Gold Bullion (GOLD)

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What Indian consumers think about gold: survey

A new survey by Morgan Stanley finds that, although Indians are set to buy less gold in 2012, with volume demand to drop 13% for urban India, respondents said they expect gold prices to rise by 8% this year.
Author: Shivom Seth
Posted: Tuesday , 05 Jun 2012

MUMBAI (MINEWEB) -

The Indian government's attempts to curb gold demand, since gold already represents 72% of India's current account deficit, appears to be working. India's demand for the precious metal is estimated to fall by 4% in volume and rise 4% in value in 2012, according to a report by global bank, Morgan Stanley.

The research report expects volume demand to drop 13% for urban India and rise 4% for rural India.

Morgan Stanley conducted a survey of 2,019 urban and rural gold buyers across 16 Indian cities for urban consumers and 8 Indian states for rural consumers.

The survey report notes that Indians own 20,000 tonnes of gold worth $1 trillion. Household gold consumption appears to have gone up to $45 billion in 2011 from $19 billion in 2009. To put things in perspective, India's gross domestic product (GDP) is inching closer to $2 trillion. This means, the value of gold held by Indians is comprises nearly half of the country's GDP.

Gold accounts for one-third of the household portfolios Morgan Stanley surveyed. Respondents from several households said they expect gold prices to rise by 8% in 2012. However, an additional 8% to 10% rise would lead to a proportionate decline in volumes.

The survey notes that gold is not the first asset that Indian households liquidate during bad times; it is equities. Gold remains an important asset class for investment, having outperformed most other asset classes over the past five years.

Indian households also are increasing their demand for gold bars and coins. The survey notes rising income is behind the growing share of gold bar holdings.

SURVEY DETAILS

The survey notes that India's demand for gold is driven by both consumption and asset class considerations.

The report indicates that the demand for gold will be split equally among investments and `life events' (which includes marriage or other ceremony, religious occasions, gifting, fashion statements and the like) and discretionary consumption.

Though `life events' are more important for rural consumers, urban consumers will tend to strike a balance between the need to invest in gold and `life events'.

The report adds that in 2012, gold demand for life events is expected to increase by 50% pushed by an increase demand from rural India.

With regards to the drivers of gold purchases, the report adds that so-called ‘life events' were responsible for around 45% of gold purchases by urban households in 2010, while discretionary consumption was around 25% and investment as a driver accounted for another 30%.

In 2011, life events as a driver for purchase came down to 35%, and investment rocketed to around 40%. Discretionary consumption was the other 25%.

The report notes that Indian households are increasingly channelling their investment demand through bars or coins. The report projects a 2% to 3% point increase in share of bars and coins this year. The World Gold Council has said bars and coins represented 39% of total investment in 2011, a record high.

DEMAND PULLS

When speaking about the reasons why they bought gold jewellery in the past 12 months, respondents said auspicious events like marriages and festival accounted for 35%, while investment demand accounted for 20%. Buying gold as a backup for bad times accounted for 16% of those surveyed, while gifting on events was another 15%.

Around 8% of those surveyed said they bought gold as an impulse buy or bought gold for no specific reason. Another 6% of those surveyed said they bought gold because they were fond of the precious metal.

Around 13% of Indian households have taken loans against gold in the last year, with a slightly greater prevalence in rural India. Some 60% of rural households choose the unorganised sector for taking gold loans, while banks are preferred by urban households.

These loans are usually taken for funding farming activities in the case of rural households, while for urban households the reasons are quite dispersed. The rate of interest is in the 15% to 20% range.

Asked what would happen if prices were to rise above expectations, 46% of those surveyed said they would keep the same amount for purchase though reduce the quantity of gold, another 25% said it wouldn't matter and they would increase the amount spent, some 19% said they would cut down on their total spends on gold and invest more in other assets, while just 6% said they would buy studded gold jewellery instead (which has lesser usage of gold).

The report adds that if prices continue to rise, demand may not come off given investor psychology.

http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152703&sn=Detail&pid=33

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Asian central banks and other quiet accumulators of bullion

According to Dave Kranzler, founder of Golden Returns Capital savvy investors and central banks in Asia are accumulating physical gold. An interview with The Gold Report.
Author: Peter Byrne
Posted: Tuesday , 05 Jun 2012



PETALUMA, CA (The Gold Report) -

The Gold Report: You started your career, Dave, in the fixed income securities division of Goldman Sachs. And you worked as a junk bond trader before founding Golden Returns Capital. What prompted you to move into precious metals?

Dave Kranzler: After working as a bond trader on Wall Street, I was day trading. A friend suggested that I look at gold and silver. I initially poo-pooed that idea, as I was more interested in shorting technology stocks during the Internet bubble. I thought the tech valuations were based on nothing more than hopes and dreams, not on real wealth. The enormous growth in paper investments was driven by the incredible amount of money supply thrown into the system by Alan Greenspan's Federal Reserve.

But in late 2001, my friend finally convinced me to get serious about mining stocks. So I investigated the reasons why there had been a 20-year bear market in precious metals and why a long-term bull market was in the offing.

TGR: Why should we invest in gold instead of, say, Facebook?

DK: People like Warren Buffett, Charlie Munger and Bill Gates characterize gold as an investment. It's really not. It's a monetary metal. Gold represents the embodiment of real wealth. By contrast, Facebook has a sustainable business model based on revenues derived from advertising. But there's an extreme differentiation between what Facebook might be worth on the basis of long-term historical market capitalization measures versus what the market was willing to pay at its IPO. It quickly dropped in value, and it has a lot further to fall. Gold is more real.

TGR: How does gold as money differ from paper currency?

DK: Paper currency can be created at the whim of a central bank. The "fiat" currencies are politicized and based only upon the issuing entity's promise to pay. Gold is the world's oldest currency; it was used as a medium of exchange before the Roman Empire. Historically, gold replaced barter by providing the fungibility to enable widespread trade and commerce. Gold is very hard to produce, let alone counterfeit. It represents a true measure of wealth exchange.

TGR: You mentioned that gold is a medium of exchange, so it's a repository of value. It embodies a standard of value that represents the usefulness of other commodities, like a bushel of wheat. But if the gold itself is not the source of value, then what is the ultimate source of the value that it represents?

DK: Globally, the value of gold is rooted in supply. The supply of aboveground gold represents economic wealth, which is embodied in the price of gold, when there is a gold standard in place. A gold standard fixes the price of gold. Therefore, under a gold standard, the money supply can be increased by pulling more gold out of the ground. But if the price of gold is not fixed, then the price must rise and fall as new wealth is created or destroyed-regardless of the amount of aboveground gold in existence.

Unlike gold as money, paper currency is easy to reproduce. If the government wants to spend more money, it doesn't have to base that increase in spending upon incremental economic output. It can just decide to issue bonds and print money to pay for those bonds. Inflation occurs when the paper money supply is increased over and above marginal economic output.

TGR: So why is the price of gold volatile?

DK: The price of gold has steadily gone up every single year for 11 years. That's not really volatile; its one way, to the upside. The gold market is small and not very liquid. When someone wants to sell a lot of paper gold, and there are not many buyers, the price goes down, and vice versa to the upside. So we see large swings in price over short periods, but over the last 11 years, the price has only gone up. It has been less volatile than the S&P 500 over the last 10 years.

TGR: Large and institutional investors are showing some interest in gold. For example, George Soros has significantly increased his position. J.P. Morgan and other banks are investing in junior gold and silver mining companies, as are large mutual funds. Is this a significant change?

DK: A very, very small percentage of the institutional investment world is in gold-less than 1% of institutional funds globally. Very few of those institutions have taken physical delivery of gold. There are exceptions: Northwest Mutual took delivery of 400 million ounces (Moz) gold a few years ago; Texas Teachers Retirement keeps physical gold. If you look at the three cycles of a bull market-smart money, the institutions and then the public-there is potentially a huge wave of institutional investing in gold yet to come.

TGR: What metrics do you use to assess the value of junior mining stocks?

DK: We look at a range of firms: from companies poking holes in mineral lease claims to companies that have proved resources and are on the verge of becoming producers. I define a junior as a mining exploration company that's not producing and is depending upon the market for financing. I do not invest in evergreen companies. I look for a company that has a track record of drilling results. And, I want those results to come from areas that are proven producing areas, such as the Carlin trend in Nevada or the Durango silver belt in Mexico. Ideally, I like to see an NI 43-101-compliant mineralization report showing some Proved or, at least, Measured resources. I want a company to have on hand at least a year's worth of cash under normal operating and capital expenditure scenarios. Ideally, I want to see a large mining company as a sponsor. I want management to hold 5-10% of the equity. And the company must be operating in areas of relatively low political risk.

TGR: What happens if we have Qualitative Easing (QE) 3?

DK: Some people would argue that the market's already pricing that in, and that's why the entire stock market hasn't gone lower right now. But there's a high expectation that the Fed will not do a QE3. If it does do it, gold and silver and the mining stocks will explode as they did when QE1 was announced in 2008 and QE2 in late 2010.

TGR: China, Russia, India and the Gulf States are accumulating massive amounts of bullion. How is that affecting the market?

DK: The Western central banks have been selling off bullion for the last 15 years. What I like to call the "Eastern Hemisphere central banks" have been accumulating that bullion. There has been a transfer of bullion from the Bank of England, the European Central Bank and the Fed to central banks in China, Russia and India. A lot of people don't realize that Vietnam is the fifth largest gold-importing country in the world. Obviously, the Gulf States have started accumulating it pretty aggressively. Recently, Mexico and some of the South American countries are showing up as large accumulators of physical gold, not through ETFs or any of the other paper forms, but actual physical gold.

TGR: How does that affect pricing?

DK: The steady climb of gold over the last 11 years reflects this accumulation by very wealthy interests in Europe and Asia. China has been voraciously accumulating gold. The International Monetary Fund sold 400 tons of gold a couple of years ago. But a lot of these central banks, instead of selling gold, are leasing it out. They rent their bullion to banks like J.P. Morgan and Deutsche Bank that turn around and sell it into the marketplace. That gold is going somewhere. It is going to these quiet accumulators of physical bullion. At some point and, again, it's impossible to measure when, the central banks and investors that have been buying physical gold will have to get more aggressive with what they are willing to pay. That will be the next stage in the bull market.

TGR: When you talk about leasing, these companies that lease the gold aren't actually taking physical possession of it?

DK: They're borrowing it. Then they go onto the London Bullion Market Association and sell it. It's a legal transaction, but it's a paper transaction.

TGR: Is it a form of derivative?

DK: That's correct. Say that you are J.P. Morgan and you've sold me some gold that you leased from a central bank. If I ask for delivery of the metal, you will have to find it and deliver it. That's where the problems are going to start.

TGR: That certainly could be a problem. You have described yourself as an investment contrarian. What is your parting advice on mining stocks?

DK: Mining stocks are at an extraordinarily cheap level vis-à-vis their historical valuations, especially when you measure them versus the price of gold. Large and small companies are basically trading at the same valuation levels in relationship to gold that they were when gold was at $400/oz back in 2003-2004. To me, it's the ultimate contrarian and value play to hold your breath and invest in these companies now. I think if you do it now, you're going to be rewarded with a lot of money down the road, especially if the fundamentals for supporting gold and silver only get stronger.

TGR: OK, Dave. Thanks for your time.

DK: Thank you, Peter.

Dave Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for Bankers Trust. He has a Master of Business Administration from the University of Chicago, with a concentration in accounting and finance. Currently he co-manages Golden Returns Capital, a precious metals and mining stock investment fund based in Denver. He writes a blog to help people understand and analyze what is really going on in our financial system and economy: www.truthingold.blogspot.com



Article published courtesy of The Gold Report
http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152667&sn=Detail&pid=33

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Market Nuggets: Archer Financial's Platt: Gold Still Drawing Flight-To-Quality Buying

Tuesday June 05, 2012 8:57 AM

Comex gold is continuing to draw a safe-haven bid, says Stephen Platt, senior account executive with Archer Financial Services. He cites follow-through buying in the aftermath of a surge Friday following a weak U.S. jobs report. “The market responded in force, given the weak and deteriorating economic prospects,” he says. He also cites building worries about building budget deficits in Europe and the U.S. “The global economy seems to be in trouble, and that has encouraged some flight to safety, which had been lacking from this market for some time,” Platt says. So far Tuesday, gold is stronger even though the dollar is also higher. As of 8:48 a.m. EDT, Comex August gold was up $6.80 to $1,620.70 an ounce. The euro was down to $1.2438 from $1.2495 late Monday. Platt put the initial chart resistance for August gold around $1,630 an ounce, with support in the area from $1,607 to $1,600.

By Allen Sykora of Kitco News; [e-mail]
http://www.kitco.com/reports/kitcoNewsMarketNuggets20120605.html

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A.M. Kitco Metals Roundup: Comex Gold Firmer amid Consolidation on Charts

Tuesday June 05, 2011 8:05 AM


Comex gold futures prices are modestly higher in early U.S. trading Tuesday. The market early this week is consolidating on the charts following last Friday’s big price gains. The gold market bulls still have some upside near-term technical momentum. August gold last traded up $3.60 at $1,617.50 an ounce. Spot gold was last quoted down $2.40 an ounce at $1,616.75. July Comex silver last traded up $0.213 at $28.22 an ounce.

The overall market place is a bit calmer Tuesday, as there were no major, market-moving developments overnight to shake things up. There will be a Group of Seven teleconference late Tuesday to discuss the European Union debt and financial crisis. This comes ahead of two key events traders are awaiting later this week: a European Central Bank officials meeting on Wednesday and U.S. Federal Reserve Chairman Ben Bernanke’s testimony before U.S. lawmakers on Thursday. The market place is wondering if the U.S. and/or EU will hint of further easing of their monetary policies this week, in the wake of their recent weaker economic data.

There was another disappointing economic report from Spain Tuesday, as its services sector PMI fell sharply. The overall EU services PMI came in slightly better than expected but was still weak, overall. Meantime, China received a positive economic report overnight as services activity rose to a 19-month high.

The U.S. dollar index is trading higher Tuesday morning. There is still safe-haven demand moving to the greenback. The dollar index bulls still have upside near-term technical momentum. Meantime, Nymex crude oil futures are weaker and hit a fresh eight-month low of $81.21 a barrel on Monday. Crude oil remains in a fully bearish overall fundamental and technical posture. The overall postures of the U.S. dollar index and crude oil remain underlying bearish factors for the raw commodity sector.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM non-manufacturing survey, and the global services PMI.

Technically, gold futures bulls have gained upside near-term technical momentum recently. Bulls and bears are on a level near-term technical playing field. On a longer-term technical basis, the gold bulls never lost their overall technical advantage as prices are still in an 11-year-old uptrend from the 2001 low of $255 an ounce. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at $1,650.00. Bears' next near-term downside price objective is closing prices below what is now psychological support at $1,600.00. First resistance is seen at last week’s high of $1,632.00 and then at $1,640.00. First support is seen at Monday’s low of $1,610.00 and then at $1,600.00.

July silver futures bears still have the overall near-term technical advantage and have not garnered the strong safe-haven demand that has gold recently. Silver still sees a three-month-old downtrend in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at Monday’s high of $28.68 and then at $28.895. Next support is seen at Monday’s low of $27.955 and then at $27.50.

Follow me on Twitter to immediately get the very latest market developments. If you are not on board, then you are not getting key analysis and perspective as fast or as often as you could! Follow me on Twitter to get my very timely intra-day and after-hours briefs on precious metals price action. The precious markets will remain very active. If you want market analysis fast, and in after-hours trading, then follow my up-to-the-second precious metals market perspective on Twitter. It's free, too. My account is @jimwyckoff.

By Jim Wyckoff, contributing to Kitco News; [e-mail]

http://www.kitco.com/reports/KitcoNews20120605JW_am.html

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US 9th circuit ruling could reach further than gold dredge miners

The 9th Circuit Court has ordered the Forest Service to consult with wildlife agencies prior to granting notices of intent to mining and exploration activities in critical wildlife, fishery habitat areas.
Author: Dorothy Kosich
Posted: Monday , 04 Jun 2012

Small miners sue to overturn CA Fish & Game dredge mining ban
Coalition sues to block proposed California gold dredge mining regs

A Court of Appeals ruling ordering the U.S. Forest Service to consult with wildlife agencies prior to granting Notices of Intent to weekend hobbyists using suction dredges to mine for gold in the Coho Salmon critical habitat in northern California could eventually be bad news for all U.S. small miners and explorationists working on Forest Service lands with critical wildlife habitat.

In a news release distributed to the nation's news media Friday by the Karuk Tribe and the Western Mining Action Project ,the plaintiffs observed the court "made a historic decision in giving the Endangered Species Act precedent over the 1872 Mining Law when it decided in favor of the Karuk Tribe and endangered Coho Salmon in California and Oregon over recreational miners in the Klamath River area."

"This decision [Karuk Tribe of California v. USFS] sets a major precedent across the western states," declared long-time environmental attorney Roger Flynn, who represented the tribe and is director of the Western Mining Action Project in Colorado.

"The government and miners had argued that the archaic 1872 Mining Law, which is still on the books today, overrides environmental laws such as the Endangered Species Act. The Court today re-affirmed this guiding principle of federal public land management," he observed.

And, the 9th Circuit Court of Appeals judge who wrote the dissenting opinion in the 7-4 ruling, also believes the ruling has far-reaching ramifications well beyond the weekend hobbyist miners who dredge for gold along the Klamath River south of the California-Oregon Border.

In his dissenting opinion, Circuit Judge Milan Smith, Jr., wrote, "By rendering the Forest Service impotent to meaningfully address low impact mining, the majority effectively shuts down the entire suction dredge mining industry in the states within our jurisdiction."

Those states include the mining states of Alaska, Arizona, Idaho, Nevada, Montana, Oregon and Washington.

Prior to the aforementioned appellant court decision, informal Notices of Intent allowed low-impact mining projects to proceed within a few weeks. "In contrast ESA interagency consultation requires a formal biological assessment and conferences, and can delay projects for month or years," Smith noted.

