BIG OPPORTUNITY: THE LOWEST XAU OVER GOLD RATIO WE HAVE EVER HADShare on Facebook Tweet on Twitter
Posted by Bob Moriarty via Michael Campbell
on Thursday, 15 March 2012 12:21
Posted by Bob Moriarty via Michael Campbell
on Thursday, 15 March 2012 12:21
Posted by Bob Moriarty - 321Gold.com
on Thursday, 15 March 2012 05:51
Now is the time when we Juxtapose:
Posted by Julian D. W. Phillips, GoldForecaster.com
on Wednesday, 14 March 2012 00:00
The last few weeks have seen a larger consolidation pattern forming, pointing to a much bigger consolidating pattern that implies far more than just a short-term trading move just ahead of us. The forces that drive both supply and demand in the very short-term are just about in balance, so it is appropriate that we look at these forces to see how they influence gold prices in the short, medium, and long term.
The forces that influence the gold and silver markets are very different from those that affect industrial and base metals. They go far beyond simple prices and the technical picture of demand and supply. They encompass trust, confidence, dependability, and protection that have little or nothing to do with gold's uses. Warren Buffett is quite right about the "uselessness” of gold. But he has missed the point as to its value. Such a master of management and investment must find such an unmanageable metal virtually useless to him. But therein lays its value as an investment.
Over the long term gold cannot be managed or controlled. It's the last investment standing when push comes to shove and silver is its lesser sidekick. We mentioned the saying in an earlier article that people don't buy gold to make money but because they have money. That's why central banks hold gold. They wish they didn't have to but they know that their currencies are vulnerable to mismanagement and that over time are almost inevitably mismanaged. Gold is bought to get away from people and their games in the knowledge that when those games are played gold stands at much higher levels than before the games started. During the time that these events are played out, the gold and silver prices reflect each step made.
At Gold Forecaster and Silver Forecaster, we track these influences as much as we track the fundamental and technical pictures. Failure to do this would make our work directionless as well as inadequate. After all, one cannot exclude any facet of the influences on gold or silver if you want a professional understanding of these markets.
The supply of both gold and silver is rising but not in nearly sufficient amounts to satisfy the growing demand coming from all sides of the world. The production of gold is more difficult than that of gold because miners have to go to more and more different countries to extract gold. The governments of those areas may be friendly at the start of the operations, but if they feel that profits being made by miners are too large, then they move in with higher taxes and in some cases, nationalize the mines. With all the easily reached and exploited gold deposits having been mined out in the last century, miners are seeing costs jump inordinately; however, with the prospect of higher gold prices, even the far flung deposits are becoming profitable.
Bear in mind that miners first have to replace the deposits that they've mined out. After that their reserves can grow, but most miners are pleased simply to be able to replace mined-out ounces.
What is clear is that newly-mined ounces will prove insufficient to supply demand in the future. The only other source of supply has to come from what is badly termed, "scrap” gold. When this term is used it does not always mean gold that has to be re-refined like steel from a scrap car. It usually means that this is gold sold by current owners, who for some reason feel it necessary to sell it. This can be for reasons as simple as they need the cash with which to buy something else, pay something off, or because the owners feels the price is too high, wants to profit and buy it back after the price has fallen back to a level where it forms a base from which to rise again. Such sellers are confined to the retail side of gold and not to central bankers any more. That makes gold very different from silver.
This leaves the supply of gold relatively inelastic.
Only when prices 'spike' do we see dishoarding or scrap sales in volume. Such a 'spike' has to be significant because gold now has a habit of falling less than expected before consolidating ahead of the next rise. Many times traders are caught wrong-footed and pay a similar price to the one they exited at.
The emerging world investors in a debt-distressed Eurozone and central bankers comprise the backbone of the demand for gold and will do so for many years to come. All three of these types of investors are driven by factors pertaining to the retention of value. Their buying reflects a need to counter the falling values of paper money not because they use gold or consume gold. This makes gold an entirely different metal from all others.
For gold to keep this quality it must not be consumed in significant quantities; it must persuade its owners to keep it out of reach of others in vaults or personal safes and the like. It is money when all else fails.
It is this facet that keeps its price rising and always will so long as paper money, over time, continues to cheapen.
The supply of silver is mainly confined to the Americas, particularly Central and South America and Mexico. Apart from pure silver mines, silver is mined as a by-product of other metals. Where it is a by-product, its supply is reliant on the demand for the metal of the mine that the owners are targeting (i.e. nickel etc.). But there is a rapidly rising group of mines that are targeting silver alone. The supply from these mines again is insufficient to supply the rising demand from investment demand. It is growing and will continue to do so, but so is the demand, not just from the investment side of the market, but from industrial demand.
