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December 19, 2011 • 13:34:52 PST
As we head towards 2012, uncertainty and growing pessimism are the dominant themes in the gold market right now. read more
by Timothy Oakes December 19, 2011
ENGLAND SCORNED, BACKS OUT OF IMF LOAN
Since the Mid-Day Gold & Silver Market Report, precious metals prices have been steady, with some dips through the afternoon. There are concerns for South Korea after the death of Kim Jong Il. There are a number of uncertainties this has presented, including a possible Arab Spring-like event. The European debt crisis has intensified, with England bailing out of the International Monetary Fund vote for funding. All the uncertainty has increased the demand for physical Gold. “We have seen since last Wednesday very good demand for physical (Gold),” said Afshin Nabavi, head of trading at MKS Finance. “It was still continuing this morning.”
Stock markets slipped today over comments made by European Central Bank (ECB) President Mario Draghi regarding the ECB not being able to step in to buy bonds based on the founding treaty of the eurozone. The overall feeling revolves around a need for safety, said PIMCO Chief Executive Mohamed El-Erian. “The ECB has made it very clear that it doesn’t believe in the bazooka. … It believes in the national governments and other institutions getting their acts together first.”
The other concern that presented itself during a three-hour conference call was England’s refusal to participate in increasing the IMF’s resources to help the debt crisis. This places a greater need on Russia or China to help in bailout efforts. The United States is concerned about its exposure to the debt. German Finance Minister Wolfgang Schaeuble said, “Washington cannot make bilateral loans available to the IMF without Congress approving it. … There's no chance of that, and the American government has always made that clear.” There are still plenty of hurdles and difficulties within the eurozone, including Finland’s resistance to how the European Stability Mechanism is run, which could cause issues as early as July 2012.
At 4:03 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,595.30 – Down $2.60.
- Silver - $28.82 – Down $0.89.
December 17, 2011 • 12:43:36 PST
It’s momentary—and it’s because of the euro.
read more
by Timothy Oakes December 16, 2011
HOUSE PASSES BILL RATING AGENCY FITCH PUSHES DOWNGRADES
Since the Mid-Day Gold & Silver Market Report, precious metals prices have been on the rise. The good news surrounding the passing of the House bill to avert a government shutdown has been tempered by the ongoing European debt crisis. The uncertainty has been one factor in helping Gold prices rally today. When considering Gold, though, one should not be watching the minute-to-minute movement of the market, but as a long term investable asset. Frank Holmes, chief executive of U.S. Global Investors, said, “People get so caught up with the next three minutes for Gold, and they should really be focused on the next three years. It's a non-event for Gold to go plus or minus 15% over a 12-month period. I still think Gold prices have the ability to double over the next five years, which would out us around $3,600 an ounce.”
The U.S. House of Representatives passed the spending bill today to avoid a government shutdown. The bill is being hailed as a rare bipartisan compromise, which is saying something going into an election year with typical partisan politics. U.S. Rep. Hal Rogers, R-Ky., said, “After weeks of arduous negotiations on this package with our Senate counterparts, we’ve struck a fair, bipartisan compromise. No party got everything they wanted.” Those comments were echoed by U.S. Rep. Norm Dicks, D-Wash., who said, “It reflects the fact that neither party can pass this bill on its own in either the House or the Senate.”
Credit rating agency Fitch today put a number of countries in the eurozone on notice for potential downgrade, but that agency reaffirmed France’s AAA rating. Belgium, Spain, Slovenia, Italy, Ireland, and Cyprus were put on notice. Standard & Poor’s had already put 15 of the 17 nations on notice of potential downgrades. Fitch said, “Of particular concern is the absence of a credible financial backstop. In Fitch's opinion, this requires more active and explicit commitment from the ECB (European Central Bank) to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent euro area member states.”
At 4 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,600.90 – Up $23.70.
- Silver - $29.74 – Up $0.45.
