Pedal to the Metals

In an article headlined “States seek currencies made of silver and gold,” CNN Money updates legislative efforts to establish alternative currencies in what now totals 13 states.  It cites Rep. Ron Paul’s sponsorship of the “Free Competition in Currency Act,” which would allow states to issue their own currencies, and quotes a project director at the American Principles Project, a leading advocate of the measures, as saying that “I think we could get a couple passed in this legislative session, and that would show this is mainstream, popular and it would be a justification for more of the risk-averse states for doing this.” More from Beacon Equity Research on “U.S. States Prepare for Hyperinflation.”

As American Silver Eagles have their second-best January since the coin was introduced in 1986, with 6,107,000 sold,  Patrick Heller, in a CoinWeek article, argues that the “Rush to buy physical gold and silver hasn’t started yet.” While providing an extensive list of reasons why the supply of gold and silver is constrained, he believes that the “largest impact on the prices of both will come from a surge in buying demand.  Even though there has been an increase in demand for the two metals for industrial and investment purposes, the market has not yet experienced a sustained rush to buy physical gold and silver.”

Related Links:  

Dow Jones:  U.S. jobs surprise dents gold

MarketWatch:  Gold futures fall 1.1%, log first drop in four sessions; silver down 1.3%

Wall Street Pit:  Gold and silver outperform in January; Is there more upside in 2012?

Kitco:  Gold prices could correct next week, but trend remains up

Telegraph:  Gold will rise against ‘heavily debased‘ currencies

Barratt’s Bulletin:  Silver the better bet

Beacon Equity:  Gold:Silver ratio screams buy silver

Citywire:  Silver needs ‘a new group of investors‘ to keep surging higher

Bill Bonner:  Buying gold in uncertain times

MarketWatch:  Short-term risk is now quite high in the gold arena

Zero Hedge:  Kyle Bass: “Don’t sell your gold“

Bullion Vault:  Gold capitalises on low interest rate environment

Bloomberg:  Payrolls jump casts doubt on Fed rate pledge

ABC News:  U.S. jobs report skepticism: As good as it gets?

Jesse’s Café Américain:  The non-farm payrolls report: Air brushing history

Mike Shedlock:  In January, those “Not in Labor Force” rose an amazing 1,177,000

Fiscal Times:  Why most U.S. manufacturing jobs are gone forever

MarketWatch‘s Brett Arends interviews gold standard advocate, Jim Grant, who’s having what NPR described as “A gold bug’s moment in the political sun.” Newt Gingrich named Grant to co-chair a potential gold standard commission, after Rep. Ron Paul said that if elected president, he would nominate Grant to be his Federal Reserve chairman.  “Unfortunately, I haven’t heard from Mr. Romney yet,” jokes Grant, but “I’m sitting by the phone, I’m ready.”

Asked what he would do as Fed chairman, Grant “said he’d begin by communicating to the public why the present system was so wrong, and needed to be changed. He’d make the case for the gold standard….In his ideal world, says Grant, he would lay out a three-year program to convert back to the gold standard, probably at around $2,500 per ounce of gold.” More from Grant, who calls gold “sort of the Muhammad Ali of monetary substances; the world over, you look at it, you know what it is.”

Related Links:

Dow Jones/Beacon Equity:  Gold at 11-week high on Bernanke debt warning; silver gains 1.1%

Zero Hedge:  Bernanke is indeed a gold bug’s best friend

Wall St. Cheat Sheet:  Gold and silver continue to rally

Jesse’s Café Américain:  Gold & silver charts:   Clawing up the wall of worry one brick at a time

CNBC:  Golden rally

Bloomberg:  UBS:  Gold is getting new investors first time in 3 months

Arabian Money:  Precious metals trounce stocks in best January for decades

Commodity Online:  Silver: The dynamics of demand and supply

Market Oracle:  Silver and the shift to measuring wealth in ounces instead of dollars

Barron’s:  Metals, miners make waves; Time to buy equities and gold?

Trader Dan:  Euro gold comments

Reuters:  Italy top gold scrap buyer sees booming business

GoldSeek:  Iran’s currency war heats and the people rush to metals

Mineweb:  China’s gold output and demand could be far greater than ‘official’ data suggest

Spiegel:  The hard sell:  Merkel seeks euro zone investments from Beijing

New York Times:  U.S. Treasury ponders negative interest rates

In the above video, the Wall Street Journal’s Rhiannon Hoyle is interviewed about her report that “Investors are loading up on gold and silver coins in what some say could be an early sign of a rally in precious-metal prices. In this case, individual investors may be ahead of professionals.”

