Pedal to the Metals

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

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.”

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)

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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.”

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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?

Following what is described as a “gold positive” move in which “Japan and China will promote direct trading of yen and yuan without using dollars,” the director of the research bureau affiliated with China’s central bank advised that “The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation,” adding that “Gold remains the only safe haven for risk-averse investors.”

A China Daily article on his comments quotes one analyst as saying that “The PBOC may have realized that its euro-denominated assets are in greater danger than it expected and started to eye gold,”  but, he “added that there was no easy way for China to get as much gold as it wished because major economies such as the US hold the majority of gold and market supplies are very limited.”  This as the Chinese government has also clamped down on the proliferation of gold exchanges across the country, banning all but two exchanges, located in Shanghai.

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Dow Jones:  Comex gold hits one-week low below $1,600

MarketWatch:  Gold loses over $10 to tally a four-session loss; silver down 34¢

P. Radomski:  Gold might have already hit rock bottom

KWN:  JamesTurk – What to expect from gold & silver in 2012

Alasdair Macleod:  Gold price set for hyperbolic increase

Seeking Alpha:  The gold/silver ratio and $200 silver

TF Metals Report:  Interview with “Ranting Andy” Hoffman

Jesse’s Café Américain: Comex, what is it good for?

J.S. Kim:  Did bankers deliberately crash MF Global to crash gold and silver?

Gonzalo Lira:  A run on the global banking system – How close are we?

GoldMoney:  “Tragedy of the Euro” author on moral hazard in Europe, inflation, and gold

USA Today:  James Rickards sees ‘Currency Wars’ destroying dollar

Zero Hedge:  Has the Fed run out of options to “grow” credit money?

UPI:  Obama nominates two for Fed board

Mises Daily:  JP Morgan chief economist tells lies to help his firm and harm Ron Paul

In a very upbeat article about the prospects for precious metals, the Wall Street Journal reports that “Gold, silver appear set to shine in ’12.” It cites Morgan Stanley picking gold as its “top commodity play for 2012″ with an estimated average price of $2,200 an ounce, and quotes an analyst for Bank of America Merrill Lynch, which is also bullish on gold, as saying that “Investors [are expected to] raise their exposure to silver due to increased usage in new applications, higher offtake from emerging markets and continued concerns over the stability of the global macro economy.”

The article concludes that “while further bouts of heavy selling can’t be ruled out—particularly in times of concern over cash liquidity—if macroeconomic uncertainty continues to cloud the outlook for investors, new highs for gold are unlikely to be far behind. And even though the road to record highs for silver may be a little more difficult, gold’s sister is also likely to regain some of its shine in 2012.”

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Wall St. Cheat Sheet:  Precious metals edge lower after backdoor QE

Sharps Pixley:  The economy in 2012 – and its implications for gold

Kitco:  Fed watch 2012: What does Ben have up his sleeve now?

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GoldSeek:  Comex:  The march to irrelevance

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KWN:  London trader – There are tremendous silver shortages

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Business Insider/Delta Farm Press:  MF Global client attorney explains in one sentence why JP Morgan’s involvement in MF Global is suspicious

Bloomberg:  FBI pulls off ‘Perfect Hedge‘ to nab new insider trading class

In a commentary to his subscribers that is now publicly available, Ted Butler analyzes the short position in SLV, the largest silver ETF, and finds that from the start of this year, it “had grown dramatically, from around 13 million shares, to a peak of 37 million shares in the spring. Not only is the percentage of shorted shares of total outstanding shares higher in SLV than in any other hard-metal ETF, it is higher for a very unique reason – there is not enough physical silver available to allow for the normal issuance of shares as dictated by the prospectus. Aside from the harm short sellers are having on SLV shareholders, these short sellers are also manipulating the price of silver. If they had to go out and buy 25 or 37 million ounces of silver to issue shares as dictated by the prospectus, the price of silver would have soared. Instead, the SLV short sellers are helping to manipulate the price of the metal itself by defeating the intent of how shares should be issued.

This is not the first time I have raised this issue. Back in the summer of 2008, when silver was near the $20 mark, I wrote how the short position in SLV had grown to 25 to 50 million equivalent silver ounces, which was unprecedented at that time. This was back when Barclays still owned SLV and naked unreported short selling was prevalent. This naked SLV short selling played a big role in the collapse of silver from $20 to under $9 back then, just like the SLV short selling this year has contributed mightily to the collapse in silver from $49 to under $30. Certainly, the percentage decline in prices is strikingly similar between 2008 and this year. It is no coincidence that the price collapsed in 2008 and 2011 when the short selling in SLV was at an extreme.”

Related Links:

Kitco:  Comex gold ends near steady in quieter, consolidative trading

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Forexpros:  Confused about falling prices of gold and silver?

Peter Brimelow:  Gold bugs take big hit, but Asia is buying

Bloomberg:  China 2012 metals demand to grow at slower pace, group says

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Profit Times:  Kyle Bass on why he owns so much gold…

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Alasdair Macleod:  Money supply explosion will lead to accelerating inflation

Rep. Ron Paul:  Beware the coming bailouts of Europe

Bloomberg:  Paul’s raw milk freedom pitch reflects offbeat campaign on rise

Christian Science Monitor:  What if Ron Paul wins Iowa?

