Hard Assets Alliance: The New Trend in Gold

By The Hard Assets Alliance Team

It’s not too often that you see a major shift within the gold market.

The last such recalibration in sentiment for gold investors was the introduction of the first gold-backed ETF in 2004, and the subsequent explosion in exchange-traded products (ETPs) for bullion and precious-metals equities.

Today, another tidal change is under way, as the flow of funds into structured bullion products ebbs. I think this shift – as you’ll read about in a moment – signals two things. First, it confirms that growing numbers of investors are increasingly nervous about the reckless monetary and fiscal paths being pursued on a global scale. Identifying this trend early on will let investors position themselves accordingly.

Second, it tells me that acting now – securing the gold you want and need – is critical to withstanding the likely fallout ahead from the mountain of unpayable government debt and promised benefits. If we’re correct about the dismal future of all major currencies – the dollar’s inexorable decay in purchasing power and the “race to the bottom” between it and other currencies – then failing to act will greatly degrade your future standard of living.

What is this new trend? It’s simple, yet powerful…

Investors are shifting from paper to physical

We began to watch this trend after it was reported last year that billionaire hedge fund manager John Paulson dumped his shares in the ETF GLD, opting instead to purchase physical metal. Since then, the shift out of paper proxies for gold and into the metal itself has picked up steam, and it’s now clear that a new investor trend is under way.

Here’s the evidence. The following chart shows the total purchases since 2001 of gold coins and bars versus the net additions to gold ETPs.

 

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SILVER COT REPORT 10/26/12: COMMERCIALS COVER ANOTHER 8 MILLION OUNCES OF SILVER [silverdoctors]

Silver COT Report 10/26/12

Commercial paper stacks sold off a small 435 longs on the week but led short covering raids utilizing -2,030 shorts to drop the price to end the week with 45.18% of all open interest, a decrease of -0.63% in their share since last week, and now stand as a group at 277,495,000 ounces net short, which is a decrease of just about 8,000,000 net short ounces from the previous week. 

 

 

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Jim Rogers goes Short US Treasuries, talks JP Morgan Silver and a Boom in North Korea

China Silver Demand to Climb to Record [businessweek]

Silver demand in China, the world’s second-largest user, is set to jump as much as 10 percent next year to a record as investors look to preserve wealth, according to Beijing Antaike Information Development Co.

Consumption may climb to 7,700 metric tons after gaining 6 percent to 8 percent in 2012, Shi Heqing, an analyst at Beijing Antaike, said in an interview on Oct. 22. About 33 percent of the country’s demand comes from jewelry and coins, with the rest from industrial use in photography, solar and electrical appliances, according to Antaike, which has studied metals for two decades.

Investors in China are buying more silver as the second- largest economy slowed for a seventh quarter, the Shanghai Composite Index is heading for a third straight annual drop and property curbs are limiting prices. Silver climbed 15 percent this year and holdings by exchange traded funds gained 6.5 percent this year after touching 592 million ounces last week.

“Chinese investors want hard assets such as silver, especially when it’s cheaper than gold and requires less funding,” Shi said. “Many producers and investors have hoarded the precious metal in the form of ingots or unwrought silver.”

Silver rose 53 percent in the Federal Reserve’s first round of quantitative easing from December 2008 through March 2010, twice as much as gold, and 24 percent during the second phase ending in June 2011, three times as much. The U.S. central bank announced a third round of QE on Sept. 13. Silver will probably beat gold in the next several quarters, Morgan Stanley (MS)predicts.

 

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AUSTRALIAN GOLD SALES TO CHINA SOAR 900% [silverdoctors]

While Congress argues over labeling China a currency manipulator, China is busy continuing to massively increase their physical gold and silver reserves. The Australian reports that Aussie gold exports to China have soared a mind-blowing 900% over the first 8 months of 2012 to $4.1 billion as Chinese buyers are hoarding the precious metal.

Sales soar 900pc as China makes grab for Aussie gold
GOLD has soared past coal as Australia’s second most valuable physical export to China, with sales up a whopping 900 per cent for the first eight months of the year, bringing in $4.1 billion.

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Silver and Gold Price Action – Winter Outlook [wealthcycles]

As markets never go anywhere in a straight line we have been licking our chops to explain to readers the small pull-back in silver and gold following a rally out of the summer consolidation period on new printing. Here is our projection for where we will head through early 2013 and why.

