Pedal to the Metals

As Spiegel reports that “Fears of bank runs mount in southern Europe,” Eric Sprott tells King World News that while central banks and governments are desperate to avoid a Lehman-style “liquidation event,” he thinks “the market is just liquidating, irrespective of whether the powers that be want it or not,” and with that, “the world is going to start focusing back on precious metals. We’ve had one Minsky moment in Greece and we’re going to have another one.  As these Spanish yields and Italian yields move up here, it will become a Minsky moment in those countries as well.”

As for the recent decline in gold and silver, Sprott says that he thinks it “was engineered because when you look at the physical aspects of gold, they seem totally different than the paper aspects of gold.  The major dealers, who have now massively covered their short positions, orchestrated the takedown in the face of fundamentals that were just screaming to buy gold and silver.”

Related Links:

MarketWatch/Dow Jones:  Gold futures bounce 1.1% higher as dollar weakens, silver gains 2.5%; Comex gold rebounds to end wild week up 0.5%

Trader Dan:  Gold continues its bounce

Gold Scents:  Major long-term bottoms are forming in gold and silver

KWN:  Ben Davies- The gold & silver liquidation is over; Peter Schiff – The market rollover, QE3 bottom & gold

Forbes:  Gold sets for rally as Bernanke Fed and ECB rev up the printing press

Bloomberg:  China’s appetite for gold:  Interview with GoldCore’s Mark O’Byrne

Frank Holmes/GoldSeek:  How gold demand remains resilient; Whales in the gold market

SilverSeek:  Dramatic turnaround for silver?

Silver Vigilante:  Video:  Bill Murphy & David Morgan @ The Money Show in Las Vegas

Eric Parnell:  Stocks:  One more flicker before the lights go out

AP/DeutscheWelle: Germany says reports that Merkel suggested Greek referendum on euro ‘untrue’

Phoenix Capital Research:  I just got back from the EU… and it’s worse than you imagined

Financial Times/WSJ:  JPMorgan unit has $100 billion of risky bonds; loses could total $5 billion

Jesse’s Café Américain:  Jim Rickards on JP Morgan’s trading (gambling) loss

The Golden Truth/CNET:  Facebook’s IPO; After the hype, a ho-hummer

With gold and silver reaching 10- and 15-month lows respectively on Wednesday, Peter Grandich observes that “As you can see from the charts, both gold and silver have entered not only key support areas, but are recording some of the most oversold readings in quite some time…. While there shall be no quick fix and the pain can linger awhile longer, the ‘mother’ of all bull markets is far from over.”

And before April’s FOMC meeting minutes revealed that “several” Fed policy makers were open to more easing if the economy faltered, as opposed to a “couple” in March, Jim Sinclair reiterated his prediction of “QE to infinity,” pointing out that “The Fed has never failed a sitting administration in its history. The Fed is not going to fail the sitting administration in this election year.”

Related Links:

Trader Dan:  Why the delay from the Fed in announcing additional stimulus measures

TF Metals Report/Financial Sense:  Additional covert QE on the way?; Richard Russell:  The quiet revolt against the dollar

Bloomberg:  Gold eclipsed by dollar haven as Goldman sees rally

Forbes: Stocks and gold should rally post-Facebook IPO

Yahoo Finance!:  Gold slides to new 2012 low:  Buying opportunity or bull market breakdown?

SilverSeek:  Backwardation in both gold and silver

The Gold Report:  Analyst:  Opportunity in silver, the devil’s metal

Arabian Money:  Gold and silver still the best protection against the derivatives blow up that started with JPMorgan’s loss

Zero Hedge:  In historic move, Japanese pension fund switches to gold for first time ever

GATA:  Asset managers:  Central banks aim to redistribute gold and push it way up

Wall St. Cheat Sheet/Golden Truth:  What are hedge funds doing with gold?; Soros quadruples his investment in gold

Globe & Mail:  Top hedge fund manager:  Buy bullion, not gold stocks

MarketWatch/Azizonomics:  Germany will blink and won’t let Greece exit euro; The fabled Greek mega-bailout

Spiegel:  Germans fret about their foreign gold reserves

GoldMoney:  Ronald Stöferle and Alasdair Macleod on German gold, European elections, and precious metals price action

Ted Butler, who recently offered a tutorial on how Comex gold and silver trading works, wrote in a commentary last weekend to paid subscribers:  “One thing that I hope everyone realizes is that we have not declined in gold or silver prices for any reason other than to enable the commercial controllers on the Comex the opportunity to buy as many gold and silver contracts as possible.  The data indicate that these commercials are doing just that, in spades.

