Gold & Silver Digest: 6/12/13
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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6/13/13 12:29 AM EST US close metals price quotes from Finviz
Gold rose on Wednesday as sharp losses in U.S. equities and a drop in the U.S. dollar prompted the metal to rebound from the previous session's three-week low.
After earlier rangebound trade with no major U.S. economic data, bullion extended gains in late morning trade as the S&P 500 index fell almost 1 percent on persistent worries over how soon central banks will begin to scale back supportive measures.
Gold prices ended about 1 percent higher on Wednesday, as losses in U.S. equities and a drop in the U.S. dollar prompted the metal to rebound from the previous session's three-week low.
After earlier range-bound trade with no major U.S. economic data, bullion extended gains in late morning trade as the S&P 500 index fell almost 1 percent on persistent worries over how soon central banks will begin to scale back supportive measures.
Every man has a day on which he turns a new leaf. For Peter Schiff, that day has not yet arrived.
This year, "gold can certainly make a move up to $1,700 or $1,800, but I think ultimately it's going a lot higher than that," Schiff said Tuesday on CNBC's "Futures Now."
We are deceived when we consent to think about the "price of gold." At the very outset of our thoughts regarding gold, we are wrong, just as astronomers prior to Copernicus were wrong in thinking about the solar system as geo-centric, with the Sun, Moon and planets describing perfect circles around Earth. Gold is − to follow the astronomical simile − the center of the monetary universe, and the planets − the currencies − circle the Sun, which represents gold.
The correct starting point is the price of a currency expressed in terms of gold, and not the other way around.
The “cleanest” dirty shirt, the U.S. dollar, is down versus the euro so far this year; and was down last year. Yet, S&P, in upgrading the credit outlook of the U.S., cites U.S. dollar strength. If this is a strong dollar environment, are investors prepared for a weak one? With plenty of dirty laundry in the world, we ponder how investors might be able to profit from actively managing currency risk.Not managing currency risk may be risky. When holding U.S. dollar cash, if nothing else, one risks the erosion of one’s purchasing power. When adding non-dollar currencies to a portfolio, one clearly adds rather than removes risk when judged in terms of U.S. dollar returns, but it might be a risk worth pursuing. Let us explain:
The “mania of policy makers” might be best expressed in currencies
The recent drop in gold prices is a confirmation, or a revelation, to investors of the battle between the physical and paper gold markets. In this interview with The Gold Report, Brien Lundin, editor of Gold Newsletter, predicts the timing of a handoff from Asian physical demand to Western speculative demand and assesses the readiness of the junior market to respond to a revival in commodity prices. Plus, in a tip to Father's Day, he discusses his efforts to groom the next generation of investors.
The Gold Report: In your latest newsletter, you advocate that gold investors pay close attention to the Federal Reserve meeting taking place on June 18. What are you looking for out of that meeting?
While silver is on the defensive short-term there is plenty of evidence that over the medium and longer-term it is setting up for a powerful rally. COT’s and sentiment are already very bullish indeed, which means that when the turn does come, the rally is likely to be accentuated by panic short covering.
On its 6-month chart we can see how silver is being pressured lower by its falling 50-day moving average coming into play overhead, although the increasingly large gap between the 50 and 200-day moving averages is indicative of an oversold state that increasingly calls for reversal. Volume is still predominantly negative, suggesting lower prices dead ahead. After that we can expect reversal. There was a pronounced bull hammer in silver in the middle of May towards the intraday low of which there is quite strong support – silver may drop no longer than the low of this hammer.
Even though silver investment demand has picked up recently due to the lowest prices in over two years, this may be just the tip of the iceberg for what is to come in the future. Currently, only a small fraction of investors understand silver's future potential but that will change in the next few years.
Presently, the Main Stream Media bandwagon has been quite busy putting out bearish analysis on silver demand and price. Whether it's due to a decline of industrial demand or a lack of silver investment by those in India, there doesn't seem to be a shortage of this sort of commentary. However, this should not be a concern for those who understand the true fundamentals in owning silver.
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