Gold And Silver Surge Over 3% And 4% Respectively On Iraq, The Fed and Commodities Ponzi

GoldCore's picture

Gold has surged over $41 and silver over 70 cents to over $1,314 and $20.46 per ounce or 3% and 4.2% respectively.

Gold and silver have surged and added to overnight gains as geopolitical risk raised its ugly head once again. The situaiton in Iraq has deteriorated leading to deepening tensions in the region and oil prices steadily marching higher. There are also concerns that the Chinese commodities collateral fraud could lead to a scramble for physical metals - both base and precious.

Stocks and the dollar have weakened after the U.S. Federal Reserve confirmed ultra loose monetary policies are set to continue due to slowing economic growth and despite inflation pressures building. The Fed cut its U.S. growth forecast for 2014 from 2.9% to a range of between 2.1% and 2.3%.

Oil prices rose again today and remain near multi month highs on concerns of supply disruption. The violence gripping energy producer Iraq continued to create supply fears, with global crude pushing higher after hitting a nine-month high.  Army troops and Islamic militants battled for control of Iraq's largest oil refinery, which by late Wednesday remained in government hands.

However, this morning AP reports that ISIS militants are flying their black flag over the Iraqi Baiji refinery. Tensions over Iraq and Ukraine are attracting some safe haven bids for gold.

Platinum and palladium rose as new hurdles emerged in settling South Africa's industrial unrest and doubts remain about the viability of Russian supplies.

The smart money continues to dollar cost average into gold and is getting into position. The half year and full year weakness we saw in 2013 may be seen again and create a buying opportunity for bullion buyers.

?Bullion Coin And Bar Global Price Match Guarantee

Faber Advises 25% Allocation To Gold And Says “Media Doesn't Like Gold"
Dr Marc Faber told CNBC in an interview yesterday that the “media does not like gold.” Dr Faber, the author of the Gloom Boom Doom Report sought to explain gold’s poor price action recently and suggested it is due to poor sentiment and the fact that “the media doesn't like gold."

“Investors should have some exposure to gold" and Dr Faber has been adding recently as gold (and gold stocks) are so much cheaper than “over-inflated stocks”.

"I have an exposure of approximately 25%, and just recently when it dropped, I bought some more," he said. "Nothing is particularly cheap, [but] gold is relatively cheap compared to equities at the present time."

Faber holds around 25% of his assets in gold because he believes we have a “colossal asset inflation” and eventually the monetary policies of central banks will lead to a further loss of purchasing power in the value of paper money.

When asked by the CNBC anchor why investors are shunning gold, Faber suggested one reason is  "because the media doesn't like gold, nobody at CNBC owns gold. Nobody at Bloomberg owns gold. Gold is being constantly talked down by the media, and Fed officials, and economists, who also don't own any gold. They're all stocked up in equities."

This is an interesting point as we know from conversations with financial journalists in London that many of them are actually banned from owning gold by their employers as it would create a “conflict of interest.” Bizarrely, at the same time they are allowed to own other asset classes such as stocks and bonds and can have cash deposit accounts.

Therefore, there is the possibility that there is a cognitive bias towards certain asset classes and against other asset classes amongst journalists. This is unfair to gold and indeed to the journalists in question as it means that they cannot own a properly diversified portfolio.

It was funny that in the CNBC coverage of the interview, the producer confirmed Dr Faber’s assertion and disclosed at the bottom of the piece that he does not own any gold:

“Disclosure: The writer of this article indeed does not own any gold.

—By CNBC's Alex Rosenberg”

Dr Faber, pointed out the bias against gold in the very language used to describe gold proponents. "When people talk about people who are optimistic about gold, they call them 'gold bugs.' A bug is an insect. I don't call equity bulls 'cockroaches.' Do you understand? There is already a negative connotation with the expression of 'gold bug.'"

The somewhat pejorative language used regarding those who advocate owning gold is another very interesting point and one we have pointed out before. People who are bullish on stocks or the dollar are not called stock ‘bug’s or paper ‘bugs’ rather they are stock bulls and dollar bulls.

Faber recently told GoldCore in a webinar how he will “never sell his gold”, he buys “more every month” and believes storing gold in Singapore “is safest”.

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Bemused Observer's picture

With so many people in the financial world hating on gold, I sure wish they'd shut the hell up about it already! I don't appreciate them 'talking it up' and getting folks all interested in it again...Right now, PM's seem to be as popular and desirable as Precious Moments figurines or Beanie Babies, and like those I'm finding PM's in the yard-sale equivalent of the 25 cents box...I don't relish the idea of sellers getting the notion that the stuff may really be worth more.
So, you talked about drive on and talk about Kim Kardasian's ass or something and stop screwing up a good situation for folks like me!...

