Deutsche Bank: Gold correction may be almost done

Tuesday, July 9, 2013 10:33:20 AM America/Toronto

This is the official part of the note from the strategists at Deutchse Bank: “Lessons from history suggest that although gold-price losses have been extreme…..we would classify events over 30 years as significantly different since at the time, U.S. short term interest rates rose to 20% with real interest rates also rising rapidly; it is possible that the major part of the gold price correction has already occurred.”

I do not think that there is a coincidence that the German central bank is the central bank buying the most gold and silver at these depressed prices. This could be a catalyst for a strong higher bounce which will create a new floor in prices.

 

Comments | Posted in Blog By Jamie Cohen

The Astonishing news out of Singapore this Week

Tuesday, June 11, 2013 2:27:37 PM America/Toronto

The Deutsche Bank has launched its second-biggest gold-storage vault in Singapore that can hold up to 200 tonnes of the metal as it looks to capture surging global demand for physical bullion.

 

Not surprisingly, it has been reported that Deutsche Bank has been the biggest buyer of physical gold and silver over the last few months as gold and silver dropped about 20%

Of course, we all know that JPMorgan opened a similar facility at the Singapore Freeport in 2010.

Comments | Posted in Blog By Jamie Cohen

IMPORTS of gold bullion into India, traditionally the world's biggest gold buying nation, look set to top 100 tonnes for the second month in a row, as banks and jewelers look to import ahead of restrictions proposed by the central bank, one New Delhi-based industry insider said this week.

Rajesh Khosla, managing director at MMTC-PAMP India, said the industry is trying to get ahead of proposals made last week by the Reserve Bank of India to only allow banks to import gold on a consignment basis – where the gold is shipped but the supplier retains ownership – where that gold was to meet the needs of gold jewelry exporters. 

India's gold imports, which totaled 860 tonnes in 2012, have been blamed for exacerbating the country's trade deficit. Gold and silver was India's second biggest import item last year behind oil.

"[Gold] imports this month look as good as in April as everyone is trying to import as much as possible before the RBI guidelines are issued," said Khosla.

The RBI's proposed restriction "will lead to lower supply of gold" within India says Suvanker Sen, executive director at Senco Gold, a leading jewelry chain in eastern India.

"While demand for jewelry will not be affected, there is possibility of investment demand getting affected."

"Jewelers will find it difficult to get gold," says Bachhraj Bamalwa, former chairman of the All India Gems & Jewellery Trade Federation, who says that the premium charged to jewelers by banks rose last month to $12 an ounce – compared to $2 an ounce previously – as a result of bullion shortages.

"If these premiums increase further, there will be enough incentive for smuggling in gold, as the import duty is 6% and 1% VAT (value added tax) is already applicable."

The impact of the RBI's proposed restriction "is expected to be transitory" according to a report from investment bank UBS.

"The net impact on Indian gold imports as a whole would very much depend on how quickly affected banks can adapt to the new requirements and the capability of others to fill any gaps this might create in the market... and overall import volumes would ultimately be determined by underlying demand."

UBS said last week that Indian demand for gold was "very strong", adding that its index of physical flows into India was five times higher than its 12-month average.

Imports by India breached the 100 tonnes mark last month following gold's sharp price drop, which was followed by a global increase in physical gold demand. The festival of Akshaya Tritiya, seen as an auspicious occasion on which to buy gold, is celebrated next Monday and is also cited as a factor behind recent strong demand.

Goldbug, 09 May '13

 

 

Comments | Posted By Jamie Cohen

Bullish bets on gold defy worst slump in 33 years

Tuesday, April 23, 2013 3:21:10 PM America/Toronto

By Joe Richter | Bloomberg News

Central-bank stimulus will “eventually lead to inflation,” Paulson & Co. said in a letter to clients obtained by Bloomberg News, reiterating a bullish outlook for bullion.

Hedge funds increased bets on gold rallying after prices plunged the most in 33 years, underscoring billionaire John Paulson’s view that bullion will rebound.

