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Morning Gold Fix: January 13

Tyler Durden's picture





 

Courtesy of Goldcore.

Gold

Gold and silver have fallen by less than 1% in all major currencies
today. Asian equities were mixed with strong selling seen in India and
European equities and US index futures are tentatively higher. Eurozone
periphery bonds yields have fallen as have those in Germany (10 year)
after rising above 3% in recent days.

Gold is currently trading at $1,385.30/oz, €1,046.24/oz and £875.67/oz.

click for full size

Gold in USD – 3 Month (Daily)

The primary driver of gold is very robust physical demand -
especially from Europe and Asia. With inflation surging internationally
especially in the essentials of life (food and energy), this demand is
not going to abate any time soon. The demand is leading to
consolidation close to record nominal highs in all fiat currencies.
Prices today are close to the levels seen 3 months ago and the chart
above clearly shows consolidation.

The 50 day moving average is at $1,383/oz and below that there is
strong support at the 100 day moving average at the $1,300/oz mark (see
first chart above). Given the extent of physical demand from Asia,
Europe and internationally, we would be surprised if gold fell to this
level of support.

click for full size

ETF Gold Holdings – 1 Year

However, as ever in the short term anything is possible and
momentum-driven traders in the gold pits could push gold lower.
Cornered institutional shorts could attempt to again squeeze the longs
and engineer a selloff in the futures market.

click for full size

1000 Days of Average Gold Intraday Price Movement

The above chart from Nick Laird of ShareLynx and shown on Casey
Research is remarkable. It shows how gold is sold consistently close to
the London PM Fix. The majority of physical gold is bought on the
London AM Fix. For more than 10 years the Gold Anti-Trust Action
Committee (GATA) and a growing number of analysts have alleged
manipulation and claim that sharp sell offs in the gold and silver
futures markets are engineered.

They allege that this may be a way for the Plunge Protection Team or
President's Working Group on Financial Markets to affect the “mood
music” at the start of each day on Wall Street. The opening on Wall
Street is eagerly watched by the global financial markets. GATA has
some evidence (including admissions by officials and sworn testimony)
and their allegations have yet to be examined or rebuffed by those who
they accuse, by the media or many analysts.

Besides the mood music and maintaining confidence in US markets and
the US dollar – another motivation may be the number one motivation of
many Wall Street players – to make money or the profit motive. Large
institutions with close ties to the US government, Treasury and Federal
Reserve may have access to information not available to other market
players which they can press to their financial advantage.

Given some of Wall Street’s far from ethical behavior in recent
years it is incumbent on us all to keep an open mind on such matters
rather than resorting to name calling or dismissing without
investigation as “conspiracy theory”. Indeed, after many years of
investigating this matter, the CFTC itself has not come to a
conclusion.

A paper-driven sell off in the futures market (whether natural or
manipulated) will likely be greeted lustily by physical buyers who
continue to buy on all dips.

Concerns about wholesale liquidation of the gold ETF (see chart
above) is overdone despite it being the latest “reason” the bears are
putting forward for a fall in gold prices. Indeed George Soros himself
seemed to have hinted at this – in the usual cryptic way he speaks about
the gold market.

This latest bear’s argument is again very weak as much of the buyers
of the gold ETF are passive in nature and not the leveraged short term
players on futures markets. Many, including hedge funds such as David
Einhorn’s Greenlight Capital, are value-oriented funds and have bought
to hedge the “fiscal pathology” in the US today. This was warned by
Federal Reserve Bank of Dallas President Fisher overnight.

Many pension funds today are beginning to allocate capital to gold,
have small allocations to gold and they are buying passively to hedge
inflation and for diversification purposes.

Federal Reserve Bank of Dallas President Fisher might want to examine
the “monetary pathology” that he, Ben Bernanke and his colleagues are
creating which is leading to currency debasement and inflation soaring
internationally (affecting the poorest people in the world – see News
below).

Allied to these hedge funds and pension funds - central bank and
investment demand internationally will more than compensate for any
possible ETF gold liquidation.