Gold up, headed for biggest weekly fall in 3 months
* Funding stress weighs on gold prices
* Gold on course for 7 percent weekly loss
* Coming up: U.S. CPI data
By Silvia Antonioli
LONDON, Dec 16 (Reuters) - Gold rallied on Friday after a sharp pullback in the four previous sessions, gaining support from a weaker dollar, but the metal remained headed for its biggest weekly fall in almost three months.
Spot gold rallied as much as 1.63 percent to $1,595.30 and then traded at $1,594 by 1226 GMT, off a 2-1/2-month low of 1,560.36 hit in the previous session.
U.S. gold rose more than 1 percent to $1,595.
Better-than-expected U.S. job data on Thursday suggested a weak U.S. economy is gradually improving and supported financial markets.
A slightly weaker dollar against a basket of currency was also helping precious metals.
A softer U.S. currency makes dollar-priced commodities, such as gold, more affordable for holders of other currencies.
Bullion however was still on track for a 7 percent loss this week, the biggest fall since the end of September, and remained vulnerable to a deepening euro zone debt crisis and rising funding stress.
" Gold took a beating this week and today bounced a bit as investors see this as a good moment to buy, but it is still vulnerable," Credit Agricole analyst Robin Bhar said.
" I expect gold will stay under pressure as the funding stress is increasing the need of liquidity and gold is seen as one of the assets to liquidate."
The need for cash has overwhelmed gold's traditional status as a safe haven in last few months, putting the metal on course for its first quarterly fall since end-September 2008 when the global credit crunch was at its worst.
Helping market sentiment Spain saw solid demand for its bonds on Thursday, helping to ease concerns it could be among the next to fall in the euro zone's debt crisis.
FUNDING STRESS
Gold would benefit from money printing, diversification from money managers and all measures intended to alleviate funding stress, analysts said.
" With access to liquidity being constrained, market participants have increasing problems to refinance," Credit Suisse said in a research note.
" As a result they have to sell their assets - including precious metals - to raise the much needed cash. This is the main reason why gold prices fall on days of increasing funding stress."
In other precious metals, spot silver gained 2.40 percent to $29.82 an ounce, before easing to $29.74.
Spot platinum rose as much as 1.51 percent to $1,425.30, before trading at $1,422.70.
Palladium climbed more than 2 percent to a session high of $627 an ounce and then eased to $623.97.
" As well as tracking gold, for platinum and palladium there are fears over weak industrial growth and they may be hit harder as people look to liquidate risk," Bhar said.
" Some support however comes from costs. These metals are already trading very close to their costs." (Editing by Anthony Barker)
Gold rallies 1.5 pct on Spain bond sales, US data
* Spot gold headed for biggest weekly loss in nearly 3 mths
* Physical demand strong after price dipped to 2-1/2-mth low
* Coming up: U.S. core CPI, Nov 1330 GMT
(Adds details, updates prices)
By Rujun Shen
SINGAPORE, Dec 16 (Reuters) - Spot gold staged a
strong rally on Friday, snapping four sessions of losses with
possibly its biggest one-day gain this month, as a smooth
Spanish bond auction and upbeat U.S. jobs data supported
sentiment.
Gold, however, was headed for a weekly decline of nearly 7
percent, its biggest since late September, as funds rushed to
liquidate positions with just two weeks left on this year's
calendar.
" People prefer to hold cash in hand at the year end," said
Dick Poon, manager of precious metals at Heraeus in Hong Kong.
Investors are also concerned that euro zone's problem will
drag well into 2012, which may further boost the dollar and
depress dollar-denominated commodities, he added.
Solid demand for Spain's bond auction on Thursday and data
showing U.S. jobless claims at a 3-1/2-year low gave a reprieve
to equities, industrial and precious metals, which have suffered
heavy losses this week.
Spot gold rallied as much as 1.6 percent to $1,595.3
and traded at $1,593.39 by 0726 GMT, off a 2-1/2-month low of
$1,560.36 hit in the previous session.
