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Monday, March 28, 2011

What's Really Driving the Gold Price?

Source: Julian Phillips, Gold Forecaster 03/28/2011

Gold attracts tremendous emotion from people and it has always done so. It manages to bring out the extremes in investors, reporters, governments. It's either hated or loved. Copper isn't, nickel isn't and coal isn't. You can call it a commodity, a barbarous relic, money or a wealth preserver. Whatever title you use, someone will react. As a metal, it has certain qualities that other metals don't have, but that's not what produces these reactions. It's not even its price rise over the last decade that causes the noise. In fact, it's not about gold at all. Governments have in turn loved it, hated it and now are beginning to love it again. It's what it's purported to represent that causes all the fuss. Just look at the reasons put forward by some as to why it's rising in price and you get the picture.

Rejection of Capitalism, Paper Currencies or the Unreliability of Man

Gold Defeats the Technical Picture
Gold has defied many sound technical analysts forecasts of late and it continues to do so rising to record levels in the dollar. It still has to rise to €1070 to beat the euro highs and if it does with the dollar falling heavily a rise to that price with the dollar at around $1.42 against the euro, you will see a dollar price of $1,519. It doesn't seem far away does it? Why should it be rising so strongly?

Communist Capitalism
We heard one commentator ask if this was the rejection of capitalism. Nothing so restricted, we say. It goes far deeper than that. A look at China shows a communist for of capitalism [if there is such a thing] and they are doing very well with it, yet they are buying gold, buying silver, buying gold, buying silver. . .We are looking at the entire structure on which global economies are built on to see why. Could it be a rejection of the entire monetary systems of the world? That's part of it. Is it something deeper than that, going down to the behavior of man from the individual to all-powerful government? We think so. A fact that most are realizing now is, that man is incapable of leaving the underlying principles that should dominate money without interference. What goes wrong? National interests kick in. Selfish influences discolor money's value. Power that comes from controlling money becomes irresistible and distortions are inevitable, as we are seeing.

Trade Deficits Exact Tributes
For instance, a perpetual trade deficit becomes a way of exacting 'tribute' from trade partners who accept newly printed money in payment. All other nations have to earn that money through trade surpluses or face a cheapening of their own money. By pricing international trade in the dollar, the business gained in U.S. banks from foreign global trade is vast. All the benefits of being the world's superpower accrue to the nation dominating the world's global reserve currency. That is until international trust is lost in that nation and another superpower rises to share and eventually take on that crown of power. In the past that position has been the subject of wars, but in today's world the battleground is economic and financial.

Means of Exchange as Governments Melt
Man will always need and use a means of exchange even if it descends to barter, but history has shown that the only money that has proved enduring is one free from individual national influence in this world. Gold and silver have carried that mantle and always will. The experiment with manmade money could only last as long as man's determination to provide a money that moved from simply a means of exchange to a measure of value. Man's inherent nature ensures that. We are now at the point where manmade money is losing its value and most men can see this and don't like it. They feel betrayed at the most basic of levels and by their own governments.

Remarkably, in the first 100 days of 2011, we have seen the effectiveness of government melting. We are not just referring to those in the Middle East, but to the collapse or emasculation of governments in the developed world. The U.S. and the UK have governments that are now only capable of functioning well when issues agreed by both sides come to the fore. Citizens are appalled when they see their leaders unable to agree on critical matters, such as reining in excessive spending and debt growth.

As to the sight of money creation through quantitative easing for the benefit of boosting economic growth, one is made tense in the knowledge that this is a process that undermines confidence in and the value of money, in savings, investments and trade. If such devaluations were fully realized, then the flight to gold and silver and out of manmade money would rise to a stampede.

The Function of Money
In the past, money was an item whose principal role was to measure value. Its secondary role was to function as a means of exchange. By using a desirable commodity to act as money it was made to be attractive to all men wherever they were on this planet. By using an item of limited availability, the ability of man to expand it beyond its accepted value was curtailed. By using an internationally recognized and accepted item of high value men, wherever they were, would use it. The moment one nation could dominate money and its international acceptability, the only way if could be used effectively was if that nation dominated all nations. Rome was a case in point. The UK morphing into the U.S. rule ensured that first the pound sterling and then the dollar ruled global money.

In moving from gold to manmade money, dependence on the behavior of government became total. The only link to the ongoing credibility was to the oil price, which created an ongoing international demand for the dollar. Break that and the entire credibility of the dollar rests on trust in the U.S. monetary system, so far, hardly an inspiring performance.

The last 40 years has been an incredible experiment with manmade money made possible only by lulling mankind into acceptance through economic growth. Take that growth away and its path to rejection will be a short one. Since 2007, we have started down that road.

Understanding the Fall of Manmade Money and the Rise of Gold and Silver


Legal Notice/Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina only and are subject to change without notice. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report.

Posted by Mike Gupton at 3:48 PM 0 Comments

Monday, March 28, 2011

Industrial Use of Silver Forecast to Rise

The amount of silver used for industrial purposes is forecast to rise to 665.9 million troy ounces by 2015, which would be a 36% increase from the 487 million used in 2010, according to a report from the Silver Institute released Monday.

The report, The Future of Silver Industrial Demand, was produced on behalf of the Silver Institute by the precious metals consultancy GFMS Ltd. Industrial use of silver accounts the largest share of annual fabrication demand, the Silver Institute said.

The "base case" forecast from GFMS is predicated on what the consultancy sees as the most likely outcome for the global economy, the consultancy said.

The report identifies 11 still-new applications for silver, ranging from food packaging to radio identification tags to auto catalysts, which collectively could exceed 40 million ounces of industrial demand by 2015, said the Silver Institute.

The report also said that stronger silver industrial demand in the U.S. and Asia will be a key factor driving growth through 2015, with healthy developing-country demand especially in markets such as China and India.

Much of the forecast growth will come from established applications, such as silver's use in electrical contacts and in the photo-voltaic market. The "technical proficiency of silver" limits the ability to switch in favor of lower-cost alternatives.

The report recounted steady growth in industrial demand for silver for two decades now, interrupted only briefly by financial-market weakness in 2001 and 2008. Back in 1990, this demand stood at 273 million ounces, meaning it has already grown by 78% to 2010.

PV use of the white metal was developed over two decades ago, but until recently, silver offtake remained slight, the report said.
Posted by Mike Gupton at 3:45 PM 0 Comments

Monday, March 28, 2011

Gold at $2,000 by Year's End?




Gold had a week for the history books but ended with a whimper. However, gold bugs remain confident.

Both Thursday and Friday saw steep declines in the New York afternoon (after European markets had closed). Naturally, the faction I call the "Radical Gold Bugs"—who believe that gold is constantly subject to covert, malign influence by the U.S. authorities and their chosen instruments—were neither whimpering nor quiet.

The specter of a determined official-sector effort to cap the gold price is alarming for the gold bulls—especially as a credible rumor of it is likely to attract opportunistic profit-motivated sellers and be self-fulfilling.

But this time the fear may be overblown.

For one thing, gold shares are optimistic. The ARCA Gold Bugs Index managed to gain 5.45% last week, six times gold's rise. And while gold shares generally are still below their highs of early December, the HUI does appear to have broken its downtrend since then. Gold bugs believe that the shares do sometimes display predictive powers.

For another thing, physical-market premiums as tracked on Le Metropole Café have improved lately. Partly this stems from the U.S. dollar decline, and partly from the recent start of a rally in emerging-market equities. This is firming up such currencies as the Indian rupee, and consequently strengthening their bid to the global gold market.

Consequently, the assessment posted Friday on the Jesse's Café Américain website deserves attention: "I do not know what it is going to take to move gold over that neckline in the big inverse head and shoulders formation, or how long it might take. But I suspect strongly that when it does break out, we will see another fast move higher, because so many in the markets are not positioned for it. After at least one serious 'gut check' on the longs, gold will most likely move fairly quickly to $1,590."

"Depending on what happens, I will not be surprised to see gold hitting $2,000 by year-end."
Posted by Mike Gupton at 3:43 PM 0 Comments

Monday, March 28, 2011

Gold at the World's End

They do things differently in the Yukon outpost of Dawson City, writes Winsor Dobbin.

Panning for gold in the Yukon

The former gold-rush city, a Wild West legend at the junction of the Yukon and Klondike rivers, lies somnambulant under snow for much of the year, deserted by all but the hardiest of its residents. Most hotels and restaurants close down; locals travel by skidoo, dog sled or on skis and tourism is virtually non-existent.

Then the sun starts to shine and each year, like a chrysalis emerging as a butterfly, this tough-but-fascinating town is reborn and visitors are once again invited to take a step back in time to enjoy panning for gold, sleeping in a former brothel or exploring the remains of once-majestic Yukon River paddle steamers in a slightly spooky ship's graveyard.

Dawson City is one of the weirdest, wackiest spots on the planet—and a magnet for adventurous travelers.

Dawson City has enjoyed booms and busts. In the late 1890s, gold was discovered and it was known as "the Paris of the north," becoming the second city in North America to get electricity after Chicago. In 1898, it had a population of more than 45,000 and was the largest city north of Seattle and west of Winnipeg. There was so much money in town that locals used to send to London and Paris for champagne and silk shirts and men and women from around the globe descended to "mine the miners."

Four years later, the gold rush was over; however, locals say "there are still nuggets out there" and hopefuls from around the world hit the rivers hoping to strike it lucky. They can pan for free at Claim #6 on Bonanza Creek, a fast-running stream off the Klondike and keep any gold they discover.
Posted by Mike Gupton at 3:39 PM 0 Comments

Monday, March 28, 2011

Gold, Silver Prices Volatile on Profit Taking

Gold and silver prices were volatile as investors weighed recent highs in the precious metals and looked to lock in profits ahead of the second quarter.