Fund managers and other speculators increased net-long positions in gold by 9.8% to 61,579 futures and options in the week ended April 16, U.S. Commodity Futures Trading Commission data show. Investors turned bullish on silver for the first time in three weeks. Wagers on higher prices across 18 U.S.-traded raw materials climbed 5.1% to 453,467 contracts, the first gain in three weeks.

A two-day, 13% drop in gold through April 16 drove prices to a two-year low, erasing $560 billion from the value of central-bank reserves since the metal peaked in 2011. Official- sector purchases and demand in Asia will support bullion, Paulson & Co. said in a letter to clients last week, joining BlackRock Inc., the world’s biggest money manager, in predicting a rebound. The U.S. Mint’s sales of American Eagle gold coins surged eightfold this month from a year earlier.

“Given the price action, this rise in holdings was pretty surprising,” said Dan Denbow, a fund manager at the $1 billion USAA Precious Metals & Minerals Fund in San Antonio. “People may have been looking to get back into the market and are taking advantage of the price to do so. There are people who still have a long-term belief in it. Physical buyers have also stepped up.”

Prices Slump

Gold futures slumped 7% to $1,395.60 an ounce on the Comex in New York last week, the biggest drop since September 2011. The Standard & Poor’s GSCI Spot Index of 24 raw materials fell 2.5%. The MSCI All-Country World Index of equities slid 2.2% and the dollar rose 0.5% against a basket of six trading partners. Treasuries rose 0.1%, a Bank of America Corp. index shows. Bullion for June delivery gained 2.7% to $1,433.10 an ounce on the Comex in New York by 6:44 a.m. local time.

Since reaching $1,321.50 on April 16, the lowest since January 2011, bullion rebounded 8.4%. The China Gold Association said retail sales surged April 15 and 16. Imports by India may jump by 36% in the three months through June compared with a year earlier, the Bombay Bullion Association Ltd. said April 18. The U.S. Mint sold 167,500 ounces so far in April, heading for the biggest monthly total since May 2010.

Paulson View

Central-bank stimulus will “eventually lead to inflation,” Paulson & Co. said in a letter to clients obtained by Bloomberg News, reiterating a bullish outlook for bullion. The hedge fund is the biggest shareholder in the SPDR Gold Trust, the largest exchange-traded fund backed by the metal. The price plunge was a “panic event,” Catherine Raw, a fund manager in London at BlackRock, which oversees about $3.8 trillion, said in an interview April 16 on Bloomberg Television.

While the net-long position in gold climbed last week, most of the gain was attributable to a retreat in short holdings rather than an increase in long wagers. The divergence shows that the gain in the net position may reflect short traders taking profit, rather than investors becoming more bullish, according to Stanley Crouch, who helps oversee $2 billion as chief investment officer at New York-based Aegis Capital Corp.

“Sometimes you have to peel the onion when you look at this data,” Crouch said. “It looks like that after such a big drop, people who were short were ready to take their gains. That might also be why the price stabilized, and it could mean that it’s even more vulnerable now.”

Short Holdings

Short positions narrowed 8.2% to 59,742 contracts, and longs gained 0.1% to 121,321. The short holdings reached a record 70,126 in the week ended March 12, and are still more than triple the average since 2006, when the CFTC data begins.

Assets in ETPs backed by the metal tumbled 11% this year as investors shunned the metal in favor of equities and inflation remained subdued. Societe Generale SA said April 2 that the metal was in bubble territory and would fall to $1,375 this year, when it was $200 higher. Goldman Sachs Group Inc. advised traders on April 10 to sell the metal. Prices may need to drop to as low as $1,050 after gold entered a “new reality,” Deutsche Bank AG said April 18.

“This drop happened so fast and so violently,” said Mary Ann Bartels, the chief investment officer of portfolio strategies at Merrill Lynch Wealth Management, which oversees more than $2.2 trillion in assets. “People are asking ‘Why do I have this in my portfolio?’ But when we run the analysis, nothing has changed, gold adds diversification. Unfortunately, sometimes a diversifying asset doesn’t go up.”

