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Gold Surges In Quiet Trading Session
With no macro data on the docket (the NAR's self promotional "existing home sales" advertising brochure is anything but data), the market will be chasing the usual carry currency pair suspects for hints how to trade. Alas, with even more ominous economics news out of Europe, and an apparently inability of Mrs Watanabe to breach 100 on the USDJPY (hitting 99.98 for the second time in two weeks before rolling over once more), we may be rangebound, or downward boung if CAT shocks everyone with just how bad the Chinese (and global) heavy construction (and thus growth) reality truly is. One asset, however, that has outperformed and is up by well over 2% is gold, trading at $1435 at last check, over $100 from the lows posted a week ago, and rising rapidly on no particular news as the sell off appears to be over and now the snapback comes and the realization that Goldman was happily buying everything its clients were selling all along.
Curiously the other outperforming asset class in the overnight market are Italian BTPs, whose yield was slide by another 11 bps to 4.11% on hope the reelection of the 87 year old Napolitano as president on the 6th round of voting will end the gridlock plaguing Italian politics, bring some sort of political compromise to the country as well as a grand alliance. Yet another one of those "we will believe it when we see it" events, especially with the implosion suffered by the Democratic Party over the weekend.
Speaking of Europe, there was little other good news. ECB's Weidmann told FAZ that monetary policy must focus on inflation, hardly news the Buddhist monetarists (all about the here and now, tomorrow never comes) wanted to hear on a monday morning. Adding to the worries of the EUR bulls, Bonnici echoed Weidmann from last week, adding that a rate cut would have "limited impact", an outcome further justified by Asmussen who said a rate cut is possible if justified by the data. This explains the inability of the EUR to catch any bid in the overnight session. The final hammer in the European economic coffin came from the Bundesbank which said that "sluggish industrial production and cold winter weather" may have delayed Germany's economic recovery. Yep: the weather is to blame again.
Adding substantial pressure on the future of Europe was news overnight from Handesblatt that the German anti-Euro party would gain 19% of the political vote.
Finally, rounding off the picture, was the update that Euro-Area government debt rose to a record 90.6% of GDP in 2012. How did the Keynesians react to this news? "Not Nearly Enough!"
A quick look at European markets:
- Italian 10Y yield down 11bps to 4.11%
- BTP/bund 10Y spread -12bps to 285bps; earlier hit 2-mo. tight at 280bps
- Spanish 10Y yield down 7bps to 4.56%
- U.K. 10Y yield up 4bps to 1.7%
- German 10Y yield up 1bp to 1.26%
- Bund future down 0.03% to 145.98
- BTP future up 0.82% to 113.93
- EUR/USD down 0.05% to $1.3046
- Dollar Index up 0.08% to 82.78
- Sterling spot up 0.06% to $1.524
- 1Y euro cross currency basis swap up 1bp to -21bps
- Stoxx 600 up 0.78% to 287.43
SocGen's summary of key macro events to watch out for:
Headlines from Italy over the weekend are delivering a positive impetus for cross asset markets as the week gets underway, with periphery debt the main beneficiary and 10y BTP yields slipping closer to 4.00%. This has not translated into higher EUR/G10 which says quite a bit over EUR sentiment and a bias to focus on the USD side of the equation especially with a raft of US data including GDP looming this week. The wealth effect is finally helping support the US housing market. After sending long-term rates into a nosedive, now that households have deleveraged (SG report), and as US stock markets recently hit their highest points since 2007, the wealth effect of US households is being rebuilt. This should be reflected in existing home sales today.
This probably creates some hope for the outlook for domestic demand, and thus supports our call on the Fed. However, the Fed is in no hurry to put a stop to its asset buying policy (currently $85bn/month). As a reminder, retail sales reported on 12 April disappointed, but this week's data rush will provide a fresh angle.
The situation is not at all the same in the eurozone, with very different leverage and wealth effects. Given the unemployment rate of 12%, household confidence to be reported today will unfortunately most likely reaffirm the bleak economic situation. Against this backdrop, it is tough to be optimistic on the capacity of European households to boost business morale. Output growth has stalled, thus the ECB is having a hard time finding a satisfactory solution right now in overcoming a fragmented North/South divide. Speculation on another rate cut will not go away especially after Weidmann's comments last week: most participants who have floated this possibility of more stimulus are nevertheless doubtful that it would have a big impact on activity.