On July 17 veteran fund manager Marc Faber warned that investors “may lose up to 50 percent of their total wealth,” and said that “gold is oversold near-term” after observing two months of consolidation under the 1650 pivot point. For GoldSilver Insiders, Mike Maloney published videos atGoldSilver.com during the consolidation period, in which he said that “it is getting more bullish for gold and silver,” after commenting on the demoralized sentiment.

Citing little new web-based curiosity, Mike quipped that the “bull market hasn’t even gotten going yet,” despite gold’s actual rise ever since 1934, from twenty bucks an ounce to where we sit today.

Alternatively we could have said: “…despite the Fed’s dollar fall in purchasing power since 1934, from twenty bucks to buy an ounce of gold, all the way down to where we sit today.” In July, Mike said he “just does not think we have several months [more] before things start to move,” and that his preferred strategy was continuous diversification of savings into gold and silver.

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Letter to Hugo Salinas-Price: Forget a Silver Backed Currency, Mexico’s Got To Bring Its Gold Reserves Home [silvervigilante]

venezuelagold

Last year the Bank of Mexico did not reveal the location of its gold reserves for national security purposes.  This came after it purchased 93 tonnes of gold. The Federal Transparency Law in Mexico, however, has forced Banxico to state the amount of its gold holdings as well as the names of its custodians and the locations of where its gold holdings are held.  The bank refused time-and-time again to release the information, but has been compelled to do so by the “Department of Management for Rules Control.”

Banxico claimed that revealing the location of its gold would “harm the financial, economic or monetary stability of the country.” Here are some of the facts regarding the disclosure:

  •    “At month’s end, April 2012, Banco de Mexico maintained a position in fine gold of 4,034,802 ounces, of which only 194,539 ounces are located in the territory of the United Mexican States.”  

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PHYSICAL SHORTAGE? 169 METRIC TONNES OF SILVER SENT FROM US TO LONDON IN ONE MONTH

The latest USGS monthly Silver Commodity Update IS AN ABSOLUTE SHOCKER.  If we take a look at the difference in silver exports from just June to July, we can see that a staggering 169 metric tonnes of silver was sent to the United Kingdom back in July.  This is a 5.4 million ounce transfer of silver to the U.K in just one month:

 

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MASSIVE COMEX SILVER WITHDRAWAL ON FRIDAY- 3.6 MILLION OUNCES WITHDRAWN FROM BRINKS! [silverdoctors]

There was a massive silver withdrawal out of the Comex on Friday.  Over the past week, there has been a steady increase in the total amount of silver in the Comex warehouses.

However, in one huge withdrawal, 3.6 MILLION OUNCES, a whopping 17% of Brinks total REGISTERED silver inventory was removed on Friday.  I have not seen such a large withdrawal from the registered category for quite some time.

Furthermore, this single withdrawal from the Brinks registered category was nearly 10% of all the total registered silver in the Comex warehouses.

NEW IMPORTANT UDPATE BELOW:  added at 9:53 pm SATURDAY

 

Brinks had a staggering 3.6 million ounce silver withdrawal (or 17% ) from its total REGISTERED INVENTORY on Friday.  There was an additional 558,390 ounces withdrawn from HSBC.

There were two deposits on the same day.  456,057 ounces was deposited into the JP Morgan warehouse and 1,176,937 ounces went into the Scotia Mocatta vaults.

 

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Silver Manipulation [silverforbeginners]

Silver Manipulation is nothing new. For thousands of years, the elites have devised systems and techniques in which to cleverly steal from others. However, in sheer magnitude, the story of modern day silver may be unparalleled in all of human history.

Manipulative

Though the motives are uncertain, the manipulation taking place is not. Is the cabal’s interest in silver suppression only to prop up the US dollar for a little longer? Or are they quietly acquiring physical silver while shorting its paper price? Whatever their motives may be, let’s take this time to review events from the past week to put you in a better position to succeed.

First, we begin with a recent Ted Butler column published on 24hgold.comTed Butler has been a constant voice calling for investigations into silver manipulation and has been publishing content concerning precious metals online since 1996. He recently published ‘The Arguments Against Silver Manipulation‘ to take a devil’s advocate approach and run through the points of those who disagree with manipulation. JPMorgan has been the ‘alleged’ biggest culprit in the silver manipulation. Those who disagree that silver manipulation is even taking place often point to these reasons for JPMorgan’s short positions:

  • JPMorgan is selling short paper contracts aggressively in order to buy physical cheaply.
  • JPMorgan is only hedging for clients.
  • JPMorgan is only selling more silver short to serve as a counter party to speculative buying.
  • JPMorgan’s COMEX short position is offset by (presumably long) OTC positions, netting out and neutralizing the COMEX short.

