Market Update: Every cloud has a silver lining

We hope you enjoyed your Thanksgiving holiday! Although it was a short week for the markets here in the US, you wouldn’t know it judging by the news. The cease-fire in Gaza ensured that many would not have indigestion while eating their holiday turkey. However, the devil is in the details and the market responded appropriately with gold closing up at $1734.50 and silver up by 3.5% to close at $33.41, no doubt due to Iran’s and Japan’s sudden infatuation with the white metal (see this week’s Spotlight on Silver). Meanwhile, the greenback shed significant value, indicating that moves from the Eurozone to stabilize Greece could bode ill for the dollar standard. (Are we closer than we know to a gold standard?) If the US slips into a “Japanification” of its economy, gold bulls could well come out on top. Have a look at this interview with Kyle Bass, founder of the hedge fund Hayman Capital, as he describes Japan’s financial nose dive.

Precious metals on the move

Spot price at week’s end, and change over previous Friday:

  • Gold: $1,734.50, up 1.2%
  • Silver: $33.41, up 3.5%
  • Platinum: $1,584.00, up 1.9%
  • Palladium: $657.00, up 5.5%

In the news

Gold attracts major hedge fund investing groups; Soros and Paulson hold more gold than many major nations
“We see gold as a hedge against the follies of politicians. It’s a good time to garner some protection in portfolios by having some real asset like gold.” — Michael Mullaney, chief investment officer at Fiduciary Trust (link)

After two straight months of major buying, Brazil gold reserves reach 11-year high
“This is a chunky purchase by a central bank, and the gold market will likely sit up and pay attention. Today’s news confirms much of the market chatter at the time that official sector buying was taking place and was one of the key factors that gave prices a reasonable floor last month.” — Edel Tully, analyst at UBS AG (link)

This is the chart that every investor needs to see
“The important message from this chart is that the stock market is not rising because of good economic activity, which is understandable. The economy will not be improving until employment starts growing again. After all, that is what economic activity is all about – people working and saving or spending the money they earn.” — James Turk (link)

Spotlight on Silver

Iran stockpiling millions in silver through complex system of smuggling
“According to a top Turkish official, Iranians over in Turkey are stocking up on silver bars and jewels, paying with the Turkish lira – the currency of Turkey – and they’re crossing the border to make this happen on the regular.” — Brittany Stepniak for Wealth Wire (link)

Investors showing more interest in silver
“We wouldn’t be surprised also if silver’s gains outpaced gold’s, not only as the usual result of lower liquidity, but also as memories of early 2011’s painful losses continue to fade.” — Philip Klapwijk, GFMS global head of metals analytics (link)

Silver may surpass $50 in 2013
“Strong investment demand, higher gold prices on the back of monetary easing, rising inflation expectations and the persistence of ultra-low interest rates are among the factors that will lure buyers to the safety of silver.” — Philip Klapwijk, GFMS global head of metals analytics (link)

The week ahead

  • Japan continues to rearrange the deck chairs as the yen burns
  • Greece stays in Euro, gets another drop in their funding bucket, but is there still a hole?
  • The dollar scrambles to find its footing among other currencies
  • More violence in South Africa mines may be the final nail in Jacob Zuma’s presidency
  • Muslim Brotherhood all hot air about Palestine, or will the Gaza conflict reignite?
brazil, Featured, george soros, gold, greece, iran, james turk, japan, silver, turkey