Gold demand plunges 29% in Q1
NEW DELHI: High gold prices coupled with the three-week strike by jewellers has resulted in a sharp fall in purchase of the yellow metal during the first quarter, with sales falling nearly 29% to a little over 200 tonnes during January-March, 2012.
While housewives are deferring purchase of jewellery, even the savvy investors, who prefer to have the metal in their investment portfolio, seem to have given up, thanks to high prices. As a result, jewellery sales were down 19% during the quarter, while the demand for coins and bars was down by nearly half to 55 tonnes, data released by the World Gold Council (WGC) showed.
“Weakness and volatility in the rupee resulted in elevated local prices, while consumers struggled to digest a rise in import taxes on gold and the introduction of an excise duty on gold jewellery, which prompted jewellers country-wide to strike,” the agency said in a report, adding that the demand in terms of value for jewellery increased by 10% in the quarter to a record high of Rs 41,480 crore.
Although WGC seemed to suggest the strike for the fall in sales, where large retailers such as Gitanjali and Tanishq stayed away, jewellers said shops now wear a deserted look as buyers are waiting for prices to fall.
In India, gold prices are off their peak of near Rs 30,000 per 10 grams seen in early May, but they are still around 28% higher than a year ago. In Delhi, the yellow metal fell by Rs 100 to a five-week low of Rs 28,440 per 10 grams, while it lost around Rs 165 to close at Rs 27,940. A bulk of the price rise in the domestic market is on account of a weaker rupee, which has lost nearly 21% against dollar over the past 12 months and closed at 54.49 on Thursday. During this period, gold gained nearly 6% and was trading at $1,575 an ounce internationally, according to data available with Bloomberg. WGC said global demand for gold was down 5% in the first quarter, essentially due to higher prices.
Most Popular Gold and Silver Coins and Bars
(JH MINT Sales and Purchase Volume Data)
Silver Stock Report
by Jason Hommel, May 18th, 2012
Here’s the link to tables of JH MINT Sales data without commentary.
http://jhmint.com/reports.html
People who are ready to buy silver and gold often ask us, “Which should I buy?” and “What’s the most popular?” It’s the one ounce silver round! It’s the clear winner.
The sales volume data shows what’s popular, and by how much. To my knowledge, no other bullion dealer has published such data ever. Thus, this is very important industry data. It should be linked, and discussed and cross referenced by those who would comment on the physical bullion market.
The data reveals much. One of my favorite points is that it exposes a lot of fraud.
Don’t ever believe it when fraudsters who vault your bullion in the form of 1000 oz. bars, claim that one ounce rounds are not popular, or that it’s “too difficult” or “too costly” to manufacture these popular silver products.
Note, the data covers the period from August 2010 to April 2012, which is 1.75 years, or a year and 9 months.
We sold a total of $33.9 million, and bought a total of $13 million worth of silver and gold from the public. We have excluded purchases from wholesalers, or sales to refiners, which would have offset the difference, and would have helped to balance the numbers. So, the numbers reflect what the public is buying and selling and doing and choosing to do, not what dealers buy or sell or have to do to serve the public demand.
Overall, it’s important to note that silver one ounce rounds are the most popular item, both in sales and purchases. Since they are the most popular of purchases as well, this says that silver one ounce rounds were the most popular item of the last ten to twenty years. Since sales of silver one ounce rounds were 23.6% of all sales, and purchases were 11.6% of all purchases, this says that they are only growing in popularity. We didn’t sell “twice as many as we bought”, we really sold $8 million worth of one oz. rounds, while we bought $1.5 million, which is 5.3 times more. To me, that suggests that one oz. rounds are 5.3 times more popular now (over the last two years), than they were “historically”.
Every now and then, people will sell the 100 oz. silver bars, or sell gold coins, just to convert into one ounce rounds, as people are growing in their awareness of the need to have a fungible, popular, barterable unit of tradable precious metal.