GoldNomics - Cash or Gold Bullion?

GoldCore 'GoldNomics'

The 'GoldNomics' educational video about gold can be viewed by clicking on the image above or on our YouTube channel: www.youtube.com/goldcorelimited

Silver

Silver is currently trading $29.44/oz, €22.23/oz and £18.61/oz. 

Platinum Group Metals

Platinum is currently trading at $1,820.50, palladium at $814.50/oz and rhodium at $2,375/oz. 

News

(Bloomberg) Gold Buying Shows RBI Losing `Never Ending' Inflation Battle: India Credit 

Record imports of gold by India show the central bank may be losing
the battle to tame inflation, spurring investors to sell government
bonds. 

Shipments into Asia’s third-biggest economy may have increased to
800 metric tons from 557 tons in 2009 and exceeding the previous
all-time high of 769 in 2007, according to Ajay Mitra, managing
director for India and the Middle East at the World Gold Council.
Mumbai-based brokerage Nirmal Bang Commodities Pvt. forecasts purchases
from overseas markets may rise to as much as 810 tons this year. 

“Gold is being used as a store of value to protect against
never-ending inflation,” Ritesh Jain, the Mumbai-based head of fixed
income at Canara Robeco Asset Management Ltd. who oversees $1.5
billion, said in an interview on Jan. 7. “Inflation is the biggest
concern in the minds of investors and savers.” 

India’s government bonds have lost 0.5 percent this month, Asia’s
worst performance after Indonesia, according to indexes compiled by
HSBC Holdings Plc. Annual inflation in December was probably 8.40
percent, accelerating for the first time in three months, according to
the median forecast of 30 economists in a Bloomberg survey ahead of
official data tomorrow.

(Full article can be read in News section of www.GoldCore.com

(Bloomberg) India Must ‘Copy’ China Policy to Curb Food Prices, Adani Says 

India, facing the highest food inflation in six months, should
emulate China in building strategic stockpiles of staples to cool
prices, according to Adani Enterprises Ltd., the nation’s biggest farm
goods trader. 

(Bloomberg) Steel Output in India May Drop on Australia Floods, Analysts Say 

Tata Steel Ltd., Steel Authority of India Ltd. and local rivals may
cut output and raise prices as floods in Australia disrupt coking coal
supplies and boost costs, RBS Equities India Ltd. and Macquarie Group
Ltd. said.

(Bloomberg) NAB Cuts Australia Cotton Outlook by 10% After Floods

National Australia Bank Ltd. cut its cotton production estimate for
Australia, the fourth-largest exporter, by about 10 percent after more
than 75 percent of Queensland state was declared a disaster zone
because of floods. 

(Bloomberg) Corn Surges to 30-Month High After USDA Cuts Supply Estimates 

Corn surged to an almost 30-month high and soybeans advanced after
the U.S. government cut forecasts for domestic inventories, tightening
global food supplies after adverse weather slashed harvests. Wheat
rose.

(Bloomberg) Palm Oil Gains After USDA Cuts Global Soybean Inventory Estimate 

Palm oil gained for the first time in five days after the U.S.
government lowered forecasts for global soybean inventories. Futures
for March delivery advanced as much as 2 percent to 3,724 ringgit a
metric ton on the Malaysia Derivatives Exchange. 

(Bloomberg) Sri Trang to List in Singapore After Rubber Gains to Record 

Sri Trang Agro-Industry Pcl, Thailand’s biggest publicly traded
rubber producer, refiled a prospectus to list on the Singapore stock
exchange after rubber prices jumped to a record. 

(Bloomberg) Australia Price Risk Seen in 20% Tomato Jump as RBA to Pause 

Reserve Bank of Australia Governor Glenn Stevens can glimpse the
inflation threat he faces from the nation’s floods at the produce shop
near his Sydney home in Sylvania Waters. 

