and silver are higher after last week’s 1% and 3.5% gains in dollars. Silver
is particularly strong again this morning and the euro has come under
pressure as bonds in Ireland, Spain, Portugal and Greece continue to rise.
While Asian equity markets were higher, European indices have given up early
backwardation has deepened with spot silver at $30.16/oz, March 2011 contract
at $30.13/oz and April’s at $30.00/oz. While spot silver has risen
nearly 1% so far today, the July 2012 futures contract was down 0.187% to
gradual drain of COMEX silver inventories seen in recent months continues and
COMEX silver inventories are at 4 year lows. Total dealer inventory is now
42.16 million ounces and total customer inventory is now at 60.68 million
ounces, giving a combined total of 102.847 million ounces.
small size of the physical silver market is seen in the fact that at $30 per
ounce, the COMEX silver inventories are only worth some $3 billion. The US
government is now paying some $4 billion a day merely on the interest charges
for the national debt. It is also the same value as Twitter’s new
venture round of financing or Ford’s debt pay down in the first
Comex Silver Inventory Data
Talk of a default on the COMEX is premature but the scale of current
investment demand and industrial demand, especially from China, is such that
it is important to monitor COMEX warehouse stocks.
Hunt Brothers were one of a few dozen billionaires in the world in 1979 when
they attempted to corner the market. Today there are thousands of
billionaires in the world, any number of whom could again corner the silver
market. Also, today unlike in the 1970s, there are sovereign wealth funds and
hundreds of hedge funds with access to billions in capital.
possibility of an attempted cornering of the silver market through buying and
taking delivery of physical bullion remains real and would likely lead to a
massive short squeeze which could see silver surge as it did in the 1970s.
is trading at $1,358.08/oz, €1,009.72/oz and £849.12/oz.
is trading at $30.13/oz, €22.40/oz and £18.84/oz.
is trading at $1,820.50/oz, palladium at $819.00/oz and rhodium at $2,450/oz.
Times) Gold ETF outflows and shifts in investor sentiment
from precious metals exchange traded funds since the start of the year have
left some analysts questioning if investor sentiment towards gold and silver
could be shifting.
redemptions from the gold and silver ETFs in early 2011 may be a sign of
things to come,” said Daniel Major, precious metals analyst at the
Royal Bank of Scotland.
decline in safe haven buying interest for gold and the prospects for interest
rates returning to more normal levels in the US and Europe could mean that
“positive sentiment towards [gold and silver] ETFs may be
fading”, according to Mr Major.
added that if ETF inflows were to dry up or reverse, then it would be
difficult for gold and silver prices to make further gains and the silver
market would be “particularly vulnerable to a price correction”.
Major said he did not expect “large scale selling” but he
estimated that the value of holdings in all precious metals ETFs has dropped
almost $10bn so far this year with withdrawals mainly coming from the gold
and silver products.
analysts acknowledge that ETF outflows have weighed on sentiment but say that
the fundamentals supporting the gold price remain intact.
Cooper, precious metals analyst at Barclays Capital said that the gold market
was facing “short-term headwinds”.
Ms Cooper also said that longer-term investment demand remains intact, given
low interest rates, concerns about currency debasement, inflationary risks
and rising geopolitical tensions as demonstrated by the situation in Egypt.
to Barclays, holdings in gold ETFs ended 2010 at $98bn, a record, even though
last year’s inflows at 330 tonnes were down by almost half compared
with 614 tonnes in 2009.Total gold ETF holdings were 2,142 tonnes at the end
of 2010, slightly below the all-time high of 2,155 tonnes reached in the
middle of December.
latest available data suggests total gold ETF holdings have fallen to around
2,166 tonnes after a record monthly outflow in January.
the gold price down around 4 per cent so far this year, the value of gold ETF
holdings has retreated to around $90.4bn.
Lewis, commodity strategist at Deutsche Bank said that the rally in gold
prices has gradually run out of steam over the past five months due to
concerns about a turn in the global interest rate cycle.
Lewis also said these concerns were overdone and that ongoing weakness in the
US dollar and further diversification by central banks should sustain a
positive outlook for the gold market.