That said, this just bolsters our scenario in the medium term for a drop in the EUR/USD, and an underperformance of the US bond markets vs EUR bond markets in H2 2013.
The news cycle from this weekend via DB's Jim Reid
Just over 20% of S&P500 companies have reported earnings thus far, represent about one-third of the index’s market cap, and we’re starting to get a clearer picture of how the reporting season is panning out in the US. As we mentioned in last Friday’s EMR, we are seeing a large divergence in terms of the EPS and revenue performance. Of the firms that have reported so far, the beat/miss ratio for earnings is 71%:27% (2% in line). However the beat/miss ratio for sales is currently tracking under 50% (currently 48%:52%). This is clearly a weaker performance versus the 64% sales beat ratio in Q4 2012 but slightly better than the 42% and 41% in Q3 and Q2 of last year so this is not a new trend. For the record, current Q1 EPS beats are not too dissimilar to what we saw in Q4 (74%), Q3 (72%) and Q2 (71%) of last year. It does seem that the stronger Dollar and perhaps weak European activity are having a drag on top line numbers this time round but our US equity strategist David Bianco also noted that net interest margin pressures (on banks), flattish commodity prices, and still soft capex conditions are all reasons behind the sales weakness. By industry, Financials, Healthcare, Industrial and Tech are having the weakest sales beat ratios this reporting season.
It is still early days for Europe but we are also witnessing a similar trend here. Of the 40-odd Stoxx600 companies that have reported so far, 60% of those have beaten EPS estimates but less than 40% have been able to do so on the top line. Stoxx600 EPS beats have ranged between 55%-58% in the last four quarters so the current run-rate is not far off that. Sales performance has been typically the bright spot though for Europe given a 60%-plus beat ratio (other than Q3 12’s 54%) in the past year so we’ll see how European sales stats unfolds this time round. Our usual earnings tracker table is included in the PDF of today’s EMR. Staying on this theme its worth highlighting that we are also moving into one of the peak reporting weeks in Japan. Over 50 Nikkei firms are lined up to report this week, which represents about 32% of the index’s market capitalisation. Japan clearly has been one of the bigger macro stories this year and with the Nikkei being a global outperformer to date, corporate fundamentals may eventually need to show signs of improvement to support the rally. We’ve seen 8 Japanese firms report so far of which 6 have beaten sales estimates but only half topping EPS consensus. The Nikkei’s sales beat/miss ratio for the corresponding quarter was an unimpressive 49%/51% although EPS performance was solid at 63%:37%.
Clearly its early days still but we have an interesting few weeks ahead to see what a 9% depreciation of the JPY during the 3 months of 2013 will do to corporate results. For what it’s worth, a 11% decline in the Yen between October-December of last year seemed to have done little for top line. Maybe there's a J-curve impact and the fruits of the Yen devaluation will come through more as we move through the year.
Turning to some of the weekend headlines, perhaps the most significant news of note was the re-election of Giorgo Napolitano as President of Italy. Napolitano becomes the first Italian president to be given a second seven-year term after reluctantly accepting a plea from the Democrat Party along with caretaker PM Mario Monti and Silvio Berlusconi to stand again. DB’s Marco Stringa thinks that markets will react positively, even if Napolitano reflection is a symbol of the fragmentation within the Italian political system. On the positive side, the market should be relieved that the risk of elections in the summer should be avoided and that finally a new government can be formed. Indeed, they see Napolitano’s reelection as an implicit commitment by the centre-left, centre-right and Monti’s Civic Alliance to support the formation of a grand-coalition government sponsored by Napolitano. On the negative side, the Presidential election process sends a message of political fragmentation. The fragmentation across parties in the Parliament was already well known, but the dramatic fragmentation within the centreleft Democratic Party was a negative surprise. Napolitano’s election comes after Bersani’s other candidates former PM Prodi and Franco Marini faced opposition from within Bersani’s own coalition. Given the political fragmentation, DB’s central case scenario is a government timeframe of just one or two years.