I believe this is a good trend. It shows the growing awareness of the importance of fungibility, and it is helping the silver one ounce round to gain that fungibility that comes with being the most common unit of trade.
The sales data is showing that silver one ounce rounds are “becoming money”.
FDIC Ponzi
“The Truth Gets Out Eventually”
zerohedge.com / by Tyler Durden / May 18, 2012
Some look at today’s FaceBook IPO flop, the ongoing market rout, and the situation in Europe with disenchantment and disappointment. We, on the other hand, view it with hope: because more than anything, the events of the past few days show that the truth is getting out – the truth that capital markets simply can not exist under the authoritarian rule of central planners, the truth that the stock market is a casino in which the best one can hope for a quick flip, and finally the truth that our entire socio-economic regime, whose existence has been predicated by borrowing from the uncreated wealth of the future, and where accumulated debt could be wiped out at the flip of a switch if things go wrong in the process obliterating the welfare of billions (of less than 1%ers), is one big lie.
We believe that hope is what SocGen’s Dylan Grice is what he has in mind when he penned the following conclusion to his most recent piece: La Grande Illusion.
JPM’s CIO Loss Widens to $5 Billion
silverdoctors.com / May 18, 2012
Last weekend we advised SD readers that our sources had informed us that JPMorgan’s derivatives losses sustained by their CIO desk were actually $100 Billion, not the $2 Billion admitted by Jamie Dimon to investors.
Well, one week later, the MSM (WSJ) is now reporting that JPM’s CIO has now lost $5 billion.
Perhaps more interesting, the WSJ states that Jamie Dimon personally approved the delta-hedging of its interest rate swaps positions which has resulted in the FUBAR derivatives losses for JPM.
So lets get this straight. The Big Cahuna who approved the strategy gets a $23 million bonus, and reappointed as CEO by shareholders, while Iksil and boss Achilles who implemented the trade for Dimon get shown the door have The Morgue attempt to claw-back their bonuses?
The US mega-bank JPMorgan Chase & Co loss from derivatives trading may widen to 5 billion dollars, the Wall Street Journal reported on Friday. CEO Jamie Dimon personally approved the strategy that led to the trades, without monitoring how they were executed, the newspaper said.
JPMorgan last week announced a 2 billion dollars trading loss on synthetic credit products, or derivatives tied to credit performance. Dimon said the transactions, intended to manage risk, were “egregious” failures by the bank’s chief investment office. JPMorgan has said the amount could increase by 1 billion or more as it winds down the positions.
Gerald Celente – Morning news with Tony Cruise – May 16, 2012
The T Report: Corporate Bond Chaos, ETF’s, and JPM’s “additional losses”
tfmarketadvisors.com / by tchirp / May 18, 2012
Corporate bonds in the U.S. took a beating in the past 48 hours. The high yield market, which had been spared much of the carnage seen in the HY CDS markets, finally succumbed.
This chart is key for a couple of reasons. First it shows that the 3 point drop this week and the 2 point drop in the past two days for HYG is largely a catch up to moves that had already occurred in the CDS market. We still think of HYG as a “retail” product, but volumes have spiked in recent days as it has become a valued source of liquidity. Hedge Funds have been looking at the ETF versus the HY CDS index. A trade we have liked, that as recent as 4 months ago was generally met by polite grins from some of the HF’s we talk to. Now it is a strategy people like. More investors and market makers are looking at the ETF’s as a better way to hedge themselves than using the CDS index. The HY ETF’s have their own sets of problems, but there is a growing realization, particularly in the high yield market, that at least they move with their bonds more than the CDS indices.
