Gold and Silver Correction Possible but Store of Value Demand - Especially from Asia to Support
Silver and gold are lower today after the record nominal highs seen
yesterday (gold marginally and silver significantly). Gold reached
$1,518.30 per troy ounce, a nominal record, while silver climbed to
$49.79 per ounce, its highest nominal level since the short term
parabolic spike in 1980.
Gold in USD - 10 Day (Tick)
A period of correction and consolidation has been expected for some
time and it may ensue as gold and particularly silver are overbought in
the short term. However, absolutely nothing has changed with regard
the primary fundamentals driving the gold and silver markets.
Ultra loose monetary policies are set to continue with Ben Bernanke,
Federal Reserve chairman, to announce the conclusions of the Fed's
monthly meeting to set monetary policy. Interest rates are set to
remain near zero percent which will lead to many investors continuing
to favour non-yielding gold due to the lack of opportunity cost.
Silver in USD - 10 Day (Tick)
Near zero percent interest rates and negative real interest rates as
inflationary pressures grow are of course bullish for gold and silver
and investors would be prudent to buy any dip.
Contrary to non-evidence based assertions that the recent price
gains were purely due to “speculation”, recent rises are largely due to
supply and demand fundamentals. The rises are primarily due to
increased and robust physical demand for the precious metals due to
inflation concerns, concerns about the debasement of the dollar, the
euro and paper currencies, sovereign debt and geopolitical concerns.
These concerns are not going to disappear overnight and indeed are
likely to intensify in the coming months with consequent financial and
monetary ramifications. Inflation hedging and store of value buying of
precious metals, especially from China, India and Asia, in set to
continue for the foreseeable future (see news below).
Euro-area debt reached a record in 2010, Eurostat said today, making
it harder for Germany, France and the Eurozone’s better-off countries
to bear the costs of the fiscal crisis triggered by Greece, Portugal,
Spain and Ireland. Debt rose in all 16 euro-region countries, lifting
the bloc’s average to 85.1 percent of GDP from 79.3 percent in 2009.
Gold in EUR - 1 Year (Daily)
The euro zone debt crisis is far from over and the risk of contagion
remains very real. The euro, like other fiat currencies, is vulnerable
to falling sharply against the finite currency of gold in the coming
Gold is trading at $1,502.65/oz, €1,028.79/oz and £911.80/oz.
Silver is trading at $45.52/oz, €31.17/oz and £27.62/oz.
Platinum Group Metals
Platinum is trading at $1,809.50/oz, palladium at $748/oz and rhodium at $2,250/oz.
(Financial Times) -- Precious metals cool after reaching highs
Precious metals weakened after touching highs as investors sought substitutes for paper currencies.
Gold reached $1,518.10 per troy ounce, a nominal record, while
silver climbed to $49.31 per ounce, its highest level since a supply
squeeze in 1980.
Trading was light in the spot market because of a bank holiday in
London, the bullion centre. Spot gold pared gains to $1,509.51 per
ounce, while silver was up 1.7 per cent at $47.48 per ounce.
Silver futures traded furiously on New York’s Comex exchange,
however. Volume in the iShares Silver Trust, a $17bn US exchange-traded
fund, surpassed share volume in the much larger SPDR S&P 500 stock
Precious metals prices have surged as investors search for havens
from a variety of risks, from inflation and weaker currencies to
“There’s been a resumption of sovereign risk worries in Europe, safe
haven buying related to Japan and more recently, discussions over US
debt,” said James Steel, precious metals analyst at HSBC in New York.
Silver, at a fraction of the gold price, has prompted individual
investors to buy coins and exchange-traded funds. The grey metal has
gained more than 160 per cent in the past year.
Suki Cooper, precious metals analyst at Barclays Capital, said:
“Should that retail interest in silver slow down just a little bit, we
would expect prices to correct quite sharply.”
The market considers $50 an ounce as the record nominal high for
silver, although veteran traders say that in the chaotic trading of
January 18, 1980, some small amounts changed hands in the physical
market at higher prices.
(Bloomberg) -- Gold, Silver Decline From All-Time Highs as Investors Seek Cash
Gold and silver retreated from records as some investors sold
the metals to lock in gains and raise cash to cover losses in other
The MSCI Asia Pacific Index of equities declined for a second day
today, after the Standard & Poor’s 500 Index yesterday dropped for
the first day in four. Commodities snapped a four-day winning streak,
led by crude oil and copper.
