Last Updated : 03 January 2012 at 13:15 IST
Gold and Silver gain on Iran nuclear development and Eurozone weakness
NEW YORK/MUMBAI (Commodity Online): Precious metals are trading up on Tuesday after reports of Iran's nuclear development made investors put money in Gold and silver. At the COMEX, January Gold contract is trading up by $13.2 at $1579/oz while Silver January contract gained $0.245 to trade at $28.12/oz as of 9:54:25 PM CT.MCX Gold February contract is trading at Rs 27582 as of 12:15 PM IST, a gain of 0.72% while MCX Silver March contract is up by 1.31% at Rs 52000.
Reports from Iran indicates that the country has successfully completed and developed its first nuclear fuel rod, which after the performance tests was inserted into Tehran's atomic reactor. Though the centre is claimed to use the same towards treating cancer, investors remain extremely worried that increasing sanctions and pressure from the US and EU could tip the country to take drastic measures.
And this cloud of uncertainty seems to be supporting precious metals at the markets. Also supporting the PM's is the Euro Zone manufacturing PMI, which remained under 50 in December-indicating that economies in the region are still contracting.
Tuesday, January 3rd 11:22 AM IST
Silver gets off to a solid start in 2012
Silver lost nearly 10 percent in 2011 as worries about the
global economy weakened prospects of industrial metals.
SINGAPORE(BullionStreet) : Silver got off to a promising
start for the year as the white metal climbed near three percent in early Asian
trade.
Spot silver was seen trading near $29 an ounce in early trade before easing
to $28.43 an ounce at 1.00 p.m Singapore time. The most-active US silver futures
contract rose 1.5 percent to $28.33 an ounce.
Analysts attributed silver's gains so early in the year to global
uncertainties, ignited by Iran's nuke ambitions and missile tests while a
better-than-expected manufacturing data from China also supported sentiment.
Silver lost nearly 10 percent in 2011 as worries about the global economy
weakened prospects of industrial metals.
After soaring 81% between late January and late April, and nearly breaking
the record set in 1980, prices plummeted. The front-month futures contract lost
$3.0350, or 9.8%, for the year, settling at $27.8750 an ounce.
Managed money cut net length on US silver futures and options to 6,200 lots
in the week ended Dec. 27, its lowest in more than three years, according to
data from the US Commodity Futures Trading Commission.
Monday, January 2nd 03:08 PM IST
'Dragons' to lead China's gold sales in 2012
Among them, the Lunar New Year Year of the Dragon gold bars became so popular that some of the jewellery shops, who normally didnt't sell gold bars, opened special sections for it.
BEIJING(BullionStreet): China's gold sales for 2012 got off to colourful starts all across major centres in the nation as all major banks and merchants are offering special Lunar New Year discounts to customers.
According to reports, Chinese vendors are offering a variety of styles of gold products, notably various Lunar New Year gold bars and gold jewelry.
Among them, the Lunar New Year Year of the Dragon gold bars became so popular that some of the jewellery shops, who normally didnt't sell gold bars, opened special sections for it.
As buying for the occassion gained momentum, business operators in China have been busily engaged in promoting dragon-related gold products in a hope to boost sales.
Chinese people have cultural and historical likings for gold and silver, as both ornaments and accessories.
Gold shops in China project Dragon as the theme of gold varieties and compared with previous years, this year's launch of the Lunar New Year of the Dragon attracted more people on the first day of the year.
Apart from jewellery's major banks have also launched gold products labeled in different dragon characters.
ICBC launched the Lunar New Year gold bars of " wishful Jinlong Feng Phoenix" , " wishful gold into the God of Wealth Gold," and many other styles.
Bank of China launched the Year of the Dragon series of precious metal products, such as " dragons HSIEN RUEY" gold and silver of the Zodiac Year of the Dragon " Golden Dragon blessing" Zodiac Year of the Dragon gold and silver bricks.
Bank places the Qing Dynasty " Dragon Stamps," the main pattern, using gold, silver casting, introduced the " Chinese Dragon Mail" gold brick, " Dragon Stamps" gold and silver gold brick two Lunar New Year series.