Early elections in October 2013 cannot be excluded, but now they appear much less likely now. The big question for the new administration is whether they have the appetite and political will to push through much needed economic reforms. An interesting few months still await even if the risk of fresh elections should have receded.
The G20/IMF/World Bank meeting wrapped up over the weekend, with the G20 simply reiterating its pledge to avoid competitive devaluation and saying that the BoJ’s monetary policy is “intended to stop inflation and support domestic demand”. Shortly after the meeting the BoJ’s Kuroda told reporters that “Winning international understanding gives me more confidence to conduct monetary policy appropriately. We will continue our qualitative and quantitative easing for the next two years”. The yen is a touch weaker against the dollar this morning (+0.2%) after depreciating 1.4% last Friday. Meanwhile the Nikkei (+2.1%) is off to a strong start to the week as the G20 hasn't really leaned on Japan to be more circumspect.
Elsewhere in Asia, markets are broadly stronger with most equity indices trading about half-a-percent higher overnight. The Shanghai Composite (-0.4%) is the main underperformer as Insurers were led lower by news of the Sichuan earthquake that saw at least 188 fatalities and over 11,000 injuries. The death toll from H7N9 avian influenza has also climbed to 20 (out of 102 confirmed infections) in China. WHO experts suspected human transmission ‘in very rare cases’ but this is clearly still an open issue for markets to keep a close eye on.
As newsflow from the Korean peninsula starts to fade there have been some snippets from the Middle East. In a week-long visit to the Middle East, US Defence Secretary Hagel pressed an American agenda on Sunday focused on deterring Iran (including a new weapons deal for Isreal) coupled with caution that it would be premature for Israel to opt for unilateral strikes on Tehran's nuclear program. Mr Hagel however on Sunday acknowledged that there might be 'minor' differences between the US and Israel on the timeline in which Iran might develop nuclear weapons (NYT).
Looking in more detail at this week’s calendar, in the US the highlight is Friday's advance Q1 GDP reading. Consensus is calling for GDP growth of 3%. Outside of GDP, we have existing home sales today followed by new home sales tomorrow and durable goods orders on Wednesday.
In Europe, tomorrow’s flash PMIs for April will be the most closely watched data point for the week. Outside of that we have advance Eurozone consumer confidence numbers for April later today, Germany’s IFO survey tomorrow and on Friday we have March credit aggregates. The UK will report Q1 GDP on Thursday.
In Asia the BoJ’s meets on Friday – and with all the major announcements last meeting, there should be no major surprises from the central bank this week. However the BoJ will be updating its economic and inflation forecasts for 2013 and 2014 this week. In China, flash manufacturing PMIs are scheduled on Wednesday.
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Surging up 1%
Silver is not able to follow. A very bad sign. We'll probably see sub-23 silver again soon.
Silver up 2.8%
Well....there you go. Someone just needed to give it a kick.
It has not even cleared 24. It massively underperformed gold on the snapback.That's a sign of weakness. The copper market is holding silver down.
Sounds good....on paper that is.
You can't buy an oz of silver (physical) for less than $29. That's the real price for the real thing.
But thanks for your comments, Jamie.
Sorry, I can buy lots of silver here in Switzerland for small premiums.
I would like to see it acting differently, but it's just not showing the strength that one would expect. Industrial demand is weak and the effect of huge investment demand is not yet able to counter that. It might change, but it clearly hasn't occured yet.
You got to stay realistic.
I guess reality is geographic. Premiums on silver in the US are stratospheric right now.
That being said, this move up in gold is making me ill. Silver as well. I was hoping paper would continue to get smashed. Stocks up, oil up etc etc etc today just makes it seem like we are back to where we were....and this is with the Bernak bailong on Jackson hole.
The physical dealers in certain markets probably need to restock after the weekend, and the paper-pimping-banksters need to reload for another drive-by, so why not be up Monday morning?
You got to stay realistic.
Wait for it to go to zero.....then offer to haul it away for free.
Fuck.
Please don't give away my business plan (silver scrapper).
Industrial demand? Oh...you think that economic funcamentals have something to do with asset prices? I thought I was having an exchange with a sane person...Let's just ignore the BOJ, ECB, and the Fed, shall we?
Ignore supply/demand metrics at your own risk.
