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With gold prices pinging around like a thought in a schizophrenic’s head, the real story this week is profit taking from gold and silver backed paper holders who are scrambling to get out of the way of the Eurozone meltdown. Gold closed down on Friday at $1,660 with silver making a lateral move closing down at $31.50. After a downgrade from Moody’s, Commerzbank in Germany announced the slashing of 6,000 full time jobs by 2016. Italy’s Unicredit is following suit with a shedding of 1,000 employees of their own. There are known issues in Asian investment banking and the “perp walks” have started for the Libor scandal. Emerging markets are trying to avoid joining in the currency battles initiated by all the quantitative easing of more advanced economies. Thailand is running a surplus, and will seek to create a “pleasant deficit” by shoring up its infrastructure to ease the pressure on its business community. Those addicted to the fast pace of burning paper are rabidly jumping from one investment vehicle to the next, trying to outpace everything from conversations on the U.S. debt ceiling to the IPO freeze in China. Those who possess gold can sit back and enjoy the show in peace. The fools are rushing out.

Precious metals on the move

London Fixed PM price at week’s end, and change over previous Friday:

  • Gold: $1,660, down 1.7%
  • Silver: $31.50, down 0.8%
  • Platinum: $1,678, down 0.1%
  • Palladium: $725, up 0.4%

In the news

Despite lack of strength from U.S. dollar, gold trades lower, but not all expect that to last
“We remain bullish on the gold price outlook in 2013 despite recent selling pressure triggered by market concerns of an earlier-than-previously-anticipated tightening in U.S. monetary policy.” — Morgan Stanley note to investors (link)

Weak hands have their positions shaken free; gold remains poised
“Gold is in a trading range right now. What that tells me is there’s no one rushing to sell, but there’s no one rushing to buy either.” — Oliver Pursche,  GMG Defensive Beta Fund Co-portfolio Manager (link)

Cocktail inspired by 165th Anniversary of the California Gold Rush — Kee Seymore, Lambs Club bartender (link)

  • 2 oz bourbon
  • 1 oz honey syrup (a one to one honey to water mixture)
  • 3/4 oz lemon juice

Spotlight on Silver

Silver may not be as sexy as gold, but it has all eyes on it
“[Expects silver to] push the $35 level over the next six months, setting up for a larger extended move over the next year and a half targeting $45.” — Alan Knuckman, chief market strategist, Optionshop (link)

The white metal is a show stopper in Chinese manufacturing and asset management
“Chinese investors want hard assets such as silver, especially when it’s cheaper than gold and requires less funding.” — Shi Heqing, Analyst, Beijing Antaike (link)

The week ahead

  • Will all that oil for gold business from Iran turn out to be the basis for increased militant activities in Northern Africa?
  • Great Britain looks for ways to march to its own drum, Eurozone terrified, Germans sit and look at their gold, with a sigh of relief
  • Asian emerging markets refuse to rumble in the pending currency wars, Japan prints more money, but buys even more gold
  • India’s surprise tax on platinum (the one expected for gold) shores up the price of silver