As “Gold and silver calm down after selloff,” the collapse of negative gold lease rates is seen as one sign that the metals sell off may be ending.  And Ted Butler, in a note to subscribers, writes of seeing “scant signals from the real world of supply and demand to account for the decline in gold and silver prices. At the core, this is strictly another Comex-commercial rig job…. We have only gone down in price so that the commercials could buy. It’s not possible that the commercials can always be big buyers on such declines for any other plausible explanation. That the CFTC sits by, even though it has been armed with new anti-manipulative regulations is as shameful as it gets.”

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Kitco:  Comex ends lower on follow-through pressure from Wednesday’s drubbing

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Peter Brimelow:  Are the bears vindicated?

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Bloomberg:  IMF’s Lagarde: Europe crisis ‘escalating’; Bernanke signals Europe risk keeps Fed ready to ease further

MarketWatch:  No quick fix for euro crisis in 2012

Daily FX:  How the European debt crisis affects gold price

Telegraph:  China’s epic hangover begins

Pragmatic Capitalism:  Gold bugs should be watching China

With Comex gold closing below $1,600, its lowest level in five months, Jesse’s Café Américain looks at the role of gold lease rates in exacerbating “the ferocity of this sell off,” and with gold now “in a technically oversold condition, on a near-term basis,” Kitco‘s Jim Wyckoff is looking for it to bounce back soon.  He points out that the 14-period Relative Strength Index (RSI) on the above graph “is in a posture very similar to those RSI postures seen in July and September of this year,” after which “the gold futures market did proceed to post solid price rallies in the following weeks.”  And MarketWatch‘s Mark Hulbert writes that “contrarians detect a very strong wall of worry forming in the gold market, one which could very well be the springboard for bullion rallying into new all-time high territory.”

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Reuters:  Gold dives 4 percent on fund liquidation, technicals

Forbes:  Gold falls off a cliff as margin calls cream speculators

Wall St. Cheat Sheet:  Gold and silver plummet on dollar strength

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Bullion Bulls Canada:  The bankers’ new gold

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Last week Eric Sprott spoke of his idea for silver miners to put their money into silver.  Now, Sprott and David Baker have published a written “Call to Action” in which they suggest that those miners “should seriously consider storing a portion of their reserves in physical silver outside of the banking system. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don’t pay their customers to take on those risks today.”  More:  “Sprott Hatches an OPEC for Silver Industry.”

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Statements on banks’ action: The Fed & Rep. Ron Paul

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MarketWatch:  Gold likely to be higher at year’s end

Seeking Alpha:  Buy gold ahead of QE3

SafeHaven:  Silver:  Buy, hold or sell

Reuters:  Morgan Stanley says prefers gold, silver in 2012

Bloomberg:  Russian billionaire Prokhorov touts gold for perplexing times

In an interview with The Gold Report, Shadowstats‘ John Williams reiterates his forecast that “we’re heading into U.S. dollar hyperinflation, and the effective purchasing power of the currency as we know it will disappear. If you’re living in a U.S. dollar-denominated world, you don’t want to be in dollars … I look very specifically at physical gold, preferably gold coins and silver, and assets outside the U.S. dollar. The currencies I like the best are the Swiss franc, the Australian dollar and the Canadian dollar. This is something you do for survival over the long haul because you’re likely to see all sorts of volatility in the short term.”

And precious metals analyst Clive Maund tells The Gold Report that “The near-term outlook for gold and silver is for a correction that should not see silver go below its recent panic lows set in September. Then everything depends on the manner in which the debt crisis is handled. If unlimited liquidity is created in an effort to paper over the cracks both in Europe and the U.S., then the sky is the limit for precious metal prices. But if deflation takes hold, then gold and silver are likely to drop with most everything else, although not as fast, as there will be few other safe havens in which to put your money.”  Read Maund’s latest gold and silver market reports.

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Market Oracle:  Which fiat currency behaves most like gold?

Reuters:  Today’s currency war may be tomorrow’s global crisis

In a wide-ranging interview, Ted Butler tells Investment Rarities’ President Jim Cook why $200 silver is still possible, how “we may be very close” to a silver shortage, and the conditions that will lead to silver outpacing gold.  He also thinks the COMEX will be undermined by “The rush towards physical” silver, that without JPMorgan’s meddling the price of silver would be “Double, at least,” and that there’s reason to be optimistic about the new position limits on silver. Asked if it will impact the price, he says, “Yes, and I’m sure it already has, both up and down as big players react and influence the market.  The main thing is that it will be good in the long term as it promises to end the silver manipulation.”

Butler recently likened silver manipulation to financial terrorism.  In a report to newsletter subscribers he spelled out the sequence of events that leads to “sudden and sharp silver sell-offs,” and concluded that “This is a crooked, rotten racket that has been going on for decades in silver. The only difference is that it is not al Qaeda or some militant terrorist group at work, but a consortium of leading banks and firms financially terrorizing that segment of the public that has chosen to invest in silver. Instead of being organized by bin Laden, the silver terrorists are organized and protected by the CME Group.”

Related Links:

Kitco:  Comex gold ends higher on bargain hunting, short covering

Bloomberg:  Gold rises most in a week, silver surges on U.S., European budget concerns

Jesse’s Café Américain:  Bounce back from the smackdown

New York Times: In nervous market, gold gains respectability

Financial Times:  The case for gold in the euro zone bailout

PressTV:  China’s banks use gold as legal currency

IB Times:  Pullback in gold and silver is a buying opportunity

Seeking Alpha:  Silver Summit interview: David Morgan

Got Gold Report:  Big markets herald sea change?

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Zero Hedge:  Mohamed El-Erian: U.S. economic conditions “terrifying,” recession chances 50%

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