Sales of American Eagle gold bullion coins almost doubled from December to January, according to U.S. Mint figures, with 127,000 ounces sold in January compared to 65,500 ounces in December 2011.  And January sales of Silver Eagles reached 6,107,000, more that three times the 2,009,000 sold in December 2011.

Related Links:  

Dow Jones:  Dollar declines send gold near 2-month high

Marketwatch:  Gold closes 0.5% higher on positive market sentiment; silver gains 1.6%

Reuters:  Gold keeps up rally after best January in 32 years

SafeHaven:  The next 17 months for gold

Bullion Street:  Silver off to perfect start with 20% gain in January

David Morgan: Silver in the next decade

The Gold Report:  James Turk:  Great deals on gold and silver

Beacon Equity:  Hey silver bugs: Is James Turk off his rocker?

Zero Hedge:  PIMCO’s Bill Gross:  Why gold is becoming the default “store of value”

Benzinga:  Central bankers weaken their currencies, boost gold

Mineweb:  China enhances position as world No. 1 gold producer – but where’s it all going?

Daily Reckoning:  Gold in the face of Facebook

Bruce Krasting:  The CBO report – OMG!

Gary North:  Ben Bernanke: The official counterfeiter

Of Two Minds:  Our counterfeit economy

As a Financial Sense article offers up “A Golden Solution to a Global Crisis,” the Gold and Silver Blog, pointing out that U.S. stock markets have shrugged off a rash of recent apocalyptic economic predictions, even though they’re “coming from some of the most normally sedate institutions in the world such as the IMF and the World Bank,” asks, “Exactly what is going on? The answer is positive for both stocks and gold.  The ‘collective wisdom’ of the markets saw a resolution to the imminent threat of the European debt crisis last fall, and that resolution is known as quantitative easing.

As previously noted in this blog last December, ‘Every Solution to the Euro Crisis Involves Printing Money,’ which is exactly what happened.  Both the European Central Bank (ECB) and the Federal Reserve stand ready to print whatever quantity of money is required to paper over the European and U.S. debt crisis. Long term this does little to solve Europe’s fundamental problems, but is short term bullish for stocks and extremely long-term bullish for gold and silver.”

Cambridge House International has posted more than 50 videos from its Vancouver Resource Investment Conference held last weekend.  Among them is the above interview with David Morgan who discusses his presentation on the silver market, — including silver myths, particularly that “silver is not money” — and responds to investors’ concerns that they may have “missed the move” in silver.

And interviewed by Hard Assets Investor, Morgan is asked, “Where do you think silver is headed in terms of price this year?”  He replies that “I’m on record saying $60 by the end of the year. The key is to get through that $50 psychological barrier. It’s probably going to take a couple of tries…. Once it does that, you could see silver go up from $50 to $60 in a matter of two weeks. That’s the kind of move silver is capable of making.”  He also discusses the implications of silver being “in tightly held hands,” and explains why he prefers coins over bullion.

You can sign up for SilverSeek‘s free online presentation of Morgan’s “Silver in the next decade.”

Related Links: 

Dow Jones:  Gold climbs for third day, ends at 7-week high

MarketWatch:  Weekly gains for gold reach 4.1%; silver gains 6.7% on week

Silver Investing News:  Silver price surpasses $33 on Fed statements

Bloomberg:  Gold bulls ascendant on biggest rally since ’80

Kitco:  Gold’s rally expected to continue next week

Reuters:  Analysts Survey:  Gold seen rising in 2012, 12th year of rally

Independent:  Going for gold

Seeking Alpha:  Expanded horizon of negative interest rates should boost gold and silver prices

P. Radomski:  Stock Market and dollar sustain bullish environment for precious metals

KWN:  Jim Rickards – Gold may super spike as we see the end of the dollar

MarketWatch:  China’s yuan set for more international role

321 Gold:  Funeral for a bond

Zero Hedge:  Tim Geithner added to list of gold bugs’ best friends

Wall St. Cheat Sheet:  With friends like these does gold need an official QE3?

Bloomberg/GoldCore:  Roubini’s bearish forecast is bullish for gold

Peter Schiff:  Waist deep in the big muddy

Reviewing the London Bullion Market Association’s 2012 silver forecast, — by 25 professional analysts, including commentary from each — Mineweb‘s Lawrence Williams writes that “they anticipate an average silver price over the year of $33.98 and a high of $44.49, but even this, which some might consider a conservative prediction, still represents a substantial 39% increase over the current $32 price for the metal.  And taken in conjunction with the gold price forecast, suggests that the gold/silver ratio may come back a bit from the current 52 to around 46 – well above the low point achieved last year and hugely above the so-called historic ratio of 16:1 so beloved of the principal silver bulls.”