"Most miners affected by this decision will have neither the resources nor the patience to pursue a consultation with the EDA; they will simply give up, and curse the Ninth Circuit," the judge warned. "As a result, a number of people will lose their jobs and the businesses that have invested in the equipment used in relevant mining activities will lose much of their value."

The judge noted that in 2008, California issued about 3,500 permits for suction dredge operations and about 18% of those miners received "a significant portion of income from dredging."

"The majority's opinion effectively forces these people to await the lengthy and costly ESA consultant process if they want to pursue their mining activities, or simply ignore the process, at their peril," Smith wrote. "Unfortunately, this is not the first time our court has broken from decades of precedent and created burdensome, entangling environmental regulations out of the vapors."

Chief Judge Alex Kozinski and Circuit Judges Sandra Segal Ikuta and Mary Murgia also dissented from the majority.

MAJORITY OPINION

Nevertheless, the en banc majority opinion of seven circuit judges requires the Forest Service to consult with fish and wildlife agencies before granting permits for notice level gold dredging operations along a 35-mile stretch of the Klamath River.

The 9th Circuit decision overturned rulings in 2005 by a district court and in 2011 when the appellant court's own three-judge appeals panel in a lawsuit originally filed by the Karuk Tribe.

The case was brought by the Karuk Tribe, which originally filed the lawsuit in 2004 in the federal court in Oakland, California, against the U.S. Forest Service. The new 49'ers, a group of weekend mining hobbyists with gold mining claims along the Klamath River, intervened as a defendant in the litigation. The tribe not only challenges suction dredge mining in the Klamath River, but also mining activities outside the stream channel, such as motorized sluicing.

Circuit Judge William A. Fletcher, writing for the majority, said the appellant court had to concern itself with whether the approved NOI mining activities ‘may affect" a listed species or its critical habitat. "The record shows that the mining activities approved under NOIs satisfy the ‘may affect' standard."

"We therefore hold that the Forest Service violated the ESA by not consulting with the appropriate wildlife agencies before approving NOIs to conduct mining activities in the Coho Salmon Critical Habitat within the Klamath National Forest," said Fletcher. The Coho Salmon in the Klamath River system were listed as threatened under the ESA on May 6, 1997.

The Karuk Tribe says it depends on Coho Salmon in the Klamath River System for cultural, religious and subsistence uses.

Commercial gold mining in and around the rivers and streams of California "was halted long ago, due in part, to extreme environmental harm caused by large-scale placer mining," the judge observed, noting that miners who use gasoline-power engines to suck streambed material through flexible intake hoses dredge from about five feet to as much as 12 feet beneath streambeds.

The moratorium is the result of a state court lawsuit filed by the Karuk Tribe against the California Department of Fish and Game in 2005. The moratorium will expire on June 30, 2016.

The California Department of Fish and Game has published proposed new state suction mining regulations that "fully mitigate all identified significant environmental impacts." The Karuk Tribe, environmental NGOs, and recreational fishing groups have sued to block the regulations, as have The New 49ers and other holders of mining claims in California's rivers and streams.

Fletcher noted, "The Forest Service and Miners argue that the controversy is moot because the California Legislature has imposed a statewide moratorium on suction dredge mining. ...No suction dredge mining may occur in the Six Rivers or Klamath National Forests until the temporary state ban expires."

"The moratorium does not moot this appeal for two reasons," he insisted. "First, the suction dredge moratorium does not prohibit other mining activities at issue in this case.'

"Second, even if these other mining activities were not at issue, the state's moratorium on suction dredge mining is only temporary," he added. "Similarly, here, despite any changes to the state suction dredge regulations, ‘dispute would continue' over whether the Forest Service can approve NOIs allowing mining activities in critical habitat of a listed species without consultation under the ESA."

"Moreover, the record in this appeal includes ample evidence that the mining activities approved under the NOIs in the Happy Camp District ‘may affect' Coho Salon and their critical habitat," the judge concluded.

Voting in favor of the majority opinion were Circuit Judges Barry G. Silverman, Susan P. Graber, Kim McLane Wardlaw, Ronald M. Gould, Richard A. Paez, Marsha S. Berzon and Fletcher.

http://www.mineweb.co.za/mineweb/view/mineweb/en/page34?oid=152590&sn=Detail&pid=34

http://investorshub.advfn.com/Gold-Bullion-COMEX-GC-Z12-23105/

[CaptWhizbang]

The Golden Wealth of Turkey

Monday June 04, 2012 11:11

When I talk about the Love Trade, India and China are frequently discussed since the two countries have been dominating world jewelry demand. Turkey’s love for gold, though, cannot be overlooked, as an estimated 5,000 tons have been accumulating in people’s homes for years.

Turkey is now offering incentives for people to store their gold in the bank instead. By acknowledging the hidden wealth of the Eastern European nation, this move will allow banks to lend more money and ultimately improve the country’s current account balance.

Turks’ Love Trade dates back more than 5,000 years ago, when gold jewelry was produced in Anatolia. That city still holds the world’s oldest jewelry art. Istanbul is the center for the production of gold jewelry and is also home to the Grand Bazaar which was constructed in 1461 and remains “the heart of the Turkish gold jewelry sector,” says the World Gold Council (WGC). Similar to India and China, Turks view the precious metal as both an adornment and a traditional form of saving. From a very young age, girls learn that gold is a wealth preservation asset, which helps explain why almost a quarter of those surveyed in Turkey today chose gold as their top investment choice, says the WGC.

You can see on the chart below how jewelry has historically been a majority of gold demand until just last year when half of gold demand came from investment, as gold coins and bars reached record levels, says the WGC.



In November 2011, ahead of the changes considered under Basel III, Turkey’s central bank said it would allow lenders to hold up to 10 percent of local-currency reserves in gold, according to the Wall Street Journal. As of March 2012, the central bank increased the percentage to 20 percent.

Now, retail investors can not only hold their gold jewelry, bars and coins in an account at a bank, but can also accumulate gold in accounts, with tax-free 24-carat gold transactions. The WGC says people can choose among gold deposit accounts, gold checks, gold credits, gold transfers, gold gram accounts and protected capital gold backed gold funds. Now, total gold deposits in the banking sector have reached an estimated $7.69 billion, according to the WGC.

I discussed last June how gold was being considered as a Tier 1 asset by the Basel Committee on Banking Supervision. The international banking supervisory committee helps ensure global banks have adequate capital, and the yellow metal was historically considered a Tier 3 asset with a net stable funding ratio of 50 percent. This means that banks’ gold holdings have historically been discounted by 50 percent of their current market value. I said at the time that upgrading gold to Tier 1 encourages banks to increase gold’s share of their reserves.

By making this change last year, Turkey is light-years ahead of other central banks around the world since the changes do not go into effect until January 2013.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

By Frank Holmes,

http://www.kitco.com/ind/Holmes/20120604.html

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American Eagle gold bullion sales more than double in May

While both American Eagle gold and silver bullion coins May sales were up substantially from April, they still lag far below 2011 bullion sales.
Author: Dorothy Kosich
Posted: Monday , 04 Jun 2012

RENO (MINEWEB) -

The U.S. Mint's sales of American Eagle gold bullion coins in May rose 158% over the total number purchased in April.

Sales of American Eagle silver bullion coins rose 89% during the same period.

The increased sales for both precious metal bullion coins were attributed to a decline in metals prices.

The U.S. Mint reported 49,000 American Eagle gold bullion coins were sold during May, up 158% from the April sales total of 19,000 gold bullion coins. However, May 2012 gold bullion sales were down 46.7% from the 93,500 in American Eagle gold bullion coins sold in May 2011.

American Eagle silver bullion sales for May 2012 were reported at 2,875,000 coins, up nearly 89% from 1,520,000 silver bullions coins sold in April 2012. However, May 2012 gold bullion sales declined 68% from 3,653,500 American Eagle silver bullion coins sold in May 2011.

The benchmark gold price fell for the fourth straight month in May 2012, the longest slump since 2000 while silver declined for the third consecutive month as of May.
http://www.mineweb.co.za/mineweb/view/mineweb/en/page34?oid=152580&sn=Detail&pid=102055

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Technical Trading: The Week Ahead - Gold Consolidates, Significant Bottom Confirmed

04 June 2012, 12:42 p.m.
By Kitco News

(Kitco News) - August Comex gold futures are slightly weaker Monday, as the market consolidates in narrow inside day action following Friday's explosive rally move. The consolidation is not a surprise in the wake of such a massive move higher on Friday.

Last week's action was bullish from a medium and longer-term perspective. The gold market decisively rejected the test of the $1,537-$1,529 an ounce support zone (the lower end of the market's five month intermediate term sideways range.)

The explosive rally on Friday, which saw gold futures surge over $80 on an intraday basis, confirms an important bottom at the $1,529 area. That zone now represents major technical chart support.

The market blasted above the 20-day moving average on Friday, and is testing 40-day moving average resistance at $1,617 on Monday.

The longer-term secular bull trend remains intact and last week's rally confirms an end to the bearish pullback off the late February high.

Dave Toth, director of technical research at R.J. O'Brien said, as long as the Friday low at $1,545.50 is not violated, "it would be a mistake to conclude that this market is not resuming the secular bull to new all-time highs above $1,924."

Toth remains bullish longer-term on the gold market because in part "the market has only retraced a Fibonacci minimum 23.6%, exactly, by the way, of April '09 - August '11's suspected third wave rally from $868 to $1,877 on a weekly log close-only chart below, potentially underscoring the long-term strength of this market."

Bottom line according to Toth? "Traders are advised to move to a cautiously bullish policy, first approaching setback attempts as corrective buying opportunities ahead of what could be surprising gains in the weeks and even months ahead. Former $1,600-area resistance is expected to provide new near-term support," he said.

Shifting over to the Comex July silver futures chart, the action last week was more muted. July silver rallied on Friday, but it failed to break out of recent price ranges. Near term, July silver remains stuck in a short-term sideways range. Key short-term resistance lies at $28.89 per ounce, with support at $27.08. Traders should monitor those levels closely as an upside or downside breakout from those levels could signal the next directional move.

Finally, looking at July platinum futures, despite the gains seen on Friday, the recent bear trend remains intact. There are two key near-term resistance levels for platinum traders to monitor—the first is $1,449 and the second is $1,474, the May 22 swing high. The platinum market needs to rally through the May 22 swing high to confirm a reversal to the current bear trend.

Major multi-month support for July platinum lies at $1,354.70. That represents the low from late December 2011.



http://www.kitco.com/reports/KitcoNews_tech_trading_20120604.html

http://investorshub.advfn.com/Gold-Bullion-23105/

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Gold Trades Moderately Lower on Corrective Pullback from Friday's Big Gains

Monday June 04, 2012 10:54 AM


Comex gold futures prices are experiencing a moderate downside technical correction from the large gains scored on Friday. Such is not surprising given the magnitude of Friday's price gain in gold--in excess of $60.00 an ounce. The gold bulls still have some upside near-term technical momentum on their side after Friday's advance, but do need to show some follow-through price strength soon to keep it. August gold last traded down $10.00 an ounce at $1,612.00.
http://www.kitco.com/reports/KitcoNews20120604JW_update.html

[CaptWhizbang]

DJ Argentina Mining Companies Hit Brakes As Government Rattles Nerves


Jun 01, 2012 (Dow Jones Commodities News Select via Comtex) --

--Government measures to stem dollar outflows pour cold water on mining

--Some companies stopping exports as unable to comply with dollar repatriation timetable

--Companies cutting back on exploration, slowing development plans

By Shane Romig

Of DOW JONES NEWSWIRES

BUENOS AIRES (Dow Jones)--After years of surging investment and exploration by mining companies in Argentina, the industry is grinding to a halt due to government policies have made the business climate less hospitable than the Andean peaks many of the companies target.

Since late 2011, mining companies have had to contend with new rules that have made it virtually impossible to repatriate profits and also made it increasingly difficult to import equipment and supplies.

Mining exploration companies "don't want anything to do with Argentina and are going someplace else," said Daniel Bosque, director of industry news site Mining Press.

After hitting a record in 2011, there is going to be a sharp drop in drilling this year, Bosque said.

Faced with the uncertainty, exploration companies are on "standby," said Julio Rios Gomez, president of Argentine mining exploration company group Gemera.

Companies with existing mines were surprised in November when the government said they would now have to bring all cash from export sales into the country and convert them into pesos.

Amid heavy capital flight, the government sought to ease pressure on its international reserves by forcing exporters to bring more dollars into the country.

The pressure, however, has only increased and the government has recently taken a series of draconian steps to stem dollar purchases and block the U.S. currency from flowing overseas.

Now a number of big mining companies have gone so far as to suspend shipments because they can't comply with a new requirements that they repatriate the cash within two weeks, rather than the 120 to 180 days that was previously the case, the director of one of Argentina's major gold mining companies said on condition of anonymity.

Companies that export concentrates by sea have stopped sending shipments as they can't collect and repatriate the money within the required 15 days, he said. A spokesman for the Mining Secretariat didn't return a message seeking comment.

Moreover, with growth slowing sharply in Argentina, cash-strapped provincial governments are starting to view some of the mines in their areas as potential pots of gold.

Santa Cruz Province has gone as far as to ask mining companies to chip in an additional 15 million pesos ($3 million) a month as a "gesture" to help plug a gap in the government's payroll, according to the gold mining company director.

All these problems are slowing investment and complicating projects under construction, he said.

A spokesman for Santa Cruz Governor Daniel Peralta declined to comment.

Canada's McEwen Mining Inc. (MUX, MUX.T) is now faced with the fact that it can't get its profits from the San Jose gold mine out of Argentina to use to develop its El Gallo mine in Mexico.

"We didn't foresee the changes in Argentina ... which have created a large amount of uncertainty," the company's Chief Executive Rob McEwen said in a May 22 conference call. "We've hit a bump in the road, a nasty bump," he said.

Companies looking for financing are finding doors shut to them because of worries about the global economy and Argentina.

Those doubts were amplified in April after the government nationalized oil and gas producer YPF SA (YPF, YPFD.BA), a unit of Spanish oil company Repsol YPF SA (REPYY, REP.MC).

Brazilian mining company Vale SA (VALE, VALE3.BR, VALE5.BR, VALE5.FR) is currently reviewing its plans to develop the $6 billion Rio Colorado fertilizer project in Argentina following the YPF nationalization and inflation of about 30% a year, the company's Chief Executive Murilo Ferreira said recently.

At the end of May, Extorre Gold Mines Ltd. (XG) said it would downgrade its schedule at Argentina's Cerro Moro gold and silver mine to a two-stage development plan, investing $110 million to come on line in 2014 and then using cash from the first phase to invest in doubling production within 18 months.

The regulatory uncertainty comes amid stiff resistance from environmental groups wielding a strict federal glacier-protection law.

The law threatens to stall a number of projects by limiting economic activity in areas near glaciers. The government is currently putting together a national inventory of the country's glaciers with the first province reporting preliminary results last week.

"In the first partial inventory a small river basin in Mendoza province, an area six times the size of Manhattan, is already a no-go zone for mining," said Daniel Taillant, founder of environmental advocacy group Cedha.

The government glacier inventory is well behind schedule, leading Cedha to produce its own, which it says shows that there is ice in the areas of a number of major mine projects.

The Mining Secretariat denies that there are any glaciers in areas where projects have been approved.

-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; [e-mail]

(END) Dow Jones Newswires

http://futures.tradingcharts.com/news/futures/DJ_Argentina_Mining_Companies_Hit_Brakes_As_Government_Rattles_Nerves_179652674.html

[CaptWhizbang]

Gold Glitters Amid Market Slide


Jun 01, 2012 (Dow Jones Commodities News via Comtex) --

--Comex August gold up 3.7% to $1,622.10/oz

--Weak jobs data spark hopes of easy money

--Gold gains on weaker dollar, short covering

NEW YORK (Dow Jones)--Gold prices roared to a three-week high Friday on speculation of fresh monetary stimulus triggered by a disappointing U.S. monthly employment reading.

The most actively traded contract, for August delivery, rose $57.90, or 3.7%, to settle at $1,622.10 a troy ounce on the Comex division of the New York Mercantile Exchange. June-delivery gold, the front-month contract, settled up $57.90, or 3.7%, at $1,620.50 a troy ounce.

U.S. non-farm payrolls grew by a lackluster 69,000 in May, missing forecasts of a 155,000 gain. The unemployment rate, obtained by a separate survey of U.S. households, rose to 8.2% in May from 8.1% in April, the first increase in nearly a year.

"That's just what gold wanted to hear," said Frank Lesh, broker and futures analyst with FuturePath Trading.

Gold bugs celebrated the sour jobs data, catapulting prices up nearly $60 at one point and helping gold end at a three-week high.

"People feel that after this number, more money printing is coming," said Matt Zeman, head of trading at Kingsview Financial.

Employment is a key consideration for monetary policy decisions at the Federal Reserve, and many gold-market participants have been hoping that weakness in the labor market would usher in another round of stimulus measures from the bank.

Gold prices have rallied on past accommodation efforts. Investors tend to flock to gold on fears that excess liquidity would erode the value of the dollar and spark inflation. Gold is widely considered a hedge against inflation and a store of value.

[/b]"While inflation is not now apparent, stimulus that may result from this turmoil is not far away," said George Gero, vice president at RBC Capital Global Futures.

Gold's rally intensified in the final half hour of trade, with futures setting fresh records as investors streamed into the market.

Gold's gains were amplified by investors who had bet on lower prices, or shorted gold, who were forced to return to the market as buyers in order to reverse those positions.

"Not only do we have new money coming into the market, but everybody who was short gold is being forced to cover today," Zeman added.

Market watchers also cheered gold's decisive grab for its mantle as a haven asset. Gold prices had traded in line with risk-based assets like equities and other commodities since last September, worrying investors. The precious metal had slumped 6% over the course of May, mirroring losses in riskier markets.

But these bonds were fractured Friday, as gold prices rallied while stocks and commodities fell.

"We're seeing gold trading once again as more of a safety instrument than anything else," Zeman said.

The rest of the precious metals complex followed gold's lead, climbing Friday. Silver for July delivery rallied 75.5 cents, or 2.7%, to settle at $28.512 a troy ounce on the Comex.

