Gold & Silver Digest: 5/9/13
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.
5/9/13 6:15 PM EST US close metals price quotes from Finviz
Gold fell 1 percent in choppy trade on Thursday as the dollar rose to a four-year high against the yen and rallied against the euro, decreasing bullion's appeal as a hedge against U.S. currency depreciation.
After trading slightly lower earlier in the session, bullion accelerated losses after the dollar smashed above the 100 yen mark and jumped 1 percent against the euro. The resurgent dollar also weighed down on equities and other industrial commodities such as crude and copper.
Bullion investor sentiment remains lackluster as outflows in gold-backed exchange-traded funds showing no signs of abating.
After a massive decline in mid-April that shattered any sort of confidence in the gold market, bullion prices have remained relatively range bound. While physical demand has picked up, ETF liquidation has kept the gold market flush with supply. Amid light volumes, record-high stock markets, and relative tranquility in Europe, gold has failed to garner enough momentum to break out, despite gaining more than 10% since hitting its 52-week low of $1,323 after the massive April plunge.
If you bought gold on April 16 and held on, you would think you’ve made a good investment. At least a good trade. The yellow metal is up 11% since then, the day after a multi-session market collapse that saw bullion prices fall more than $200, or nearly 15%. The decline was so hard that it wiped out $640 million from the portfolios of hedge fund billionaires John Paulson and David Einhorn, if one includes gold equities and assumes their holdings haven’t changed since their latest regulatory filings.
BlackRock Inc. President Robert Kapito and James Grant, publisher of Grant's Interest Rate Observer, talk about inflation, central bank policy and gold. They speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg)
Gold investors can make the long term case for the yellow metal as loud and often as they want, but the market price is the final arbiter investing success. By that objective measure the barbaric metal has had a tough run over the last 18 months.
Since peaking near $1,900 in early September 2011, gold has fallen more than 20%. Over the same period the S&P 500 is up more than 40%. Even for patient investors, that type of spread in performance is cause for concern if not outright panic.
Peter Schiff, outspoken author of The Real Crash and head of Euro Pacific Capital, says the euphoria has been well and truly beaten out of gold. "I've never seen such negative sentiment since I've been buying it," he says in the attached video. It's that negativity that Schiff thinks will provide a wall of worry for gold prices to climb in the coming months.
Gold imports by China from Hong Kong more than doubled to an all-time high in March as buyers in the biggest consumer after India boosted purchases, underscoring increased bullion demand in the world’s second-largest economy.
Mainland buyers purchased 223,519 kilograms (223.52 metric tons), including scrap, compared with 97,106 kilograms in February, according to Hong Kong government data yesterday. Net imports by the mainland, after deducting flows from China into Hong Kong, were 130,038 kilograms compared with 60,947 kilograms a month earlier, according to Bloomberg calculations.
Although the Pharisees of paper money successfully forced down the price of gold, like those who lobbied Pontius Pilate to crucify Jesus, the consequences of their actions will backfire beyond their wildest imagination.
The decision of the paper money cabal to force down the price of gold is akin to Japan's decision to attack Pearl Harbor. Although the attack was successful, the eventual consequences were not what Japan had envisioned.
Recently, an article, The Gold Correction: What's the Big Deal?, at Seeking Alpha posted the following chart. However, measured from its September 2011 high of $1901.35, gold's fall is 28 %, a drop remarkable similar to its 2008 correction of 27.7 %.
The usefulness of sentiment’s stealth crystal ball is about to be revealed to the litany of unsuspecting precious metal bears and skeptics who have convinced themselves that gold’s bull market is either over or, at the minimum, in need of lengthy ongoing retesting, restructuring and consolidation.
This article will bring us up to date as to the degree of current bearish sentiment regarding both gold and silver using no fewer than 5 sentiment indicators (with 9 illustrative charts), as well as provide the reader with an opportunity to observe the price outcome of previous bearish extremes using these sentiment indicators.
The legal claims on physical gold far exceed the amount of physical gold that the banks actually have by a very, very wide margin. And right now the bankers are scared out of their wits because their warehouses are being drained of physical gold at a frightening rate. So what happens when their physical gold is gone but they still have lots and lots of people with legal claims to gold? When that moment arrives, it will represent the end of the paper gold scam. Many believe that the recent takedown of the price of paper gold was a desperate attempt by the bankers to put off that day of reckoning, but it appears to have greatly backfired on them. Instead of cooling off demand for precious metals, it has unleashed a massive "gold rush" all over the globe. Meanwhile, word has been spreading among wealthy families in both North America and Europe that they had better grab their physical gold out of the banks while they still can. This is creating havoc in the financial community, and at least one major international bank has already declared that it will only be settling those accounts in cash from now on. The paper gold scam is starting to unravel, and by the time this is all over it is going to be a complete and total nightmare for global financial markets.
Through a fortuitous chain of events, I have recently uncovered the 36 year energy wave that shapes and influences every major trend in financial markets. This wave can be traced back in perfect alignment with all of modern market history, and far beyond.
This 36-year wave is pointing unequivocally to a major top in gold in 2016. This should be the “big one” that gold bulls have been waiting for, as prices break free and come unglued from paper currencies, with no price seemingly too expensive in dollars, euros, yen, etc.
How can we be confident that 2016 is the time for this? Because there is a perfect 36 year monetary cycle that is scheduled to hit its next climax in 2016.
The 70s silver bull took place during a period from a major peak in the Dow/Gold ratio (1966) to a major bottom in Dow/Gold ratio (1980). The silver bull market started in 1971 and ended at the beginning of 1980.
The current silver bull market also started after a major peak in the Dow/Gold ratio (peak was at the end of 1999).The current silver bull market started in 2001, and it is also likely to end when the Dow/Gold ratio makes a major bottom. See the chart below, as illustration:
Sticking with the theme of milestones, we’ve just crossed a few important anniversary dates that relate to silver that taken in proper perspective point to a disturbing conclusion. That conclusion is that the US commodities regulator, the CFTC, has done more public harm than good over the past few years. Simply put, the public and our markets would have been better off had the agency not been run by the commissioners in place, specifically including Chairman Gensler and Commissioner Chilton. In fact, rarely has so much promise for genuine regulatory reform been squandered as badly as has been the case over the past few years.
Four years ago tomorrow, Gary Gensler was sworn in as chairman of the CFTC, following the financial crisis that brought the system to the brink. He hit the road running and immediately began to speak publicly in terms of position limits and concentration that paralleled exactly what I had been espousing for more than 20 years. Gensler followed up his public speeches with a series of unprecedented public meetings designed to garner industry consensus for how to prevent concentration and manipulation and how to institute legitimate speculative position limits in those commodities where they did not exist, such as silver.
Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.