U.S. gold rose 1.2 percent to $1,596.3.
The Relative Strength Index on spot gold returned to above
30, after dipping below that mark into the oversold territory
for the first time in more than three years.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust, said its holdings fell 1.1 percent to a
one-month low of 1,279.98 tonnes on Thursday.
The decline in bullion prices triggered a jump in buying
from Asian countries, although a weak rupee depressed interest
from India, the world's top gold consumer.
" We saw huge physical demand from Thailand and Indonesia,"
said a Singapore-based dealer. " But there isn't much demand from
India, mainly because the rupee is very weak."
A record-low rupee has kept local gold prices at lofty
levels, depressing buying interest despite the ongoing Indian
wedding season.
Gold bar premiums were steady at $1 an ounce over spot
prices in Singapore, but may edge up next week as supply falls
around the Christmas holiday, she added.
Spot silver gained more than 2 percent to $29.78 an
ounce, before easing to $29.63. The precious and industrial
metal was on course for a 8.3-percent weekly decline, its
sharpest since late September.
Industrial metals also rebounded, with bellwether copper
rising 2 percent on the London Metal Exchange.
Gold rebounds, headed for weakest week in 3 months
SINGAPORE, Dec 16 (Reuters) - Spot gold edged up on
Friday, but was on course for its biggest weekly drop in nearly
three months on a year-end flight to cash, while a smooth
Spanish bond auction and upbeat U.S. jobs data may support the
sentiment.
FUNDAMENTALS
* Spot gold edged up 0.4 percent to $1,576.09 an
ounce by 0030 GMT, headed for a weekly decline of 7.8 percent.
* U.S. gold inched up 0.1 percent to $1,579.30.
* Asian shares posted modest gains and the euro traded
steady, as U.S. jobless claims dropped to a 3-1/2-year low last
week, suggesting a weak U.S. economy is gradually improving even
though factory data proved more mixed.
* Spain saw solid demand for its bonds on Thursday, paying
more than 2 percentage points less to borrow over 5-years than
Italy a day earlier as budget cuts helped ease concerns it could
be among the next to fall in the euro zone's debt crisis.
* The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust, said its holdings fell 1.1 percent to 1,279.98
tonnes on Thursday from 1,294.8 tonnes on Wednesday.
MARKET NEWS
* U.S. stocks rose on Thursday, as signs of strength in the
economy and higher-than-expected profit at FedEx outweighed more
warnings about Europe.
* The euro clung to modest gains against the dollar in Asia
on Friday, having ended three straight sessions of losses after
a Spanish bond sale attracted solid demand and upbeat U.S.
economic data helped revived risk appetite.
by Timothy Oakes December 15, 2011
IMF FEELS EUROPEAN CRISIS GETTING WORSE
Since the Mid-Day Gold & Silver Market Report, precious metals prices have remained fairly stable. The outlook for gold remains quite strong. The relative strength index for gold remained below average for another day, which points to an attractive buying potential. In a note to its investors, Commerzbank analysts wrote, “Investors with a medium- and long-term view are remaining loyal to gold, and gold ETFs are still showing no outflows. In our view, bargain hunters are soon likely to take advantage of the low price levels.”
In an interview with IMF Director Christine Lagarde the international community was basically put on notice that the European debt crisis could affect all global economies. The issue revolves more around the global community needing to come together versus isolating countries, which just recently happened with England after the EU summit last week. Europe needs to get its house in order to contain the risks being posed. Her most telling comment, “There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding, but escalating at a point where everybody would actually have to focus on what it can do.”
That news should be a bit concerning to Americans as economic data here in the U.S. starts to actually show improvement. The overall good news involving industrial output, unemployment and even auto production has investors feeling more confident. That confidence has led to a slightly higher stock market closing after three straight days of losses. " It looks like we have just hit a clear patch on the road to recovery, where things are going to speed up a little bit," said Mark Vitner, a senior economist at Wells Fargo Securities.
