Another Day, Another Fed and Bullion Bank Intervention
GoldSeek
Dear Friend of GATA and Gold (and Silver):
Interviewed today by King World News, Sprott Asset Management's John Embry discusses another smash in the gold and silver paper markets by their "manipulators," the bullion banks:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/2/29_Em...
Market analyst and gold mining entrepreneur Jim Sinclair writes that today's action in gold is an "intervention" functioning as "window dressing" camouflage for more "quantitative easing" by central banks:
http://www.jsmineset.com/2012/02/29/todays-window-dressing-fall-in-gold/
And MarketWatch quotes Richard Hastings of Global Hunter Securities as saying today's comments by Federal Reserve Chairman Ben Bernanke may have been "designed to take out some of the inflation in the industrial and commodity side of the markets right now, since the Fed does not want inflation to creep up and threaten its ultra-low rate policy at this time":
http://www.marketwatch.com/story/gold-futures-inch-higher-in-electronic-...
That is, more market manipulation by the Federal Reserve, market manipulation being, as GATA has been noting for many years, central banking's reason for being:
"And so we have come to an era of daily market interventions by central banks -- so much so that the main purpose of central banking now is to prevent ordinary markets from happening at all." (http://www.gata.org/node/6242)
Well, at least this manipulation and intervention are being acknowledged in public more often now. But don't ask GATA when they'll end or when foreign central banks and sovereign wealth funds will pull the plug on the operation by dumping U.S. government bonds and buying gold and commodities all at once. That portfolio rebalancing has been happening gradually for a long time, the plug will be pulled only when those foreign central banks and sovereign wealth funds consider themselves fully hedged, and they won't be tipping us off the night before.
read more on this article here
Ron Paul Tells Bernanke He Killed The Dollar, Silver Coin In Hand
Forbes
Fed Chairman Ben Bernanke had an interesting morning over on Capitol Hill, facing the ire of Ron Paul and receiving Democratic praise from Barney Frank. Bernanke was testifying before the Committee on Financial Services, where he said the economic recovery continues but remains frail, but was put on the spot by Ron Paul who pulled out a silver eagle and accused him of debasing the currency and destroying America’s wealth.
Ron Paul was in full campaign mode. So was Barney Frank. Bernanke was caught in the middle.
In what was supposed to be a Q&A session, the Fed chief essentially sat down and listened to one side bash him and the other love him. Barney Frank took the floor after some softballs by Committee Chairman Spencer Bachus, praising Bernanke’s tenure as Fed Chairman and pointing to continuing job growth.
It was Ron Paul, though, who took the day. In what is usually the most heated and interesting exchange of Bernanke’s excursions to Congress, the Fed Chairman was forced to sit down and listen as Ron Paul scolded him for “debasing” the currency and “destroying” the wealth of millions of Americans.
Ron Paul first asked Bernanke if he did his own grocery shopping, to which the Fed Chairman responded with a “yes.” Paul immediately cut him off and said “no one believes the 2% inflation rate,” claiming it was actually closer to 9%. “Someone is stealing wealth,” said Ron Paul, in full campaign mode.
He then pulled out a silver eagle, a silver coin that has nominal face value of one dollar that is legal tender. Ron Paul told Bernanke that in 2006, as he took the top spot at the Federal Reserve, an ounce of silver bought about 4 gallons of gas. Today, said Paul, it buys about 11.
“That’s preservation of value,” yelled an excited Ron Paul, before accusing Bernanke of loving paper money and begging him to “legalize competing currencies.” Bernanke responded by explaining that anyone can hold whatever currency they want, and told Paul he’d gladly help him figure out how to hold euros, yen, or whatever he pleases.
Paul once again lashed out, telling Bernanke “the record of what you’ve done is destroy the currency,” before saying he still can’t pay his bills or taxes with silver eagles, just as his time was running out and he was forced to forfeit the floor to California’s MaxineWaters.
