Analyzing the above chart from the COT report released Friday, Got Gold Report‘s Gene Arensberg, under the headline “Gold Legacy COT Stunner,” writes that “as gold gained $45.72 or 3.3% to $1412.78 Tues/Tues combined commercial traders very strongly reduced their collective net short positions by a huge 37,541 lots or 26.5%, sending the relative commercial net short position or LCNS.TO hurtling lower to just 25.2% of all COMEX contracts open (lowest since Nov of 2008 during the Panic). (Gold +3.3%, LCNS -26.5%!!) (Very bullish by itself, without considering the other data.)”…Read More >>>
Archive for the ‘Goldman Sachs’ Category
About what was described as Friday’s “bloodbath” in the gold markets, Jesse’s Café Américain points out that “There was no news to provoke this kind of a massive sell off in a quiet market and on heavy volume,” which saw gold and silver futures drop 4.1% and 4.9% respectively. Quoted by MarketWatch, the Got Gold Report‘s Gene Arensberg fingers Goldman Sachs: “Give credit where credit is due — to Goldman Sachs, for a masterful sell raid on gold.”
Metals market analyst and whistleblower Andrew Maguire tells King World News that while Friday’s sell off was “in excess of 500 tons of paper gold,” China has “purchased and taken delivery of over 400 tons in less than a month and a half.” He contends that “What we are seeing today is actually a very positive development. I think we’ve reached a point of capitulation. I cannot see how the central bank buying cannot overwhelm all of these short sales, despite the leverage.” And Dan Norcini gives a qualified agreement, writing that “It is too early to call this as a final washout day but it has the makings of one.”
News & Views
GoldSeek: Gold and silver fall about 6% and 4% on the week
Wealth Wire: Remove Goldman’s golden veil
Bloomberg: Analysts – The era when safe havens are no longer safe
Economic Collapse: The tunnel people that live under the streets of America
“There are few better barometers to gauge demand for bullion products on the street than the dealer to dealer premiums on those products,” according to the Got Gold Report’s Gene Arensberg. Citing the above chart, he notes that “The last time we witnessed premiums of this size for ‘junk silver,’ as it is inappropriately called in the trade, was during the 2008-2009 crash in silver prices. During the height of the panic then, as silver collapsed from roughly $18 to about $9, premiums spiked briefly as high as $4 over spot.
The recent rise in premiums absolutely reflects the fact that with silver under $30 fewer owners are willing to part with the popular silver product at the same time as investors want to purchase more of it. Independent dealers locally report that ’90%’ is available, at a price, but they also report very steady, even robust demand for all legacy U.S. gold and silver coinage at the moment. As long time members know ’90%’ is our favored way of owning silver metal.”
News & Views
Seeking Alpha: A U.S. dollar retreat could ignite the precious metals market
Visual Capitalist: The golden ratio: Using gold to price market data
NY Times: Seeking relief, banks shift risk to murkier corners
GATA: Canada’s CBC to air ‘The Secret World of Gold‘
MarketWatch offers up a laundry list of reasons for why gold sold off 1.8% on Wednesday. First is that Goldman Sachs cut its price forecast for 2013 from $1,610 to $1,545, but a CNBC commentator points out that “we all know and have seen Goldman reduce or raise forecasts in order to find themselves a better entry or exit point, so this should all be taken with a grain of salt.” Other reasons given for gold’s fall were that “the dollar strengthened, equities rallied and Federal Reserve officials offered mixed signals on the duration of its bond-buying program.”
Finally, Cyprus reportedly agreed to sell $522 million worth of gold. One analyst told Reuters that “The amount mentioned, 10 tonnes, is not large – we’ve seen that on average come out of exchange-traded funds this year every week. But it’s the first euro zone country to have said it will do this, and the first euro zone country to sell gold, other than Germany’s coin program, for a while.” According to figures released Tuesday, the net gold flow from Hong Kong to China was 60.95 tonnes in February.
