Marc Faber Says “Gold Is Oversold Near Term”

Gold inched up on Tuesday ahead of Federal Reserve Chairman Ben Bernanke's Congressional testimony today and Wednesday which should provide the market with information as to whether the US central bank will flood the market with more US paper.

Recent soft data from the US such as weak retail sales that fell in June for a 3rd month in a row, shows further signs that US economic growth is sluggish, at best.

The market is expecting QE3 in some form to be announced and gold is finding support from inflation hedging buying and a pickup in safe haven demand – particularly in Europe.

Marc Faber has again warned that the U.S. government-bond market is overbought, the U.S. dollar is overbought and gold is oversold near term.”

Faber is “very negative about the outlook longer term” according to Paul Farrell writing in Marketwatch (see Commentary) who writes an interesting article about Faber’s recent interview on CNBC.

Farrell, like Faber, has been accurate in warning of the significant risks facing savers and investors in recent years.

Faber warned that “massive wealth destruction” is coming and that the ‘Super-Rich’ “may lose up to 50% of their total wealth.”

As Farrell astutely points out “both Wall Street and Main Street investors invariable don’t wake up … till it’s too late.”

Cross Currency Table – (Bloomberg)

Farrell agrees with Faber that Bernanke’s money printing will lead to a crash:

Final warning: Remember Dr. Doom’s Rule One: “Invest where you’ll lose the least amount of money!” Why? Because “massive wealth destruction is coming.” A time when “the rich may lose up to 50% of their total wealth.” With Bernanke the trigger.

(Thomson Reuters Global Gold Forum) 
Jim Steel at HSBC says yesterday's soft US retail sales data will likely have increased speculation for another round of QE. "The slowdown in consumer spending reinforces the overall impression that economic activity has decelerated over the last few months following a relatively strong start to the year. Furthermore, the level of sales was revised down for April, to a decline of 0.5%, from an initial decline of 0.2%, taking the overall level of spending down for the entire quarter," he said.

"The data will probably lead to downward revisions in estimates of GDP growth for Q2. This may contribute to greater pressure on the Federal Reserve to provide additional monetary accommodation," he adds.

(Thomson Reuters Global Gold Forum) 
On the charts, Barclays Capital, whcih has a neutral stance on gold, flags up near-term resistance at $1,600/oz, and again at $1,640/oz. ScotiaMocatta notes downtrend resistance at $1,614.

(Bloomberg) -- South American Silver to Focus on Chile as Bolivia Seizes Mine
South American Silver Corp. will focus on developing a copper deposit in Chile as Bolivia takes steps to strip the company of a silver mining concession valued in the billions, Chief Executive Officer Greg Johnson said.

The company is seeking talks with Bolivia’s government after Vice President Alvaro Garcia Linera announced last week that the Andean country was “entitled” to recover control of the Malku Khota concession, Johnson said.

South American Silver may not lose its investment in the silver mine, Johnson said. The Vancouver-based company is studying options including arbitration to seek compensation. It also has other assets in the region.

“South American Silver has invested tens of millions of dollars into the project directly, but the value of this asset is that future cash flow, which is worth billions,” Johnson said in a July 13 interview. “We believe the story’s not over.”

The company has $38 million in cash and will continue to develop its Escalones project in Chile, which has 4 billion pounds of copper and 600,000 ounces of gold in resources, Johnson said.

Bolivia’s government on July 10 reached an agreement with local communities to revoke South American Silver’s exploration license after protests left two dead and company officials were taken hostage. The government will compensate the company for the silver and indium deposit located in the southwestern Andes, Garcia Linera said.

South American Silver’s shares plummeted 55 percent since July 6 after protests at the concession began. President Evo Morales said July 8 he was considering seizing Malku Khota. Since taking office in 2006, Morales has nationalized gas wells held by Repsol YPF SA and Total SA, and last month took over a Glencore International Plc tin and zinc mine.

(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,697 Metric Tons
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,696.71 metric tons as of July 16, according to figures on the company’s website.


                   July 16    July 13    July 12    July 11    July 10

                      2012       2012       2012       2012       2012


Million Ounces     311.757    311.757    312.823    312.823    312.823

 Daily change            0 -1,066,648          0          0          0


Metric tons       9,696.71   9,696.71   9,729.89   9,729.89   9,729.89

 Daily change         0.00     -33.18       0.00       0.00       0.00


(Bloomberg) -- Zimbabwe Indigenization Isn’t Nationalization, Official Says
Zimbabwe’s indigenization laws that aim to boost black ownership in the economy do not equate to nationalization, mines ministry Permanent Secretary Prince Mupazviriho said.

“It’s not nationalization,” he said in a speech in Johannesburg today. “It’s not forced on anyone. You come up with your own partner. You come up with your own structure.”

The southern African nation last year introduced a law compelling foreign and white-owned companies to sell or cede 51 percent of their shares to black Zimbabweans or a state-owned indigenization fund. The law initially targeted only mining companies in the country and has now been extended to foreign- owned banks.

Zimbabwe has the world’s largest platinum deposits after neighboring South Africa. Gold, diamonds, ferrochrome, coal, copper and asbestos are some of the minerals mined there by companies such as Impala Platinum Holdings Ltd.’s Zimplats unit, Aquarius Platinum Ltd., Sinosteel Corp. and Metallon Corp Ltd.

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Gold inches up as investors await Bernanke testimony - Reuters

Gold Advances As U.S. Retail Data Increase Stimulus Speculation - Bloomberg

Gold flat as investors await Bernanke testimony - MarketWatch

Gold Beats Lafite As Wine Tracks China Stocks: Chart Of The Day - Bloomberg


Faber: Rich will lose 50% in massive wealth destruction - MarketWatch

Gold 'Divine' As Chinese Sell Wine - ZeroHedge

Things That Make You Go Hmmm - Such As QE3 Marking An S&P500... Top? – Zero Hedge

Summer Doldrums Over, Gold & Silver To Explode – King World News