As usual, Ron Paul put the focus on what he considers to be the illusory essence of fiat or paper money. This time around, though, Ron Paul didn’t let Bernanke respond, making it a one way conversation.
read more on this article here
Silver Up 4 Percent, Gold Races Toward $1,800 on ECB
Reuters
Silver rallied more than 4 percent on Tuesday after it breached key technical resistance and gold prices raced toward $1,800 an ounce a day before the European Central Bank will offer cheap loans to banks.
Bullion rose to a three-month high as markets focused on economic uncertainty driven by an upcoming ECB move to offer another half a trillion euros of low interest three-year loans to banks and companies in need of investment funds.
Silver hit a five-month high and its rally quickened pace after it broke above recent highs near $35.70, a resistance that had failed to breach several times since September.
"Both gold and silver are lifted by an expectation of continued liquidity coming into the market," said Frank McGhee, head precious metals trader at Integrated Brokerage Services
LLC.
"Massive fund buying and predominantly technical factors boosted silver, which was undervalued compared to everything else and we are covering a lot of the ground today," he said.
Spot gold was up 0.8 percent at $1,780.20 an ounce, having hit a fresh three-month high of $1,789.40.
U.S. gold futures for April delivery settled up $13.50 an ounce at $1,788.40, with trading volume about 20 percent below its 30-day average, preliminary Reuters data showed.
Silver rose 4.1 percent to $36.80 an ounce by 11:31 a.m. EST (1631 GMT), having hit a high of $37.21, its loftiest since September 22.
Silver is by far the best-performing precious metal this year with a 32 percent gain. Last year, it posted a 10 percent loss after prices corrected sharply from a record near $50 an ounce set in April.
On weekly charts, silver was poised to breach $35.66 an ounce, where the channel top converged with the major double-bottom neckline, said CitiFX strategist Tom Fitzpatrick. A close above that resistance would confirm a break, suggesting a test of $45, up 25 percent from current levels.
Some investors also bought silver as it appeared cheaper relative to gold. The gold/silver ratio, or the number of silver ounces needed to buy an ounce of gold, dropped to 48, its lowest since mid-September.
Strong investment buying also helped. Holdings of the world's largest silver exchange-traded fund rose 22.7 tonnes on Monday, and are up 109.8 tonnes since the beginning of the year. In the same period of 2011, they fell 255.2 tonnes.
ECB LIQUIDITY MOVE HELPS
Gold rallied as the euro rose 0.5 percent versus the dollar ahead of an expected cash injection of 500 billion euros from the ECB on Wednesday. The move is seen as buying more time for policymakers to sort out the sovereign debt crisis.
"Gold and silver have been trending up in the last several weeks on continued loose monetary policies from the Fed and the world central banks," said Michael Cuggino, portfolio manager of the Permanent Portfolio Funds with $17 billion in assets.
Cuggino said he did not focus on Tuesday's short-term rally, and added that U.S. economic growth and easy money should boost industrial metals such as silver and platinum in longer run.
Other analysts say with much euro-positive news now largely priced into the market, gold may struggle to rally as it has so far struggled to maintain traction above $1,780 an ounce.
read more on this article here
Gold May Gain in NY on Weaker Dollar
Bloomberg
Gold advanced to a three-month high and silver posted its biggest gain in eight weeks as investors bought precious metals as an alternative to a weakening dollar. Platinum and palladium also rose.
The dollar fell for the third time in four sessions against a basket of currencies and the euro rose to a three-month high as the European Central Bank prepares to allot a second round of three-year loans to help the region’s banks tomorrow. The MSCI All-Country World Index of stocks climbed as a gauge of U.S. consumer confidence jumped to a one-year high.
“The euro is stronger against the dollar and that’s one of the major supportive factors” for gold, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by telephone. Higher equities are “also supportive” for commodities, including gold, he said.
Gold futures for April delivery advanced 0.8 percent to settle at $1,788.40 an ounce at 1:30 p.m. on the Comex in New York, after climbing to $1,792.70, the highest level for a most- active contract since Nov. 14.
Prices are up 14 percent this year after a 10 percent increase in 2011, the 11th consecutive annual gain, as investors sought to diversify from equities and some currencies. The dollar index has declined 1.2 percent this month while gold advanced 2.8 percent.
