Gilded Feet

Gold defied the experts last week, closing up on Friday at $1669. Following suit – that is, defying the experts – silver closed down at $31.43. With better than expected job reports in the U.S. and Britain, despite both economies being under duress, financial analysts were left scratching their heads. The culprit is quantitative easing, which is impacting not only the price of precious metals, but also the value of the economies’ currencies. Additionally, Iran’s gold-for-oil-and-gas-program is creating very tense nerves in Turkey (even as that country makes use of the program), due to international sanctions against trade with Iran. And even Korea and Ghana have recently found themselves drawn into this epic cat and mouse game. There are also increasing signs that gold is acting more and more like a currency across the world;  India’s decision to not only tax gold, but also create a secondary market for its paper trade is certain to be met with smuggling, and potentially, an economic collapse. Gold, not paper currencies, are bolstering developing nations’ economies. With so much gold walking back and forth across borders in satchels and pockets, is it any wonder that security experts are on pins and needles?

Precious metals on the move

London Fix PM Price at week’s end, and change over previous Friday:

• Gold: $1,669.00, up 0.5%
• Silver: $31.43, down 0.5%
• Platinum: $1,687.00, up 0.5%
• Palladium: $745.00, up 2.8%

In the news

Analysts are warning of a 2014 ‘production cliff’ for gold 
“Where is the new technology?” — Pierre Lassonde, Chairman of Franco-Nevada Corporation (link)

Turkey running afoul of Dubai gold dealers for using gold to pay for Iranian gas
“This is not something declared. It has been going on very quietly for the past month. Some international banks have taken the lead in this and they are simply staying away from any gold bullion that is coming out of Turkey.” — Turkey-based industry source (link)

Was there Ghanian gold headed to Iran to pay for oil?
“The absence of proper documentation on the said gold, the experts argued, is said to have accounted for the lie that the gold was on its way to Iran to settle Ghana’s bilateral transactions, leading to the Turkish officials seizing the consignment onboard the cargo aircraft chartered from Tripoli-Libya.” —  GhanaWeb (link)

Spotlight on Silver

Silver’s historic bull run begs the question: Where on earth will all that silver come from?
“We are seeing a big shuffle at the top [of silver-producing countries] with China making a move. And the Latin American countries are continuing to show their force, now collectively responsible for over half of the world’s mined silver production.” — Scott Wright, Zeal Intelligence (link)

1794 silver dollar fetches $10 million at auction
“It is the first American metal dollar struck and the finest known. You have these combinations coming together. No museum has an equal piece.” — David Bowers, Chairman Emeritus, Stack’s Bowers Galleries (link)

The week ahead

• Changes to Swiss tax laws will drive foreign wealth (and banks) out of the country, with gold possibly to benefit
• Iran keeps finding itself in the middle and the odd man out as its clients face mounting pressure to stop using gold as money
• Zombie economies began to sprout up in the European Union, no amount of cash can sate their stagnant growth
• All’s quiet in Mali and Algeria for now, but more European countries join in the effort to stop this centralization of North African radicalism, while Egypt burns