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Gold’s London AM fix this morning was USD
1,629.50, EUR 1,240.20, and GBP 1,007.54 per ounce. Yesterday's AM fix was
USD 1,642.50, EUR 1,251.24 and GBP 1,015.90 per ounce.
Silver is trading at $29.99/oz,
€22.93/oz and £18.60/oz. Platinum is
trading at $1,533.50/oz, palladium at $657.40/oz and rhodium at $1,350/oz.
Gold dropped $16.50 or 1.00% in New York yesterday and
closed at $1,637.10/oz. Gold gradually traded lower in Asia and in European
trading.
Cross Currency Table – (Bloomberg)
Gold is down 1.6% on the week. The gold market has seen
peculiar, lack lustre, low volume trading this week
punctuated with sudden, oddly timed, very large sell orders. This leads to
quick price falls followed either by slow, gradual recovery or a sharp bounce,
prior to next bout of strangely timed sudden large sell orders.
This was clearly seen by the mysterious and massive
$1.24 billion ‘Goldfinger’ trade on
Monday.
While the $1.24 billion trade on Monday was attributed
to a “fat finger” or algo trading in
the gold market, there was a similar spike in volume at exactly the same time
in silver – while all other markets saw little price movements.
There have been a few instances of this and it was seen
yesterday again around 1330 GMT when there was a large 3,000 plus lot gold
sell order which saw the price quickly fall by over $5 before a rapid
recovery. Volume that size is unusual for that time of the day on the COMEX.
Yesterday the silver pits again suddenly saw the sale
of some 200,000 lots in a minute or two that knocked the most-active SI
future back a few cents (see chart below) and this led to silver breaching
the $30/oz mark later in the session.
It is unusual to see a market building momentum in a
certain direction and then to see massive sell orders in both the gold and
silver market which then lead to further tech selling which can feed on
itself.
At the same time there appear to be eager buyers at
these levels who continue to accumulate on the dips. Ultimately prices will
be dictated not by strange and potentially manipulative trading on the COMEX
but by the global supply and demand of physical bullion.
Silver Price and Volume – May 3rd (Thomson
Reuters)
Gold’s weakness may also be due to short
correlations with equity markets – which have come off due to investor
jitters after recent poor data and ahead of the US payrolls report.
Market expectations for Friday's non-farm payrolls
report have fallen this week, with dealers now expecting that the economy
added 125,000 to 150,000 jobs in April, below the previous Reuters consensus
forecast of 170,000. Investors are expecting more lacklustre
job growth last month following a trail of weak U.S. indicators.
A poor jobs number should lead to gold moving higher as
it will lead to concerns about the US economy and concerns that QE3 will be
launched leading to the further debasement of the dollar.
The European Central Bank kept rates steady at 1% as
expected by market watchers. The euro faces additional risks on Sunday from
elections in France and Greece which could create further disruption in the
Eurozone about their countries commitment to fiscal austerity.
Euro gold is consolidating between €1,150/oz and €1,400/oz (see
chart below). Given the terrible economic mess that Europe finds itself in,
it seems only a matter of time before gold reaches €1,400/oz again and there is of course the risk of the euro
falling by much more against gold.
Gold a Bubble? “More People That Own Apple Stock
Than Gold”
Respected investment fund manager and author of the 'Gloom, Boom & Doom
Report' has advised buying gold again and says that 25% of a portfolio should
be in precious metals.
He says another move to the downside of gold is
possible, but worldwide printing of money assures long term support.
Swiss born and educated Marc Faber’s contrarian
voice is common on CNBC and Bloomberg TV when it comes to big-picture macro
forecasting and an astute historical perspective. However, outside of the
specialist financial media his astute historical perspective remains
relatively unknown.
Interviewed at his residence in Hong Kong by Hard Asset
Investor, Faber made the excellent point that the majority of the investment
public continues not to own gold. Especially, when compared to say one
popular tech stock - such as Apple.