We are starting to see spikes to the downside late in the day. It could be for any number of reasons, but the reality is that I think it is market makers more than anyone who are causing that. To the extent you get hit on bonds in the morning (you didn’t fade your bid fast enough, or the client was too important) you spent the whole day trying to move those bonds. With everything going on in Europe you don’t want (or aren’t allowed) to be long overnight. Your choices are hitting a down bid on the bonds – probably a loss of at least 1%, shorting HY18, which is already very cheap and the index guys get annoyed at anything less than $25 million, or, shorting some HYG. It might cost you a ¼ point, but that is better than selling the bond and it seems closer to the market than the CDS index which feels ripe for a squeeze. That flow is occurring.
The HY ETF’s are both trading at a discount. That is encouraging the arb which means arb clients will be selling bonds, buying shares, and then using share redemptions to monetize the trade. Again, it seems like a “market neutral” strategy, but for some reason, the selling of bonds seems to weigh more on the market than the purchase of the ETF’s. That adds to the downside pressure, and there is currently a big game going on of “which bond will the ETF’s sell”. That is adding to the volatility in the cash market.
An Argument for a Contrarian Investment
As a general rule, the most successful man in life is the man who has the best information
While it might not look like it now, the most investable trend over the next 20 years is going to be in the resource sector, the renewable and non-renewable resources, the minerals, ores, fossil fuels and biomass a wealthier and growing global population is increasingly demanding from finite supplies and already strained production capabilities.
Renewable and Non-renewable Resources
We have crossed a critical threshold. The demand we are now placing on our planets resources appears to have begun to outpace the rate at which they can be supplied.
The gap between human demand on our planet’s renewable resources and the supply of those resources is known as ecological overshoot. To better understand the concept think of your bank account – in it you have $5000.00 paying monthly interest. Month after month you take the interest plus $100. That $100 is your financial, or for our purposes, your ecological overshoot and its withdrawal is obviously unsustainable.
The human enterprise now consumes nearly 60 billion metric tons of the world’s four key resources – minerals, ores, fossil fuels and biomass (plant materials) – per year.
Developed countries citizens consume an average of 16 tons of those four key resources per capita (ranging up to 40 or more tons per person in some developed countries).
12 Pictures That Demonstrate How The New World Order Openly Mocks Us
endoftheamericandream.com / May 18, 2012
If you know what to look for, it quickly becomes obvious that the elite of the world are not even trying to hide their insidious plans for the planet. They hope to unite the entire globe under their leadership, and they don’t think that we are strong enough or smart enough to stop them. They openly embed symbols expressing their desire for a one world economic system, a one world religion and a one world government on our buildings, on our monuments and on our money and they think that it is funny that most people have no idea what those symbols mean. The New World Order openly mocks us and they seem to take pleasure in giving us “clues” about what their plans for humanity are. In the “global society” that they have planned for us, individual freedoms and liberties will be greatly restricted “for the good of humanity” and they will use the emerging Big Brother police state control gridto monitor and control everything that we do. It would be a totalitarian regime unlike anything the world has ever seen before. That is why it is absolutely imperative that we wake people up and get them educated about what the globalists plan to do so that they can resist this growing tyranny.
The following are 12 pictures that demonstrate how the New World Order openly mocks us….
Wenlock – Official Mascot Of The 2012 London Olympics
On the official London 2012 website, we are told that Wenlock, the official mascot of the 2012 London Olympics, has a camera for an eye because that “lets Wenlock record everything”.
President Obama Could Be Kept Off Arizona Ballot
thedailysheeple.com / by Truthdig / May 18, 2012
Despite claiming he does not believe in the birther conspiracy theory, Arizona Secretary of State Ken Bennett has threatened to keep Obama off the state’s general election ballot if he can’t verify the president was born in Hawaii.
“I’m not a birther. I believe the president was born in Hawaii—or at least I hope he was,” Bennett told KFYI radio host Mike Broomhead on Thursday. “But my responsibility as secretary of state is to make sure that the ballots in Arizona are correct and that those people whose names are on the ballot have met the qualifications for the office they are seeking.”
Bennett, who is preparing to run for Arizona governor in 2014, claimed the move is not meant to appease birthers in the state ahead of that election.
