Gold Reaches $1,913.50 – Smart Money Moving Into Silver As UBS Says $50 Silver In 3 Months

Tyler Durden's picture

From GoldCore

Gold Reaches $1,913.50 – Smart Money Moving into Silver as UBS Says $50 Silver in 3 Months

All major currencies are higher against gold today including the US dollar, despite the dollar falling on international markets.
Gold reached new record nominal highs at $1913.50/oz overnight and profit taking and traders nervous about potential margin increases have led to a 1% fall in dollar terms today. Gold has fallen by more in euro and sterling.

Cross Currency Table

Gold remains higher than at this time yesterday and is trading at 1,876.60 USD , 1,295.40 EUR , 1,135.40 GBP, 1,470.90 CHF and 143,670 JPY per ounce.

Gold’s London AM fix this morning was a new record nominal dollar high - USD 1,886.50, EUR 1301.75, GBP 1138.64 per ounce (from yesterday’s USD 1,877.75, EUR 1303.17, GBP 1139.55 per ounce).

Silver has also fallen after yesterdays and last week’s sharp rise. However smart, risk averse money sees silver bullion as a buying opportunity at these levels after the recent period of consolidation between $33/oz and $42/oz.

Silver  – 1 Year (Daily)

UBS have raised their 3 month forecast for silver sharply from $30/oz to $50/oz. They suggest that investors are too nervous to short gold and may be preferring to buy silver instead.

Silver remains more than 16% below the record nominal high seen in late April 2011 and in January 1980. While gold at $1,888 is now 120% above its nominal 1980 high of $850/oz.

The inflation adjusted high for silver is over $130/oz and those who understand the fundamentals of the silver market are positioning themselves for the possibility of a move to these levels in the coming months.

Silver Adjusted for Inflation – Monthly (40 Years) < Bloomberg Composite Silver Inflation Adjusted Spot Price – CPURNSA>

The autumn months are traditionally the best months to own gold and silver.

Speculative fever in the silver futures market remains muted with COT data showing net longs well below the records seen in April.

Silver is volatile but in the current climate what isn’t? Recently, there has been huge volatility in currency and bond markets and entire equity indices have been as volatile as silver.

While silver is volatile, what makes silver valuable is the fact that like gold it has no counterparty liability or risk (with silver coins, bars or allocated storage) and therefore cannot go bankrupt unlike banks and sovereign governments.

Media coverage of silver remains minimal with big brother gold getting some of the limelight recently.

From a contrarian perspective silver remains massively under owned by investors and not known about – this is bullish.

Leveraged speculation of silver (futures, spread betting, CFDs) should be avoided in favour of physical bullion as volatility is likely to increase and even experienced speculators could incur brutal losses speculating with silver.

For the latest news and commentary on gold and financial markets please follow us on Twitter.


(Bloomberg)  -- Gold Declines From Record Above $1,910

(Bloomberg)  -- Gold Tops $1,900 for First Time as Economic Concerns Lift Demand

(MarketWatch) -- Gold futures move past $1,900 an ounce

(Reuters) -- Gold tops $1,900/oz to new record on world economic woes

(Reuters) -- Shanghai Gold Exchange lifts margins for gold forwards


Gold Margins Assessed on Market Volatility, CME’s Hunnable Says
UBS Raises 3-Month Silver Forecast to $50 From $33 An Ounce
UBS Physical Gold Sales to India Yesterday Highest Since May 10 (Double the daily average volumes this year)
Economist Dennis Gartman Said He’s Reducing His Gold Position (Warned would go parabolic on Monday)


(Reuters) -- How to get $12 billion of gold to Venezuela

(ZeroHedge) -- S&P Board Fires CEO For Telling The Truth, To Be Replaced With COO Of Citibank

(GoldSeek) -- The Neverending Story of a “Gold Bubble”

(Reuters) -- Analysis: Gold shines as Swiss franc's haven appeal dims

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hugovanderbubble's picture

UBS is a scam bank be careful

They hold the 5th worst TCE ratio.

Once Secret Banking Privacy Policy has dissapeared is stupid to hold money in swiss banks...

 Off shore accounts will be exterminated all over the world

Chief KnocAHoma's picture

Chief agree. Banks speak with forked tounge. Silver and land will protect you.

Chief will take 750 1 OZ AGE for this:

I am The Chief


eigenvalue's picture

+1. Ugly BullShit has been a contrarian indicator of PM moves. Ergo I expect a sharp correction of PMs is coming very soon.

Sudden Debt's picture

It will but I don't think they'll be able to push silver down 38 anymore. Gold at 1650 is possible.

