Pedal to the Metals

Gold and silver topped Bloomberg‘s list of the best returns of all commodities in the past five years when adjusted for volatility.  Leading the Bloomberg Riskless Return Ranking was gold, which produced a 6.5 percent risk-adjusted return, followed by silver at 3.1 percent.  The total-return index for all raw materials was 0.2 percent.

The article quotes UniCredit SpA analyst Jochen Hitzfeld, described as “the most accurate precious-metals forecaster tracked by Bloomberg in the past two years,” as saying that “People are still very under-invested in gold, and so there is a huge scope of that increasing.”  Last week Bloomberg reported Hitzfeld’s prediction that “Gold will average $1,800 an ounce this year, and rise even more next year on investor and central bank demand.”

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Kitco:  Comex gold hits 7-week high on follow-through strength, bullish technical momentum

MarketWatch:  Gold adds 1.6% on post-Fed rally; silver up 1.9%

Trader Dan:  The party continues

GoldMoney:  Bernanke lights a fire under gold and silver prices

KWN:  Stephen Leeb – Fed game changer sparks 2nd leg of gold & silver bulls

Zero Hedge:  Has Bernanke become a gold bug’s best friend?

GoldSeek:  How long can the Fed pump up the US bond bubble? Time to shift into hard assets?

Gold Scents:  Broken dollar

Mineweb:  Sprott’s John Embry:  Fiat currency system meltdown has huge implications for gold and silver

Barron’s:  Hedge fund guru sees gold price soaring

Jesse’s Café Américain:  A closer look at the gold chart for a break and run possibility

J.S. Kim:  Identifying severe undervaluation points in gold & silver beats trying to perfectly time bottoms

Times of India:  Gold for Iran oil? Indian govt declines any comment

Silver Investing News:  Buying support boosts India silver price

NYT:  Stored for decades, Hitler’s silver is to go on display

As the Wall Street Journal reports that “The Chinese have been loading up like never before on gold ahead of the Lunar New Year, which falls on Jan. 23 this year,” a Reuters analysis looks at how Chinese banks are encouraging gold buying.  Headlined “China’s banks lure man on the street to gold,” it cites one bank that has signed up more than 2 million customers under a program with the World Gold Council that was launched in 2010. Investors “buy as little as a gram a month through the accounts, a tiny quantity but one that adds up when the middle class of the world’s most populous country is involved.”  The article also notes that “China has one of the world’s highest saving rates, and the public faces few investment options. A volatile stock market and a property market under government crackdown are driving investors to seek alternative investment choices.”

Related Links:

Kitco:  Gold ends modestly lower on mild profit-taking from recent gains

MarketWatch:  Gold ends 0.3% lower after two-session climb; silver down 3¢

Barron’s:  Eric Sprott:  Gold to still top $2k an ounce, silver seen rallying in 2012

Contrarian Investor:  Is rising demand for physical silver signaling a rally?

Coin News:  U.S. Mint sales:  Bullion coins (scroll down)

KWN:  Stephen Leeb – Why gold & silver are about to soar

The Gold informant:  Where to be if/when the metals markets explode – Part 1 and 2

CNBC:  Is bullion back? ‘Gold is still in a super bull market’

Peter Brimelow:  James Dines’ gold call and his new theory on “murmuration”

Bullion Vault:  Real risks to the gold price

New York Times:  Will India’s higher import duties dampen demand for gold?

Bloomberg:  Gold, currencies and commodities: Axel Merk’s outlook

Mineweb/New York Sun:  Newt Gingrich calls for U.S. Gold Commission; Gingrich goes for the gold

Janet Tavakoli:  Gold and silver market manipulation, look for motive

Reuters:  JPMorgan again at center of a financial failure

Courthouse News Service:  JPMorgan Chase accused of brazen bankruptcy fraud

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.”

Expanding on a research note to clients that forecasts gold averaging $1,875 an ounce and peaking at $2,200 in 2012, Barclays’ analyst Suki Cooper tells CNBC that gold’s “key watch factor right now is really the physical demand and that has started to show signs of life, and in turn we remain positive on gold …The two key countries we need to watch in terms of physical demand are India and China,” particularly China.  She cites this week’s report about an upturn in China’s gold imports from Hong Kong as evidence that the “physical flow that was under question in December has now started to come back and is looking much stronger.”