Bennett said he has petitioned the state to verify the existence of Obama’s long-form birth certificate, and that his request has gone unanswered for eight weeks. The White House released Obama’s long-form birth certificate last year. Still, that doesn’t seem to have satisfied the legion of conspiracy theorists who continue to believe the president was born elsewhere. —TEB
Facebook IPO Is Bubble Redux?
thedailybell.com / by Staff Report / May 18, 2012
A global frenzy buzzes now like so many angry bumblebees. At any moment, a company started in a dormitory just eight years ago will sell promoted common shares to the investing public and become the hottest technology diva ever. Unusual animal movements have preceded extraordinary natural disasters—might they also mark onset of man-made financial mayhem? Hundreds of millions of us like using Facebook. At first blush the features and benefits seem a compelling bargain. But as far as investors in this offering are concerned, are valuation levels for Facebook’s Class A common shares supported by realistic hope or by artful hype? – Washington Times
Dominant Social Theme: Now that Facebook is worth US$ 100 billion, where’s the next hot deal?
Free-Market Analysis: Frankly, we’ve been surprised by the lack of articles doubting Facebook’s US$ 100 billion valuation.
This article in the Washington Times, written yesterday, is about the closest we could come, recently, in the mainstream media.
We’ve been frank about our perception of what Facebook is – a creation in part of American Intel, which evidently and obviously has a stake in utilizing the data that Facebook “mines.”
For this reason we have described Facebook as lacking a business model, which is odd for a company that was just valued at US$ 100 billion.
Fears of ’08 Credit Meltdown Impacting Markets
kingworldnews.com / by Eric King / May 18, 2012
With fears building concerning another ‘08 credit meltdown, today King World News interviewed the #1 oil analyst in the world, Mike Rothman, to get his take on what is happening. Rothman is the Founder of Cornerstone Analytics and he has been rated #1 for Independent Energy Research by Institutional Magazine since 2006. Rothman consults directly with governments and has attended every OPEC Meeting since 1986. Here is what Rothman had to say about the current situation: “Essentially, with all of the concerns about the world either falling into recession or being in a recession, you still have Brent oil at triple digit levels. That’s a testimony that oil balances are actually quite tight. There’s a problem getting supply.”
“The reality is with people being so concerned about Europe, and a repeat of the credit crisis, you’ve had a shunning of the asset. It’s kind of a weird gap between what oil prices have done and what oil sensitive equities have done.
Normally the stocks trade as a proxy for the commodity, but we’ve had a pretty big gap develop because sideline money is afraid of getting caught, perhaps ahead of something cataclysmic happening out of Europe….
Facebook’s IPO bombs & “hot” tech co.s cook the books
l eyes seemed to be on Facebook’s IPO today. But we look at some of these hyped up social media and gaming companies that have gone public and ask if they can get away with some choose-your-own-adventure accounting methods to boost profits. And back in March, our futures veteran Mark Melin told us MF Global was worth more to some entities dead than alive. Well now we know how much its carcass is worth to the legal team winding down the estate — the team led by the trustee and former FBI director Louis Freeh. They’ve reportedly racked up $25 million in fees! Customers are reportedly upset, as their money is still missing. We’ll talk about some possible MF Global enablers that seem to be getting a free pass from regulators and investigators: the auditors. Plus, the Financial Times reports JP Morgan’s chief investment office has built up positions totaling more than $100 billion in complex risky bonds – the types at the center of the 2008 crisis. This is in addition to the positions in credit derivatives that led to the $2 billion dollar trading loss we learned about last week. Has the bank’s reputation until now as an “excellent risk manager” allowed it to escape scrutiny when taking these risks? We discuss all of this with Francine McKenna on this episode of Capital Account. McKenna is author of the blog re: The Auditors, and a columnist for Forbes and American Banker. We wrap up with responses to your viewer feedback.
