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Gold’s London AM fix this morning
was USD 1,788.00, EUR 1,329.96, and GBP 1,120.79 per ounce..
Yesterday's AM fix was USD 1,774.75, EUR
1,321.48, and GBP 1,120.42 per ounce.
Cross Currency Table – (Bloomberg)
Gold rose 1% in New York yesterday and
closed at $1,783.90/oz. Gold rose in Asia to a high
of $1,790.16 it’s highest since mid November then edged down. Europe this morning saw
sideways trading until unusually volatile trading around the London AM fix
saw gold rise from $1785.oz to over $1790/oz at
1030 GMT and then fall quickly to $1783/oz.
Spot silver has gained another 0.5% to
$37.05 an ounce, after surging 4.5% yesterday once it rose above resistance
at $35.50/oz. Silver reached a 5 month high of $37.21 but remains more than
30% below its nominal high in of April last year of $48.44.
Silver Spot $/oz –
(Bloomberg)
Over 800 European banks have taken
€529.5 billion from the ECB today after taking €489 billion euros
at the first tender in December. The ECB’s 3 year lending is now near 1
trillion euros ($1.35 trillion) and the ECB’s balance sheet looks
increasingly precarious.
Although the flood of paper has been
credited with fuelling a rally on Europe’s distraught bond markets and
safeguarding the region’s banks, it is another exercise in kicking the
beer keg down the road as it fails to address the fundamental issue which is
the insolvency of many European banks and many European nations and the
obvious risk of contagion from that.
The continuation of ultra
loose monetary policies increases the risk of inflation which will
benefit gold which is an excellent inflation hedge. Extremely low yields on
deposits and “risk free” sovereign debt means the opportunity
cost of carrying non yielding bullion remains very low.
Spot silver gained 0.4% to $37.05 an
ounce, after surging 4% and hitting a 5 month high of $37.21 in the previous
session.
Silver as ever outperformed gold
yesterday and traders attributed the surge to “massive fund
buying” and to “panic” short covering. Some of the bullion
banks with large concentrated short positions covered short positions after
the technical level of $35.50/oz was breached
easily.
Massive liquidity injections and ultra loose monetary policies make silver increasingly
attractive for hedge funds, institutions and investors.
This time last year (February 28th 2011)
silver was at $36.67/oz. Two months later on April 28th it had risen to
$48.44/oz for a gain of 32% in 2 months.
There then came a very sharp correction
and a period of consolidation in recent months. Silver’s fundamentals
remain as bullish as ever and the technicals look
increasingly bullish with strong gains seen in January and February.
Very bullish is the fact that silver also
remains more than 30% below its record nominal high 32 years ago in 1980 and
more than 75% below its inflation adjusted high of $140/oz
in 1980.
The gold-silver ratio dropped to its
lowest level in 5 months, after silver rose more than 12% so far this month
and an enormous 34% this year, outperforming other precious metals.
Rising holdings of silver-backed
ETF’s also indicated growing investor interest in the metal. The
overall silver Exchange Traded Funds holdings rose to 491.079 million ounces,
the highest since last May.
Spot platinum gained nearly 0.5% to
$1,722.24, as investors await the latest in Impala Platinum's dealing with an
illegal strike that has disrupted production at Rustenburg, the world's
largest platinum mine.
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OTHER NEWS
(AP) -- Silver Prices Jump, Playing Catch-up to Gold
Silver prices shot up 4.5 percent Tuesday, playing catch-up to gold.
Silver is both a precious and an
industrial metal. Traders can buy it to hedge against a volatile stock
market, as they do with gold. But it can also be used to make products like
computer chips, meaning prices can rise when traders expect demand from
manufacturers to go up.
In March contracts, silver rose $1.616 to $37.14 per ounce. It's up roughly 10
percent from where it was a year ago. Sterling Smith, senior market analyst
at Country Hedging in St. Paul, Minn., said part of the reason silver is
surging is that traders believe it's undervalued compared to gold. Gold
closed at $1,788.40 an ounce, up $13.50 for the day. It's up about 26 percent
compared to a year ago.
Copper rose 3.15 cents to $3.912 per
pound, and platinum rose $9.20 to $1,723.50.
Energy contracts fell, partly because investors
were pulling back after price gains last week. Oil prices remain close to
nine-month highs because of concerns that Iran could cut shipments of crude
to Europe and interfere with supplies elsewhere. The European Union and the
U.S. are using sanctions against Iran because they fear the country is
developing a nuclear weapon.
Benchmark oil fell $2.01 to finish at
$106.55 per barrel on the New York Mercantile Exchange. Natural gas prices
fell 8.5 cents to end at $2.627 per 1,000 cubic feet. Heating oil fell 6.28
cents to $3.2201 per gallon.
Smith said grains and other agricultural
products have been enjoying a "winning streak" for the past week.