At 4:00 p.m. (CST), the APMEX precious metals spot prices were:
- Gold - $1,572.90 – Down $14.00.
- Silver - $29.18 – Up $0.23.
Gold breaks below the triangle, downside risk increases
By Deepak RanganGold prices are heading downwards after breaking through the triangle pattern which has been in formation for over 3 months. COMEX Gold December contract is trading at $1662/oz as of 4:10AM CT.
-The Euro leaders summit has been disappointing. The upcoming Chinese PMI data will therefore prove crucial as any indication of further contraction could mean lower gold prices since gold is tracking equities and every asset class seems to move in conjunction with each other.
-Technically, gold is still inside the 2 year long trend channel (chart below). Prices are below the 100 DMA (Daily Moving Average) and is closing in on the 200 DMA.
The MACD has broken through the 0 level near the same time prices broke downward from the triangle. RSI is below 50.
The $1580-$1600 level will be crucial since it will possibly be the lower supporting trendline of the uptrend channel (circled). Technical supports are seen at $1625 and $1580. Extended support is at $1460 and $1380.
Unless Gold does not decouple from equity movements, negative economic news will prove to be detrimental to gold prices. And since market sentiment is strongly negative with regard to the economic outlook, in the short-term, prices may head south.
The one big reason you should buy gold stocks right now
By Jeff ClarkWe've been saying since September that Gold producers are undervalued, and here are some data that show just how extreme the undervaluation is.
The following chart measures the stock prices of major and intermediate gold producers against their Net Asset Value, based on the daily price of gold. In the simplest terms, a company should be worth more as the product it sells rises in price faster than the cost of those sales.
In this case, gold has doubled in price over the past three years while costs have not kept up, dramatically increasing the intrinsic value of a reasonably well-run gold producer. Yet look what the stocks have done when measured against this higher value.
In spite of a rising gold price, stock prices have steadily fallen. In fact, as the right axis shows, the industry is currently selling at a 20% discount to its Net Asset Value (as of October 21) – and historically, Gold stocks trade at a premium.
Notice that gold stocks hit 1.6 times their NAVs just before the crash of 2008. Gold producers often trade at this level. If I'm right, companies will revert to historical premiums, meaning much higher stock prices than today.
These data don't tell us when prices will rise, nor do they signal that stocks can't trade lower. They are simply telling us that at this point in time, gold stocks represent a true bargain. Someday this won't be the case, and the opportunity to buy at current levels will be gone.
I'm convinced that in a year or two, we'll look back and be very happy with our positions.
Last Updated : 14 December 2011 at 20:05 IST
by Peter LaTona December 14, 2011
SILVER PRICE DROPS BELOW $30
Silver prices had been spending time below $30 per oz earlier this morning, but the price had bounced off its low by 8 a.m. (CST). Precious metals prices in general are under pressure on continued eurozone concerns. The euro continues to decline and 5-year Italian bond yields went to a record 6.47%. The declining euro has bolstered the U.S. dollar, creating the widest spread between the two in almost a year. As the U.S. dollar becomes the preferred safe-haven play, we have seen money moving out of Gold and Silver. The decline of the euro and the rise in Italian bond yields are both strong indicators that pessimism is growing over whether the politicians will be able to work toward a viable plan.
Are the Gold bugs throwing in the towel? Or is this recent rise in discouragement going to serve as a springboard for the next new rally? In an article written today for MarketWatch, Mark Hulbert presents contrarian analysis stating that Gold could be setting up for a rally to all-time highs. He does point out that no analysis is right all the time, but contrarian analysis is right most of the time.
At 8 a.m. (CST), the APMEX precious metals prices were:
- Gold - $1,620.80 – Down $40.10.
- Silver - $29.69 – Down $1.56.
Gold tumbles below $1,600/oz as euro falls
LONDON Dec 14 (Reuters) - Gold fell below $1,600 an ounce for the first time since early October after a decline in the euro to 11-month lows against the dollar and losses on stock markets unleashed heavy selling.