Ben Davies – The Gold & Silver Liquidation is Over
kingworldnews.com / by Eric King / May 18, 2012
With continued uncertainty in markets around the world, today Ben Davies, CEO of Hinde Capital wrote the following piece exclusively for King World News. Davies believes the gold and silver liquidation is over: “I humbly believe the seller is done. For one week there has been several but mainly one entity selling Comex gold futures, as well as some physical to liquidate on the open and closes. This suggest to us it was a CTA commodity type fund. They use volume areas of the day to transact.”
Ben Davies continues:
“The sell-off in gold is reminiscent of the 2008 deleveraging process but it is more similar in dynamics to 2012 when a notable fund manager had to sell his gold/ ETF holdings. There were buyers of course, seller and buyer volumes must match. But the need to sell overwhelmed the need to buy.
When you have redemptions time is against you to liquidate, so it becomes a case of sell at any price as time becomes finite. Gold buyers picked up some bargains then and they will now.
Before FOMC minutes two nights ago the seller was back at the close. And then the FOMC minutes changed the dynamic of market with the mention by some members that QE would be back if they saw renewed economic weakness. This is the association for us all of why the market stopped going down but in truth the seller was done.
Like the December experience, once the seller is done, the market will snap back. We run intraday correlations just to observe if markets are starting to fibrillate against each other. We could see that risk assets were diverging and SPX was no longer moving with a 1.0 correlation with gold and silver. We took this as a positive sign that the precious metals were decoupling from risk assets.
The seller was being soaked up by multiple buyers. But all week we saw no significant Asian buying until two nights ago when the market went straight up yesterday on the open of the Asian morning.
Things Are Not as Normal as They Appear
blog.milesfranklin.com / by David Schectman / May 18, 2012
I have stated that $1,550 is an important plateau for gold. It was nerve-racking to see gold fall below this support level, but thankfully, today gold easily cleared $1,550 and as I am putting the finishing touches on Thursday’s daily at 5:00 A.M. Friday morning, gold is closing in on $1,600. We, in the gold universe, need some uplifting price action. In the last 48 hours, gold is up 4%, a whopping $60. Before the year is over, this kind of move will not be unusual.
And how about silver; its two-day performance ain’t too shabby either. It was below $27 on Wednesday.
oday was a thing of beauty. Gold, as I’ve repeated numerous times, is almost always capped at 1%. It hardly ever logs a 2% up day. Today gold closed up 2.21%! Without going way back and digging, I can’t remember a day that gold rose so much. Gold’s RSI was as oversold as I can remember and now, it appears that gold is ready to move back up. I expect that later on Friday, Ed Steer will write about the JPM closing out a massive amount of their gold and silver shorts.
I haven’t got Thursday’s sales figures yet, but Andy told me it was very, very busy all day. All of the brokers were selling a lot of gold and silver. Our ¼ oz. Gold Maple Leaf promotion was well received. We don’t “promote” too often, but when we do, it is a good deal!
A topic I often mention is the falling standard of living in America and how it is hitting the middle class especially hard. Backwoods Jack keeps reminding me that the highways are jam packed during rush hour and the restaurants are full. Things appear “normal,” but are they really?
JPMorgan Chase and Central Banking
mises.org / by Frank Shostak / May 18, 2012
On Friday, May 1, 2012, JPMorgan Chase said it suffered a $2 billion trading loss. Some commentators have suggested that the huge loss emanates from so-called proprietary trading or placing risky bets using the bank’s money. The loss raised the credibility of the Volcker rule, which restricts banks from trading their own money. Despite JPMorgan Chase’s large loss, the opponents of the Volcker rule are of the view that the rule, if it is introduced, will only destabilize the financial markets and make things much worse. Hence they would like to allow market forces to do their job.
Do Fewer Banking Controls Always Equate with a Free Market?
The proponents for less control in the banking industry hold that fewer restrictions imply a better use of scarce resources, which leads to the generation of more real wealth.
