Gold & Precious Metals

, “Bullion’s Day in Sun is Long Gone”,

 Gold bullion prices touched fresh three-year lows Friday at $1269 an ounce before recovering a little by lunchtime in London, as stocks and commodities also regained some ground after sharp falls yesterday.

Spot silver prices fell as low as $19.41 an ounce, as with gold their lowest level since September 2010, before they too recovered a little, as other commodities also ticked higher while the US Dollar weakened slightly.

A day earlier, gold fell more than 5% between the London open and US close, while the S&P 500 recorded its biggest daily drop since November 11 2011, with volumes reaching a 2013 high, a day after US Federal Reserve chairman Ben Bernanke said the Fed could begin scaling down its asset purchases “later this year”.

CME Group, which operates the New York Comex exchange on which gold futures are traded, announced yesterday it is increasing margin requirements on gold trading by 25% to $8800 per 100-ounce contract. The new initial margin requirement will come into effect after close of trading today.

“That is definitely affecting gold,” says Joyce Liu, investment analyst at Phillip Futures in Singapore.

“For those who cannot put out margin calls on time, they will be squeezed out even when they don’t want to get out.”

Heading into the weekend, gold in Dollars was down 7% on the week by late morning in London, with silver down 10%.

Gold in Sterling meantime looks set for a drop of more than 5% on the week, trading below £840 an ounce. Gold in Euros was down around 6% on the week at €982 an ounce.

Going by London Fix prices, gold in Dollars looks set for its worst week since April, although a fix price of $1273 an ounce or below would make for the worst week since at least October 2008.

“In the precious metals markets, nothing is simple and now we are at the lows, market sentiment is needless to say very negative,” says David Govett, head of precious metals at broker Marex Spectron.

“I am now hearing from people how a thousand Dollars is the next stop. These are the same people who were predicting two thousand Dollars this year, so I take it all with a pinch of salt. However, there is no doubt that the bull market in gold has had its back broken and its day in the sun is long gone.”

Over in India, traditionally the world’s biggest source of private gold demand, financial services firm Reliance Capital has suspended sales of gold. The Reliance Gold Savings Fund had assets equivalent to eight tonnes of gold under management at the end of the first quarter, newswire Reuters reports. Indian imports last month amounted to 162 tonnes, according to the country’s finance ministry.

The announcement follows the introduction by India’s authorities of new measures aimed at curbing gold imports, such as restricting imports on consignment and raising duties to 8%. The objective is to reduce India’s current account deficit and thus support its currency.

The Rupee however touched an all-time low of Rs.60 to the Dollar Thursday, as the Dollar strengthened and emerging market assets sold off following the Fed’s announcement.

“We are not insulated from what is happening in the rest of the world,” India’s finance minister P. Chidambaram told a press conference in response to the Rupee’s fall. 

“My request is we should not react and panic. It is happening around the world.”

In contrast with Reliance, jeweler Shree Ganesh, which in recent years has imported around 70 tonnes of gold a year,  said earlier this week that it plans to issue short-term debt to fund bullion imports now that the rules prevent it from obtaining credit from suppliers shipping the gold on a consignment basis.

Indian gold demand usually drops during the summer months during the period known as Chaturmas.

 

 

Ben Traynor

BullionVault

 

Gold value calculator   |   Buy gold online at live prices

 

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

 

(c) BullionVault 2013

 

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

As we see gold and silver prices plunge lower (again) today; it becomes an especially good idea to step back, and look at the Big Picture of these markets. Why? Because nothing happened today.

What is the official propaganda today from the Corporate Media on why precious metals prices have fallen?

…Federal Reserve Chairman Ben S. Bernanke said stimulus may be reduced later this year as the economy recovers.

The problem here? B.S. Bernanke (aka “The Boy Who Cried Exit Strategy”) has been saying this every day for 4 ½ years. There was literally not one word that was new. It could have all been copied-and-pasted from one of his 2009 scripts. Simply calling this “news” is a perversion in and of itself. So nothing happened today in bullion markets.