NYMEX Platinum for July delivery rose $15.60, or 1.1%, to settle at $1,433.20 a troy ounce.

Palladium for September delivery, the most active contract, edged up 10 cents to $614.00 a troy ounce.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,606.00; previous PM $1,558.00
Aug gold $1,384.90, up $7.90; Range $1,372.70-$1,388.40
Jul silver $28.512, up 75.5 cents; Range $27.170-$28.680
Jul platinum $1,433.20, up $15.60; Range $1,388.80-$1,447.60
Sep palladium $614.00, up $0.10; Range $597.15-$617.95

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]

(END) Dow Jones Newswires

http://futures.tradingcharts.com/news/futures/DJ_PRECIOUS_METALS__Gold_Glitters_Amid_Market_Slide_179646847.html

[CaptWhizbang]

Raging gold bull vs muted gold bear - Grandich vs Palmer

Two respected names in the investing world share their arguments for what could happen to gold in the coming years and how to profit from it. One predicts a lot more upside while the other has a more cautious outlook. Gold Report interviews
Author: JT Long
Posted: Sunday , 03 Jun 2012

http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152573&sn=Detail&pid=33

[CaptWhizbang]

Is another good summer for gold now ahead?

Has there been a complete mood turnaround in the gold market? Up until Friday it had mostly been doom and gloom for gold investor. But now what after a 5% plus price increase in a day?
Author: Lawrence Williams
Posted: Saturday , 02 Jun 2012

LONDON -


What a difference a day makes! After a month of doom and gloom and lingering doubts that, perhaps, the gold bears are right after all, gold investors will have gone into the weekend with smiles on their faces. Maybe the recent gold price decline is now over and the yellow metal will get back on the bull market track it has been following for the past eleven years. OK it still hasn't got back to where it was at the beginning of May - yet, but it could well have the momentum to do so now that the link with the strong dollar and weak euro has been broken, perhaps decisively.

The portents look good for the gold bulls- but then they have been all along if one follows the logic which provides what should have been the key drivers for an increasing price scenario. But at least Friday's 5% in a day price rise will regenerate some confidence amongst the gold believers, and perhaps put the frighteners on the short sellers who will have had their fingers nastily burnt as they raced to get out of their positions - in itself contributing in part to the very sharp price increase.

As New York-based gold pundit, Jeff Nichols of American Precious Metals Advisors and Rosland Capital, put it in an email to Mineweb late yesterday (Friday): "Has gold lost its mojo? Obviously not! Sooner or later, gold and silver were sure to bounce back. Today, it was the disappointing employment news for the U.S. economy that was the catalyst -- coming on top of other indicators of slowing economic activity. . . not just in the U.S. but also across Europe . . . and China . . . and India.

"All of this taken together suggests another round of global monetary accommodation and reflation -- simply put, printing more money! This is the rocket fuel that gold thrives on.

"With so many so short it should come as no surprise that today's move up has been so dramatic. But beneath it all is a very tight, very strong physical market. Even as institutional speculators and traders (the big banks, hedge funds, and other financial firms) held gold down in recent months, the physical market remained solidly bullish with Chinese private sector demand and emerging nation central banks leading the way."

Can gold fall back again? Yes, of course it can - indeed we'd be surprised not to see a burst of sustained high volume selling of paper gold next week in an attempt to drive the price downwards - just as we've seen in the past, orchestrated perhaps, if the GATAs of this world are to be given credit, by the Fed and its gold cartel allies. But this time one suspects, now that the gold bulls have suddenly gained some confidence back, it may well not last.

Will we see a repeat of last northern summer when gold surged throughout June, July and August, contrary to traditional patterns, before crashing back, after it got ahead of itself, in September. Possibly, but we will have to wait and see. It is still possible that the bears, and those who want the gold price to stay down primarily for political reasons, could gain the upper hand once more but somehow one feels they have had their chance and the most likely directional move is upwards again.

Look at the price drivers. This observer found it hard to understand how the virtual collapse of the Eurozone single currency experiment, bringing together countries with hugely disparate, and divergent, economies under a common currency regime, should have led to gold falling. Logic suggested that the smart European money would have fled the banks into gold as the perennial safe haven. But no - it appears to have chosen the dollar instead, despite the U.S.'s own economic problems which have continually been talked down by the Administration and its Fed allies.

In part it could have been because gold is not yet a Tier 1 asset for banks as we have highlighted in a couple of articles here over the past week or so, and with the European banks needing to strengthen their reserves they may well have had to sell ‘saleable' gold and put their money into the dollar or German bonds, even though they recognise that the former, in particular, has its own underlying problems.

These underlying problems came to the fore though on Friday with what could be described as extremely disappointing job recovery figures in the U.S. - hugely below economic pundits' already slightly pessimistic estimates. This raises the whole question of further Quantitative Easing being needed to try and stop the U.S. economy falling into recession again (if indeed it has really come out of it - who can trust government figures in these days of political spin!). Given that Fed statements had neatly downgraded the possibility of further QE to a level where even much of the financial community, which should have known better, had written off this likelihood in their minds - and investment decisions, the nonfarm payroll news at a time of year when jobs should be booming, was a body blow.

The investment community sees the return of QE, in whatever form, as being decidedly gold positive. Short positions suddenly needed to be liquidated, buying increased and the rest is history - albeit one day's! But so saying gold still has a long climb to get back to its end-Summer 2011 high - but bear in mind that on June 1st last year the yellow metal was sitting in the $1530s before it climbed to around $1910 inside 3 months. It could happen again although some factors currently seen by some as positive - notably the state of the Indian and Chinese economies among others - may actually mitigate against such a rapid increase if demand from those nations - the key gold purchasers nowadays - falls off as a result.

Overall Friday may well have seen a mood change in gold which could well prove to be sustainable for the yellow metal, but could be bad news for stock markets in general.


http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152562&sn=Detail&pid=33

[CaptWhizbang]

Is this the turning point for gold (upwards) and equities (down)?

Interviews with a number of top analysts suggest a downturn for the stock markets ahead but a big upswing in gold with the latter becoming more of a necessity than an investment.
Author: The Gold Report
Posted: Saturday , 02 Jun 2012

PETALUMA, CA -


Legendary Dow Theory Letters Writer Richard Russell issued a big bear warning May 27. In a special early alert for his subscribers, he announced that his analysis of the April to May activity on the Dow Jones Industrials showed the continuation of a primary bear market that started on October 9, 2007. "We are now dealing with the latter part of the primary bear market. . .subscribers should now follow a course of utmost caution," he said. "As for gold, I think it will be under pressure for a while, but before this bear market is over, gold will embark on a major bull move. The current correction in gold will test every goldbug's nerves," he added.

The Gold Report asked other market watchers for their interpretations of the numbers and the impact these trends could have on the price of gold and gold equities. Their responses reflected their unique perspectives.

"Richard Russell will likely be right about the broader markets entering a bear market," said Jeff Clark, a senior precious metals analyst with Casey Research. "Otherwise, where is all the economic growth going to come from that will nullify the otherwise unavoidable impact of record debt, obscene deficit spending and runaway money printing?" he asked.

"As a gold equities investor, though, this doesn't worry me because the very reasons we'll likely have a bear market in the overall stock market are the same ones that will drive gold and then gold stocks higher. In fact, gold is becoming less of an investment and more of a necessity; once the economy improves-whenever and however-expect a serious bout of inflation, something that will erode the purchasing power of cash and cash-equivalent investments.

"In fact, not buying gold will likely be a very costly blow to our future standard of living. Based on the historical performance of gold and silver, we won't experience any inflation in the things we buy 10 years from now if we pay with the proceeds from precious metals sales. Think about that: if gas prices double, we pay today's price if we sell some gold or silver to cover it. Ditto food. In 1964, three Roosevelt dimes bought one gallon of gas; today it only takes two of those dimes. This is one of the big reasons we're accumulating physical metal."

Toby Connor, author of the popular Gold Scents newsletter, was not ready to call a bear market yet. "We need to see how the market acts as it comes out of this intermediate cycle low," he said. "Even if a bear market has begun, there is usually a denial phase where the market retests the highs or even marginally breaks to new highs. We saw this in 2007 as the subprime implosion was getting underway, but the market ignored it and focused on the Fed slashing interest rates and printing dollars. The market assumed this would fix the problems. It didn't fix anything, but it did drive stocks back to marginal new highs where smart money sold positions to the retail crowd. Even if a bear market has begun we will almost certainly see a retest as soon as the Fed hints at the next round of quantitative easing. I don't believe for a second the Fed will give up without a fight. They certainly didn't in 2010 or 2011."

Connor was still undecided about gold's place in the cycle. "I'm not sure whether gold has formed an intermediate bottom yet. The miners seem to be saying yes, but gold is still fighting the dollar rally," he said.

Dr. Michael Berry, author of the respected Morning Notes, has also looked at the bigger economic numbers and he saw a world perilously close to slipping into a "Fisherian debt-deflation spiral" as described by Irving Fisher in the 1933 paper The Debt-Deflation Theory of Great Depressions. He pointed to debt liquidation and distress selling, contraction of the money supply, a fall in asset prices, a greater fall in the net worth of businesses, a reduction in output, trade and employment, general pessimism and loss of confidence and hoarding of money as indicators that mirror the trends Fisher saw before the big crash in 1929.

Berry does not think there will be a reprise of the Great Depression, however. His worry is that the world may be entering a Keynesian liquidity trap in which more monetary stimulus is ineffective. He warned that until the massive debt overhang in the world is dealt with and a clean credit cycle commences, growth will be slow and inflation could be high. Of course, that could also increase gold and silver prices "significantly."

John Kaiser, author of Kaiser Research Online, took a positive longer view. "I would point out that the peak of the real estate bubble was June 2006, with most of the descent taking place by Q1/09. It looks as if housing prices are locked into a downtrend, plumbing new lows since 2011, but the housing starts for April were at the highest level since early 2009. Given the backdrop of emerging markets such as China and India slowing, Europe grappling with its sovereign debt crisis and the United States paralyzed by an election year during which no new fiscal initiatives can be made and the Federal Reserve reluctant to engage in quantitative easing for fear of being accused of biasing the election outcome in favor of Obama, it is hard not to have a bearish macroeconomic outlook for the remainder of 2012. However, with the rest of the world off-balance, and the United States effectively in a holding pattern, the circumstances are right for a massive round of fiscal stimulus supported by additional quantitative easing in 2013 regardless of who wins the election so that the perception of the United States as a fading power gets turned around. The long-run destiny of the United States as being in relative decline within a global economic context remains intact, but the solution to avoiding a global depression requires restoration of a leadership role to the United States. This will not happen if the next government ends up with a Tea Party-styled mandate that reinforces the current austerity mindset."

With all of the negative news in the media, Kaiser said he was not surprised by the apocalyptic outlook saturating the public consciousness, but predicted a positive change in the not so distant future. "This is the classic paroxysm of an approaching bottom. I suspect that by the end of summer we will see housing starts not plunge back the way they have done every year since 2009, real estate prices will be edging away from the cliff, manufacturing jobs will continue to grow as more companies contemplate the implications for their China-based operations by a Chinese shift away from infrastructure stimulus into domestic consumption stimulus, and the election focus will be on which party has a better centrist vision for leading the United States economy back into a more balanced state. This will happen when the political discourse shifts to the Medicare and Defense items in the budget and recognizes that the only way to avoid flushing retirees down the toilet or jettisoning America's role as global supercop is to put the American economy back on a diversified growth track. Once it becomes apparent that it does not matter who wins the election, the glass will switch from half empty to half full, and the markets will benefit."

That good will will shine on commodities as well, Kaiser concluded. "Gold will also benefit because, except in the case of an extraordinary energy or technology windfall generated by innovation, the modern economy only grows when fueled by a credit expansion."

http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152560&sn=Detail&pid=33

[CaptWhizbang]

Gold ‘remains in long-term bull market’
Dubai: Thu, 31 May 2012

Bruce Powers

Gold remains in a long term bull market for the investors, said a study, adding that investors are starting to look at lower gold price as a buying opportunity.

The recent decline in gold has some investors puzzled as the precious metal is supposed to be attractive when global economic uncertainty rises, said the analytical study conducted by Trust Securities DMCC, a clearing broker member of Dubai Gold and Commodities Exchange (DGCX).

During the debt crisis, investors turned to gold as a safe haven which helped propel it to a record high of around $1920 in September 2011, the study pointed out.

More recently, gold has done a better job of tracking the equity markets and moving opposite the US dollar like other commodities, according to the study.

In late-February, gold rallied up to a high of $1790.60 per ounce and has since fallen as much as 14.5 per cent to around $1526.9 per ounce this week (ending May 31). The decline off the record high has been a little over 20 per cent.

Bruce Powers, head of Research at Trust Securities, said: “Lately, instead of jumping into gold for safety, investors have flocked to the US dollar, US Treasuries and German bonds.”

“Recent downward pressure may have been amplified by investors liquidating gold to cover weak positions in the equity markets. However, even with the recent decline, gold remains in a long-term bull market.”

He said the highly liquid gold futures market can be used as a mechanism to purchase physical gold. Investors can lock-in the purchase price of gold now through a futures contract, which offers the benefit of leverage, by depositing only a portion of the total value of gold they are purchasing.

It’s only when the physical gold is delivered to the investor that they pay the full value of their purchase, said Powers.

Asim Khan, CEO, Trust Securities, said: “Investors are starting to look at the lower gold price as a buying opportunity, either to re-enter the market or add to existing long-term positions. Some clients are even using gold futures as a method to purchase physical gold.”

An investor buys a gold futures contract on the DGCX and then holds it through to the expiration date of the contract rather than closing the position prior to expiry.

The DGCX then delivers a Dubai Gold Receipt under the Dubai Multi Commodities Centre’s (DMCC) Global Multi Commodities Receipt (GMR) platform, which verifies the quality and quantity of gold. An investor then takes delivery of physical gold which can be stored in an approved Dubai vault.

Bruce added: “Our analysis indicates that there is a good chance that gold prices may be heading towards a bottom for now.”

“As the European debt crisis continues to unfold with new concerns over Greece and now Spain, plus Moody’s downgrade of Italy’s banks, as well as a big trading loss surprise at JP Morgan, investors could once again see gold as a safe haven alternative.” – TradeArabia News Service

http://www.tradearabia.com/news/cm_218343.html

[CaptWhizbang]

Major Improvement In Gold’s Interim Outlook
By Clif Droke
Jun 03, 2012 08:04AM

As of the end of May 2012, gold suffered the indignity of its first “bearish” year after its long-term bull market began in 2001. Gold made almost no net progress in the past year, and although the gold price is still well above its long-term uptrend, on an intermediate-term basis it’s hovering only slightly above its year-ago level. There are reasons for believing that in the coming weeks, however, gold’s intermediate-term fortunes will change for the better.

Gold’s lack of progress through the month of May was thanks largely to a series of margin requirement increases by CME Group last summer. This policy move on the part of the commodity market regulators took the air out of gold’s speculative balloon and chased away the momentum crowd, resulting in a lower gold price and a lack of “hot money” trading interesting in the yellow metal. When the gold market lost its status as a leveraged play, the momentum-chasing hedge fund crowd quickly left and went off in search of faster-moving markets. That left the yellow metal firmly in the hands of the die-hard long-term investors.

While the lack of participation by the momentum crowd can be viewed as a positive in terms of reducing gold’s relative volatility, it hasn’t exactly been a boon to intermediate-term swing traders who count on having an extended upward trend to ride.

Since the beginning of May, gold has been plagued by the uncertainty arising from renewed fears over the euro-zone debt crisis. Investors largely shunned the metal in favor the U.S. dollar.

The first day of June witnessed a watershed event for gold from a technical standpoint, however. An important indicator of gold’s internal condition has registered a very positive reading – the first such reading in years. As we mentioned in our previous commentary, the 10-month price oscillator for gold , which measures how “overbought” or “oversold” the gold price is, registered its first “oversold” reading since the bottom of the credit crisis in late 2008. See chart below.

gold oscillator
This is a significant event considering that gold has been technically “overbought” on a longer-term basis for the last few years according to the oscillator. The switch from an overbought to an oversold reading is a positive event for gold and will pave the way for new purchases for intermediate-to-longer-term investors in the coming weeks and months.

Mining Stocks

The broad market correction that began in April has been less kind to commodities than it has to stocks. From the standpoint of the U.S. consumer, however, this is a good thing. Oil and gasoline prices have dramatically declined in recent weeks which will help lower the consumer price level somewhat in the coming weeks and months. This in turn will bode well for the domestic retail recovery (see U.S. Economy section below).

The big drop in commodity prices may also present bargains for value investors in the coming weeks. One area that is of particular interest is precious metals and mining stocks. Gold mining stocks in particular are beginning to look attractive at current levels. Below is the daily chart of the XAU Gold Silver Index in relation to its 15-day moving average. The XAU technically confirmed an immediate-term bottom signal last Friday per the rules of our trading discipline. One week later on June 1, the XAU broke out from its short-term trading range and advanced nearly 6% in a single day.

XAU
What’s even more interesting from a technical perspective is that while the gold stocks had the weakest internal momentum reading of any of the major sectors in April and May, the internal momentum readings are now improving. As of June 1, the gold stock group actually has the best internal momentum readings on a relative basis than almost any other major sector right now.

Consider also that the relative strength line for the XAU Gold Silver Index, which compares sector strength against the S&P 500, has recovered its previous levels from late March through April. The XAU index itself hasn’t yet made this recovery, but the relative strength line suggests it might just recovery its March high in the coming weeks.
relative strength
In light of this marked technical improvement, traders might wish to take a closer look at the actively traded gold stocks. It’s often true that in the wake of a major market correction the biggest percentage decliners are often the biggest percentage gainers once a new up cycle begins (and vice versa). If the gold stock internal momentum indicators continue improving in the coming days, this will likely be the case for the gold stocks in the early stages of the new interim cycle scheduled to begin in June.

U.S. Economy

Friday’s broad market sell-off was blamed by the media on a negative jobs report with the implication that the economic recovery is slowing. Our New Economy Index (NEI) tells a much different story, however, as the following graph shows.

