Category: Precious Metals


JPMorgan Chase & Co. cut a large position in the U.S. silver futures market, the Financial Times said, citing an unidentified person familiar with the matter. The decision was made to try to deflect public criticism of its dealings in silver, the FT said. The bank declined to comment on whether it had cut its position, according to the report.


Source:Money Control: The price of silver rose to a 30-year high on Monday and gold was approaching its all-time peak after Ben Bernanke raised the prospect of an expansion of the Federal Reserve’s programme of quantitative easing.
Silver has risen 10% in the past week, and 66% since August, as concerns over the debasement of paper currencies have boosted its appeal.

Comments from Ben Bernanke, chairman of the Federal Reserve, suggesting that the US central bank could increase its USD 600bn quantitative easing programme, weighed on the dollar on Monday morning and buoyed precious metals.
Spot silver gained as much as 1.9% to trade at USD 29.90 a troy ounce, the highest since the Hunt brothers cornered the market and sent the price to USD 50 in 1980.
Investors also see it as a cheaper alternative to gold, and so more likely to see a rapid rise in price. Gold rose to USD 1,418.55 on Monday before slipping later in the session as the dollar recovered against the euro.
Edel Tully, precious metals strategist at UBS in London, said she expected gold to test its all-time nominal high of USD 1,424.10 “as the undercurrent of buying overwhelms investor profit-taking”.
“Precious metals generally should be supported this week by the renewed focus on US quantitative easing following Bernanke’s comments,” she said.
Palladium was hovering near a nine-year high of USD 776.22 a troy ounce set on Friday, while platinum slipped to USD 1,717 a troy ounce.
Elsewhere, European milling wheat hit a new two-year high, surpassing the peak it hit in the wake of Russia’s decision to ban grain exports in August. The benchmark March milling wheat futures in Paris rose to Euro 238.75 a tonne. CBOT December wheat, the US benchmark, gained 0.1% to USD 7.39 a bushel.
Emmanuel Jayet, agricultural commodities analyst at Société Générale, said he expected European wheat to rise further relative to the US contract.
“Europe is exporting wheat at a brisk pace,” Mr Jayet said. “European wheat exports are going to have to slow down in the second half of the marketing season. But this will only happen when European wheat is no longer competitively priced against US wheat.”


ZERO HEDGE reports

As of today, one of the world’s top oil exporters announced that has exchanged about $15 billion of its FX reserves into gold. Earlier, Iran announced that the country has converted about 15% of its foreign exchange reserves into gold, and “will not need to import the metal for the next ten years.” There is your mystery buyer to all that gold the IMF was selling in Q3… And since Ahmadinejad said that Iran’s total FX reserves exceed $100 billion, the amount of gold in stock held by Iran is more than $15 billion. Which is equivalent more than 345 tonnes at a closing price of about $1350. Which also means that the WGC’s official gold holdings are in dire need of an update, as Iran does not appear anywhere on the IMF’s listing of official gold holders, and with over 345 tonnes, it would make Iran a top 15 holder of the yellow metal.

From Bloomberg:

Iran has changed some 15 percent of its foreign exchange reserves into gold and will not need to import the metal for the next ten years, Mehr reported, citing Central Bank Governor Mahmoud Bahmani.

Iran’s gold reserves have “multiplied several times” in the past two years, Bahmani said in a report published late yesterday by the state-run news agency.

Bahmani gave no specific figures, only saying the country consumes 30 tons of gold a year and that the central bank will have “ample supplies for the next 10 years” even if it doesn’t increase its gold holdings further.

Iranian President Mahmoud Ahmadinejad said yesterday his country’s foreign exchange reserves exceed $100 billion.

Source: Marketwatch

An investor has accused J.P. Morgan Chase & Co. (JPM 37.60, +0.06, +0.16%) and HSBC Holdings Inc. (HBC 51.99, -0.29, -0.55%) of manipulating the price of silver futures, according to news reports Thursday. Two separate lawsuits filed in federal court in Manhattan Wednesday allege that the two banks manipulated silver futures by “amassing enormous short positions,” according to a report from Dow Jones Newswires. The Commodity Futures Trading Commission has been investigating allegations of price manipulation in the silver market since 2008

Source: Reuters

The world’s wealthiest people have responded to economic worries by buying gold by the bar — and sometimes by the ton — and by moving assets out of the financial system, bankers catering to the very rich said on Monday.

Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

“They don’t only buy ETFs or futures; they buy physical gold,” said Stadler, who runs the Swiss bank’s services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week.

“We had a clear example of a couple buying over a ton of gold … and carrying it to another place,” Stadler said. At today’s prices, that shipment would be worth about $42 million.

Julius Baer’s chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lackluster U.S. data and amid concerns about currency weakness.

“I see gold as an insurance,” Van Anantha-Nageswaran said. “I recommend 10 percent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals.”


Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the “ultimate bubble” because it is costly to dig up and has no real value except its market price.

But a rising price for the precious metal has in itself generated more and more demand from investors looking for a way to hedge against a fresh recession. Gold bears no yield and is uncompetitive in an environment of rising interest rates.

The uneasy outlook for inflation, hard currencies and global growth has triggered a five-fold increase in a physical gold fund launched by Pictet one year ago, the Swiss private bank said.

UBS’s Stadler said the precious metal has become a staple of investors’ portfolios, despite questions about whether it makes for a smart long-term investment.

“If you talk to ultra-high net worth individuals, that level of uncertainty has never been higher in the last two, three, four years,” he said. “If they ask me, ‘Is inflation going up or are we entering a deflationary cycle?,’ I don’t know. But obviously nobody knows.”

Anthony DeChellis, managing director of Credit Suisse’s Americas private banking unit, said at the Reuters summit in New York that clients are more interested in capitalizing on the rise in gold prices than using the precious metal as a safe-harbor investment.

“They’re asking, ‘If it’s a bubble, how far can I ride that bubble,'” he said. “I cannot say we’ve seen a spike in gold interest, but there’s an interest in the phenomenon of it.”

Source: Gold Alert

Gold futures traded up to $1,301.30 per ounce on the COMEX as the gold price continued to power higher amid weakness in the U.S. dollar. The gold price has surged 4.2% in September, bringing is year-to-date gain to 18.5%. Gold prices have rallied alongside the broader commodity complex, which is headed for its fifth straight weekly gain as measured by the Reuters/Jefferies CRB Index. Hard assets have been strong as the U.S. dollar decline has accelerated in recent weeks. The euro has risen in concert with the gold price, appreciating to 1.34 versus the dollar Friday morning, its highest level since April.

Gold mining producers and explorers have rallied on the back of the ascending gold price – with the Market Vectors Gold Miners ETF (GDX) gaining 4% this month. Earlier this week, institutional investors gathered at the annual Denver Gold Forum, where both industry executives and the investment community were in good spirits amid record gold prices. While the senior gold producers have posted impressive gains both this month and this year, the small-cap gold mining equities have seen spectacular returns. The Market Vectors Junior Gold Miners ETF (GDXJ) has bested its larger counterpart, the GDX, by roughly 300% this month, rising 11.9% in September alone.

A flurry of mergers and acquisitions has bolstered the smaller gold miners and explorers although given the large percentage moves in many of these companies, the pace of activity may slow in coming months. National Bank Financial analyst Tara Hassan, in a note to clients, commented that “While many juniors pointed to the increase in implied valuation as a result of recent transactions (Kinross (KGC) – Red Back Mining (RBI), Goldcorp (GG) – Andean (AND.TSX) ), the run-up in valuation of numerous junior gold companies during the quarter has resulted in many trading at premium valuations which may make acquisitions more challenging in the coming months.”

In a bull-bear debate over the direction of the gold price at the Denver Forum, Paul Walker of the metals consultancy firm GFMS, squared off against Dundee Wealth’s Martin Murenbeeld. While Walker called for weakness in the mid-term, Murenbeeld forecasted a continuation of strong gold prices in the back of investment demand.

What does a $1,300 gold price mean? According to Bill Fleckenstein, President of Fleckenstein Capital and a long-time bull on the gold price, “Gold at $1300 doesn’t mean a whole heck of a lot any more than $1200, $1100 or $1000 did.” Fleckenstein elaborated his thoughts to CNBC, stating that “There seems to me there is a tremendous amount of angst about gold having a correction, the implication being everyone is worried about those folks who already own gold. To me, the bigger trade is, almost no one owns gold. And, if you ask your friends, do they own gold and how much, I think the securer trade is that people have yet to understand that this colored paper is not worth anything and people need protection. There will be shakeouts as in the past, but the path of least resistance is up.”

How high will the gold price ultimately go? While nobody has a crystal ball, Fleckenstein postulates that “I don’t know whether a parabolic move will happen in the near-term. I think before it is over, sometime it will go parabolic.”

Source: AFP

Gold hit a fresh record above 1,290 dollars on Wednesday as the dollar sank after the US Federal Reserve hinted at more stimulus spending if the tepid US economic recovery cools further.

The metal jumped to 1,293.35 dollars an ounce at 0650 GMT on the London Bullion Market, after breaching 1,290 dollars late Tuesday.

“A combination of a weakening dollar and the Federal Reserve indicating it may loosen monetary policy further is pushing gold to record highs,” ETX Capital senior trader Manoj Ladwa told AFP.

“While some are calling for a it to run out of steam around the 1,300-dollar level, the momentum still clearly remains to the upside.”

The Federal Reserve said Tuesday that it was prepared to take new stimulus measures if necessary to keep the US economy on track while leaving interest rates at record lows.

