News and Views

In early November, Bart Chilton announced that his 6 1/2-year tenure as a CFTC commissioner would end at the end of this year.  As the only commissioner who publicly expressed concern about gold and silver market manipulation heads for the exits, Bloomberg columnist William Cohan writes that “Chilton leaves behind a sobering message: As we long suspected, Wall Street continues to use every trick in its playbook to do whatever it can to eviscerate numerous post-financial-crisis rules. The arsenal includes high-powered lobbyists who outnumber lawmakers 10-to-1; $1,000-an-hour letter-writing lawyers who gain strength from negotiating over arcana; and the occasional hoodwinking of a president whose knowledge of the ways of finance are close to nil.” … Read More >>> Before President Obama announced last week that he’s nominating Wall Street securities attorney Sharon Bowen to replace Chilton, the New Republic reported that Bowen “has little background in derivatives, commodities or agriculturalContinue Reading
With the Federal Reserve turning 100 on Monday, Wall Street on Parade describes how a “debate” turned into a denunciation of the Fed, when, during a segment on the PBS show, WealthTrack, “two famous stock market historians made the same stunning announcement – that the Fed has decided its job is to push up the stock market.”  The designated Fed naysayer was James Grant (above right), editor & founder of Grant’s Interest Rate Observer. In an interview with Switzerland’s Finanz und Wirtschaft, Grant says that “To me, gold is an investment in the almost certain failure of the PhD-standard in central banking. The gold price is down some 25% this year and gold stocks have been destroyed. In fact, the bear market in gold equities is the only bear market I know of these days. But when the world gets a full-on glance of the new Fed Chairman Yellen andContinue Reading
Following up on Bloomberg‘s late-November exposé on the London gold fix, allegations of gold and silver market manipulation get more mainstream exposure in the news service’s publication of a commentary headlined, “How to Keep Banks From Rigging Gold Prices.” Among the evidence cited by author Rosa Abrantes-Metz, is research by commodity analyst Dimitri Speck, from his new book, “The Gold Cartel.” She describes it as combining “minute-by-minute data from most of 1993 through 2012 to show how gold prices move on an average day. He finds that the spot price of gold tends to drop sharply around the London evening fixing (10 a.m. New York time). A similar, if less pronounced, drop in price occurs around the London morning fixing. The same daily declines can be seen in silver prices from 1998 through 2012.” (See above chart) Abrantes-Metz finds it “extremely odd that the prices of gold and silver are stillContinue Reading
December 20, 2013