With today’s price-action having no connection with the real world, and with any Bernanke “prediction” of an Exit Strategy having no connection with sanity; it behooves us to look at the actual supply/demand dynamics for bullion markets – something never attempted by the Corporate Media itself.

…..read more of this Peter Grandich recommended article HERE

On Markets, Bernanke & The Fed

Posted by Peter Grandich - Grandich.com

on Friday, 21 June 2013 2:34

After watching, listening and reading all the analogies of the what, why and who caused the markets to do what they did, I concluded there’s only one truly honest response to all of it. 

I may be a half-famous whiz kid or a wanna-be or maybe even a never was, but after 30 years in and around the financial arena, I long ago realized there are only two types of commentators:

1-      Those who say what they think; or

2-      Those who say what they think you want to hear and it sells

The financial service industry is full of #2s and looks to get rid of any individuals who try honestly to be #1s. I’ve prided myself for the last half of my career to be a #1 no matter how much “number two” gets throw at me.

When the dust settles and it finally comes to light how bad America is economically, socially, politically and spiritually, this will become the song of what’s left of us who worked hard and tried to do the right thing. Unfortunately, what may be played right after that is this.

U.S. Stock Market – Long ago I said trying to trade markets was futile and only focus on making (at best) educated guesses. I feel very good about my guessing over three decades and my latest suggestion that it ran out of room to the upside appears to be correct. I do think the “Don’t Worry, Be Happy” crowd won’t take this lying down as they were all over TOUT-TV and elsewhere, urging the flock to stay in line. As previously noted, stocks are the lesser of two evils when compared to bonds.

Screen shot 2013-06-20 at 7.28.33 PM

U.S. Bonds – Months, if not a year or two worth of gains evaporated for those who remained in bonds. While some consolidation and countertrend rallies are expected, the worse investment for the next decade remains status quo. I never heard any bond bull explain to me when the 10-yr. was around 1.75% how bonds couldn’t fall if the FED stopped being 60%-75% or so of all bond purchases. Keep this in mind as a three decade bull market in bonds ends.

Screen shot 2013-06-20 at 7.30.03 PM

U.S. Dollar – It was very oversold going into this FED announcement and given what happened elsewhere, the bounce has been anemic so far. It would come as no surprise by as early as next week and no later than July 4th that it has given up all the gains made off the Fed news and then some.

Screen shot 2013-06-20 at 7.29.25 PM

 

…….more on metals & the Mining Shares HERE

Surveying The Global Damage (in a Glance)

Posted by ZeroHedge

on Thursday, 20 June 2013 22:57

With the US equity markets only 2 to 3% off their highs, we thought it appropriate to look around the world at where the leveraged equity unwinds so far. There remain a select few nation’s equity markets that are positive year-to-date.

Year-to-Date, the deleveraging point is clear… (but US equities – for now – remain clean) – ZeroHedge

 

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Ed Note: the above is just a fraction of the Global Markets you can view all in one chart HERE

Pimco’s Gross On Bond Market, Bernanke, Fed Policy

Posted by Bill Gross via Bloomberg TV

on Thursday, 20 June 2013 22:51

120905023633-bill-gross-blogBill Gross, the co-manager ot the 2 Trillion dollar Pimco Bond fund, is one man whose interpretation of what Ben Bernanke had to say yesterday is worth listening to.  

Here is what he had to say to Trish Regan and Adam Johnson on Bloomberg TV’s “Street Smart” 

He said that investors who are selling Treasuries on expectations that the Federal Reserve will scale back QE are missing the influence of inflation on the Fed’s decision. He said, “The market basically has misinterpreted the growth and the unemployment targets while leaving out the inflation targets going forward…This is a combined growth, unemployment and inflation type of combination that has to be delicately managed.”