Agricultural Bank of China launched the Lunar New Year gold bars, the product to the theme of the dragon, the dragon with the blessing of modern technology to show the product, the cast of 20 grams, 60 grams, 100 grams, 200 grams, 500 grams of gold bars and other specifications.
Silver 2012 predictions: What do you think - bearish or bullish?
Last Updated : 02 January 2012 at 17:05 By Commodity Online
Previous year has been a very mixed for Silver investors. By April it was very bullish for silver which rose 61% compared to the closing level in 2010. Silver suffered a setback in 2011, backtracking from a near-doubling in price during 2010, as worries about the global economy and a recent slide in Goldhurt demand. This is its first annual loss in three years.
Silver is now however well below the $30 mark and is thus over 10% in the red from its peak. The huge gains in the first 5 months of 2011 were completely erased in 7 months that followed. A significant setback for the silver bull!
So, how does the coming year look like? We must prepare ourselves as silver investors for the next 12 months and expect a similar volatility as we have seen in 2011? Where should you buy or where should you sell?
Most of you would have been bombarded with many 2012 predictions in recent days, with most predictions ranging from as low as $10 to as high as $50. The truth , however, is somewhere in between.
What do you think - bearish or bullish?
Here are some silver predictions for 2012:
David Morgan, publisher of Silver Investor, still believes silver price will go above $50/oz in 2012. He forecast $65–75/oz silver by the end of 2012.
David Morgan stated, “I don't see the silver price going above the $50/oz level in 2011. In other words, the top is in for this year, and has been for some time. I still believes silver price will go above $50/oz in 2012. I forecast $65–75/oz silver by the end of 2012. I don't foresee a big rush into price appreciation for gold or silver in the first quarter of 2012 (Q112), which is seasonal.”
Eric Sprott, chairman of Sprott Inc. stated, " I think the price should already be substantially higher, the trade should be 16:1 gold:silver ratio in 2012. That implies that at $1,600/oz gold, silver should be $100/oz. At $3,200/oz gold, silver should be $200/oz. The outlook for gold is phenomenal and silver is going to go up even faster. That is why I think that this next decade will be the decade for silver."
James West, the editor of The Midas Letter and portfolio advisor of the Midas Letter Opportunity Fund, isn't interested in timing the precious metals market—that's a good way to end up butchering perfectly good investments. He believes Silver price is going to be one-sixteenth of the Gold price so it's already undervalued by at least two-thirds. Gold and silver are both going to continue to appreciate. Also he agree with Sprott when he says that silver is going to outperform gold in 2012.
Bob Moriarty, founder of 321gold.com, argues that the Silver Gold ratio over 100 years has been 47:1—47 ounces of silver per ounce of gold. He believes that the ratio could spike to 100:1 during this financial crisis given that historically the ratio has always been higher in such situations.
Alasdair Macleod, Senior Fellow at GoldMoney Foundation, also expects silver to take some bold leaps in the year upon us. In lieu of a dying fiat currency, Macleaod believes silver and gold will undoubtedly take the reigns as the financial currency of choice as the purchasing power of dollars, euros, pounds, and other currencies wanes.
In these uncertain and changing times, more and more investors will be forced to invest their wealth in safer places. Macleod understands this, saying: “We don’t have very long left to live under fiat money. We’re on an accelerating road to a complete destruction of paper currencies, with only about two and half years left to go. The economic establishment is collapsing. On one hand it’s frightening, and on the other it’s very exciting.”
HSBC Securities has lifted its silver price forecasts for 2012 and 2013 amid expectations that strong bar and coin investment demand, together with growing interest in silver exchange-traded funds, will push the market higher. It now expects the silver market to average $34 a troy ounce next year, and $32/oz the year after–both of which are a $2/oz increase on HSBC’s earlier forecasts.
“Demand for silver will be sustained by global concerns about fiscal profligacy, political gridlock on dealing with the U.S. budget deficit, long-term sustainability of the U.S. dollar, potential inflationary consequences of highly accommodative monetary policies, and economic uncertainty. Coin and small-bar demand may moderate from current high levels, but remain strong, further contributing to silver price strength,” HSBC added.
