Precious Metals

Today’s AM fix was USD 1,715.00, EUR 1,347.42, and 1,075.84 GBP per ounce. 
Yesterday’s AM fix was USD 1,730.50, EUR 1,345.86, and GBP 1,080.75 per ounce.

Silver is trading at $31.85/oz, €25.10/oz and £20.00/oz. Platinum is trading at $1,546.75/oz, palladium at $607.30/oz and rhodium at $1,100/oz.

Gold rose $2.10 or 0.12% in New York yesterday and closed at $1,718.30. Silver hit a low of $31.209 then recovered in late trade but still finished with a loss of 0.56%.

Investors should prepare for rising prices and more expansionary monetary policy now that President Barack Obama has won re-election, investor Jim Rogers told CNBC on news of the election. The co-founder with George Soros of the Quantum Fund said he expected Obama’s policies to drive up commodities and drive down the U.S. dollar. As the Federal Reserve moves to ‘stimulate’ a stalled economy through debt purchases, Rogers says markets should expect the status quo to remain the same. “If Obama wins, it’s going to be more inflation, more money printing, more debt, more spending.” Rogers told CNBC, saying he expected to sell U.S. government debt and buy precious metals, such as silver and gold.  “It’s not going to be good for you me or anybody else.”

Once upon a time there was a myth that the equity market can only go up, year after year, with the average annual return according to such esteemed counting institutions as Ibbotson, at 10% or more. Then, we got the November 7, 2000 presidential election, which took place when the S&P was 1432. Fast forward to today, skipping the second and third elections in the interim, and going straight to today's fourth presidential election. The closing S&P today? 1428. We have now had four presidential elections... and a funeral - that of the "stock market always rises" myth. But wait, it gets worse. The numbers above are nominal. When adjusting for the real purchasing power lost in the past 12 years, whose best indicator in a regime in which CPI data is constantly fudged and manipulated, is the price of gold, one can see that 3 presidential elections later, the S&P 500, when priced in gold terms, is now 83% lower. In other words, how is that wealth effect working out for you? And where will the stock market be in another 3 presidential elections in either nominal or real terms? One can only hope that Japan is not prologue...

Here’s a breakdown of gold and silver performance by political party for the last 5 US Presidential terms.

Turkey’s trade deficit has been shrinking and the country has enjoyed the best bond rally in the emerging markets this year due in part to the contributions of airline passengers transporting gold in their baggage. Statistics from Istanbul’s 2 main airports show $1.4 billion of precious metals were registered for export in September.  Iran is Turkey’s largest oil supplier and Turkey has been paying for the oil not only with liras but also with gold bullion. Turkey exported $11.7 billion of gold and precious metals since March, when Iran was barred from the Society for Worldwide Interbank Financial Telecommunication, (Swift) making it nearly impossible for Iran to complete large international fund transfers. Of the $11.7 billion, $10.2 billion or 90% was to Iran and the United Arab Emirates, according to data on Turkey’s state statistics agency’s website. Turkey’s current account deficit is second in the world at $77.1 billion or 10% of GDP while the US currently holds the top spot.   The problem with Turkey switching from a net importer to a net exporter of gold bullion this year is that the foreign trade data is misrepresented. Turkey’s use of precious metals is a key factor to help turn around its nation’s current junk bond rating status.

Given that every single election in our lifetimes has been a sham between two candidates that serve the same money master, do something much more constructive and helpful for America than wasting your time and energy at the voting polls tomorrow.

In terms of storing your wealth or preparing for what’s to come, I think everyone should have SOME gold and silver bullion on hand.

Gold looks to have stabilized and is building a basing pattern.

Equity markets in Europe traded higher today, supported by solid corporate earnings, further monetary policy easing from Japan, as well as what can only be described as “less bad” GDP report from Spain. Also, commodity complex benefited from upward revision to China’s GDP estimate by analysts at Bank of America (Q4 GDP estimate now stands at 7.8% vs. Prev. view of 7.5%). Decent demand for the latest debt issuance saw IT/GE 10s tighten by c.5bps, with SP/GE 10s also seen tighter by 3bps.

So with world central banks printing paper money day and night it is no surprise that Gold is now emerging as the ultimate currency: one that cannot be printed. Indeed, Gold has broken out against ALL major world currencies in the last ten years. The below chart prices Gold in Dollars (Gold), Euros (Blue), Japanese Yen (Red) and Swiss Francs (Purple):

Bloomberg reports that Chinese silver demand is set to climb nearly 10% next year as investors look to preserve their wealth. Although China as the 2nd largest world economy may be in an economic slump, investors are seeking out silver as a value alternative investment.  Silver climbed 15% this year and ETF’s holding silver have gained 6.5%. Research from Beijing Antaike said that 33% of the country’s demand comes from jewellery and coins, the rest for use in photography, solar panels electrical appliances.  “Many producers and investors have hoarded the precious metal in the form of ingots or unwrought silver.” After the US Fed’s QE1, (December 2008-March 2010) silver rocketed 53%, almost twice the jump as gold, and for QE2, (ending June 2011) silver rose 24%. Morgan Stanley predicts that silver will again return more than gold after QE3 was announced this September. Chinese national statistics show that jewellery sales rose 19.3% for the first eight months compared to last year.  “I’m bullish on silver, so I personally have stockpiled 3 tons of it at home,” Yang Guohui, president at Hunan Yishui Rare & Precious Metals Recycling Co., said in Xiamen on Oct. 17. Yishui is based in Yongxing County, Hunan province, where about 20 percent of China’s silver is from, according to Huang Xiaoming, head of the local precious metals management bureau.

Legendary oilman T. Boone Pickens famously calls America’s oil imports ‘the greatest transfer of wealth in the history of the world.’ Pickens is referring to the money that is paid each year to oil exporting nations, particularly those in the Persian Gulf which raked in around $100 billion last year. No doubt, this is an enormous transfer of wealth. But it’s a drop in the bucket compared to the TRILLIONS that Ben Bernanke gives the world’s elite. It constitutes, by far, the greatest transfer of wealth in history, vastly exceeding America’s energy imports. It’s an unconscionable, immoral, ridiculous game. But there’s good news– we can stop playing whenever we want. We don’t HAVE to hold their worthless currency. We don’t HAVE to keep transferring our purchasing power to an elite group. We can “opt-out”. Trade as much of their paper as you can for something REAL, especially physical precious metals.

Hands down, the best way to trade stock market volatility day today is simply not to do it, cash out, and purchase hard assets, in particular, precious metals.

Romney has stated several that he would fire Fed Chairman Ben Bernanke if he wins office. While this doesn’t represent the real shakeup that the Fed needs, it’s definitely a step in the right direction. The question is if the market is predicting this or something else is happening.

The blinding nominal light of a Dow Jones Industrial Index near pre-crisis highs is enough provocation for most of the well-assuming US citizenry to 'believe'. Ahead of the third and final Presidential debate this evening, QBAMCO's Paul Brodsky and Lee Quaintance distill the listening audience into Realists and Nominalists. The critical difference between the two, which is described below, is hidden notably from view as the rhetoric within the institutionalized process of vetting and voting for our next President is narrowly focused, intentionally avoiding any major sticking points that will really bring change. As a result, they note, public policy and the people picked to craft and execute it have become anodyne; further implying that regardless of the outcome of the election, inflation will be the accepted manner of de-leveraging to be pursued; but the re-awakening of the so-called 'Chicago Plan' does acknowledge that significant monetary change is likely (for better or worse). Our leaders are dividing us with idealism and conquering us with vote counting. And yet... we all know it’s fake.