Central Bank

Central banks are divided on whether the metal is cheap enough to increase investment. Sri Lanka’s central bank governor said April 16 falling prices are an opportunity for nations to raise reserves. Reserve Bank of Australia’s assistant governor, Guy Debelle, said at a lunch in Canberra the same day that gold has no “intrinsic value.”

Money managers took $3.7 billion from commodity funds in the week ended April 17, said Cameron Brandt, the director of research for Cambridge, Massachusetts-based EPFR Global, which tracks money flows. Outflows from gold and precious-metals funds totaled $3 billion, he said.

Investors are holding a net-long position in silver of 7,694 contracts, the CFTC data show. That compares with a short position of 560 a week earlier and is the most bullish outlook since Feb. 26. The funds trimmed their net-short holding in copper to 27,412, from 32,850 a week earlier.

Crude Wagers

Wagers on a rally in crude oil slid 6.8% to 183,032 contracts, the second consecutive drop, the CFTC data show. Bullish platinum holdings slumped 9.3% to 20,005, the lowest since August. Those for palladium retreated 16% to the lowest since mid-January.

A measure of speculative positions across 11 agricultural products surged 87% to 105,246 contracts, the biggest jump since September 2006. Holdings a week earlier reached the lowest in more than six years. Soybean wagers jumped 19% to 74,569, the largest gain since Feb. 5, and hog holdings are at the highest in seven weeks. Bullish corn bets gained for the first time in three weeks.

Cold, wet weather delayed corn and soybean planting across the U.S. Midwest. Sowing of the grain on April 14 was 2% completed, the slowest since 1993, government data show. U.S. soybean sales since Sept. 1 are 13% higher than a year earlier. China is the largest buyer of the oilseed, used to make cooking oil and animal feed.

“Agriculture is going to be very weather-dependent, and the change in diet in China will support demand,” said Jeffrey Sica, who helps oversee more than $1 billion as the president of SICA Wealth Management in Morristown, New Jersey. “For gold, until we see a meaningful decrease in the short positions, it’s going to be very volatile. It’s no longer a safe haven, but a momentum investment.”

Comments | Posted By Jamie Cohen

Gold Prices: Don’t Ignore this Bullish Trend

Monday, March 18, 2013 1:21:27 PM America/Toronto

Jeff Uscher | Money Morning

“World stands on the brink of a 1930s style currency war.”

Gold prices have been languishing in recent weeks as investors have been drawn into riskier assets such as equities.

New highs in major world stock indices including the Dow Jones Industrials and the Nikkei 225 have investors looking for higher returns.

“Investors are not really looking for safe havens at the moment,” Eugen Weinberg, head of Commodities research at Commerzbank, told Reuters. “Gold as inflation protection should get more demand from investors in the second half of the year. Right now, the market participants are looking for more yield and they’re finding it in other asset classes like equities.”

In fact, the amount of gold held by the SPDR Gold Trust (NYSE: GLD) has been declining since it peaked on Dec. 10, 2012. It was at 1,353.35 metric tons then and now stands at 1,244.86 metric tons as money has flowed out of precious metals and into financial assets.

But not everyone is shunning gold – and you shouldn’t, either.

Central-Bank gold buying continues

The central banks of South Korea, Russia and Kazakhstan have all reported additions to their gold reserves this year, continuing the trend of central bank gold buying.

Data for January show that Russia and Kazakhstan have each increased gold purchases for the fourth consecutive month. The Bank of Korea issued a statement saying that it has purchased 20 metric tons of gold – more than 643,000 troy ounces – during February, increasing its gold reserves by 24% to 104.4 metric tons.

“The Bank of Korea’s gold buying is part of the long-term diversification of currencies and assets in foreign-exchange reserves,” South Korea’s central bank said in its statement. “It is of no great importance to try to gauge if it’s profitable or not based on short-term price swings.”

Even after last month’s gold-buying spree, the Bank of Korea still does not own a lot of gold compared to its total foreign-exchange reserves. According to the World Gold Council, South Korea’s 104.4 metric tons of gold puts it at number 34 on the central bank league table of gold reserves, just behind Greece and just ahead of Romania.