Bank of America Merrill Lynch (BofAML) estimated that there is a good upside potential in 2012 Silver prices. As per the bank, prices should average $34/oz, followed by $37/oz in 2013, because of continued interest in the metal.
Silver fundamentals have been improving in recent years for a host of reasons, including increased demand from emerging markets, somewhat reduced drag from the photography sector and higher usage from new applications. This suggests that gradual increases of silver quotations were justified. Use in applications like solar panels should increase going forward. Demand from the photography sector has fallen steadily and scope for further large reductions in off take is limited.
TD Securities looks for an even greater 9% gain, to 1.021 billion ounces.
Barclays Capital has bullish outlook for silver in 2102, an increase of 24% to $35 an ounce.
Commodity Online Research estimated that silver prices may witness moderately bullish trends in 2012 on global macro-economic uncertainties and possible fall in industrial demand for the commodity.
Deutsche Bank is forecasting $37 for silver in the first quarter, $39 in the second and $44 in the third and fourth quarters.
According to Professional Numismatists Guild (PNG) silver in the first quarter varied from $24.35 per ounce to $57.50 with a mean average of $34.04, and from $23 to $130 with the average of $48.73 by the end of 2012.
Six factors would drive the price of silver higher
--There are more (probably much more) than five Billion ounces of Gold bullion collecting dust in vaults around the world, and more is added to the vaults everyday because more is mined than is used as jewelry or industry or investment products.
--There is less (probably much less) than one Billion ounces of silver bullion available for consumption by industry, and that number is further depleted every day because less is mined than is either consumed by industry or is converted into more valuable investment products.
--Perhaps 70% of the silver currently being mined is a byproduct from base metals mining. As the world continues to fall into a deeper inflationary depression, the amount of base metals that will be mined will reduce as worldwide construction demand decreases with the slowing economy. That inevitable reduction in base metals mining will further exacerbate the supply deficit in Silver relative to the demand.
--The industrial applications that consume silver cannot reasonably substitute other alternatives, so those industries must have silver to continue their business. The amount of silver used in each product is small, so the use of silver is price inelastic because industry will continue to consume silver even after the price increases substantially from current levels. The real wild card is that all industries have migrated to just in time purchases of the Silver that those industries must have. When news gets out that one industry is having trouble getting delivery on cheap bullion silver, there will be a stampede by all industries to lock in the physical they must have to continue production.
--The Banksters have been artificially depressing the price of silver for decades, and those criminals continue to squelch price rises in silver by selling huge quantities of paper that is not backed by anything. The investment world is beginning to realize that paper promises have little meaning, and that smart investors need to hold physical. As that migration to physical accelerates, the paper market will become much less relevant and the Banksters will be overrun with demands for physical. The explosion in the price of silver will be so strong that it will even be able to carry its little brother Gold to higher prices.
--One silver problem is that buyers get too much metal for their money. As silver rises, it will not take as much space in secure storage, and big money people will consider putting some of their wealth into silver. That buying by big money will drive the price of silver exponentially higher, as each increase in price makes silver that much easier to store. People who prefer to buy gold because silver is too heavy and bulky will be happy to hear that someday they will be able to get much less silver for their gold, because the price of silver will increase so much more rapidly.
Gold in 2012
Published : January 01st, 2012
623 words - Reading time : 1 - 2 minutes
We all understand that the future is unknowable. Events yet to come cannot be predicted. Nevertheless, the outlook for 2012 is probably set in stone, and the reason is simple. The financial crisis imperiling the globe for the past several years has not been solved. Until it is, we can expect more of the same – specifically, serial bailouts of governments and banks that, if not already insolvent are bordering on insolvency. It is a distressing prospect.
Perhaps the outlook for the months ahead can be best summarised by the Governor of the Bank of England, Sir Mervyn King. In a recent interview on British television, Sir Mervyn in a rare candid moment made a remarkably bold statement: “This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances.”
It is somewhat odd that Sir Mervyn chose the word “unusual” to describe the present situation. After all, banking crises and defaults on their debts by sovereigns – princes and kings as well as countries – have been a recurring feature of monetary history even before the founding of the Bank of England in 1694. So there is only one reasonable conclusion from his comment. He was obviously referring to the severity of the today’s circumstances, meaning that the depth and long duration of this present crisis have few parallels.