Related Links:

Financial Times:  Did China just overtake India as the world’s largest gold consumer?

The Street/Telegraph:  Gold prices lose steam as S&P downgrades France

MarketWatch:  Gold drops 1% after 3-session run, silver down 2%

Trader Dan:  Gold retreating from chart resistance near $1650

Wall St. Cheat Sheet:  Global factors boost gold and silver demand

Kitco:  2012 precious metals outlook

KWN:  Silver Eagle sales are exploding, “demand is shocking”

Coin News:  Bullion Silver Eagles best since Jan. 2011

SilverSeek:  Renewed Iranian worries support silver and gold prices

Bloomberg:  Iran to raise deposit rates to stabilize gold, currency markets

Casey Research:  The danger of paper gold

Bloomberg:  Europe’s $39 trillion pension risk grows as economy falters

Fox Business:  Peter Schiff:  U.S. is in worse shape than Europe

CNBC:  Fed to weigh further easing amid doubts about recovery

Washington Post:  Fed’s image tarnished by newly released documents

WSJ:  From gold bras to gold bars

Bullion Vault:  The deeper reason for buying gold

Following last week’s Financial Sense‘ interview with CFTC Commissioner Bart Chilton, Ted Butler responded in a now-public note to his subscribers, by writing that “Chilton pointed out that it is difficult to prove manipulation in a court of law. He indicated that there are three elements necessary to prove manipulation – the intent to manipulate, the ability to manipulate and the success in the manipulation. I accept his legal definition. Where I respectfully disagree with him is in the degree of difficulty in establishing all three elements in the silver manipulation.”

Butler goes on to argue that “it appears so easy for the Commission to prove a silver manipulation on the basis of the three elements outlined by Commissioner Chilton, my guess is that there is something else holding the agency back from ending this scam. They just don’t want to end it. Perhaps there is a political motive or the knowledge that JPMorgan and the CME may be too big to sue. It’s hard to see how the three elements can’t be proved by the public data.” (Photo:  CFTC Chairman Gary Gensler)

Related Links:

Kitco:  Comex gold ends with solid gains, amid bullish “outside markets”

MarketWatch:  Gold futures settle at best in four weeks; silver gains 3.6%

Zero Hedge:  Gold storms above 200 DMA

Tim Iacono:  A double bottom for gold?

Barron’s:  Gold, silver looking up; Goldman sees ‘significant value opportunity’

Wall St. Cheat Sheet:  Can precious metals overcome U.S. dollar strength?

Silver Investing News:  2012 silver market outlook

Globe & Mail:  Silver bears see ‘cloudy lining’ in metal’s prospects

Ted Butler:  Reasons why silver could hit $50 by April 2012

Reuters:  India allows more banks to import gold, silver

MarketWatch:  Investors should root for the gold bugs

Profit Times:  Soros said to have bought gold again late last year

Bloomberg:  Soros says Europe’s debt woes ‘more serious’ than 2008 crisis

Fortune:  Europe’s ticking time bomb: Credit default swaps

Reuters:  Fed officials:  Economic conditions may warrant more easing

The Golden Truth:  Stand by for massive housing subsidies

Bill Bonner:  World’s biggest zombies

Although silver hit an 11-month low on Wednesday, Arabian Money’s Peter Cooper explains in a SilverSeek article, “Why we are sticking with silver as our top pick for 2012,” and Got Gold Report‘s Gene Arensberg describes Comex silver futures as being “near extreme bullish levels,” based on the latest COT report:  “This is the least net short silver futures for the combined commercial traders in a decade.  We can say that as of December 20, 2011, the usual Big Sellers of silver futures, as a group, were about as confident of silver falling to lower levels as they were a decade ago with silver then trading at $4.20.  The current LCNS condition is rare.  We have only witnessed such low readings of LCNS two times in a decade.”

