Spot gold and silver gained about a half a percent Thursday as tensions ratcheted up between Ukraine and Russia. “The market is getting nervous about the Ukraine situation, and people are moving to gold,” said one commodities broker, adding that “Talks of further sanctions against Russia are increasing the safe-haven premium of gold.” And while noting that the “propaganda is flying hot and heavy from both sides” of the Ukraine border, Jesse’s Café Américain suggests that “A real flight to safety would crush the precious metal shorts if it spills over from paper to the bullion markets. And so I would look for the banks to do all that they can to avoid it, diffuse it, deflect that possibility.”
Archive for the ‘JPMorgan’ Category
In making the case for a “coming silver bubble,” Ted Butler explains that “an asset bubble develops when an undervalued asset which has a compelling investment story and there exists an overall financial environment of sufficient buying power, catches the collective interest of the crowd. For example, by the mid-2000’s and after years of steady appreciation, residential real estate developed into an asset bubble amid the self-fulfilling cycle of continued gains and the availability of easy credit.
As far as great stories go, silver has the best potential story to develop into a bubble. First, there is little argument that it is among the most, if not the most undervalued asset of all by objective relative historical price comparison. In addition, it is at or below its primary cost of production, as evidenced in recent quarterly earnings reports. Remember, most bubbles start out with an asset that is undervalued – on this score silver more than qualifies as being undervalued. Aside from extreme undervaluation, the silver story is multi-faceted.”… Read More >>>
Silver futures finished off 0.3% on Wednesday, which is what gold ended up, with the impetus being July’s flat retail sales, described as “an appalling number” that “has faded the notion of a hike in the interest rate by the Fed, at least today.” And while U.S. data held sway over geopolitics, fighting resumed between Israel and Hamas, U.S. troops are on the ground in Iraq, and the Russian aid convoy headed to Ukraine has gone to ground at a Russian military base, some 300 miles from its Ukrainian destination of Luhansk. This as Ukraine’s Interior Minister declared that “No Putin ‘humanitarian convoy’ will be permitted to travel through the territory of Kharkiv region.”
Reuters: Commodity future – Islamic State militants grab new weapon – Iraqi wheat
The Gold Report: Jim Rickards and Peter Schiff discuss global gold markets
Wall Street on Parade: How high up did the Madoff fraud go at JPMorgan?
Read the first chapter of JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook
Spot gold and silver prices decoupled on Tuesday, with the latter off 1.8% while gold added 0.2%, reports Reuters, “as a tumble in U.S. equities and worries about escalation of military action in eastern Ukraine helped bullion recover earlier losses driven by bullish U.S. economic data. Silver and gold were both pressured early by a higher dollar, and according to one analyst quoted by Bloomberg, “there is little physical demand for silver.” But while the article points out that the U.S. Mints’s July sales of silver coins were off 27 percent from June, Coin News reports that the mint’s bullion coin sales advanced for a second consecutive day on Tuesday, and silver coin sales are almost double last week’s total of 335,000 ounces.
David Stockman: Market maven warns Fed’s 3rd bubble this century heading for 20% tumble
Zero Hedge: 4 million fewer jobs: How the BLS massively overestimated U.S. job creation
Spot gold and silver dropped more than 2% on Monday, with one stated reason being an easing of problems in Portugal’s banking sector, which may still be far from solved. But arguably having little to do with Portugal, there was “massive selling in the futures market. Reportedly, 2300 futures contracts, with a notional value of $1.4 billion, were sold at the New York open,” according to USA Gold: “We’ve seen such raids in the paper market in the past. Throwing this kind of volume at the market all at once is reflective of someone not interested in getting the best price, but rather someone looking to generate shock and awe.” But while gold was being shocked and awed to its worst day in 2014, U.S. Mint bullion coin sales jumped, and GLD, the major gold ETF, was said to have seen its largest inflow since August 2011.
Ted Butler: The silver conspiracy
Reuters: Yellen says Fed easy money needed even after recovery – New Yorker
BullionStar.com: Koos Jansen – For how long will people trust fiat money?
Spot gold and silver saw the slightest of gains on Tuesday while futures were slightly off in what Gold Forecaster‘s Julian Phillips brands a “strange” market, where gold demand is “steady and solid in a relatively thin market, but not swayed by speculators,” who, along with and dealers, “are trying to move gold around with the euro, which keeps going stronger as the dollar weakens.” But, he added that gold “keeps drifting higher as U.S. investors are now net buyers of the SPDR gold ETF in the last three weeks.”
As for the prospect of gold drifting even higher, CNBC, under the headline “These 3 charts tell you to buy gold,” highlights a note from Sterne Agee. The author contends that the investment advisory “remain new buyers and would be new buyers right here, in anticipation of the current ‘bearish-to-bullish’ reversal continuing and gaining urgency as new participants are drawn in.” It goes on to predict that gold will rise to $1,500/oz, but with no timeline, before running into resistance….Read More >>>
Eric Sprott: The physical buyers will overwhelm the paper sellers
After spot gold and silver added a fraction of a percent on Monday, silver ended up 7% for the quarter, its highest gain in three quarters, reports Reuters, and gold gained about 3.5 percent on the quarter after a nearly 7 percent gain in the first quarter, making gold the best-performing asset in the first half of 2014.