False Capital's picture

Gold is usually capped at a 2% daily upward move, and has been for years. What the hell happened today? Has the Fed lost control?

master bait's picture

Nothing extraordinary and nothing to get your shorts in knots yet, don't see any follow through in equties to know what the move today is about, just nice to see a little voltility one way or the other in my paper and PM pile.

Acidtest Dummy's picture

Op failed to mention the Russkie minister's advocating for dumping the dollar (to stem that darn exceptional 'merikan adventurism.) Point being: anyone can guess why Au does this or that, but Au don't care (specially don't care for guesses spoken in English.) I am unimpressed by "analyists" who say, "Oh, gold went up (or down) x-percent." Gold didn't change at all -- something changed, but it wasn't gold changing. 

 It seems rather more important to know where it is or what its direction is (velocity or trajectory) than how many zeros are on a piece of paper (or ledger) today. 

 How much energy to synthesize one atom of Au? Is it more today or less?




swmnguy's picture

That's the key to it, right there.  Gold doesn't do anything.  Ever.  I've heard that since at least Roman times, 1 oz. of gold is what it has cost to buy a good suit and pair of shoes (not fabulous, mind you; but good).

The price of gold in whatever unit you choose doesn't tell you a thing about gold.  It does, or can, tell you quite a bit about your measuring stick though.  Gold itself does nothing.  It just sits there, at the bottom of the lake near the wreckage of your boat.  Everything else moves and changes value and does whatever it does.  That's why we bother measuring gold's value in other things; not to learn anything about gold, but to learn about the other things.

Before the advent of fiat currency, I'd imagine the idea of the value of gold would be a very confusing question to the average guy.  They could tell you much wheat per oz. of gold, or how much lumber, or how nice a suit and pair of shoes.  And how much more or less wheat this year than last year per ounce of gold.  But the value of the gold changing?  That might have been a brain-pretzel for most people.

Come to think of it, the idea of gold's having a changing value might not have occurred to people until flailing regimes started to debase the coins.  Then the official value of the coin would have been whatever it's value in gold, but since the coin was mostly lead (pre-tungsten), one could speculate on the differential between the face-value and the actual value of the proportion of the coin that really was gold.  So in that regard, debased coinage was the first fiat, which in turn created the notion of a price of gold in fiat terms.  Interesting.

logicalman's picture

I think you just explained why the printers hate the stuff.

RaceToTheBottom's picture

Funny Marketwatch has no mention of Gold or Silver.  Nothing.


Financial Media SUCKS

Bananamerican's picture

I'm personally amused at the way MarketCrotch regularly flushes it's comments section

marchare's picture


messymerry's picture

The monkeys have been pretty quiet over the past few weeks.  Do you guys think they will start hammering again???

quasimodo's picture

Does a bear shit in the woods?

I think the bigger question is how big of a hammer will it take to drive it down each time it rises any noticeable amount.

Idaho potato head's picture

The old anvil will laugh at all the broken hammers.

philipat's picture

Especially when they don't HAVE any more physical Gold to use in manipulating the price....?

messymerry's picture

lol,, thanks you guys.  Since I can't seem to make any friends in the physical world, it's nice to know there are like minded people here at ZH.  Vaya Con Dios,  ;-D

Armed Resistance's picture

Break that fucking COMEX and LBMA in two and force PHYSICAL DELIVERY!!

 Somewhere in the PM jump today I think I heard a Phil Collins off in the distance:


Well, if you told me you were drowning
I would not lend a hand
I've seen your face before my friend
But I don't know if you know who I am

Well, I was there and I saw what you did
I saw it with my own two eyes
So you can wipe off that grin, I know where you've been
It's all been a pack of lies

And I can feel it coming in the air tonight, oh Lord
Well, I've been waiting for this moment for all my life, oh Lord
I can feel it coming in the air tonight, oh Lord
Well I've been waiting for this moment for all my life, oh Lord, oh Lord

Well, I remember, I remember, don't worry
How could I ever forget?
It's the first time, the last time
We ever met

But I know the reason why you keep your silence
No, you don't fool me
Well, the hurt doesn't show, but the pain still grows
It's no stranger to you and me

Okienomics's picture

Give 'em hell, Faber!  How does that guy keep getting on the financial news programs?!  "Here's crazy Uncle Mark to tell us about gold again and why the system is going to crash any day now.  How about it, Mark?"  Whatever it is, I'm glad there's someone as entertaining and jovial as Mark Faber to tell it like it is.

Tao 4 the Show's picture

Interesting with his subjective valuations. How does he determine cheap?

CheapBastard's picture

Silver is screaming, "Buy Me!" since it has to be one of the most underpriced [and valuable] assets out there. I added some the other day, and it's sweet to make quick gain. However, I suspect it will gradually creep upwards to near 50 again as John Williams and others predict.


But Beware!


"If you don't hold it, you don't own it." Corollary: "If you don't hold it, it will be gone."