24 January 2012
Gold and Silver advance/Euro breaks to the upside/No Greek deal
Good evening Ladies and Gentlemen:
Today's commentary is will short as I have arrived home late today.
The price of gold rose by $14.30 to $1678. Silver also rose by 59 cents to $32.24.
I would like to caution you that we have the FOMC meeting results on Wednesday and Thursday is the dreaded options expiry. So be careful as our bankers surely raid around these events.
Let us head over to the comex and assess trading, inventory movements and of course amounts of gold and silver standing.
The total gold comex OI fell by 2833 contracts from 441,320 to 438,487. Because gold had a good day on Friday we must have seen some liquidations probably by our banker friends. The front options expiry month of January saw its OI fall from 53 to 42 for a loss of 11 contracts. We had 11 delivery notices on Friday so we neither gained nor lost any gold and thus no cash settlements. The next big delivery month for gold is next week as first day notice is next Tuesday the 31st of January. Here the OI fell from 156,621 to 148,308 and this movement to a futures month is on schedule. Nothing earth shattering here. The estimated volume at the gold comex came in at 147,018 which is very mild. The confirmed volume on Friday with a big rise in gold came in at 153,683 which is also tame. Due to the confiscation with respect to the MF GLobal fiasco fewer players are playing the comex casino.
The total silver comex OI rose in contrast to gold. The new Oi rests tonight at 104,406. In gold we had liquidation but in silver we had accumulation of the metal by stronger hands. The front options expiry month of January saw its OI fall from 152 to 108 for a loss of only 44 contracts despite 114 delivery notices on Friday. We thus gained 70 contracts of additional silver standing (350,000 oz) and lost nothing to cash settlements. The next big delivery month is March and here the OI rose from 51,351 to 53,024. We are still quite away from first day notice which is Feb 28.2012 for March delivery. The estimated volume at the silver comex was very light at 42,910. The confirmed volume on Friday was also light at 46,146.
Exposing Silver Mythology, Part I
Written by Jeff Nielson Monday, 23 January 2012 00:12
Advanced economic analysis involves high-level mathematics at least as complex as the realms of physics or engineering, accompanied by equally convoluted jargon. As a result, it is virtually incomprehensible to the ordinary person.
Conversely, the basic principles of economics are very straightforward. Indeed they could be summarized as little more than a combination of common sense and simple arithmetic. As a result, fundamental economic analysis is highly accessible to the ordinary person – because of its relative simplicity.
What then are we to make of the fact that the self-described (mainstream) “experts” on the silver market; the quasi-official sources for data on the silver market; and the primary regulator of the silver market all regularly and consistently demonstrate complete ignorance of even the most elementary of economic principles? Are we to attribute this to gross incompetence, inherent bias, or an intentional attempt to deceive?
I will leave it up to readers to reach their own conclusions. This piece will simply lay out the positions of these individuals and entities (past and present), lay out what little reliable data is available to us; and then apply the simple, common sense principles of economics to this data. It will focus on the three most basic aspects of any market: supply, demand, and inventories.
First, however, I will refer readers to some previous, elementary economic analysis. As I established with simple numbers (and logic), in any market shorting always “consumes” while investing always “conserves”. In other words, in any market which is dominated by shorting we will see a substantial increase in consumption, and (over time) a radical decline in inventories/stockpiles. On the other hand, in any market dominated by investors (who are invariably mis-labeled as “speculators”), we will see consumption decline and inventories swell – due to the rising prices generated by increased investor-buying.
Meanwhile, the entities/individuals mentioned previously do not merely regularly engage in analysis which is wildly erroneous, but in many cases is totally perverse. It is with respect to this last point where it becomes more difficult to ascribe this behavior to mere incompetence and rather more likely that there is some degree of malice involved.
Advanced economic analysis involves high-level mathematics at least as complex as the realms of physics or engineering, accompanied by equally convoluted jargon. As a result, it is virtually incomprehensible to the ordinary person.
