News and Views

September 30, 2010

Gold to Grow?

With the Gold to Go ATMs set to debut in the U.S. by the end of this year, it’s predicted that “these new coin machines will work to really develop an interest in precious metals among even the most retail of investors. Today, the gold and silver markets are very much an institutional exchange.  Banks and billionaires know the value of gold and silver, but few on Main Street have even given them a chance at a mere percentage of their portfolio.” The Mises blog has more on the gold ATM, which Wall Street Journal’ gold derider, Matt Phillips, sees it as a yet another sell signal. Related Links: MarketWatch:  Gold extends record run as Fed policy sinks dollar Coin News:  One more record for gold, silver prices touch $22 Bloomberg:  Gold/silver ratio drops below 60 for first time since October 2009 Silver Coins Today:  U.S. Mint sales:  Silver coinsContinue Reading
As silver pierces the mainstream, with an ABC News report asking, “Is Silver the New Gold?,” the gold/silver ratio drops to 61, and “Technically, the ratio seems to be aiming for the 50-to-1 area,” according to Hard Assets Investor.  But, “a tumble to that level won’t happen tomorrow, if it happens at all…. A reach to the 50x multiple won’t necessarily be easy, either. There’s some key numbers along the way that need to be punched through.” And as Hinde Capital’s Ben Davies points out that “Within a single week 25 nations have deliberately slashed the values of their currencies,” Fund My Mutual Fund sees “a conundrum… gold and silver continue to rocket for good reasons. No one can find a reason that gold should go down anymore because of what central banks are engaging in. But now everyone is on the same side of the trade (know any goldContinue Reading
September 28, 2010

Fed Up

The Telegraph’s Ambrose Evans-Pritchard apologizes to readers “for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing. My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off deflation, not to create inflation. If the Federal Open Market Committee cannot see the difference, God help America.” And he further extends the mea culpa to “all those hillsmen in Idaho, with their Colt 45s and boxes of krugerrands, who sent furious emails to the Telegraph accusing me of defending a hyperinflating establishment cabal, [you] were right all along. The Fed is indeed out of control.” Related Links: Reuters:  Gold and bonds soar as Fed’s purchases eyed Bloomberg:  Gold advances for fourth session onContinue Reading
September 27, 2010

QE2 the Moon!

After conducting “a rough analysis on how QE2 will reshape the Fed’s balance sheet,” Zero Hedge was “stunned to realize that over the next 6 months the Fed may be the net buyer of nearly $3 trillion in Treasurys, an action which will likely set off a chain of events which could result in rates dropping all the way to zero, stocks surging, and gold (and other precious metals) going from current price levels to well in the 5 digit range.” And, writes the Mad Hedge Fund Trader, “If you had any doubt about what the driver has been for gold’s meteoric rise to $1,300, take a look at the [above] chart showing the spike right at the Fed’s announcement that QE2 was in the cards.” He goes on to suggest that “Peak gold may well be upon us,” calling the current supply “not much when you have the entireContinue Reading
September 25, 2010

Gold Crosses the Line

Silver hit a 30-year high on Friday, and before settling at $1,298, gold briefly topped $1,300, which one analyst called “the line in the sand between bulls and bears.” Asking, “What’s driving $1,300 gold?,” Frank Holmes refers to a Financial Times article that cites “competitive currency devaluation” as possibly the most important driver in precious metals investing. And David Rosenberg predicts that gold “is likely to remain in this secular uptrend for quite a while longer. We’re talking years. We’re still talking $3,000/oz. Gold has made this transition this year away from being a strict commodity towards a role befitting a monetary metal that is no government’s liability.”Continue Reading
September 24, 2010

Precious Meddling?

As a Seeking Alpha post argues that “Gold bulls needn’t fear noise about government confiscating gold,” MarketWatch reports on Thursday’s Energy and Commerce subcommittee hearing on the “Precious Coins and Bullion Disclosure Act.” The hearing included testimony from Goldline’s Scott Carter (above), who defended his company’s practices and explained its advertising strategy, after a New York neurologist (above right) testified that he lost $60,000 in converting his $140,000 IRA into gold coins. The committee’s Web site has video and testimony from the hearing. Related Links: Reuters:  US gold ends up, near $1,300 as data disappoints Marketwatch: Silver back at 30-year high Silver Investing News:  Silver at $21 an ounce: Buy, sell, or hold? Daily Reckoning:  Undervalued silver in a government spending frenzy Coin News:  US Mint sales: Bullion coins robust, silver products rally ChartFacts: Thursday’s economic data supports the case for gold Financial Times: Few obstacles in path of bullionContinue Reading
September 23, 2010