Gold for April delivery was losing $3 to $1,423.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,430 and as low as $1,410.10 while the spot gold price was dropping more than $8, according to Kitco's gold index.

Silver prices were adding $0.13 to $37.18 an ounce. Both metals, however, have bounced back from session lows as buyers stepped in to buy the metals at lower prices.

Explanations for today's selloff have run the gamut. Headline news like hawkish comments from Federal Reserve members to worries that there will be no third round of quantitative easing to improving economic growth in the U.S. were the favorites. But most traders weren't surprised by the move down.

"I've been calling for this $1,400 support and $1,450 congestion area," says George Gero, senior vice president at RBC Capital Markets. Gold has tried five times now to break, conquer and hold record highs. Prices inch higher each time but haven't been able to sustain those levels. Gold now has to overcome an intraday high of $1,448.60 an ounce.

"I see. . .that silver has been outperforming gold," argues Gero, "and I think silver is outperforming gold because it is a bridge between investment demand and industrial demand." Gero also says that gold is less speculative and that silver is where investors and traders are trying to hedge their currency positions.

Year-to-date, silver has rallied 20% while gold is relatively flat despite hitting new records.
Posted by Mike Gupton at 3:35 PM 0 Comments

Friday, March 25, 2011

What is The London Fix?

The Londion fixings are used throughout the precious metal industry to determine a fixed or steady trading price for precious metal transactions. The London fixings are different from "Spot" prices.

On the 12th September 1919 at 11.00am the first Gold Fixing took place.

The original five founding members were: N M Rothschild & Sons; Mocatta & Goldsmid; Samuel Montagu & Co.; Pixley & Abell; and Sharps & Wilkins.

For over 80 years we have been fixing the price of gold providing market users with the opportunity to buy and sell gold at a single quoted price. It also provides a published benchmark price that is widely used as a pricing medium by producers, consumers, investors and central banks.

The fix is carried out twice a day by the 5 members via a dedicated conference call facility.

At the start of each fixing, the Chairman announces an opening price to the other 4 members who relay this price to their customers, and based on orders received from them, instruct their representatives to declare themselves as buyers or sellers at that price. Provided there are both buyers and sellers at that price, members are then asked to state the number of bars they wish to trade.

If at the opening price there are only buyers or only sellers, or if the numbers of bars to be bought or sold does not balance, the price is moved and the same procedure is followed until a balance is achieved. The Chairman then announces that the price is fixed. It should be noted that the Fix is said to balance if the buy amount and the sell amount are within 50 bars of each other. The Fixing will last as long as it is necessary to establish a price that satisfies both buyers and sellers.

Customers may leave orders in advance of the Fixings. Alternatively, they may choose to be kept advised of price changes throughout the Fixing and may alter their orders accordingly at any time until the price is fixed. To ensure that the price is not fixed before the member has had an opportunity to communicate any changes each member has a verbal flag. As long as any flag is raised, the Chairman may not declare the price fixed.

KMG Gold Recycling calculates all of it's pay out rates and bullion sales rates using the London Fixings.
Posted by Mike Gupton at 4:55 PM 0 Comments

Wednesday, March 23, 2011

How to Build Better Business Relationships

Whether you realize or not, relationships are the fuel that feeds the success of your business. Here's how to make ones that last.

Whether you recognize it or not, all successful small businesses–regardless of what they do or sell–have one thing in common: their owners know how to build and maintain relationships. The truth is that entrepreneurs too often get caught up in the details of the kinds of products or services they are selling to notice how critical it is to build relationships not just with your customers, but also with your vendors, employees and–gasp–even your competitors. "Without strong relationships, it is impossible to have success as a business owner," says Michael Denisoff, who is the founder and CEO of Denisoff Consulting Group in Redondo Beach, California.

"You need to have long-term customers and good vendor relationships that will carry you through challenging times or tight deadlines, as well as relationships with other business owners to share struggles, resources and best practices that can really give you an edge. The reality is that business relationships are just like any other relationship. They require some effort to maintain and they must be mutually beneficial. As in any relationship, you must be willing to give, share and support, not just take or receive."

That's a lesson Denisoff admits he had to relearn the hard way when, a while ago, he fell into the trap of neglecting some of his business relationships. But it wasn't that he didn't care about those relationships. It's just that he got so busy that he didn't realize how much time had gone by where he had not checked in with several of his contacts–an easy mistake for most small business owners who feel like every day is shorter than the last. What Denisoff found was that, in two cases in particular, his failure to put enough effort into nurturing his relationships caused them to wither away.

The first instance was when he called up a supplier to ask for a favor–not realizing how much time had gone by from the last time he had touched base. Denisoff says his supplier seemed distant and not very willing to help him out, which was surprising. After asking him if anything was wrong, Denisoff's supplier answered that since Denisoff hadn't been around in a while, he felt like he was being taken advantage of. In another instance, he called up a customer who he could tell was not pleased with him because, in truth, he only called her when she had a project ready to go. She felt like Denisoff did not truly value her and was using her only for her business. It's like having a friend that only comes to see you when they want to borrow money or need help moving," he says. "In time, you cut them off."

The two eye-opening experiences caused Denisoff to take two major actions in response. First, he created a contact database where he not only stored information on his clients, but also with vendors and business peers. He now uses the database to document the details of the conversations–both personal and professional–that he has with each of his contacts. "This helps with continuity and helps me to remember key facts and information about each contact," he says. "It felt mechanical at first but it proved to be an efficient method to ensure that no one fell through the cracks." Secondly, Denisoff changed around his daily routine so that he now dedicates a portion of his day to doing nothing but reaching out and maintaining his professional and personal relationships. "Thankfully, I have strong long-term customers to keep the pipeline full and a good group of vendors and business peers dedicated to helping each other succeed," he says.

The actions taken by Denisoff are great tips for any business owner to adopt as their own. Here are some additional tips from Denisoff and other business owners on how to build stronger business relationships that will last.

How to Build Better Business Relationships: Encourage Honest Feedback

"An open, honest relationship demands clear communications of how each party is performing," says Patrick Scullin of Ames Scullin O'Haire, an Atlanta-based marketing services company. "Encourage constructive criticism and be brave enough to suggest ways clients can help your firm perform better," he says. "If you know where you stand, you can stand stronger."

How to Build Better Business Relationships: Listen More Than You Talk

"We all want to extol our strengths, our virtues in hopes of impressing others and, ultimately, getting more business," says Alisa Cohn, an executive coach. "It's counter-intuitive, but being a good listener highlights your virtues much better than being a big talker. I coach a financial planner and we did a little market research on what his clients value the most in him. Yes, they value his advice and his skills in handling the money, but a lot of financial planners have that. What sets him apart is that he takes the time to listen to them and really understand where his clients are coming from. They said most often that they value his role as a sounding board, and a few even called him better than a shrink! That's the kind of behavior that leads to referrals and long-term business success."

Dig Deeper: Listening With More Than Two Ears

How to Build Better Business Relationships: Make A Routine

Devise a system to ensure that not too much time passes before you connect with your contacts, such as the formal database Denisoff created. And with the proliferation of social media tools these days such as Facebook, LinkedIn and Twitter, it's never been easier to keep in touch.

How to Build Better Business Relationships: Be Honest

"As a small business owner, it's important that people see me as expert in my field," says Amy Harcourt of Definitive Marketing. "But, when asked questions I don't know how to answer, I always say so. I remember an initial meeting with what became one of my best clients. I was meeting with the executive team and was asked about my experience in their industry (of which I had none). I could have tried to spin my response to sound like I knew their industry. Instead, I told them that I had no experience and why that might work to their advantage. I was surprised to see stern, questioning faces turn to friendly nods and smiles. They really appreciated my honesty. And that laid the foundation for a great relationship."

Dig Deeper: Can the Truth Set Your Profits Free?

How to Build Better Business Relationships: Take Notes

Keep detailed notes on everyone you meet, says Mike Scanlin, CEO of Born To Sell, a software company that makes investing tools. "When you get back to the office, enter those notes into your address book or contact system. Later, you will want to be able to enter keywords like 'sailing' or 'wireless' or 'French' and find all the people you know who match that keyword. Doing keyword mining on your own contacts will pay dividends for years."

How to Build Better Business Relationships: Give More than You Receive

Be sure to contact people when you are NOT in need of something. Take time to learn about their business since it's as important to them as your business to you. "Take a minute to understand your client's dreams and provide opportunities for them to fulfill this whenever possible," says Rohan Hall of rSiteZ.com, a company which builds social networking sites. "Whenever I have a client on the phone I try to understand what they're trying to achieve with their business. From time to time there will be an opportunity that I will actually refer them to someone that I think could help their business especially where I gain nothing from this. Clients really appreciate it when they realize that you're looking out for them."

Dig Deeper: How to Incorporate Philanthropy Into Your Business

How to Build Better Business Relationships: Be Proactive

Using your journal and knowledge of your relationships, forward articles, links and other information that might be of interest to your contacts. "When I see interesting news stories I forward them to people who I think would find them relevant," says Scanlin of Born to Sell. "I've had many recipients come up to me later and say things like, 'I can't believe you remembered that I wanted to go to Thailand.' It takes less than 30 minutes each morning to send out a handful of these. Do it every day and the care and feeding of your network will be alive and well."

How to Build Better Business Relationships: Be Real

"Do not be afraid to be vulnerable," says Amy Ludwigson of Pure Citizen, an organic clothing retailer. "Let people see who you are. It builds trust and respect. Being too professional is a bore and well you are not going to enjoy yourself."