The news sent the dollar reeling against the euro and the yen.

A weak dollar stimulates demand for dollar-priced gold, which becomes cheaper for buyers using stronger currencies. In turn, that tends to push prices higher.

CMC Markets analyst Michael Hewson predicted that gold would eventually reach 1,300 dollars.

“Perceptions that the Fed will look to further ease monetary policy into year-end will underpin gold and help push it above 1,300 dollars as investors seek better stores of value,” Hewson said.

When it comes to the metals debate most people identify with one of two camps, Gold Bugs or Silver Bugs.

Gold bugs say buy gold its been used as a monetary metal for over 6000 years and the price is going to explode.  Well if you take into account gold went from $640 in January 2007 to its all time high of $1260 in June 2010 and many experts are calling for it to go higher, Gold bugs might be right. This could be the best way to positively secure your retirement  On-the-other-hand, silver bugs say the price of gold is too high and silver is greatly under valued, making it the better purchase. Some silver bugs even advise to only buy pre-1964 silver coins (which are 90% silver)  to use for bartering in the event of an economic collapse. So who’s right? Where should I be putting my extra money: gold krugerrands or mercury dimes? My answer is both!

I think it is extremely short sighted to only focus on one metal over the other both have there own particular uses. Let’s take a look at bartering situation: if you needed to secure a couple bars of soap it would be more practical to count out a few walking liberty halves or mercury dimes than to try and get change for a 1/10 or a 1/4 of an ounce gold eagle. However, what if you needed something more than a few bars of soap or chicken or two? What if you needed to have your leaky roof fixed or needed to have your transmission replaced? In either instance you’d probably be better served with a couple of gold eagles or Canadian maple leafs.

Now let’s look at retirement investment. The average Joe will need anywhere from 100k to 1 million dollars to retire. Just taking into account the physical space needed to keep 1 million in “junk silver” is enough to me look to gold. Secondly but more importantly, you have to take return on investment. Over the past ten years gold as majorly out performed silver. Some speculators would assure you that silver with hit astronomical highs of $500 and beyond.  Despite their wishful thinking there really isn’t any precedent to support this conclusion.

In short,  don’t put all your eggs in one basket. Diversify and protect yourself and your investment.

Source: Telegraph

At about 09.25 GMT on the London Bullion Market, gold hit a record $1,251.85 an ounce.

“Gold rallied to a new all-time high this morning as worried investors continue to pile in to the precious metal,” said Rajesh Patel, head trader at financial betting firm Spread Co.

“We are seeing continued signs of stress in the financial markets and investors, novice to expert are looking at gold now as a hedge against further turmoil.” Gold is viewed as a safe-haven investment in times of economic trouble.

US gold futures for August delivery hit a record high $1,254.50, and were later up $10 at $1,250.80. The precious metal also hit record highs in euro, sterling and Swiss franc terms.

Investors’ concern that loose monetary policy will unleash inflation is among the factors prompting interest in tangible assets such as gold.

Jeremy Charlesworth, manager of the Moonraker Commodities fund, said: “If you mass produce something then it will lose value at some stage. Quantitative easing is undermining the value of Western currencies and assets.

“Yet the European Union has decided that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated. When people abandon bonds and Western currencies they will look for real assets, which can’t be created at the touch of a button. The gold market really does have the bit between its teeth at the moment.”

Not everyone shares this bullish view, however. Robert Prechter, the president of Elliott Wave International, who is known for forecasting a big bull market in stocks in 1982 and for getting out before the 1987 stock market crash, told the Reuters Investment Outlook Summit in New York that the gold price could drop by 40pc because of bearish technical momentum and deflation amid a European debt crisis.

“The time to get excited about gold was back in 2001 when no one wanted it,” he said. “And now everyone seems to want it, so I don’t.”

Source: Business Insider

JP Morgan’s John Bridges believes the latest breakout for gold was a huge positive sign for the metal.

Euro weakness fears, coupled with dollar weakness fears, could lead to an enormous amount of demand:

JP Morgan:

A German banker once told us that gold normally trades like a commodity. However, when investors lose confidence in currencies, because the pool of gold is so much smaller than the pool of currencies, demand for gold can effectively become unlimited. We believe the European version of “QE” is generating serious currency worries and led today to the breakout of the gold price above the previous intraday high at $1,226/oz.

We see this breakout as significant: The market might have welcomed the European’s latest solution to the Greek crisis with a weaker gold price. If the gold price had fallen, bears could have pointed to a “double top” in the chart, and this could have contributed to a period of weakness for the metal.

They’re recommending exposure both through gold and gold-related stocks, as insurance, since despite the fact that gold is a record price levels, they believe that it could feasibly go far higher. Guessing just how wild investors will get for an asset is still a horribly tricky game nonetheless.

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