Pedal to the Metals

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.”

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.)

Following what is expected to be a record year for central bank gold purchases in 2011, according to a World Gold Council report, Reuters quotes a 2012 forecast by HSBC analyst James Steel, who writes that “The outlook for central bank gold purchases remains positive for this year, based on the likelihood that emerging markets central banks will continue to diversify away from the U.S. dollar. Since U.S. dollar foreign exchange holdings are already at record levels in many countries, we believe these nations will seek to increase gold reserves, in a bid to diversify their USD-laden reserves. While we do not expect official sector activity to move the market near term, we regard central bank purchases as a bulwark of the long-run gold rally.”

Related: 

Kitco:  Gold ends weaker on profit-taking, corrective technical pullback; silver down 29¢

Global Macro Monitor:  Is gold about to get a monetary blast (off)?

CNN Money:  The new new gold rush

KWN:  Richard Russell – Comex gold & silver shorts in do-or-die battle

MoneyWeek:  Look what’s happening to silver

Wall St. Cheat Sheet:  Currency wars are driving gold and silver higher

Bloomberg:  Iran said to seek yen oil payments from India amid sanctions

Forex Crunch:  Report:  Gold for oil – India and Iran ditch dollar

GoldSeek/Asia Times:  Sovereigns declare war on U.S. dollar; Sheikhs fall in love with renminbi

Sharps Pixley:  Chinese gold sales in the year of the water dragon

GoldCore:  Japan gold buying on Tocom again supports

Washington Post/Zero Hedge:  IMF report: Global economy looks grim for 2012; Former IMF chief economist on Europe’s last stand

Bloomberg/Reuters: Pariahs no nore, U.S. bankers ascend at Davos; Top Justice officials linked to mortgage banks

Wall St. Cheat Sheet:  Is this the secret Wall Street fraternity that rules the world?

Economic Policy Journal:  Mitt Romney loves Goldman Sachs

Forbes:  Gingrich, the gold standard, and the Florida primary

Under the headline “Silver rally likely to experience short-lived pause,” P. Radomski emphasizes “the importance of a recent development. Silver bottomed right at the very long-term cyclical turning point and prices have moved higher since. The lack of any additional declines has clearly confirmed that the bottom is in and greatly increases the odds of a rally from here.This appears to have been a major bottom, perhaps as significant as the one seen late in 2008, which was followed by what could be described as pretty much a two and a half year rally, with prices rising more than 500% through early 2011.”

And considering both bullish and bearish scenarios in his latest “Silver Market Update,” Clive Maund points out that “after its long and brutal decline from its highs of last April, silver is washed out and oversold, with public interest in it now at a low ebb – sentiment is close to rock bottom and the COT structure is at its most positive for silver pretty much since records began, so if ever there was a time to stick your neck out, this is it.”

Related Links:  

MarketWatch:  Gold rebounds, returns to highest in five weeks

Wall St. Cheat Sheet:  Gold climbs to 5-week high, as silver remains above $30

KWN:  Egon Von Greyerz – Silver shortages & gold to accelerate higher\

Kitco:  CFTC:  Speculators mixed on gold, but buy up silver

Got Gold Report:  David Morgan tackles silver myths in video

ETF Trends/Jesse’s Café Américain:  Sprott’s physical silver ETF falls 9% after follow-on offering

WSJ:  Chinese see new year as golden

Wall St. Cheat Sheet:  Will China unleash more stimulus and boost gold prices?

GoldCore:  2012 gold estimates lowered by banks – But remain bullish

Fox Business:  Peter Grandich’s $2 million bet on gold

IB Times:  Turkey adds 63 tonnes of gold due to acceptance of metal as reserve requirement from banks

GATA:  At last Financial Times notices that central banks do shady things with gold

AP:  Ron Paul gives new life to an old issue: gold standard

The Burning Platform:  AP article about Paul’s flight expenditures debunked

The Atlantic:  World Bank to world: ‘prepare for the worst‘

Bloomberg:  IMF seeks $500B boost to lending resources

MarketWatch:  The euro-crisis horror show

The above chart is the centerpiece of a presentation by the Bullion Management Group’s Nick Barisheff, who argues that “Rising debt will lead to $10,000 gold.”  And he reminds that “it’s not just the US. Most Western economies have reached unsustainable levels of debt that will be impossible to pay off.”  This is echoed in a comprehensive report by Spiegel on “The danger debt poses to the Western world.” It estimates that world debt at the end of 2011 was $55 trillion, more than double what it was in 2000.  And according to a Bloomberg article, “Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs.”