Tully, precious metals analyst at UBS, noted that outflows from gold ETFs
were “relatively modest” so far in February, in contrast to the
heavy selling seen in January.
suggests to us that the bulk of the ETF holders who wanted to exit gold have
already done so,” said Dr Tully.
also warned against assuming that outflows from gold ETFs represented
“absolute selling” as there was evidence to suggest that some
institutional investors had been switching their exposure from ETFs into
“allocated” gold (numbered bars held in bank vaults in a separate
picture painted by recent persistent ETF outflows is not wholly
accurate,” cautioned Dr Tully.
-- Investors Boost Bullish Gold Bets as Egypt Turmoil Fuels Demand
are piling back into New York gold futures and options as turmoil in Egypt
sent bullish bets on the metal to the highest since April 2010, government
data show. Holdings in silver also increased.
funds held net-long positions, or wagers on rising prices, totaling 145,846
contracts on the Comex as of Feb. 2, U.S. Commodity Futures Trading
Commission data showed on Feb. 11. The holdings jumped 17 percent, after five
straight weeks of declines.
rallied 0.8 last week, the biggest price gain since December, as protests in
Egypt forced President Hosni Mubarak to flee the country after 30 years in
power. In January, the metal dropped 6.1 percent as an improving world
economy eroded gold’s appeal as a haven investment. Prices have rallied
for 10 straight years, touching a record $1,432.50 an ounce on Dec. 7.
seeing a renewed interest in gold from speculative money who put the brakes
on the metal earlier this year,” said Adam Klopfenstein, a senior
market strategist at Lind-Waldock in Chicago. “There’s turmoil in
Egypt, and inflation is heating up. Investment advisers and money managers
are ready to put their money back to work. People are more comfortable
jumping back into gold after a correction.”
futures for April delivery settled on Feb. 11 at $1,360.40, after rallying to
a three-week high of $1,369.70 during the session.
in exchange-traded products backed by gold fell to 2,019.4 metric tons as of
last week, down 0.6 percent since January, when holdings plunged 3.1 percent,
the biggest decline since April 2008, data compiled by Bloomberg show. ETPs
trade on exchanges, with each share representing metal held in a vault. They
accounted for 21 percent of investment demand last year, according to GFMS
Ltd., a London-based research firm.
holdings by managed-money funds totaled 29,742 contracts, up 27 percent from
the previous week and the highest total since November, CFTC data show.
Silver settled Feb. 11 at $29.995 an ounce on the Comex, capping three
straight weeks of gains.
year, silver rose to $31.275 on Jan. 3, the highest in 30 years, before
dropping as low as $26.30 on Jan. 28.
more bullish on silver than gold because of its industrial component,”
said Barry James, the president of James Investment Research Inc. in Xenia,
Ohio, which manages about $2.5 billion.
silver’s dipsy doodle, it’s creeped right back to where it
started the year,” said James, who has reduced the fund’s
holdings of silver and gold to about 2.5 percent from 7.5 percent in the
fourth quarter. “We’re more neutral than bullish on gold and
don’t expect it to pick up steam and race to a new record. The dollar
will probably recover and show some strength.”
positions include hedge funds, commodity- trading advisers and commodity
pools. Analysts and investors follow changes in speculator positions because
such transactions may reflect an expectation of a shift in prices.
-- Gold Stalls in ‘Tug of War’ Moving Average: Technical Analysis
has rebounded this month from the worst January since 1997, is stalling near
a key moving-average, signaling a “tug of war,” said Matthew
Zeman, a trader at LaSalle Futures Group.
gold futures have closed near the exponential 50-day moving average for four
straight days as a move below or above this level may signal the
metal’s next direction, Zeman said by telephone from Chicago. The
average is near $1,361 an ounce.
commodity can “breach” the level by closing higher, it can climb
above the record $1,432.50 reached on Dec. 7, Zeman said. If prices
don’t rally above the resistance, they will likely fall to the 200-day
moving average near $1,291, he said.
traders will initiate short positions below this level, and gold can’t
stage a rally until it vaults above this level,” said Zeman.
“Gold is staging a tug of war.”
last time gold posted consecutive closes near the average was in early
January. After falling below the level, the metal tumbled 6.1 percent that
month, the worst start to a year since 1997. Prices have rebounded as unrest
in Egypt spurred investors to buy gold, historically used as a hedge against
Feb. 11, prices erased early gains after Hosni Mubarak stepped down as
president of Egypt and handed power to the military, bowing to the demands
tens of thousands of protesters who have occupied central Cairo.
futures for April delivery dropped $2.10, or 0.2 percent, to $1,360.40 on
Feb. 11. The metal was still up for a third week, gaining 0.8 percent.