Solar-Charging Silver

In his recent interview with The Gold Report, David Morgan noted that “There’s a big impetus by several governments … to install more green energy. Solar is at the top of that list. Silver plays an important part in that story.” In late June, Bloomberg reported statistics compiled for The Silver Institute, that “Half of silver demand, or 435.1 million ounces, goes into industrial applications including electrical conductors, alloys, solar panels and batteries,” compared to 12 million ounces for gold. The article cited a trade group’s estimate that in Europe, where solar is booming, installations may increase 44 percent this year, and quoted an industrial buyer of silver as saying that “Probably the biggest jump we’ve seen is in the demand for the metal for photovoltaic systems.” And China, in addition to having the world’s “largest solar-powered office building,” recently announced plans for what it’s claiming will be the world’sContinue Reading
September 22, 2010

The Bubble Machine

Playing off of a Forbes‘ blog post headlined ‘Gold defies George Soros bubble talk,’ The Daily Bell points out that “the West is kind of a bubble machine.  Fiat money is forever blowing bubbles of one sort or another and the only way we can avoid said bubbles is to recreate a free-market economy that allows the Invisible Hand to sort through supply and demand. Might there still be bubbles in a truly free-market economy? Perhaps, but they would be mild and regional as they have been in the past. The one thing that the globalization of central banking has succeeded in doing is synchronizing disaster. Today, when one country blows a bubble, you can bet that ‘contagion’ will ensure that others do the same. In a sense of course gold is the anti-bubble, blowing up only after other bubbles have BLOWN up.” Related Links:  Coin News:  Gold prices soarContinue Reading
September 21, 2010

Gold: Steady As It Goes – Up

Given new highs for gold and claims of it being the “ultimate bubble,” a post on the options trading blog, VIX and More, points out that “With such strong convictions and emotions riding on the gold trade, this is the type of environment in which one would expect to find extreme volatility. Instead, the exact opposite has been unfolding.” It offers up the above chart, with the dotted green line representing volatility, to show that “during the last month the 20-day historical volatility in gold has dropped to its lowest level in several years. At the same time, the CBOE’s gold volatility index GVZ, which measures 30-day implied volatility expectations for GLD, has been making all-time lows.” And implying volatility, MarketWatch columnist Peter Brimelow writes about how “famous veteran gold bug” Harry Schultz is currently “fascinated by the possibility that hyperinflation might be triggered quickly, by a sort of globalContinue Reading
September 20, 2010

Mainstream Media Mines Gold

As it’s noted — and cautioned — that gold investing is “starting to hit mainstream media,” with reports last week on both NBC‘s “Nightly News” and ABC‘s “Nightline,” Richard Russell writes that “we’ve already gone through the first psychological phase of the gold bull market, and we’re now deep in the second (usually the longest) phase of a bull market. If my instincts are correct, the third speculative phase in gold lies somewhere ahead. Forget timing for the third phase, it doesn’t matter – somewhere ahead new comers will know the meaning of the phrase, ‘There’s no fever like gold fever.’ Often during the third phase, the item makes more for investors than all their profits through the first and second phase.” Related Links: Nightly Business Report:  Gold and silver shine on Wall Street New York Times:  Wall Street’s engines of profit are slowing down James Turk:  The battle forContinue Reading
While silver closed Friday at its highest price since 1980, and gold scored its fifth weekly advance in the past six weeks, the latest COT report saw “further deterioration in the bullion banks’ short positions in both silver and gold,” reports Ed Steer.  The additional 3,263 net short silver contracts puts the bullion banks at their largest net short position in 12 months.  While “In gold, the bullion banks only increased their net short position by 5,259 contracts, which isn’t a lot in the grand scheme of things.”Continue Reading
September 17, 2010

All In, All Physical

“If you have wealth, the only way you can protect it is with gold and silver assets. There is no other choice,” argued Bob Chapman in his International Forecaster newsletter. Asked by The Gold Report, “How are you protecting yourself with gold and silver?,” Chapman explained: “While I do recommend a few gold stocks, I do not buy stocks. I have no accounts. My family has no accounts. Period. I buy bullion and coins and I do it frequently.  I’m a big believer in both. I do not recommend exchange-traded funds (ETFs) because I do not believe they have gold and silver in the amounts close to 100% of what they’re supposed to be holding. Neither do any of the hedge fund managers because most of them are not getting involved in that area. I think it’s going to end up being a scandal.” Related Links: The Street: Gold pricesContinue Reading