NEI
The New Economy Index (NEI), which measures the state of the U.S. retail economy, has been in a rising trend since 2009 and hasn’t given a “sell” signal since 2010 in what was only a temporary blip in the economic recovery. Since then the NEI has been in a bullish trend for the U.S. retail economy despite the negative headline data at home and abroad at various times in the last couple of years.

NEI is essentially a composite of the leading retail stocks which are used to reflect the combined outlook for retail employment, transportation, small and mid-sized business and consumer retail sales. When the NEI price line is in a rising trend the domestic economy is in decent shape. Conversely, a falling NEI reflects a poor retail economy. The 12-week (black line) and 20-week (red line) moving averages are further used to confirm strength or weakness within the economy.

The latest NEI reading was updated as of Friday, June 1. As the chart shows, the NEI is still above its rising intermediate-term trend line which tells us that the U.S. retail economy is still in a fairly good condition. With the 4-year cycle still up until October – and with this being an election year – the retail economy is likely to continue to see improvement this summer and into the election. There is simply too much at stake here for the “powers that be” to let the U.S. economy fail at this time, which is why I’m more inclined to believe the positive reading in the NEI than the recent negative reports released by the Labor Department.

http://www.forexpros.com/analysis/major-improvement-in-gold’s-interim-outlook-125264

[NYBob]

Aurico Gold Inc. Ord (AUQ) fiat$7.75 UP $0.33 +4.45%

Volume: 2,871,368 @ 4:08:44 PM ET Strong Demand
Bid Ask Day's Range
- - 7.51 - 7.91
AUQ Detailed Quote Wiki

AuRico Reports Q1 Financial Results
Production Increases 17%, and Margins Increase 20% at its Core



http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75566692

GOLD to go higher and $$ to fall off the cliff -

Japanese media are reporting that this is the first time China has
let a major currency other than the US dollar trade directly
with the yuan.

China and Japan to start direct yen-yuan trade in June -

http://www.bbc.co.uk/news/business-18245909

[CaptWhizbang]

Gold's 1 year declining Pennant Pattern with Triple Bottom:


Notice today's pps nearly touched top Bollinger Line. Will next week push through Bollinger or retreat after very large spike?

[CaptWhizbang]

DJ PRECIOUS METALS HIGHLIGHTS: Top Stories Of The Day


NEW YORK, Jun 01, 2012 (Dow Jones Commodities News via Comtex) --

TOP STORIES

PRECIOUS METALS: Gold Glitters Amid Market Slide

Gold prices roared to a three-week high Friday on speculation of fresh monetary stimulus triggered by a disappointing U.S. monthly employment reading.
STORIES OF INTEREST

CFTC PRECIOUS METALS: Funds Accumulate Bets On Gold's Rise

NEW YORK (Dow Jones)--Fund managers stocked up on Comex gold futures and options in the week ended May 29, according to data released Friday by the Commodity Futures Trading Commission.
Peru Cracks Down Hard On Mine Protests, Offers Talks

LIMA (Dow Jones)--President Ollanta Humala's government has adopted a strategy of cracking down hard on violent protests against mining, while offering to negotiate to find solutions to activists' demands.
US Jobs Data Batter Commodities Amid Demand Worries

NEW YORK (Dow Jones)--Commodities tumbled Friday after dismal economic news spurred fears that global growth is slowing and eroding demand for raw materials.
Vale Faces Charges For Deaths Of Two Ontario Miners

CALGARY (Dow Jones)--Brazilian mining giant Vale S.A. (VALE) faces charges from the Ontario government related to the deaths of two Canadian miners in an underground accident last year.
Vale Faces Charges For Deaths Of Two Ontario Miners

CALGARY (Dow Jones)--Brazilian mining giant Vale S.A. (VALE) faces charges from the Ontario government related to the deaths of two Canadian miners in an underground accident last year.
Standard Life: Glencore-Xstrata Deal Should Be Opposed

LONDON (Dow Jones)--A major U.K. institutional investor, Standard Life PLC (SL.LN), said Friday that proposed remuneration packages for executives at Glencore International PLC (GLEN.LN) and Xstrata PLC (XTA.LN) makes the merger plan between the two companies "even less palatable" and so should be opposed.
Congo Fighting Hampers Conflict Mineral Monitoring And Exports

KAMPALA, Uganda (Dow Jones)--Renewed fighting between the Congolese army and renegade troops in the mineral-rich North Kivu province is hampering mineral exports and a monitoring scheme aimed at blocking trade in conflict minerals, officials said Friday.
MARKETS

PRECIOUS METALS: Gold Glitters Amid Market Slide

NEW YORK (Dow Jones)--Gold prices roared to a three-week high Friday on speculation of fresh monetary stimulus triggered by a disappointing U.S. monthly employment reading.
Spot Gold Breaches $1,600/oz After Poor US Job Report

LONDON (Dow Jones)--Spot gold traded back above the key $1,600 a troy ounce mark for the first time in three weeks in Europe Friday after a disappointing nonfarm payroll report sparked hopes for further U.S. monetary stimulus.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]

http://futures.tradingcharts.com/news/futures/DJ_PRECIOUS_METALS_HIGHLIGHTS__Top_Stories_Of_The_Day_179649601.html

[CaptWhizbang]

U.S. 10-year yields fall to record low under 1.50%
Data give Fed cover to buy more bonds, CRT says
By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) — Treasury prices jumped on Friday, pushing yields on major benchmark indexes down to record lows, after a report showed the U.S. economy added far fewer jobs in May than expected, spooking investors that a U.S. slowdown may be in the cards.

Yields on 10-year notes /quotes/zigman/4868283/delayed 10_YEAR +0.14% , which move inversely to prices, dropped 10 basis points to 1.46% — setting a new low of 1.44% intraday.

A basis point is one one-hundredth of a percentage point.

Click to Play European markets fallEuropean stocks fell, Spanish bond yields moved higher and German bund yields hit record lows in a flight to safety. Photo: Reuters

Thirty-year bond yields decreased 12 basis points /quotes/zigman/4868063/delayed 30_YEAR 0.00% to a record low 2.53%. They fell to 2.50% intraday.

Yields on 5-year notes /quotes/zigman/4868109/delayed 5_YEAR 0.00% fell 4 basis points to 0.62%, also hitting their lowest level ever after the jobs report.

The Labor Department said only 69,000 jobs were created in May, less than half the median estimate of economists. The number of jobs added in the prior two months were revised lower, and the unemployment rate unexpectedly edged up. Read about U.S. payrolls report.

Bonds were up before the report following weak economic data out of Europe and China.

“The outlook for global growth has declined and it seems like everyday the news continues to get worse,” said Gary Pollack, head of fixed-income trading at Deutsche Bank’s private-wealth-management unit. “There hasn’t been any real policy response out of Europe and that’s causing a lot of people to panic, so they’re going from risky assets to safer assets, no matter what the yields are.”

A separate report showed Americans’ spending rose faster than their incomes in April, cutting into the savings rate — which economists consider an unsustainable way to foster economic growth. The data include the Federal Reserve’s preferred measure of inflation, the personal consumption expenditure index, which was flat for the month. See more on spending, PCE.

Traders speculated that the data could raise the likelihood that the Fed takes steps to loosen monetary policy further and add liquidity to the financial system in the hopes that it will foster more growth in the economy. The Fed’s bond-purchase program, known as Operation Twist, is scheduled to end this month.

“The combined spending, inflation, and employment profile now gives the Fed plenty of cover for additional [quantitative easing] — or at least an extension of Operation Twist,” said Ian Lyngen, a government bond strategist at CRT Capital Group.

Also, the Institute for Supply Management’s index on the U.S. manufacturing sector showed the industry expanded at a slower pace than expected in May. Read about ISM.

Ten-year yields fell for a fifth day, down from a week ago by the most since September.

After yields rose slightly last week, the drop is the 10th week in 11, after what was a highly unusual run of weekly declines.

In May, Treasurys staged a strong rally after a Greek election left no party with a majority, requiring new elections in June. Also Spain’s yields jumped and its banking problems deepened, prompting investors to seek the relative safety of U.S. government debt. Read more on Treasurys in May.

Ten-year yields dropped 33.6 basis points last month, following a large drop in April. It was the biggest decline since September, back when markets also had very little confidence in the willingness of European politicians and monetary-policy officials to take the steps necessary to rein in their sovereign-debt problems. The Fed announced Operation Twist in September.

Thirty-year yields fell 44 basis points last month, also a second monthly decline and the most in eight months.
/quotes/zigman/4868283/delayed Add to portfolio 10_YEAR 10 Year Treasury Note US : ICAP Sovereign Debt 1.46 +0.0020 +0.14% Volume: 0.00June 1, 2012 5:30p
/quotes/zigman/4868063/delayed Add to portfolio 30_YEAR 30 Year Treasury Bond US : ICAP Sovereign Debt 2.52 0.00 0.00% Volume: 0.00June 1, 2012 5:30p
/quotes/zigman/4868109/delayed Add to portfolio 5_YEAR 5 Year Treasury Note US : ICAP Sovereign Debt 0.62 0.00 0.00% Volume: 0.00June 1, 2012 5:30p

Deborah Levine is a MarketWatch reporter, based in New York.

http://www.marketwatch.com/story/us-bond-yields-hit-new-lows-after-weak-payrolls-2012-06-01?siteid=bigcharts&dist=bigcharts

[CaptWhizbang]

Friday's Analytical Charts for Gold, Silver and Platinum and Palladium



http://www.kitco.com/reports/template_jimw.htm

[CaptWhizbang]

Egan-Jones cuts Italy on heels of Spain downgrade

( The woe spreads to Italy. CW )

By Sue Chang SAN FRANCISCO (MarketWatch) -- Egan-Jones Ratings Co. on Friday lowered Italy's sovereign rating to B+ from BB, noting that the country is in "miserable shape." "Italy's independent ability to support its banks is questionable given the country's weak condition," said the ratings agency in a statement. It also warned that Italy cannot support its debt if the European economy falters. Egan-Jones put the possbility of a default by Italy in the next year at 6%. It had cut Spain's rating to B from BB- earlier this week, citing the possibility that the government will likely have to extend more support to its banking sector.

http://www.marketwatch.com/story/egan-jones-cuts-italy-on-heels-of-spain-downgrade-2012-06-01?link=MW_latest_news

[CaptWhizbang]

METALS OUTLOOK: Gold's Focus Will Remain On Europe, Hopes For Monetary Stimulus

1 June 2012, 2:08 p.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/

(Kitco News) - After a round of lower-than-expected economic news out of China, Europe and the U.S., talk about the potential for more monetary stimulus pushed up gold prices on Friday and will likely keep the yellow metal supported into next week.

The most-active August gold contract on the Comex division of the New York Mercantile Exchange rose Friday, settling at $1,622.10 an ounce, up 3.2% on the week. July silver rose Friday, settling at $28.386 an ounce, up 0.44% on the week. London markets are closed Monday and Tuesday to mark the Diamond Jubilee of Queen Elizabeth II.

In theKitco gold surveyout of 33 participants, 22 responded this week. Of those 22 participants, 20 see prices up, while two see prices down, and zero are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.


There was further evidence Friday that global economy is slowing, with Chinese and European manufacturing data coming in lower than expected and the eurozone unemployment rate rose to the highest level since the euro currency was created, with the 17-nation jobless rate at 11%.


There wasn’t much better news out of the U.S. as just 69,000 jobs were added in May, which is the lowest number in a year, according to the U.S. Bureau of Labor Statistics. It was also sharply lower than what was generally expected. The unemployment rate ticked up 0.1 percentage point to 8.2% as more people started looking for work even as hiring slowed. On top of May’s news, job gains for April and March were trimmed back.


Adam Klopfeinstein, market strategist with Archer Financial Services, said gold rose on fears of a global economic slowdown, particularly after a poor U.S. jobs figure.


“We saw a jump in fear. People thought that the U.S. was safe, but now there are worries of the U.S. slowing. We saw a lot of pent-up demand coming into gold,” he said.


Klopfeinstein said with yields in German bunds and U.S. Treasurys at record lows as investors buy those debt instruments as a safe haven, that asset is getting “crowded” and is offering little return. Gold, on the other hand, has found favor again because it was neglected by investors and now is considered undervalued.


“Gold had a very positive reaction to the economic news. We’ve had a change in sentiment. Prior to this, gold was acting like a dead man walking,” he said.


Several market analysts said gold was able to break through resistance at $1,600 on the hopes for more stimulus, either from the Federal Reserve or from the European Central Bank.


Andrew Busch, global currency and public policy strategist for BMO Capital Markets' Investment Banking Division, said the talk about possible stimulus “created even more volatility for the financial markets. The reaction in gold is a perfect example of investors looking for any safe haven in this storm as the yellow metal has soared $60 today (Friday). Overall, the data and market reaction indicate the heat is being turned up on Europe to act.”


First-notice day has now occurred for the June futures, said George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, and any traders who remain in the June contract are “spreading to further months indicating willingness to stay long,” Gero said.


First-notice day is the first step in the winding down of the June contract. The contract goes into what’s called the delivery period. Traders who wish to maintain their position must roll forward any June contracts into further dated months. Those who stay in the June contract are subject to make or take delivery, depending on their position, but it’s rare for traders to do so.


EUROPEAN CENTRAL BANKS MEET NEXT WEEK


Next week could set the stage for a new look at monetary stimulus, although market watchers said it’s unlikely central banks will act so fast.


On Wednesday the Fed’s Beige Book of economic conditions will be released. This report is prepared in advance of the June 19-20 Federal Open Market Committee meeting and Nomura’s analysts said this report should “take on a more cautious tone when describing current economic conditions, but should not inspire a policy change at the June FOMC meeting.”


Also on Wednesday, the ECB’s Governing Council meets, Nomura noted, adding that they don’t see the ECB changing its current policy rate of 1% until there’s a better sense on Greece’s euro-area membership. They put the likelihood of a 25-basis-point rate cut at a 30% probability. The central bank may take a “significantly more dovish” tone than at the last meeting, they said.


The greatest pressure is on the ECB to act, Busch said, given the data and market reaction. The easiest is for the ECB to revive its Securities Market Program, known as SMP, where it buys bonds from eurozone nations. “We’ll find out on Monday if the ECB has already restarted SMP when the ECB releases their data,” he said.


Other actions include another round of Long Term Refinancing Operations, another bond-buying plan, and cutting rates, but he said he thinks the ECB will still drag their feet on that.


On Thursday the Bank of England meets, but no policy response is expected yet, Nomura said.

Early next week could set the tone for gold. If August gold futures can maintain this momentum, it might target $1,645-$1,650, Klopfeinstein said. A move above $1,650 would then put $1,680 in sight.

By Debbie Carlson of Kitco News [e-mail]
http://www.kitco.com/reports/KitcoNews20120601DeC_metals_outlook.html

[CaptWhizbang]

Gold jumps back above $1,600

Disappointing US data helped the yellow metal wipe out its losses for the week but analysts say the current larger trend is still bearish
Author: Ben Traynor
Posted: Friday , 01 Jun 2012

LONDON (BullionVault.com) -

U.S. DOLLAR prices to buy gold climbed back above $1600 an ounce on Friday, after disappointing US jobs data was then followed by news of a slowdown in American manufacturing activity.

The ISM Manufacturing Index fell to 53.5 in May, down from 54.8 a month earlier (a figure above 50 indicates an expansion in manufacturing activity).

The ISM release followed several examples of disappointing manufacturing data from around the world, with signs of slowdown in China and ongoing contraction in the UK and the Eurozone.

Friday afternoon's London gold Fix was $1606 per ounce, the first Fix above $1600 since May 8.

Earlier in the day, gold spiked immediately after the release of worse-than-expected US nonfarm jobs data.

The US economy added 69,000 nonagricultural private sector jobs in May, according to official data published Friday, compared with analysts' forecasts for 150,000.

The US unemployment rate meantime ticked higher to 8.2% - up from 8.1% in April.

Gold's jump wiped out its losses for the week. By Friday afternoon in London, prices to buy gold looked set for a 0.6% gain on where they started the week.

Silver also spiked higher following the US jobs news, climbing to $28.63 per ounce, and headed for a slight gain on the week by Friday afternoon in London.

"The larger trend [however] remains bearish," says technical analyst Russell Browne at bullion bank Scotia Mocatta.

A day earlier, gold's final London Fix of May 2012 was down 5.6% on April's last Fix - the third monthly fall in a row by gold Fix prices. Spot gold meantime - which back on February 29 fell by $100 an ounce after the PM Fix - ended May by making fourth straight monthly loss in Dollar terms.

By London Fix prices, gold has not fallen four months in a row since summer 1999.

In contrast with gold, European stock markets fell following the nonfarms release, extending their losses from Friday morning's trading.

Earlier in the day, German 10-year Bund yields fell to a fresh all-time low below 1.15%, while on the currency markets the Euro sank to its lowest level against the Dollar since June 2010.

Spain's banking system meantime saw €97 billion of capital leave the country in the first three months of 2012, according to figures published Thursday evening by the Spanish central bank. The Spanish government, which this week saw its implied 10-Year borrowing costs breach 6.7% for the first time since November, is trying to raise €19 billion to rescue nationalized lender Bankia.

The International Monetary Fund yesterday denied rumors that Spain's government has approached it for a bailout.

Over in Ireland, votes were being counted Friday following yesterday's referendum on whether or not to ratify the European Union's new fiscal treaty, which would impose limits of government borrowing.

"We are very, very confident [of a 'Yes' vote]," said Lucinda Creighton, Ireland's European affairs minister.

Press reports suggest around half of those eligible to vote in the referendum actually did so.

In Greece meantime, the biggest pro-bailout party New Democracy leads second place Syriza in the opinion polls, with just over a fortnight to go until the June 17 elections, news agency Bloomberg reports.

Syriza's leader Alexis Tsipras said Friday that the bailout agreement is a failure, reiterating that Syriza would reverse some of the Greek government reforms if elected, including privatizations and cuts to public sector wages.

"The [bailout] memorandum equals a return to the Drachma," Tsipras added.