Dig Deeper: When Do You Lie? Strategies For More Authentic, Respectful Communication

How to Build Better Business Relationships: Turn Blunders into Opportunities

Admitting mistakes and correcting missteps will take you far when it comes to building relationships, says William Gregory O, who is the co-founder of Lex Scripta, a law firm in Illinois. "Often times, people just want to know that you are sorry and that you have a plan for getting back on track," he says. When one of our service providers made a mistake, which resulted in our service being delayed for a week, the service provider responded immediately with an apology and a proposal for fixing the problem. Instead of looking for another service provider, we decided to work with this provider because we know that the provider is honest and diligent. When a mistake is more than a minor setback, do something to make it right or otherwise provide value to the wronged party."

How to Build Better Business Relationships: Make it Personal

Sometimes it is good to send an actual physical letter or card of appreciation as opposed to an e-mail. "Say 'Thank you," a lot," says Amy Blum, owner and president of Eagle Marketing. "I send notes to new clients thanking them for their business. I send e-mails of appreciation often, for no reason at all. And, I send great toffee during the holidays. Never forget who got you where you are. And never, ever think you can say thank you enough to clients, customers, colleagues and even vendors too."

Dig Deeper: How to Build Personal Relationships With Customers

How to Build Better Business Relationships: Meet Face-to-Face

Invite your contacts to an event (sporting, music, etc.) that you would both enjoy. You will naturally deepen the relationship and get to know each other better. You could also make plans to catch up at or join someone at a networking event. For some people, networking events are challenges and having at least one friendly face there can give them the confidence to network better. Plus, you will strengthen the relationship.

Posted by Mike Gupton at 8:37 AM 0 Comments

Saturday, March 19, 2011

World-Renowned Bullion Products and an Accredited ISO 9001 Gold and Silver Refinery Facility

The Royal Canadian Mint's bullion products are universal symbols of innovation, ingenuity and excellence. At the heart of our distinctive line of bullion products is our collection of Maple Leaf bullion coins in gold, silver, platinum and palladium - all guaranteed by the Government of Canada for weight and purity.

The Royal Canadian Mint also operates one of the most technically advanced and respected gold and silver refineries in the world. Our accredited ISO 9001 facility offers a variety of client services.

World Firsts. World Records.

To reach new heights of achievement for expertise, craftsmanship and can-do spirit, the Mint crafted the world's first 100-kg, 99999 pure gold bullion coin with a face value of $1 million. This coin was later recognized by Guinness World Records to be the world's largest gold coin.

Purchasing Bullion | Bullion Products | Refinery Services

Wondering how to purchase bullion?
How to purchase bullion

Our bullion products can be purchased through banks, coin dealers, foreign currency exchange offices, and brokerage houses worldwide. Choosing your best purchasing avenue is a personal decision. Here are some points to consider prior to selling or buying bullion:

•Are you dealing with a reputable vendor/advisor that understands the bullion market?
•Is the vendor/advisor well established with a history of satisfied clients?
•Have you remembered the importance of looking at more than one vendor/advisor to get competitive quotes?
•What policies are in place to ensure your satisfaction for buying or selling bullion?
Pricing

Prices of gold and silver bullion products are based on international market rates which vary daily, as well as supply and demand. Be prepared for a reasonable premium to be charged over the daily spot quotations to cover manufacturing, transportation and distribution costs.

Purchasing Bullion | Bullion Products | Refinery Services

Universally recognized for quality and purity
Gold and other bullion products from the Royal Canadian Mint are universally recognized for their quality and purity. The Mint refines and produces Maple Leaf bullion coins, gold kilo bars, trade bars and gold wafers - all struck with their weight and purity. Our bullion coins are also recognized as legal tender in Canada.

Gold
Our Gold Maple Leaf coins are the world's most popular pure gold coin. Since their introduction in 1979, over 20 million troy ounces have been sold. As the first bullion coin to achieve the heightened standard of 9999 fine, the Gold Maple Leaf is available in five weights from one-twentieth of an ounce to one troy ounce. Also of special interest are the one ounce gold bullion coins celebrating the Vancouver 2010 Olympic Winter Games and our 99999 Gold Maple Leaf.

Silver
Encouraged by the success of the Gold Maple Leaf, the Mint introduced Silver Maple Leaf Coins in 1988. The Silver Maple Leaf is minted with one troy ounce of 9999 fine silver. The coin has a face value of $5, the highest face value of any comparable silver bullion coin. Also of special interest are the one ounce silver bullion coins celebrating the Vancouver 2010 Olympic Winter Games.

Platinum
Introduced by popular demand in 1988 are the Mint's one troy ounce Platinum Maple Leaf coins with a face value of $50.

Palladium
Introduced in 2005 the Palladium Maple Leaf coins with a face value of $50. This popular one troy ounce coin is made with 9995 pure palladium.

Purchasing Bullion | Bullion Products | Refinery Services
Posted by Mike Gupton at 5:34 PM 0 Comments

Friday, March 18, 2011

Silver market Prices – Silver metal stocks Investment trading

Investment experts have long-recommend portfolio diversification and that 10% to 20% (and sometimes more) of an investor’s assets be devoted to tangible assets such as gold, silver and platinum bullion and bullion coins. That’s prudent asset diversification strategy at any time. But in today’s uncertain political and economic environment, there are many (and very sound) reasons to consider investing in precious metals now with KMG Gold Recycling.

Here are three:

1. Precious metals have been a solid hedge against a declining U.S. dollar

The value of the U.S. Dollar declined more than 30% from 2001 through 2004, plunging 5% in just a few weeks. For a long list of reasons, including massive increases in U.S. government deficits totaling trillions of dollars, the cost of a prolonged war against terrorism and a massive trade imbalance, this trend may be just the beginning. This means U.S. Dollars could now be worth less and less every day. Which also means that investments pegged to the U.S. Dollar could be worth less and less every day. Gold, silver and platinum, though, are held and traded throughout the world…and their true value (that is, their purchasing power) is not solely or directly dependent on the falling fortunes of the U.S. Dollar. Precious metals, therefore, can be a form of protection against a falling U.S. Dollar. As demonstrated during 2003 and 2004, as the value of the U.S. Dollar declined, gold and silver prices and the value of precious metals expressed in dollars increased.

2. Precious metals have been a proven safe-haven in times of war, political strife and uncertainty

Today’s financial markets are increasingly at risk from terrorism, political instability and war. As we saw so after the 9/11 tragedy, financial markets can be closed down, and remain closed down, for extended periods of time. As terrorism incidents continue to increase around the world, it is not unreasonable to expect further (and potentially more severe) disruptions in financial markets, banking and commerce in the future. Whenever and wherever tension or hostilities break out, people everywhere quite naturally gravitate toward the assets they trust most. And today, even in our high-tech-driven 21st century, the asset class millions rely on in times of trouble is gold and silver. Precious metals have always been, and likely will continue to be, a valued form of “wealth insurance” in good times and bad.

3. Precious metals can offer outstanding price appreciation and profit potential

After the infamous stock market “bubble” debacle in early 2000 wiped out trillions of dollars of investor equity, the major stock indices have failed to return to anywhere close to their previous highs. Gold and silver prices, on the other hand, have increased dramatically—more than 40%—during that same time period. Which means precious metals can produce impressive investment returns even when (and sometimes, especially when) returns from stock, bond and other paper investments decline in value or evaporate completely. The Account, a way to purchase precious metals using up to 5-to-1 investment leverage, can be a powerful short-term trading vehicle during periods of rapidly changing precious metals prices. And many financial experts have predicted and continue to forecast rising gold, silver and platinum prices in the months and years ahead.

Silver Prices
 KMG Gold Silver market Prices Silver metal stocks Investment trading

The extraordinarily bullish fundamentals of the Silver Market suggest, at current prices, that investing in silver could offer investors one of the single best long-term investments today. It is no secret that both gold and silver are recognized as a store of value. What is not so well known is that while gold has demonstrated a solid trend of price appreciation since 2001, more than quintupling in price, the price of silver has recently outperformed that of gold.

In fact, between January 4, 2010 and December 31, 2010, the price of gold increased approximately 27%, while the price of silver increased more than 80%. In addition, there is a compelling argument for silver investing because the economic and monetary fundamentals in place today are even more bullish than the conditions of the 1970s when the silver price exceeded $50 per ounce. Yet today’s market prices, at well below the $50 level, are a mere fraction of levels projected by silver industry experts for the future.
Silver Price Chart

Silver market Prices Silver metal stocks Investment trading

Worldwide market demand for silver is growing, while supplies of silver are quickly disappearing. New high-tech uses for silver will further strain already-tight supplies in the future. World demand for silver now exceeds annual production and has every year since 1990, depleting above-ground stockpiles of silver. The U.S. government, once the largest stockpiler of silver on the planet, dumped billions and billions of ounces of silver onto the world market over the years, resulting in depressed silver prices. Today, that government silver hoard is gone, and now the U.S. government is a buyer of silver at prevailing world silver prices.

For these reasons and many more, the silver market certainly appears to represent an outstanding investing opportunity. The Account makes investing in silver bullion and coins convenient and flexible, offering up to 5-to-1 investment leverage, and it can be a powerful short-term trading vehicle during periods of rapidly changing silver prices.

KMG Gold Recycling


Posted by Mike Gupton at 6:16 PM 0 Comments

Friday, March 18, 2011

Silver Prices Headed for a Correction?