(Bloomberg) Coal at 28-Month High to Beat Oil, Gas on Floods: Energy Markets 

Coal for producing power may beat oil and natural gas this year as
disruptions from Australia to South Africa drive prices for the fuel to
a 28-month high. 

(Bloomberg) World Bank Sees Capital-Flow Risks, Global Growth Slowing to 3.3% in 2011

Capital inflows, a driving force of the recovery in emerging
countries, now pose risks to global growth as they can trigger abrupt
currency fluctuations that may do "lasting damage" to some nations, the
World Bank said. The Washington-based institution today left a growth
forecast for the world´s economy this year unchanged at 3.3 percent,
from a revised 3.9 percent in 2010. It predicted that the slowdown,
which reflects capacity constraints in developing nations and
restructuring in developed economies, will be followed by faster growth
of 3.6 percent in 2012. "The pickup in international capital flows
reinforced the recovery in most developing countries," Hans Timmer, the
World Bank´s director of development prospects, said in a press release
today. "However, heavy inflows to certain middle-income economies may
carry risks and threaten medium-term recovery, especially if currency
values rise suddenly or if asset bubbles emerge." While the recovery is
"broad-based" and "solid," the growth rates "are not strong enough to
undo the damage that was done during the crisis in all parts of the
world," Timmer said on a conference call today. 

(Bloomberg) Trichet Faces `Annus Horribilis' as Crisis Tests One-Size-Fits-All Policy 

Jean-Claude Trichet´s final year at the helm of the European Central
Bank may be his toughest yet as widening economic divergences within
the euro area strain the bank´s one-size-fits all monetary policy. With
the sovereign debt crisis threatening to engulf Portugal and bond
yields in debt-strapped nations near euro-era highs, Trichet must decide
when to stop buying government assets, withdraw unlimited liquidity
provision for banks and possibly even raise interest rates to stem
inflation risks. His response to those challenges may shape his legacy
by helping to determine the euro´s future. "2011 could be another annus
horribilis for the ECB," said Ken Wattret, chief euro-area economist
at BNP Paribas in London. "Stress in debt markets hasn´t diminished and
the divergence between euro-area countries is getting bigger. It´ll be
a big challenge for the ECB and a tough job for its president to
negotiate an appropriate path for monetary policy." Trichet, who chairs
an ECB policy meeting today, has been forced to take unprecedented
steps to buy time for the euro as governments struggle to agree on how
best to shore up confidence in the monetary union. The decision to buy
government bonds split the ECB´s Governing Council, and some policy
makers have warned that price stability, the bank´s primary goal, could
be compromised if emergency measures are left in place too long 

(Bloomberg) Federal Reserve Bank President says monetary policy can’t cure US “fiscal pathology” 

Federal Reserve Bank of Dallas President Richard Fisher said
monetary policy isn’t a “salve for the nation’s fiscal pathology” and
that Congress should focus on reducing the federal deficit and creating
incentives for companies to grow.

“There are limits to what we can do on the monetary front to provide
the bridge financing to fiscal sanity,” Fisher, 61, said in a speech
in New York today. “The Fed has done much, in my words, to provide the
bridge financing until the new Congress gets to work restructuring the
tax and regulatory incentives American businesses need to confidently
expand their payrolls and capital expenditures here at home.” 

(Bloomberg) Commodities Touch Two-Year High on Economic Growth Speculation 

Commodity prices jumped to the highest in more than two years on
expectations for global economic growth and lower U.S. forecasts for
agricultural inventories. Grains, oilseeds and coffee led gains.

(Bloomberg) -- ECB Has ‘Gold Buffer’ to Absorb Losses on Debt Bought, UBS Says 

The European Central Bank ’s gold holdings earned 100 billion euros
($130 billion) in 2010, adding to a “gold buffer” that may absorb
losses in its program of sovereign debt purchases, UBS AG said. 

The profit will go into a eurosystem “revaluation account” valued at
331 billion euros at the end of last year, UBS economist Stephane Deo
said in a report dated Jan. 7. Gold prices jumped 30 percent last year. 