But only for a few weeks/months before a full retrace and higher again.


eigenvalue's picture

But it's almost autumn. The season is on our side. I expect a quick pullback, probably one week or two, and then the rise will continue. 

caerus's picture

agreed.  it looks like ag has been testing the resistance levels established 5/2 to 5/5

5/5 esi opened 39.25 - tested several times from may to mid aug...looks like  support after 8/12, 8/13

5/4 esi opened 41.67 - tested 8/3, 8/4, broke through 8/19

there's still the 43.87 open from 5/3 etc.

that's my take

edit:  i also expect an au correction but closed shorts on that bet last week...put that on too early



mayhem_korner's picture

Interesting - thanks.  Way over-cooked in its optimism about Ag, however.  It's use as an industrial metal pushes on the physical scarcity lever (not indefinitely, however) but it also has the potential to moderate the price because it is an input to production.  Plus CB's aren't accumulating Ag, and they are going to affect marginal scarcity more than any other buyers. 

In any case, I agree that Ag has much more % upside than Au, but both are going to the moon anyway, so the important thing is being able to TOUCH 'em.

mayhem_korner's picture

I doubt gold will plunge anywhere near that far even in the face of an aggressive raid.  It has shrugged off prior raids and there are too many CBs accumulating for it to go flaccid.  Plus where would the money run to?  Treasuries?

I'm not a predictor price moves, but I'm confident that once we get to a 2 handle, a lot of those governed by normalcy bias are going to freak out.

GFKjunior's picture

All my accounts are in offshore banks, primarily in tropical countries known for their lax tax laws. They would'nt be safe?

WeTheRobots's picture

Well you say smart money - I think the people reading ZH all these years are the REAL smart money. I've owned Gold and Silver for over 4 years now. I'm still buying..



DormRoom's picture

Paulson's Funds are not doing so well.  Any of you gold bulls concerned investors will pull out of it, causing him to unwind some leveraged positions, thus selling off some of his GLD holdings, thereby causing a huge pullback, like SLV.

sgorem's picture

Where there's a SELLER, there's a BUYER. I would like to see a "huge" pullback of some type though. Back up the proverbial "pickup truck". Good article, I was just contemplating listing a roll or two of BU Englehard "Prospectors on Ebay. Might wait for the $50+ price, which in turn would see the rolls going for that extra premium, maybe $1200+/roll.

Randy Kruger's picture

This is a very good book covering PM price suppression:   Some excellent archives on the FOFOA blog (related in origin to the book) contain convincing arguments as to why we only need one monetary metal.

augie's picture

3 months? my 46 calls expire next month :(

I did it by Occident's picture

No worries, when UBS or any bank for that matter says 3 monthsm they really mean 1 month.  And when they say 50, they really mean 80.  For bankers, one would think they would be better with numbers. 



Manthong's picture

I'm not giving up on my calls yet.

Too many swords hanging by too many threads.

It could all turn in an instant.

zorba THE GREEK's picture

Gold and silver are on sale. Gold should be $2500 oz and silver $75 oz. Smart money knows this.

That's why we are not seeing the long expected pull-back in PM's. When the pull-back does come, 

so many investors who have been waiting for one will pile in and run PM's up to highs far above where

they are now.





Ignatius J Reilly's picture

So when do the margin hikes come?  This week or next?

Paradigm's picture

Three months. Methinks a week or two silver needs to break out

konputa's picture

Less than 3 weeks ago I said I'd frame a screen grab when gold hits $1913. I'm not sure I expected it to hit that threshold so quikcly. Staggering.

Dangertime's picture

Careful out there.

Gold is looking awfully toppy.  Could hit 2k or even higher in this upleg, but it would be very wise to start buying some puts today.

akak's picture

Funny how you invariably only show up in these threads to call a top in either gold or silver (or both).  Are you Jon Nadler's long-lost twin brother?

Another sportscar-obsessed troll (or another sockpuppet manifestation of one uber-troll, anyway).  Oh, and let me guess: "it only costs $5 to dig from the ground", right? 

Please say "Hello" to Methman for me the next time you run into him at one of your troll continuing education classes.

DefiantSurf's picture

It doesn't matter to me, I'm saving my silver until I'm using FRN's to wipe my ass....wait...I'm doing that now....

fredquimby's picture

UBS predictions are notoriously as bad as GS predictions!!

When I started bying options, the UBS guy first said it was too complicated to explain, then said, you do realize it is expensive now to buy gold/silver and then buying calls you do realize you are betting directly against the advice and position of the bank?