It is true that a free banking environment is an agent of wealth promotion through the efficient use of scarce real resources, while controlled banking stifles the process of real wealth formation. However, it is overlooked by the opponents of the Volcker rule that the present banking system has nothing to do with free banking and thus a free market.
Gold/Silver & Mining Stocks Going From Today’s Cycle Bottoms to Parabolic Peaks by 2015
munknee.com / by the editor / May 28, 2012
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Once every year gold and stocks form a major yearly cycle low while other commodities form a major cycle bottom every 2 1/2 to 3 years. Occasionally all three of these major cycles hit at the same time….That’s what’s happening right now and it should lead to a powerful rally over the next 2 years, culminating in 2014 when the dollar forms its next 3 year cycle low.
So says Toby Connor (www.goldscents.blogspot.ca) in edited excerpts from his original article*.
Connor goes on to say, in part:
The CRB Index and US Dollar Index
The implications are that once the CRB has completed this major cycle bottom we should see generally higher prices over the next year and a half to two years, presumably topping during a major currency crisis as the dollar drops into its next three year cycle low in the fall of 2014.
Gold
I think the recent rally in gold is signaling that gold has put in its yearly cycle bottom. Since gold did not break below the December low of $1523 I think we can assume that this is a B-wave bottom and should be followed by the consolidation phase of a new C-wave that should break out to new highs either later in the fall or next spring. [Read:
- Goldrunner: Fractal Gold Analysis Says Gold On Way to $3,500 Mid-year!
- Leeb: Gold Going to $3,000 Before the End of 2012!
- David Nichols: Expect to See $2,750 – $3,000 Gold By June 2013 – Here’s Why]
The next two years should generate an even more impressive advance than the 2009-2011 rally, possibly even generating the bubble phase of the bull market in late 2014 or early 2015 as the dollar crisis reaches a crescendo. [Connor is not alone in his assessment that the peak will be in that timeframe.
Why Gold & Silver will be Impelled Even Higher.. Soon
goldseek.com / May 18, 2012
Old news it is to most readers, that a Cartel (Note 1) of Mega-Bankers and Allies has for years, and is, engaged in Ongoing Price Suppression of Gold and Silver and their Miners’ shares.
Increasingly wide acknowledgement of Gold and Silver as the Ultimate Stores and Measures of Value (i.e. Real Money) would further devalue their Paper Treasury Securities and Fiat Currencies, and diminish their immense power. Thus their ongoing Price Suppression intensifies.
Indeed, it is no surprise to us that The Cartel has successfully (thus far) waged a battle against pro-Gold and Silver Sentiment since last September, 2011, and especially since the end of February, 2012. And they have been helped recently by Fears of Economic Deflation arising from of the Eurozone Crises.
Specifically, Greece moves ever nearer to Default and Spain and Italy are too Big to Bail, but both the latter are at increasing Risk of Economic Meltdown, as reflected in their 10yr Treasury Securities Yields moving back up over the Toxic 6% level.
Gold Daily and Silver Weekly Charts – Something Wicked This Way Comes
“Something has to be done because it’s totally out of control these days. I mean you can’t have bank runs like we’re seeing. The one thing the powers that be, the central banks and the governments, have tried to do is to avoid what I call a ‘Liquidation Event.’
Ever since we saw what happened when Lehman was liquidated, they realized we can’t go there. Fannie was taken over as well as AIG and GM to prevent this liquidity event. But I think the market is just liquidating, irrespective of whether the powers that be want it or not.
I just think that process is picking up into a tsunami and the world will start focusing back again on precious metals.”
Eric Sprott, interview at King World News
I tend to agree with Eric. If the markets see Greece slip out of the Euro and fold its debts up and toss them away, the consequences for the banks and debt in some of the other Euro countries are going to be enormous.
They are deathly afraid of uncontrolled runs on the banks. And even more so, they are concerned of contagion to US and UK banks, and a run on the currencies. At the end of the day, when the fundamentals are shot to hell, its all down to running a confidence game.