Conversely, the basic principles of economics are very straightforward. Indeed they could be summarized as little more than a combination of common sense and simple arithmetic. As a result, fundamental economic analysis is highly accessible to the ordinary person – because of its relative simplicity.
What then are we to make of the fact that the self-described (mainstream) “experts” on the silver market; the quasi-official sources for data on the silver market; and the primary regulator of the silver market all regularly and consistently demonstrate complete ignorance of even the most elementary of economic principles? Are we to attribute this to gross incompetence, inherent bias, or an intentional attempt to deceive?
I will leave it up to readers to reach their own conclusions. This piece will simply lay out the positions of these individuals and entities (past and present), lay out what little reliable data is available to us; and then apply the simple, common sense principles of economics to this data. It will focus on the three most basic aspects of any market: supply, demand, and inventories.
First, however, I will refer readers to some previous, elementary economic analysis. As I established with simple numbers (and logic), in any market shorting always “consumes” while investing always “conserves”. In other words, in any market which is dominated by shorting we will see a substantial increase in consumption, and (over time) a radical decline in inventories/stockpiles. On the other hand, in any market dominated by investors (who are invariably mis-labeled as “speculators”), we will see consumption decline and inventories swell – due to the rising prices generated by increased investor-buying.
Meanwhile, the entities/individuals mentioned previously do not merely regularly engage in analysis which is wildly erroneous, but in many cases is totally perverse. It is with respect to this last point where it becomes more difficult to ascribe this behavior to mere incompetence and rather more likely that there is some degree of malice involved.
SilverDoctors: Japan Gold Buying on TOCOM Again Supports
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SilverDoctors: S&P Warns Greek Event Would Qualify as a Default
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Exclusive – Marcus Grubb: “Gold Becoming More and More A Part of The Fabric of The [Global] Financial System”
January 23, 2012 | By Tekoa Da Silva |
I had the spectacular opportunity last week to speak with Marcus Grubb, Managing Director of Investment with the World Gold Council. It was an exciting interview to say the least, as the World Gold Council is the world’s preeminent gold organization whose member companies represent nearly 70% of global gold production.
During the interview, Marcus shared his thoughts on the changing global perception of gold by investors, governments, and central banks, efforts by the World Gold Council to catalyze global gold demand and delivery systems, as well as the future of gold in the world’s financial system.
Beginning the discussion with the mandate of the World Gold Council, Marcus said,“The World Gold Council is the market development organization for the world gold industry. It represents the mining producers; something close to 70% of mine production is represented by members of the World Gold Council…We have programs to promote gold demand on a worldwide basis, we produce research on the gold market, and we also invest in developing and creating new channels and new products to make gold more accessible, whether it be in jewelry, investment, technology, and we also speak to and lobby on official use of gold and communicate regularly with the central banks.”
I had the spectacular opportunity last week to speak with Marcus Grubb, Managing Director of Investment with the World Gold Council. It was an exciting interview to say the least, as the World Gold Council is the world’s preeminent gold organization whose member companies represent nearly 70% of global gold production.During the interview, Marcus shared his thoughts on the changing global perception of gold by investors, governments, and central banks, efforts by the World Gold Council to catalyze global gold demand and delivery systems, as well as the future of gold in the world’s financial system.
Beginning the discussion with the mandate of the World Gold Council, Marcus said,“The World Gold Council is the market development organization for the world gold industry. It represents the mining producers; something close to 70% of mine production is represented by members of the World Gold Council…We have programs to promote gold demand on a worldwide basis, we produce research on the gold market, and we also invest in developing and creating new channels and new products to make gold more accessible, whether it be in jewelry, investment, technology, and we also speak to and lobby on official use of gold and communicate regularly with the central banks.”QE3 may come in April, says Credit Suisse
Source: BI-ME with Bloomberg , Author: Posted by Bi-ME staff
Posted: Tue January 24, 2012 11:35 am
INTERNATIONAL. The Federal Reserve may implement a third round of quantitative easing this spring to bolster the economy, according to Credit Suisse Group AG’s Ira Jersey.