WTF! haha it was $24 then and he was saying I should by puts to $20 #muppets (I bought expiry +34 with $2,500 and cashed it out for $14,500 when it hit $37 six weeks later :)

Only question now is: are they saying $50 thinking $75 or are they saying $50 and thinking $33 ??!!!







Paradigm's picture

Yes the bernank put is coming however will this actually help gold and silver rise . . .

Monedas's picture

It took Castro a year or two to raid the Safety Deposit Boxes......after the honeymoon had calmed down ! Do not expect that luxury with Obama ! They can controll access, demand PM forfeit, then search the boxes at their convenience ! "Money (Gold) is like your shouldn't let other people get their hands on it !"....Chinese Proverb, Flower Drum Song      Monedas 2011 Hoarders have more fun !

sgorem's picture

"demand PM forfeit", shit. Good fucking luck getting my au & ag. The USSA doesn't control the price of either metals ANYMORE. They can shit in one hand, and hope in the other, and see which one gets full quicker! The WORLD market sets the PM price now. This "ain't" your grandads gold and silver anymore! .45 and 223 caliber for sure amigos.....

Catullus's picture

roubini tweets:

"In inflation tail risk virtual gold (ETF GLD) beats physical gold. But in global financial crisis 2.0 physical gold in safe vault beats GLD"

Too bad you can't eat it.  The man is such a confused piece of donkey crap.


Sqworl's picture

He's a tool...Geithner's bitch...


Ace Ventura's picture

Both gold and silver are pulling back this morning. At these prices, gold is beyond the reach of a peasant like myself. Been on the silver Radio Flyer since 2007, and although I'd like to add more gold, I missed the train on that one, expecting a pullback below $900 some time ago. Oops.

Last acquired silver at $20, and told myself if it ever reached that level again I would accumulate some more. Well, the odds of that are looking less than optimistic, thus it looks like its time to revisit Ye Olde Coin Shoppe again. I shudder to think what the premiums have become since the good ol' $20/oz days.



fredquimby's picture

I saw $47.50 quoted yesterday for silver eagles.....

Monedas's picture

The Socialist PTB and their minions like Buffet and Soros and Congress have all the fiat and insider tips and privileges they need to sop up as much Gold as they want ! Those who have lived high on hot fiat will come out the other side with plenty of Gold ! Don't sell your PMs to them ! The more PMs in private hands.....the better for individual freedom.....if it has any chance of surviving ! Stay out of government controlled bank safety deposit boxes.....Bernanke could announce restrictions on them Friday ?     Monedas 2011 Comedy Fatwas issued while you wait !

sgorem's picture

go for circulated US silver coinage, ie., Merc's, Franklins, Liberty's. You just might get lucky and find a 1916-D, etc. good luck...... 

THE DORK OF CORK's picture

I don't know what to think - I am just sitting here watching this spectacle.

Dr. Gonzo's picture

"What makes silver valuable is the fact that like gold it has no counterparty liability or risk"....Thanks genius analyst but you forget It's also NOT a ponzi scheme, is rare and useful, is real money in a time of broken promises and busts, is real and proven, is undervalued with the measure of gold and is NOT the USD or Euro or Pound, is hard to procure in large quantities, and is becoming more scarce with time.

Reptil's picture

Media coverage? I'm sitting in a hotel room watching the CNBC clowns last week make statements to NOT buy physical. Now they've changed their tune again and state that gold at 1900 is not a "save haven" investment, but gold at 1100 is. Riiiiiiight..

Long-John-Silver's picture

Last night on CNBC where one of the Hong Kong talking heads was interviewing one of their experts(?) was asked about Gold and Silver. He stated that he had been wrong about (downplaying) Gold and Silver. He told them up front that both had entered a new phase sense Hugo Chavez demanded physical delivery of Venezuela’s Gold reserves. He stated that Gold was the new reserve currency. When asked about Silver he stated the near term price would be $130 USD per troy ounce. Everyone in the room freaked out. One asked "did you mean $13 an ounce"? He look at her incredulously and reaffirmed his $130 call and added "that will be cheap in the coming years".

I did it by Occident's picture

by "near-term", did they give na estimate timeframe.  Enquiring minds want to know?!

mayhem_korner's picture

That's funny.  It's also indicative of the depth of their deception.  How the alpha currency's relative safety can be a function of its price in another currency ($) is comical.  The half-life of these half-wits' conviction is about 15 seconds.

Johnny Lawrence's picture

Why do we tout the research of the big brokerage firms when we agree with their opinion, and then rip them to shreds when we disgaree and call them frauds.