That is why I think that they will fight the inclusion of gold and silver in the world currency systems tooth and nail. Once you open the door to alternatives, you erode the span of your control. And that is fatal to an overextended control fraud, which is what the paper financial markets look like today.
And that is why the price of gold and silver have to be controlled. They have an objective, but they need to avoid panics and sudden uncontrolled movements from the chose path to reach it.
The key word is ‘orderly.’
Make no mistake and have no illusions. For all their bravado, I think these guys are scared shitless. You can have faith in your free market gurus I’m sure. Faith that they will drop you a postcard of gratitude and encouragement from Paraguay and Switzerland, Abu Dhabi and Singapore.
And when they inevitably lose control it could go quite a few ways, but no matter which way it goes, it is likely to be memorable.
My Advice to Hedge Against Washington’s Coming Cash-Grab
If Barack Obama wins the presidential election in November, there’s a mighty cash-grab coming, Of course, if Mitt Romney wins there’s likely a mighty cash-grab coming, too.
America’s checkbook is so out of balance with debt that no matter who ends up in the White House, lawmakers have only three honest choices … cut spending, increase economic growth or raise taxes.
Cutting spending – actually reducing the size of the budget from one year to the next – hasn’t happened in the last 40 years in this country. Plus, we’re a people now accustomed to living on the dole, so I don’t see true spending cuts as realistic. Increasing economic growth to such a degree that we grow ourselves out of our debt crisis seems impossible, as well, since we’re already the biggest economy in the world.
So that means the government will be ransacking the sofa cushions looking for as much extra change as it can find. And that clearly means tax hikes, fee hikes and just about any other hike you can imagine.
To me, one of the best ways to hedge against Washington’s coming cash-grab is to invest in foreign real estate. It’s the solid way to move your wealth out of paper and into something tangible that the government can’t touch.
Why I am a Fan of Buying Overseas
I’m writing to you today from the clubhouse at Rancho Santana on the Pacific coast of Nicaragua, down near the Costa Rican border. I’m looking at the real estate opportunities that have emerged here in the last five to 10 years, as well as soaking up the enhanced quality of life.
G8 and NATO Meetings, Greece Leaving the EU? And More: Weekly News Wrap-Up
http://usawatchdog.com – There are two sets of meeting over the next four days that are likely to make big news. One is at Camp David with the G8 and one in Chicago with NATO. Forget the protests, that is just noise and distraction. There are three big problems that will be talked about at these meetings. Syria is in the middle of a revolution, and Russia has warned the West to stay out. Nothing is settled there, and the cease fire was short lived. Any NATO action, such as what happened in Libya, could spark World War III. The European debt crisis is getting worse, not better. Spanish banks are in trouble, more than two dozen Italian banks have been downgraded and the Greeks took nearly a billion dollars (700 million euros) out of the banks there. Germany is under Pressure to come to the rescue, but Angela Merkel is in trouble from all the bailouts. The fear is if Greece leaves the EU, then other countries will follow, and the banks could all take big losses. The other big topic for discussion will be the Iranian nuclear program and the big meeting in Iraq next week. The last meeting in April with the U.S., Germany, France, Britain, China and Russia ended with nothing more than an agreement for the meeting next week. Israel is not happy and, basically, said Iran was free to enrich uranium. Iran has repeatedly said its nuclear program is for the peaceful production of energy
Gold futures bounce higher as dollar weakens
marketwatch.com / by Virginia Harrison and Claudia Assis / May 18, 2012
Metal ekes out 0.5% gain in week
Gold for June delivery GCM2 +1.07% rose $17, or 1.1%, to $1,591.90 an ounce on the Comex division of the New York Mercantile Exchange.
On the week, the metal gained 0.5%.
“The move up is largely a bounce back from the steep declines we had been seeing in the last two weeks,” said Rohit Savant, an analyst with CPM Group in New York.