From supplying photography and jewelry demand for decades, the changing face of silver demand is remarkable. Today, its qualities in the electronic and medical field have burgeoned. Solar Panels, price tags, silver in clothes, in medicine, in computers and similar uses have moved silver from a metal related to discretionary wants to important needs. The demand for silver has moved to a much less price and economic conditions, sensitive metal, to one where demand remains strong when economic conditions weaken.
In these uses, unlike photography and jewelry, silver is consumed once and for all and does not come back to the market re-cycled nearly so much as it used to. This is ensuring that industrial demand is now rising, taking from the market significant amounts of newly-mined silver, which never returns.
Silver has set a pattern of moving alongside gold as monetary metal too. Do not expect silver to be accepted as a monetary metal by monetary authorities for the foreseeable future, but this has not stopped retail demand from treating it as such. As the price of gold has moved up and away from the poorer investor, so they turned to silver to fulfill the same requirements of retaining value. Silver's track record is as remarkable as that of gold having moved up from $6 to the current level of $33. This has assured the place it found in the past, in the future. Silver too, is money in the hands of poorer investors. You will not see a central banker anywhere near silver, but you will see huge numbers of emerging world investors newly rescued from poverty. With the emerging world numbering above 4 billion people, this demand has not even been dented, let alone satisfied.
Relationship between Gold, Silver
The relationship we are talking about here is not the gold silver ratio; it is simpler than that. The price performance of the two metals since 2005, in particular, is roughly the same as 'both have risen over five fold since then'. The question that investors should ask is, "Will this change?” We believe not! There is a likelihood that silver will outperform gold in the future, but remember why the two are rising in the first place.
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Posted by John Hathaway via King World New
on Tuesday, 13 March 2012 06:48
With continued volatility in the gold and silver markets, today King World News reached out to 40 year veteran John Hathaway. Hathaway is the prolific manager of the Tocqueville Gold Fund and he has achieved a 5-star rating from Morningstar. Hathaway sent KWN, exclusively, an outline of 9 key points in the gold and silver markets. Here is a portion of one of the 9 key points (all 9 points below): “The fact that gold has survived the negative news flow from the monetary and economic front is encouraging. If gold can withstand the apparently changing narrative that had underpinned a bullish stance on gold, it will be a sign of enormous strength.”
Posted by Equedia
on Monday, 12 March 2012 06:13
Most people have no idea what is taking place behind the scenes of the precious metals market - in particular, the silver market.
For many of you, much of what I am about to say may seem like Déjà vu. But because of the timing and the way I see the charts moving, I find it to be my duty to go over this once again.
Most of what is determining gold's price is paper trading - which is fundamentally flawed. The amount of paper gold and silver contracts that trade on the futures and equities exchanges easily outweigh the amount of actual physical trading that takes place.
That means it's the paper markets setting the price discovery for gold. It means that short term sentiment - and manipulation - are the causes of both gold and silver's volatility and not the actual fundamentals of gold and silver themselves.
For example, in a report published last year (see Before it's Too Late), Eric Sprott and Andrew Morris pointed out the significant discord between paper and physical supply on the Comex relating to silver:
"...Over 800 million ounces traded each day in April on (the Comex). Further, consider that as at the end of April there were only 33 million ounces of registered inventories to back up all of that paper trading. Just imagine if a mere 5% of all of that buying actually stood for delivery; the entire inventories would be more than wiped out."
Over a year ago, I published a letter that revealed how most of the gold that is traded in the markets are not actually fully backed by the actual metal itself, as many believe (see The Silver Conspiracy):
For years, most people have assumed that the London Bullion Market Association (LBMA), the world's largest gold market, had actual gold to back up the massive "gold deposits" at the major LBMA banks. But it doesn't.
This was confirmed during the CFTC hearings when Jeffrey Christian of the CPM Group said that the LBMA banks have approximately 100 times more gold deposits than actual gold bullion. This means that for every ounce of gold traded in these markets, 99 of them appear from thin air. Has gold and silver been converted into a fiat currency in these markets?
In the LBMA market, for example, an average of 19.6 million ounces of gold was traded per day in July. The world has produced on average approximately 2,497 tonnes per year over the last several years - which is just over 80 million troy ounces.
That means the LMBA, trades nearly a year's worth of worldwide gold production in less than a week.
In October 2010, we published another letter proving our theory and why silver will climb to new highs (see Enron Lives On?). Silver more than doubled in value since that time, as it nearly reached an all-time high of $50.