“We do think the Fed is going to do another round of asset purchases later in the quarter, probably aiming for April,” Jersey, director of U.S. rates strategy at Credit Suisse in New York, said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “We are growing, we just don’t feel prosperous. It is a part of the job of the Fed to assure prosperity, one of the ways to do that is to kick- start housing,”
The policy-making Federal Open Market Committee meets January 24-25. The central bank is forecast to keep its target for the federal funds rate at zero to 0.25 percent. The target has been at that level since December 2008 and the Fed has pledge to keep it there until mid-2013.
The central bank has purchased US$2.3 trillion of mortgage and government bonds in two rounds of so-called QE. In September, it announced plans to sell US$400 billion of short-term debt and use the proceeds to buy an equal amount of longer- maturity securities, in a program as nicknamed Operation Twist after a similar action in 1961 designed to contain borrowing costs for companies and consumers.
India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned
DEBKAfile Exclusive Report January 23, 2012, 5:57 PM (GMT+02:00)
India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, debkafile's intelligence and Iranian sources report exclusively. Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran's total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.
By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank's assets and the oil embargo which the European Union's foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran's oil exports.
The vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.
India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, debkafile's intelligence and Iranian sources report exclusively. Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran's total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.
By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank's assets and the oil embargo which the European Union's foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran's oil exports.
The vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.
$58-60 silver price by September says Dubai silver trader
Pop down to the Old Gold Souk in Deira, part of the modern city of Dubai and the hottest selling item is a 1kg bar of silver these days.
Karachi Jewellers told ArabianMoney yesterday they are selling 600 to 700 of these $1,300 bars each month with a 4.1 per cent profit margin.
‘We get a lot of passing tourists who buy 1kg silver bars. I was born in Dubai and spent most of my professional life in London but business is better here now. Even a modest shop in this souk does well.’
Karachi Jewellers told ArabianMoney yesterday they are selling 600 to 700 of these $1,300 bars each month with a 4.1 per cent profit margin.
More profitable than gold
‘It is far more profitable to trade silver than gold where the margin is much smaller,’ said director Ejaz Ilyas in a video to be broadcast on this website tomorrow. ‘We get a lot of passing tourists who buy 1kg silver bars. I was born in Dubai and spent most of my professional life in London but business is better here now. Even a modest shop in this souk does well.’
More QE on the Way
By Scott Silva
Editor, The Gold Speculator
Editor, The Gold Speculator
There is an old saying around Wall Street: “So goes January, so goes the year.” Many traders believe that if the stock market is up in January, then the stock market will finish for the year in the black. Actually, there is some truth to the old saying. Data collected on the S&P 500 over the 65 year period of 1940-2004 show that the broad market closed higher for the year 69% of the time when stocks were up in January. Well, that’s better than flipping a coin, but it is hardly a basis for a successful trading strategy.
Fortunes are made by selecting the best investment compared to others. We have seen, for example, in 2011, stocks fared poorly compared to precious metals, investors in Treasurys lost capital and real estate values continued to decline. Many investors simply gave up and retreated to cash, which turned out to be a losing proposition as inflation cut into purchasing power of every dollar stashed away.
But there seems to be a change in sentiment in the air now. Despite massive debt, political gridlock, numbing high unemployment and turmoil abroad, there are some faint signs of optimism. The manufacturing indices have ticked up a bit, productivity has improved and even wages have inched up a bit. Consumer confidence is improving, and corporate profits may bring good news as the earnings season unfolds.
Even the Fed appears to be more optimistic. Last week, the Fed signaled it would hold off on new bond buying (QE3) for now, even though it trimmed its estimates for GDP growth for the New Year.
But not everyone is so sanguine about Fed restraint. Most traders and some economists believe the Fed will step in with another round of Quantitative Easing (QE3) in the first half of 2012. This round would be huge, as much as $1 Trillion and targeted to support the ailing housing market. Under QE3, the Fed would purchase Mortgage Backed Securities (MBS), the derivative instruments that bundle thousands of home mortgages into a single, collateralized package. Many MBS’s were considered “toxic” assets because they contained subprime mortgages that defaulted, making them very difficult to price in secondary markets. When enough MBS’s failed to fetch a bid, mark-to-market rules rendered them worthless, which destroyed many bank balance sheets and created the financial meltdown of 2008.
