Gold Swap Dealers Go Net Long For Only Third Time by Mark O'Byrne

Today's AM fix was USD 1584.00, EUR 1300.17 and GBP 1020.68 per ounce.
Friday’s AM fix was USD 1579.00, EUR 1294.05 and GBP 1022.34 per ounce.

Gold rose by $16.30 or 1.2% in New York on Friday to end the week 0.8% higher at $1,588/oz.
Silver rose 8 cents to close at $27.25/oz – a gain of 0.52% on the week.

Cross Currency Table – (Bloomberg)

The sharp losses in the gold mining sector Friday and last week could presage further weakness today but the higher weekly closes for gold and silver were constructive from a technical perspective.

After initial gains in Asia, gold fell early in Asian trading prior to recovering and then weakening again bang on 0800 GMT as Europe opened (see chart below).

Gold is higher in euro and Swiss franc terms but slightly lower in dollars and pounds.

Gold’s technicals in euro terms are not bad and gold remains just 6.5% below the record nominal high from last August. Gold has been higher than €1,300/oz for more days in 2012 so far than in all of 2011 – 20 trading days in 2011 and 25 in 2012 so far.

Another bullish indicator is the CFTC data last week. While COMEX gold market participants in total reduced their net long positions - the swap dealers, relatively larger traders and big banks, went net long for just the third time.

Gene Arensberg of the Got Gold Report (see Commentary) reports that “as of Tuesday, July 10, as gold closed on the Cash Market in New York at $1,567.16, Swap Dealer commercial traders reported holding 54,038 gold contracts long and 53,239 short for a combined net long position of 799 lots according to data released by the CFTC on July 13.”

This is a bullish development as there has been a long period of accumulation by the swap dealers in recent months and this change of ownership may mean that COMEX gold has now transferred to stronger hands on the long side who are getting into position for gold’s next leg higher in this secular bull market.

NEWSWIRE

(Thomson Reuters Global Gold Forum) -- Goldman Sachs Stick to 6-Month Forecast Of $1,840/oz
Goldman Sachs reiterated its trade recommendation for a long position in Dec. 2012 Comex gold. A note says: "While gold prices have returned to trading with a strong inverse correlation to US real rates, at sub-$1,700/oz they remain below the level implied by the current 10-year TIPS yields. As we look forward, our US economists forecast subdued growth and further easing by the Fed, which should push the market’s expectations of real rates back down and gold prices back to our 6-mo forecast of $1,840/oz."

(Thomson Reuters Global Gold Forum) -- Marex Spectron: Gold Range Between $1570/75 and $1596/1600
David Govett at Marex Spectron doesn't see much change to the range-bound gold market before testimony of Fed Chairman Bernanke tomorrow. He says in a morning note: "Friday’s move once again deterred the bears, but both sides will be wary of trying anything in a market so obviously stuck in its current range. Look for buying to kick in around $1570/75 and selling around $1596/1600. Keep an eye on the dollar and the stock market for clues as to the next direction, but all in all, it should stay quiet, albeit thin and nervous as usual."

(Bloomberg) -- Gold Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended July 10, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 126,235 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 10,980 contracts, or 8 percent, from a week earlier.

(Bloomberg) -- Silver Traders Trim Bets on Price Rise, CFTC Data Shows
Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures in the week ended July 10, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 8,782 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 924 contracts, or 10 percent, from a week earlier.

(Bloomberg) -- India Cuts Benchmark Import Price for Gold to $506 Per 10 Grams
India cut the benchmark import price of gold to $506 per 10 grams from $507 on June 29, the finance ministry said today.

The benchmark price for imports of silver was reduced to $866 per kilogram from $871, it said. The benchmark prices are used to set the tax on precious metal imports.

(Bloomberg) -- Sprott Silver Trust Assets Jumped 16% After Secondary Offering
The Sprott Physical Silver Trust’s silver assets jumped 16 percent after a secondary offering to buy more metal.

The silver assets were 38.1 million ounces by yesterday, according to data on the company’s website. That’s up 5.2 million ounces, or 16 percent, since July 10, according to data on Bloomberg. Sprott said yesterday gross proceeds from a follow-on offering would be up to $230 million. Companies that buy metal on behalf of investors are known as exchange-traded funds, or ETF.

“There is still potential for residual buying to come through today, which we estimate could be as much as 3 million ounces,” Edel Tully, an analyst at UBS AG in London, said in a report today. “Given silver’s steady slide for the bulk of yesterday’s trading session, we have to wonder: how low would have prices gotten if the ETF buying did not step in? With limited support to be expected from residual ETF buying today, no material change in silver sentiment, and no significant improvement in the technical picture, we just might find

(South China Morning Post) -- Chinese Gold and Silver Exchange Society
Chinese Gold and Silver Exchange Society
Number of members: 171
Turnover: US$2.74 trillion (July 2011-June 2012)
Trading method: Open outcry and electronic trading Founded: 1910 in Hong Kong
Electronic trading platform launched: 2008 Yuan-denominated gold bar launched: 2011
Silver trading launched: 2012

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NEWS

PRECIOUS-Gold steady as investors await Bernanke outlook - Reuters

Managed money cuts gold, silver longs, ups copper shorts - Reuters

Indian gold extends losses, traders seek more - Reuters

IMF seen downgrading global economic outlook - Thomson Reuters

COMMENTARY

Radical gold bugs vindicated? - MarketWatch

Does Central-Bank Gold-Buying Signal the Top Is Near? - GoldSeek

The CME On Gold As Collateral And Its Unsurprising London-Based Custodian - Zero Hedge

Financial System Supply-Chain Cross-Contagion: Study in global systemic collapse - FEASTA

Peak Oil Guru Robert Hirsch Gives A Dire Outlook For The Future - Business Insider