“This is why people are buying gold now,” is the headline of a Credit Writedowns post that introduces a commentary by economist and business professor, Dr. Peter Morici, who asks: “Is Italy next to fail and will gold go to $3,000 an ounce?“  Morici sees Europe “approaching the end game. Credit markets and other governments know what its leaders won’t admit, namely the euro is failing. And then gold, more than the dollar, is set to rocket in value as the crisis unfolds….With the implosion of Italy, Portugal and Spain would not be far behind, and French debt will come under closer scrutiny. At that point, investors will stampede from the euro-denominated debt of most governments, but with rates so low on U.S. Treasuries and too little Japanese and Chinese sovereign debt in open circulation, gold would become the asset of choice.”

Related Links:

Reuters:  Euro falls most vs dollar in 15 months on Italy debt

Dow Jones:  Gold slips as Italy fears push dollar higher; silver down 2.3%

Trader Dan:  Silver whacked along with copper as risk trades are taken back off (AGAIN)

KWN:  James Turk – Expect cataclysmic events in the coming weeks

Jesse’s Café Américain:  Psycho killers qu’est-ce que c’est?

Mineweb:  HSBC:  Gold to average $2025 an ounce during very volatile 2012

Examiner:  Ron Paul: Dollar could drop to infinity and gold skyrocket without changes

Seeking Alpha:  Silver set to reach new highs

Forbes/SilverSeek:  MF Global bankruptcy could rattle silver market for days

Bloomberg:  Italy bond attack breaches euro defenses, contagion worsens

Reuters:  French, Germans explore idea of smaller euro zone

GoldSeek:  Gold and silver gain as bond markets get a taste of the future

KWN:  Nigel Farage – Where is Europe’s gold?

The Local:  Bundesbank gold location kept secret

GATA:  Financial Times Deutschland joins hunt for Germany’s gold

Max Keiser:  China to beat IMF to Italy’s gold

Among a crop of new books that focus on economic strife is Jim Rickards’ “Currency Wars,” which will be released November 11.  Early reviews include Kirkus Reviews citing Rickards’ “intriguing thinking,” Publishers Weekly writing that while “the book will no doubt interest policymakers, even non-experts will be rewarded for their efforts, and a particularly glowing review from Booklist, which calls the book “a must-read,” says that Rickards “presents a compelling case for his views and offers thought-provoking information.”  James Turk concludes that “I have nothing negative to say about ‘Currency Wars.’ It is a great book, and you will not be disappointed with it.”

On a day in which silver fell 17.7% to close at $30.10 an ounce, before rebounding after hours, silver traders are implored to “Stop cryin’ and start buyin’!,” and trends forecaster Gerald Celente tells King World News that he’s doing just that:  “I’m now buying physical silver for the first time.  One of my reasons is I am very concerned that when gold prices begin their upward ascent again, I believe the central banks and the governments are going to blame the gold people for the financial problems.  They have regulated the price of gold before, not that they will be able to do it, but I am concerned they will try something to regulate the supply (to the people) and the price of gold as the price eventually keeps going higher.  Silver to me is not going to have that kind of regulation imposed upon it.  So I’m buying a position in silver against any future actions taken by the world governments to restrict the supply and the price of gold.  They did it before in the US, they will do it again.”

Related Links:

Reuters:  Gold price tumbles more than $100

IBT:  Gold falls hard; silver falls harder

WSJ:  Silver’s role as precious and industrial metal hits prices

Mineweb:  Silver biggest loser so far in precious metals and markets sell-off

TF Metals Report:  Who/what is selling?

Jesse’s Café Américain:  “It is important to keep this retracement in context”

KWN:  Sprott Money temporarily runs out of physical silver

MarketWatch/Zero Hedge:  CME raises margins for gold, silver, copper

Benzinga:  What to make of gold and silver pullback?

Bullion Vault:  Why has the gold price tumbled?

