Precious Metals Morning Summary

Tyler Durden's picture

From GoldCore

The world is still coming to terms with the terrible tragedy in Japan. A second explosion at the Fukushima nuclear reactor overnight and Pentagon reports of radiation being detected 60 miles away from the reactor suggest widening nuclear contamination leading to concerns of a nuclear catastrophe.


Cross Currency Table GoldCore

Gold ticked lower momentarily to $1,417.63/oz on the open in Asia prior to rising to over $1,432/oz where determined sellers sold aggressively, sending gold back down to near Friday's closing price on the London AM Fix (see chart). Silver also rose initially prior to determined selling.

Ordinarily, last week's lower silver and gold weekly close would lead to further momentum-driven liquidation but these are no ordinary times.



The catastrophe in Japan is already leading to safe haven demand for gold. Premiums for gold bars in Tokyo rose to their highest level since February. Overnight, gold bars were quoted at a premium of $1 an ounce to the spot London prices in Tokyo, up from zero last week and a discount of 50 cents two weeks ago.

In Japan, panic buying and stocking up with essentials such as food and gasoline has seen shortages developing, prices rising sharply and concerns of inflation. A bullion dealer in Tokyo said that premiums were higher as the Japanese market is a bit tight on gasoline, so there are inflation risks."

Given the European sovereign debt crisis, geopolitical instability in oil producing nations and continuing concerns about the global economy, the devastating megaquake and tsunami could not have come at a worse time both for the indebted Japanese economy and the global economy.



Japan's central bank, the Bank of Japan injected a record 15 trillion yen (US$183 billion) into money markets and eased monetary policy overnight. Japan's 10-year government bond has fallen to 1.21%, see chart above). The Bank of Japan also offered to buy 3 trillion yen (US $36.6 billion) of government bonds from lenders in repurchase agreements starting March 16. It seems likely that the Japanese authorities may have been buying bonds on Friday and today in order to keep interest rates low. The yen is slightly weaker today after Friday's strong rise.

The Nikkei fell 6.18% overnight but there were encouraging signs from other Asian markets which were resilient. The Hang Seng, CSI 300 and Kospi all eking out small gains and European indices are mixed.




(Dow Jones via Wall Street Journal) -- PRECIOUS METALS: Gold Up On Nuclear Fears; Platinum Slumps
Gold was higher in Asia Monday as the ongoing nuclear emergency in Japan
fueled safe-haven buying, and economic uncertainty resulting from
Friday's earthquake and tsunami.

The benchmark Nikkei equity index slumped 6.2% after local media
reported an explosion at the No. 3 nuclear reactor building at Tokyo
Electric Power Co.'s (9501.TO) Daiichi plant in Fukushima prefecture,
following a similar blast at its No. 1 reactor over the weekend.

"We keep getting news dissipating from Japan saying it's all under
control, but until we get more certainty there will still be the safety
in gold," said Darren Heathcote, head of trading at Investec in Sydney.

At 0800 GMT, spot gold was at $1,427.50 a troy ounce, up $7.90 since
Friday's New York close, although it was well off an intraday high of
$1,432.60/oz hit in opening trades.

Tokyo Commodity Exchange February 2012 gold was at Y3,771/gram, down Y22, as the yen strengthened.

Political unrest in Bahrain, where protesters and police clashed over
the weekend, is a potential further source of support for gold, but
failed to provide the market an extra boost Monday as fears of lower
crude supply from the Middle East were outweighed by concerns Japan's
oil demand will fall, sending oil prices lower.

Europe also provided a minor headwind, as currency markets bid the
euro higher after euro-zone leaders agreed to expand the their bailout
capacity to EUR500 billion, reassuring credit markets over sovereign
debt issues, at least temporarily.

Gold in euros was at EUR1,023/oz, steady from Friday's close.

Spot silver was tracking gold at $36.08/oz, up 18 cents, while
platinum group metals, which are heavily reliant on demand for auto
catalysts, a component used in vehicle exhaust systems, were being hit
hard by production shutdowns at Japanese auto makers.

Nissan Motor Co. (7201.TO), Honda Motor Co. (7267.TO) and Toyota
Motor Corp. (7203.TO) said they will suspend operations at nearly all
their domestic plants in the aftermath of the quake.

Spot platinum was at $1,747/oz, down $30, while spot palladium, which
is more reliant on Chinese demand, was $3 lower at $754/oz.