Reuters attributes gold’s gains to tensions over Ukraine and Iraq, and going forward, geopolitical tensions are also seen as the “wild card” for gold and silver, according to one analyst quoted by MarketWatch. He adds North Korea as a potential third hot spot, and says that “Any flare up in these areas could quickly lead to another round of ‘safe haven’ buying in the precious metals.”
MarketWatch: Taper Time? Janet Yellen’s Georgetown neighbors complain about ‘doughnut bellies’ of security detail
With gold and silver futures posting their longest run of weekly gains since January, MarketWatch‘s “Commodities Corner” column looks at “Why silver’s outperforming gold and isn’t done yet,” and Ted Butler declares that “there has rarely been a better time to buy and hold silver because the sharp price decline has created an undervaluation that I never expected.”
Describing the two categories of traders known as “raptors” and “technical funds,” Butler explains that “The raptors who are long have the technical funds who are short over a barrel. It’s only a matter of time until the raptors decide to ring the cash register by orchestrating higher silver prices. This will cause the technical funds to buy back their silver short position. Because the technical funds hold a record silver short position, this makes the current setup the best in history. Make no mistake, the technical funds must buy back, rather than deliver metal to close out their short position. As a result, there is now the largest amount of potential buying power in history. Silver should surprise to the upside at some point soon.”… Read More >>>
Gold and silver pared losses on Wednesday to end slightly up after data showed that U.S. GDP for the first quarter fell 2.9%, and the dollar dropped with it. USA Gold, describing what it calls “this stunning collapse in economic activity,” cites Jim Rickards’ “prescient assertion early in the new year that the Fed was tapering into weakness, and in doing so before achieving their own growth and inflation criteria. ‘The danger now is that they cause a recession,’ Rickards stated in a February interview. I wrote last week that gold’s gains back above the $1300 level significantly improved the technical picture and went a long way toward confirming the cycle lows at 1182.10/1179.83. The latest “In Gold We Trust” report from Incrementum AG of Lichtenstein [see below] seems to agree: “We are therefore convinced that the technical picture has been repaired and that a stable bottom has formed.”
Jim Sinclair: 30 reasons the bear phase in gold ends this summer
Zero Hedge: Chairman of China’s largest copper producer commits suicide by jumping from hotel
New York Times: Barclays faces New York lawsuit over dark pool and high-frequency trading
Gold and silver futures gained about 1% and 2% respectively on Thursday, reports MarketWatch, with increased demand for gold attributed to growing unrest in Iraq and weakness in U.S. stocks. And with both metals logging multiple-session gains, the article quotes one analyst who references recent COT data showing “speculators shorting the metals, while commercials have gone in the opposite direction.”
He predicts that “If the rally continues, a lot of small traders will be caught on the wrong side of the precious metals trade and will be forced to cover their short positions — especially in silver. This could produce a furious short-covering rally and money will start to flow back into this sector.” Adding fuel to the fire, “Gold and silver shorts ignored Iraq’s Islamist threat nearly as badly as Baghdad,” according to BullionVault‘s Adrian Ash, who sees last week’s “extreme positioning … getting unwound fast, and there could be further to run yet if crude stays firm and equities soft.”
With the silver price chart said to be at a “make or break level,” it’s also taking its good time to decide, according to an analysis at the Short Side of Long: “Consider the fact that silver traded at around $19 in June 2013 and it also traded around $19 in December 2013. As I write this post, silver is trading at… yep you guessed it… $19 per ounce.” It goes on to point out that “despite no change in the price, silver’s sentiment has either remained extremely negative by looking at certain indicators, or actually deteriorated even further by looking at others.”
The author writes of waiting for a resolution of the technical triangle in the above chart before pulling the trigger, and cautions that “just because every man and his dog is bearish on silver does not mean we cannot fall further from the current levels. However, if we do fall further, I think that the selling pressure and bearish energy is all but exhausted. Therefore, any further downside should be limited. Also, I honestly feel that this level of bearishness (gross short bets) isn’t going to be sustainable for a long time, so eventually one should expect a major short squeeze coming. In summary, I got my finger on the buy trigger… but I haven’t pressed the button yet.”
In Gold We Trust: Chinese gold demand stable, Shanghai silver scarce
Gold Reporter: Iraqi gold reserves triple year-to-date
In describing the thinking of many gold analysts, that the relationship between real long-term U.S. interest rates and the gold price is strongly negative, Mining.com explains that “The underlying reason for the relationship is that as yields rise, the opportunity costs of holding gold increases because the metal is not income producing. Higher rates also boost the value of the dollar which usually move in the opposite direction of the gold price.”
But, as illustrated by the above chart, “this inverse correlation … has broken down.” The 10-year TIPS (Treasury Inflation Protected Securities), “is currently at 0.32% (which is consistent with a gold price north of $1,400), down from 0.68% two months ago. It goes on to cite a research note from Capital Economics that sees this as bullish for gold: “This decline at least partly reflects growing speculation that the neutral level for official interest rates in the longer term has fallen, which should reduce the opportunity cost of holding gold.” And it concludes that “Unless there is a decisive move below $1,200 per ounce, which seems unlikely given the (rising) floor set by mining costs, we are therefore retaining our end-2014 forecast of $1,450.”
SafeHaven: Silver – still seeing the forest for the trees