News & Views
Got Gold Report: If Goldman is “initiating” a short gold position we will eat our hats
Sprott Group: Dropping “carpet bombs of liquidity“
New York Times: Wary of events in China, foreign investors head to Cambodia
As gold & silver drop 1.1% & 1.4% respectively on Wednesday, erasing most of Tuesday’s gains, Mineweb‘s Lawrence Williams asks, “Can gold’s fragile recovery take hold?” This as Dan Norcini points out that just “three little words” uttered by Fed Chairman Bernanke, in House testimony on Wednesday, show “how incredibly sensitive gold is to anything related to this bond and mortgage-backed securities buying program.” And, a retired Ron Paul reflects on why he misses questioning Bernanke, and explains what he would have asked him.
News & Views
Zero Hedge: Rick Santelli on the securitization of gold
Guillermo Barba: Mexico’s federal audit demands physical inspection of gold holdings
Mining.com: The end of paper money? Europe hit by gold rush as crisis worsens
Gold and silver futures gained 1.2% and 3.2% respectively on Wednesday, shooting up when the Commerce Department reported that the U.S. economy had unexpectedly contracted in the 4th quarter of 2012, driven in part by a fiscal cliff-related drop in defense spending. The metals rose further when the Federal Reserve announced at the end of its two-day Federal Open Market Committee meeting that it will continue to purchase securities at the rate of $85 billion per month.
Dan Norcini points out that “Prior to today’s GDP report, there were genuine fears of a curtailment in the QE4 program coming sooner rather than later. Today’s GDP number should put those fears to rest. This is what has gotten both gold and silver in such a tizzy this AM…. Traders are now revising their views of any premature end to QE4; based on today’s contraction, it ain’t gonna happen anytime soon.”
News & Views
Bloomberg: Gold heads for biggest gain in 3 weeks on U.S. GDP data; silver jumps most since September
Mineweb: U.S. Geological Survey: U.S. gold, silver production down in 2012
Mineweb: Is gold the answer to Europe’s worst case scenario?
Gold & Silver Blog: GATA finally gets the recognition It deserves
As Zero Hedge illustrates what “1,230 days (and counting) of explicit market support by the Fed looks like,” Eric Parnell describes — see above graph — how the Fed has entered a new phase of QE3 in which it has basically doubled its asset purchases since early January. He reasons that “it would not be surprising to see stocks continue their drift higher in the coming weeks.” But he also cautions that “at some point, the marketplace will become exhausted even under the influence of QE3,” and “unfortunately, a bell will not ring when the market transitions into its next phase.
Thus, maintaining portfolio hedges in other asset class categories that can consistently rise under the influence of Fed stimulus but perhaps for different reasons also remains worthwhile. Leading among these is gold and silver, both of which stand to be direct beneficiaries of the currency debasement associated with the Fed along with other global central banks continuously increasing the supply of their currencies.”
News & Views
DanNorcini: 50-day moving average stymies gold
Zero Hedge/Glenn Greenwald: Asst. Attorney General admits on TV that in the US justice does not apply to the banks; The Untouchables: How the Obama administration protected Wall Street from prosecutions
ProPublica: Explosive charge: Morgan Stanley peddled security its own employees called ‘nuclear holocaust,’ ‘subprime meltdown’ and ‘shitbag’
“Based on the Fed’s track record of predicting the future, this has to have been one of the dumbest reasons to sell gold and silver in recent years,” declares Tim Iacono, about the sell-off following last week’s release of December’s FOMC minutes, which suggested a possible end or pullback of QE in 2013.
Advising precious metals investors to “watch what the Fed does, not what the Fed says,” he points out that “just a few years ago, the Fed spent inordinate amounts of meeting time discussing their ‘exit strategy’ – and then they went on to buy a couple trillion dollars worth of mortgage-backed securities and government debt with newly printed money.”
And he predicts that “in the fullness of time, it will be realized that futures market selling simply provided another opportunity for long-term investors and central banks to increase their precious metals holdings at better prices.”