The silver-gold ratio has fallen to 39:1, it’s lowest level in over 13 years. Silver’s impressive rally over the last five weeks is no doubt a reflection of investor demand for safe haven assets in times of political and economic uncertainty. The political destabilization in the oil-rich region of the Middle East and North Africa has pushed up gold prices alongside of oil; and of course, silver has followed suit outperforming gold on the uptrend as usual.

Much of the run-up in investment demand for silver and gold over the past few years has been predicated upon the threat of rising inflation on the back of currency debasement.

While many a gold newsletter writer is still haranguing about the continuance of free money being dumped into the system by Helicopter Ben and the looming inflation crisis, some analysts are not convinced.

This latest rally in gold and silver prices is much more a function of speculative safe haven demand than any perceived threat of inflation. “I don’t think this is the Bernanke market,” said Robert Lenzer, writing last week in his StreetTalk blog on Forbes, “as he made it clear today that inflation is just the 2% he wants, and that’s despite the horrific run-up in food prices. And he’s beaten off deflation with QE2. No knee-jerk connection between Bernanke and precious metals. The connection for gold and silver is geo-political.”

And there are serious indications that the Federal Reserve will be ending the QE2 program early this summer, without any need for a third round.

Another threat to the “inflation thesis,” says The Steet’s Alix Steel, “is if central banks around the world decide to raise key interest rates.” The People’s Bank of China once again raised its rates recently, for the third time since October; and the European Central Bank has signaled it may do the same next month.

A major driver in the silver price over the last few years, exploding investment demand has succeeded in large part due to the creation of physically backed silver ETFs, which provided an easy way to invest for those previously denied access to the silver market.

The more investors take ETF positions, the more physical silver is taken off the open market, leading to higher and higher prices and increased demand. If the rumors about Chinese buyers planning to take delivery of SLV shares prove true, silver prices will surge even higher.

Analysts calling for $100 silver are surely making silver bugs salivate; however, let’s not forget basic economic principles. Despite the exponential growth in investment demand over the past five years, silver is still very much an industrial metal. Higher silver prices are obviously welcomed by silver investors, but no so much by the industrial sector that has to pay those high prices on materials needed for production. According to some insiders, end-users are already becoming frustrated with rising silver prices. The concern is that if prices continue to rise, end-users will look to more economical substitutes for the white metal. Such a move would lead to decreased industrial demand for silver long before prices could reach the three figure level.

Nonetheless, 2011 forecasts for industrial demand are strong with growth from electronic gadgets such as iPads, the renewable energy sector (e.g. solar panels) and the medical field. But, don’t expect demand to be on par with the significant levels seen in 2010. “This year, this type of news will not be quite as unequivocally good,” said GFMS’ Philip Klapwijk. “We’ve had such a significant rebound in industrial demand for silver that gains will be somewhat harder to come by this year compared to 2010.”

What about that supply deficit?

The proposition of a possible near-term silver supply deficit is hard to swallow for some who point out that the market has been in a surplus for years on rising output as a secondary metal from gold and base metal operations, and industrial demand from traditional sources such as photography has been slipping for years as well.

But the signs of an actual supply deficit in the physical silver bullion market are piling up, including the recent backwardation in silver futures prices on the COMEX. Other points of proof include the US Mint’s temporary discontinuation of US Silver Eagle production due to a lack of “sufficient inventories of silver bullion blanks,” and Sprott Asset Management’s announcement that it has encountered problems sourcing 1,000 ounce silver bullion bars in large volumes for its silver fund.

But skeptics remain. “In the silver market, there is enough silver, it is more to do with a short-term squeeze,” said Standard Bank analyst Walter de Wet.

Last month, the CPM Group dismissed the idea of a deficit in total above-ground supply, laying the blame on the recent tightness in the physical market on spot shortages of particular high-grade bars.

“There are rumors of shortages of physical silver circulating in the market. There are some spot shortages, but they appear limited to higher purity metal in specific forms and locations,” CPM analysts said in a report, specifically referring to the supply of 1,000 oz bars of 0.9999% and 0.99999% high-purity. There is a shortage of these bars because the majority of manufacturers focus their energy and materials on producing high-purity silver sponge for industrial applications such as solar panels rather than high-purity investment bars, and rising investment demand has in turn created a high demand for these specific bars, further creating tightness in the supply of said bars.

But what about the shortages in coins and 100 ounce investment bars? CPM Group surveyed Fidelitrade, Kitco and Northwest Territorial Mint (NWTM) last month and found “hundreds of thousands of ounces in 100 oz bars available for immediate delivery, and NWTM said it was steadily producing more each day.”

“In conclusion, there are short-term market developments along the lines of what CPM has repeatedly said to expect in February and March 2011, and there is spot tightness in high purity silver cast into bars as opposed to sponge. The rest is noise.”

In regards to the backwardation in March COMEX future prices, CPM analysts are not impressed and blame market congestion rather than supply deficits. They also point out that although the lease rate has risen to 0.8 percent from 0.3 percent, over the last three decades lease rates have ranged between 3 percent and 6 percent, making 0.8 percent still very low.

Still a good time to get into the silver market?

Yes! say those optimistic bullish silver bugs who see the price of silver surging higher and higher in the near to medium term.

James Turk, GoldMoney founder, has said silver is still in stage one of its bull market (gold, according to Turk, is in stage two) and won’t advance into stage two until the price of the white metal pushes past $50 an ounce, which he expects will happen in 2011. And because silver is still in the first stage of its bull market, it remains a good buy.

Speaking with Reuters at the annual Prospectors & Developers Association of Canada convention in Toronto Tuesday, Eric Sprott of Sprott Asset Management said silver will continue to outperform gold. “I watch where the money goes and the money’s going into silver. There’s as much money going into silver as into gold in dollar terms.”

But, a few say the time to enter the market has passed.

HSBC Global Asset Management analyst Charlie Morris says he still supports having some silver investment, but not picking up more at these prices and at this time. “Not to say I think it’s coming down, but I think we’ve missed it. Buying something overbought and chasing it is rarely a good strategy.”

Many analysts are still bullish in the medium to long-term, but advise investors to stay cautious in the short-term and heed silver’s seasonal cycle

Standard Bank’s de Wet advises, “If you’re long silver, stay long, but it’s probably not worth the risk/reward getting in now. It’s not called the devil’s metal for nothing.” I believe he’s referring to silver’s infamous volatile nature characterized by huge swings on the downside.

“Silver is surging and gold has made new all-time highs, but the technicals indicate that risk is high and that better entry points may be presented in the months ahead,” said MoneyShow.com senior editor Tom Aspray. “For those who are not already long precious metals, my analysis continues to suggest that you will have a better risk/reward entry in the next few months.” Aspray is referring to the seasonal cycle of silver, in which late April, and the summer doldrums are traditionally marked by significant downside in silver prices, offering investors a chance to jump in the market at discounted prices.

Analysts are also warning of an upcoming pullback in precious metals prices before moving higher. Silver guru David Morgan told Mineweb’s Metals Weekly podcast listeners that he remains long-term bullish on silver with a price forecast of $40 for 2011; however, is exercising caution as he views gold as ready for a correction. “With all of this geopolitical tension it [gold] should be soaring to new highs and it’s not doing so. I’ve seen it time and again that people say gold is the best thing you can buy right now and I see it not reacting as favourably as it should be to what’s going on, on the ground on the political front. When that takes place the smart money usually is backing off the gold trade.”

Another bullish, but cautionary statement comes from CPM Group’s Jeffrey Christian, whose forecast puts silver trading in a range of $20 to $40 an ounce over the next few months, showing he fully understands the volatile nature of this market. CPM Group has advised “clients to not necessarily be buyers a $36,” while at the same time maintaining their long positions, buying “some puts to hedge against prices falling down.” Christian suggests investors looking to add to their silver holdings wait until the price pulls back to the $27 an ounce range, which he expects to happen over the next few months.

Besides the futures or ETFs market, there are still profits to be had in the junior mining sector.

Higher silver prices translate to higher silver miner share prices, notes Northern Securities analyst Michael Zylstra, who also points out that as prices for the metal rise the margins of producing juniors will as well. “A typical silver producer might have total cash costs around $5 to $10/ounce so, with the price of silver at roughly US$34/ounce, margins should be strong.” Exploration and development stage juniors will benefit from rising prices as well since majors will be looking to acquire further resources and increase production rates, making those juniors with promising projects very attractive takeover targets.

A look at the Silver Stock Index on Silver Investing News should give investors insight into how silver juniors are performing in relation to the silver market and against each other.
Posted by Mike Gupton at 6:08 PM 0 Comments

Thursday, March 17, 2011

The Gold Standard 2.0 is Coming

This is not mere conjecture or prediction. It’s fact. Utah has already passed a bill allowing Gold and Silver to be used as legal tender. Similarly, Virginia has passed legislation (though the Governor has yet to sign the bill) that would permit the state to mint its own Gold and Silver coins.

You can see this on the international stage as well. China’s Gold demand rose 500% last year. And world central banks became net buyers of Gold for the first time in 2010 as well.

These are of course baby steps. China and all central banks’ reserves are only minimally invested in Gold at this time. However, these changes DO mark the beginning of necessary structural changes to the global monetary system that will eventually culminate in a Gold standard of some kind being adopted again.

It’s not difficult to see why. We’ve been on this insane “paper only” since the early ‘70s. While everyone wants to claim we’ve seen a massive boost in GDP and stocks since that time, the reality is that when you account for inflation, it’s clear that most GDP and stock strength has been a result of inflation, NOT real organic growth.