Related Links:

Reuters:  Gold down 2 percent, at 3-month low as dollar surges

Bloomberg:  Gold posts longest slump since 2009

Jesse’s Café Américain: Gold and silver charts

Barron’s:  Advisors: save your ammo, gold & silver at crossroads

Kitco:  Outlook 2012:  Silver should see renewed investor interest on global finance worries

Trader Dan:  Long-term gold chart views

Bill Bonner:  Gold in the next calendar year

Forbes:  2012: Gold above $2,000, BRIC bubble pops, Sarkozy, Merkel & Obama re-elected

Bloomberg:  Goldman Sachs:  BRIC decade ends as growth peaked

Bullion Street:  China gold exchange curbs unlikely to create major impact

Zero Hedge:  Update on the “non-printing” ECB’s parabolically rising balance sheet

GoldAlert/WSJ:  Ex-Fed official accuses Bernanke of “covert bailout” of European banks in op-ed

GoldMoney:  Iranians flee to gold

Economic Times:  Gold may become acceptable asset class for India’s insurers

Reuters:  U.S. Mint says has enough gold, silver Eagles coins

NASDAQ:  Speculative money pouring out of GLD, keeping SLV under pressure

Seeking Alpha:  Is paper gold a safe investment?

Asking is “Silver ready for take-off?,” a Profit Times article employs the above chart to suggest that the current combination of negative sentiment and a reduction in the net short positions of Commercial traders, “could mean that silver is at or at least very close to a bottom, and that it could take off pretty soon.” And while “Superficially silver still looks pretty sick on the charts and weak compared to gold,” according to Clive Maund in his latest silver market update, “the more closely you look at it, the more bullish the picture becomes.”

Maund continues that “in the last update we had identified a potential Head-and-Shoulders top in silver on its 18-month chart, which would – and still could – become operative if Europe founders and the deflationary scenario prevails. However, the events of last week are evidence that a rescue is in its early stages, and that large-scale money creation is on the way in order to facilitate this. This being so the potential H&S top looks set to abort, and there are some important indications that Smart Money has positioned itself for this.”

Related Links:

Dow Jones:  Gold and silver retreat 1% as EU debt worries weigh

Bloomberg:  S&P places 15 euro nations on warning for downgrade

Forbes/Zero Hedge:  Gold could fall below $1,700 if Merkel & Sarkozy fail at EU summit

Financial Sense:  Get ready for another gold buying opportunity

USA Gold:  Saving gold:  Old reliable stands tall in crisis atmosphere

Mineweb:  Indian homes hold gold worth $950 billion

Motley Fool:  Jim Rickards:  Warren Buffet is wrong about gold

Got Gold Report/Harvey Organ:  Comex silver open interest is lowest since May 2009

StockHouse: How “big money” could push silver 54% higher in 2012

SafeHaven:  Silver to follow gold and double its 1980 high at least

Reuters:  CFTC tightens limits on brokerages using customer funds

Alasdair Macleod:  Currency swaps – the beginning of a ‘solution’?

WSJ:  Euro treaty changes plant the seeds of the euro’s eventual collapse; Soros:  World financial system on brink of collapse

Zero Hedge:  Jeremy Grantham releases the scariest market forecast yet

New York Times:  Secrets of the bailout, now told

60 Minutes:  Prosecuting Wall Street

Even if Europe’s debt crisis is resolved and the global economy begins to recover, gold’s bull run will extend into 2012, according to analysts and industry officials, who tell Reuters that “Gold’s growing allure for buyers ranging from central banks to retail investors will provide a cushion for prices.” And while the article notes that “Some analysts said that if the market sentiment stabilizes, there could be a marginal reduction in investment demand for gold as investors move into other asset classes…. Even in that scenario, gold would remain supported due to its nature as a hedge against inflation, as central banks around the world are most likely to ease monetary policies to provide cheap cash and kickstart growth, which would boost the inflation outlook down the road.”

Richard Russell asks readers to “Think about it, we’re in a low inflation, low investor fear environment, a dollar that appears to have bottomed and is now firming, and still gold holds above 1700 an ounce. This is a remarkable performance aided by heavy buying in China, India, and Asian nations. But what happens when we hit the inevitable inflation; when investors fears are on the rise? To conclude, gold is holding well in an environment that is not bullish for gold, but in due time, the environment will turn highly bullish for the yellow metal. Do not time your gold purchases. Simply continue to accumulate gold. The skyrocketing phase lies ahead, maybe one to three years.”