Gross said that he thinks Bernanke “might be driving in a fog” and on Janet Yellin, he said, “I think she is a Siamese twin in terms of policy.”

Gross on yesterday’s statement by Bernanke:

“It was a pro-growth type of statement and a suggestion that some additional definitions in terms of when tapering might begin and when it might end. Obviously according to a 7% unemployment number that speaks in his mind and perhaps my mind to early 2014. But I might also say in terms of questions and answers, and that is critical I think, that he did speak to the conditional influence of inflation. That even if unemployment came down to 7% and inflation did not go up to 2%, they would look around and readjust their decision. This is a combined growth 

unemployment and inflation type of combination that has to be delicately managed and i think the market has misinterpreted the growth and the unemployment targets while leaving out the inflation targets going forward.” 

On what he means by market misinterpretation:

“I think they are missing the influence on inflation that obviously the chairman has considered and perhaps the committee as well. There was a question and Q&A that basically said, Mr. Chairman, if we are down at 1% inflation and it doesn’t rise, then real interest rates are in a quandary to which you have limited flexibility, and he said, I agree completely with the premise of your question. I would think the markets are looking at the 7% unemployment rate and suggesting the tapering will end at that point. I would suggest that yes, he did say 7% in terms of an unemployment target where tapering would end, presumably in 2014, but he also qualified significantly a number of times that inflation has to go back up towards that 2% target and at the moment we are not there. Those who are selling treasuries in anticipation that the Fed will ease out of the market might be disappointed unless we have inflation close to 2%.” 

On how the Fed will respond if we don’t get to 2%:

“I think the Chairman is almost deathly afraid and we have witnessed in speeches going back five or 10 years on the part of the chairman in terms of the helicopter speech and the reference not only to the depression but to the lost decades in Japan. I think he is deathly afraid of deflation. As we meander back and forth around the 1% level, i would suggest that the chairman to the extent that he perhaps has a limited time left in terms of being the Chairman, that he would guide the committee towards not only an unemployment rate which has been emphasized in terms of the Q&A but also towards a higher inflation target, which is really a target. It’s not something in terms of a cap, but the inflation target of 2% and for the next year or two, 2.5% has been specifically delineated in terms of that. It’s a target. Those who think it is a cap and we are 1% below the cap and therefore the Fed doesn’t care about it, I think the chairman told us the Fed does care about it and the closer we get to 2%, the better as far as he’s concerned.” 

On Janet Yellin:

“I think she is a Siamese twin in terms of policy. She is very much a dove and has chaired the communication effort on the part of the Fed for the last few years which has emphasized and will continue to be emphasized. PIMCO does not want to be in a position of endorsing anyone. We would simply endorse a chairman or chairwoman who perhaps would emphasize Main Street as well as Wall Street which has been the emphasis for the past three or four years.” 

On when he thinks the Fed will start to taper QE and when investors need to start trading on that:

“Based on what he said, based upon what the Fed estimates have given us in the last hour it suggests that yes, towards the end of the year, as we hit 7.25%, and if inflation rises as opposed to stays at 1% that the Fed would begin to taper and that ultimately they would end tapering in perhaps the first quarter of 2014. Is that a realistic possibility? At PIMCO, we don’t think that really is. We think the chairman and the Fed are taking a very much of a cyclical type of view. He blames lower growth on fiscal austerity and expects towards the end of the year once that is gone, all of the sudden the economy will be growing at 3%. He blames housing prices moving up on homeowners that simply like higher home prices as opposed to emphasizing the mortgage rate, which is really what has provided the lift in the first place. To certain extent his driving analogy, which he talked about pulling back on the accelerator, I think he might be driving in a fog. I think the Fed itself may be driving in a fog. To think that is a cyclical as opposed to a structural problem in terms of our economy. I simply think and PIMCO thinks that real growth to lower unemployment below 7% is a long shot over the next 6, 12, 18 months.”

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