Tag Archives: china

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.

The historic Kumbh Mela ended in India this week; it is said that bathing near the event clears away all of ones sins. Maybe a wise man took a bath for gold and silver, with prices resurrecting and closing at $1675 and $31.50, respectively. Indians have come under increasing pressure from their own financial minister to curb their consumption of gold, but since there is not a viable Social Security system in the country, consumption is set to continue at current levels, even if taxes on the yellow metal goes up another 6%. A lot of the purchasing may even move to the black market. China has yet to surpass India in consumption of gold and is currently showing signs of an economic slowdown. Keep a close eye on India’s financial minister’s next move; nothing fuels social instability like unnecessary taxes; just ask Algeria, likely suffering from all that under-the-table gold moving between Turkey and Iran.

Sales of physical gold are expected to pick up in the coming weeks as China, the world’s second largest consumer of gold, prepares for celebrations in February when it will ring in its new year and mark the arrival of the Black Water Snake during its Spring Festival. Gold’s movement last week certainly looked like a serpent swimming in a pond, and closed the week up %0.6 at $1,657.50. Silver picked up slack and closed a full 4.6% higher, docking at $30.67. Chatter has begun about a possible hard landing for China’s economy. Rough rumors or real talk? As the U.S. fiscal follies come back into view with debate over the debt ceiling, prepare for some jitters in the market. From the outside, the Eurozone seems to be stable (if you consider a slowed slide into collapse as stable), but citizens in each country continue to launch local, alternative currencies. The unrest in the Central Republic of Africa has been halted by a cease fire agreement, but the citizens of the country still clamor for greater redistribution of the wealth generated by the national mining industry. This could be bad news for French mining concerns. Further pressure in Africa: if China does have a hard landing, Angola, Congo, Ghana, Zambia could also see major disruption to their economies. Like the predictions for the Year of the Black Snake, gold will have its ups and downs. Keep your eyes on China these next few weeks.

December 2012 was a touch-and-go month for gold, as it ended the month about $50 lower than it started. Some may be led to think that the value of the metal had tanked, at least judging from recent sensationalist headlines calling it a risk asset rather than the traditional hedge against inflation that it has served for centuries. A number of pundits have gone so far as to show the numbers behind why gold prices should be marked to oil, not the dollar. Others have begun to realize that gold has not tanked because more than Americans buy and trade the metal. Still others claim that like fiat money, gold’s value is a group hallucination.

But no one can deny one simple fact: Since 2001 – and including in 2012 – the price of gold has climbed each year over the previous.

Despite a fourth week beneath $1700, physical gold continues to inspire confidence, remaining a safe haven during this rather frantic close of the year. Gold closed up Friday at $1657.50 while silver closed up at $30.15. With the country now coming ever so close to going over the fiscal cliff, many analysts believe that the U.S. will end up doing just that. Meanwhile, forecasters are calling for the European Union to remain intact, but with significant shocks for 2013. Renewed unrest in the Congo throws Chinese mining interests in the region into flux. Ongoing tensions in Sudan, Libya, Egypt, Israel, Palestine and Syria complicates the future of oil, rare earth and precious metal prices creating a fiscal time bomb in the region. In Asia, Japan’s growth has come to an almost complete halt, but South Korea is seeing surpluses. The Chinese business sector is chomping at the bit for a stabilized stock market, looking to initiate a backlog of IPOs. Brazil’s economy is on fire, but they are importing gold. Bolivia has made good on nationalizing a few mines and Peru may finally make that move in early 2013. The world continues to spin, and precious metals and rare earths continue to be its axis. Have a prosperous New Year.

It wasn’t enough that our mysterious traders struck again last Wednesday, throwing speculators of paper gold into a frenzy, thus driving down precious metals prices for the close of the week, gold at $1696.25 and silver at 32.52. Nor was it sufficient that fiscal cliff conversations have now gone completely behind closed doors while the light is finally shining on the Libor scandal which got this entire party started to begin with. No, we still needed more news of the wild as the Tankan survey in Japan marks the country’s 5th straight year of recession, the rupee in India has strengthened a bit to ease anxiety over the price of gold, and China swears it’s not in a bubble, it’s not in a bubble. So with all this wild news and uncertainty still swirling around the domestic and global markets, coupled with sales of gold American Eagles reaching a 14 year high and the precious metals market heading for crisis due to US banks’ huge short positions in gold and silver, Egon von Greyerz proclaims, “A major short squeeze could be imminent.”

November has come and gone with gold not reaching $2000 as some had predicted. Indeed, several large ETF sales and massive automatic sell-offs stymied the progression of the yellow metal during the last week of the month. Gold closed down Friday at $1701.50, with silver closing at $32.85. While some are pulling back on their predictions for gold and silver, Morgan Stanley is remaining bullish and suggests you do, too. China has launched their own gold index, and some mines seem to be indicating that the need to diversify their enterprise is at hand. The European Union is still together, with Draghi twisting some arms to at least get a stay of execution until the US decides that the fiscal cliff is really just its own shadow. Meanwhile on Planet Real World, gold coins are seeing record sales. It’s deja vu all over again.

Gold tacked left this week, then right as it looked for its footing amid a series of pre-ordered trades. What was the trip wire? Failure of US monetary policy makers to step away from the fiscal cliff’s edge, mingled with very jittery bets. While gold closed Friday at $1726.00, making up much of its large slide from Wednesday, it remains to be seen if the bears or bulls have it. Major forecasters are quite bullish as they count the many ways that portfolios must diversify, with gold being a major piece of the program. Silver rose a respectable 2.6%, closing at $34.28. The Euro looks strong next to the weak-kneed dollar, but now Germany is considering bailing on the union while the UK looks like it may be the next domino to fall across the pond. In the midst of all of that, investors are clamoring for physical gold, and India is seeing the highest prices for physical gold ever. So calm those nerves. The bulls appear to have it.

With the US elections over and maintaining the status quo for the most part, are we back to square one, or can we expect reverse motion away from the fiscal cliff? The markets didn’t think so last week, with gold closing up at $1,738 and silver at $32.16. As indicated last week by astute analysts, the election was a non-event for the markets, though it has made it clear that hedging in gold and silver is a very good idea. Have you talked to one of our precious metals specialists yet? It’s time to ready yourself for the likely paper burn as inflation picks up. You may reach us at (800) 355-2116.

With the presidential election just a few days away, the latest jobs report showed that more jobs than expected entered the economy in October, pushing gold to close at $1685. But even with this drop, the yellow metal continues to average unprecedented highs. Silver, however, is looking like a steal, with global markets bullish on the white metal. Superstorm Sandy’s wake of destruction may have done little compared to the anticipated market frenzy before the US election: with opinion polls showing a dead heat between Obama and Romney, analysts are expecting a surge in trading after the election. Does emotional trading commence on the 7th of November?