Gold accounts for only 1.73% of the Bank of Korea’s reserves as of the end of February. If we take the central bank at its word, then there would seem to be plenty of room for more gold as the Bank of Korea continues to diversify its reserves. Central-bank gold buying is one of the market “fundamentals” that Money Morning Chief Investment Strategist Keith Fitz-Gerald has advised investors to watch.

“Stick to the facts: Fiat currencies are failing, the world’s central banks are buying more gold than they ever have in history, and the world stands on the brink of a 1930s-style currency war. In the long run all three are incredibly bullish influences for gold prices,” Fitz-Gerald wrote last week.

Gold prices going forward

We remain bullish on gold prices and other precious metals over the longer term but there can be no denying that GLD is near a critical support level around $150.

GLD first hit the $150 mark in April 2011 and faced considerable resistance there. The popular gold ETF did not break out above $150 until mid-July 2011 during the last leg of the rally that took GLD to its all-time high above $180 in early September 2011.

Since then, GLD has tested $150 three times. The first two tests, at the end of December 2011 and in the latter part of May 2012, were successful. The third and perhaps most critical test of $150 is going on right now.

If the $150 level is held this week – especially after the better-than-expected jobs report released Friday – then investors should feel reasonably confident that the correction in GLD is complete. If this third test is successful, then it makes sense to accumulate GLD around the current mark for long-term appreciation and diversification.

Comments | Posted By Jamie Cohen

Medium-Term Outlook for Gold? Still Bullish

Thursday, March 7, 2013 10:25:00 AM America/Toronto

By Przemyslaw Radomski | Minyanville
March 5, 2013 – The long-awaited rally will likely begin soon.

There are a lot of words in the dictionary to describe what you need these days in order to be a gold investor — patience, endurance, and fortitude are some of them. Recently investors were beginning to lose their staying power. But in the past, it has often worked out that just as investors’ patience runs out, gold comes charging in.

Sentiment toward gold is so low that it is scraping the floor. Two weeks ago, gold exchange-traded funds suffered their largest outflow since January 2011 with gold falling on Friday as low as $1572.80. The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust (NYSEARCA:GLD), reported its fourth successive daily outflow last Monday. The sell-off since the start of the year is mostly due to a perceived improvement in the global economic outlook and concerns on the longevity of the Fed’s quantitative easing.

Comments by top Fed officials made two weeks ago, suggesting the US central bank could reduce or halt its asset buying, had put heavy pressure on gold prices. Also two weeks ago, data released by the Commodity Futures Trading Commission showed hedge funds and other investment managers were shorting gold in record numbers. The number of bearish contracts held by professional speculators reached above 90,000 for the first time since mid-1999. It is ironic to juxtapose that with the rosy picture 10 years ago this month when the number of bullish contracts held by professional speculators first broke above 100,000 contracts.

Investors without the qualities mentioned above — patience, endurance and fortitude — have already been shaken out of the market. The pool of sellers is dwindling into a pond.

Forbes magazine ran an interesting piece this week quoting a Time magazine article: “To hoarders and speculators gold lately has had about as much luster as a rusty tin can.”

The article itself is a bit rusty. The Great Gold Bust ran in August 1976 right at the bottom of a 50% retreat in the 1970s gold bull market. It had been only 19 months since gold purchases became legal for US citizens and, according to the article, “the price has fallen more than 40% from its peak of $198 an ounce. In three chaotic days of trading last week, gold fell $14 on the London market, reaching a 31-month low of $105.50 an ounce. Though the price recovered to $111 by week’s end, that is still a dismal figure for gold bugs, who not long ago were forecasting prices of $300.”

Wow. $300. It‘s almost funny to read today.

It’s often when sentiment is at its nadir that gold becomes turbocharged. After the Times article, gold proceeded to gain 750% over the next three and a half years.