The Eurozone's purchasing manager's index for manufacturing, a survey indicator of whether the sector is expanding or contracting, fell from 45.9 in April to 45.1 last month, figures published Friday show. A PMI above 50 indicates sector expansion.

Germany's PMI meantime fell to 45.2 in May - down from 46.2 a month earlier.

The Eurozone's unemployment rate meantime remained at 11.0%.

On the currency markets, the Euro fell to a two-year low against the Dollar Friday morning, remaining below $1.24.

European Central Bank president Mario Draghi warned Thursday that the current Eurozone structure is "unsustainable".

"At the moment, Europe and downside risks to the Euro are the problem for gold," says Michael Lewis, head of commodities research at Deutsche Bank.

"Dollar strength is going to be the big problem over the next few weeks."

The US Dollar Index, which measures the currency's strength against a basket of other currencies, hit its highest level since August 2010 this morning.

Here in the UK, manufacturing activity fell into contraction last month. May's manufacturing PMI was 45.9, compared to 50.2 in April. The consensus forecast among analysts ahead of Friday's PMI publication was for a figure just below 50.

The disappointing UK PMI figure "has increased dramatically the likelihood of the [Bank of England] announcing more quantitative easing next Thursday," reckons Deutsche Bank's chief UK economist George Buckley.

Manufacturing activity also slowed in China, the world's largest source of demand to buy gold in the first three months of 2012.

May's official PMI figure was 50.4, down from 53.3 in April. HSBC's PMI meantime, which looks at smaller Chinese firms, showed ongoing manufacturing contraction, falling to 48.4 from 48.7.

In India meantime, traditionally the world's biggest gold buying nation, gold demand for 2012 will fall by 4% by volume compared to last year - but will be 4% up in value terms - according to a report published by researchers at Morgan Stanley.

http://www.mineweb.co.za/mineweb/view/mineweb/en/page34?oid=152549&sn=Detail&pid=34

[CaptWhizbang]

Big Majority Of Survey Participants See Higher Gold Prices Next Week


Friday June 1, 2012 12:03 PM

A worldwide slowdown in economic growth could lead to new rounds of stimulus from the various central banks and that has most participants in the weekly Kitco News Gold Survey forecasting higher prices for the yellow metal next week.

In the Kitco News Gold Survey, out of 33 participants, 22 responded this week. Of those 22 participants, 20 see prices up, while two see prices down, and zero are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Many participants said the shakiness in the outlook for the global economy will ramp up expectations for some sort of quantitative easing from the Federal Reserve or other central banks. The Federal Open Market Committee, the monetary-policy arm of the Fed, meets at the end of June.

Frank Lesh, broker and futures analyst at FuturePath Trading, summed it up this way. “Gold has established a trading low the past several weeks, although that was only confirmed after this morning’s trade. Gold sees QE coming from the Fed and the ECB (European Central Bank) and traders now have a reason to be long again, and to cover the short positions that have been building for the past few months. Significant resistance will be around $1,655 and the market will have to close through that level to turn up on the charts. We should expect to see that level tested (really) soon so I look for gold to be higher next week,” Lesh said.

Phil Streible, senior commodities broker at RJO Futures, also said the drop in U.S. Treasury yields to record lows could push investors to gold as they seek value.

Those who see weakness in gold said the problems in Europe are likely to fester and that could eventually weigh on the metal, as it has in the past.

There were no netural views on gold for this week.



http://www.kitco.com/kgs/goldsurvey_june01.2012.html

[CaptWhizbang]

Comex Gold Soars on Fresh Safe-Haven Buying, Panic Short Covering

Friday June 1, 2012 09:39 AM


Comex gold futures prices are trading sharply higher and have soared to a fresh three-week high in the aftermath of a much-weaker-than-expected U.S. jobs report that has quickly put U.S. quantitative easing of monetary policy back on the table. August gold futures have pushed above what was stiff psychological resistance at the $1,600.00 level. U.S. non-farm payrolls rose by just 69,000 in May, which is much less than the 150,000 rise expected by the market place. U.S. stock indexes slumped, U.S. Treasury bond and note futures prices soared and the U.S. dollar index vacillated but did back down in the wake of the jobs data. Friday morning's gains in gold come on panic short covering, bargain hunting and solid fresh safe-haven investment demand. The weak U.S. jobs data combined with the very uneasy status of the European Union and a weakening Chinese economy have played right into the hands of the gold market bulls. The bulls have gained fresh upside technical momentum as price action Friday is scoring a bullish "outside day" up on the daily bar chart--whereby the high is higher and low is lower than the previous session's trading range, with a higher last trade. Prices are also poised to close at a technically bullish weekly high close on Friday. Look for volatile trading in the precious metals and other markets as the trading sessions progresses Friday. August gold last traded up $39.30 an ounce at $1,603.30.

http://www.kitco.com/reports/KitcoNews20120601JW_update2.html

[CaptWhizbang]

Gold's on a bumpy ride
By Nin-Hai Tseng,
May 31, 2012: 11:41 AM ET

This year, gold is seeing its worst performance since the 2008 financial crisis, but certain catalysts may reverse its course in the coming months.

FORTUNE -- Investors have long found safety in gold, but the precious metal has been losing luster as Europe's ongoing debt crisis intensifies. As of Thursday morning, gold was down 7% this month, at $1,560.90 an ounce.

This isn't the first time gold has fallen when markets turn shaky. During the depths of the global financial crisis, the metal dropped by 20%. A few factors drove the decline: As the U.S. financial system nearly collapsed, investors took their money out of stocks and poured them into U.S. Treasuries. And institutional investors, faced with losses on U.S. investments, liquidated overseas assets to meet margin calls or broker agreements. Finally, as banks clamped down on lending, money became scarce.

All that helped drive up the value of the greenback. Because gold is priced in dollars, the currency's decline typically leads to a rise in the metal's value because gold becomes more expensive for buyers who hold other currencies. And vice versa.


In recent months, the rapidly rising dollar against the euro has brought down gold. As the euro zone crisis turns from bad to worse with Greece's possible exit from the monetary union, investors have been leaving the euro and flocking to safety in Treasuries and German bunds. On Wednesday, the euro fell to its weakest level against the dollar in almost two years after Egan-Jones Ratings cut Spain's credit rating for the third time in less than a month.

But pressure on gold could ease up some. For the past year, it has been entangled in the world's biggest fiscal woes, says James Steel, chief commodities analyst at HSBC Securities. While Europe's financial mess has driven gold downward, America's debt problems have helped boost gold to record highs. It soared past $1,900 an ounce by last September, shortly after the U.S. suffered its first-ever debt downgrade as Congress stalled on talks to reduce the national deficit.


If the past repeats itself, gold could see a rebound later this year. Lawmakers are expected to scramble once again on a deficit reduction plan or else trillions of dollars in looming tax hikes and spending cuts will automatically kick in. The Congressional Budget Office has warned the economy could contract by 1.3% during the first half of 2013. These issues threaten to cast a shadow over equities and other financial assets, and push investors into bullion.

For at least the next several months, gold will surely be caught in the middle of the world's big debt fiascos.


http://finance.fortune.cnn.com/2012/05/31/gold-prices/?iid=HP_LN

[CaptWhizbang]

One of the finest opportunities to buy gold in the whole bull market - Embry

http://investorshub.advfn.com/Gold-Bullion-23105/

GRONINGEN (Mineweb) -

While gold has fallen significantly since hitting a peak in September last year, according to Sprott asset management's chief investment strategist, John Embry, nothing in this period has been "gold unfriendly".

Indeed, Embry believes that there has been a great deal of interference within the market with a lot of people trying to make the global economic picture look better than it actually is. And, as a result, at current levels, gold represents " one of the finest opportunities if not the finest in the entire bull market which is now in its 12th year."

Embry is nothing if not bullish about the price of gold. Speaking on Mineweb.com's Gold Weekly podcast, he said, "I think gold is going to $10,000 at some point and it's going to have nothing to do with the cost to dig it out of the ground, it's going to have everything to do with the fact that people just don't think their money is going to be worth anything."

To back up his claim he says one just needs to look at the state of global budget deficits.

"They're out of control and they [politicians] are not going to get them back in control because austerity just makes budget deficits bigger. So, I think you're waiting for that moment of recognition when people realise 'Oh my God this paper currency that I've just clung to for the last 40 years isn't going to buy me a loaf of bread in two years.'"

He adds, "Gold is the mortal enemy of the fiat paper currency system that we are operating and have been operating for 40 years. People are beginning to realise that this money is going to be turned into confetti and the authorities are scared to death that they are going to make the connection that gold is a good idea...People aren't making the correct connection that gold is what you should be holding in this environment - that will change."

For Embry, one of the major problems is that while, understandably, a great deal of attention is being currently focused on Europe, the situation in the US is equally as dire.

"I spent a lot of time studying the real US economic statistics and I don't think there's any recovery of any substance whatsoever ... I think the most shocking statistic that has come out in the last nine months is the fact that last year the US monetised 61% of its budget deficit. That's staggering. I can't even conceive of that, yet they did it and no one seems to care."

But, he does agree with other commentators, such as Ian McAvity, that if Europe were to implode or if the banking system got into a great deal of difficulty, it would go viral around the whole world almost immediately and no-one would be immune.

"The majority view, which is propounded by the US and a lot of the European countries, will prevail and austerity will go by the boards and essentially we will refinance the European banks and it will be wildly inflationary," he says.
http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152366&sn=Detail&pid=33

[CaptWhizbang]

Prudent central banks stock up on gold

Amidst the deepening financial crisis in the euro zone, certain prudent central banks are adding gold to their reserves.

Author: David Levenstein
Posted: Wednesday , 30 May 2012

JOHANNESBURG -

Recently, while European leaders gathered in Brussels for an "informal summit" the euro continued to plunge as fears of a Greek exit caused renewed fears about contagion in the Eurozone. Only a few days before this summit US President Barack Obama hosted a gathering of world leaders at his secluded and highly secure mountaintop retreat at Camp David. In a statement issued after the G-8 meeting, leaders agreed that they have to do something to contain the financial crisis that could spread from the Eurozone to the United States and impact on the rest of the global economy. They also declared unanimity in ensuring that Greece, which is crippled in debt and politically gridlocked, remains as part of the 17-member euro currency union.

"The leaders here understand the stakes," Obama said. "They know the magnitude of the choices they have to make and the enormous political and economic and social costs if they don't." And, in what seemed an amazing revelation, he also said that "There's now an emerging consensus that more must be done to promote growth and job creation right now."

The Group of Eight summit includes leaders of the United States, Japan, Britain, Germany, France, Italy, Canada and Russia.

It seems that the only outcome of these meetings was perhaps some indigestion from all the rich food consumed and an acknowledgement that something must be done to ease the debt crisis currently plaguing the Eurozone, but they did nothing to restore market confidence.

While these global leaders argued about growth, deficit cuts, austerity plans, increasing taxes and unemployment, the euro continued to weaken against all major currencies except the Swiss Franc. The Dollar index broke above 82 and has now gained almost 5% since the beginning of May. Most commodities came under some pressure due to the stronger US dollar, and gold managed to hold above $1570 an ounce.

Last week saw increasing speculation that Greece might be forced to leave the euro as a top European Union official said officials were working on emergency plans in case of a Greek exit. Greek depositors have been withdrawing hundreds of millions of euros from banks, with the fear being that their euros are suddenly changed to newly devalued drachma in the event that Greece does exit the euro. In this instance, whatever they had in the bank will immediately become worth a lot less. And, of course such a conversion will come by surprise.

As depositors continue to withdraw their cash from an already weakened banking system the country is facing the most acute financial crisis of the Eurozone and the entire country essentially depends upon life support from the ECB. Although there has been no official announcement, nor have any terms or conditions been disclosed, Greece's banking system is being propped up by an estimated EUR 100 billion or so of emergency liquidity provided by the country's central bank -- approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the Eurozone, the immediate cause might be an ECB decision to pull the plug.

In an article published in The Financial Times, analysts at Barclays reckon Greece is now using EUR 96 billion in "emergency liquidity assistance" (ELA), with Ireland accounting for another EUR 41 billion and Cyprus EUR 4 billion. If correct, the total ELA in use has exceeded EUR 140 billion -- more than 10 per cent of the amount lent to Eurozone banks in standard monetary policy operations.

Shortly after the EU summit failed to produce any solutions, a May survey of Eurozone business confidence on Thursday showed the sharpest monthly fall for nearly three years while the data for Germany was the worst for six months and a survey in France, the poorest for 37 months.

European Central Bank President Mario Draghi said the EU was at "a crucial moment in its history" and that the debt crisis has demonstrated the EU's weaknesses.

"The process of European integration needs a courageous jump in political imagination to survive," he said, adding that while growth was a priority, "there is no sustainable growth without ordered public accounts."

The crisis in Greece has only deteriorated over the last two years. And, now it seems that Spain's financial woes are finally coming to the forefront. The moment the former Prime Minister of Spain, Jose Luis Zapatero declared on numerous occasions that Spain did not have any financial problems I knew Spain was in trouble. And, now it is evident that the country's banking system is in trouble. Only last week trading in shares of Bankia, the fourth largest Spanish bank which was nationalized earlier this month, was suspended as it became apparent that the bank requires additional funding from the government. The bank is set to ask the government for a bailout of more than 15 billion euros ($19 billion). Earlier in the month, the bank was nationalised by the Spanish government. It holds around 10% of the country's bank deposits.

In the meantime, as these financial leaders deliberate on how to save the Eurozone, several central banks have added more gold to their reserves. According to the IMF, central banks around the world are continuing to buy gold, and if the trend continues there is a chance that they may buy even more this year than last. Central banks gold purchase during April included purchases from Mexico (2.9 tons), Kazakhstan (2 tons) and Ukraine (1.4 tons). The Philippines added 1.033 million ounces (32 tons) in March with gold now at 13.6% of its total reserves. This is the second largest monthly Central Bank's purchase after Mexico's purchase of 2.5 million ounces in March 2011. Turkey's gold reserves went up by 29.7 metric tons reaching 239.3 tons in April, according to International Monetary Fund data.

Another positive factor for gold is that the CME Group announced a cut in margin requirements effective 29 May. Initial performance bond requirements for speculators for gold futures will be cut from $10,125 to $9,113 while the maintenance margin will be cut from $7,500 to $6,750.

During this week, market participants will monitor the unemployment rate in April, non-farm payrolls and ISM manufacturing index in May from the U.S. and also May PMI data from China.

As bank runs and financial and economic problems continue to develop around the world, more and more people are going to be moving to the precious metals. As our monetary system has so much debt and has become so corrupt that the only way you can really protect your savings is if you buy physical gold and silver.

TECHNICAL ANALYSIS:
The price of gold still remains trapped between $1500 an ounce and $1600 an ounce. However, it looks set to re-test $1600 an ounce.



The price of gold still remains trapped between $1500 an ounce and $1600 an ounce. However, it looks set to re-test $1600 an ounce.

[CaptWhizbang]

What if the gold megabulls are right?

LONDON (MINEWEB) -

There is a strong element, even among the respected gold bulls, which is not looking for, say, gold at $2,000 an ounce (more of a mainstream view supported by many banks) but continually preaches a much greater price for gold some as high even as$10,000 an ounce plus - and sooner rather than later.

Far be it from us to deride this position, although deep down we think it could be a step too far - primarily because the factors that could drive gold to this kind of level in the short term are almost too horrific to contemplate - but what if they are right?

After all, it was only a few short years ago that $1,000 gold was considered totally unrealistic by the mainstream and here we are now with gold more than 50% higher than that level - and this in a downturn for precious metals.

$10,000 gold short term can only come about through total currency collapse - a possible scenario which must give the politicians of this world nightmares, not least because we are so awfully close to such a situation occurring. Global economies are poised on a knife-edge. Logically we are in a situation where continual money printing by the world's Central Banks, or Quantitative Easing as it has popularly become known, should be debasing currencies to a huge extent. Any study of economics tells us that the enormous increases in money supply of the type we have been seeing over the past few decades is, in effect, currency debasement - indeed there are plenty of studies out there that show that what appears at the moment to be the world's strong currency - the mighty U.S. dollar - has lost more than 90% of its purchasing power in a couple of generations. This applies to most other major currencies too - to a greater or lesser extent.

Now, as long as earnings and investment - across the board - keep up with this debasement, most people in the mainstream remain happy - indeed appear to be far better off as improvements in technology and manufacturing bring all kinds of unforeseen luxuries into a relatively low-cost bracket, although the essentials like housing, food, metals and materials etc. keep on going up in price almost regardless. The occasional crash in some sector or another is the exception that proves the rule!

Gold is unpopular in the political and banking environment because its overall increase in value over the same couple of generations is about the one overt indicator that is a true pointer to how far the purchasing power of currencies has collapsed. But, because virtually all currencies have been falling in value too, the relative situation as far as the man-in-the-street is concerned looks relatively stable. It is not.

So back to $10,000 gold short term. If this does come about those who invest directly in the precious metal - and indeed in gold stocks - will see huge financial returns, but at the expense of the global economy collapsing around them. Hyperinflation would most likely come to the fore in many nations and the potential for enormous unrest and anarchy among the 99.9% or more of the global population who are not invested in precious metals.

Be careful what you wish for

I remember Ian McAvity in a presentation in New York spelling this out to a gold-friendly audience in spelling and then saying - "be careful what you wish for". The trigger which rapidly sends gold to this kind of level would be an indicator of a collapse of the whole monetary system as we know it. Maybe we would muddle through, but the likelihood would be that the fallout, as people turn to support extremist elements which always come to the fore in such circumstances - think the rise of the German Nazi party after the hyperinflation horrors of the Weimar Republic - would be scary.

Europe is the current trigger zone and whether the Eurozone can sort its problems out over the next year (perhaps in some form of compromise) will be critical. It can withstand the Greek problem - Greece is too small an economy to have a serious impact and if the Euro nations pull together can be rescued again - and again. But the possible next in line - Spain - is another question altogether. It is just too big to be rescued. The combined European nations don't have the wherewithal to bail Spain out from its enormous debt problems exacerbated by nearly 25% of its population being out of work. How can Spain possibly implement further austerity measures to allay its debt problems when a quarter of its people (and nearly 50% of its youth) are already unemployed?