News & Views
BullionVault: Shanghai gold trading jumps as US gold derivatives shrink to 3-year low
Reuters: American Eagle gold coin 2012 sales down but outlook bright
Jesse’s Café Américain: The legacy of the Fed and the U.S. experiment with fiat currency in one chart
Naked Capitalism: SEC gives JP Morgan and other big banks license to manipulate commodities
Zero Hedge: Gold: It’s for more than just wealth preservation
Analysts at Bank of America forecast that “large-scale policy easing by the Fed and the ECB should push gold prices higher.” They see gold reaching $2,000/oz in 2013 and $2,400 in 2014. In the new report they also estimate what gold’s floor might be:
“Our analysis shows that investors will have to buy significant amounts of gold to push prices above $2,000/oz this year. However, with emerging markets getting richer, their budget allocation to non-essential items such as gold will likely increase in the long-run. This means that the marginal importance of investors could start to decline in the longer term, likely supporting a gold price floor above $1,500/oz over the next decade. In any case, a firm recovery in the US and global economies will remain the greatest risk to gold prices over this new phase of QE3, as a rapid and disorderly unwind of this monetary easing cycle would likely drive investors out of gold, in our view.”
News & Views
Jesse’s Café Américain: Gold & silver charts – Capping action in gold & silver is heavy-handed and obvious
Michael Pento: Employment condition gives central banks more ammo
Gold Switzerland: Egon von Greyerz – Gold and silver poised for major move
William Cohan: Citigroup’s amazing Abu Dhabi adventure
A MarketWatch report that “Silver gains favor as an investment asset,” cites last month’s forecast by Thomson Reuters GFMS of a silver rally in 2013 based primarily on investment demand, and quotes Silver Price Advisor‘s Mark Thomas, who says “The evidence is clear that investment, not industrial demand, is what is driving silver prices higher.”
“Many analysts tout silver’s dual role as an industrial metal as an added advantage,” adds newsletter publisher Brien Lundin, but “it is silver’s monetary utility that justifies its current valuations, and that is the only basis on which it should be analyzed in the current environment.”
The article also quotes Paul Mladjenovic, author of “Precious Metals Investing for Dummies” who says that “Silver is increasingly seen as an undervalued asset and its strong consolidation levels around $30-$33 are seen as a buying opportunity. Silver is also getting more acknowledgment as being more scarce and more affordable than gold.”
News & Views
Commodity HQ: Preparing for economic headwinds: Bill Gross’ commodity picks
One day after Goldman Sachs lowered it’s forecast for gold, prompting the observation that its “Right hand does not know what its left hand is doing,” Morgan Stanley said that “We maintain our long-standing recommendation of overweight exposure to precious metals as conditions underpinning the gold bull-run largely remain in place.” Those include a weaker U.S. dollar, central bank buying, ETF demand, and a recovery in Indian demand.
News & Views
Mineweb: Gold and silver the ‘go-to’ assets for capital preservation – Thunder Road Report
GoldSeek: China plans to double gold consumption in 3 years, how high will gold prices go now?
CT News: Fool’s gold? CFTC says 12 firms sell phantom metals
Forbes: Inside the Koch Empire: How the brothers plan to reshape America
After Goldman Sachs lowered its gold forecast, predicting that an improved U.S. economy in the second half of 2013 “will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013,” futures traders were quick to debunk the call.
One told CNBC that “I think with QE still going on next year and no call for it to end, gold will go higher.” And another agreed that “it’s too early to call.” He pointed to central banks “still adding physical gold to their coffers,” the continued strength in ETFs, and the U.S. dollar being historically “closer to the lows than it is to the highs.”
News & Views
The Gold Report: Jason Hamlin: Pent-up potential for precious metals in 2013
Zero Hedge: Bombshell: Deutsche Bank hid $12 billion in losses to avoid a government bail-out
Arabian Money: Central bank gold purchases to top 500 tons this year in a new record supporting prices
Forex Pros: On your marks! Get set! Gold… and silver, too