Indeed, Bill King, Chief Market Strategist M. Ramsey King Securities recently published the following chart comparing REAL GDP (light blue), GDP when you account for inflation (dark blue), and the Dow Jones’ performance (black) over the last 30 years.

What follows is a clear picture that since the mid-70s MOST of the perceived stock gains have come from inflation. You should also note that MOST of the GDP growth we’ve seen since the early ‘70s has been the result of inflation as well (REAL GDP, the light blue line, is MILES below the “claimed” GDP, dark blue line).

 

What does all of this mean? That the inflationary system in place for the last 30+ years is crumbling, that paper money is going to become more and more worthless, and that we’re going to return to some kind of Gold standard in the coming years.

Posted by Mike Gupton at 6:05 PM 0 Comments

Thursday, March 17, 2011

Silver Forecast: Investment Strategies for "the Other Precious Metal" in 2011

Get smart. Buy silver to earn golden rewards. KMG Gold Recycling offers silver certificates at 2% less than spot market price!

Silver could reach $150, or even $250, per ounce this year. 

Why? Because silver prices are currently selling at a more than 50% discount.

The price of silver is much lower than history tells us it should be. To reach normal values, silver prices must more than double, increasing 100%, or more. And that's just based on history.

When you're considering the future of silver prices, you also have to factor in growth. As long as the dollar is down, silver prices will continue to rise. And with Ben Bernanke and the fellas at the Federal Reserve doing their best to crush the dollar, you can bet silver will keep going up this year.

Based on history and the dismal dollar, silver prices could reach $150 per ounce this year.

But nearly half of all silver doesn't get turned into coins, bullion bars or jewelry. Instead, it's used by industry to make everything from mirrors and musical instruments to methanol and medical equipment.

And with industrial demand finally returning after the 2008 crash, silver prices could soar even higher. Silver could be in for the ride of a lifetime, with prices reaching as high as $250 per ounce by the end of the year.

Can you afford not to own silver? We didn't think so.

But how do you choose a silver investment? Silver certificates, or "digital" silver is the smart choice.

With silver prices as high as $250 this year, you'll want to purchase safe and durable products.

Discover the smartest, most valuable ways to buy silver today.

Silver prices could see serious returns this year. Will you be in on the silver prices boom? KMG Gold Recycling

Posted by Mike Gupton at 5:57 PM 0 Comments

Thursday, March 17, 2011

KMG Gold Offers Several Investment Alternatives In Precious Metals

While short-term fluctuations in precious metal prices continue to make headlines, most analysts would agree that the real appeal of gold and silver is their proven ability to act as a long-term store of value. More than any other liquid assets, gold and silver have tended to retain their purchasing power and provide an efficient hedge against inflation.

KMG Gold offers several investment alternatives for clients who want to take a position in precious metals, but don't want to worry about the storage costs and insurance against theft that are usually required when purchasing gold or silver bullion:

With Gold and Silver certificates through KMG Gold, you can buy and sell gold and silver certificates in a way very similar to, and just as convenient as, traditional stock market trades. You may place either a market order for a precious metal certificate.

With the dual attraction of gold and silver, it is a small wonder that a growing number of investors look to these precious metals as an integral part of a well-balanced portfolio. To learn more about how you can invest in precious metals, please contact KMG Gold.
Posted by Mike Gupton at 10:02 AM 0 Comments

Thursday, March 17, 2011

Investment Methods in Gold

With the rising prices of gold in the bullion market, investors can embark on investment of gold either directly through ownership or through shares, spread betting, accounts and gold and silver certificates.

Miscellaneous Methods of Investments in Gold and Silver:

Gold & Silver Certificates: Investment in gold and silver does not mean storing the actual gold and silver bullion. Rather, the gold and silver investors can hold certificate of ownership. The Gold certificate permits the investors to sell and buy the security without any hassles involved in the transfer of the actual physical gold. It offers the investors the ability to store platinum, silver and gold in an unallocated account without any storage cost, fabrication fees, insurance costs, or bar premiums.

The advantage of gold certificates is that there are no fees, bar premiums, or fabricaton charges to purchase the certificate. There are no storage or insurance fees. And when it comes time to sell or liquidate your gold certificates, there are no fees. Gold and Silver certificates are also sold at a discounted rate where the price is actually less than the price of gold or silver provided the investor holds the gold or silver certificate for a period of time before cashing in.

KMG Gold Recycling, www.kmggold.com provides gold and silver certificates for terms ranging from 15 days to 120 days at a 2% saving below the spot price of gold and silver.

Apart from storing gold at the safe deposit box in home or at a bank, investors can also place gold in unallocated or allocated storage with a dealer or a bank. In the event of the latter becoming bankrupt, the client can claim the gold to become a general creditor, whereas the gold held in the allocated storage has to be returned to the client in full.

Purchase of bullion gold bars is the most conventional method of investing in gold. In some nations such as Switzerland, Liechtenstein, Austria and Argentina, dealers can easily sell or purchase them over the counters of major banks. Instead, there are bullion dealers providing the same form of service. There are various sizes of gold bars available in the bullion market. Typically, in Europe, these are either available in 12.5 kg bars or 1 kg bars. However, other weight units also exist such as 1oz bar, 10 oz bar and the Tael.

More about gold investments:

The popular way of holding gold is by purchasing gold coins as an investment. Usually, the prices of bullion coins depend on the weight, with no or little premium above the price of gold. The most popular bullion gold coins include the Australian Gold Nugget, the American Gold Buffalo, the American Gold Eagle, the Canadian Gold Maple Leaf and the South African Kruggerrand. But alloyed gold coins such as the Krugerrand, which are 22 karat, may be subject to tax in some countries. In Canada, the Goods and Services Tax and the Harmonized Sales Tax applies to all precious metal purchases if the purity of the item is less than 99.9% pure.

Gold Accounts: Majority of Swiss banks provide gold accounts, wherein investors can easily sell or purchase gold just as a foreign currency.

Exchange-traded Funds: Investors can trade GETFs or Gold exchange-traded funds as shares on the major World Stock Exchanges including Sydney, New York and London.

ETFs in gold denote simple method of gaining an exposure to the price of gold sans the inconvenience of placing physical bars. Typically, for trading in gold ETFs, authorities charge a small commission along with a small yearly storage fee. By selling a small amount of gold, the annual expenses such as management, insurance and storage fees are balanced. Hence, the amount of gold held in each certificate of gold declines gradually over a period.

In some nations, gold ETFs indicate a method of avoiding the VAT or sales tax that may apply to physical gold bars and coins. Ease of purchase, sale and liquidity make ETFs a popular method of gold investment.

Posted by Mike Gupton at 9:29 AM 0 Comments

Wednesday, March 16, 2011

Platinum Production Falls as Japanese Auto Plants Close

Source: Platinum Today 03/15/2011

Production levels in several major industries are anticipated to fall as Japanese firms close factories and plants following last week's earthquake and tsunami.

The problem will be compounded by a series of rolling black-outs as electricity providers cut power to cope with the loss a number of nuclear plants.

Japan's largest carmaker Toyota initially shut two of its factories immediately after the earthquake.

It has now said all factories, including its subsidiary vehicle manufacturers, will be closed until March 16th.

According to Dow Jones, the shutdown will result in a production loss of 40,000 vehicles.

Meanwhile, the news provider reports that Honda will stop production at all of its Japanese factories until Friday (March 18th) with the loss of around 16,600 vehicles and 2,000 motorcycles.

Nissan has also closed several of its plants with a resulting drop in output expected.

Dow Jones reveals that platinum and palladium prices fell sharply as a result of the closures, noting that these metals are widely used in the automotive industry for catalytic converters.

It is thought that the drop in car production will only have a temporary effect on metal prices.

Standard Bank analyst Marc Ground is reported by the news agency as saying to clients: "Auto production can be shifted from Japan elsewhere. . .ultimately damaged vehicles need to be replaced in the country."

Authorities may, however, be concerned about the wider effects of the disaster on industry, with Tokyo Electric Power initiating black-outs across Japan until the end of April, while there was also a fire at a Cosmo Oil refinery.

"I would say the biggest risk is power," Takuji Okubo, chief Japan economist at Societe Generale, told Reuters.

www.kmggold.com
Posted by Mike Gupton at 7:15 PM 0 Comments

Wednesday, March 16, 2011

Gold Nugget Finder Hopes to Strike it Rich at Auction

Source: Sacramento Bee, Carlos Alcalá 03/15/2011

The discovery in Nevada County of a nearly seven-pound gold nugget last year has been called a one-in-a-billion find.

Now, on the eve of the so-called Washington Nugget's auction in Sacramento, its finder has told the story.

On top of uncommon luck, it's a tale of geological knowledge, high technology and elbow grease.

KMG Gold Nugget
The Nevada County resident had his undeveloped property—not far from the old mining town of Washington—assayed by a professional for possible gold deposits.

"Just to see what gold would be down to the first 10 feet," the finder said, requesting to remain anonymous.

There was some fine gold, and a hint that there might be more in the bedrock beneath the old mining tailings.

A friend brought in a piece of equipment known as ground-penetrating radar.

"We found an anomaly—a crevice or crack that indicated that would be a good target," he said.

And this one was within 10 feet down—the outside limit for their backhoe.

"We started to use the gold detector and we got a very strong signal," he said.

All the time, they were working through groundwater that seeped in as they dug.

The nugget they found would be worth more than $100,000 at current gold prices.

Unannounced, the finder took it to Fred Holabird, an experienced mining engineer in Nevada.

"His eyes popped out of his head," the finder said. "He screamed for everybody to take a look."

"The Washington Nugget may be the sole remaining authenticated large gold nugget of 100-troy-ounce caliber from the California gold region," Holabird wrote in an essay on the piece.