There is talk of Greece pulling out of the Eurozone - or being forced out - but in reality Spain is perhaps more vulnerable still. There's a fascinating, and compelling, article by Matthew Lynn published on MarketWatch entitled 6 Reasons Spain will leave the Euro first which spells out the options in this respect and is well worth reading as this is the way the Euro single currency experiment could be brought to an untimely end. If this does occur there could be several years of debilitating economic turmoil in Europe as the remains of the Eurozone is either unwound or reformulated and with the huge interlinking of the global banking system this wouldn't just affect Europe, but the whole of the developed world.

That is the kind of trigger that could push gold rapidly to around the $10,000 mark as those with wealth scramble to try and find something that can protect their assets against global banking collapse - the kind of which we have not seen before except in very limited geographical areas. The politicians may find ways of propping up the banks and economies with quick fixes, but the perception that all is well, which is keeping most global economies afloat, will have perhaps dissipated forever. We would be in a new world order.

We are in a situation where much of the above scenario seems more and more likely - the question is whether it can be managed in an orderly fashion or not. Do not, however, underestimate the politicians' ability to muddle through by manipulating public opinion, massaging, and downright falsifying, economic statistics etc. As we've said here before, perception is everything. If the population can be convinced that things are alright, a semblance of stability can remain.

But we are getting awfully close to a breakdown - at least in some nations. We have already seen bank runs in Greece and they are beginning in Spain. Any exit from the Euro would mean a return to a country's old currency and inevitable devaluation - maybe by up to 50%, and who wants to keep savings in an institution where such a fall in value is seen as possible? There is thus beginning a flight to safe havens - and at the moment this is mostly benefiting the dollar, U.S. Treasuries and German bonds.

But are even these safe in a global banking crisis which could be imminent? At some stage the flow will return to gold and perhaps silver, boosting their prices - but to where? $2,000 gold or $10,000 gold, or more? One thing you can bank on is that Central Banks - and the U.S. Fed in particular - will do their utmost to manage currencies (and in this one has to include gold as a currency) to create the perception that all is not doom and gloom ahead. If they fail in that purpose then gold could easily hit the higher levels - but do you want to live in a society where economic survival of any kind for the masses would be as precarious as such a scenario might suggest?

It is this commentator's hope is that $10,000 gold can be avoided in the short term. Maybe over time, yes it can reach that level, as currencies carry on being debased in an orderly manner and the so-called bull market in gold continues. Or perhaps the reality is that we are in a bear market in global currencies with gold the only true constant?


http://www.mineweb.co.za/mineweb/view/mineweb/en/page33?oid=152437&sn=Detail&pid=33

[CaptWhizbang]

Patience Pays with Gold and Silver

Thursday May 31, 2012 09:15

There seems to be no shortage of turmoil in the markets. The European debt crisis continues to remain in focus, while a multi-billion dollar loss by America’s largest bank does little to restore confidence in the financial system. Even Facebook, the most highly anticipated initial public offering in years, has failed to spark interest in equity markets. In the current situation, one might expect precious metals to perform well as investors seek safety, but the complete opposite has been true.

As the euro zone received more negative news on Tuesday, gold and silver slid further into the red. Gold futures for June delivery dropped $20 to close at $1,548, while silver futures fell 60 cents to finish below $28. Ratings agency Egan-Jones cut Spain’s credit level from B to BB- with a negative outlook. It was the third downgrade from the firm in less than a month. Reuters reported, “Much as it did in downgrades last week and in late April, the company pointed to deteriorating public finances and worries that the country will be faced with sizable payments to support its banking sector. Spain is battling a debt crisis that is shaking its government, banks and companies. The country will soon issue new bonds to fund ailing lenders and indebted regions despite borrowing costs nearing the 7 percent level that drove other states to seek a bailout.”

Despite deteriorating public finances appearing in countries across the entire globe, including the United States, many investors continue to flee to the U.S. dollar as a safe-haven asset. The dollar index, which compares the dollar in a basket against six other fiat currencies, climbed to as high as 82.63 on Tuesday. The euro, which accounts for the majority of the dollar index, fell to its lowest level since July 2010 at $1.2458. “We are seeing the headline-driven market continue to prop up the greenback amid the growing threat of a Spain bailout paired with fears of a Greek exit,” explained David Song, currency analyst at DailyFX. Today, the dollar continues to charge higher while the euro sinks below $1.24. In fact, the yield on the 10-year U.S. Treasury note fell to its lowest level on record this morning, below 1.65 percent. More than half of the companies in the S&P 500 now yield more than the 10-year note.

Much like the Facebook IPO, many investors have dropped gold and silver from their friend list. Both precious metals have erased gains for the year and are well-off their multi-month highs made in March. However, investors that have been riding the decade long precious metals bull market have seen this story before. The markets still perceive king dollar as the ultimate safe-haven because it is the cleanest shirt in the fiat currency laundry basket. Doubts surround Europe, China just announced its stimulus’ efforts won’t match 2008 spending and the Federal Reserve continues to send mixed signals on more quantitative easing programs. The current situation is somewhat reminiscent of 2008, when investors rushed into dollars as gold fell from $1,000 to nearly $700 per ounce and silver plunged from $21 to $9 per ounce.

Looking in the rear-view mirror, patience has clearly been a smart strategy for investing in precious metals. Gold and silver both skyrocketed off their lows made in 2008 as central banks turned to money printing as a band-aid for a bullet wound. The dollar is currently experiencing strength, but what happens when the Federal Reserve is forced to step in and apply more band-aids, as it did with QE1, QE2, Operation Twist and European swap lines?

While some may expect bullion demand to be significantly lower from falling gold prices, demand for gold as an insurance policy on fiat currencies remains high. For the first-quarter, gold investment demand jumped 13 percent to 389.3 tonnes, compared to 343.5 tonnes a year earlier. Earlier this month, Russia’s central bank also announced it will keep buying gold in order to diversify foreign exchange reserves. Even though precious metals can be volatile at times, it is better to have your insurance a year early than a day late.

http://www.kitco.com/ind/McWhinnie/20120531.html

[CaptWhizbang]

Comex Gold Trades Near Steady on Chart Consolidation; U.S. Economic Data Awaited

Thursday May 31, 2012 8:14 AM


Comex gold futures prices are trading not far from unchanged levels Thursday morning as the market place awaits a heavy slate of U.S. economic data to be released Thursday, followed by Friday’s U.S. jobs report. The gold market is also seeing some consolidation on the daily bar chart. The key “outside markets” are in a mildly bullish posture for the precious metals Thursday morning, as the U.S. dollar index is weaker and crude oil prices are slightly higher. August gold last traded down $1.90 at $1,563.90 an ounce. Spot gold was last quoted up $0.10 an ounce at $1,563.00. July Comex silver last traded down $0.063 at $27.92 an ounce.

On this last trading day of the month (which makes Thursday an extra important day, from a technical perspective), there is a heavy slate of U.S. economic data released, including weekly jobless claims and the gross domestic product estimate for the second quarter, which could make for more active trading in many markets today.

The U.S. and European stock markets have at least temporarily stabilized from their selling pressure seen on Wednesday.

Here are the latest news headlines coming out of the European Union sovereign debt crisis. The European Central Bank chief Draghi has reiterated he wants comprehensive banking union in EU. Spanish 10-year bond yields were above 6.5% late Wednesday. Spanish bond yields above 6% are deemed untenable.

However, possibly the most poignant development Thursday is news that St. Louis Federal Reserve president Bullard said in a speech in Japan overnight that the EU debt crisis is “grave” and said EU leaders must act to prevent a “major meltdown” of the world economies. Bullard also said he is worried about the economic slowdown in China. When a major U.S. banker and economist says such, it only underscores how close the world could be to a major debt/financial contagion and/or economic calamity.

The main data point of the week is the U.S. jobs report due out on Friday morning. Trading in many markets could be more subdued ahead of that report, and then turn more active in the aftermath of the report. The key non-farm payrolls figure in the jobs report is expected to have gained around 150,000 in May.

The U.S. dollar index is trading weaker Thursday morning on profit taking after hitting a nearly two-year high on Wednesday. The dollar index bulls still have upside near-term technical momentum. Meantime, Nymex crude oil futures are slightly higher on tepid short covering after hitting a seven-month low of $87.27 a barrel on Wednesday. Crude oil remains in a bearish overall fundamental and technical posture.

The London A.M. gold fixing was $1,567.50 versus the previous London P.M. fixing of $1,540.00.

U.S. economic data due for release Thursday includes the Challenger job cut report, the ADP monthly jobs report, second-quarter GDP estimate, the weekly jobless claims report, the ISM Chicago business survey, and the weekly DOE liquid energy stocks report.

Technically, August gold futures prices closed nearer the session high in an active day Wednesday. Gold market bulls were encouraged by the market’s ability to hold above strong chart support at the May low of $1,529.30. Gold bears do still have the overall near-term technical advantage. A three-month-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears' next near-term downside price objective is closing prices below solid technical support at the May low of $1,529.30. First resistance is seen at the overnight high of $1,572.60 and then at this week’s high of $1,585.70. First support is seen at $1,550.00 and then at $1,540.00.

July silver futures bears still have the solid overall near-term technical advantage. A three-month-old downtrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at the overnight high of $28.19 and then at $28.50. Next support is seen at $27.50 and then at this week’s low of $27.355.

http://www.kitco.com/reports/KitcoNews20120531JW_am.html

[CaptWhizbang]

Comex Gold Ends Higher on Fresh Safe-Haven Buying Interest

Wednesday May 30, 2012 2:02 PM

Comex gold futures prices ended the U.S. day session higher and near the daily high Wednesday. The gold market saw some short covering and bargain hunting, but more importantly saw some fresh safe-haven buying demand surface amid the keener risk aversion in the market place Wednesday. The fact the key “outside markets” were in a fully bearish posture for the precious metals Wednesday, yet gold posted good gains anyway, is indicative of good safe-haven buying interest entering the gold market. August gold last traded up $15.00 at $1,566.00 an ounce. Spot gold was last quoted up $9.50 an ounce at $1,565.00. July Comex silver last traded up $0.214 at $28.005 an ounce.

Wednesday’s impressive rebound in gold prices hints that if the European Union sovereign debt and financial crisis escalates in the coming days or weeks, then the precious yellow metal could see more serious safe-haven investment demand to lift prices higher.

The market place Wednesday did tilt toward a “risk-off” trading day. The U.S. and overseas stock indexes were lower, while the U.S. dollar index and U.S. Treasury prices traded solidly higher. U.S. 10-year Treasury notes hit a record low yield Wednesday.

The markets are still reacting to Tuesday’s news that Spain’s sovereign debt was downgraded by Egan-Jones. There are concerns regarding the entire Spanish banking system after the European Central Bank reportedly said it will not support funding of the bailout of Spain’s largest bank, Bankia. In other news Wednesday, a poll showed Greece citizens want to stay in Euro zone. Also, the European Commission reportedly wants more banking union among EU nations.

Reports out of China overnight said China’s new economic stimulus package will not be at all large. That was bearish for the raw commodity market sector Wednesday.

The main data point of the week is the U.S. jobs report due out on Friday morning. Trading in many markets could be more subdued ahead of that report, and then turn more active in the aftermath of the report. The key non-farm payrolls figure in the jobs report is expected to have gained around 150,000 in May.

The U.S. dollar index traded higher Wednesday and hit a fresh 22-month high. The dollar index bulls have good upside near-term technical momentum on safe-haven demand. Meantime, Nymex crude oil futures were sharply lower and hit a fresh 6.5-month low of $87.49 a barrel overnight. Crude oil remains in a fully bearish overall fundamental and technical posture.

The London P.M. gold fixing was $1,540.00 versus the previous London P.M. fixing of $1,579.50.

Technically, August gold futures prices closed nearer the session high Wednesday. Gold market bulls were encouraged by the market’s ability to hold above strong chart support at the May low of $1,529.30. Gold bears do still have the overall near-term technical advantage. A three-month-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears' next near-term downside price objective is closing prices below solid technical support at the May low of $1,529.30. First resistance is seen at $1,575.00 and then at this week’s high of $1,585.70. First support is seen at $1,550.00 and then at $1,540.00. Wyckoff's Market Rating: 3.5.

July silver futures prices closed nearer the session high Wednesday and saw short covering and bargain hunting. Silver bears still have the solid overall near-term technical advantage. A three-month-old downtrend is in place on the daily bar chart. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at $28.50 and then at this week’s high of $28.76. Next support is seen at $27.71 and then at Wednesday’s low of $27.355. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 715 points 339.10 cents Wednesday. Prices closed nearer the session low and hit a fresh 5.5-month low. The key “outside markets” were fully bearish for copper Wednesday—the U.S. dollar index was higher and crude oil prices were lower. Copper bears have the overall near-term technical advantage and gained fresh downside momentum Wednesday. Prices are in a four-week-old downtrend on the daily bar chart. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at this week’s high of 350.85 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of 327.00 cents. First resistance is seen at 340.00 cents and then at 343.00 cents. First support is seen at Wednesday’s low of 337.25 cents and then at 335.00 cents. Wyckoff's Market Rating: 3.0.

http://www.kitco.com/reports/KitcoNews20120530JW_pm.html

[CaptWhizbang]

Gold Market Update
originally published May 21st, 2012

"Has gold finally bottomed?" That is the big question we are going to attempt to answer in this update. Last week it bounced sharply after it arrived at the strong support at its September and December lows. This was a development that was easy to predict and it was predicted on the site hours before the bounce started.
On its 2-year chart we can see that by dropping down to its December lows, gold aborted the potential Head-and-shoulders continuation pattern that had earlier looked like it was completing. That, however, does not mean that some other reversal pattern is not in the process of completing. Gold's immediate fate depends on whether the gathering deflationary forces can be beaten back by another tidal wave of printed money. Europe is teetering on the edge of an abyss and it is thought that the powers that be are summoning up a veritable tsunami of QE is order to avert the collapse into chaos that now threatens. The key question here is timing - how long are they going to leave it - how long can they afford to risk waiting - until they intervene with this QE tsunami? If the markets don't see light at the end of the tunnel soon in the form of this impending QE they are likely to crash as deflation impacts - if it becomes obvious that the QE is on its way, then we are likely to see a recovery in commodities generally and the Precious Metals in particular, and given the magnitude of the inflation that this QE is likely to stoke up, coming on top of all the other stimulus, this recovery could mark the start of a huge upleg in commodity prices.



While it is not easy to tell when exactly this QE is likely to be forthcoming, there are some other means we can employ to determine its likelihood soon. In addition to the normal technical indicators which show gold to be oversold and in position to commence another upleg, barring an out market crash, we can observe what the Smart Money is doing by reference to their positions as revealed by the latest COT charts.

Gold's COT chart reveals that the Commercials have scaled back their short positions to their lowest levels for the period shown by this chart, which dates back to last August, and they are thus at lower levels than those at the lows of last September and last December. By itself this is clearly a bullish indication, and here we should note that the latest COT chart for silver is much more startlingly bullish. This is a reliable sign that we may well have just seen the bottom for this cycle.



It is therefore interesting to observe that the Commercials have ramped up their long positions in the euro to massive record levels - levels which considerably exceed those attained in January just before a heavy dollar selloff ensued. Unless it's different this round, this does not bode well for the dollar going forward at all.



As we know, the dollar has capitalized handsomely on the euro's predicament, and it has soared in recent weeks, despite the grave and appalling state of affairs prevailing in the US with regards to its own debt situation. On its 6-month chart we can see that after breaking out from a Triangle pattern the dollar index has staged a very impressive rally to arrive at a first target at the resistance at its January highs in a critically overbought state short-term, which is why we have been looking for it to stall out and possibly react back, and as pointed out above the Commercial's huge long position in the euro makes a reaction morte likely.



On the other hand, the 1-year chart for the dollar shows that it has the potential, after digesting its recent gains, to run to the top of the large trend channel shown on the chart, which means it could get as high as 85 - 86. Should this occur it is obvious that it will be very bad news indeed for the markets, as such a development would involve the forces of deflation bursting onto center stage.


With everything now depending on how bad things get before the rulers of Europe open the floodgates on the biggest torrent of QE the world has ever known, which will send gold and silver to the moon, but before which they COULD crash the nearby support and drop further, you might think that there is no way to play the current situation, in which case you would be wrong. The most important point to take note of at the juncture we are now at is that we have an exceptionally favorable risk/reward profile for those going long gold and silver here, as the strong support at the September and December lows has just been validated by last week's strong bounce off it - so you can buy here and set either intraday or closing stops beneath it. If the deflationary scenario prevails near-term you get taken out for a minor loss. If it becomes obvious that the huge QE is in the pipeline, then both gold and silver will soar, and the upside from here is relatively unlimited - and the COTs are pointing to this scenario prevailing.

Finally it's worth reminding you all that gold stocks are now extraordinarily cheap compared to gold itself, as made plain by the XAU index over gold chart going back 20 years - this chart is now showing low readings that are approaching the extremes at the depths of the market selloff late in 2008 at the height, or rather depth, of the financial crisis at that time, which, incidentally, is a sideshow compared to what will happen shortly if they don't get on with it and unleash the great QE rescue, which is not designed to solve the crisis, only postpone it a little longer, at the expense of stoking up an inflationary firestorm. So does this mean that it's time to go storming in to fill your boots with gold stocks - not necessarily, because if they don't get on with it and do the QE soon, then markets will crash and PM stocks could get dragged even further into the mire, but what this chart does definitely tell us is to stand ready to wade in and pick up bargains immediately the QE is telegraphed. This will be an unmistakable event that should cause a truly dramatic rally, particularly across the commodities sector. With honorable exceptions, juniors should continue to be avoided. Many of them are now in the habit of using routine stock dilution to keep their offices going and their coffee machines on the go, and their token rigs turning, but due to their stock prices having dwindled to almost nothing, they will be obliged to dilute even more aggressively to keep going, so it doesn't look like there is much relief in sight for the beleagured holders of these stocks. The lesson here is to stick with producers, especially those that are set to ramp up production.