Supporting Gold
“The dollar’s weakness is supporting gold,” Rick Trotman, a senior research analyst at MLV & Co. in New York, said in a telephone interview.
Holdings in exchange-traded products backed by gold extended a climb to a record 2,398.2 tons yesterday, data compiled by Bloomberg show.
NYSE Euronext’s Liffe said it began options trading in gold and silver futures yesterday. The contracts will be available as options on 33.2 ounces of gold and 1,000 ounces of silver, the exchange said in a statement posted on its website.
Silver futures for May delivery rose 4.5 percent to $37.205 an ounce on the Comex, the biggest gain since Jan. 3. Earlier, the metal rose to $37.295, the highest for a most-active contract since Sept. 22. It’s the best-performing precious metal this year, up 32 percent.
“The funds seem to be very actively buying silver today,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
On the New York Mercantile Exchange, platinum futures for April delivery rose 0.5 percent to close at $1,723.50 an ounce. The metal gained 5 percent last week. Palladium futures for June delivery rose 2.1 percent to $722.20 an ounce, the biggest jump in a week.
read more on this article here
Gold, Silver Rally to Multimonth Highs
MarketWatch
Gold futures on Tuesday rose to a three-month high as value-buying and a lower dollar lifted the metal, and silver surged more than 4.5% to end at its best since September.
Gold for April delivery added $13.50, or 0.8%, to settle at $1,788.40 an ounce on the Comex division of the New York Mercantile Exchange.
That was gold’s best finish since mid November. Year-to-date, gold has gained 14%, while prices have risen 2.8% on the month.
Prices had taken a hit on profit-taking in the previous two sessions, but the lower prices were met with vigorous buying as analysts said long-term support for higher gold is intact.
Metals were also buoyed by the combination of a stronger euro and a weaker dollar, with silver rallying and other base and precious metals also ending higher.
Silver for March delivery gained $1.62, or 4.6%, to settle at $37.14 an ounce. That was silver’s highest settlement since September
Silver is often said to be gold’s poor cousin because of its ability to attract investors priced out of the yellow metal.
Silver recently broke through technical levels that, after some consolidation late last week, freed it for Tuesday’s rally, said Charles Nedoss, a senior market strategist with Olympus Futures in Chicago.
Silver also caught some tailwind from firmer U.S. equities, he added.
read more on this article here
Gold, Silver Advance on Global Cues, Good Buying
Economic Times
Gold prices recovered modestly at the bullion market here on Tuesday on renewed buying by stockists and investors amidst good jewellery off-take on the back of firm European cues.
Silver also advanced on sustained speculative buying amidst higher industrial support.
Standard gold of 99.5 per cent purity rose by Rs 45 to close at Rs 28,545 per 10 grams from Monday's closing level of Rs 28,500. Pure gold of 99.9 per cent purity gained by a similar margin to finish at Rs 28,670 per 10 grams from Rs 28,625.
Silver ready (.999 fineness) strengthened by Rs 370 per kg to end at Rs 58,530 as compared to Rs 58,160 previously.
In London, gold prices rose on climbing euro ahead of cash injection from European Central Bank to tide over the eurozone debt crisis.
Spot gold was bid higher at USD 1,773.89 an ounce in early trade. Silver was also bid up at USD 35.56 an ounce.
read more on this article here
Gold Eases but Set for First Gain in Four Weeks
Reuters
Gold prices fell on Friday, breaking ranks with the euro, as sharp gains from earlier in the week based on economic optimism and a Greek bailout deal prompted investors to take profits.
Silver touched a five-month high after climbing past its 200-day moving average. Analysts, however, said it looks vulnerable for a pullback after the sharp rise.
Bullion is on track for its first weekly rise in four weeks, as expectations for further easing by China and a near-zero interest-rate outlook for the next several years boosted the metal's inflation-hedge appeal.
News that Europe sealed a rescue package for Greece to avert an imminent chaotic default lifted gold along with the euro and other riskier assets. Other investors also bought gold on lingering doubts about Greece's ability to implement deep cuts.
"When the debt crisis showed signs of easing, people started to look at gold's correlation with the equity market," said Min Tang-Varner, securities analyst at investment research firm Morningstar.