(Bloomberg) -- Silver Will Rise to $50 on Demand, Supply Drop, Hightower Says
Silver prices will rise to $50 an ounce before the end of this year on
increased global demand and declining inventories of the metal, said
David Hightower, president of the Hightower Report in Chicago.

Record gold prices will shift consumer demand to jewelry made from
the cheaper silver, especially in India, Hightower said today at a R.J.
O'Brien & Associates LLC client conference in Chicago. Investors
also will boost purchases of silver to hedge against inflation, he said.

May silver in New York has more than doubled in the past year to
$35.935 an ounce yesterday. Silver inventories held in warehouses for
delivery against New York futures fell last week to the lowest since
August 2006.

"We should see silver demand increase and we will reach my $50
objective this year," Hightower said. "Silver production is not keeping
up with demand."

Hightower also said natural gas prices may double by the end of the
2011 and could triple by the middle of 2012 on reduced production.
Natural gas prices are just above the cost of production, and producers
will reduce output as the discount to crude oil boosts demand, he said.

(Bloomberg) -- Gold Advances for a Second Day on Turmoil in Libya, Japanese Earthquake
Gold advanced for a second day as investors sought shelter from the
aftermath of Japan's strongest earthquake on record and intensifying
violence in Libya. Platinum and palladium fell on concern that demand
may drop after the quake forced some carmakers to halt output.

Immediate-delivery gold climbed as much as 1.1 percent to $1,432.68
an ounce before trading at $1,427.22 at 3:27 p.m. in Singapore. The
metal advanced to an all-time high of $1,444.95 on March 7. The
April-delivery contract in New York gained 0.2 percent to $1,424.60 an

"With the recent and ongoing political events in the Middle East and
Africa, combined with the devastation in Japan, I believe gold will
remain at the forefront of most sensible investors' minds," said Gavin
Wendt, an analyst at MineLife Pty Ltd. "Gold will hit further record
highs this week."

Japan was struck by a 8.9-magnitude temblor, triggering a tsunami
that engulfed the northern coast on March 11. Local media has said the
death toll may top 10,000. Workers today battled to prevent a nuclear
meltdown after a second hydrogen explosion rocked the Fukushima atomic
plant north of Tokyo.

Unrest In North Africa and the Middle East, which has toppled leaders
of Tunisia and Egypt, has reached Saudi Arabia's neighbors Yemen, Oman
and Bahrain. In Libya, Muammar Qaddafi is fighting rebels seeking to end
his rule.

Ten of 16 traders, investors and analysts surveyed by Bloomberg said
bullion will rise this week. Four predicted lower prices and two were
neutral. Gold rallied 30 percent last year on the prospect of rising
inflation and currency debasement.

Sell Assets
Efforts to rebuild Japan may weaken the dollar, helping to bolster
demand for gold, as financial institutions sell assets to raise money,
said Ong Yi Ling, Singapore-based analyst with Phillip Futures Pte Ltd.

"Japanese insurance companies may start selling dollar- denominated
assets to raise disaster claims," Ong said. "This could contribute to a
weaker dollar and greater demand for gold as a currency alternative."

(Bloomberg) -- Japan's Government Bond Trading to Start at 8:40 a.m. in Tokyo
Japan Bond Trading Co. will start transactions at its regular opening time of 8:40 a.m. in Tokyo.

The country's largest interdealer debt broker halted trading at 2:49
p.m. in Tokyo on March 11 after an earthquake struck off the nation's
northern coast and forced some of its customers to evacuate.

(Bloomberg) -- Vietnam May Only Allow the Sale of Gold Bullion, VnExpress Says
Vietnam may limit gold bullion trade to just sales of the bars to the
central bank, online newswire VnExpress reported today, citing an
unidentified source.

The proposal is part of a draft decree on gold bullion trading that the central bank is working on, the report said.

Under the proposal, the State Bank of Vietnam will buy back gold
bullion from businesses and individuals or appoint some agencies to do
so, VnExpress said. The price at which the central bank buys the gold
bullion will be determined by the international price, according to the

(Bloomberg) -- UBS Increases One-Month Gold Forecast to $1,450 From $1,375
UBS AG raised its one-month gold forecast to $1,450 an ounce, from a
previous estimate of $1,375. The bank's three-month forecast was
unchanged at $1,400, it said today in an e-mailed report.