Dyler Turden II Esq's picture

Because we're ideologues, burning with passionate belief in our One True Faith, and prepared to go to any length to defend and promote it. ;-)

ItchiBitzchi's picture

I don't know. The banks are procuring chavez's 99 tons of gold in the open market. This is a lot of physical. I don't know how you can deflate the Gold market while at the same time the lem's and banks buy, add also the paper gold storms pouring. This is turning into a storm of uncertainty. 

Negro Primero's picture
  1. Here you have my friends a more extensive analysis.

Courtesy of UBS


UBS Investment Research
Precious Metals Daily- 23 August 2011

Revising Short-Term Gold & Silver Forecasts
Gold's price action over the past seven weeks has surprised most in the market, even those in the most bullish camp. On Friday, gold overshot ourthree-month forecast of $1850. We think gold has enough momentumcurrently to travel north of $2000 before year-end, but we caution that somevolatile price moves - both to the upside and the downside - lie ahead. Given the speed of the recent rally, the possibility of a correction is rising asinvestors look to bank profits; in fact as the US session started yesterday Asian selling emerged and gold felt quite heavy. We have certainly noticed an increase in clients looking to book profits, although it's not a dominant trend. We caution that the risk of CME margin hikes is rising; the SGE announced margin hikes overnight for its forward contract. But even if a$150 or more pullback were to materialise, we'd strongly view it as a good buying opportunity. Quite simply, we think there are more than enough gold friendly macro variables out there. While our economists do not see
sufficiently compelling evidence to merit a recession forecast, they do see
increased downside risk to the outlook from recent events. And importantly,
with the threat of intervention in both the Swiss franc and the Japanese yen high, gold is attracting additional safe-haven flows.  

We believe the ingredients for a +$2000 price tag are firmly in place. Today we upgrade our one-month forecast to $1950 from $1725 and raise our three-month forecast to $2100 from $1850. But we want to stress that predicting price levels for gold has become a difficult exercise. No sooner are forecasts revised that gold targets new records, somewhat like the palladium market in 2010. Looking towards the next one-to-three months, instead of absolute targets of $1950 and $2100, we're more inclined to think of the trading range that gold could occupy. Taking into
account the possibility for a correction, we see gold in a range of $1725 - $2100 over the next three months. This seems even more appropriate given the volatile price action that will most likely follow in the wake of Fed Chairman
Bernanke's speech at Jackson Hole on Friday. 

Gold's support is very broad based; if this was purely a spec-driven move,dominated by large increases in Comex net longs, then we would be sitting very nervously right now. But a large portion of the recent buying has been physical based: European demand for small bars and coins remains very strong, although somewhat behind
the volumes in 2008. The type of physical demand currently is not only stronger than last summer, but also a lot more resilient. Last summer, amidst the first stage
of the Greek sovereign crisis, physical demand was notably higher - but it didn't persist. This time around, demand is resilient and not stunted by higher prices. ETF
holdings are rising substantially: from net sellers in H1 2011, ETF holdings increased by 3.2 moz in July and 2.3 moz so far in August. There is also a trend towards
allocated gold: we have observed among existing and indeed new clients this week a growing preference towards allocated gold instead of metal account/unallocated gold. This has been evident across multiple client segments including wealth management, private clients and the fund industry. The move to real assets such as gold in physical form signifies the heightened state of risk aversion at present.

That physical demand from India has also been evident this week suggests low stock levels currently; rather than
waiting and potentially chasing higher prices, buying is now starting ahead of the start of the physical season. Yesterday our physical sales to India were the highest we've seen since May 10 this year, and more than double average YTD daily volumes. At a conference in India in recent days, the President of the Bombay Bullion Association said that gold imports may reach a record this year, 950-1,000 tonnes, from last year's record of 958 tonnes. Considering the giant steps the gold price has taken in recent weeks these are surprising comments. The monsoon
season so far has been good, and strong gold demand is expected for the upcoming festival season.

Also, although scrap supply has noticeably increased versus earlier in the year, current gold prices have not prompted a material change in the recent weeks trend; we understand that whatever gold that is returning to the factories in Switzerland is being used up in production. Hence the location swap between Zurich and London remains stable. We are aware though that scrap supply in Japan is picking up, but so far this material is not being seen in the international
Silver is asserting itself as the week begins. Silver is always a difficult beast to figure out, but we think the reason why
silver has started to outperform gold is down to one simple fact: those who have missed out on the last few hundred
dollar rally in the gold price perhaps believe that gold is near its short-term peak. And instead of playing gold from the
short side, they prefer buying silver. That trade may well extend this week. In contrast to gold, silver spec positions are
significantly below their all-time highs. But given its volatility, silver needs a much bigger disclaimer than gold. From its
six-month high of 46.25 last Wednesday, the gold/silver ratio has fallen back to 42.9 as silver outperforms. Given our
higher estimates for gold towards year end, this also translates into a higher silver forecast. Our new one-month
forecast becomes $46, from $35 before. And we revise our three-month forecast to $50, from $33 previously.