Last week the World Gold Council released research finding that “Gold remains an under-owned asset making up only 1% of global financial assets in private hands.” One reason often cited is the dearth of institutional investment in gold.  But Dow Jones reports that “Gold is on the verge of being re-incorporated into the financial system as large financial institutions boost their allocations of the asset,” according to Shayne McGuire of the Teacher Retirement System of Texas, speaking at a recent commodities conference.

McGuire and his retirement fund made big news last April by converting almost $1 billion of paper gold investments into bullion. Read more about McGuire, who laid out the rationale for investing the fund’s money in gold in an interview with the Financial Times, and in an essay published by Newsweek, that was adapted from his book, “Hard Money: Taking Gold to a Higher Investment Level.”

Related Links:

Dow Jones:  Gold settles shy of $1,700 as dollar weighs

MarketWatch:  Gold ends at loss but off session lows; silver down 3.2%

Reuters/NY Times:  “Disastrous” bond sale shakes confidence in Germany

Zero Hedge:  Germany sells 150,000 troy ounces of gold in October… But not why you think

Mineweb:  Could eurobonds backed by gold be Europe’s salvation?

Commodity Online:  China eyes the 2500 ton Italian gold reserve as gold & silver become legal currency

The Economist:  Euro crisis – The screw tightens

KWN:  Eric Sprott – This financial crisis will be a lot worse than 2008

Globe & Mail:  Sprott’s physical silver premium starts to fall

IB Times:  Stronger U.S. dollar keeps silver prices down

KWN:  Jim Rickards:  Who will bail out the Fed & how high for gold?

P. Radomski:  Short-term gold price moves from a different perspective

GoldMoney:  Gold buying increasing in India as concerns over rupee grow

Globe & Mail:  Royal Canadian Mint raises $600 million in gold fund IPO

Zero Hedge:  Thanksgiving tally: lunatics & hacks win as gold up 19.3% YTD; S&P down 7.5%

Happy Thanksgiving! Patrick Heller: “This week, as you count your blessings … be thankful for the benefits you are enjoying from the physical gold and silver that you own.”

With both gold and silver down on Monday, Sprott Asset Management’s John Embry tells King World News that “I’m not terribly surprised.  I mean they’ve got the perfect backdrop against which to drop gold and silver prices.  They just lob it into the whole idea that they are risk assets and the whole risk on trade is being taken off because of all of the problems in the background.” He goes on to note that “we’ve got an option expiry on gold [and silver] tomorrow and until that’s over we won’t have a true picture because they’ve got a vested interest in driving the prices down and they’ve got the environment in which to do it.”

Embry also argues that silver’s “fundamentals are fantastic.  It’s a very small market relative to all the other markets and there is a  massive paper short who has been manipulating the market violently for years, and we all know who that is. I mean we shouldn’t be surprised that in these difficult times these guys are throwing everything at it but the kitchen sink.  It’s just creating an unbelievable opportunity and when silver is trading at 5 and 10 times these levels in a few years, this will just be a bad memory.”

Related Links:

Dow Jones:  Comex gold hits 4-week low below $1,700; silver drops 4%

Barron’s: Gold, silver slide: Is this like 2008-2009?

Trader Dan:  Gold nearing important technical support level

Daily Gold:  Precious metals charts point to higher prices

SilverSeek:  Why silver for a monetary collapse?

Frank Holmes:  The gold triple play – Volatility, currencies and Europe

Bloomberg:  Credit Suisse:  Euro zone needs ‘momentous deal‘

Zero Hedge:  Jeffries & Co. strategist:  The Fed should print… in Europe

Guardian:  Could gold-backed bonds be the answer to the eurozone crisis?

GoldSeek:  Middle East gets its first ever online gold and silver trading platform

Mineweb:  India urged to buy more gold as reserve value soars

Reuters:  Yellow-BRIC road leads to mystery gold buyers

Rep. Ron Paul/Forbes:  The supercommittee was designed to fail

Reuters:  Global economic outlook grim, China tells U.S. trade delegation

Jesse’s Café Américain: Trustee says MF Global may have stolen $1.2 billion in customer funds

Sun Sentinel:  Gold firm owner sentenced in $29.5 million Ponzi scheme