"It's a delicate balance about whether or not gold is considered a wealth accumulation tool or a commodity," she said.
Spot gold was down 0.2 percent at $1,776.21 an ounce by 11:54 a.m. EST (1654 GMT), heading for a three-percent rise for the week.
The metal is also set for its second consecutive monthly gain after it flirted with entering a bear market in late December.
The dollar fell to a 2/1-2 month low against the euro, which usually supports gold. However, the gold's relationship with the currency markets sometimes breaks down, as the metal itself is often seen as a safe haven.
U.S. gold futures for April delivery were down $8.40 an ounce at $1,777.90.
Gold has risen 13.5 percent this year. However, it appears to struggle to gain further to approach its record at $1,920.30 an ounce.
"It is not our favorite position to go long gold at these high levels," LGT Capital Management analyst Bayram Dincer said. "The potential for disappointment, and price consolidation, is a given."
SILVER SET FOR BIG WEEKLY RISE
Silver touched a four-month high of $35.70 an ounce, as its rally picked up momentum after breaking through its 200-day moving average at $34.84 on Thursday.
read more on this article here
Gold Encounters Profit-Booking, Silver Surges
The Economic Times
Gold prices took a pause after a three-day surge at the bullion market here today on moderate sell-off from stockists amidst reduced jewellery off-take on the back of lower European trend.
On the other hand, silver maintained its rally on sustained speculative buying following rising industrial demand.
Standard gold of 99.5 per cent purity declined by Rs 70 to end at Rs 28,530 per 10 grams from Thursday's closing level of Rs 28,600.
Pure gold of 99.9 per cent purity also fell by similar margin to finish at Rs 28,655 per 10 grams as against Rs 28,725 yesterday.
However, silver ready (.999 fineness) jumped by Rs 700 per kg to conclude at Rs 58,190 from Rs 57,490 previously.
In Europe, gold slipped snapping from its three months high following strong dollar amidst profit taking, though eurozone uncertainty limited the fall.
Spot gold was bid lower at USD 1,775.14 an ounce in early trade.
read more on this article here
Analysis: Can U.S. economy withstand gasoline Price Curse?
Yahoo News
Could history repeat itself? That is a question uppermost in the minds of many Americans as they warily watch gasoline prices at the pump rise week after week.
After all, a spike in gasoline prices early last year helped nearly knock the economy back into recession.
The answer, economists say, is that this time is different: the recovery is in far better shape to absorb the blow.
"This is the dark cloud in an otherwise brightening domestic economic picture. It's something we need to watch right now, but not panic about yet," said Jerry Webman, chief economist at OppenheimerFunds in New York.
U.S. gas prices have jumped 8.8 percent since the start of this year, according to the Energy Information Agency, topping an average of $3.65 a gallon in the week through Monday. This is a record for this time of the year when prices are usually on the low side because of slow seasonal demand.
Early last year, a combination of strong gasoline prices in the wake of the so-called Arab spring uprisings and disruptions to motor vehicle production after a devastating earthquake in Japan put the brakes on U.S. growth.
Although gasoline prices are 41 cents higher than they were at this time last year, there are no supply-chain problems disrupting factory production and winter this year has been unseasonably warm, giving the economy a mild stimulus.
"Fortunately the U.S. economy is on an upswing, not strong but on the way up. It's in a better shape to deal with the oil prices," said Sung Won Sohn, an economics professor at California State University Channel Island. "We don't have the Japanese tsunami to worry about, business and consumer confidence have improved, and the job market is growing nicely."
CRUDE PRICES NEAR 9-MONTH HIGHS
Recent data ranging from employment to manufacturing have been solid, leading economists to temper their expectations of a sharp slowdown in U.S. economic growth in the current quarter.
The brightening outlook has helped support oil prices, although the main driver appears to be fear that a confrontation between Western nations and Iran could end up disrupting oil supplies. U.S. crude prices hit a more than nine-month high at $106.72 a barrel during trading on Wednesday.