If it doesn't sell at auction, it may be finders keepers.

 

Posted by Mike Gupton at 7:10 PM 0 Comments

Wednesday, March 16, 2011

Gold Prices Rebound After Selloff

Source: The Street, Alix Steel 03/16/2011

Gold prices were rallying Wednesday, shaking off Tuesday's selloff as bargain hunters jumped into the market.

Gold for April delivery was adding $4.50 to $1,397.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has moved through the $1,400 level, a psychologically important level for investors, and traded as high as $1,406.60. The spot gold price was adding $3.60, according to Kitco's gold index.

Silver prices were also participating in the relief rally, up 34 cents to $34.46 an ounce. Silver also saw nearly a 5% selloff Tuesday but still held above the $33.50 level. Silver is appealing to investors not only for its safe haven status but also for its use as an industrial metal, which will be pivotal to rebuilding Japan.

All told, gold prices tanked 2.25% Tuesday as Japanese investors frantically sold gold for cash. The selloff brought bargain hunters into the market who started picking up the metal around $1,380 an ounce and have pushed the metal past the $1,400 level.

"I still think there is still room to get in on gold," says Scott Redler, chief strategic officer for T3Live.com. "I think at some point it's going to make new highs this year and it's something you should have."

Safe haven buying is coming back into the market after Bahrain declare martial law in the country and three more people died as protesters clashed with police. Iran condemned the military support of other Arab nations including Saudi Arabia, which has now sent 1,000 troops into the region.

The bank of Japan also pumped more money into its economy, bringing the three day total to 55.6 trillion yen, or $688 billion. More paper money in any economy highlights gold as a safer alternative paper currency.

www.kmggold.com
Tags gold price  Japan 
Posted by Mike Gupton at 7:06 PM 0 Comments

Wednesday, March 16, 2011

Checking in on Relative Gold

Source: Jordan Roy-Byrne, The Daily Gold 03/15/2011

Relative gold is also known as the real price of gold. It's essentially a comparison of gold against various asset classes. Why is this important? There are two reasons. First, the real price of gold tends to lead leverage performance (e.g., the HUI:Gold ratio). Second, the real price of gold often provides hints of the future direction of the nominal price of gold.

Keep in mind that gold is the type of asset class that performs best when it's strongly outperforming the other asset classes. This seems like an obvious statement but it is an important one. If stocks and/or bonds are performing very well, money (usually mainstream) flows into those asset classes?not gold. If conventional asset classes perform well, there is little reason for the masses to go into gold.

In the chart below we show gold against various asset classes. gold has made a new high in nominal terms but hasn't held it. One reason could be the weak performance of gold against stocks, currencies and commodities. In recent months, money has flowed into those markets and not gold. Gold made marginal highs against both bonds, but with risk aversion increasing and a possible US Dollar rally, how long will that last?

gold charts

Gold's real performance is mixed, which suggests a sustained breakout in nominal terms is unlikely at present. Gold has started to outperform stocks and commodities and we expect that to continue. However, there is a clear divergence with gold priced in other currencies, which suggests that recent U.S. dollar weakness has buoyed gold. While struggling, the USD has yet to break support. Sentimentrader's public opinion is only 31% bulls for the U.S. dollar.

When many markets are in flux, as is the current situation, intermarket analysis becomes all the more important. Comparing markets against each other helps us decipher the leaders, the winners and the laggards. The current picture for gold is mixed but could become clearer if/when the greenback confirms its bottom. We would welcome that, as it would clear out the last of the weak hands and position gold ready to move higher.

These are difficult times. When trends are shifting or changing, we need to analyze various markets and asset classes to get a better handle on what is going on. This analysis allowed us to foresee the lack of a true breakout in gold and gold shares while the gold permabulls continued to cheerlead onward.

www.kmggold.com

Posted by Mike Gupton at 7:04 PM 0 Comments

Tuesday, March 15, 2011

CANADA FX DEBT-C$ dives on Japan, then regains altitude

Tue, Mar 15 17:06 PM EDT * C$ pares losses to $$1.0163 * Some say Japan crisis may drive C$ back below parity * Bond prices soar on safety bid * Japan braces for potential radiation catastrophe (Adds details, updates prices) By Ka Yan Ng TORONTO, March 15 (Reuters) - The Canadian dollar fell hard against the U.S. dollar on Tuesday on fears of nuclear catastrophe in Japan, but then regained a fair bit of ground, helped by a rebound in equity markets on renewed confidence in the U.S. economy. The currency dived more than 2-1/2 cents from Monday's close to its lowest level in more than four weeks. By session's end, however, it had regained more than a penny of that. The early move was dramatic and volumes were strong, mirroring aversion to risk that also drove world stock markets sharply lower and pushed down the price of oil -- usually a leading factor in the Canadian dollar's direction. For a graphic on the link between the Canadian dollar and commodity prices, see: http://r.reuters.com/hyp58r Equities pared losses after the U.S. Federal Reserve maintained its ultra-loose monetary policy and said the economy was gaining traction. That added to figures that showed manufacturing in New York state rose to a nine-month high in March and homebuilder sentiment ticked up to its highest level since May 2010. "Financial markets are shifting their focus back to stronger growth prospects and recognizing the influence of Japan on a global economy is still fairly minor," said David Tulk, chief macro strategist at TD Securities. The Canadian dollar dropped early in the day as the Japanese government raced to avert a radiation catastrophe and concern intensified about the impact of the disastrous events in the world's third-largest economy. The Canadian dollar fell as low as C$0.9974 to the U.S. dollar, or $1.0026, its weakest point since Feb. 11, plunging out of the range between C$0.97 and C$0.98 that it had been locked in for most of the past two weeks. It finished the day at C$0.9840 to the U.S. dollar, or $1.0163, still down more than a penny from Monday's close of C$0.9726 to the U.S. dollar, or $1.0282. "Going forward I think this crisis too will pass, the market is trying to grapple for information and see the extent of the contagion and just how bad it's going to be," said Firas Askari, head of foreign exchange trading at BMO Capital Markets. Some currency watchers said Japan's earthquake and unfolding radiation disaster will likely drive Canada's currency below parity with the U.S. dollar in the near term, for the first time since Feb. 1, as investors dump assets tied most closely to global economic growth. [ID:nN15236117] But Tulk said this was unlikely. "We certainly saw a run early this morning and that really was the peak point of capitulation in the market," he said. "As long as there's not more bad news on the nuclear front in Japan, I think it's hard-pressed to get the flight to quality into the U.S. dollar that comes at the expense of the Canadian dollar." BONDS ADVANCE Bond prices were higher but gave up some ground by session's end in a still-uncertain trading environment, and as equity markets cut losses shortly after the U.S. central bank held rates steady. The two-year Canadian government bond CA2YT=RR was up 9 Canadian cents to yield 1.630 percent, while the 10-year bond CA10YT=RR advanced 20 Canadian cents to yield 3.199 percent. Canadian bonds had a mixed performance against their U.S. counterparts. Earlier, Canadian data that showed that productivity rose more last year than in any year since 2005 was overshadowed by the Japan news.
Posted by Mike Gupton at 5:56 PM 0 Comments

Thursday, March 10, 2011

US Mint Reports Unprecedented Buying Spree Of Physical Silver


Three days ago we noted that in just the first week of January, the US Mint had sold 2,221,000 ounces of silver "a number which if run-rated would be an absolutely all time monthly record," A quick glance at the tally today, shows that something very scary is going on. In the subsequent three days, the number has surged by 50% and has hit 3,407,000 ounces of silver! In just the first 12 days of the month we have already surpassed the total monthly sales of 9 separate months of 2010.

And some additional observations on what is becoming a physical buying frenzy from CoinNews.net:

 
 

An increase in 2010 Silver Proof Eagles and record-approaching 2011 Silver Bullion Eagles are the most interesting aspects in the latest US Mint sales report.

The Proof Eagle coins have seen two weekly adjustments since they sold out in late December. The latest brings them up 3,644 to 860,000, which would seem like a natural stopping point. Collectors will have to wait until the July time frame for the 2011 Silver Proof Eagles to make their appearance, according to the US Mint.

2011 bullion eagles launched  on January 3, 2011. Silver Eagles already have last year’s January record in their sight. The coins have raced to 3,407,000 in less than two weeks after their latest weekly pick-up of 1,322,000. Until January 2009, the silver coins had never topped the 3 million mark during the first month of a year. Those record sales totaling 3,592,500 may get clobbered in mere days. The all-time monthly high of 4,260,000 which was just set in November could be the next victim. As a side note, the 3,407,000 sold this month includes 469,500 of the 2010-dated issues. The US Mint had buyers order one 2010 Silver Eagle for every five of the 2011?s.

Bullion one-ounce 2011 Gold Eagles are running, but not sprinting like their silver counterparts. US Mint sales has their tally at 42,500 for a weekly increase of 29,000. As a comparison, buyers ordered 85,000 in January 2009. Inventory of the 2010-dated coins also remains. There were 53,000 at the start of the year. US Mint Authorized Purchasers must order one old for every four of the new ones.

Mike Krieger presents the following disturbing observation on this trend: "In the first 12 days of January 3.4 million silver eagles have been sold.  I have never seen anything like this.  The amount of physical being taken off the market on this paper sell off is EXTRAORDINARY.  We must be VERY close to the end." Whoever has adopted JPM's legacy paper silver short position is in for some very troubling days ahead.