Sir Mervyn went on to add that it is necessary for central bankers “to act calmly to [these circumstances] and to do the right thing.” While his comment reads well, and may even extract a sympathetic response from some people, do his actions confirm his words? More generally, are central bankers doing the “right thing”? For the answer, we only need to look at the price of gold.
Gold is a barometer of the ill winds stirred by monetary problems. It is as reliable as a canary in a coalmine. The rising price of gold flashes for everyone a clear warning signal. And a rising gold price is what we can expect in 2012, for the same reasons that it has been rising for a decade.
First, central bank money printing continues unabated. It is the repeated answer that central bankers offer to address all of today’s financial problems, with the only outcome being the continual erosion of the purchasing power of national currencies – what is usually referred to as inflation.
Second, people everywhere are increasingly worried about the safety of the bank in which they have money deposited. Ever since the collapse of Northern Rock in the UK four years ago, confidence in banks has been diminishing. The failure of Bear Stearns, Lehman Brothers, MF Global in the United States and the near collapse of Dexia, the Belgian-French bank, have only provided more evidence that there is real reason to worry. These failures also illustrate that the problem of insolvent banks is a global phenomenon.
Third, the interest income one can earn on a bank deposit is not sufficient compensation for the counterparty risk being taken. Even worse, the interest income is less than the rate of inflation, with the consequence that bank deposits result in the loss of one’s purchasing power.
I could go on, but these observations made my point. To all of these problems,and indeed, all the problems that plague national currencies, gold provides a safe refuge.
To end as I began, the future is unknowable. Consequently, we do not have solutions for today’s problems we only have choices. For 5,000 years, gold has been the world’s preferred money. Being tested time and again over the millennia, gold’s proven record continues to make it the preferred choice for a future that is always uncertain.
Last Updated : 02 January 2012 at 18:35 IST
Gold to hit $3800 by end-2012, silver to triple due to shortages
By Jack Kneafsey
A few days ago I had the opportunity to speak with Alasdair Macleod, a proponent of sound money and Senior Fellow at the GoldMoney Foundation.
The interview was a fascinating discussion on the concept of money itself, different schools of economic thought, plus what may lie ahead for gold, silver, and the West.
A chief topic during the interview was Keynesian Economics and it’s deadly impact on society
Alasdair: “Keynesianism is a self-serving mechanism,”in which, “only governments, their cronies, and banks benefit.Outside of Ron Paul, you don’t have anyone with the foresight or the guts to take the Austrian view. If members of congress or parliament do find out about Austrian economics–they have to keep quiet about it because of the politics of the system itself.”
On the future of Paper Money
Alasdair:“We don’t have very long left to live under fiat money. We’re on an accelerating road to a complete destruction of paper currencies, with only about two and half years left to go. The economic establishment is collapsing. On one hand it’s frightening, and on the other it’s very exciting.”
What does he expect from Gold and Silver in 2012?
Alasdair: “Gold & silver will be considerably higher at the end of 2012 then they are today. The acceleration in money printing going into next year will diminish the purchasing power of dollars, pounds, euros, and other currencies against gold. Looking at my models, gold should be priced around $3800 by the end of 2012, and silver’s got potentially a triple or more over the next year considering the shortages”
As a final warning to investors Alasdair concluded,“We live an upside down world where, the things meant to be risk free are suddenly full of risk, and the parties which traditionally carry the risk are absolved of it.”
This interview was quite the intellectual adventure, and is a absolute “must-listen” for investors and students of economics
Source: bullmarketthinking.com
Last Updated : 31 December 2011 at 21:20 IST
'Gold may decline further in early 2012'
LONDON (Commodity Online): After falling $350 an ounce from their all-time highs, Gold prices could see further weakness in the start of 2012, said Mike Zarembski, senior commodity analyst, optionsXpress.
“Not only has gold begun to lose some of its ‘safe-haven’ luster, but several key technical indicators look to be pointing to even lower prices at the start of 2012,” he said.