In watching the daily price action I have been muttering many things to myself, not the least of which has been the phrase, ‘slicing the salami.’  That’s the term that my good friend and mentor Izzy [Friedman] and I have used to each other over the years to describe one of the commercials’ favorite tricks against the technical funds.  It involves the deliberate setting of a series of new price lows to lure the technical speculators into selling (both long liquidation and new short selling).  Nothing encourages technical selling more than the establishment of a series of new price lows (or buying into new price highs).  It’s like waving a red flag in front of a bull.  Once this process is complete, you are invariably left with an important price bottom.  I haven’t talked with Izzy lately, but I’m sure he would agree that the commercials sliced the salami recently in silver and gold like never before.

The changes in this week’s COT report for gold and silver were spectacular, as they should have been given the price action.  If you have to endure the financial pain from the endless slicing of the salami, the reward should be a commensurate improvement in the market structure.”

Related Links:

MarketWatch:  Gold settles at 2012 low as dollar gains on Greece; silver down 1%

Jesse’s Café Américain:  Gold & silver charts:  More liquidation on Greece and Facebook

GoldSeek/P. Radomski:  What will happen to Greece and gold?; Political and economic factors bode well for gold

SilverSeek:  Is fear of deflation sapping gold and silver?

WSJ:  Price is right for Fed to come on down with stimulus

Bullion Bulls Canada/Jim Cook:  Gold losing battle vs. U.S. dollar in 2012; Doom of the dollar

Peter Grandich/Wealth Cycles:  Gold bears:  Put your money where your mouth is; Safeguarding your precious metals

KWN:  Paul Brodsky – The paralyzing fear among investors today; James Turk – Expect tremendous chaos, Europe deteriorating rapidly

Mineweb/GoldCore:  A shift in Indian gold buying patterns?; Bundesbank confirms German gold held by Fed, BOE and Banque De France

Frank Holmes:  Looking to China to fire up its economy

Perth Mint:  Bron Suchecki:  IMF to buy gold? Not

ChrisMartenson.com:  Acknowledging the arrival of Peak Government

Zero Hedge:  Jim Rogers: A must-see rebuttal to the ‘normal’ CNBC hopium

Reuters/Washington’s Blog: The core problems with JPMorgan’s failed trades

Jim Rickards/Forbes:  Why JPMorgan’s Jamie Dimon should resign; More bad news for JPMorgan as FBI gets involved

The Golden Truth:  It’s simple – Think like a criminal

With gold and silver both closing at multimonth lows on Monday, Dan Norcini points out that the “Gold’s move down towards $1550 has in the past attracted very substantial central bank gold buying. Hopefully this will remain the case as the market is now pushing towards the lower band of an eight month long trading range.”

And with the markets “moving so quickly away from risk and out of basically everything except Treasuries or cash,” he thinks that the Fed “is going to have a major problem on their hands if they do not soon give some sort of signal that they are preparing to act to stem the deflationary decline.”

Norcini also sees China’s lowering of its bank reserve ratio requirements as a sign that it’s “responding to slowing growth there as their export markets are impacted by the woes in the Eurozone and the anemic growth in the US. This is one of the signals that copper has been sending for a while now as it descends in price. Were copper to finally show some signs of a bottom, that would be constructive for silver which is testing chart support down near the $28 level once again.”