Spot gold was last down 1.6 percent on the day at $1,603.60 an ounce, having fallen to a low of $1,599.74 earlier in the European afternoon.
" Against a backdrop of falling stocks and a stronger dollar, you certainly can't hide anywhere," said Ole Hansen, senior manager at Saxo Bank.
" We are ending the year on a pretty sad note here and no asset class, no matter what you look at, can find itself shielded from this," he said. " Right now, it's all about position squaring and not many people are taking new decisions."
Gold usually trades inversely to the dollar as strength in the U.S. currency usually encourages non-U.S. holders of bullion to book higher profits in their own
currencies by selling the metal.
Gold ETF holdings grows 22% this year
This makes the GLD ETF holding of gold larger than the gold reserves of Russia, Switzerland, the UK, India and China, at least according to official statistics.LONDON(BullionStreet): ETF holdings of gold flourished in 2011 despite occassional price declines and a sizeable cut in holdings by a major investor.
SPDR Gold Trust ETF remained hot favourite among investors this year. The current market capitalization of the GLD ETF is $71.5 billion, an increase of 22 percent over the course of 2011.
At the current price of gold of approximately $1,700 an ounce this represents the equivalent of 1,300 tons of gold.
This makes the GLD ETF holding of gold larger than the gold reserves of Russia, Switzerland, the UK, India and China, at least according to official statistics.
Despite the price declines, ETF holdings of gold have stayed firm and central bank buying continues apace.
Major investor John Paulson had cut his holding in the SPDR Gold Trust in the third quarter, however Paulson remains the largest holder of GLD with a stake worth about $3.5 billion at the end of the third quarter.
Some commentators suggest that any such selling may have been to cover losses in other markets and that long-term investors in gold are retaining their belief in the bull run in gold prices.
Despite the reduction in holdings of the SPDR Gold Trust, the price of gold remains well supported.
December 13, 2011 • 13:25:44 PSTThere is one thing you can be sure of. The bad days are over.......worse days are on their way. Read More
By Timothy OakesDecember 13, 2011ECONOMY ‘EXPANDS MODERATELY’ PER FED Since the Mid-Day Gold & Silver Market Report, precious metals prices have been on the decline, due in large part to technical selling. The outlook by financial analysts, though, still points to Gold as a safe-haven investment, largely on the Fed-supported view of economic uncertainty surrounding Europe.Morgan Stanley’s commodities research section still holds to an average price forecast in 2012 at about $2,200 per ounce, primarily “due to monetary expansion and the lack of faith by investors globally and the desire to diversify the reserves of central banks and individuals,” chief investment strategist David Darst said.
Federal Reserve policymakers met today to discuss the U.S. economy and said they feel that our economic conditions are slowly expanding, even as global conditions deteriorate. They decided to take no new policy action at this time. “The economy has been expanding moderately, notwithstanding some apparent slowing in global growth,” Federal Open Market Committee members said in a statement at the conclusion of their meeting today in Washington. “While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated.” This does not entirely eliminate the potential for further easing, but the drop in unemployment to 8.6% is a key driver at this point, since the rate has come down over the past two months.
In late-breaking news, numbers for existing home sales are being revised downward going back to 2007. Data from 2007 through October of this year is being revised, which will portray a much weaker housing market than previously reported. Much of the problem was due to double counting, or houses being listed more than once. As bad as the housing crisis might have seemed, apparently it was much worse.
At 4:01 PM (CST), the APMEX precious metals spot prices were:
- Gold - $1,632.30 – Down $33.90.
- Silver - $30.80 – Down $0.20.
December 13, 2011 • 07:00:43 PSTWhat do you get when you mix negative real interest rates with stimulative money supply efforts by global central banks? Read More
December 13, 2011 • 07:25:31 PSTAbsolutely nothing has changed with regard to the fundamentals driving the gold market. Investment demand for physical bullion robust... Read More
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