“Initial dollar-related profit-taking saw the precious complex
down,” James Moore, an analyst at TheBullionDesk.com in London, said in
a report to clients today. “Given the pace and scale of gains in gold
and silver in recent weeks there is the threat of a deeper correction in
the coming sessions, particularly if the FOMC minutes tomorrow
indicate the Fed is close to starting monetary tightening.”
Bullion for immediate delivery dropped as much as 0.8 percent to
$1,495.75 an ounce and traded at $1,504.43 by 9:58 a.m. in London. It
climbed to an all-time high of $1,518.32 an ounce yesterday. Gold for
June delivery fell 0.3 percent to
$1,505 an ounce on the Comex in New York. Silver tumbled as much as
4.8 percent to $44.6625 an ounce before trading at $45.9125. Spot
silver rose to a record $49.79 an ounce yesterday.
Federal Reserve Chairman Ben S. Bernanke will hold a media
conference after the Federal Open Market Committee statement tomorrow
following a two-day meeting in Washington, where policy makers are
expected to keep borrowing costs near zero.
The dollar advanced by as much as 0.6 percent against the euro
earlier today, before trading 0.3 percent lower. Bullion typically
moves inversely to the greenback. The U.S. currency gained as much as
0.5 percent before declining 0.2 percent against a basket of six
‘Possible Event Risk’
“The Federal Reserve meeting is a possible event risk but we expect
that Ben Bernanke in its first public speech post-meeting will confirm
that U.S. short-term rates are most likely to stay low,” Bayram Dincer,
an analyst at LGT Capital Management in Pfaeffikon, Switzerland, said
in an e-mail. “This confirmation of low nominal rates combined with
higher inflation will be positive for gold.”
A correction in gold and silver price is unlikely to last more than
three days, Dennis Gartman, an economist and the editor of the Suffolk,
Virginia-based Gartman Letter, said in a daily report.
“It’s more the action in silver that’s making me a little queasy,”
Charles De Vaulx, a manager at International Value Advisers LLC, said
in an interview yesterday with Margaret Brennan on Bloomberg
Television’s “InBusiness.” “It’s a much smaller market than gold,
there’s anecdotal evidence that some silver-based, closed-end funds are
even trading at a premium, so it seems to have become a lot too
Silver holdings in the iShares Silver Trust, the biggest
exchange-traded fund backed by silver, climbed 239.76 metric tons to a
record 11,390.06 tons as of April 25 from 11,150.30 tons on April 21,
according to figures on the company’s website.
Platinum lost 0.8 percent to $1,809.75 an ounce in London, while palladium declined 0.9 percent to $754.25 an ounce.
(Bloomberg) -- Investor ‘Euphoria’ to Spur India Silver Demand, Bourse Says
Silver demand in India will climb this year as investors boost
purchases on expectation that prices will extend a record rally,
according to the National Spot Exchange Ltd.
Demand will gain “at least 10 percent to 15 percent” from the current
level of about 3,000 metric tons a year, said Anjani Sinha, chief
executive officer of the Mumbai-based bourse. The exchange is the
biggest in India for trading physical gold and offers spot contracts
for silver, zinc and copper.
Silver surged to an all-time high of $49.79 an ounce yesterday as
investors sought to protect their wealth against accelerating inflation
and a weaker dollar. The metal, which has more than doubled in the past
year, is the best performer on the Standard & Poor’s GSCI Index of
“A new euphoria is there among the investors to buy silver,” Sinha
said in a phone interview yesterday. “People in India have started
believing it will go up further, so demand has picked up very well.”
Silver futures in India, which reached a record 73,600 rupees
($1,655) a kilogram yesterday, plunged as much as 5.3 percent on the
Multi Commodity Exchange of India Ltd. today. Silver joined a slump in
global commodities from oil to gold and grain, as the dollar rebounded
and some investors sold the metal to lock in gains.
Global silver demand climbed 15 percent to 1.06 billion ounces last
year, the highest level in at least 20 years, as investment jumped to a
record and industrial usage rebounded from a five-year low, researcher
GFMS Ltd. said in a report published by the Washington-based Silver
Institute on April 7.
‘Rushing for More’
“Physical silver is on fire, so people are rushing for more,” said
Ketan Shroff, managing director of Pushpak Bullions Pvt. in Mumbai.
“People are very bullish on silver.”
Silver trading on the National Spot Exchange has increased at least
20 percent in the past month, Sinha said. Prices may reach 100,000
rupees per kilogram in the next three to six months, he said.