Only those assets which tptb want to go up (stocks, bonds) have profited from QE3. Commodities didn't. Silver's run from 20 to 49 in 2010/11 was underpinned by actual shortages. We had massive backwardation in the futures curve back then. There is nothing like that happening right now. Silver is an industrial metal as well as a monetary metal and industrial demand is just not strong right now.
16% of the whole US production in silver was wiped out right before the smashdown in the paper market due to a mine collapse. We shall see on the demand part but that should affect prices after this run subsides for production on new bullion and bars.
or is it that the world is starting to recognize that gold is money and nobody expects much positive correlation between flooding fiat into the system and car sales (aluminum blocks) or electronic equipment and other things that affect copper. As more folks begin to realize that gold is money, being dirt cheap right now and it's the only safe hedge against these banksta maniacs it's possible that gold could lead the way to new highs while industrial metals fall into a coma.
And silver is both money and an industrial metal! G/S ratio will be 1:1 in the not too distant future- you heard it here!
What company, do they shp to the US?
Kitco selling 1oz silver Maple Leafs at 27% premium.
Valcambi, Europe's largest refiner, does ship to the US as far as I know.
The lowest premiums for bars are available at the tbtfb CS and UBS if your're buying serious amounts. But they won't ship to the US.
No, but you can manipulate it by taking 2, $12 silver half dollars, and calling that an ounce. Like pinching a bag of hooch, and keep it 4% range bound to sleep at nite.
i bought 500 silver maples at vancouver bullion exchange on friday for cad $26.91 so usd ~$26. they told me that sales had been very strong for both gold and silver and that the maples he was selling me were not new. if u want new ones its a 2 week wait.
I hope so. I need more.
10y BTP now 4.04% and 10y Spain 4.53% after horrendous deficit figures
Can't say I look at the paper Gold prices much more anymore - the price of Gold IOUs is not the price of Gold.
Then there's the LBA which is really a members-only old boys club, not a real market.
Do you have some real source of Gold prices that reflects actual store prices?
Makes it a little hard when Germany can't even get back the gold for 7 years that they actually own to begin with.
One has to ponder on the meaning of "ownership" itself in this case.
You can go to court to get back what you own....but then you just have to hand it over to the lawyers.
The lession to learn....is never let someone hold what you own.
I can think of one exception!
Like my timex watch.
The exception I'm thinking of isn't (usually) detachable.
Especially if she'll hold it in her mouth...
Real gold is going for $1495 - $1515. At least as of the wee hours.
To me, the real issue is how many sheeple dollars were scared from GLD to SPY. The criminals may have simply transfered wealth and moved the herd into the next slaughter pen. We'll see in time...
Ebay is showing 1 oz eagles selling at 1525. APMEX is selling at $1517 and buying at $1475.
Given premiums are about $65 over spot right now, the real phyzz price is about $1455, or $20 higher than the paper price ($1435, +$39 as of this writing.)
We all know that gold has been hit below the belt but the reality is that many dealers are taking advantage of the healthy buying to ask for premiums that are excessive in some cases. Many dealers are also stating that delivery might take a week or two so as to give the impression of short supply even thought they have adequate stock on hand.
What is scary is the vast multitude of people who have fallen prey to years of unrelenting conditioning so as to believe that fiat by the convoy is somehow saner and of more value than precious metals. It is astounding how so many people trust in the unlimited production of a printer rather than the slow release of mother earth and the hard toil of man.
So keep in mind that gold is valued not jsut because of its scarcity but also the labour cost of extracting a single oz of gold.
The FED can print gold and Bernanke pisses the gold ink for the presses...
World Gold Council takes a week to realize that sell off was due to speculators on comex. This is according to "comments to be attributed to Aram Shishmanian." i.e. He didn't even bother writing the press release himself.
http://www.gold.org/download/get/pr_archive/pdf/AES_media_alert_on_deman...
This is after Marcus Grubb of the WGC unbelievably remarked to Bloomberg earlier in the week that the selloff was because investors thought there was a recovery and that gold was being seen as just another asset. To Quote Mr Grubb:
"Investors may be selling gold because they believe “recovery is coming and therefore gold is less useful as an asset,” Marcus Grubb, managing director of investment research at the World Gold Council, told Bloomberg Television’s “The Pulse” yesterday. “That’s what’s driving this down move"."