(FT Fund Management) -- Gold's Role in Pension Funds Under Scrutiny
But it is not necessary to believe in the more conspiratorial theories
to see the attractions of gold. After such a long bull run, the risk of a
significant gold price correction cannot be ignored, but supportive
supply and demand fundamentals, diversification attributes and inflation
hedging potential suggest there is a place for gold in investment

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tiger7905's picture

If silver's going to $50/oz then I'm glad I hold McEwen plays like MAI.

Of course I think $50/oz is just the next step, McEwen has said $300/oz isn't unreasonable, and Sprott has been calling for $50 for a while now.

Harlequin001's picture

$50 is a temporary step. You can't print twice as much money and go out and buy twice as much oil, or wheat or copper. Eventually you run out of oil or wheat or copper and the price goes up. When interest rates pop and Govt funding costs rise you will see bigger QE and more frequent. That's money creation.

Nobody can say how high silver and gold can go because no body can quantify the future even short term cash needs of a liquidating market. The price target is therefore infinite. And by that I mean until gold is back in money; a long way off

johnQpublic's picture

if both wheat and copper goes up, what happens to the price of my wheatback copper pennies?

Harlequin001's picture

If you save up I could trade you some copper plated wheat biscuits...

oddjob's picture

Dump MAI and its copper exsposure and buy UXG!

Cash_is_Trash's picture

What will be the straw that breaks the fiat's back?

Arch Duke Ferdinand's picture

""What will be the straw that breaks the fiat's back?""


.....Starve the Government.....

Posted 2011-02-11 11:30
by Karl Denninger

""All governments exist only with the consent of the governed. That consent does not have to be "withdrawn" via unlawful force at-arms or even via the ballot box.

Indeed, it is most-effectively withdrawn when the citizens refuse to go to work!
The Beast of Government exists on tax revenues. ALL governments share this fundamental reality. ALL governments fail when the economic capacity to tax is destroyed.""

Zero Govt's picture

don't know why you got junked twice, seems a pretty good idea to me ....slightly better would be small businesses (90% of the real economy) and taxpayers simply refuse to pay tax ....starve the f'n parasitical beast of its money which would in turn kick off one hell of a clown show in US and Eurozone Govt Bonds (would i love to watch that;)

InconvenientCounterParty's picture

"The Beast of Government exists on tax revenues"

Bullshit. Government exists on borrowing and patronage.

The coporate elites are running the show people! Isn't it obvious that they are above the legal system? They want humans to behave like little gears in their machines. Wake up before it's too late.

Dumping tea was a tax protest. A general strike is the obvious answer to modern productivity parasites.

Zero Govt's picture

Govts still get the bulk of its income from taxation, the balance between the grotesque orgy of spending and tax takes (socialised theft) is the deficit financed by the borrowing you mention.

You're right it is Big Govt and Big Corps in a parasitical collusion to rob society... the correct term for this is fascism now the practice of both left and right wing parties (the left have almost entirely given up trying to manage industries in their previous practice of socialism).

It's all now one big fascist elite scum... The Parasite Club  ...or as they like it to be called, "democratic government" ....yeah right, pull the other one you MF's

jkruffin's picture

Many of us said for the past 2 years this would all end badly, and the dominoes are starting to fall into place to end the biggest ponzi scheme ever created. How many will end up homeless and left with nothing? We will find out soon enough.

tiger7905's picture

The Camels back is already broken, just no one has notice the 2X4's strapped to each side as a splint to hold it together.

Paper CRUSHer's picture

Yes,I know its rid-i-kill-i.o.u.s too be in cash.I jus' ain't got the guts ain't buyin' jack shit...and that goes for silver too....jus' don't like buyin' those parabola's as the hair on my back is beginning to stand up contemplating $50 silver.

Sudden Debt's picture

just wait untill they give you 1/10oz of silver as your salary this month



Zero Govt's picture

cash is fine, in fact it's a 'safe haven' for now... the real threat to humanity is the credit/debt mountain, that'll be first to blow, during which 'Cash will be King' ....after the hyper-deflation (debt implosion) that's when to worry about inflation and how many Benny Bucks he's printed Debt will be 1st to go, then 2nd the Benny Bucks funny money

sudzee's picture

Vietnam will soon have to print trillion dong notes to buy gold from residents for worthless paper. Watch this situation closely as it may pretain to the developed world gov'ts last kick at the cat. 

Sudden Debt's picture

Silver is not a option for the Japanese because Nickle absorbs the radiation!



Silverhog's picture

Well, were back to the battle of $36. This should fall soon. The real battle ground will be $50.

DosZap's picture

The real battleground is $37.00...............have you seen the WAR at / in the #$36.00 range, there's a MAJOR reason.