“Our understanding is that if the ECB were to take a loss on its
portfolio, this would feed into the ‘revaluation account’ just like the
ups and downs of the gold portfolio do,” Deo wrote. 

The ECB’s Securities Markets Program started in May to intervene in
the sovereign market, Deo wrote. The ECB has bought 73.5 billion euros
of sovereign securities through the end of 2010 and losses may total 10
billion euros, according to Deo. The ECB bought Portuguese, Irish and
Greek securities yesterday, a trader said. 

The European Central Bank’s gold holdings earned 100 billion euros
($130 billion) in 2010, adding to a “gold buffer” that may absorb
losses in its program of sovereign debt purchases, UBS AG said.

 


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Thu, 01/13/2011 - 10:20 | Link to Comment Caviar Emptor
Caviar Emptor's picture

It's all bullish for gold this morning for as far as the eye can see. 

With new jobless claims back up to baseline depressionary levels, the downsizing of America continues. And with PPI breaking all expectations in the US and everywhere else, the inflation genie is out of the bottle.

What's the Fed gonna do? Make money looser of course! QE3 is a Vegas fix now as unemployment is quickly starting to look structural, and we don't want that rumor to spread, oh no. 

Thu, 01/13/2011 - 10:23 | Link to Comment Ecoman11
Ecoman11's picture

So much for that CFTC meeting today. They must have told Gensler to delay or else...

Thu, 01/13/2011 - 10:26 | Link to Comment flacon
flacon's picture

What happened to the meeting? I thought they were scheduled to meet today to discuss "position limits" - that was the news last week. Remember when Jill Sommers said she was on board? What now?

Thu, 01/13/2011 - 10:36 | Link to Comment Cdad
Cdad's picture

It is going on right now...decision expected today.

Thu, 01/13/2011 - 10:36 | Link to Comment Quintus
Thu, 01/13/2011 - 10:58 | Link to Comment flacon
flacon's picture

Thanks for the link!

Thu, 01/13/2011 - 10:40 | Link to Comment Sudden Debt
Sudden Debt's picture

They are first writing the press releases and once these are done they will do the circus meeting for the spectators, and ading some abiance to it and make it look good.

 

Thu, 01/13/2011 - 10:25 | Link to Comment TraderMark
TraderMark's picture

50 Cent was pumping a penny stock he had ownership of on Twitter this weekend.  It truly is 1999 all over again.

http://www.fundmymutualfund.com/2011/01/50-cent-pushes-penny-stock-as-gh...

Thu, 01/13/2011 - 10:34 | Link to Comment Sudden Debt
Sudden Debt's picture

SILVER PLEASE!

 

Tyler:

You should check the US government silver reserves!

It's somewhere between 0 and 0 ounces :)

Thu, 01/13/2011 - 10:33 | Link to Comment Pants McPants
Pants McPants's picture

I am relatively new to trading gold, but bought my first few coins back in 2006.  I have since concentrated the majority of my positions in silver (long AGQ).  As has been discussed before, it's been a great few months - I hope to see even more gains in the coming year.

 

Thu, 01/13/2011 - 10:38 | Link to Comment Sudden Debt
Sudden Debt's picture

I'm going for a 100% per year price increase om my silver for the next decade or so.

no need to be greedy and expect to much of it. Everything that surpasses the expectation is a surplus for me :)

Thu, 01/13/2011 - 10:41 | Link to Comment Caviar Emptor
Caviar Emptor's picture

The next wave of gold buying will have way more urgency than the last few. Keep in mind the eye popping price rises in other countries, including the very largest ones. As the inflation story gets more intense, sovereign and systemic risk will rise dramatically as long dated bonds of recent vintage get dumped wholesale. And even equities will suffer since the current brand of inflation comes with high unemployment and demand destruction, killing margins and leading to some downside earnings surprises

Individuals and governments alike are going to be rushing for the protection of gold

Thu, 01/13/2011 - 10:43 | Link to Comment Sudden Debt
Sudden Debt's picture

For now, only the weirdo's have bought silver and gold. (you, me and other nutcases)

Soon to follow: The masses :)

 

 

Thu, 01/13/2011 - 10:48 | Link to Comment velobabe
velobabe's picture

not nutcases SD, nutsacks, and that ncludes females†

Thu, 01/13/2011 - 10:43 | Link to Comment bigdumbnugly
bigdumbnugly's picture

and the recent daily beatdown commenced again just minutes before the meeting began.