Related Links:

Gold Alert/Forexpros:  Fed: No QE3 but low rates through 2014, USD drops, gold rebounds

Kitco/Jesse’s Café Américain:  Comex gold soars to 6-week high in wake of “dovish” FOMC statement

MarketWatch:  Silver leads gains in metals, ends at highest since mid-November

SafeHaven:  Fed to markets:  Buy gold and silver

Trader Dan:  FOMC to markets:  “Welcome to the party“

Reuters:  Bernanke says Fed pondering further stimulus

Zero Hedge:  And the winner is…gold

KWN:  Jim Sinclair – Mainstream entities will now enter gold market; Eric Sprott – Aggressive Chinese buying will spike gold price

Globe & Mail:  Sprott takes a new path toward less volatility

Seeking Alpha:  Silver: Historical upside potential

Arabian Money:  Talk of Dubai Gold Souk: silver to double in six months

Commodity Online:  US gold production gains 2.6%, silver declines 8.7% in 2011  

SilverSeek:  Bullish technical signals support silver and gold prices

P. Radomski:  Dollar’s influence on gold

Murray Pollitt:  Gold is the uninvited guest

Telegraph/NYT:  Davos keynote: Merkel defiant as IMF leads attack on Germany; pleads for patience to let Europe solve its problems/Video (at 24 min.)

As gold and silver hit fresh six-week highs, with prices for both said to be “regaining altitude on stimulus rumours,” Trader Dan Norcini sees the above chart revealing “all you need to know about whether or not silver is going to perform. If risk is in and hedge fund money flows are coming into the commodity complex in general, it will move higher. When it does, silver goes right along with it. When risk is out and money flows OUT of the commodity complex, silver sinks like a lead brick.”

On Saturday’s King World News‘ “Weekly Metals Wrap,” Norcini said that “what I’ve noticed over the last 3-4 weeks now is that the hedge funds that had been shorting silver are beginning to cover … because it looked like, based on the technicals, that silver was finding a pretty good bottom down there below $30…. Now we’re at a point in silver where we have a very low long-side exposure, with the market turning bullish as far as the technical indicators go, and the price being above the important moving averages, and what it’s going to do now is to start attracting some of this money that’s been on the sidelines, as long as this environment persists.”

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Kitco:  Comex Gold ends higher on bullish “outside markets,” positive technicals

Tim Iacono:  The remarkable rise in the price of silver

Arabian Money:  $58-60 silver price by September says Dubai silver trader

The Golden Truth:  Got silver? An overlooked factor that will affect supply this year

MarketWatch/Barron’s :  Silver outperforming gold; Sprott impacting silver?

Got Gold Report:  Sprott Silver Trust (PSLV) premium collapse costly  

Mineweb:  In gold, inflation we trust – Sprott’s Franklin argues

Financial Sense:  Inflation: The only tool left

GoldSeek:  More QE on the way

Peter Brimelow:  Gold’s happy new year

Russia Today:  Gold may remain a very attractive asset in 2012

Zero Hedge:  Nomura:  A longer-term perspective on gold

GoldCore:  Currency wars – Iran banned from trading gold and silver

Fox News:  David Morgan:  How does China play in the bigger commodities picture?

Financial Times:  Year of Dragon lifts China gold demand

CBS MoneyWatch:  Gold prices driven by Asia, not inflation

As Reuters reports on what it describes as “a growing subculture of Americans who refer to themselves informally as ‘preppers,’” some of whom are “driven by a fear of imminent societal collapse,” Sharps Pixley’s CEO, Ross Norman, highlights the currency decline since 1971, in asking, “Is a new gold standard a realistic option?”

Although many potential voters support a gold standard, Norman points out that “Economists broadly do not favor a return to a gold standard. The University of Chicago conducted a poll of 40 leading economists, none of whom supported the move.  But it is also clear that something needs to change. So long as policy makers make over-extended promises on the one hand (to ensure re-election) and the printing presses in the other, then we will continue to see inflation and currency declines as those shown [in the above graph]. Since 1971 the US dollar has lost over 85% of its value by official (CPI) measures. Truly the thief in the night and that’s just not right. To use the words of President Hoover in 1933 – ‘We have gold because we cannot trust governments.’”

Newt Gingrich’s announcement that he would appoint Lewis Lehrman and James Grant to co-chair the gold commission that he intends to establish if elected president, gets a thumbs up from the New York Sun and William Kristol at The Weekly Standard, but no endorsement for Gingrich from either Lehrman or Grant.

In asking “When Will Silver Make a New High?,” a Casey Research analysis reviews the biggest corrections in the current bull market.  The most recent one is the longest of the three, but it’s close to the average drop of 42.1%.  And while “Counting from the previous peak of April 28, 2011 we wouldn’t break the $48.70 high until May 26, 2013 … an exact date is pure conjecture, of course, and ignores fundamental factors that directly influence the price. 2011 is not 2008.”