XAU/EUR Currency Chart – (Bloomberg)
Faber said that he attends lots of conferences and
usually asks the audience, “How many of you own gold?” Normally,
hardly anyone owns it. I’ve been to conferences with thousands of
people attending, and nobody owned any physical gold.”
Faber believes that this shows that gold is not a
bubble.
“When you went to an investment conference in
1989, everybody owned Japanese stocks. And in 2000, everybody owned tech
stocks. That is the bubble, when the majority of market participants own an
asset. I think there are more people that own Apple stock than gold.”
Faber points out that while the price of gold has risen
by quite a lot in the last 13 years (from $252/oz
in 1999), the debt situation of the western world
has deteriorated dramatically.
“People say the price of gold is in a bubble
stage and it is up substantially from the lows in 1999, which was, at the
time, around $252 per ounce. But at the same time, we had an explosion of
debt, not just government debt, but private sector debt, and an explosion of
unfunded liabilities such as in the pension fund industry, and not just with
Medicare, Social Security and Medicaid.”
“So now, 12 years after the gold’s low, we
are essentially in a situation where maybe the price of gold should be much
higher because the economic and financial conditions are worse than they were
12 years ago.”
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
OTHER NEWS
(Bloomberg) -- RBS Lowers 2012 Gold Price Forecast by $25 to $1,725 An
Ounce
Royal Bank of Scotland Group Plc lowered its
2012 gold price forecast by $25 to an average $1,725 an ounce.
Central banks by the end of 2015 will have bought 1,050
metric tons of gold, on top of 455 tons in 2011, the largest purchase since
1964, Nick Moore, head of commodity research, said in an e-mailed report
today. “Gold remains attractive to investors, given continued economic
uncertainties and its near 15 percent retracement from its record
high,” he said.
(Bloomberg) -- Silver Falls to $29.8675 in London,
Lowest Price Since Jan. 18
Silver for
immediate delivery declined to $29.8675 an ounce by 9:15 a.m. in London, the
lowest price since Jan. 18.
(Bloomberg) -- Russia’s Palladium Sales May Drop
by Half This Year, GFMS Says
Russian state stockpile sales of palladium will probably drop to about
400,000 ounces this year, from about 800,000 ounces in 2011, Philip Klapwijk, global head of metals analytics at Thomson
Reuters GFMS, said today in a presentation in London.
(Bloomberg) -- Palladium Stockpiles are About 11.5
Million Ounces, GFMS Says
Palladium stockpiles equal about 11.5 million ounces globally, according to
Thomson Reuters GFMS.
“That is still a bit of an overhang,”
Philip Klapwijk, global head of metals analytics at
the researcher, said in a presentation today in London.
(Bloomberg) -- U.S. Mint Gold-Coin Sales in May Match
April Total Sales
The U.S. Mint’s sales of American Eagle gold coins have reached 20,000
ounces so far in May, according to figures from the Mint’s website.
That matches the total sales for April.
(PTI) -- Gold at life-time high of Rs
29,695
Gold prices today rose to all-time high of Rs
29,695 per 10 grams in the bullion market here as investors shifted funds
from melting equity markets to the precious metal, considered as a safe-haven
investment.
Gold closed higher by Rs 35
at Rs 29,695 per 10 grams over the previous close.
Silver, however, lacked necessary follow up support and
declined by Rs 400 to Rs
56,200 per kg on reduced offtake by industrial
units.
Traders said gold raced to record high levels as stockists and retail customers preferred to park their
funds in the precious metal amid weak stocks and forex
markets.
Gold in Indian Rupee – 1 Year (Bloomberg)
Gold of 99.9 and 99.5 per cent purity rose by Rs 35 each to new peak level of Rs
29,695 and Rs 29,555 per 10 grams respectively.
Sovereign remained steady at Rs 23,750 per piece of
eight grams.