As evidence, he cited gold remains under the 200-day moving average, a strong U.S. dollar, and that the uptrend line drawn from the key October 2008 lows was broken on Thursday for the first time.
A weekly close below this trendline could Lead to a bout of accelerated long liquidation selling. Assets that were being moved into gold due to concerns about Europe and its handling of the debt situation are being moved to U.S. Treasurys and German bunds.
“Investors now appear more willing to earn even meager interest from owning government bonds than they do owning precious metals that not only pay no interest, but are also a cash drain, as both storage and insurance on metal holdings must be paid,” he added.
The break of the October 2008 uptrend was short-lived and if that level can hold, it could spark bargain buying, he said.
However, Zarembski said based on the Fibonacci retracement from the October 2008 lows, “we notice prices have not even retraced to the 38.2% level! This could potentially Lead to further losses, with the 50% retracement not coming into play until the $1,300 area.” If prices break Thursday's low, the next support point is seen near the $1,478 area, with near-term resistance found at the Dec. 21 high of $1,642.10.
Last Updated : 31 December 2011 at 12:00 IST
'Five factors affecting the gold price'
By Rajivi Sharma
Gold is a precious metal with which mankind has had a long and illustrious relation and continues to do so. Gold served as money until other forms of currency were devised and even now gold is bought as an investment. The innate high value of gold makes it a reliable form of wealth, no matter the conditions. This makes it a hedge against economical fluctuations. The actions of people based on this principle drive the price of gold.
For the prospective buyer of gold, it is important to know what all factors affect the rates of gold. This will allow a person to predict with good accuracy the trends in the rates and thus be able to direct an investment to more profit.
The Five factors influencing price of gold
--The first factor is rather basic and depends on the simple economics of supply and demand. This is true of any commodity. If the demand for gold increases (particularly in the Asian markets of India & China) suddenly and the supply cannot meet the demand, the prices will increase. Similarly, if production of gold is hit because of a miners' strike and the supply falls, this will also Lead to an increase in prices.Although there are many hidden factors that are said to influence price of gold, broadly speaking, there are only a few factors that certainly do. The remaining factors are generally speculative and not mutually agreed upon.
--The second factor is the Gold and other policies of central banks. The banks often invest in gold as a hedge against inflation. Moreover, their other policies on interest offered on savings also affect the prices. A higher interest rate will Lead to people investing in currency, whereas a low interest will increase gold purchase.
--The third factor is the social conditions prevalent. In times of war, emergencies, the price of gold shoots up as the value of the prevalent currency is in doubt. Since one can be sure of the value of gold, people try to acquire as much gold as they can, pushing up the price of gold.
--The fourth factor is the state of the economy. If the economy is in the doldrums with the markets performing in a shabby manner like now, prices of gold will increase due to more people choosing to invest in gold.
--The fifth factor is the value of the US Dollar. Since the dollar is the currency that most people incest in any fall in its value will lead to the prices of gold shooting up. The gold rate has always had this relationship with the Dollar ever since the dollar became the global trading currency.
Last Updated : 30 December 2011 at 19:05 IST
Bonds signal crash, heads and shoulders in Euro, gold indicate potential uptrend
By Williem Weytjens
Are Bonds about to plunge? And if so (or if not), what are the implications for stocks, gold, Silver and other precious metals?
Let's have a look at TLT, which is the iShares Barclays 20+ Year Treasury Bond Fund.
Back in 2008, at the climax of the financial crisis, TLT was very stretched above the 200MA, and the RSI was very oversold on a weekly basis. Recently, we had a similar situation, although right now, RSI is not oversold anymore but instead is forming negative divergence, as it sets lower highs and lower lows on the weekly chart, while price recently set a potential double top.
When we look at TLT until 2010, we can see that price retraced exactly back to the 50% Fibonacci Level, where it found strong support. This level also happend to be a level where the long term trend line came in…
If bonds would top here, that would likely be caused by investors rushing out of this (perceived) risk-free asset class, and into more risky assets like stocks.
That would probably involve a more sustainable (or at least more sustainable as perceived by the market participants) way out of this Euro Crisis, which has been making headlines in recent months, causing investors to rush out of risky assets and into bonds.