Sudden Debt's picture



Go figure.... didn't see that one comming....




I wonder how I will  be able to power my deathray now....

SilverFiend's picture

Seriously,  I need a correction back down to $30 toz so I can add to my stockpile!

Crumbles's picture

Cliff High (Webbot Clif - TSOTTC) predicts $600 silver in 2011, started mentioning spike in silver in early 2010.

warning:  this is scary shit - just avoid the site if you are easily upset


ivars's picture

I think there are few weeks left before a short term ( 1 year) correction at 45-50 USD to 26-32 USD, which may last 1 year. The same proportions for gold- peak at 1600-1700, drop to 1000-1200, till April 2012: Summary in the graph below ( its still clearly worth buying if holding time is > 1 year-but remember MARGINS-the correction will be close to 50%):

What if Japan starts to sell gold reserves?


They already released oil from strategic reserves, and there has not been even a nuclear accident yet, but its obviously brewing.

Zero Govt's picture

Ivars  -  are you making lots of money from your charts?

ivars's picture

Not yet-timing is the problem, and I have little own money that I loose and then recoup when I get the timing right. Training on own money. But I am prepared to make some more money on the DJIA meltdown in H2 2011. The expected difference is from 11500 in July to 7500 in January-March 2012( timing!) .

Basically, on spread betting, You need to sell some 20 positions with margin 200 ( =5000 EUR investment) to make 20*4000=80 000 EUR in the end. Return 20 times. Margin must be adjusted along the slide, stops adjusted, and profits taken every few hundred points so that sudden peak does not eat up too much of gains. Or, more positions can be added.

You do not need too much margin there, as it continues to slide with +-200 points volatility. Oil and gold are so volatile, You need a lot of money to stay in even few days shorterm. Like 1000 EUR margin, even that might be not enough , per position.

But the middle term timing should improve with every new peak/bottom. Little more data needed. So far things going well. If I only had more money - but people who have can use the ideas in the graphs.


Zero Govt's picture

yes "timing is the problem" indeed as i've also found out "training with my own money" ....that's why I just invest straight short or long... your spread betting requires almost pinpoint timing which i don't think can be done unless you have a very defined clear trading set-up pattern ..but i can see the temptation if you've a small pot and are looking for fast bucks

I think your Silver and Dow numbers are good BTW.. but timing is everything

depression's picture

100% bullish sentiment as every news story is now being spun as ultra-bullish for PM. Smells like a top to me.

Zero Govt's picture

Possible but take Silver for example, it's friggin around up and down through $36 Oz like a Yo-Yo .....tops are usually fast spikes up then down, that isn't happening... it looks like sideways action ready for a blow off to me     

adamas's picture

Silver is back in contango. hold your core. if you're a member of gamblers anonymous with a billion oz's bought with a credit card deposit on and hoping for no more than a $1.50 pull back prepare for a shock......

lsbumblebee's picture

Looks like $1430 gold and $36 silver are sore spots from the syphillis that is JPMorgan.

Long-John-Silver's picture

$ Billions are at stake if one or both exceeds those prices.

speculator's picture

Silver explorers index is still down 50% from 2007 highs:


While silver producers are at twice their 2007 highs:


Incredible discrepancy - I bet a lot of those marginal exploration or development properties aren't so marginal anymore at >$30, but you wouldn't know it from share prices.

The list of profitable miners (usually a rarity) must be growing every week:

I Am The Unknown Comic's picture

Well well...looks like Uncle Benny just gave the Blythe whore a fresh wad of POMO cash and told her to go spend it all in one place....

Rusty Shorts's picture

Okay, lets man up and go to Africaaa before China grabs everything that's not nailed down, I've already done the legwork.

youngman's picture

I think PM´s are going to hold for a day or two until we figure out what is up with Japan....and MENA...we know know what is up with the EU.....print more.....but the trend is up and up big....

guasilas's picture

 Pity, Viet nam had the only sensible system in the world:  Untaxed and free trading gold.  Which meant that as soon as the government behaved stupidly with the local currency, people would exit it for gold.  In fact giving power to the people.  Obviously it could not last.

Bansters-in-my- feces's picture

It seems like the "Fucking Pig-Dog" Manipulators are Willing to allow silver to go to $35.80ish,and Gold to $1425.ish.

After that,it's bang bang Maxwells (JPM) hammer comes crashing down on them.

So speaking of Hammers,when is Benny going to get hammered out of a job.?