Silver Sales Up As Supply Slips
For the first time in history, Silver Eagle & Maple Leaf sales will surpass domestic silver production in the U.S. and Canada in 2011
Steve St. Angelo| January 23, 2012 - 4:52pm
The demand for American Silver Eagles and Canadian Maple Leaf coins has increased tremendously over the past several years. 2011 will be the first year in which official coin sales will surpass domestic silver production in both countries.
Even though each country has seen declines in their domestic silver production over the past decade, U.S. silver production declined a whopping 30% yoy (year over year) in October. According to the USGS in their most recent Silver Mineral Industry Survey, silver production fell to 81,400 kilograms in October— compared to 117,000 kilograms the same time last year.
Steve St. Angelo| January 23, 2012 - 4:52pm
The demand for American Silver Eagles and Canadian Maple Leaf coins has increased tremendously over the past several years. 2011 will be the first year in which official coin sales will surpass domestic silver production in both countries.
Even though each country has seen declines in their domestic silver production over the past decade, U.S. silver production declined a whopping 30% yoy (year over year) in October. According to the USGS in their most recent Silver Mineral Industry Survey, silver production fell to 81,400 kilograms in October— compared to 117,000 kilograms the same time last year.
China tiptoes to petrodollar recycling - China & UAE skips the US dollar and trade in Yuan
The currency swap agreement between China and the United Arab Emirates [UAE] signed during Premier Wen Jiabao’s tour of the Persian Gulf region ending today, will raise eyebrows in the western capitals, especially London and Washington. The list of countries with which China has such deals is slowly and steadily lengthening and this is the first such deal with a Gulf Cooperation Council [GCC] state.
The deal with the UAE is worth $5.5 billion — bilateral trade was $36 billion last year with Chinese exports accounting for two-thirds — and aims at “strengthening bilateral financial cooperation, promoting trade and investments and jointly safeguarding regional financial stability”, according to the Chinese central bank. China is, in essence, providing ’seed money’ so that businessmen wouldn’t need to convert every transaction into dollars, thereby lowering the foreign exchange costs.
The cool reasoning here is practical convenience but its shadows inevitably fall on other domains. Clearly, the Middle East is being ’sensitized’ about the renminbi’s role. To be kept as reserve currency in the UAE vaults enhances renminbi’s prestige. For the UAE, keeping the mighty yuan is one of the safest thing they ever did in the world of high finance, as the appreciation of the Chinese currency in value is a near-certain happening in the future.
Beyond all that, the swap deal calls attention to China’s rapidly-growing economic links with the GCC region. It is a political statement of intent by China to boost ties with the UAE, which has been a ‘pocket borough’ of Britain, historically, in the Middle East. From the dhows, they are calling, ‘Yo, ho, Chinese are coming!’
The deal with the UAE is worth $5.5 billion — bilateral trade was $36 billion last year with Chinese exports accounting for two-thirds — and aims at “strengthening bilateral financial cooperation, promoting trade and investments and jointly safeguarding regional financial stability”, according to the Chinese central bank. China is, in essence, providing ’seed money’ so that businessmen wouldn’t need to convert every transaction into dollars, thereby lowering the foreign exchange costs.
The cool reasoning here is practical convenience but its shadows inevitably fall on other domains. Clearly, the Middle East is being ’sensitized’ about the renminbi’s role. To be kept as reserve currency in the UAE vaults enhances renminbi’s prestige. For the UAE, keeping the mighty yuan is one of the safest thing they ever did in the world of high finance, as the appreciation of the Chinese currency in value is a near-certain happening in the future.
Beyond all that, the swap deal calls attention to China’s rapidly-growing economic links with the GCC region. It is a political statement of intent by China to boost ties with the UAE, which has been a ‘pocket borough’ of Britain, historically, in the Middle East. From the dhows, they are calling, ‘Yo, ho, Chinese are coming!’
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