Iran, the world's fifth-largest oil exporter, has threatened to close the Strait of Hormuz, the main Gulf oil shipping lane, in response to sanctions aimed at getting Tehran to abandon its nuclear program. Western nations say the program is aimed at developing weapons; Tehran says it's peaceful.
Although U.S. gasoline prices have jumped, economists take comfort in the fact that the pace of the increase has not been as rapid as it was in 2011. Gasoline prices peaked at about $4.02 a gallon in May last year, not far from the all-time high of $4.16 a gallon reached in July 2008.
The rise in gasoline prices poses a threat to both inflation and growth. It acts as a tax on households, which are already strained by weak income growth, and will likely pull spending away from non-energy goods and services.
So far, the pinch has been tempered by falling prices for natural gas. Natural gas prices dropped 2.9 percent in January, their fourth straight monthly decline.
"Roughly one-third of the gasoline spike has been offset by lower natural gas prices," said Joseph LaVorgna, chief economist at Deutsche Bank in New York. Other economists say the impact could be even greater.
Still, a sustained increase could complicate the task of the Federal Reserve. Officials who may want to come to the economy's aid with more stimulus could think twice if there is upward inflation pressure.
"If we get caught in an environment of steadily rising gasoline prices, that will put them in a bind," said Anthony Karydakis, chief economist at Commerzbank in New York.
read more on this article here
Great Day for Gold
MarketWatch
Great day for gold, and the gold bugs think more is to come.
Gold closed at a new high for the year Wednesday, as measured by the CME April gold contract — up $12.80 at $1,771.30. By the stock-market close, the metal was over $8 higher, up 1.1% on the day.
The NYSE Arca Gold BUGS Index closed up 1.7% at 545.78, just below Feb. 2’s 551.24 high but, perhaps more importantly, breaking the downtrend involving that high.
Gold on the basis of the CME close has risen nearly 15% since the Dec. 29 low, and more than 3% since Friday.
A proprietary note: After Wednesday’s close, our Mark Hulbert’s Hulbert Gold Newsletter Sentiment Index jumped 13.4 points to 44.3%. And MarketVane’s Bullish Consensus for gold added a point to 68%.
But these are not unprecedented levels. Those gauges were over 50% and over 70%, respectively, in early February.
“Trader” Dan Norcini’s Market View website commented: “Gold is surging higher later in the session today having caught a gust of wind that took it all the way to major overhead resistance at $1780. The ability of the market to remain above $1750 caught the attention of momentum based traders and that was all she wrote. Up it went taking the weak-handed shorts out of their position.”
Apparently, gold’s jump has come as a serious surprise to market professionals.
Bullion bank HSBC’s analyst James Steel allowed that “a wave of technically motivated momentum driven buying washed over the market. We detected no obvious macro or geopolitical event to support the rally.”
Gold’s jump enabled Bill Murphy at Le Metropole Café to take another trick off the Gartman Letter’s Dennis Gartman in another round of their good-natured — I hope — feud.
This evening Murphy chuckled: “It doesn’t get more bullish than this … Dennis Gartman this morning: ‘We do not expect the correction to be severe however and suspect that it shall play out by taking the market sideways for a week or two perhaps. Thus, we cannot and we will not suggest doing anything other than sitting tight.’ ”
The radical gold bugs who muster around the Le Metropole Cafe banner allege that Gartman is a contrary indicator. But in fairness, while he may have been worrying about a correction Tuesday morning, he did not actually sell his gold holdings.
What next? Since the culprits for today’s (indeed this week’s) rally have not stepped forward, the immediate future is not clear.
One possibly bullish sign: UBS analyst Edel Tully spent last week in India, still by far the world’s largest gold importer and basically the buyer of last resort on a pull back.
She reported Monday: “Our main takeaway is that Indian gold demand is quite likely to show a year-on-year increase in 2012. … Physical buyers in India had to contend with a sharply weaker currency in the second half of the year, which made the rupee gold price a lot more expensive. Our economists are looking for a 12% appreciation in the rupee to 47 versus the U.S. dollar by the end of 2012, which supports further buying. … Indian demand has been very decent so far this year, with our flows consistently above average.”
read more on this article here