Gold looked very good last Tuesday when it posted the biggest gain of the year, up 1.3%, on Ben Bernanke’s reassurance of continued monetary accommodation combined with Italy’s uncertain political and economic future. Gold broke above $1,600 an ounce, extending its rally to a fourth straight day.  Italy’s problems raise uncertainty about the viability of Europe’s single currency. The unemployment rates for youths in Spain, Portugal, and Greece are approaching 50% and that may spell trouble this summer. Italian elections failed to show a clear winner indicating that voters reproached the present government’s austerity measures. It also suggests political instability in Italy in the coming months. Flight-to-safety buying of US Treasuries, German bunds, gold, and the US dollar became the thing to do. Bernanke delivered the central bank’s semiannual testimony to the Senate Banking Committee sending a strong signal that he backed the continuation of the $85 billion bond-buying program.

The market largely ignored a cut of more than $200 in the gold price outlook by Goldman Sachs (NYSE:GS), one of the top global bullion banks. The bank reduced its 2013 gold price forecast to $1,600 an ounce from $1,810, citing bullion’s recent price drop and an increase in US real interest rates.

For those who have recently bailed out of gold it may have the allure of a rusty tin can, but for my firm, it still has its timeless allure, that special something that has made it a store of value for centuries and millennia.  To see what is in store for the yellow metal in the near future let’s begin this week’s technical part with the analysis of its long-term chart (charts courtesy of http://stockcharts.com).

In the chart, we see that the RSI level is extremely oversold and at levels very similar to what was seen in 2008. At no other time in this bull market has the situation been as oversold. This is one good reason for considering long positions in gold as opposed to short.

We still see a continuation of two weeks ago when gold bounced off the declining medium-term support line and no breakdown was seen. Last week, back and forth price movement was seen but still no breakdown, so the situation remains bullish for the medium term.

Let us see how the situation looks like from the non-USD perspective.

Recall that in our essay from a week and a half ago we stated that the breakdown had been invalidated. Prices did pull back and rally last week, but overall, on average, the price in non-USD currencies is now clearly above the medium-term declining support line. The breakdown has been invalidated and the picture remains bullish.

Finally, let us have a look at gold from the British pound perspective.

In this chart we have a situation even more bullish than in the previous one. The consolidation has continued, and prices are clearly above the declining resistance line. The consolidation began last October, and the situation remains bullish; prices are expected to move to the upside. It’s good to remember the saying that, “the longer the base, the stronger the move.” The consolidation lasted for a long time so the coming rally will likely be significant. The consolidation is exceptionally visible.

The reason a lengthy consolidation often leads to a significant rally is that many investors stay on the sidelines or continue to leave the market while the consolidation plays out. This keeps the consolidation in place to some extent until something finally triggers a move to the upside to signal that the consolidation is about to end. Then an influx of capital from the sidelines quickly drives the price even higher. With longer consolidations, more investors, and thus capital, is waiting on the sidelines and can fuel following move.

This is what we have on the precious metals market now – combined with discouragement. Since the fundamentals are on our side, this creates a significant potential, just waiting to be triggered.

Summing up, the long- and medium-term outlook remains bullish for the yellow metal, and it seems that the long-awaited rally will probably begin soon. Most of this week’s charts remain bullish and indicate that the overall situation for gold is improving.

Thank you for reading. Have a great and profitable week!

 

Comments | Posted By Jamie Cohen

Gold’s bull run not over, it’s just taking a break

Friday, March 1, 2013 11:46:31 AM America/Toronto

Commentary: Why you should expect the price gains to resume
Myra P. Saefong, MarketWatch Wall Street Journal

SAN FRANCISCO (MarketWatch) — After five months of declines in gold prices, it’s still not time to call an end to gold’s bull run.

After all, the factors that contributed to gold’s fifth straight monthly decline — central-bank monetary-policy cues, economic data, currency fluctuations, asset relocation, and emerging markets — are generally the same as they’ve been for gold’s more-than-decade-long bull run.

“Many are declaring that there is no catalyst to drive gold forward,” said Jan Skoyles, head of research at The Real Asset Co., a precious-metals investment platform provider. “They’re right — the bullish drivers of gold haven’t changed at all for several years.”

“Those that pay attention to the markets know that governments embrace easy-monetary policy, they know that the euro will continue to have significant problems and they know that currency wars will continue to escalate,” she said. “That is why gold’s bearish factors, such as improved U.S. data, have greater impact on the gold prices.”