NYT:  A gold rush wanes as hedge funds sell

Tim Iacono:  Margin calls whack gold

FX Street:  Gold:  Since the fall and how low can it go

Wall St. Cheat Sheet:  What’s next for gold?

Kitco:  Higher prices seen for gold next week – survey participants

Reuters:  CFTC backs down on commodities rules

Seeking Alpha:  Gold ‘believers’ appear distraught over dollar strength

MarketWatch:  Fed watchers stunned by market downturn

Peter Schiff:  Fed’s lame twist paves way for QE 3

SafeHaven:  Why are the markets so hectic? Debt and growth

Bloomberg/NYT:  Treasuries decline on speculation G-20 will act on European debt crisis

Telegraph:  IMF’s Lagarde blames politicians for bringing world to brink of recession

Daily Beast/Politico:  9 juicy bits from Ron Suskind’s “Confidence Men“

“I believe we have also lost true liquidity in silver, as we have in gold,” writes Ted Butler.  “This can be seen in the volatility of the silver price, same as in gold. Back in April, the commercials panicked in silver and bought back shorts, causing prices to explode into the end of that month. Then, a giant manipulative takedown occurred, starting May 1.  Recently, the commercial shorts in silver haven’t panicked as they have in gold. In fact, JPMorgan, who I believe to be the largest COMEX silver short, added to short positions in the last COT, as I reported on Saturday. Considering what has occurred in gold, I believe it is only a matter of time before the big commercial shorts also panic in silver. But the panic in silver will be much more profound than it has been in gold….It’s impossible to say when such a process will start in silver, but we surely are closer to that than ever before. This is more a case of inevitability than it is of timing. It will come when it is least expected, but it will come.”

Related Links:

MarketWatch:  Gold tops $1,900 intraday, but finishes lower; silver drops 2.8%

Bloomberg:  Gold declines from record as Swiss National Bank imposes franc ceiling

Zero Hedge:  How Switzerland caught up to the rest of the world In devaluing paper currencies against gold

Seeking Alpha:  Swiss intervention paves way for metals, Singapore and Canada

The Daily Gold:  Silver and silver stocks forming bullish cup and handle pattern

SilverSeek:  COMEX silver stocks remain near record

Mineweb:  U.S. Mint:  Strong gold and silver bullion coin sales for August

KWN:  Andrew Maguire – LBMA gold and silver shorts will be forced to take losses

GoldSeek/Bullion Vault:  Wikileaks drops bombshell on gold market

GATA:  More Beijing embassy cables show China sees gold as central in currency war

Sharps Pixley:  Is China buying gold?

Financial Times:  Gold still endures as a wealth protection

MarketWatch:  Gold bugs cheer bounceback

Daily Bell:  Doug Casey interviewed on continuance of Greater Depression and the brighter prospects for gold

Telegraph:  IMF: global economy faces a ‘threatening downward spiral‘

Business Insider: Nassim Taleb:   U.S. economy will transfer $5 trillion to banker pay & bonuses over next 10 years

“Technically silver is looking better by the day and is now trading not far above its 50 and 100 day moving averages,” according to a GoldCore analysis that suggests silver could reach $50 an ounce in “early autumn.”  GoldCore’s Mark O’Byrne told Bloomberg that “The 50-day moving average is rising after the recent price gain and is looking like it will cross the 100-day moving average in the coming days, which will be a bullish technical signal.  We should see silver surpass the record nominal high in the coming weeks or months.”

And in a column headlined “Will gold top $2,000 by the end of September?,” Patrick Heller writes that “If gold can reach $2,000, I also would expect to see silver top $50 as well.  There are no major gold or silver commodity options or contract expirations until the December maturities hit in late November.  With such a relatively clear path that would not be sabotaged by price suppression tactics as such contracts mature, we could see a very interesting next few months.”