KMG Gold Recycling saw a glut in the silver market in Decmber 2010. "We couldn't sell our silver to the secondary refineries in Canada." Said KMG president Michael Gupton, "We had to shop it around. That doesn't seem like a shortage of silver to me, that sounds like media manipulation in order to drive the price of silver up".

"We are seeing people buying physical and certificate silver at the same rate as people are selling and recycling physical silver, and the volumes are huge".

kmggold.com

Posted by Mike Gupton at 5:23 PM 0 Comments

Thursday, March 10, 2011

GoldCore Comments On Silver Shortages And A Possible Price "Tipping Point"

zerohedge.com
Submitted by Tyler Durden on 01/18/2011 15:22 -0500

Our friends at GoldCore have summarized recent shortages in the silver market and provide some observations on what this could mean for future silver prices. Curiously, the lack of inventory has happened even as the spot price of silver has consistently declined over the past week (if nominally the decline has been very modest). Just as curiously after the US Mint reported a massive surge in buying, the number of January sales has been fixed flat at 3,407,000, where it was a week ago, and indicates that either buying interest has ceased overnight (unlikely), that the mint is not updating its numbers (likely), or, worse, that the Mint has now stopped selling any form of silver for reasons unknown. Although at the end of the day the only question worth asking is whether JPM feels lucky (again): as we posted last week, the firm has received "grandfathering" protection from position limits, arguably the biggest reason for the recent drop in the precious metal price.

From GoldCore:

Silver Bar Shortages to Lead to Price “Tipping Point”?

Gold is mixed while silver is higher in all currencies today, especially in the weaker US dollar. European sovereign bond yields are higher and the UK 10-year has risen to 3.66% and is close to breaking out after inflation figures surprised the majority of analysts who remain complacent about inflation.

Gold is currently trading at $1,370.75/oz, €1,022.11/oz and £856.57/oz.

click for full size

Equities in Asia were higher as are those in Europe so far today. US equity index futures are mixed with Apple leading to weakness in the Nasdaq; the S&P 500 is flat.

SILVER

Silver is currently trading $28.81/oz, €21.48/oz and £18.01/oz.

Reports of shortages of silver bullion continue to grow. While there are no widespread shortages in this area and dealers with extensive supplier networks (mints and large refiners) are not experiencing difficulties sourcing bullion inventory, it would be wise to keep an eye on this.

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Silver in USD – 35 Years – (Weekly). Click for full size

Reuters reported shortages of 1 kilo gold bars in Asia last week. Sprott Asset Management reported that it was experiencing difficulty sourcing 1,000 oz silver bars. Sprott said they were concerned about the “illiquidity in the physical silver market" and said delays in being able to source physical silver highlights the “disconnect that exists between the paper and physical markets for silver."


Zero Hedge reported that Bullion Vault, the digital gold provider, had run out physical silver inventories in Germany (and possibly elsewhere) and was advising clients to buy silver from other sources.

Zero Hedge also reported yesterday that some smaller bullion dealers in the UK were having difficulty sourcing all silver bars and had delayed delivery of silver bars (including 1 kilo silver bars) until February.

This comes at a time when the US Mint has reported huge demand in the first two weeks of January for their very popular US Silver Eagle 1 oz bullion coins.

click for full size

Click for full size

At about $33, €25 or £20 a coin, collectors and those seeking financial insurance have been buying silver in very significant quantities. The 2011 minted coins were first issued on January 3 and in just the first two weeks, 3.5 million coins were sold, according to numismatic web site Coin News.

In January 2009, the silver coins first topped the 3 million sales mark, with record sales totaling 3.59 million for the entire month.

If sales continue at these levels, that record should be surpassed this week. The all time monthly record of 4.26 million silver coins, which was set last November, is clearly in sight.

A recent report by analyst Adrian Douglas of GATA warns of forthcoming shortages of gold and silver bullion coins and bars, and that a “tipping point” will soon be reached that could lead to a COMEX default and a short squeeze which leads to much higher prices. Douglas himself has shown in Le Metropole Café how Comex silver inventories are shrinking and are not far from ten year lows.

The “bear raids” by the large concentrated shorts being investigated by the CFTC, are only leading to increased physical off-take. Indeed, the selling raids may be leading some participants on the COMEX (including large hedge funds) to take delivery or sell futures and buy bullion in allocated accounts.

None of the factors, in and of themselves, suggest that widespread shortages of silver (or gold) bullion are imminent in the immediate future. However, much circumstantial evidence suggests, especially the bona fide reports of difficulty in sourcing large silver bars, that the supply and demand balance in the silver market is very tight.

The more than 80% increase in the silver price seen in 2010 is not leading to an increased supply of silver but rather to a continuing and possibly increasing demand.

This is not surprising as silver is a byproduct of base metals and therefore its price increase will not have led to any material increase in silver mine production. This fact is known by most buyers of silver coins and bars and many of them continue to hold and add to their silver holdings in anticipation of much higher prices.

Silver at $50 per ounce and the 1980 adjusted for inflation price of $130 per ounce are conservative estimates for some silver enthusiasts. They have been proved right in recent years and the extremely delicate supply and demand equation in silver could see them proved right again in the coming months.

Since 2003, GoldCore have written research articles pointing out that the very small size of the silver bullion market would likely see its inflation adjusted high of $130/oz reached in the long term.

Interestingly, were gold to reach its adjusted for inflation 1980 price of $2,300 per ounce, and silver revert to its long term gold/silver ratio of 15:1 (geologically there are 15 parts of silver to every one part of gold in the Earth’s crust) then silver would reach over $150 per ounce.

While this seems über bullish to those who know little about the silver market, some silver enthusiasts - and there are many - believe that in time, silver will be valued at the same price as gold as huge quantities of silver have been used up in industrial applications since the Industrial Revolution of the 19th Century and throughout the 20th Century and into this millenium.

In these unprecedented financial and economic times, it is important to have a long term perspective.

KMG Gold Recycling saw a glut in the silver market in Decmber 2010. "We couldn't sell our silver to the secondary refineries." Said KMG president Michael Gupton, "We had to shop it around. That doesn't seem like a shortage of silver to me, that sounds like media manipulation".

kmggold.com

Posted by Mike Gupton at 5:15 PM 0 Comments

Thursday, March 10, 2011

March is National Engineering and Geoscience Month

Taking place in March, National Engineering and Geoscience Month (NEGM) is an annual initiative to raise awareness about the important role the professions play in society. NEGM highlights the various academic and career opportunities in engineering and geoscience available to young Canadians.

Across the province, APEGBC’s regional branches will educate and inspire young minds to think about how engineering and geoscience touches their lives by hosting events and activities as a part of NEGM. Popsicle stick bridge building competitions and rock and mineral workshops are some of the most popular events held around BC and allow children to explore how creativity and science can be combined to solve real world problems—the very essence of what professional engineers and geoscientists do every day.

In addition to supporting these events and activities, APEGBC is proud to be encouraging this initiative through published features in local and regional newspapers to raise awareness of our professional members and highlight their accomplishments. Throughout the month of March, editorial features will run in the Vancouver Sun, the Victoria Times Colonist, the Kelowna Daily Courier, the Prince George Free Press and the Alaska Highway News; in addition, radio ads will run on CKNW AM980 and The Beat 94.5 FM to inform the public of upcoming events.

Check out the National Engineering and Geoscience Month website for updates on events and activities in your community in March: www.shapingourworld.ca/.
Posted by Mike Gupton at 5:01 PM 0 Comments

Thursday, March 10, 2011

Gold Retraces All Losses After Official Says "China Should Take Every Chance To Buy Gold, Especially When Gold Prices Fall"

It was only logical that hours after Jim Cramer "Whitney Tilsoned" gold, China would come out and say it needs to buy more of the precious metal. After hitting an overnight low of $1,423/oz for some unknown reason, perhaps the latest overdue shakeout of the weakest holders, gold has since retraced half the distance to its all time highs, following a report from Reuters that "China should use some of its $2.85 trillion foreign exchange reserves to buy more gold, a government adviser was quoted as saying by local media reports on Wednesday. Li Yining, a senior economist at Peking University and member of the Chinese People's Political Consultative Committee, an advisory body to the national parliament, said that China should use the precious metal to hedge against risks of foreign currency devaluations. "China should increase its gold reserves appropriately, and China must take every chance to buy, especially when gold prices fall," Li was quoted by the official Xinhua news agency as saying." And so the immaculate record of all those calling for the "inevitable" correction in gold continues with a roughly 0% success rate.

GoldCore has more:

Renewed fears over eurozone debt have seen the euro fall against most currencies and precious metals today. The yield on Greek 10-year bonds is approaching an alarming 13% after jumping to a new record high of 12.89% today (see bond charts below). The Portuguese 10-year rose to a new record high of 7.7% ahead of today’s auction where they borrowed 1 billion euros in order to avoid a “bailout”.

GoldCore

The risk of contagion in the eurozone has clearly not gone away and this is another primary factor supporting gold above the $1,400/oz and the €1,000/oz level. The charts contradict those who simplistically call gold a bubble with gold having seen a period of correction and consolidation since November last year and looking like it is ready to break out and challenge new highs above $1,500/oz and EUR1,100/oz in the coming weeks.

GoldCore

Gold in Japanese yen has continued its gradual rise and has reached multi-year nominal highs at 119,000 yen per ounce. Gold in yen remains a long way from the nominal high of 160,000 yen per ounce seen in February 1980. This is likely a leading indicator that Japan’s deflation may be morphing into stagflation and the yen’s safe haven status is likely to be as questioned as the dollar’s in the months ahead.

GoldCore

While oil prices came off somewhat they remain near recent highs and uncertainty in Libya and in Saudi Arabia (where there are concerns about the coming ‘Day of Rage’ on Friday) will likely see oil remain robust with sell offs being shallow and short.