We can see from the Commitment Of Traders (COT) reports that Commercials (usually seen as the " Smart Money" ) have taken on HUGE long positions in the EURO, while Speculators (usually seen as the " Dumb Money" ) have taken on HUGE Short positions:
However, Commercials have deep pockets and can stand the dips (which they usually keep buying)…
If bonds haven't topped yet, we can expect a potential top around 132 for TLT, based on Fibonacci Retracement levels. If it would top there, and retrace 50% of its move, it should drop towards 92.5, where once again, the long term uptrend support line comes in…
A continued rise of Bonds would probably mean more worries about the Euro Crisis. In the EURO chart, we can notice a potential Head & Shoulders pattern, which could send the EURO as low as 1.15 if the pattern holds…
However, on a short term daily basis, the Euro shows (weak) signs of Positive Divergence. On the other hand, it also seems to be stuck in a bear flag (very short term).
If the MACD would fall below the low of last week, this would probably Lead to a further decline in the EURO, meaning we should keep an eye on the Head & Shoulders pattern…
I keep finding it fascinating to look at the similarities between now and 2008, as the SP500 still hasn't broken that 200MA and heavy resistance at 1265-1280… Once it does, I think we would see new highs pretty soon.
If it doesn't, look out below…
Last but not least, let's think about what will happen to Precious Metals if Bonds top here.
We can look at it in 2 ways:
* A top in bonds probably means investors become less risk-averse, meaning Gold could also sell-off (as it is often perceived as a hedge against turmoil)
* However, gold has rather acted as a risky asset lately and has already sold-off quite a lot, meaning investors could start to load up the truck as they see the recent dip as an opportunity to buy…
Let's have a look at the TLT:GLD chart, which divides the price of TLT by the price of GLD. We can see that during the last 7 years, TLT has severely underperformed Gold, as the ratio has declined substantially.
When we have a closer look, we can notice 5 times where the ratio showed signs of Negative Divergence. Everytime this happened, it marked a top in the TLT:GLD ratio, meaning TLT started to underperform GLD soon thereafter (or equivalently, Gold started to outperform TLT). Will this time be any different?
Based on Sentiment in Gold (but especially Silver) and the recent decline, I would assume this time Gold is seen as a " risky" asset, and should thus profit from a top in TLT/Bonds, although the risk of further declines still exists.
Source: profitimes
Last Updated : 30 December 2011 at 21:05 IST
Five best trading ideas for the next 2 weeks
By Chris Vermeulen
The last week of the year volume tends to be light due to the fact that big money traders are busy enjoying the holidays and waiting for their year-end bonuses.
I was not planning on doing much this week because of the low volume but after reviewing some charts and risk levels on my top 5 trading vehicles I could not help but share my findings with everyone last Friday.
This Wednesday turned out to be an exciting session with all 5 of my trade ideas moving in our favour right on queue.
Charts of the 5 investments moving in the directions we anticipated …
Dollar bounced off support
Stocks are topping and selling off today
Oil looks to have topped and is selling off
Gold and Silver are moving lower
VIX (Volatility Index) just bounced
Many of my readers took full advantage of my recent analysis and trade ideas which is great to hear. All the different ways individuals used to make money from Friday's analysis is mind blowing…
The most common trade is the oil one with most traders adding more to Tuesday when the price reached its key resistance level on the chart. Also many traders took partial profits Wednesday locking in 3% or more in two days using the SCO ETF.
It's amazing how many people like to trade the vix using ETFs. The best trade from followers thus far was an 8% gain in TVIX which was bought 4 days ago anticipating the pop in volatility which I had been talking about last week. Keep in mind ETFs for trading the vix are not very good in general. I stay away from them, but TVIX is the best I found so far.
Currently stocks are oversold falling sharply from the pre-market highs. Meaning stocks have fallen too far too fast and a bounce is likely to take place Thursday.
Also we saw some panic selling hit the market today with 14 sellers to 1 buyer. That level tells me that the market needs some time to recover and build up strength for another selloff later this week or next. We will see this pause unfold when the SP500 drifts higher for a session or two with light buying volume. This will confirm sellers are in control and give us another short setup.
Source: goldandoilguy
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