Remind me again who the WGC really represent?
Hint: see this course which is being organized by the WGC next week in UC Berkeley:
http://executive.berkeley.edu/programs/executive-program-gold-reserves-m...
sell off was due to speculators on comex
Has anyone actually tried to take delivery of a contract off the Comex?
Anyone........anyone?
Don't chime in all at once....and please present your proof in the form of pictures.
I called my broker to get physical delivery of my SLV I had purchased some time ago, you know, kind of like getting actual stock certificates for shares you buy. All I got in response was a really long pause on the other end of the line. Brokers are trained to be great salesmen but I think I left mine totally speechless
You should sell now and just get some cash. You'll never see any silver from SLV. Hah.
Didn't you read the prospectus on SLV?
You have no right to silver.
Foiled......again.
Yes, but the last time was way back one rinse, repeat... banking crisis ago, PMs were significantly cheaper then now, and it still took a month or so.
And NO you can't have pictures- whether of comex gold/silver, cash and carry gold/silver, massive mountains of lead, or stashes of scary lead delivery devices... none of those things should ever see the light of being posted on the internet, asking to see my home movie collection would be more polite, and more sensible for me post...
Celente takes delivery, except when he got Corzined.
It's only around 2oz to attend.
The Illuminati are desperate. As evidenced by the PM shenanigans. They know there will never be a NWO, and are mighty pissed. Mighty. Buy all the PM's you can. The dawning of a new age is upon us. One where greed has no place. The Galactic Federation confirm, after the Illuminati have been kicked out, there will be a global currency based on PM's. The best 'insider' tip, ever. And being representatives of God, they cannot tell a lie. Buy! Buy! Buy!
At least you didn't blame the joos.
Those guys have had some bad press lately.
I know from whence I speak. Even the Zionists are owned by the Illuminati. All of whom just got a severe arse-kicking from the Galactic Federation. Yippee!
More smashes coming as the paper metals go through convulsions. Just take advantage of the prices if you can find any suckers selling.
OpEx is 4/25, so it seems likely one or more smashes will happen before then.
If not, given the price increase so far this AM, something isn't going according to plan. One can only hope a massive wave of delivery notices hits this week.
I'm hoping it crashes below 1400 to get back in. Wouldn't be surprised if we see another big waterfall move before this is over.
BTP up 160 points now HOD unreal
Love the sound of that snap-back... Screw Blankfein & Goldman Sachs!
i dont get it , in euroloand silver is cheaper now than in apmex.ect.. Premiums have gone up in usa but not in eu land. weird.
Not many buyers over there?
In my exp. no. There's a VAT on silver, but not on Gold... which helps direct funds into gold over silver.
Do you think the Neo-Nazi's trust the Chicoms or the Ruskies to refine the fuits of their teeth pulling and serf shaking? The thieves might just get bars and coins back wrapped in silver foil.
Look at the list of LBMA acceptable refiners, their annual volumes, and geographic distribution- ask yourself - where would I go if...
That and the fact that a 300-year old silver set in Europe didn't necessarily belong to any elite or revolutionary figure, so we can dig tons of it, out of tons of basements, cheaper than others can dig tons of it out of the ground.
Mr Grubb truly a talker of shit and shill. Is there anybody on the entire planet that would believe that?? He must feel totally emabarassed knowing he just exposed himself as cock puppet shill for TPTB.
Yes, those who still have "faith" in the system because it is rewarding them. They sit on both sides, D & R, Liberal and Conservative, etc. Those are the ones that need to be kept blind because they fund elections and keep the whole game running. As long as it's just the dregs taking to the streets, police can tear gas them into submission all day. Once those with the money realize the jig is up, the fund flows change course and positive changes (dislocation of current power structures) may potentially occur.
May still be in for a price pullback / take down towards the end of the week for options expiry.
"Nothing is more thrillin' then to stack up some new buillion in the morrrrrrning!"
Got my Silver Eagles right on time I ordered Monday nite at the (for now) low. I love the smell of fresh stack in the morning...smells like..victory!
I just thought everyone should know that silver will close today at +/-$23.30...