Related Links:

Reuters:  Gold slips on U.S. economic data, strong dollar

MarketWatch:  Gold settles modestly lower; silver off 0.6%

Coin News:  US Mint sales:  Bullion coins soar

KWN:  Louise Yamada – Critical levels to watch on gold & silver

GATA:  How exchange-traded fund GLD lets you pretend to own gold

Jesse’s Café Américain:  “extreme fractional reserve nature of current metals markets is an accident waiting to happen“

The Standard:  China punters sway gold market

Reuters:  Barclays wins Shanghai Gold Exchange membership

MSN Money: 5 reasons gold is headed for $3,000

Mineweb:  Gold to continue rising as the need for further liquidity measures grows/Interview

CNBC/Zero Hedge:  CEO:  Buy gold before Fed announces further easing

Phoenix Capital Research:  QE3 ain’t coming unless one of these two items happen

Bullion Vault:  Euro crisis “not over” and “will test German economy”

Financial Times:  IMF and eurozone clash over estimates

Spiegel:  ‘Italy is burning and no one is putting it out’

Guardian:  Berlusconi vowed to leave ‘shitty’ Italy in conversation recorded by police

Among the ten participants in Barron’s mid-year roundtable was Marc Faber.  Asked, “Is gold still attractive at $1,500 an ounce?,” he said that “Not to own gold is to trust the value of paper money and the government’s integrity. No one in his right mind could trust the U.S. government any more. The government’s economic statistics are distorted and there is no consensus on how to solve the budget crisis. So, yes, people should own some gold. It can correct by $100 or $200 an ounce, but you own it as an insurance policy. The world is grossly underweight gold. It is flooded with U.S. dollars. Investors might be bearish about the U.S. dollar, but international dollar reserves exceed $9 trillion. Compared to that, there is very little gold.”

Related Links:

Coin News:  Gold and silver prices rise Friday, split on week

Reuters:  CFTC:  Speculators cut net length in gold and silver, raise bets against U.S. dollar

Trader Dan:  HUI – Gold ratio reflects the return of a deflationary mindset

Jesse’s Café Américain:  The almost shocking year-to-date divergence between gold and the gold miners

Mineweb:  Touch and go for gold this summer

Commodity Online:  Barclays: Macro environment supportive of gold prices

CNBC:  Dennis Gartman: Gold could reach $1650 by year’s end

GoldAlert:  One of John Paulson’s Few Bright Spots: Gold

Casey Research:  Its weight in gold:  The real price of things

MoneyWeek:  What the ’70s bull run can teach us about today’s gold market

Seeking Alpha:  Rep. Ron Paul’s gold and silver holdings

Zero Hedge:  Forget “blood diamonds”, here comes “conflict gold“

Reuters:  IMF cuts U.S. growth forecast, warns of crisis

Time:  What U.S. economic recovery?  Five destructive myths

CNBC:  How miserable? Index says the worst in 28 years

Describing the end of QE2 as a potential “danger” for gold, UBS analyst Edel Tully tells Bloomberg that it would also “be a buying opportunity for gold because certainly looking at gold towards the second half of this year, it certainly paints a positive picture given inflation prints around the world are elevated, given the European sovereign-risk fears are certainly more front and center, and macro data is rolling over, not over just in the U.S. but globally. So you have the risk that potentially you could have further quantitative easing later on this year, and you know, gold is off to the races once again.”

She also cites “Indian demand” to argue that the gold market is less seasonal than it used to be, and reminds that despite all the talk about gold, “ownership is very, very low.”

Related Links:

Mineweb:  After all that gold and silver fall-out, where are we now?

Mad Hedge Fund Trader:  A review of the gold fundamentals

Seeking Alpha/IBT:  Trading gold in the face of a strong dollar

MarketWatch:  5 money moves one gold bug is making now

Minyanville:  19 things you didn’t know about gold

Zero Hedge:  Shanghai silver trading volume surged by 65% last month

SilverSeek:  Silver action a reminder of the risks of the paper market

MarketWatch:  Margin hikes threaten your silver, gold, oil stake

Dow Jones:  Miners pare their hedging positions as gold soars

Reuters:  Speculators cut net longs in silver, gold, copper

SafeHaven:  Silver – Wanted at $50, not wanted at $35 – Time to call in the psychiatrists…

KWN:  Louise Yamada – $5,200 gold is long-term channel target

WSJ:  Why gold will outshine silver

New Zimbabwe:  Head of Zimbabwe’s central bank urges gold-backed Zimbabwe dollar

James Turk:  Political control of money

Bloomberg:  Strauss-Kahn arrest lifts emerging-market push for IMF leadership overhaul