Bullion has dropped 5 percent since touching the all-time high in December,
partly as improving U.S. economic data eroded demand for the precious metal
as an alternative to equities.
is getting a lot of competition from other products,” Zeman said.
“Equities are at multiyear highs, and interest rates and the dollar
continue to rise.”
metal jumped 30 percent in 2010, a 10th straight annual gain, as escalating
European and U.S. debt boosted haven demand. The decade-long surge attracted
fund managers from John Paulson to George Soros, and is now spurring central
banks to add to their reserves for the first time in a generation.
have also been able to stay above the 150-day moving average, near $1,315,
even after the January slump, a signal that the decline was a “a
healthy break,” not the start of a bear market, David Hightower, the
president of the Hightower Report, said last month.
technical analysis, investors and analysts study charts of trading patterns
and prices to predict changes in a security, commodity, currency or index.
The exponential moving average is a technical indicator that displays the
average value of a security over a specified period of time, giving more
weight to recent data.
-- Gold Investment Demand in South Korea May Climb, Hyundai Says
demand for gold in South Korea may advance as investor awareness increases
and the price climbs to a record, according to the manager of the
nation’s first gold-backed exchange traded fund, or ETF.
“want it as a store of value with governments in advanced countries
still having fiscal-debt problems,” said Cha Jong Do, chief fund
manager of the alternative investment team at Hyundai Investments Co. The
Hyundai Hit Gold ETF, which listed in November 2009, is worth $5.3 million.
soared 30 percent in 2010, advancing for a 10th year, as investors sought a
haven from the European sovereign- debt crisis and weakening currencies. Lion
Fund Management Co. said last month it raised $483 million for China’s
first gold fund to be invested in overseas exchange-traded products.
Korean demand for gold-related investment products will gain steadily, and we
expect gold ETFs to become a major investment product,” Cha said in a
Feb. 11 interview. Gold may advance to $1,600 an ounce this year, Cha said.
for immediate delivery was little changed at $1,357.63 an ounce at 10:45 a.m.
in Seoul. The price, which touched a record $1,431.25 an ounce on Dec. 7, has
dropped more than 4 percent this year amid signs of a global economic
funds allow investors to hold assets such as precious metals without taking
physical delivery and they trade like stocks on exchanges. Holdings in the 10
gold ETFs tracked by Bloomberg have dropped 3.7 percent this year.
-- Chinese Demand For Gold Surges To Around 25% Global Production
hard to believe that ordinary Chinese citizens are responsible for an
increase in gold imports to China– some 5 times larger than in the
recent past. But, that is what the Financial Times of London reported this
one thing China is already the globe’s largest producer. So, it has its
own domestic supply of gold. Also, it suggests that possibly the Chinese are
utilizing far greater amounts of their savings to purchase gold, rather than
increase domestic consumption. Or that official figures of Chinese wealth are
prices have been in a consolidation phase, trading between $1325 an ounce and
$1375 an ounce for the past few months, as the dollar has been somewhat
stronger in reaction to improving statistics on the US economy.
positive for gold is last week’s recommendation from the IMF that $2
trillion in the form of a new international currency be created out of a
weighted average of several currencies to begin the replacement of the dollar
as the globe’s chief reserve currency.
experts point out that the recent weakness in gold has hit the price of the
small mining company shares worse than the majors as speculation in gold has
quieted down. The speculative interests in gold futures on the Comex has been
substantially reduced. And net redemptions in the ETF GLD, has reduced its
gold holdings by $2 billion or almost 4%.
you might say that the Americans are slightly retreating from gold as the
Chinese holdings show record increases.
Money) -- Silver set for gains
I suggested on
October 23 – when silver was trading at around $23.50 – that
$31.75 was one obvious place for its next sell-off to begin, with December 22
a likely date for turns. The semi-precious metal peaked at $31.28 on January
3, within seven trading sessions of my target date
I would have preferred its subsequent sell-off to have gone deeper, I retain
my view that silver is in for substantial gains. I reiterate my targets of
$39.62 and perhaps $45.69