Gold prices will likely face some resistance if they try to go beyond $1,630 an ounce, he added. Prices have largely moved lower since the beginning of the month, Savant said.
So far in May, gold has lost 4.3%.
Gold jumped 2.5% in Thursday’s North American session, finding some support around $1,550 an ounce in a reversal from heavy selling seen earlier this week. Read more on Thursday’s relief rally.
Investors remained skittish about investments considered riskier such as commodity and equity markets, as fears of a run on banks moved to Spain and hurt confidence worldwide.
Help Is On The Way
gotgoldreport.com / by Gene Arensberg / May 18, 2012
SOUTHEAST TEXAS — We happened to grow up at a time that fell between wars, just barely missing the Vietnam conflict by a couple years. However, close friends were not so time-lucky, and a compadre of ours was involved in the South Vietnamese jungles in horrific battles with the enemy they collectively called “Charlie.” Although the stories have now mostly faded; stories listened to in awe as a young, full-of-spit-and vinegar pup who worshipped a sure-enough war hero might, a few mental images will never fade completely. The one we recall today is an example – inspired, believe it or not, by the action in the AMEX Gold Bugs Index or HUI.
The returning hero, our older friend, told of a midnight surprise firefight with a seemingly overwhelming throng of attacking North Vietnamese army regulars surrounding and isolating the good guys on some God forsaken hill. Charlie had the advantage of complete surprise and superior numbers.
A few hundred U.S. army and marines were in a tight spot. The marines had the high ground, their only advantage, but, as our warrior said modestly, “It was about 300 (U.S.) marines and army against maybe 2,500 VC (Viet Cong) so we figured it was about even. To tell the truth today, it could have gone either way.”
Another Healthy Correction for Gold and Silver
I have received several emails this week asking my thoughts on the current price action in precious metals. Some subscribers are asking how low gold and silver might go in the short term and my honest response is “I have no idea.” Anyone that claims they can predict the short-term price movements in a market as manipulated as this one is blowing hot air. The banks can utilize leveraged paper contracts to take gold down to $1,200 and silver to $20 if they want to, in the short term.
However, they absolutely can not keep prices this low for very long, as free market forces will bring things back into equilibrium. In fact, recent take down attempts have been met rather quickly with buying from strong hands, much of it likely coming from China. While I still believe that the manipulators can create rather substantial take downs that scare weak hands out of their positions in the short term, they are becoming less effective and more impotent each day. This has been obvious in the charting, where buyers are stepping up to take advantage of these paper-driven artificial sell offs. I view this manipulation of paper prices as insignificant. Whether gold falls to $1,200 or only drops to $1,600 and bounces, I have no doubt it will continue to preserve wealth and continue to increase the purchasing power of those holding it over time.
I believe it is important not to give into emotions during corrections such as these. If you have been staring at your computer screen and stressing the price action this week, you are doing yourself a great disservice. I would suggest that your focus should be mustering the strength to stick with your convictions, ignore the noise and keep your eye on the longer-term picture. I see nothing wrong with hedging via put options or inverse ETFs, but I’ve found it easier and more effective to simply hold onto core positions and buy the dips.
I am convinced that gold and silver will eclipse their previous inflation-adjusted highs before this bull market is over. This means that gold will climb above $2,400 and silver above $150 at an absolute minimum. If we use more realistic inflation numbers such as those calculated by John Williams of Shadow Stats, the true inflation-adjusted highs are more than triple the prices listed above. Whether gold climbs to $8,890 and silver to $517 remains to be seen, but I believe we are likely to see the lower price targets listed above within the next 12 to 18 months.
If you agree with this assessment of the situation, then there is no reason to be concerned when silver falls by 5% or 10% in a week. When silver is trading anywhere from $150 to $517 per ounce, will it matter much if you bought at $30 or $35? Will the temporary decline that we are currently experiencing have any meaning at all?
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