In the week to Aug 22: Gold ETF holdings continued its winning streak, rising 0.74 moz to 74.09 moz over the week. Funds like iShares, ZKB and Sprott are at their all time high. Investors scaled up their holdings in GLD fund by 778.99 koz to make GLD
fund the world’s largest ETF fund in terms of assets. iShares contract attracted inflows worth 38.55 koz and small inflows were seen into the Source, Julius Baer and ZKB funds. Meanwhile, New gold (JSE) trust faced liquidations worth 50.94 koz,
ETFS (LSE) was down by 50.04 koz, and redemptions worth 21.00 koz were seen from Julius Baer fund. Total holdings in gold ETF has rose by 2.89 moz in the month to date. The rolling monthly change extended to 2.89 moz vs 2.72 moz previously.
Silver ETF holdings rose by 3.07 moz to bring the global tally to 467.81 moz. Inflows worth 1850.93 were seen into the iShares contract followed by Julius Baer fund which has gained 1050.00 koz. Moreover, ETFS (NYSE) fund attracted 298.75 koz and ZKB fund was up by 62.34 koz. On the other hand, ETFS (LSE) faced redemptions worth 196.76 koz over the week.  Platinum ETF holdings increased 12.28 koz to 1550.74 koz over  the week. Inflows worth 9.85 koz came into ETFS (NYSE) fund and ETFS (LSE) was up by 8.00 koz. Palladium ETF reversed its trend, gaining 46.94 koz to bring the global figure to 2131.91 koz. Palladium ETF holdings witnessed inflows worth 20 koz which is the largest one-day gain since April’11.
Julius Baer fund saw additions in its holdings by 34.25 koz and ETFS (LSE) gained 12.23 koz the previous week.


While high momentum readings might suggest the market is over-extended to the upside, Gold's price break to new highs; this signals upside potential. The metal has cleared the 1900.00 psychological level to expose 1932.42 next. There is possibility of a correction and a pullback through 1852.55 would open 1821.90. Only a break below 1723.70 would signal scope for deeper correction.


For Silver, momentum conditions are positive and the MACD line is above the zero line as well as the signal line. These conditions are bullish and we expect to see the metal head towards 45.58, where a break would expose 48.15 next. On the downside, initial support lies at 42.23, a previous high, ahead of 40.55.


Platinum's price broke through the top of the trend channel drawn off the Nov 17, 2010 low, when it intersected at 1905.89 yesterday. This is an important bull trigger to signal scope for further gains towards 1930.84, an extension level. The metal is
overbought and a correction is likely in the near-term. Initial support lies at


For Palladium, the slope of the 100-day moving average is almost flat whichsuggests
that the metal is undergoing a sideways trend. Initial resistance is at 782.50 ahead
of 798.50. Initial support is at 742.75 ahead of the key low at 707.50. A move below
707.50 would be an important bearish event to signal scope for further losses.



Johnny Lawrence's picture

I love this:

While our economists do not see sufficiently compelling evidence to merit a recession forecast, they do see
increased downside risk to the outlook from recent events.


On August 3rd, UBS wrote this:

While data releases suggest that economic growth will be sluggish for longer, we do not expect a renewed recession over the next year. Equity valuations are looking very attractive at this point.


Did things really change in the past 3 weeks?  Is it ever possible for these analysts to see the forest through the trees?

cowdiddly's picture

Translation: We were the only bank that had enough gold to give Chavez back his 99 tons. And with the Russian fleet and Venenzuela conducting joint exercises in the Caribean the same week we had little choice but to cough it up, or start a massive altercation to close to our own shores. Now we are a little light on AU ourselves. LOve You chAveZ You DA MaN. Stand up to these global banking scum. You need to get some help for your buddy Gaddaffi they are trying to steal his gold and oil too. They already got Egypts gold and the gold that was in the WTC. They do not care how many people they kill to get the PHYZZ.  

Oh regional Indian's picture

Everything looks off balance right now. Everything. It seems like a giant rug pullng move is underfoot, to set up Jackson's Stinking Hole farting out some confused version of QE or Not 2 QE 2 or 3. 

We've got the lies spewing from Libya, Israel in an Egyptian AND turkish knot, US in the South China sea,  PM's to infinity or some such..... another massive move. Most people I speak or interact with have this "the air feels really strange, still, tense".

Another rip (or should that be RIP) in the fabric coming right up.

Vivek (ORI)