One example cited is “an interesting shift in investment activity in both gold and silver markets. The Silver Institute pointed out in a recent market report that ‘investor activity’ was the biggest contributing factor to both last April’s rally as well as September’s selloff. Meanwhile, [investor] demand for physical metal has not only held firm but was projected by GFMS to reach a new record high in 2011.

Investment demand is rooted in the metal’s monetary characteristics. It’s not a stretch to say that we expect silver to regain its currency appeal soon, given the amount of worldwide fiat currency destruction. This will be perhaps the strongest catalyst for prices going forward. We wouldn’t want to be without any silver.”

Related Links:  

MarketWatch:  Gold up with eye on Greece; silver rallies 3.8%

Dow Jones:  Comex silver hits 6-week high on demand hopes

Kitco:  Uncertain outlook for gold prices next week; Fed mtg could influence direction

Seeking Alpha:  Buying gold on more QE

Money Morning:  QE3, $2,200 gold, and the trillion dollar bazooka

TG Metals Report:  The significance of $1665

Equities.com:  Is gold/silver ready for bounce back after 2011 correction?

Silver Investing News:  Silver forecasts mixed on uncertain economic outlook

Arabian Money:  Gold and silver price forecasts for 2012 probably too pessimistic

Wall St. Cheat Sheet:  Inflation concerns remain as gold and silver climb higher

KWN:  Shadowstats’ John Williams – Gold, silver, economy & inflation

GoldSeek:  Suppressing unemployment to win the election

Sober Look:  Divergence of gold price and sovereign CDS spreads

Gary North:  Auditing the FED’s gold

GATA:  Bullion banking system ‘not fully backed,’ Naylor-Leyland tells CNBC Europe

Gold investment demand is no longer concentrated in just ETFs, fund investments or the futures market, “We’re now seeing significant demand for gold particularly in bar form, in coin form,” says Thomson Reuters GFMS’s Philip Klapwijk.  He was speaking about the consultancy’s latest update to its annual gold survey, which forecasts that “Gold may climb to a record above $2,000 an ounce by early next year as concern about currencies and low interest rates spurs investors to seek a protection of wealth.

And while Reuters reports that the survey “also says the gold bull market is losing steam and predicts an end to the run as economies recover next year and interest rates begin to rise,” GoldCore counters that “These are particularly large assumptions which are unlikely to come to pass. Indeed rising interest rates will likely be bullish for gold and bearish for risk assets as they were in the 1970’s. It is only towards the end of  the interest rate tightening cycle when savers are rewarded with positive real interest rates that gold’s bull market may be threatened – as was seen in late 1979 and 1980.”

Related Links:  

Dow Jones:  Easing hopes push Comex gold to 1-month high

MarketWatch: Gold rallies 1.5% on dollar slide, downgrades; silver gains 2.1%

Silver Investing News:  Industrial demand:  A strong support for silver

Gold Scents:  Has gold’s D-Wave bottomed?

Zero Hedge:  $10  trillion liquidity injection coming? Credit Suisse hunkers down ahead of the European endgame

Jim Sinclair:  QE to infinity only seen in retrospect

Mineweb:  The phenomenal rise of the Chinese gold market

Daily Reckoning Australia:  Gold:  The next bubble in China’s economy

Bullion Street/Reuters:  India gold, silver to climb on import duty hike

Bloomberg:  Gold to gain, copper ‘favored’ in 2012, Morgan Stanley says

Peter Brimelow:  Gold and energy bull charges on

GATA:  Iranian currency and economy collapsing under tighter U.S. trade sanctions

J.S. Kim:  Gold & silver price suppression has set the foundation for an explosive move higher in 2012

CoinWeek:   Analysts:  Precious metals to perform well in 2012, but prices will remain very volatile

Barron’s:  Marc Faber among panelists for 2012 Barron’s Roundtable

The Atlantic/PBS Newshour:  Flying blind:  Inside the Fed’s damning 2006 transcript

Grant Williams, who authors the widely-acclaimed newsletter, Things That Make You Go Hmmm…, free subscription here, previews 2012 through the prism of politics, printing money and precious metals, specifically how the first two will impact the third.  He concludes that “the only real way out for the western governments now, is to print money – that’s exactly what I expect them to do and that will be extremely bullish for gold and silver prices.”   Williams also speaks with Dr. Jeffrey Lewis about “Keeping your emotions away from your silver,” which includes a discussion about allegations of silver market manipulation, and the importance of deciding “whether you’re a trader or whether you’re an investor.”