationally low, while global consumerism fuels demand and supply comes up short. Lawrence Roulston, editor and publisher of Resource Opportunities, advises people to trust their guts as well as the numbers when weeding through prospective investments. In this interview with The Gold Report, he skirts around conspiracy theories regarding the recent gold sell-off and keeps his advice simple: lower expectations, get rid of poorly performing investments and load up on the companies going cheap. If you push against the trend, you might come out with your feet on the ground.
The Gold Report: In a recent edition of Resource Opportunities, you wrote, "This time is different from every previous bust." How so?
Lawrence Roulston: Some people described the late 1990s as a nuclear winter of the mining industry. Demand for metals was low, and a lot of new production had come onstream. Copper was trading at the lowest price ever in real terms. Today, we don't have that surplus. We have serious constraints on supply at a time when demand for metals is increasing. Half the planet's population is undergoing a process of modernization and industrialization. Billions of people are becoming consumers, buying cellphones and looking at refrigerators, cars and every other consumer product.
Pop higher but no breakout from the potential bull flag.
Silver lagged a bit.
Congratulations to JP Morgan and Bank of America, who both turned in 'perfect' trading records for the 1Q of this year. It pays to have friends in high places. And faithful retainers are even better.
The US markets are almost surreal. The Fed and its Bankers believe that they can set the price of everything, at will, no matter what, and without consequences. Just a push here and a pull there.
The U.S. Mint will limit dealers' purchases of its "America the Beautiful" five-ounce silver bullion coins when they go on sale next week because strong demand exceeds the mint's inventory.
The mint has been allocating sales of its more popular American Eagle silver bullion coins to its authorized dealers since late January following a brief suspension.
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