Gold coming close to a 5 week high

Tuesday, October 29, 2013 11:02:00 AM America/Toronto

Gold has started at higher prices for the 4th straight day, coming close to a 5 week high. Today is that start of the Fed two-day policy meeting in which it is expected that the Fed will announce continuing the buying of bonds at a rate of $85 billion per month. The weaker than expected economic data coming out from the United States (partly as a result of the US government shutdown) will surely confirm this. Obamacare will weigh heavily on the US economy for at least  the next few quarters. Our belief is that when/if the tapering starts in 2014, it will be minimal and is already priced into the market.

Comments | Posted By Jamie Cohen

Toronto, ON 

Lead by Mike Stead, The Abundance Society help people build wealth with the tools, strategies, and techniques that are working right now. Joining Mike Stead is Danny Kroll from Canadian Bullion Services discussing about the ups and downs of the precious metals market.

In this interview, Danny Kroll gives his opinion on the dramatic decline of the gold and silver market and his thoughts on when the precious metals will reach a bottom. As the CEO of a precious metals investment firm, Danny also touches on the effects the market has on his business.

Another issue brought up during this interview was the reaction of physical precious metals investors to the current market situation.

This interview can be found on The Abundance Society website at http://theabundancesociety.com and YouTube.

About Canadian Bullion Services

Canadian Bullion Services is a precious metals dealer located in downtown Toronto. Its management has more than 50 years of financial services experience and one most respected names in the industry. Its superior customer service and competitive pricing is what places it among the top precious metals dealers in Canada. 
For more information visit http://www.canadianbullionservices.com or contact us at info@cbmetals.com if you are interested in adding precious metals to your portfolio.

 

Comments | Posted By Jamie Cohen

Short Squeeze in Gold and Silver-Legendary

Tuesday, July 23, 2013 12:58:12 PM America/Toronto

The speculators in the futures and options market on the CME have accumulated record short positions in gold and silver. Eventually, the speculators who are short will need to buy back their position. As gold and silver climb their way up, more and more futures traders will buy to liquidate their gold position. This is a plain vanilla short squeeze and does not happen so often. It will be spectacular.

 

The short squeezes usually evolve into full blown buying panics and the quicker it rises, the more pressure the short-sellers have to buy back their positions, thereby making gold and silver rise even faster!

Comments | Posted in Blog By Jamie Cohen

Understanding Lease Rates and the Manipulation

Thursday, July 18, 2013 3:40:48 PM America/Toronto

The plain vanilla of precious-metals leasing involves central banks such as the Federal Reserve taking their gold or silver to “bullion banks.” Major firms such as JP Morgan Chase, Goldman Sachs, Bank of America, Barclays, Citigroup, , , and UBS all operate as bullion banks.

Think of the scenario where JP Morgan might pay a 1% interest rate on the gold or silver, with the promise to return it to the Federal Reserve at future specified date. JP Morgan then takes the gold and/or silver and sells it to the public, and could use the profits to buy Treasury bonds for a 3-4% net return.

But what if gold and silver rise in price and the JP Morgan has to pay more for the gold or silver it returns to the Federal Reserve than it received for the gold or silver that it borrowed? Well….. JP Morgan uses the futures market to lock in a price and delivery date of the necessary gold or silver. This cuts into their profit margins but takes all of the risk out. A 1-2% net return with zero risk is a great deal for them. As for the metal lender, a 1% return is better than the 0% return gold and silver earn in underground bank vaults. It’s a win-win for the central bank and the bullion bank—but some argue individual investors lose (read manipulation).

The lobby and critics of leasing gold and silver say that because gold and silver leasing artificially increases the supply of the precious metals, which in turn keeps the prices of the commodities down. Hence JP Morgan wants to have the prices down.

Comments | Posted By Jamie Cohen

Explaining the Difference Between the Physical and Paper Market prices

Thursday, July 11, 2013 10:04:14 AM America/Toronto

 
For all of us who read about gold and silver prices, you have inevitably come across articles and commentaries regarding the differences in prices between the physical gold and silver market and the electronic (paper) prices. As you know the price of gold and silver you see on TV represents the “paper” market. The actual prices paid for real silver coins/silver bars and gold coins / gold bars represent the physical or “real” market. It’s similar to comparing the price of a barrel of crude oil to the price of gas at the pump. While the crude market makes good headlines, it’s the price at the pump that matters most to people who want to buy and use the real commodity. 
 
Let’s compare this to crude oil and the price at the pump, we all know that a drop in crude oil prices doesn’t necessarily lead to a decrease in prices at the gas station; the same idea can be applied to precious metals products. When the electronic/paper market prices decrease, it does not necessarily mean the ask price of gold and silver in the physical market are following suit.
Comments | Posted in Blog By Jamie Cohen

What Will Happen With Gold?