Gold Be Gone … To China

With gold and silver off 1.8% and 2.7% respectively on Thursday, Jesse’s Café Américain addresses commentary by a Bloomberg analyst, who said that London’s gold vaults are “virtually empty.“ And went on to explain that the “gold had been transferred out of London, 26 million ounces, and its gone to Switzerland, where its been recast into a higher grade and shipped off to Hong Kong. And then into China, never to return.” And in an interview with, Café proprietor Jesse further discusses the shift from West to East, and he’s also asked how concerned should gold and silver investors be about the correction in the metals, which has lasted more than two years:  “Corrections are all a part of a bull market. I would suggest that people not hold over large positions or use leverage if they are worrying. That is often a sign that they have not comeContinue Reading
Despite initial volatility after the Fed announced its decision to taper $10 billion per month beginning in January, equally split between long-term treasury bonds and mortgage-backed securities, gold and silver were down just slightly in after-hours trading. A Barron’s blog post suggests that prices weren’t plunging because “the dreaded taper is finally here, so some uncertainty is lifting,” and that the move “came with dovish commentary on interest rates.” “The reason gold is doing well because the Fed is all but promising to be behind the curve in raising interest rates when inflation does pick up,” according to portfolio manager and frequent precious metals commentator, Axel Merk, quoted by Reuters.  And pointing out that a $10 billion taper, “was not enough to trigger any kind of sell off for gold,” one analyst told MarketWatch, “we think that gold has already priced in all this tapering talk and the big downwardContinue Reading
Citing a recent assessment by a Deutsche Bank analyst, “The curveball for 2014 – A U.S. recession,” Gonzalo Lira asks, “What is there’s a recession in 2014?,” and looks at how various asset classes might perform.  He argues that “The only store of value will be commodities. Not just precious metals, but all commodities: Industrials, agros, and fossil fuels. It will simply make more sense for the investment community to rotate out of iffy stocks and dodgy bonds, and rotate into physical commodities. Why? Because there is too much liquidity. If there is such a rotation from equities and bonds into commodities, then the prices of food and transportation will rise—precipitously. Thus we will have inflation, possibly severe inflation. But the Fed will be loathe to rein in inflation via interest rate hikes.” See also: Reuters:  Nobel economics winner Fama says risk of global recession in 2014 GoldSeek:  Gold &Continue Reading
Monday’s gains in Comex futures of 2.5% for silver and 0.8% for gold were attributed to “short-covering” in advance of the Federal Reserve’s FOMC meeting which begins on Tuesday, as well as “a vote for no taper” coming out of the meeting.  “Should tapering not be announced at the December meeting,” according to one analyst quoted by Reuters, “given the elevated speculative positioning to the short side, there is scope for a short-covering rally.” And respected technical analyst Tom DeMark, who has been issuing some dire warnings about the stock market, reiterates those in the above video, while also telling Rick Santelli that a bottom in gold “is going to occur with the tax-loss selling this year,” and, “we’re looking for a huge move in gold beginning next year.” See also: WSJ:  The charts are crying for a gold bottom, again Jesse’s Café Américain:  FOMC meeting this week – NoContinue Reading
In what is heralded as “a brilliant study of the gold market,” Tocqueville Gold Fund’s John Hathaway looks at the “Big Picture in Gold as We Head into 2014” and concludes with two words of advice, get physical: “It seems to us that restoration of sustainable fiscal order remains a long shot and that money printing, thought by most to be only an emergency measure, will become the norm. Our negative view on the prospects for fiat currency has not been invalidated by the steep two year decline in gold price. When the market reverses, the diminished physical anchor to paper claims, concerns over title and encumbrances on central bank bullion, and worries over the drift of public policy will drive liquid capital into gold. However, this time around, it seems to us that the major recipient of flows will be the physical metal itself. Holders of paper claims toContinue Reading
December 13, 2013

Bubble Trouble?

Spiegel:  “Central banks around the world are pumping trillions into the economy. The goal is to stimulate growth, but their actions are also driving up prices in the real estate and equities markets. The question is no longer whether there will be a crash, but when.”Continue Reading
As a former gold bear turns bullish — see above interview — gold and silver ended down 2% and 3.9% respectively on Thursday.  One explanation given was profit taking, while positive retail sales data and a likely U.S. budget deal were also seen increasing the prospects that the Fed will pull the taper trigger at next week’s FOMC meeting. Bloomberg quotes one analyst as saying that “it looks plausible that gold eases back towards $1,220 as we move toward the Fed decision. However, looking at next year, we are not so overly bearish as interest rates will continue to be a record low and QE will continue for a while even if it will be gradually reduced.”  This as MarketWatch‘s Matthwew Lynn argues that “QE and zero rates are going to be around for a lot longer than most investors have yet realized.” See also: Zero Hedge:  The complete, unabridgedContinue Reading
Following up on South Korean news reports that North Korea has begun to sell “large amounts” of gold to China to deal with a worsening economic crisis, and has uncharacteristically tapped into its reserves for the sales, Mineweb‘s Lawrence Williams points out that “this could be another indicator that China is building reserves without reporting this to the IMF.”  As of 2007, North Korea, which doesn’t report its gold holdings to the IMF, was thought to have reserves of around 2,000 tonnes, which would definitely place it in the top ten of officially reported holdings. A MarketWatch blog post on the reports notes that while North Korea “has vast mineral deposits and is estimated to have sizeable gold reserves…. it lacks electricity and equipment to mine the minerals, said Choi Kyung-soo, president of North Korea Resources Institute in Seoul, in a research paper published last year.” See an article summarizingContinue Reading