Gold & Silver Digest: 8/5/13
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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8/5/13 9:18 PM EST US close metals price quotes from Finviz
Gold dropped in quiet trading on Monday after signs of an improving British business
sector and better U.S. manufacturing activities dampened bullion's appeal as an investment hedge.
The metal accelerated losses after data showed growth in the U.S. services sector rebounded from a three-year low, while British businesses boomed and activity at euro zone companies expanded modestly in July for the first time in 18 months.
Hedge funds lowered bullish gold bets for the first time in five weeks as signs of accelerating U.S. growth contributed to the longest retreat in prices in a month.
Money managers cut their net-long position by 6.5 percent to 65,517 futures and options by July 30, U.S. Commodity Futures Trading Commission data show. Holdings of short contracts rose 6.8 percent, the biggest increase in six weeks. Net-bullish bets across 18 U.S.-traded commodities contracted 15 percent as investors cut wagers on higher crude prices for the first time in a month and more than doubled bearish bets on copper.
This is the first post in a five-part series that delves into the complex forces driving the violent recent movements in the price of gold, as well as the deeper economic underpinnings of the gold industry. It will also critically examine a sample of well-regarded gold miners, from their accounting quirks to operating metrics and prospects for long-term profitability.
This has not been an easy year to be a gold investor. For two years there has been a general slump in global commodity prices, particularly raw materials. Precious metals prices held up about six months longer than most raw materials, then joined the march lower.
In a somewhat shockingly blunt comment from the mouthpiece of Chinese officialdom, Yao Yudong of the PBoC's monetary policy committee has called for a new Bretton Woods system to strengthen the management of global liquidity. In an article in the China Securities Journal, Yao called for more power to the IMF as international copperation and supervision are needed. While comments seem somewhat barbed towards the rest of the world's currency devaluers, given China's growing physical gold demand  and the fixed-exchange-rate peg that 'Bretton Woods' represents, and contrary to prevailing misconceptions that the SDR may be the currency of the future, China just may opt to have its own hard asset backed optionality for the future; suggesting the new 'bancor'  would be the barbarous relic (or perhaps worse for the US, the Renminbi). Of course, the writing has been on the wall for China's push to end the dollar reserve supremacy for over two years as we have dutifully noted – since no 'world reserve currency' lasts forever. 
Despite some positive data, the global economy is showing signs of slowing, a remarkable development in itself when you consider all the money printing and deficit spending that's transpired over the past few years. According to the IMF's overview, global growth was less than expected in the first quarter of 2013, at just over 3%, which is roughly the same as 2012. The lower-than-expected figures were driven by significantly weaker domestic demand and slower growth in emerging-market economies, a deeper recession in the euro area, and a slower US expansion than anticipated. The report concludes that the prospects for the world economy remain subdued.
Many investors consider a weak economy to be a bearish environment for commodities, including gold. Doug Casey says we have entered into what will become known as the Greater Depression. That's as bearish as it gets, so should we expect gold to decline if the bears are right?
With gold and silver consolidating recent gains, today James Turk warned King World News that the LBMA fractional reserve gold system is disintegrating. Turk also spoke with KWN about the missing 1,300 tons from the Bank of England and plunging warehouse inventories. Below is what Turk had to say in this powerful interview.
Eric King: “James, I wanted to get your thoughts on what happened with this 1,300 tons of gold from the Bank of England?”
The largest silver producing country in the world has seen its production decline substantially in the first five months of the year. Mexico was forecasted to increase its silver production this year, however if present trends continue, total output could fall nearly 10% in 2013.
If we take a look at the last two latest reports coming from Mexico's INEGI, we can see that the majority of the declines have come from Zacatecas — the richest silver region in the country.
As India continues to wage war with gold, investors are seeking out the yellow metal through any means available.
Recent reports suggest that there is not enough room on commercial flights into Dubai for all those investors seeking to purchase gold.
“I cannot find a place for transporting gold on Emirates, on BA or Swiss Airlines this weekend,” lamented Tarek El Mdaka, the managing director of Kaloti Gold in Dubai adding he is shipping as much as 2 tonnes of gold every day.
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