[CaptWhizbang]

P.M. Kitco Metals Roundup: Comex Gold Ends at Bullish Weekly High Close Friday, to Begin to Suggest Market Bottom in Place

Friday May 18, 2012 2:33 AM

Comex gold futures prices surged late this week on short covering and bargain hunting, but more importantly on fresh safe-haven investment demand, following recent selling pressure that drove gold prices to a 10-month low of $1,526.70 on Wednesday. Gold produced a bullish weekly high close on Friday, which is an early technical clue that a near-term market bottom is in place for the yellow metal. June gold last traded up $14.90 at $1,589.80 an ounce. Spot gold was last quoted up $15.70 an ounce at $1,590.50. July Comex silver last traded up $0.61 at $28.63 an ounce.

The world market place was impacted late in the week by a weaker-than-expected U.S. business activity report from the Philadelphia Federal Reserve on Thursday morning. That economic data came on the heels of Wednesday’s FOMC minutes that hinted further quantitative easing of U.S. monetary policy is possible if the economy were to continue its lethargic ways. The U.S. and Asian stock markets sputtered in the wake of the Philly Fed report, while European stock markets tried to stabilize following recent selling pressure related to the EU debt crisis in their own back yard.

There is now fresh talk of further quantitative easing of U.S. monetary policy (QE3). Such would arguably be commodity-market bullish and possibly stock market bullish, despite the specter of reduced demand prospects due to the sluggish economy.

There is still high anxiety in the market place, as the EU debt crisis saga rolls on. On Friday, 16 Spanish banks credit ratings were downgraded by Moody’s. There was also talk in the market place that U.S. banking heavyweight JP Morgan may have $100 billion in risky bonds in its risk-management portfolio. Remember what happened to MF Global and its risky bets on European debt.

Importantly, the fact gold started to rally strongly from its recent selling pressure suggests the rally is more than just short covering. Gold saw decent safe-haven investment demand late in the week, heading into a weekend of trader/investor jitters. The fact that gold rallied strongly late this week also hints the market place is feeling even higher anxiety. It could be a very active trading day on Monday. Gold bulls are presently feeling much better than they have the past couple weeks.

The European Union debt and financial crisis is still on the front burner of the market place. After the early-week failed efforts by Greek politicians to form a coalition government, fresh Greek elections are now scheduled for mid-June. Concerns regarding Greece leaving the Euro zone are high, as the Greeks’ commitment to financial austerity is highly questionable. There were reports Friday that EU officials are preparing a plan in case they are forced to kick Greece out of the EU. Spanish and Italian bond yields were above 6% most of the week, which is also stressing the EU financial system.

The U.S. dollar index is traded near steady Friday and hit another fresh four-month high. The greenback has benefited recently on fresh safe-haven demand mainly due to the EU situation. During times of keen investor uncertainty, history has shown that gold and the U.S. dollar can both appreciate at the same time. The dollar index bulls still have good upside near-term technical momentum. Meantime, crude oil futures prices were lower Friday and hit a fresh 6.5-month low of $91.40 a barrel. Crude oil remains in a bearish fundamental and technical posture.

The London P.M. gold fixing was $1,589.50 versus the previous London P.M. fixing of $1,554.00.

Technically, June gold futures prices closed at a bullish weekly high close on Friday and that begins to suggest a near-term market bottom is in place. However, gold bears still have the overall near-term technical advantage at present. A 2.5-month-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears' next near-term downside price objective is closing prices below solid technical support at this week’s low of $1,526.70. First resistance is seen at Friday’s high of $1,597.50 and then at $1,600.00. First support is seen at $1,580.00 and then at Friday’s low of $1,567.80. Wyckoff’s Market Rating: 3.5.

(Note: For a complete explanation of my exclusive “Wyckoff’s Market Rating,” just send me an email at [e-mail] and I’ll email it back to you.—Jim)

July silver futures prices also saw a bullish weekly high close on Friday, but bulls have more work to do to begin to suggest a market low is in place. The market saw short covering and bargain hunting after prices Wednesday hit a 4.5-month low. Silver prices are still in a 2.5-month-old downtrend on the daily bar chart. The silver bears still have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at Friday’s high of $28.895 and then at $29.00. Next support is seen $28.00 and then at Friday’s low of $27.78. Wyckoff’s Market Rating: 3.0.

http://www.kitco.com/reports/KitcoNews20120518JW_pm.html

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Big Majority Of Survey Participants See Higher Gold Prices Next Week
Friday May 18, 2012 12:05 PM

Following this week’s bounce from the $1,520s region, most survey participants in the weekly Kitco News Gold Survey expect gold prices to continue to build on late-week gains.

In the Kitco News Gold Survey, out of 33 participants, 23 responded this week. Of those 23 participants, 21 see prices up, while two see prices down, and zero are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

A solid majority of participants expect prices to rally next week, especially since June gold futures on the Comex division of the New York Mercantile Exchange held the low set on Wednesday of $1,526.70. Many said the sell-off was overdone so the rebound was in due course.

“Gold made everybody right by the end of the week... bulls, bears, and fence-sitters alike can claim victory. Wednesday’s high-volume capitulation selling successfully … was followed by an impressive rally on Thursday that saw the largest one-day increase in open interest (16,000 contracts) in quite a long time. Most of the big changes in open interest the past 2-3 months have been declining so a rise of this magnitude indicates money returning to gold. Examples of technical indicators such as this tend to endure the trend so I look for gold to trend a little higher in the week ahead, settling into a $1,600-$1,625-ish range,” said Ken Morrison, editor and founder of online newsletter Morrison on the Markets.

Those who see weakness next week said they think that gold cannot build on these gains and that the rally was nothing more than a short-term bounce in an otherwise down-trending market. Worries about the eurozone, which have pressured gold recently, remain at the forefront, they add.

There were no participants who were neutral on prices

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Friday's Analytical Charts for Gold, Silver, Platinum and Palladium

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Comex Gold Solidly Higher on More Short Covering, Bargain Hunting, Fresh Safe-Haven Buying

Friday May 18, 2012 8:27 AM

Comex gold futures prices are trading solidly higher again Friday morning and are showing important follow-through buying strength from the sharp gains seen on Thursday. The precious metals are seeing more short covering and bargain hunting following recent selling pressure that drove gold prices to a 10-month low of $1,526.70 on Wednesday. Importantly, gold is also finally seeing some decent safe-haven investment demand surface. If gold holds its solid gains into the close on Friday, it would be an early technical clue that a near-term market bottom is in place for the yellow metal.
June gold last traded up $14.20 at $1,589.10 an ounce. Spot gold was last quoted up $14.30 an ounce at $1,589.25. July Comex silver last traded up $0.365 at $28.385 an ounce.

The world market place has been impacted by a weaker-than-expected business activity report from the Philadelphia Federal Reserve on Thursday morning. That economic data came on the heels of Wednesday afternoon’s FOMC minutes that hinted further quantitative easing of U.S. monetary policy is possible if the economy were to continue its lethargic ways. The U.S. and Asian stock markets sputtered in the wake of the Philly Fed report, while European stock markets are trying to stabilize following recent selling pressure related to the EU debt crisis in their own back yard.

There is now fresh talk of further quantitative easing of U.S. monetary policy (QE3). Such would arguably be commodity-market bullish and possibly stock market bullish, despite the specter of reduced demand prospects due to the sluggish economy.

There is still high anxiety in the market place, as the EU debt crisis saga rolls on. Overnight, 16 Spanish banks credit ratings were downgraded by Moody’s. There is also talk in the market place that U.S. banking heavyweight JP Morgan may have $100 billion in risky bonds in its risk-management portfolio. Remember what happened to MF global and its risky bets on European debt.

Importantly, the fact gold has started to rally strongly from its recent selling pressure suggests the rally is more than just short covering. Gold is also seeing decent safe-haven investment demand late this week, heading into a weekend full of trader/investor jitters. The fact that gold is rallying strongly late this week also hints the market place is feeling even higher anxiety. It could be a very active trading day come next Monday. Gold bulls are presently feeling much better than they have the past couple weeks.

The European Union debt and financial crisis is still on the front burner of the market place. After Tuesday’s failed efforts by Greek politicians to form a coalition government, fresh Greek elections are now scheduled for mid-June. Concerns regarding Greece leaving the Euro zone are high, as the Greeks’ commitment to financial austerity is highly questionable. Spanish and Italian bond yields are above 6%, which is stressing the EU financial system.

The U.S. dollar index is trading near steady Friday morning and hit another fresh four-month high overnight. The greenback has benefited recently on fresh safe-haven demand mainly due to the EU situation. The dollar index bulls still have good upside near-term technical momentum. Meantime, crude oil futures prices are near steady Friday morning and hit a fresh 6.5-month low of $91.60 a barrel overnight. Crude oil remains in a bearish fundamental and technical posture.

The London A.M. gold fixing was $1,588.00 versus the previous London P.M. fixing of $1,554.00.

There is no major U.S. economic data due for release Friday.

Technically, June gold futures prices closed sharply higher Thursday. Decent follow-through buying and a bullish weekly high close on Friday would begin to suggest a near-term market bottom is in place. However, gold bears still have the overall near-term technical advantage. A 2.5-month-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above psychological resistance at $1,600.00. Bears' next near-term downside price objective is closing prices below solid technical support at this week’s low of $1,526.70. First resistance is seen at the overnight high of $1,594.20 and then at $1,600.00. First support is seen at $1,575.00 and then at the overnight low of $1,567.80.

July silver futures are seeing short covering and bargain hunting after prices Wednesday hit a 4.5-month low. Silver prices are still in a 2.5-month-old downtrend on the daily bar chart. The silver bears still have the solid near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at the overnight high of $28.55 and then at $29.00. Next support is seen $28.00 and then at the overnight low of $27.78.

http://www.kitco.com/reports/KitcoNews20120518JW_am.html

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Comex Gold Rallies Sharply on Short Covering, Bargain Hunting, Fresh Safe-Haven Demand

Thursday May 17, 2012 2:15 PM

Comex gold futures ended the U.S. day session sharply higher and near the daily high Thursday, posting the largest daily advance in many weeks. Traders and investors stepped in to "buy the dip" in gold prices by doing some heavy short covering and bargain hunting. For the first time in a while some significant safe-haven investment demand also cropped up in gold. The gold market was also oversold, technically, and due for an upside corrective bounce, which it saw Thursday. June gold last traded up $37.00 at $1,573.60 an ounce. Spot gold was last quoted up $33.60 an ounce at $1,574.50. July Comex silver last traded up $0.814 at $28.01 an ounce.

The market place was seeing just a bit of a pick-up in investor risk appetite early Thursday morning, following Wednesday afternoon’s release of the minutes of the latest meeting of the Federal Open Market Committee, which hinted that further quantitative easing of U.S. monetary policy is not off the table. Then the Philadelphia Federal Reserve business survey was released and it was weaker than expected. That dented gains in the dollar index and U.S. stock market, rallied the U.S. Treasury prices, and was one impetus for traders to do some short covering and fresh buying in the gold market.

It’s important to note that Thursday’s gains in gold came amid somewhat of an overall “risk-off” day in the general market place, following the Philadelphia Fed survey. The big gains in gold do suggest a portion of the yellow metal’s gains were related to safe-haven investment demand.

Wednesday afternoon’s FOMC minutes that hinted further quantitative easing of U.S. monetary policy is possible if the economy were to continue its lethargic ways is an underlying bullish factor for the raw commodity markets, including the precious metals. Thursday’s weak U.S. economic data further stoked notions “QE3” is not at all off the table. Most traders and investors reckon a QE3 situation would be inflationary down the road, which is commodity-market-bullish. However, many reckoned the monetary stimulus seen by the major central banks of the world during the past 3.5 years would have already produced inflationary price pressures.

For the gold market bulls, they needed to see a day of solid, corrective upside price action. Prices were nearing the key technical level of $1,500.00 an ounce. A move below that major psychological support level would begin to inflict longer-term chart damage and would call into question the 11-year-old price uptrend that remains in place on the longer-term charts. Gold prices around this week’s low also mark a 20% decline from the all-time highs scored last year. Many market watchers determine a bear market to be in place when a market price has backed off by 20%.

The European Union debt and financial crisis is still on the front burner of the market place. The Fitch ratings agency Thursday further downgraded Greece’s debt rating, which was not at all surprising. After Tuesday’s failed efforts by Greek politicians to form a coalition government, fresh Greek elections are now scheduled for mid-June. Concerns regarding Greece leaving the Euro zone are high, as the Greeks’ commitment to financial austerity is highly questionable. Spanish and Italian bond yields are above 6%, which is stressing the EU financial system.

The U.S. dollar index traded near steady Thursday after hitting another fresh four-month high overnight. The greenback has benefited recently on fresh safe-haven demand mainly due to the EU situation. The dollar index bulls have good upside near-term technical momentum. Meantime, crude oil futures prices were slightly lower Thursday after prices Wednesday hit a fresh 6.5-month low of $91.81 a barrel. Crude oil remains in a bearish fundamental and technical posture. If crude oil continues to trend lower and the dollar index continues to trend higher, sustainable near-term price uptrends in gold and silver could be difficult to achieve—unless more solid safe-haven demand for gold surfaces.

The London P.M. gold fixing was $1,554.00 versus the previous London P.M. fixing of $1,548.50.

Technically, June gold futures prices closed nearer the session high Thursday. While serious near-term chart damage has been inflicted recently decent follow-through buying and a bullish weekly high close on Friday would begin to suggest a near-term market bottom is in place. Gold bears still have the overall near-term technical advantage. A 2.5-month-old downtrend is still in place on the daily bar chart. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at this week’s high of $1,585.80. Bears' next near-term downside price objective is closing prices below solid technical support at this week’s low of $1,526.70. First resistance is seen at Thursday’s high of $1,579.80 and then at this week’s high of $1,585.80. First support is seen at $1,564.40 and then at $1,550.00. Wyckoff's Market Rating: 3.5.

July silver futures prices closed nearer the session high Thursday and saw short covering and bargain hunting after prices Wednesday hit a 4.5-month low. Silver prices are still in a 2.5-month-old downtrend on the daily bar chart. The silver bears still have the solid near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at this week’s high of $29.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the December low of $26.50. First resistance is seen at Thursday’s high of $28.295 and then at $28.50. Next support is seen $27.50 and then at Thursday’s low of $27.175. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 40 points 347.40 cents Thursday. Prices closed nearer the session low. Copper bears have the near-term technical advantage. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at this week’s high of 367.45 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the January low of 340.60 cents. First resistance is seen at 350.00 cents and then at Thursday’s high of 352.15 cents. First support is seen at this week’s low of 344.90 cents and then at 342.50 cents. Wyckoff's Market Rating: 3.0.

http://www.kitco.com/reports/KitcoNews20120517JW_pm.html

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Indians’ affinity for gold pushing country into debt




MUMBAI — Kumar Jain’s small shop in Zaveri Bazaar, Mumbai’s labyrinthine jewelry district, has the feverish atmosphere of a Wall Street trading room. Women wave calculators, quote the latest global gold prices and haggle fiercely over bangles laid out on velvet trays.

These buyers are thinking about finance rather than finery. “Money can change value,” said Jain, as he watched his shop assistants and customers do battle. “But when you have gold, no one can cheat you.”

In India, the world’s biggest annual bullion importer, gold jewelry plays a central role in weddings and festivals. But its main appeal is as an investment favored by both rich and poor. India imported 933 metric tons of gold for private consumers last year, a 35 percent rise over five years and just under a quarter of global demand, according to the World Gold Council.

But the bustling business at jewelry shops is increasingly pushing the country into debt, analysts say, causing particular concern as the world’s biggest democracy faces an economic slowdown this year.

For many Indians, the bazaar has had more appeal than the bank. Indian households’ disposable incomes grew by 13 percent during the 2010-11 financial year, but the amount in their bank accounts rose by only 3 percent, according to official data. High inflation often renders the idea of financial savings unappealing, and many people in rural areas lack access to banks. Meanwhile, global economic uncertainty has boosted bullion prices. Gold today trades at around $1,540 per troy ounce, double its value since late 2008 despite a recent dip.

Yet India is struggling to balance its books partly because citizens keep buying gold. The country’s current account, the difference between the value of its imports and exports, is running at a deficit of about 4 percent largely because of high import bills for oil and gold — India bought 969 metric tons of bullion last year at a cost of $48 billion overall. The lack of money in Indian bank accounts forces the government and private companies to borrow abroad, pushing the country further into the red.

“You’re not looking at something sustainable. The balance of payments becomes very skewed,” said Deepali Bhargava, chief India economist at Espirito Santo, an investment bank.

Moreover, many Indians buy baubles as a way to launder undeclared cash and keep their wealth outside the formal economy. The vast majority of sales take place in one-off shops known as family jewelers, such as those in Zaveri Bazaar.

The family jewelers “let a customer buy jewelry and do not write any bill,” a store manager at a large jewelry retail chain said on the condition of anonymity in order to speak openly. “Everything is under the table.”

The International Monetary Fund predicts that India’s economy will grow by 6.9 percent this year, a significant drop from the double-digit rates touched in recent years. Standard & Poor’s last month downgraded the country’s credit rating outlook from stable to negative. The rupee hit a record low against the dollar Wednesday.

At home, India needs high growth to support its rapidly rising population. On the international stage, a slowdown will dampen hopes of a new superpower and democratic counterweight to China.

India’s government has been trying to exert some control this spring. This year’s draft budget extended a tiny excise duty on gold jewelry — a 0.3 percent levy would have required even small jewelers to submit detailed logs of their stock. A law requiring jewelers to record the tax numbers of customers spending more than 200,000 rupees, or $3,700, in cash was also proposed. However, the family jewelers went on strike in response, and both rules were dropped last week.

For now, Zaveri Bazaar continues its roaring trade. One of Jain’s regular clients is buying trinkets to build a savings fund because her husband has cancer. Another is saving up for a house by stockpiling gold. Jain, an affable salesman with a thick mustache and a pinstriped shirt, said he deals only in “white money” and attributes his appeal to his long-standing ties with each customer.