Those movements are especially important now as farmers decide what to plant
this year.
Soybean prices on Monday topped $13 a
bushel for the first time in five months. That's because traders think there
will be greater demand for U.S. exports of the protein-rich beans because
smaller harvests from South America are expected.
On Tuesday, soybeans for March delivery
rose less than 1 percent, to $13.125 per bushel from $13.025. March wheat
rose 15.5 cents to finish at $6.6825 per bushel. Corn ended up 8.75 cents to
$6.5725 per bushel.
The price of orange juice also rose.
Cocoa and sugar fell.
(Bloomberg) -- Gold-Oil Correlation
Rises to Eight-Month High
Gold’s strengthening correlation with oil means more gains for the
metal as Brent near a nine- month high spurs demand for an inflation hedge,
UBS AG said.
The CHART OF THE DAY shows Brent prices
reached $125.55 a barrel in London on Feb. 24, the highest since early May,
and are up 15 percent this year. Bullion has gained 14 percent in the period
and reached $1,787.55 an ounce last week, the highest since Nov. 14. The
30-week correlation coefficient between the commodities rose to 0.61 today,
the most since June. A figure of 1 means the two always move in the same
direction.
Gold’s “rolling correlation
with oil is slowly inching higher and we think this signals that some
catching up lies ahead,” Edel Tully, an
analyst at UBS in London, wrote today in a report. “To the extent that
rising oil prices feed into higher inflation expectations, gold is bound to
reap benefits.”
Some investors buy gold to hedge against
accelerating consumer prices and as a protection from slowing growth and
geopolitical risk. The metal, which generally earns holders returns only
through price gains, rallied for an 11th year in 2011 as central banks in
Europe and the U.S. kept interest rates near record lows. Oil advanced this
year on concern the west’s dispute with Iran over the Islamic
republic’s nuclear program may lead to a disruption in exports from the
Middle East.
Investors are holding a record 2,398.2
metric tons of gold in exchange-traded products backed by the metal, valued
at about $137.1 billion, according to data compiled by Bloomberg. The tonnage
exceeds the holdings of all but four central banks, which are expanding
reserves for the first time in a generation.
The Islamic republic has threatened to
close the Strait of Hormuz, a transit point for about 20 percent of globally
traded crude oil, if its exports are banned in sanctions. While UBS forecasts
Brent at $110 a barrel in the second quarter, “any Iran-related
headlines, military threats or small incidents in the Persian Gulf are likely
to push oil prices sharply higher and potentially boost gold in turn,”
Tully said.
(Bloomberg) -- Oil Set for
Best Month Since October on Recovery Signs, Iran
Oil rose, heading for its best month since October in New York, amid signs of
economic recovery and concern that tension with Iran threatens global crude
supplies.
West Texas Intermediate futures climbed
as much as 0.6 percent after sliding yesterday the most in five weeks.
Industrial output in Japan and South Korea beat estimates and U.S. consumer
confidence rose to the highest level in a year. Oil has advanced 8.8 percent
in February, its first monthly gain in three, as sanctions tighten against
Iran, OPEC’s second- biggest producer.
(Bloomberg) -- Impala Says
Strike Halts 2 Billion Rand of Platinum Output
Impala Platinum Holdings Ltd. said 100,000 ounces of output, equivalent to
sales of 2 billion rand ($265 million), was halted by a strike at its
Rustenburg mine.
The company, based in Johannesburg, is
working to resume output at the world’s biggest platinum mine after
bringing back 9,800 of 17,200 staff fired during the illegal strike, Impala
said today in a statement. About 15,800 didn’t join the strike.
“It is dependent on operational
turnout of staff,” Impala said. Fired workers have until tomorrow to
return on their prior terms after the walkout, which has entered a sixth
week.
SILVER
Silver is trading at $37.14/oz,
€27.64/oz and £23.30/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,723.00/oz, palladium at
$710.00/oz and rhodium at $1,475/oz.
NEWS
(Reuters)
Gold edges up ahead of ECB loan offer
(Reuters)
Silver up 4 percent, gold races toward $1800 on ECB
(Reuters)
Iran to accept payment in gold from trading partners
(The Financial Times)
Tehran considers trade payments in gold
COMMENTARY
(The Globe and Mail)
Don Coxe on Why Buffett Has
Gold All Wrong
(MarketWatch)
Buffett rebuffs gold, but inflation says 'buy'
(King World News)
Norcini - Silver Shorts Literally Panic, Gold Shorts Now Worried
(Chatham House)
Gold and the International Monetary System
(The Washington Post)
UBS's Hickson Expects Gold Will
Rise to $2025 in 2012
(Zero Hedge)
Silver Explodes As DJIA Closes Above 13,000
Mark
O’Byrne
Goldcore
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