Related Links:

Wall St. Cheat Sheet:  Gold and silver decline, dollar higher for 11th consecutive day

Barron’s/Citywire:  Gold goes negative for 2012; Morgan Stanley stays bullish, believes gold may hit $2,175 in 2013

Kitco:  Deutsche Bank:  Commodities outlook mixed for rest of 2010; Precious metals, energy may rise

The Daily Gold/SilverSeek:  Major bottom in precious metals could occur this week; How euro money printing is going to drive up gold and silver prices

BBC/Reuters:  Could the euro survive a Greek exit?; Can Greece even exit the euro zone? Maybe not

The Daily Bell/Yahoo! Finance:  Drop the cash from helicopters!; Frank Holmes:  “When push comes to shove, they’re going to print money“

KWN:  Stephen Leeb:  This is why world markets are incredibly unstable

Zero Hedge:  Meet the latest converted gold bug: The IMF

Alasdair Macleod:  Gold bugs will be vindicated

Mineweb:  HSBC’s James Steel:  Chinese demand, the US election and the outlook for gold over summer

Bullion Vault/GoldSeek:  Gold investment demand in Asia; Frontrunning China’s insatiable demand for gold

Market Oracle:  The yuan, rupee and physical silver demand

The Victory Report:  Richard Russell:  Stay in cash and gold coins

Patrick Heller:  Is US government gold price suppression illegal?

AP:  Gold! Haiti hopes ore find will spur mining boom

As Dan Norcini warns, in a blog post and an interview with King World News, that “Deflation scares are back and in a major way,” noted analyst David Rosenberg tells the Financial Times that the U.S. “economic slowdown is already at a train,” and with “vulnerable” equity markets repeating the downturns of 2010 and 2011, he sees “a very good opportunity in gold,” which has “corrected,” and “seems to be off the radar screen right now.”

Rosenberg also says that with gold acting “more and more like a currency,” he looks at it in dollars, “and the volume of dollars is going to go up as we get more quantitative easing.  So I actually think that when we normalize gold value divided by currency in circulation, gold will go to $3,000 an ounce before this cycle is over.”

Related Links:

Reuters/MarketWatch:  Gold posts worst weekly drop this year on euro fears; Gold and silver down 3.7% and 5.1% respectively on week

Kitco:  Metals outlook:  Europe, global economic growth may dominate headlines again next week

Bloomberg:  Gold bulls weakest in month as investors buy dollar

Silver Investing News/Trader Dan:  Silver below $30; Silver chart and comments

Wall St. Cheat Sheet:  Do Eric Sprott and China still believe in gold?

Mineweb/Forbes:  Calls for Indian gold bonds grow louder; Why gold could be setting up for a killer comeback

The Gold Report:  John Hathaway:  Gold is not a growth industry—it can just pay investors big

KWN:  Ben Davies – 3rd LTRO coming & Fed to power up swap lines

GoldSeek/Spiegel:  Germany’s mixed signals;  Breaking a German taboo:  Bundesbank prepared to accept higher inflation

BBC/PIPA:  Global poll:  Views of Europe slide sharply, while views of China improve

Beacon Equity:  GLD ETF raid imminent as China flushes JP Morgan of physical

Seeking Alpha/Fox News:  JPMorgan Chase $2 billion derivatives loss illustrates toxicity of casino-banking; After the JPMorgan Chase mess, we must bust up the big financial houses

Reuters:  JPMorgan’s Dimon loses clout as reform critic; JPMorgan may tip Wall Street’s hand on Volcker Rule

Zero Hedge:  To Jim Grant the world of finance is nothing but “The Truman Show“

Reuters/Bullion Vault:  Robert Rubin:  The U.S. has an unsustainable & dangerous financial trajectory; 2012 Election:  Obamanomics vs. Romneynomics

A Seeking Alpha post on the degree to which “Asian economies continue to welcome gold and silver,” cites two recent news stories worth focusing on.  One is the Shanghai Futures Exchange launching a silver futures trade, which debuted Thursday, and the other is India deciding to retract its excise tax on gold jewelry.

It goes on to argue that “In today’s markets, especially in the natural resource sector, the smart money is China – with India often being a notable second. So, if price is falling and the smart money remains committed, that’s a simple way of identifying a buying opportunity. And that is clearly the environment we are seeing today, in light of these important news headlines.”