Gold futures (US:GCJ3) fell about 5% last month to tally a loss of around 11% since the end of September. See: Gold drops, notches fifth straight monthly loss.

An improvement in economic data out of the U.S., more recently positive figures on housing, has helped to dull gold’s appeal as a safe-haven investment.

‘The gold bull run is not over, it just doesn’t need to rush to wherever it’s climbing to.’- Jan Skoyles, The Real Asset Co.

Strength in the U.S. dollar, with the ICE dollar index (US:DXY) climbing more than 3% in February, also pressured gold, making the metal more expensive for holders of other currencies to buy.

But bearish factors such as those won’t necessarily succeed in ending gold’s bull run, said Skoyles.

Instead, bullish factors such as the worries over the euro, easy-money policies and currency wars “will culminate in such a way that increasing numbers of investors … will turn to look for assets which are not depreciating in value and which governments cannot meddle with,” she said. A currency war refers to a competitive currency devaluation by countries trying to ease strength in their currencies. See: How gold will benefit from a currency war.

“The gold bull run is not over, it just doesn’t need to rush to wherever it’s climbing to,” said Skoyles.

Hit hard

Still, investors can’t help but question whether gold headed for more losses after its weak performance over the last several months.

“Gold was an investment as a protection against the fear of a U.S. economic collapse, hyper inflation from the [U.S. Federal Reserve’s quantitative-easing] program as well as doubt toward the leadership in Washington,” said John Person, president of NationalFutures.com.

But the dollar’s strength “appears to be from the exodus from the euro and yen,” which shows that investors “have more confidence in the potential growth and perhaps resolve to heal the U.S. economy,” he said.

A rally in U.S. stocks has also drawn a lot of attention away from gold.

“Some of the wealth that found refuge in gold has been migrating to where the public sees performance — into equities,” said Gene Arensberg, editor of the Got Gold Report.

U.S. equities climbed last month, with the Dow Jones Industrial Average (US:DJIA) gaining 1.4%. Read more in Thursday’s Market Snapshot.

“Investors and money managers seem to be willing to forget about or ignore the massive sovereign debt issues in Europe and here in the U.S.,” said Arensberg. “They have a serious case of crisis fatigue and the Fed has juiced the economy so much it really does give the illusion that things are getting better.”

However, “The U.S. stock market is a little like the sirens in Homer’s ‘The Odyssey.’ Their music sounds so sweet, but the waters are still treacherous just ahead,” he said.

That leaves gold prices stuck in its 15-month, “post parabolic peak consolidation range” of $1,525 to $1,800 an ounce, he said, “waiting on a catalyst before the 11-year secular bull market inevitably reasserts itself.”

Gold futures touched record prices above $1,900 an ounce on an intraday basis in September 2011, according to data from the CME Group (US:CME).

James Turk, founder and chairman of online bullion dealer GoldMoney, said gold “remains in the correction that began after the record high it made back in 2011.”

“No one can predict when this correction will end but when it does, I expect this bull market will take gold to a new record high above $2,000 per ounce,” he said.

On the docket
As the new month begins, gold investors will have lots to consider.

“There are several key factors driving gold higher or lower in the short term,” said Edmund Moy, chief strategist with gold-backed IRA provider Morgan Gold in Irvine, Calif. Those include “central banks becoming big buyers of gold, the series of slow train wrecks that have become hallmarks of our fiscal policy, the [European Union’s] faltering economy and retail buying from India and China.”

In February, a lack of gold purchases from China in the midst of its Lunar New Year celebrations had put a temporary drag on prices, while an election in Italy that resulted in a political gridlock renewed worries over the euro zone and raised the metal’s safe-haven appeal.

Investors will be eager to hear about the pace of Chinese buying in the following the temporary holiday slowdown as well as any musings from Europe, and further hints from the Fed about its plans for QE — so March will see much of the same influences as last month.

The steep U.S. spending cuts set to begin later Friday have also taken the spotlight of late. See: The sequester starts Friday. Then what?