Friday, July 5, 2013 9:43:38 AM America/Toronto

Unlike many hedge funds trading paper assets, we think gold is heading much higher because its supply-side balance will eventually experience a HUGE short-covering thanks to the funds short the market.
 
Eventually, all short positions need to be bought. When the shorts cover their shorts, there will be major buying pressure moving the market prices up.

More so, as with any tangible asset, gold’s most-important pricing factor is the total cost of production. It’s quite simple, if you aren’t making money, you will stop working. If producers aren’t making money, they stop producing.
 
Right now, today’s low gold prices are simply unsustainable for the industry.
 
As gold will rise; so will silver.
 
Fresh off the newswire this morning, gold and silver sell off sharply to create another buying frenzy. U.S. dollar index soars on stronger than expected jobs report, including upward revisions in NF jobs growth for April and May


Comments | Posted in Blog By Jamie Cohen

Why the Major Slide in Gold Prices is Showing Signs of a Gold Bull Market

Tuesday, June 25, 2013 3:35:39 PM America/Toronto

Everywhere you look, on the internet, newspapers, radio and TV, it seems everyone is selling gold and silver.  This month alone the SPDR Gold Trust declined to levels below 1,000 tones and the expectation from 1 prominent banks in the world is that investors will sell another 285 tons this year.

As any contrarian knows, when everyone else is selling, when the news in the market is extreme in one directions, when there is an extreme amount of negativity, that is a bullish indicator to start seriously looking for a bottom in the market.

What gold excels at is providing safety from uncertainty.  Times are very uncertain currently:

  • The economic troubles are still here and haven’t gone away
  • The global economy is very shaky
  • The worries behind the Chinese credit crunch is escalating
  • Central banks are still using QE, especially the United States and the Bank of Japan

It is almost impossible to pick the exact bottom, but I would stick my neck out to say that we are very close!

 

Comments | Posted By Jamie Cohen

Why the Federal Reserve Absolutely Cannot Stop QE

Friday, June 14, 2013 3:55:14 AM America/Toronto

Many of you have asked about the Fed’s rhetoric regarding easing up on the Quantitative Easing. This type of talk has driven the prices of gold and silver lower.

This is why the Fed cannot ease up on the QE:

  1. Although the U.S. economy has recovered since 2008- the economy is still extremely fragile;
  2. The growth in the United States has been below average;
  3. The housing market is not strong enough to higher mortgage rates
  4. The addiction to cheap money (low interest rates) will not go away
  5. The U.S. is the one of the biggest borrower globally!
Comments | Posted By Jamie Cohen

Silver and Gold Breakdown

Wednesday, May 29, 2013 1:24:09 PM America/Toronto

Recently, all I have been asked about is the breakdown in silver and gold in the last 2 months. Many individuals have been wiped out of the precious metals market due to this meltdown. And are wondering when to buy back in.

 

If you compare the last two breakdowns going back to 2008, they do look very similar. If history is any indication of what will happen in gold and silver, we will see much higher prices by the end of 2013.

The main key is for the prices of gold and silver to move and hold above the major resistance line.  This breakout should trigger a rally in gold to $2,600-$3,500 and silver to way above its record high of $50/ounce.

Comments | Posted By Jamie Cohen

Victoria Day Weekend Early Bullion Report

Thursday, May 16, 2013 11:42:25 AM America/Toronto

Gold dropped to its weakest level in almost a month today, hurt by a firmer dollar and as holdings in exchange-traded funds fell to the lowest in over four years, potentially stretching bullion's losing streak to a sixth day.

If gold ends lower on the day, it would be its longest losing streak since March 2009.The drops have already helped to fuel another scramble for bullion that has push Asian premiums for physical gold to record highs. Gold is less than $60 away from two-year lows hit in mid-April. Prices have fallen nearly 18 percent this year and are well below a record top near $1,920 struck in September 2011.
 
Financial markets are also rife with speculation that the U.S. Federal Reserve may begin winding down its aggressive economic stimulus, undermining the argument for holding gold as a hedge against potential inflation.
   
We find this extremely confusing as practically every central bank in the world is printing money and will continue to do so for many years.

Buying in China, the world's No. 2 consumer after India, has helped limit price losses. China bought a large amount of gold on Thursday morning after prices fell by more than $20 overnight, said Peter Tse, director at ScotiaMocatta in Hong Kong.

An anomaly that perplexes us is that as precious metals prices are trading lower we are seeing increased demand for physical gold and silver, which is unusual since increased demand usually results in higher prices!

Comments | Posted By Jamie Cohen