Thu, 01/13/2011 - 10:43 | Link to Comment velobabe
velobabe's picture

another thing, gold is not perishable. a lot of the other commodities are perishable. you can only lose it.

Thu, 01/13/2011 - 10:56 | Link to Comment Sudden Debt
Sudden Debt's picture

and for silver you have the airtights.

If it's tight it's good enough for me.

Thu, 01/13/2011 - 10:44 | Link to Comment papaswamp
papaswamp's picture

They popped and then dove....did a new limit get slapped on them?

Thu, 01/13/2011 - 10:47 | Link to Comment Turd Ferguson
Turd Ferguson's picture

"The above chart from Nick Laird of ShareLynx and shown on Casey Research is remarkable. It shows how gold is sold consistently close to the London PM Fix."

And again today...


Thu, 01/13/2011 - 11:13 | Link to Comment jomama
jomama's picture

the shit has traded sideways for months now.  it's obviously heavily manipulated, and the prices fiat don't mean a whole lot...  although the parity is somewhat interesting.

Thu, 01/13/2011 - 11:12 | Link to Comment PaperWillBurn
PaperWillBurn's picture

Next on the ECB's "to do" list - Buy gold on the open market to drive it's price up which coincidently gives them more of a buffer to buy struggling countries debt!! Brilliant

 

There was no sarcasm in the above post, it is briliant to use gold as a Reference Point ;)

Thu, 01/13/2011 - 11:19 | Link to Comment tmosley
tmosley's picture

I would love to see similar charts made for various commodities and/or stock markets.  This would give a nice reference point.  That way we can say "see, the manipulation is HERE, and this is NOT NORMAL".

Thu, 01/13/2011 - 11:25 | Link to Comment qussl3
qussl3's picture

Not to burst anyone's bubble but here in the far east, there have been individuals accumulating silver in 10k to 20k Oz sizes with some regularity.

They do not seem to have issues locating supply.

At least not at the broker i use.

Thu, 01/13/2011 - 11:51 | Link to Comment PaperWillBurn
PaperWillBurn's picture

I don't see much bullion for sale in Thailand but it's not because of the demand it's because of the LACK of demand. I'm sure manufacturers can find it but I just see a few necklaces here and there but noone ever wearing it.

Thu, 01/13/2011 - 18:59 | Link to Comment StychoKiller
StychoKiller's picture

You don't leave the keys in the ignition for your Rolls Royce in the ghetto, either.

Thu, 01/13/2011 - 11:26 | Link to Comment Dapper Dan
Dapper Dan's picture

Sometimes I like to wear stretchy pants, just for fun.

 

But I always like to look at the 5 year chart of Gold, for seriousness.

Thu, 01/13/2011 - 17:18 | Link to Comment Best Satan in Town
Best Satan in Town's picture

Not completely related to the post, but I have to share the experience I had today.

 

I was at the bank and I overheard a man advising a woman on her investments. He told the woman that the Fed could print as much as they want and it won't cause any inflation. He also recommended municipal bonds to her. I walked over to him and I said, "excuse me, I may have been eavesdropping, but did you tell that woman that the Fed can print as much as they want and it won't cause inflation"? He stammered a bit, "well, no, but, inflation doesn't have anything to do with printing money". I was a bit shocked really, "You do know that the Fed is directly monetizing treasury bonds right? This is inflationary". "Correlation doesn't imply causation," he ended with that.

I thanked him for holding a civil discourse on the subject, but they don't get more deluded than that.

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