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India, China, and Growing Silver Demand [silver-coin-investor]

With the Indian rupee having gained 7.3 percent against the U.S. Dollar since the end of August alone, silver prices express in rupees will likely soften in the near term.

This led at least one analyst to predict that silver’s price direction in the short term could depend on Indian investors.

Combined with seasonal demand, a strengthening rupee could impact physical demand for silver going forward at a time where strong physical demand is the only thing left keeping many weak silver longs from panicking.

 

Large Non-For-Profit Seller Reported

 

Furthermore, in a relatively thin market conditions surrounding the Columbus Day U.S. holiday weekend, the silver market once again reportedly saw a very obvious and large “not for profit” seller start to show up.

The all-too-familiar resulting decline in silver futures prices seemed designed to trigger stops placed by weak longs, thereby causing even longer term silver holders to express concern.

However, the manipulation does not seem to working this time. The longs have remained, with some traders merely buying dips in the day to day price action. Tuesday’s session was a good example of this.

 

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WYNTER BENTON GROUP STATES WILL DEMONSTRATE ABILITY TO MOVE SILVER BEGINNING 10/16

Wynter Benton, the group who claim to be former JPM commodities traders with a grudge against Blythe Masters, and who recently stated that MF Global was pulled to prevent the group from standing for delivery in silver and that silver will trade above $50 by the end of 2012 has posted another statement.
The group claims that beginning Tuesday 10/16, the group will demonstrate their ability to move the price of silver by updating their moves in REAL TIME, and advise silver investors to hold onto their seats!

Practical advice Friday: What form of Silver should you hold? [Sovereign Man]

Frankfurt, Germany

Practical advice Friday: What form of Silver should you hold?

 

Along with gold, silver has been considered money for thousands of years. In ancient Rome, for example, the silver Denarius coin was first minted in the third century BC. It contained about 4.5 grams of silver and would have a metal value worth roughly $5 in today’s money.

We talk a lot in this column about the importance of owning precious metals… and often for the sake of convenience, I lump gold and silver together in the same category. But while the two share similar characteristics as excellent inflation hedges and stores of value, silver has unique fundamentals worth considering.

For starters, while the entire gold market is small, the silver market is even smaller. It’s tiny. As such, silver is highly volatile and even more susceptible to wild price swings than gold.

This means that, in a boom, silver is going to rise more rapidly than gold. In a bust, silver is going to drop more rapidly. We saw this a few year ago after the Lehman collapse, silver dropped to $8, then subsequently reached a peak of $40. Gold’s roller coaster ride was nowhere near as severe.

This gives silver an interesting edge as a speculation. And one way to play this is to buy specific types of silver whose premiums soar during financial panics.

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Same Play – Different Act [traderdannorcini]

Nothing much has changed since my last post which is why I have refrained from posting any recent comments since this past weekend.

Gold is stuck below $1785 – $1800 and Silver is stuck below $35. Until these respective resistance levels are convincingly cleared, the market is going to sit here with the risk of the shorter-term oriented speculative longs getting impatient and bailing out.

Thus far bears cannot break down either market but neither can the bulls blow past the obvious overhead capping action. This week’s COT report will be informative in allowing us to see what kind of , if any, spec liquidation has been occuring.

Some sort of trigger seems to be needed for a fresh leg higher. With crude oil getting thumped lower today and now below $90, the initial rush to buy everything looking like a commodity on the heels of the QE3 juggernaut, has obviously dissipated. Both of the precious metals need the inflationary expectation psyche to advance strongly. Crude oil weakness is currently undercutting that; so is weakness across the grain complex I might add.

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Vanishing coins are turned into razors and ornaments [dw]

Indian intelligence officials have cracked the mystery behind eastern India’s acute coin shortage: the money is being melted down and smuggled to Bangladesh where they are turned into razor blades and ornaments.

“At least twice, we seized sacks of Indian coins from people near the Bangladesh border in recent years. Those who were carrying them confessed that the coins were going to the other side of the border. They also said that the metals from these coins were being used to make shaving blades and shining steel ornaments in Bangladesh,” Suresh Jadav, a commandant of India’s Border Security Force in West Bengal, told DW.

West Bengalpolice have confiscated bags of one-rupee, two-rupee and five-rupee coins from smugglers near the India-Bangladesh border a number of times in recent years.

The phenomenon of vanishing Indian coins in eastern India was first reported by businessmen in 2007. The crisis continued and the West Bengal state government informed federal agencies two years later, seeking their help to stem the crisis.