Silver’s relative cheapness to gold is spurring some investors to
favor the metal over bullion. The ratio of gold to silver dropped to
the lowest level since September 1980 yesterday. An ounce of gold
bought 32.9 ounces of silver today, according to data compiled by
“People are feeling more comfortable to buy silver and sell gold,”
said Pushpak’s Shroff. “There’s a little bit of selling in gold and
Silver for immediate delivery tumbled as much as 4.8 percent to
$44.6625 an ounce and traded at $45.2887 at 10:10 a.m. in Mumbai. Gold
for immediate delivery dropped as much as 0.8 percent to $1,495.75 an
ounce today. The metal climbed to an all-time high of $1,518.32
“The recent rise in the silver price has been too sharp in too small a
timeframe and we could see some correction in prices,” Pritam Kumar
Patnaik, vice president sales, Kotak Commodity Services Ltd., said by
e-mail. “The current upward momentum will push silver to new all time
high above $50 an ounce but we could see some correction in the near
(Bloomberg) -- Silver, Gold Rise to Records on Bets China’s Demand Will Climb
Silver and gold surged to records in London on speculation that
China will buy precious metals to diversify its foreign-exchange
China, with more than $3 trillion in reserves, plans set up new funds
to invest in energy and precious metals, Century Weekly magazine
reported, citing unidentified people. Silver for immediate delivery
surged to a record $49.79 an ounce, and gold reached $1,518.32 an
“People are expecting China to be a major buyer of precious metals,”
said Adam Klopfenstein, a senior strategist at Lind-Waldock in
Chicago. “Gold is piggybacking on silver.
You’re seeing a blowoff rally in silver, but we don’t know when the bubble gets popped.”
On the Comex in New York, silver futures for July delivery rose
$1.096, or 2.4 percent, to settle at $47.173 at 1:59 p.m. Earlier, the
price climbed as much as 8.2 percent to $49.845.
The metal reached a record $50.35 in January 1980 as the Hunt Brothers tried to corner the market.
Spot silver jumped as much as 5.4 percent and fell as much as 3 percent.
Gold futures for June delivery rose $5.30, or 0.4 percent, to
$1,509.10, after climbing to a record $1,519.20. The spot price
advanced as much as 0.8 percent.
Commodities have reached the highest since 2008, partly on demand
for a hedge against inflation. Gold and silver have rallied amid
sovereign-debt concerns in the U.S. and Europe. Silver has posted the
biggest gain in 2011 among 19 raw materials in the Thomson
Reuters/Jefferies CRB Index.
The dollar has dropped for four straight weeks against a basket of
major currencies. The Federal Reserve may keep borrowing costs at zero
percent to 0.25 percent, while European Central Bank officials signal
further rate increases. Fed Chairman Ben S. Bernanke will hold a media
conference after the Federal Open Market Committee statement on April 27
following a two-day meeting in Washington.
“The disdain for currencies generally and the need to embrace
precious metals is still very strong,” said Dennis Gartman, an
economist and the editor of the Suffolk, Virginia- based Gartman
Before today, spot silver more than doubled in the past year, while gold increased 32 percent.
“Silver in the long run really will end up in a bloodbath, but in
the short term, the market loves it,” Dominic Schnider, a Singapore
based director of wealth-management research for UBS AG, said today in a
Bloomberg Television interview. The commodity’s 14-day
relative-strength index, which may signal a decline above 70, was over
Investment demand for silver climbed 40 percent to a record in 2010,
and fabrication use jumped to a 10-year high, GFMS Ltd. said in an
April report published by the Washington-based Silver Institute. Assets
held in exchanged-traded products rose to a record 15,509.54 metric
tons on April 12, data compiled by Bloomberg from four providers shows.
“Silver is definitely benefiting from spillover demand from gold as a
haven investment,” said Li Ning, an analyst at China International
Futures (Shanghai) Co. Silver also is found in products from solar
panels to plasma screens and chemical catalysts.
(Bloomberg) -- Dim Dollar Outlook to Spur Gold Rally, WJB Capital’s Roque Says
The outlook for the dollar remains bearish, which means gold
prices will keep rising from today’s record, according to John Roque, a
managing director at WJB Capital Group Inc.
“People want to know the target for gold, and our response is: How
low can the dollar go?” Roque said today in a television interview with
Tom Keene on “Bloomberg Surveillance.” “We just think that the trend
is up, and we’re just going to stick with it.”
Spot gold touched an all-time high today of $1,518.32 an ounce in
London. On the Comex in New York, gold futures touched a record
$1,519.20 an ounce.
(Bloomberg) -- Swiss Platinum Imports Were 3,350 Kilps in March, Customs Says
Switzerland’s platinum imports were 3,350 kilograms in March
compared with 3,619 kilograms in February, according to the Swiss
Federal Customs Administration.