News and Views

April 21, 2010

Shareholder’s Turn?

Goldman Sachs’ general co-counsel said on Tuesday that the firm was “somewhat surprised” by the SEC suit since “no one had told us in advance.”  And while that may be technically true, ProPublica, in a blog post headlined “Charges aside, what about Goldman’s nondisclosure of a potential lawsuit?,” points out that while it “has known about the potential for civil charges since July 2009, when the SEC first gave the bank a warning known as a Wells notice, Goldman Sachs made no mention to shareholders of the possibility of legal action against the firm.” More on Goldman & Gold: Barrons: Investors Unimpressed as the Defense Makes Its Case Baseline Scenario: The Best Thing I Have Read on SEC-Goldman (So Far) Numismaster: Gold and Goldman Sachs Commodity Online: SEC Suit Against Goldman Could Spur Gold Price Business Insider: Panic Over Goldman, China, And Europe Will Push Gold Higher MarketWatch: Hard toContinue Reading
April 20, 2010

Get Physical!

As a senior Chinese government researcher is quoted as recommending that his “country consider buying some more gold,” Marc Faber suggests that “if gold went lower than U.S. $1,050, the Chinese would come in and buy some. I think they’re waiting for lower prices. But honestly … I own my gold and I will never sell it, especially when I see clowns like Ben Bernanke, Larry Summers, Tim Geithner… When I’m looking at all these characters in government, I want to own physical gold.” And making a pitch for his new physical gold trust, Eric Sprott nonetheless tells CNBC that he thinks “silver will act better than gold.” Goldman News & Commentary: Reuters/Gold drops but off lows; eyes Goldman fallout The Grandich Letter/Gold update Kitco/Investors cautious on gold, assess Goldman fallout Commodity Online/Gold prices to soar on Goldman Sachs crisis On Point/Goldman Sachs vs. S.E.C. Reuters/SEC tries to ride GoldmanContinue Reading
April 19, 2010

Withdrawal Pains

In his weekly interview with King World News, Ted Butler says that some 18 million ounces in silver deposits have been withdrawn from the SLV since early March, twice the amount ever withdrawn over the same time period, which “could be very bullish because it may be signaling the long anticipated silver shortage is at hand.”  Scroll down in this article to see a graph and more on “SLV negative money flow.” He also recommends an interview with Jim Rickards, who confirms that the London Bullion Market Association “is as far away from transparent as you can get,” and that the much-reviled COMEX, which Butler blames for last Friday’s takedown, “is like Mother Theresa” compared to the LBMA. And Butler predicts that the SEC’s move against Goldman Sachs is “going to be a real cage rattler on this financial reform battle that’s taking place in Washington,” and  also “might giveContinue Reading
April 17, 2010

Goldman Sacked?

Gold and silver prices tumbled on Friday, dropping 2% and 4% respectively after the SEC filed a fraud suit against Goldman Sachs and a vice president at the firm, for what was described as “one of the most devious and brilliant crimes of the last decade.” But GotGoldReport finds that following news of the suit, “COMEX commercials strongly increased their short bets for both gold and silver, but less than we expected,” and the charges, which may be a boon for physical gold and silver, also prompted one commentator to suggest that it’s “Time to drop the incredulity over fraud in the gold and silver markets.”Continue Reading
April 16, 2010

Golden Grifters

The Examiner, an independent weekly in Southeast Texas, has been investigating “gold-buying carpetbaggers” that set up shop in local hotels, “offering only pennies on the dollar” for gold, silver and collectibles. It’s reporting on “The Treasure Hunters Roadshow,” is lauded in an article on The Awl web site that delves deeper into the national scope of the operation and the “Small-Town Newspaper Grift” that it’s running. And Las Vegas Weekly goes behind the scenes at Gold & Silver Pawn, the setting for “Pawn Stars,” The History Channel‘s highest-rated show ever.Continue Reading
April 15, 2010

Quantifiably Insane?