A coin trader in Kolkata- waiting to sell his wares to bus conductors. He charges 10 rupee extra for a packet carrying 100 one-rupee coins.     Photo: Shaikh Azizur Rahman 2009 / DW

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Indian buyers are driving up the price of silver will it last until Diwali? [arabianmoney]

Trading in silver futures on the Bombay-based Multi Commodity Exchange surged by 30 per cent in September against July numbers while volumes for gold futures fell by 10 per cent over the same period, indicating a switch from gold to its sister monetary metal silver by Indian investors.

It’s been a great year for gold in India with the rupee’s devaluation sending gold back to record prices in the Indian currency. Silver by contrast is still 20 per cent below its record hit in April 2011, bringing out the bargain hunters.

Bargain silver

The impact of this futures contract buying is already registering in the price of physical silver. Spot silver in New York is up 27 per cent since the end of June to around $35 while gold is up by a less impressive 12 per cent, and hit $1,802 on Friday before selling off.

You sometimes wonder why investment managers are so concerned about the S&P 500 or the Nifty in India, and are not throwing their funds more wholeheartedly into precious metals.

Well for the next nine days buying precious metals is regarded as inauspicious for religious reasons in India, ahead of October 15th. The buying should then restart and peak during the week ahead of the Hindu festival of Diwali on November 13th.

 

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Look Out Silver, Here Comes Solar Demand [Casey Research]

By Alena Bialevich and Jeff Clark

In early July, Japan set a premium price for solar energy that was three times the rate of conventional power. This meant utility companies would be paid three times more for electricity sourced from solar. It’s widely expected that the premium will ignite the use of solar power – and solar uses a lot of silver.

Silver Demand from PV Panels

As you may know, silver is used in photovoltaic (PV) technology to generate solar power. A typical solar panel uses a fair amount of the metal – roughly two-thirds of an ounce (20 grams). To put that in perspective, a cellphone contains around 200 to 300 milligrams (a milligram weighs about as much as a grain of sand). A laptop contains 750 milligrams to 1.25 grams.

Photovoltaic technology is relatively young, but each year its use is growing rapidly. Just since 2000, the amount of silver consumed by solar-panel makers has risen an average of 50% per year. Demand grew from one million ounces in 2002 to 60 million ounces in 2011. Last year demand from the PV industry represented almost 11% of total industrial demand for the metal (excluding jewelry). According to statistics from CPM Group, demand grew by 11.2 million ounces, the strongest volume growth of all major sources (jewelry and electronics). And this was before the Japanese announcement was made.

 

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Hedge Funds Bullish on Silver as Hoard Nears Record [Bloomberg]

Hedge funds are the most bullish on silver in seven months and investors’ holdings are expanding toward a record on speculation the metal will outperform gold as central banks seek to boost growth.

Wagers on rising prices jumped 10-fold since June, U.S. Commodity Futures Trading Commission data show. Investors bought 717.2 metric tons valued at $797 million through exchange-traded products this quarter, the most in a year, according to data compiled by Bloomberg. Prices will increase for at least the next three quarters and average $38 an ounce in the three months through June, or 9.9 percent more than now, based on the median of 14 analyst estimates compiled by Bloomberg.

 

Hedge Funds Bullish on Silver as Hoard Nears Record

 

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The CFTC Exposed

Judge throws out CFTC’s position limits rule [Reuters]

A U.S. judge handed an 11th-hour victory to Wall Street’s biggest commodity traders on Friday, knocking back tough new regulations that would have cracked down on speculation in energy, grain and metal markets.

Judge Robert Wilkins of the U.S. District Court for the District of Columbia threw out the U.S. Commodity Futures Trading Commission’s new position limits rule, and sent the regulation back to the agency for further consideration.

Wilkins ruled that, by law, the CFTC was required to prove that the position limits in commodity markets are necessary to diminish or prevent excessive speculation.

He also ruled that the amendments to the 2010 Dodd-Frank financial oversight law “do not constitute a clear and unambiguous mandate to set position limits, as the Commission argues.”

 

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Hedge funds placing heavy bets on $50 silver by the end of the year $SLV [arabianmoney]

Hedge funds are positioning themselves for a powerful upswing in the silver price with a $50 an ounce target for the end of the year. ArabianMoney can only concur. This was our view at the start of 2012 (click here).

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SILVER SMASHED TO $33.50 AS 50% OF US ANNUAL SILVER PRODUCTION DUMPED ON MARKET IN 5 MINUTES [SilverDoctors]

Apparently Blythe’s monkey’s are burning the Sunday midnight oil in order to prevent silver clearing $36 and triggering JPM’s rumored silver derivative losses.