On the other hand, silver ready remained selling
pressure and lost Rs 400 to Rs
56,200 per kg and weekly-based delivery by Rs 375
to Rs 56,710 per kg.
Silver coins continued to be asked at last level of Rs 66,000 for buying and Rs
67,000 for selling of 100 pieces.
(Bloomberg) -- Shanghai Exchange to Start Silver
Futures Trading From May 10
The
Shanghai Futures Exchange, China’s biggest metals bourse, will offer
silver futures from next week after draft contract rules received a positive
response from potential investors, according to an executive.
The yuan-denominated contract
will start on May 10, with the new product helping producers to control their
risks, Vice President Huo Ruirong
said at a briefing today. Each contract will represent 15 kilos, according to
the exchange website.
While silver is used in industrial processes, including
the manufacture of solar panels, it’s also bought by some holders as an
investment to protect against inflation. Spot prices in dollars rallied 83
percent in 2010 before dropping last year.
“Being the world’s largest silver producer
and user, China’s introduction of a silver futures contract will add
one more tool for its local industry to better manage the risks associated
with price volatility,” Fu Peng, chief
macro-economy consultant at Galaxy Futures Co., said by phone from Beijing.
The country produced more than 12,000 metric tons of
silver last year, Fu said. It consumed more than 8,000 tons, of which about
40 percent was accounted for by investment demand in the form of coins and
bars, he said.
Spot silver traded at $30.4075 an ounce at 5:15 p.m. in
Beijing after declining 27 percent over the past year. The metal will trade
at $34 an ounce this year, according to the median of analysts’
forecast tracked by Bloomberg.
The new product will be in addition to a silver
contract for deferred delivery, or the so-called silver T+D contract, traded
on the Shanghai Gold Exchange, Fu said. That’s offered in minimum lots
of 1 kilogram.
“Given the contract size difference, we reckon
that most retail investors may still prefer trading in the silver T+D
contract, while institutional investors, such as users and miners, might want
to try out the new contract,” Fu said.
(Bloomberg) -- Standard Chartered Betting on Palm Oil
Drop, Is Positive Gold
Standard
Chartered Plc is betting palm oil prices decline
going into the third quarter because of a “seasonal downward
bias.”
Standard Chartered has one gold futures contract for
December delivery that it expects will gain because of the European debt
crisis and possible monetary easing. “Our target of $1,925 an ounce for
gold December 2012 futures has been buffered by headwinds from gold’s
correlation to the dollar,” Standard Chartered said. “Despite
this, exchange traded fund flows have not turned very bearish over the past
month, and we have also seen some central bank buying.”
(Bloomberg) -- Barrick’s
Munk Predicts ‘Major Switch’ in
Gold-Equity Valuations
Barrick Gold Corp. Chairman Peter Munk said gold prices will continue their upward trend
and there will be a “major switch” in the valuation of companies
that produce the metal. He spoke today at Barrick’s
shareholder meeting in Toronto.
NEWS
Gold near 1-week low ahead of US jobs data
- Reuters
Gold heads for biggest weekly drop in a month; US
jobs eyed - MSN
Asian Stocks Drop for Second Day on Global Growth
Concern - Bloomberg
Euro Set for Biggest Weekly Decline in a Month
- Bloomberg
COMMENTARY
Marc Faber: Gold Is No Bubble - MoneyWeek
Jim Grant: "The Federal Reserve Is The Vampire
Squid Of Vampire Squids" – Zero Hedge
Marc Faber: Inept Central Bankers Will Keep
Long-Term Gold Prices High – Hard Assets Investor
Our Central Bankers Are Intellectually Bankrupt
– The Financial Times
Swiss National Bank has lost 10% of GDP in Gold
Trade – For Sound Money
The Gold Market’s Steep Wall of Worry
– MarketWatch
Central Bank Demand to Change Gold, Silver Markets
and Prices - GoldSeek
Smelting the Family Silver –
Business Week
Mark
O’Byrne
Goldcore
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