A Seeking Alpha post describes how automated trading strategies are expanding from equity markets to commodities:  “So put the computers into the hands of commodity speculators, stir in a little leverage and see how the big trading desks pile into similar trades faster and with bigger positions.”  More on how “Commodities traders increasingly adopt algorithms,” from Wall Street & Technology magazine. Read the first two chapters and a Wall Street Journal excerpt from “The Quants:  How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It,” and listen to an interview with the author and a quant profiled in the book.Continue Reading
Ted Butler, in a wide-ranging interview with Investment Rarities’ President Jim Cook, reviews the March 25th CFTC hearing and what he sees going forward, discusses his private meeting with CFTC regulators, and offers up his views on silver and gold, including:  “I can see gold rising in price 20% or so, under the right circumstances, say up to $1,300.  I can see silver easily rising 100% to 200%, to $35 or $70.  In almost any scenario, I can see silver outperforming gold by five or ten times.  With silver you are going to get the biggest bang for your investment dollar.”Continue Reading
April 13, 2010

In Silver Eagles We Trust

Asking “Why Are Silver Sales Soaring?,” Casey Research’s Jeff Clark contrasts the sales trends for gold and silver bullion coins, and notes that “we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles,” which are on a pace to sell 36 million this year. Beyond the realm of the coins, silver gets “Trade of the Year” nods, here, and an earlier one here, and according to a Commodity Online report:  “Silver remains very undervalued vis-à-vis gold and remains a contrarian play with little or no media coverage and little or no retail investors having any allocation to silver whatsoever.”Continue Reading
April 12, 2010

Tabloid Press

Following complaints that the mainstream media was suppressing coverage of CFTC whistleblower Andrew Maguire, the New York Post published his allegations that JPMorgan Chase and HSBC are manipulating the silver and gold markets, two days after a columnist for Australia’s Melbourne Herald Sun addressed the issue in a column headlined “More Bull that Bullion.”  Both of the tabloids pressing the story are owned by Rupert Murdoch’s NewsCorp, as of course is the Wall Street Journal, which has also been criticized for giving it short shrift. The Post’ article notes commodities analyst Jeffrey Christian’s testimony to the CFTC, during which he said that precious metals “trade in the multiples of a hundred times the underlying physical.” He tried to clarify that statement in a Saturday interview with Financial Sense, which was met with both support and derision.Continue Reading
April 10, 2010

Has JPMorgan Shorted Out?

Following what he calls “a very exciting week” for gold and silver, Ted Butler speaks of a not unexpected increase in the commercial net short position for both, especially gold. But he says that “for the first time that I can recall, on a very strong rally, and on a very strong increase in total commercial short position, JPMorgan Chase has not added any contracts to the short side…. a welcome sign that either the CFTC whispered in their ear, or they wised up on their own and realized that they’re very vulnerable on this position, but them not going short is potentially a game changer.” Butler also reiterates his “A Time to Act” message about the importance of writing to the CFTC: “Let ’em know what’s on your mind about concentration on the short side, manipulation and position limits.  Not to speak up … when they’re asking you, it’sContinue Reading
April 9, 2010

Under Ground Economy

Gold exports have helped Nevada weather the economic storm, with more than one-half of the state’s reported $5.67 billion in 2009 exports coming from precious stones and metals.  Nevada is the country’s leading gold producer and ranks number two in silver. And in an industry update, Mineweb reports on “The strange, and stranger, world of gold digging.”Continue Reading
April 8, 2010

Writing a Wrong

In an article calling on silver and gold investors to write to the CFTC so that their comments can be included in the public record, Ted Butler also challenges the notion that there are 100 ounces of paper gold issued for every ounce of real gold, arguing that “The evidence indicates this is simply not true,” while calculating “that there are more paper ounces of silver in the world than silver bullion; but not by 100 times, maybe by 1 to 3 times.” Nonetheless, a visit to Canada’s only bullion bank gold vault, finds it to be “practically empty.”Continue Reading