“Indians don’t change their jeweler,” he said. “It’s like you don’t change your doctor. It’s personal.”

http://www.washingtonpost.com/world/asia_pacific/indians-affinity-for-gold-pushing-country-into-debt/2012/05/17/gIQAxsjZVU_story.html

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Thursday's Analytical Charts for Gold, Silver, Platinum and Palladium

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Market Nuggets: Nomura Sees Higher Chance Of Eurozone Stimulus; Buys Gold

Thursday May 17, 2012 9:14 AM

The likelihood of a quantitative easing in the eurozone has risen because of increased concerns regarding Greece, Nomura analysts say. If that occurs, it could cause the correlation between the euro-U.S. dollar spread to break, which would be positive for gold prices. Gold has become more sensitive to German real bond yields, supporting this view, they say. The bank adds earlier this week they bought gold on these two reasons. Although gold has mirrored risky assets lately, “this behavior has flipped historically when there have been major market shocks,” they say. The bank adds gold’s price rise during Asian hours is a positive sign, but admits it does not make a trend. “Also, we have begun to see improved technicals, such as the RSI starting to rise from very oversold territory, which has historically been … indicative of short-term lows,” they say.

By Debbie Carlson of Kitco News; [e-mail]
http://www.kitco.com/reports/kitcoNewsMarketNuggets20120517.html

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Monday's Analytical Charts for Gold, Silver, Platinum and Palladium


http://www.kitco.com/reports/template_jimw.htm

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Technical Trading: The Week Ahead - Gold Nearing Test of Major Support

14 May 2012, 12:00 p.m.
By Kitco News

(Kitco News) - Mon May 14—June Comex gold futures are hurtling towards a retest of major technical chart support at the December 2011 low at $1,528. Daily momentum tools are deeply oversold, which opens the door to the possibility of a reversal higher.

Since late February, June gold futures have been edging lower in a mild daily downtrend, still within the context of the larger longer-term secular bull market. Over the past week, however, the pace of the declines have accelerated and the bearish forces are focused on a retest of the five-month low at $1,528 per ounce.

Daily momentum tools, such as the 9-day relative strength index (RSI), are at deeply oversold levels. That indicator is currently at 19%, below the 30% oversold line. Markets can trade at oversold or overbought levels for weeks or even months during extremely strong trends, but the oversold level also puts the bears on notice for a potential reversal or snapback move.

Interestingly, the last time the 9-day RSI was at the 19% level was in mid December—just prior to the spike low to $1,528 on December 29. At that time a bullish divergence formed on the momentum indicator and prices rallied higher.

Any approach and test of the December low will be critical for the gold market near term. A sustained a sharp decline below $1,528 would break the intermediate term neutral trend and turn the medium term trend bearish. Declines of several hundred dollars per ounce could be targeted if that were to unfold.

Conversely, this major support level at $1,528 could offer a stalling point and a floor for the recent gold market declines. It is a crucial zone for traders to monitor near term.

Terry Gabriel, global head of technical analysis at Ideaglobal in New York said, "on a technical basis, it does look like we will test the December 2011 low at $1,528. But, the market is oversold and ripe for a reactionary bounce at any time."

On the upside, Gabriel highlighted resistance at the $1,613-1,627 zone. That is the level the bulls would need to conquer near term to shift the negative daily trend. "If gold were to reverse above $1,627 that would return us to the range of the past two month's highs in the upper 1600s. Right now that looks like a low probability," he said.

Just below the $1,528 low, Gabriel identified a longer-term Fibonacci retracement support at $1,514. That represents 38.2% of the January 2009-September 2011 rally, he said. If the $1,514 level were to crack "the risk would be for a decline which would be very severe."
If the $1,514 floor were to give way, that could open the door for a longer-term sell-off toward the $1,386 zone, which represents 50% of the above mentioned 2009-2011 rally.

However, Gabriel warned of the possibility of a snapback reversal higher trade. There is a possibility of a "marginal new low [below $1,528] and then a strong snapback," he said. That action would be similar to the December 2011 low which took out the September 2011 low marginally but then formed a major five-month bottom for gold.

Bottom line, though the trend is your friend, and the near term technicals point down for gold. "The technical picture is still negative until we see some form of base or reversal above resistance the market should remain under pressure," he concluded.

[CaptWhizbang]

'Au'-sterity for gold as prices plunge
By Paul R. La Monica
May 14, 2012: 1:17 PM ET

Gold prices have slid in tandem with the broader stock market as Europe debt crisis fears and concerns about a slowing global economy have investors fleeing all risky assets.


NEW YORK (CNNMoney) -- So much for gold being a safe investment in times of market volatility.

The yellow metal has pulled back sharply in the past month and a half on Europe fears -- just like stocks. At about $1,560 an ounce, gold is 13% below its 2012 high of near $1,800 back in March. Gold prices are now down slightly year-to-date.
For any investor who views gold as an alternate currency and believes that the metal's price should move higher thanks to turmoil in Europe and worries that the euro would completely unravel if Greece exits the eurozone, think again.



Gold bugs may be forgetting that gold really thrives during times when inflation fears are running rampant. This is not one of those times. The sluggish U.S. job market, slowing growth in China and recession in much of Europe all scream global economic weakness.

"Inflation is modest because of significant unemployment, The case for gold is when the economy is getting better," said Barry Ritholtz, CEO of Fusion IQ, a New York-based research firm. "Right now, gold is less than an ideal investment."

Yes, gold surged to an all-time high (not adjusted for inflation) of above $1,920 an ounce last September. That was shortly after the credit rating of the United States was cut by Standard & Poor's following the debt ceiling mess on Capitol Hill.

At that time, demand for U.S. bonds was extremely high as well. The 10-year Treasury yield was also near an all-time low. (Bond prices and rates move in opposite directions.) So it seemed last fall that gold was being viewed as a classic safe haven.

Related: Bears are roaring back

But that may have created some froth in the market for gold. Even some gold investors conceded that prices got way ahead of themselves. So this recent pullback may be the continuation of a needed correction.

"I am a bull on gold long-term. But a lot of interest in gold over the past year has been speculative. It had been due to concerns about political paralysis on both sides of the Atlantic," said Brian Gendreau, market strategist with Cetera Financial Group in Los Angeles.

Investors may be dumping gold as they begin to realize that it may not be as safe as they thought. And you can't really blame some long-term gold investors for cashing in now.





The SPDR Gold Shares Trust (GLD), an exchange-traded fund that invests in the commodity, is still up more than 65% since the stock market bottomed in March 2009.

Cameron Brandt, director of research with EPFR Global, a Boston-based firm that tracks mutual fund flows, noted that there has been a steady level of redemptions from gold funds over the past few weeks.

"People are looking to get back into cash and move to the sidelines. Given Europe's troubles, there is a segment of investors that may want to be liquid either to sidestep more trouble or pounce on other opportunities," Brandt said.

Investors in gold miners seem to be betting on further price declines as well. The Market Vectors Gold Miners ETF (GDX), which owns shares of mining leaders like Barrick Gold (ABX), Goldcorp (GG) and Newmont Mining (NEM, Fortune 500), is down nearly 20% this year.

Ritholtz, who said his firm does have a position in gold, said that having some gold investments makes sense. Gold should rise when the U.S. dollar is weakening and inflation is a worry.

Related: Millions of Europeans face long slog

But he added that the biggest problem with the metal is that it's not as easy to objectively value it like a stock or bond. Still, he said some investors treat gold like a "cult" and refuse to believe that the prices can ever go down.

"Gold doesn't have any earnings. It doesn't pay you interest. It's a shiny yellow metal. Its value only comes from its relative rarity. It should trade on supply and demand," he said.

Gold is a commodity first and foremost, not a currency. Commodity prices, even for something like gold that doesn't have as much commercial use as other metals, tend to closely track consumer demand. So it should be no surprise that gold prices are now tumbling.

After all, copper prices are sliding. So are the prices of silver and platinum -- and just about every other commodity. Oil is at a five-month low. Wheat, corn and cotton prices are all much closer to their 52-week lows than highs.

"This should not be a surprise. There are good economic reasons for gold prices to be falling," said Gendreau. "A slowdown in Europe and China and lower retail demand for jewelry in India and other emerging markets should lead to a soft market for gold for awhile."

So it looks like austerity isn't just bad news for Greece, Spain and France, it's a downer for anyone investing in the element whose periodic table abbreviation is "Au."

http://money.cnn.com/2012/05/14/markets/thebuzz/index.htm?iid=HP_LN

[CaptWhizbang]

Friday's Analytical Charts for Gold

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Higher Prices Expected For Gold Next Week After Recent Gains

27 April 2012, 2:15 p.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/


(Kitco News) - Gold prices may build on gains established late this week, as market participants look at technical charts and renewed concerns about the eurozone’s economic health for direction in next week’s trade.


Prices were higher on Friday and mixed on the week. The most-active June gold contract on the Comex division of the New York Mercantile Exchange rose Friday, settling at $1,664.80 an ounce, up 1.34% on the week. May silver rose Friday, settling at $31.347 an ounce, down 0.96% on the week.


In theKitco gold surveyout of 33 participants, 26 responded this week. Of those 26 participants, 21 see prices up, while three see prices down, and two are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.


Gold prices rose on Friday, supported by a drop in the U.S. dollar after lower-than-expected first-quarter gross domestic product. GDP growth came in at 2.2%, under expectations for 2.7% growth. Friday’s gold rally built on gains posted after the Federal Reserve’s monetary-policy committee Wednesday left interest rates unchanged from their ultra-low levels. There was some initial disappointment that the Federal Open Market Committee did not embark on any new stimulus programs, but market participants were eventually comforted by the fact that monetary policy remains friendly to gold prices, traders said.


Bob Haberkorn, senior market strategist at RJO Futures, said given the disappointing GDP figures and the rise in unemployment claims on Thursday, some in the market are beginning to think that the Fed may have to come back with some sort of stimulus program. That supported metals.


Technical-chart analysts are generally bullish on gold for next week, citing how the market performed at this week’s lows.


Adam Hewison, president and chief strategist with INO and MarketClub.com, said he sees higher prices next week. “The gold market has bottomed out around the $1,620 level. For this coming week, we are bullish on gold and expect it to move higher. The first barrier for this market comes in around the $1,700 level,” he said.


Ken Morrison, founder and editor of the newsletter Morrison on the Markets, also said for the short-term gold has potential to rise. He said open interest in Comex futures, which is the number of outstanding positions in the market, increased after Wednesday’s rally.

“Open Interest has begun rise along with rising prices, a sign that new buyers are willing to step up,” he said.


He said resistance is seen at $1,680, with $1,700 a potential overhead target which may be reached in the next two to four weeks.


A few market participants are pointing to this week’s news of continued central-bank buying of gold as a strong underlying fundamental for the metal as central banks usually buy to add to foreign-exchange reserves.


“Central banks are now creating an upside bias to the market and are reducing the ‘free-float’ available to meet future demand, even at much higher prices. As a consequence, we can expect less downside volatility – and a more sustainable bull market with much higher prices in the years to come,” said Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic adviser to Rosland Capital.


Looking ahead to next week, some market participants said the direction of the U.S. dollar will influence gold, as concerns about Europe’s economic outlook rise again.


The downgrade of Spain’s credit rating by Standard & Poor’s Thursday night is a stark reminder of the continued problems the eurozone faces. Gold initially rose on the news, but then came off as the euro retreated. Many market participants who see prices rising next week said the problems in Europe underscore gold’s safe-haven aspects.


Safe-haven assets are likely to perform well if there are more jitters around, but not everyone thinks gold is acting as a safe haven, but more as a risk asset. In that case, gold may stumble. “Since gold continues to display a high degree of correlation with commodities and equities, the yellow metal is also likely to suffer as a result,” Commerzbank said.


Mark Chandler, head of currency strategy at Brown Brothers Harriman, noted the weakness in the dollar versus other currencies on Friday was a bit counter-intuitive. “Spain's two-notch downgrade, pressure on the European bonds, the French and Greek elections a week away, an RBA (Royal Bank of Australia) rate cut and still they rally. As we noted at the start of the week, technical indicators are more constructive than our assessment of the underlying fundamentals,” he said.


If the dollar can regain its footing, gold may come under pressure.


Next week brings the April unemployment data from the U.S. Department of Labor. After March’s lower-than-expected figures, market participants will be keen to see if that trend continues. There’s debate already on which way it may go. Among those who see weak growth are analysts at BNP Paribas, who expect the April payroll numbers to come in around 125,000. Ahead of the report’s release, they said to watch the “ISM non-manufacturing number whose employment component tends to be a good indicator” for the jobs data.


Nomura analysts are more upbeat on the report, forecasting nonfarm payrolls to rise by 195,000 in April. They cite regional business surveys that point to a “healthy round” of manufacturing jobs and a rebound in retail jobs. Their caveat is that “payroll forecasts for the month of April carry an unusual degree of uncertainty.”

A survey of analysts by MarketWatch calls for a rise of 190,000 jobs in April, versus March’s figure of 120,000.

By Debbie Carlson of Kitco News [e-mail]

http://www.kitco.com/reports/KitcoNews20120427DeC_metals_outlook.html

[CaptWhizbang]

Gold rebounds post-Fed as dollar slips to three-week low



(Reuters) - Gold prices rose towards $1,650 an ounce in Europe on Thursday as the dollar sank to a three-week low against the euro, coming under pressure after the Federal Reserve opted to keep interest rates at rock bottom.

Spot gold was up 0.3 percent at $1,648.84 an ounce at 5:20 a.m. EDT (0920 GMT), while gold futures for June delivery were up $7.60 an ounce at $1,649.90.

In a statement after a two-day meeting to Wednesday, the Fed's policy-setting panel reiterated its expectation that interest rates would not rise until at least late 2014, and took no action on monetary policy.

Gold bulls, who had been hoping for fresh hints of quantitative easing from the Fed, were disappointed, and prices fell below $1,625 straight after the statement. Dollar weakness and price-sensitive buying quickly reversed that, however.

"The message out of the Fed didn't really change much," Credit Suisse analyst Tom Kendall said. "We had a little sell off immediately after the statement came out, but it quickly recovered.

"I think it would have taken a much greater change in stance coming out of the Fed for gold to really make a big break one way or the other, and given the disappointing data coming out over the last couple of weeks, I don't think that was particularly likely."

Weakness in the dollar, which makes commodities priced in the unit cheaper for other currency holders, is supporting gold. A tightening of peripheral euro zone spreads lifted the euro, but the unit is still vulnerable to the bloc's debt woes. <FRX/>

INDIAN BUYERS SHY AWAY

"The physical demand story has been very uninspiring. Combined volumes on the Shanghai Gold Exchange have been fairly decent of late... but this does little to compensate for the disappointing appetite from India," UBS said in a note

Indian buyers failed to return to the gold market in droves this week despite the arrival of Akshaya Tritiya, a key gold-buying festival, on Tuesday.

Akshaya Tritiya sales are estimated to have fallen by a half to 10 tonnes this year, as interest was hurt by high prices and weakness in the rupee.

Among other precious metals, silver was up 0.3 percent at $30.77 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to a three-month high at 53.6 on Wednesday.

The metal fell in gold's wake to its lowest since mid-January on Wednesday, and looks vulnerable to further losses, according to technical analysts, who study past price movements for clues as to the future direction of trade.

"Silver probed to fresh multi month lows to 30.00 before recovering," ScotiaMocatta said in a note. "We are bearish silver following the break of huge support pivot 31.00."

"Our target for silver is 28.86, the 76.4 percent retracement of the 26.20 to 37.46 up move. The gold/silver ratio spiked higher to 54.20 before retracing... The ratio is bid with potential for 100 percent retracement to 57.50."

Spot platinum was up 0.7 percent at $1,556.49 an ounce, while spot palladium was up 0.7 percent at $662.25 an ounce.

(Editing by Keiron Henderson)

http://www.reuters.com/article/2012/04/26/us-markets-precious-idUSBRE8390RW20120426

[CaptWhizbang]

Thursday's Analytical Charts for Gold, Silver and Platinum and Palladium



http://investorshub.advfn.com/boards/post_new.aspx?board_id=23105

[CaptWhizbang]

Gold Extends Advance on Optimism Fed Will Spur Growth

By Maria Kolesnikova and Glenys Sim
Apr 26, 2012 5:12 AM PT

Gold rose in New York after Federal Reserve Chairman Ben S. Bernanke said he’ll do more to fuel growth if necessary, weakening the dollar and boosting bullion’s appeal as a store of value.

Bernanke said the central bank is ready to add stimulus if needed even after leaving its policy unchanged yesterday and upgrading its view of the economy for 2012. Additional bond- buying is still “very much on the table,” he said. That helped stoke a rally in global stocks and drove the greenback lower. The Fed bought $2.3 trillion of debt in two rounds of so-called quantitative easing from 2008 to June 2011.

“Gold is clearly trading on the dollar,” Copenhagen-based Arne Lohmann Rasmussen, head of rates, foreign-exchange and commodity strategy at Danske Bank A/S (DANSKE), said by e-mail today. “The dollar is under pressure.”

June-delivery bullion rose 0.6 percent to $1,651.60 by 8:11 a.m. on the Comex in New York. Gold for immediate delivery increased 0.5 percent to $1,651.07 an ounce in London.

“Gold regained its footing after Bernanke said the Fed is prepared to do more for the U.S. economy,” said Lynette Tan, an investment analyst at Phillip Futures Ltd.

Bullion, which dropped as much as 1.1 percent yesterday, rose today as the dollar slid for a third day against a six- currency basket including the euro. Holdings of gold in exchange-traded products fell for a third day yesterday to 2,389.8 metric tons, the lowest level since March 23.

Platinum for July delivery, this year’s best-performing precious metal, gained 0.9 percent to $1,560.40 an ounce. Palladium for June delivery rose for the first time in four days, gaining 1.2 percent to $662.95 an ounce. Silver for July delivery advanced 1.5 percent to $30.89 an ounce, the most since April 12.

To contact the reporters on this story: Maria Kolesnikova in London at [e-mail]; Glenys Sim in Singapore at [e-mail]

http://www.bloomberg.com/news/2012-04-26/gold-extends-gains-on-optimism-fed-to-do-more-to-spur-growth.html