GoldCore

The likelihood that the People’s Bank of China is increasing and will continue to increase its gold reserves and the percentage of foreign exchange reserves held in gold, was seen in comments by Li Yining, an influential Chinese economic adviser, yesterday.

He said that China should use some of its close to $3 trillion foreign exchange reserves to buy more gold, and should use the precious metal to hedge against risks of foreign currency devaluations. Reuters reported the story this morning (Reuters Africa) and Bloomberg had a very brief news story yesterday.

"China should increase its gold reserves appropriately, and China must take every chance to buy, especially when gold prices fall," Li was quoted by the official Xinhua news agency as saying.

China does not disclose its gold reserves figures (neither on a monthly, quarterly or annual basis) but is likely quietly accumulating and will announce in the coming years that its reserves have risen from 1,054 tonnes, which is very low when compared to the Federal Reserve’s, to over 8,100 tonnes.

Gold’s recent and continuing robustness indicates that the ‘Beijing put’ is supporting the market on all sell offs and will likely continue to do so for the foreseeable future.

The Chinese are too shrewd to ‘telegraph’ their intentions to accumulate much larger gold reserves and will announce the ‘news’ when they are ready.

News

(Reuters) -- China adviser says Beijing should buy more gold
China should use some of its $2.85 trillion foreign exchange reserves to buy more gold XAU=, a government adviser was quoted as saying by local media reports on Wednesday.

Li Yining, a senior economist at Peking University and member of the Chinese People's Political Consultative Committee, an advisory body to the national parliament, said that China should use the precious metal to hedge against risks of foreign currency devaluations.

"China should increase its gold reserves appropriately, and China must take every chance to buy, especially when gold prices fall," Li was quoted by the official Xinhua news agency as saying.

His view that Beijing should diversify its foreign exchange reserves, the world's largest, into commodities is nothing new. Many other academics have publicly called on Beijing to do so.

But Li's views may carry more weight than most. Many of his former students are now high-ranking officials, including Chinese Vice Premier Li Keqiang, who is seen as Premier Wen Jiabao's likely successor in 2013.

However, Yi Gang, head of the State Administration of Foreign Exchange, which is responsible for managing most of the country's foreign currency holdings, said recently that it was not possible for China to make big purchases in the spot gold market.

"If China gets into these markets and pushes up prices to extremely high levels, the Chinese people will bear the cost at the end of the day as China is often the key buyer in these markets," Yi said.

He added that Chinese firms and households had purchased more than 300 tonnes of gold last year, and that it would have been hard for the government to buy any more with foreign reserve funds.

"The gold price shot up last year, and surging gold prices have forced Chinese people to pay more as there is strong demand for gold for those getting married and other events," he said. [ID:nTOE71P00H]

According to the central bank, China's state gold reserves have been held at 33.89 million ounces since April 2009.

Gold prices have risen about 10 percent in the last six weeks, as clashes in Libya and turbulence across the Arab world have encouraged investors to seek a safe haven, while oil has gained about 17 percent in the same period, increasing gold's inflation hedge appeal.

(Bloomberg) -- Li Yining Says China Should Raise Gold Reserves, Radio Reports
China should boost gold reserves “appropriately,” to secure the safety of the country’s foreign exchange reserves, Li Yining, an economist, was quoted as saying by China National Radio today.

(Bloomberg) -- Shanghai Gold Exchange to Extend Trading Time for Night Session
The Shanghai Gold Exchange plans to extend trading hours for the night session from late April, the bourse said in a statement posted on its website today.

The closing time for the night session will be 3:30 a.m., the statement said.

(Bloomberg) -- Merrill Lynch Says Brent May Break Through $140 in Three Months
North Sea Brent crude may trade at more than $140 a barrel in the next three months amid rising global demand and halts to production in Libya, Bank of America Merrill Lynch said.

“To reflect a tighter market, we upgrade our average second quarter 2011 Brent crude oil forecast to $122 a barrel from $86 a barrel,” the bank said in a note today. “On average for 2011, we now project Brent crude oil prices at $108 a barrel.” For West Texas Intermediate, the bank forecasts an average of $101 a barrel for this year, up from $87.

(Bloomberg) -- London Accounted for Two-Thirds of Global Gold Trading Last Year
More gold trading takes place in London than any other city, according to the latest commodities report by the financial industry-sponsored TheCityUK.

The U.K. capital captured 67 percent of the record $25.1 trillion in global gold trading last year, compared with 74 percent in 2009, according to TheCityUK. New York had 22 percent of the gold market, up from 16 percent in 2009, followed by Mumbai with 6 percent and Tokyo at 5 percent.

London kept its position as the center of the precious metals market that it established with the daily gold fixing in 1919. HSBC Holdings Plc, based in London, holds the gold on behalf of the SPDR Gold Trust, the biggest exchange-traded fund for the metal.

“London doesn’t have any competition when it comes to over-the-counter trading in gold,” said Marko Maslakovic, senior manager of economic research at TheCityUK in London. “OTC trading has been losing to exchange trading over the past five or six years because we’re getting more and more products traded on exchanges such as ETFs. It’s becoming easier to access the market through exchanges.”

London had 40 percent share of the $3.2 trillion silver market last year, down from 52 percent in 2009, according to the report. New York’s share climbed to 31 percent from 19 percent followed by Mumbai at 27 percent, down from 29 percent in 2009, according to Maslakovic.

The actual gold traded last year in London was 13.8 billion ounces of the global total of 20.48 billion ounces, according to TheCityUK. The silver total in London was 64.6 billion ounces, of a global 157.5 billion ounces, it said.

(Bloomberg) -- Gold Rises to 118,620 Yen an Ounce, Most Since Feb. 15, 1983
Gold for immediate delivery rose 0.4 percent to 118,620 yen an ounce, the highest price since Feb. 15, 1983.

 

Posted by Mike Gupton at 4:57 PM 0 Comments

Thursday, March 10, 2011

European Gasoline Hits All Time Record Of $8.632 Per Gallon

And Americans are complaining at an average gas price in the mid $3 range.

In Europe, gasoline has just hit an all time record of $8.632 per gallon! As HLN.be reports: "tomorrow the price of gas will reach an absolute record. Petrol 95 can hit €1.624 per litre. This breaks the 2008 record of €1.61 per liter." Translated into American this means that a gallon of gas in Europe is now an unprecedented $8.632 per gallon, which will certainly result in Europe literally and metaphorically grinding to a halt.

Worried about the impact of oil price on the US? Be far more worried with what happens to Europe as the continent grinds to a halt.

Tags oil prices 
Posted by Mike Gupton at 4:51 PM 0 Comments

Thursday, March 10, 2011

If The Gold/Copper Ratio Is Truly A Harbinger Of Market Weakness, Here Are Some Pair Trade Ideas

The dramatic change in the ratio of copper to gold, which moved at the highest rate of change since June of 2010. Today, the rate of change is even higher at 4.3%. And with copper starting to seriously take on water, a curious observation emerges: is the gold-copper ratio, which on an inverted basis was virtually a tick for tick correlation conjugate for the S&P, now simply a harbinger of where the stock market is headed.

All else equal, once the Chinese exuberance dynamics which appear to have stalled out in copper, move to equities (which as Finisair demonstrated yesterday is only a matter of time) we believe, as the attached chart shows, that the fair value of the stock market is about 120 points lower. Since this is a relative comparison, those who do not wish to trade a single series, can put on a pair trade of short the Gold/Copper ratio (predicting it will decline from the current 3.4 - it is shown inverted on the chart below) and short the S&P in expectation of a compression.

And for those who wish to have nothing to do with the Fed's third mandate in the form of the stock market (which is all), another even more convoluted way to play the current multi-asset mispricing, is to go long the Gold-Copper ratio (expect gold to stay flat while copper declines), while shorting the Gold Miner/Copper Miner ETFs (GDX, COPX).

Lastly, those who just want to play with gold, an interesting observation is that Gold has marginally outperformed Gold Miner stocks. An appropriate and simple compression trade here would be short gold and long gold miners for a few basis points compression.

Tags gold 
Posted by Mike Gupton at 4:44 PM 0 Comments

Thursday, March 10, 2011

International Trade News

Loonie Hits Three-Year High
2011-03-09 - CBC.ca

The Canadian dollar hit its highest level since November 2007 on Wednesday, driven by rising oil prices and concerns about spreading Middle East conflict.

The loonie rose 0.41 cents US, hitting $1.0335 on world markets in mid-morning trading.

Surging oil prices have boosted the global opinion of Canada's economic strength. Crude prices have jumped approximately 20 per cent since Feb. 18 in response to civil unrest in a number of Arab countries. As a result, the Canuck buck has gained two cents versus the American greenback.

Many foreign currency buyers linked Canadian economic fortunes to rising petroleum prices.

On Wednesday, crude prices were stable as the April contract on the New York Mercantile Exchange dipped five cents to $104.97 US a barrel in electronic trading.

Traders in this market are now concerned that popular demonstrations in Libya and other countries could spread to Saudi Arabia, the world's biggest oil producer.

Bank of America Merrill Lynch raised its 2011 oil price forecast to $101 US from $87 US and expects Brent crude to average $122 US in the second quarter.

But, earlier in the week, a report from investment house Brown Brothers Harriman said the common wisdom might overestimate Canada's link to oil prices.

The New York firm noted that crude oil prices have risen about 25 per cent since February. By contrast, the Canadian dollar has only moved up two per cent,
Posted by Mike Gupton at 4:01 PM 0 Comments