Related Links:

Dow Jones/MarketWatch:  Gold 0.1% higher, ends short of $1,600/oz; silver off 0.2%

Market Oracle:  Gold and silver steady as China spurns euro debt, Greece warned on euro exit

Jesse’s Café Américain:  Accumulation/distribution trends in gold and silver – building the V bottom

Bloomberg:  Goldman stands by gold-rally forecast even as price drops; PIMCO’s Gross says QE3 getting closer as Goldman sees easing

Jim Sinclair:  Time for ‘helicopter money drops‘

Zero Hedge:  How the Fed quietly bought 1,150 S&P points; Marc Faber sees a 1987-like crash approaching

KWN:  Citibank analyst:  Stocks to crater 27%, bonds to rally & gold to remain firm

P. Radomski:  The influence on gold of the general stock market and crude oil

Bullion Vault:  Gold price demand drivers

GATA:  Indian central bank challenged in court to repatriate country’s gold

SafeHaven:  Gold questioning Fed’s effectiveness

WSJ:  Fed foe Ron Paul breakfasts with Bernanke at central bank

The Street:  Ron Paul has a gold ally in the Buffett family

The Victory Report:  Peter Grandich:  Gold and silver get no respect

Reuters:  S & P report:  A $46 trillion perfect credit storm may be brewing

CBS News/Business Insider:  JPMorgan Chase acknowledges $2B trading loss, cites ‘egregious mistakes‘

In analyzing the current “Fickle gold and silver prices,” Mineweb‘s Lawrence Williams concludes “that gold and silver are not through their bull runs yet as the global financial turmoil is far from over.  The current gold (and silver) price hiatus is because many see the Eurozone crisis, which is the most newsworthy at the moment, as deteriorating further, but those fleeing it financially are putting their trust in the US dollar rather than gold.

Given the U.S.’s own economic problems, which are neatly being hidden from public perception in the run-up to this year’s Presidential election, this has to be a pretty shortsighted viewpoint and will surely come to an end before too long.  When it does both gold and silver will likely resume their overall upwards trend – but probably not as rapidly as the major gold and silver bulls would have you believe.”

Related Links:

Reuters:  Gold falls below $1,600 on euro zone uncertainty; silver off 0.8%

GoldMoney:  Market sell-off testing gold bulls

SafeHaven/Casey Research:  Can gold fall forever?; Gold fund manager John Hathaway calls a market bottom

Bloomberg:  Silver forecasters bullish as funds retreat from slump

SilverSeek:  Ted Butler:  Knowing the game

Silver Coins Today:  American Silver Eagle bullion coin sales retreat in April, but still 5th-best ever April

Avery Goodman:  The outlook for precious metals prices

Zero Hedge:  Eric Sprott on CNBC berates Berkshire’s buffoons and says “all markets are manipulated”; Jim Grant: “The Fed owns the stock market“

GATA/Gary North:  Gold has changed overnight, and likely will again; Why civilized people buy gold

Mineweb:  Buying gold on the ‘Roubini Dip‘

USA Gold:  Extraordinary popular delusions and the madness of machines:  Why gold might be setting up for a big move higher

Resource Investor:  The reasons for investing in physical gold

Seeking Alpha:  Gold mining stocks vs. physical gold bullion; Gold/Silver ratio in an uptrend

Jim Rickards/Azizonomics:  Romney doubles down on Obama’s toxic currency policies; Is China a currency manipulator?   

Daily Reckoning/Zero Hedge:  Bill Gross and others call for QE3; Citi’s Buiter on Plan Z: Unleash the helicopter money

Telegraph/Spiegel:  Why the euro is doomed to fall apart: it was an incredibly stupid idea in the first place; New documents shine light on euro birth defects

With renewed calls for more QE, an argument that “Gold Will Continue to Glitter” references the above chart covering the last two decades to point out that “gold prices have surged in the recent past with the surge in monetary base. Therefore, as long as governments continue to print money, gold will trend up.”

And, as economic and financial problems in both the U.S. and the euorozone continue, “the quantitative easing and the surge in gold prices will also remain prolonged. These factors make a strong case for investment in gold. Furthermore, as central banks look to diversify their reserve holdings, gold is one of the best currency choices (as a store of value). Therefore, from a demand perspective, things are expected to remain robust.”

The author concludes that “I would look at accumulating gold at current levels and adding gold to my portfolio on a further correction as well. If the economic scenario in the U.S. worsens the dollar will strengthen in the near term, leading to some additional correction in gold. However, a subsequent quantitative easing will lead to a renewed rally in the precious metal.”