In both letters, I mentioned how the trading of both silver and gold is not only highly leveraged, but easily manipulated - especially on the silver side. Many of the shorts used to manipulate the price are both naked and heavily leveraged.
But what happens when these shorts need to cover? What happens when the actual fundamentals of driving gold and silver up reveals its true colours?
Back on July 2011, I wrote a piece on the South Rare Precious Metals Spot Exchange in China, as well as The Gold Exchange.
Here is the excerpt:
In brief, the Pan Asia Gold Exchange features a market-driven mechanism and provides two basic services: a physical gold purchase and distribution network and innovative products based upon physical gold - for anyone.
In short, that means simpler, quicker, and more cost-effective transactions between all parties for gold-related transactions. But more importantly, it means a new wave of capital injection for the gold market.
Here's a video about the Pan Asian Gold Exchange (Make sure you watch it):
Even whistleblower Andrew Maquire (see The Silver Conspiracy), who is no stranger to shorts and leverage employed by the banks against precious metals, was seen featured in the video. He says the exchange promises better price discovery, less leverage, and should in-time dilute the effects of short-side concentration in both gold and silver.
We all know what happens when shorts have to cover...
The Pan Asian Gold Exchange could very well help send the price of gold into new territories.
A New Wave of Capital
The Pan Asian Exchange has signed an agreement with The Agricultural Bank of China (ABC), integrating its customer account information system with their platform.
That means the exchange will have direct access to the accounts of 320 million retail customers, 2.7 million corporate clients, and nearly 24,000 branches. ABC is China's third largest lender by assets. When it went public last year, it became the world's biggest ever initial public offering. It currently ranks No.8th among the Top 1000 World Banks and Forbes Global 2000 named it the 25th-largest public company in the world.
This is where it gets big. Real Big.
Imagine buying gold through your bank with the click of a mouse. The Pan Asia Exchange has now created the first ever rolling spot contract that will allow Chinese banking clients to buy 10 ounces (the minimum transaction) of gold contracts in RMB, through their account, and directly linked to the exchange. If you have an account with ABC, you can instantly buy gold, or gold contracts.
Think about it: 320 million retail customers and 2.7 million corporate clients, all with the same Chinese appetite for precious metals (see Age of America Over?); all now able to buy gold in 10 ounce increments with the click of a button.
Once more of these international contracts go live, we're going to see a strong demand for physical gold as the drawdown of physical gold begins to meet the obligations of the contracts. Buying gold directly from your bank account - that's real demand. It's essentially like the SPDR Gold Trust, or GLD, with much stricter leverage guidelines and 100% backed by gold.
Because of the massive short positions against silver, and gold, every physical ounce of the precious metals taken out of the physical market and into the new Chinese exchange will force a massive short squeeze as leveraged short sellers have to cover their positions in the paper market.
There's no doubt these highly leveraged shorts are extremely vulnerable and can easily be taken out by physical demand. When you go from trading paper to actual physical metals, that's when the prices of these metals will skyrocket as the supply can't keep up with demand.
This new exchange has just slowly begun to trade in local Chinese communities. But they're going to be fully operational within 6 months. That means in less than 6 months, more than 320 million retail Chinese customers and 2.7 million corporate clients can buy gold online that is 100% backed by bullion - not leveraged pieces of paper.
Eventually, the exchange will be opening its doors to foreigners.
The US did it...why not Europe?
The world's central banks have been printing a tidal wave of newly created paper money right under our noses over the past few years. And as I have stressed over the past couple of months, they won't stop.
Since December, the ECB has provided more than €1 trillion of new loans in two separate tranches. In the latest tranche, 800 banks grabbed €529.5 billion of new loans at 1% for three years using almost any form of collateral.
While it may not directly be Quantitative Easing, the outcome is the same. Just like the US, this type of negative real interest rate loan is just another form of QE. It's another way of injecting money without spooking the world, and without violating any charters.
This, in effect, means the banks effectively decide how much money is created. Because the ECB
does not directly monetize the debt of the weak sovereigns, which it is prohibited from doing by charter, it instead gives the commercial banks the ability to take their newly borrowed money and use it to buy sovereign debt.
In other words, it's as if the ECB purchased sovereign debt through the commercial banks and is effectively "printing" new money without "technically" violating its charter.
We know currency is being devalued as a result. The amount of money being created is more than we've ever experienced - and the record breaking amounts won't stop.
Gold WILL be above $2000 before the year is over and silver easily topping $50.
The opportunities to participate are mounting.
Until next week,
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