And those cuts, known as the sequester, may ultimately feed a rise in gold prices.

“In all my years in DC, I have never seen such a poor relationship between Congress and the White House,” said Moy, adding that, “There is little hope for any meaningful reduction in government spending.”

“Our deficit will continue to increase the national debt, and the national debt ceiling will continue to rise,” he said. “This means that gold prices will continue to rise in the long term.”

 

Comments | Posted By Jamie Cohen

US New Home Sales & Ben Bernanke’s Testimony

Tuesday, February 26, 2013 2:18:38 PM America/Toronto

Gold is in the midst of stringing together four consecutive up days after recovering from a multi-week sell off. Asian demand has remained robust with the return from the Chinese New Year and the Shanghai Gold Exchange premium vs. London blew out to a whopping $24 / toz at one point this week. The International Monetary Fund (IMF) also released data showing that Russia and Turkey had added 12.7 and 10.3 tons of gold, respectively, in the month of January. Despite strong Asian demand and several central banks adding to positions, ETFs have seen net liquidation and the SPDR Gold ETF has its lowest holdings since August of 2012. It is interesting to note that it is mostly retail, and not institutional, clientele that are divesting from the ETF. With the impressive rally that equities had during the month of January, it is not that surprising to see that investors looked elsewhere for a return on their assets. Gold and silver have traded lower than higher today, catching day traders off guard with exacerbated volatile movements. US New Home Sales came in much better than expected at 437,000 vs. 380,000. This was a 15.6% increase month on month. Gold and silver plummeted off this news only to rally with Ben Bernanke’s testimony as traders covered their shorts. Bernanke didn’t hint at the end of quantitative easing and suggested there is little risk of inflation or asset bubbles. Gold’s next area of resistance is at $1,630 while silver is eyeing $29.65. At time of writing Gold was trading at $1,614USD and Silver was trading at $29.28USD.

Comments | Posted By Jamie Cohen

Gold Council Sees Central Bank Bullion Buying at 48-Year High

Thursday, February 14, 2013 4:16:00 PM America/Toronto

By Nicholas Larkin| Bloomberg

Central banks added the most gold to reserves in almost a half century last year as prices averaged a record, the World Gold Council said.

The banks bought 145 metric tons in the fourth quarter, an eighth successive quarter of net buying, the London-based industry group said today in a report. They added 534.6 tons to reserves last year, 17 percent more than in 2011 and the most since 1964, it estimates.

Nations from Brazil to Russia are adding the metal to reserves at a time when investors are holding a near-record amount through gold-backed exchange-traded products. Bullion gained for a 12th straight year in 2012, the best run in at least nine decades, averaging $1,669 an ounce through the 12 months.

“We think that the current rate of net central bank purchasing, driven by emerging countries, is likely to continue to be very strong,” Marcus Grubb, managing director of investment research at the council, said yesterday by phone from London. “This is very much due to a desire to diversify away from over-reliance from the dollar and the euro.”

 

Comments | Posted By Jamie Cohen

US Mint & Royal Canadian Mint are on allocation

Thursday, February 7, 2013 4:04:03 PM America/Toronto

While the precious metals are for the most part holding their ground today and hovering slightly below unchanged, the broader commodity complex, the euro, and US bourses are trading heavily. The European Central Bank left its key lending rate at .75% as expected, but bids are being hit after a very strong half year ascension for the euro. It is already having its biggest down day since June of 2012. US equities are also trading lower on the heels of a 2% drop in US productivity in the fourth quarter versus an expectation of a 1.3% decline. With US equities very impressive performance over the last month, precious metals have understandably not garnered as much attention over the same time period. It is interesting to note that while the precious metals stale price action reflects a disinterested market, physical demand in the US for bullion items remains robust. The US Mint and Royal Canadian Mint are on allocation for silver coins meaning that they have to restrict the amount of coins they can offer their distributors in a given week. Non-sovereign silver products remain tight as well with delays in certain products several weeks out. If equities start to make an extended turn south, I would expect precious metals to rally and domestic products could become even tighter.

Comments | Posted By Jamie Cohen