Related Links:

Reuters:  Gold down 2 percent, breaks below $1,600 on euro fears; silver off 1.8%

Gold Scents/Gold Report:  Gold is at or very near, a long-term bottom; Eric Coffin:  It’s this bad because it’s a bottom

Bullion Vault:  Silver at lowest since January, China should offer key support for gold

Bloomberg:  China’s gold imports jump as country may become biggest user

Zero Hedge/MoneyShow.com:  On buying the commodity dip; Pamela Aden:  Silver’s dips are made for buying

Silver Investing News:  Silver contracts coming to Shanghai Futures Exchange

The Street:  Euro crack up not helping gold – yet

SafeHaven/Arabian Money:  Gold and financial preparedness; Why do investors always take such a short-term view on gold?

Dollar Vigilante:  Bill Gates joins what must be “bash gold” week on CNBC

CNBC/GoldSeek:  Warren who?  Gold bugs still think they have the right idea; Warren Buffet vs. gold and silver…and the winner is…

KWN/Forbes:  John Embry – There is a war going on because fiat money is dying; Dollar not doomed but you’re gonna need more of them

Financial Times/Jesse’s Café Américain :  Iran accepts yuan for crude oil; World markets decouple from U.S. prices in oil

The Hill/Dow Jones:  Lawmakers in tug of war over reforming the Fed; House Republicans criticize Fed for congressional lapses

LA Times/Matt Taibbi:  Ron Paul continues delegate offensive, wins big in Nevada, Maine; Is this the most boring election ever?

CNBC:  Forget the presidential candidates – you can stabilize the debt

“It seems all the gold and silver roads are leading to China,” observes a commentary in The Australian about this week’s debut of a silver futures trade on the Shanghai Futures Exchange.

Addressing speculation that “the next few years could see the Chinese dominating the global silver market much as they appear to be doing with the global gold market,” Mineweb‘s Lawrence writes that “Indeed a big inflow of silver into China – a country which has a long association with the metal having had a silver-related currency standard up until the 1930s – is felt by some to be likely to end some of the metal’s price volatility and perhaps end what some see as excessive manipulation of the market through COMEX.”

And while warning that initially silver trading in China could lead to increased volatility, he cites commentators referred to by The Australian who “also say that there is indeed a particular penchant for silver investment in China because retail investors are attracted by the much lower price than that of gold and because of the relatively recent association of the country’s currency with the metal.”

Related Links:

Daily Reckoning:  China buys gold… No matter who’s selling

Reuters:  Gold eases 0.3% as investors digest Europe’s elections; silver off 1.1%

Safehaven/KWN:  Eurozone election hangover; James Turk – Gold & silver bottoming as euro troubles reemerge

GoldSeek/Telegraph:  European ‘austerity’ flames out with elections; Francois Hollande has ten weeks to avert a French bond crisis

CNBC/Resource Investor:  Citi:  Look for a ‘Grexit’ following elections;  Euro-zone breakup: How would this affect precious metals?

Tim Iacono:  Gold and silver prices look for direction, Friday’s rebound reassures

Commodity Online:  India govt rolls back gold duties, may boost domestic demand  

Silver Investing News:  Is silver’s industrial personality leading to changes?

Mineweb:  David Stockman’s investment model – ABCD (anything Bernanke can’t destroy)

Financial Sense:  Why civilized people buy gold and silver

GATA/New York Sun:  Gold is limited government, which is more ‘civilized’ than the alternative; The Munger Games

Alasdair Macleod/LewRockwell.com:  Keynesian vs. Austrian debate hotting up; Lessons from the Paul vs. Paul debate

Zero Hedge:  Reinharts and Rogoff on why the debt overhang matters

FOFOA:  Inflation or hyperinflation?

Washington Post:  The incredible shrinking labor force

The stock market adage of “sell in May and go away” is recast for precious metals in a Seeking Alpha post titled “Buy Gold in May and Go Away,” which argues that “now is a good time to add to your gold and precious metal positions. High debt levels combined with stagnant employment and housing are certainly not the recipe for growth.

As shown in the chart above, if an investor would have purchased gold in May and held it through the end of the year in each of the past 7 years, your average annual return would have been 12.6%.  Not that this should be your main reason for purchasing gold, but it has as much validity as the popular ‘sell in May and go away’ adage.”