A miniature replica of the May 2nd, 2011 drive by shooting was just completed, as silver was knocked down the proverbial mine-shaft moments ago, dropping nearly a dollar in nano-seconds on Monday’s Asian open.

Volume data indicates that 3,297 contracts, or 16.5 million paper ounces of silver were dumped on the market in a mere 5 minutes between 9:00 and 9:05pm EST.
In other words, approximately 1/2 of the entire US annual silver production was dumped on the market by the cartel in a 5 minute period on a Sunday night.

 

 

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Bernanke Unleashes The Path To New All Time Highs In Precious Metals [Zerohedge]

There was one thing, ONE THING only that Bernanke could do, to become a gold bug’s best friend today, than merely announcing QE 3/4. It was to announce open-ended QE. This means this is the Fed’s final shot and there is no way to frontrun the Fed any more by definition. It means the terminal start of currency debasement is now here. It also means that the path to all time nominal (and inflation adjusted) highs in gold, which is now just $160 away, silver, platinum, and all other metals, as well as all other hard assets is now clear. It also means that very soon stocks are about to realize what soaring “input costs” mean for the bottom line.

Thank you Chairsatan: you are truly a gold bug’s bestest friend!

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RSI – Really Stupid Investors..? $silver

RSI – Really Stupid Investors..?

Yep, after a month cycling in the Pyrenees, plodding through Sartre’s finest works, and smoking Gitanes like they’re going out of fashion, JdA is back at her desk, and is rather agog at the sudden outbreak of morale in the silverogosphere.

Indeed, thanks to some decent rises in the price of silver and gold during August and early September, we’re all suddenly being advised to jump back in, with a range of erstwhile blog hosts queuing up to tell us that the ‘doldrums’ are over, and that the bullion banks have ‘lost control’.

Silver in particular has had an impressive rally, moving from around $26.50 to $32.72 today. That’s a whopping 19%. Well done to all who bought in at the bottom, and who are scaling out at the moment.

And a big wooden spoon to those doing their usual trick of beseeching their readers to buy as much as they can now that the rally is nearly at an end. You think I’m exaggerating? Read on…

The biggest problem for over-eager retail investors is that they have a tendency to buy high and sell low. In other words, they chase the momentum (buying high), and then bail out in a panic when things look rough (selling low). Despite being fully aware of this phenomenon, I’ve been known to do the same myself, so I’m casting no aspersions on the retail investor here. However, there are some tools of the trade that can help one to avoid this kind of behaviour.

The ‘Mayday Massacre’

One of my better trading moves was bailing on silver in the high 40s during April 2011, and this was prompted by two indicators. The first, which I think I’ve mentioned before, was the ‘credit card test‘. I have a rule which helps me to keep emotions in check when it looks like I’m onto a winner: the first time that I see a reference in an on-line chat room, or on a blog, or a stock board, or whatever, which says that the poster is going to max out his/her credit card to buy the stock/commodity in question, well, then that is the very moment that I log into my trading account to dump the lot. The credit-card poster is an internet-age version of the shoe-shine boy, I suppose, but depressingly more naive and ill-fated.

The second, and altogether more scientific, is the RSI, which – in loose terms – helps one to assess how far above or below the trendline a particular stock/commodity is at that moment in time. Basically, when a stock chart starts having to ‘shade in’ its RSI, then you know it’s a pretty fair bet that there’ll be a major correction coming up (if it’s above 70 or so) or that it’s a decent time to buy (if it’s below 30 or so). In April 2011, silver’s RSI went off the scale:

Coordinated central bank action is behind gold’s recent advance notes Jim Sinclair [arabianmoney]

Gold superbug Jim Sinclair, whose price forecasts have been the most consistently accurate for more than a decade, has noted that coordinated action by global central banks is the main explanation for the recent price hike in precious metals with gold now on the road to $3,500 an ounce.

‘If you have eyes to see, coordinated central bank monetary and fiscal stimulation action is taking place,’ his weekly missive to his many folloers said. ‘Yesterday was ‘Draghi Day.’ Today the Chinese officially released massive fiscal stimulus on top of the already monetary stimulus. Watch for the US Fed to chime in.

QE to infinity

‘QE to infinity MOPEd as sterilized is falling into place. Please review my post from last weekend to you on the illusion of monetary sterilization. Gold is going to and through $3500.

‘The approach some long term gold bulls took toward gold, initiating a temporary short directly after Labor Day, is now in the process of backfiring badly.’ That’s a reminder that staying long and staying strong is often a much better approach than trying to trade the gold bull market.

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