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Precious Metals – Gold

Pivotfarm's picture




 
Gold has been hovering in the middle of a trading range for the past few trading sessions, while the most recent FOMC statement has been price supportive of precious metals and gold in particular.  While this is true, many economists have lowered their core 2013 inflation forecasts from 2% - 2.1% to 1.5% - 1.75% due mainly to the less aggressive indicators for the inflation of consumer basics.  Overall sentiment in the market is that the current regime of Asset Purchasing or QE is now set to begin slowing going into 2014. With the inclusion of the sound payroll numbers of April this year, the overall picture for Gold remains difficult to determine with a strong conviction. 
Gold ETF’s are reducing their holdings with outflows of 736.5koz month to date.  This is on a nearly 5.5moz decline in gold holdings for Gold ETFs for the total month of April.  The Net Gold holding for Gold ETFs rests at 8.4moz, which are the lowest levels for Gold ETFs since April 2008.
Futures data indicates a small 0.2moz reduction in Net Longs at the end of April.  Short Gold Futures are the heaviest trade with a value of 13.3moz near the all time high.
The combined reduction in ETF net Physical Gold holdings and Heavy Short Positioning as reported by the CFTC continue to add pressure to the yellow metal.

Net Longs
4/22/13               8.61moz
4/30/13               8.38moz

Precious Metals ETF Holdings    
  
4/29/13            77.94moz
5/6/13              77.09moz
Change           -  0.85moz

Source: UBS
 

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Tue, 05/07/2013 - 21:39 | 3539520 August
August's picture

I would interpret the decline in metal held by PM ETFs as a consequence of the public's declining interest in holding PM ETFs as a proxy for actual metal.

Tue, 05/07/2013 - 20:16 | 3539302 Cycle
Cycle's picture

If you look at a chart of CPI and gold prices, there isn't a lot of correlation for long periods, so perhaps decisions made on buying gold given the presumed rise or fall of CPI may not be that good. I think you are right that the price is at a crossroads, but you can see here that there may be a strong rise in price in early 2014, after another 6 months of bouncing around +/- 300. Given its past performance, it might provide a clue going forwards. The analysis is pretty simple, you can decompose the price time series into a set of 'statistically ha ha signficant ha ha' cycles which you then recompose with a future time input  to get estimated future prices.

Tue, 05/07/2013 - 19:50 | 3539226 XOFnews
XOFnews's picture

no sales taxes

Tue, 05/07/2013 - 19:44 | 3539215 Doubleguns
Doubleguns's picture

I am thinking a good ole fashion short squeeze could change a lot of dumb asses into jack asses. 

Tue, 05/07/2013 - 19:56 | 3539245 Room 101
Room 101's picture

Yep.  Deflation seems to be in the cards.  Not understanding the gold bulls.  Long term, I agree.  But why pay more FRNs now when you can get it for less later?

Tue, 05/07/2013 - 20:19 | 3539313 AllThatGlitters
AllThatGlitters's picture

A short squeeze would mean higher prices.  Did you really mean to say "yep?"

Tue, 05/07/2013 - 19:42 | 3539210 XOFnews
XOFnews's picture

.999 Bitcoins for sale. IRA approved.

Tue, 05/07/2013 - 19:39 | 3539204 AllThatGlitters
AllThatGlitters's picture

When I see "the yellow metal" used as a substitute for "gold," I assume the piece is just another shallow regurgitation of somebody else's thoughts, with no depth of analysis, orginal thinking, or new information. While the no longer clever cliche was saved for the end of this article, I had already arrived at that very same conclusion! "The yellow metal" was still clever when the second opinion spewer borrowed it from the first one.

Tue, 05/07/2013 - 19:44 | 3539216 AllThatGlitters
AllThatGlitters's picture

OK, before the down-arrows start to appear, that was dumb and rude. I guess my dislike for the overuse of the phrase is my problem.

Tue, 05/07/2013 - 19:55 | 3539241 Room 101
Room 101's picture

-1 for apologizing.  "Yellow metal" is an overused and trite term. 

Tue, 05/07/2013 - 20:12 | 3539293 AllThatGlitters
AllThatGlitters's picture

OK, OK.  Apology rescinded.

Fri, 05/17/2013 - 00:10 | 3571831 Ctrl_P
Ctrl_P's picture

-1 obviously an ambivalent sychophant.

Tue, 05/07/2013 - 19:10 | 3539124 Cult of Criminality
Cult of Criminality's picture

Sound payroll numbers ?     hmmm

Tue, 05/07/2013 - 21:35 | 3539515 let-them-eat-cake
let-them-eat-cake's picture

Doubting "the numbers" makes you a terrorist.

Tue, 05/07/2013 - 19:05 | 3539109 Bullionaire
Bullionaire's picture

"...many economists have lowered their core 2013 inflation forecasts from 2% - 2.1% to 1.5% - 1.75% due mainly to the less aggressive indicators for the inflation of consumer basics.  Overall sentiment in the market is that the current regime of Asset Purchasing or QE is now set to begin slowing going into 2014."

 

 

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