Comex gold and silver rose 0.6% and 1.4% respectively following another disappointing payroll report showing that 115,000 jobs were created in March, the lowest number in six months.  And with Wall St. posting its worst week this year, Tim Iacono writes that in many ways, the jobs number “is probably about the worst case scenario for markets as it creates more uncertainty about how much economic growth will slow in the months ahead while giving the Fed all the reasons it needs to simply do nothing, waiting to see what happens as ‘Operation Twist’ winds down in the weeks ahead.”

Related Links:

KWN:  Louise Yamada – Gold and silver at critical points in this cycle

Rick Ackerman:  A wickedly bumpy ride for silver & gold bulls

Trader Dan:  Commodity sector continues to reel

SafeHaven/GoldSeek:  The silver bull market is over?; Precious metals: Don’t want to play anymore?

Zero Hedge:  Berkshire’s Charlie Munger:  Civilized people don’t buy gold

MarketWatch:  “A very robust wall of worry is being built. Eventually, gold will begin to climb it.

Seeking Alpha:  Time for gold bugs to pay attention to the Dow/gold ratio

The Atlantic:  Is gold today’s safest investment?

Hugo Salinas Price:  The gold price: the reds against the blues

Zero Hedge:  David Einhorn:  Only gold is an antidote to the Fed’s destructive “jelly donut policy“; Jim Grant: “The Federal Reserve is the vampire squid of vampire squids”

MarketWatch:  Ron Paul taking end-Fed bill before House subcommittee on Tuesday

Reuters:  Greeks to vent rage in election set to rock shaky eurozone

CSM/Financial Times:  French candidate Hollande’s projected win could change eurozone’s course; Sarkozy’s strange reluctance to play crisis card

Business Week:  Recession hit-Britons smelting the family silver

Bloomberg/Market Oracle:  The violent, scandalous origins of JPMorgan Chase; Keynes, the closet gold bug

Introducing an article on how ETFs may be “the next accident waiting to happen,” Jesse’s Café Américain speculates that “the next trigger event for a major financial crisis” will be ETFs and derivatives.  (Update:  A part 2 has been added)

About ETFs, he cites a “lack of transparent audits from legitimate physical trusts,” and contends that “some of the ETFs, especially in commodities and on the short equity side, appear to be almost fraudulent both in construction and representation, and are often more instruments of manipulation and raw speculation for extracting wealth from the less sophisticated than investment vehicles.” He goes on to describe why, “when the ETFs fail it will be an echo of the market failure of 1929…”

And the author of a Seeking Alpha article on reasons why the price of silver is down for now, writes that “I don’t own the SLV ETF anymore, but I’ve been buying some actual silver – a little at a time – for few years now and will probably continue to do so,” adding that “in many ways, real silver can be a better investment vehicle than an ETF.”

Related Links:

MarketWatch:  Gold off 1.1% after U.S. jobs, services data; silver down 1.7%

Trader Dan:  ECB’s Draghi derails metals, but where did the money flow?

CNN Money/Bloomberg:  ECB leaves rates steady but hints at future cut; Draghi leaves door open for further ECB action as elections loom

Mineweb:  Gold’s quietest 40 days since the financial crisis began

KWN:  Egon von Greyerz – Swiss refiners say “demand for gold is massive“

JSMineSet/Reuters:  Dear Jim, Is this capitulation in the gold markets today?; Gold’s 3-month drop could be basis for fresh uptrend

Road to Roota:  Silver: Big money lays in wait…for the sub-$30 end game

Bullion Street:  Silver rally to hit $50 later this year

Casey Research:  Rick Rule on contrarian speculation

Firstpost:  Why Indians will keep buying gold even at higher prices

Amity Shlaes/Gary North:  Gold standard for all, from nuts to Paul Krugman; Bernanke’s pet peeve: The gold standard

CNBC:  Peter Schiff:  US Treasurys are ‘junk,’ dollar headed for collapse

Alt-Market:  States to use gold and silver as legal tender

Financial Times/GATA:  Norwegians take big broker’s trading algos for an expensive ride

Gallup/NYT:  Poll:  Retirement, slipping farther and farther away

MarketWatch:  Have Americans lost trust in banks? Interest in home safes grows