Month: February 2013

By MoneyMorning.com.au

As the global currency war intensifies, the majority of attention has been paid to the fall of the Japanese yen against the U.S. dollar over the past few months. The implosion has given cover to the sad performance of another once mighty currency: the British pound sterling.

But in many ways the travails of the pound is far more instructive to those pondering the fate of the U.S. currency.

Japan has a unique economic and demographic profile which makes it a poor stalking horse. Newly elected Prime Minister Shinzo Abe and the Bank of Japan have clearly and forcefully committed Japan to a policy of inflation at any cost.

Even in a world of serial money printers their plans stand out as exceptional. Britain, on the other hand, is charting a more conventional course to the same destination.

Pound Sterling Fading to the Margin

The UK government, under conservative Prime Minister David Cameron and Chancellor of the Exchequer George Osborne, has succeeded in bringing marginal discipline to their budgetary imbalances.

From 2009 to 2012, British government expenditures rose a total of just 1.6%, which was far below the official pace of inflation. (In contrast, U.S. federal spending grew by 7.9% over that time period).

Since 2009 the British have kept their debt-to-GDP ratio lower than America’s and have cut into that metric at a faster rate.

But while the British are conservative when compared to their American cousins, they are hardly austere when compared to Germany (which continues to have a nearly balanced budget and extremely low debt to GDP). Paul Krugman blames Britain’s lackluster economic performance on their misguided experiment with austerity.

The monetary side of the equation also puts the UK within the spectrum of its peers. Ever since the Great Recession began in 2008 the Bank of England, led by outgoing Governor Mervyn King, has been far more stimulative than the European Central Bankers in Frankfurt (but not quite as much as the Federal Reserve or the Bank of Japan).

In contrast to the permanent and ongoing bond-buying quantitative easing programs underway in the U.S. and Japan, the Bank of England has engaged in such measures only selectively.

Given the relatively moderate approach pursued by the British, the poor performance of their currency may be hard to fathom. The deciding factor may be that the Pound Sterling is not nearly as vital to investors, or as integrated into the global economy, as the U.S. dollar or the euro.

The greenback, being the world’s reserve currency, has always benefited from demand that is independent of its economic fundamentals. The euro benefits from the size of the euro zone and the legacy of German banking discipline. The pound enjoys no such privileges and as a result foreign central banks do not feel as pressured to prop it up.

As a result, over the past few years the pound has been…pounded. Since July 2008, the currency is down 26.7% against the U.S. dollar, and in recent months it has started falling faster than all other developed currencies except for the Abe-pummeled yen. Since October 1, 2012 the pound has fallen by 4% against the dollar and 8% against the euro.

Central Banker Syndrome

The pound’s health is made more suspect by the extreme challenges faced by the Bank of England (BoE) as it tries to stimulate the most admittedly inflation prone economy among the major Western nations.

Unlike the Federal Reserve, which is tasked by statute to combat both inflation and unemployment, the BoE has only a single mandate: to keep inflation contained. On that score it has been failing habitually.

Inflation in the UK economy has been north of its 2% target for the past five years (the current official rate is 2.7%). In its most recent inflation projections, Mr. King admitted that it will stay that way for years to come, and that it may exceed 3% this year and next.

With its currency weakening and inflation accelerating, the mandate of the BoE would clearly indicate that the time has come for monetary tightening.

However, like all central bankers, Mr. King, and his successor, the Canadian Mark Carney, will not be bound by such triflings as statutory mandates and past promises.

In his press conference last week, Mr. King spoke of ‘looking past’ current inflation figures to a time when he expects inflation will moderate. When the choice is between inflation and the political pain of economic contraction, bankers (at least those who don’t speak German) will choose inflation every time.

While the American media has poked fun at the Bank of England’s backtracking, they somehow do not understand that the Federal Reserve would be doing the same if not for the advantages given by the dollar’s reserve status.

The Fed Steering the US to Stagflation – or Worse

Our ability to monetize the vast majority of the annual government deficit while exporting our inflation through half trillion dollar trade deficits and the overseas sale of hundreds of billions of Treasury bonds annually means that we do not yet face the pressures bearing down on the Bank of England.

For now at least Cameron is sticking to his guns and making the politically difficult case to voters that today’s hard choices will yield benefits down the road. This puts all the pressure on the Bank of England to satisfy the calls for stimulus. The Federal Reserve is fortunate in that the Obama Administration shares none of Cameron’s fiscal determination.

But already the Fed has done plenty of backing off from its prior promises. Just a few months ago Ben Bernanke announced specific inflation and unemployment triggers that would apparently put monetary policy on automatic pilot.

But just last week, Fed Vice Chairman Janet Yellen announced that those goalposts (6.5% unemployment and 2.5% inflation) should not be considered ‘triggers’ but as thresholds past which the Fed ‘may consider’ tightening.

When U.S. prices start to rise in earnest, look for the denials and rationalizations to come in torrents. The Fed will never acknowledge high inflation no matter what the data, nor will it ever take any steps to combat it. The simple reason is that it will be unable to do so without bringing on the economic contraction that is so terrifying to the British.

However, as British inflation accelerates, the pressure on the Bank of England to change course will intensify. As monetary stimulus continues to take its toll on the pound, price pressures will mount, even as the economy continues to stagnate.

In other words, it is charting a course to stagflation. Perversely, this will put even more pressure on the BoE to ease. However, more cheap money will not stimulate the economy but merely cripple it further by fueling the inflationary fire.

At some point the British will have to admit that stimulus doesn’t work. To break the inflationary spiral and rescue the ailing pound, the BoE will be forced to aggressively raise rates, at which point the British government will have no choice but to slash spending more deeply than would have been the case had they taken their medicine sooner.

However, if the BoE refuses to tighten even in the face of much higher official inflation, the pound may deteriorate further and the UK might be left with the embarrassing choice of adopting the euro.

As far as the United States is concerned, the U.K. is the canary in the coal mine. What they are going through now, and what they may be about to go through, we will surely experience in the years ahead.

The only difference is that the leeway afforded to us by our special status simply gives us more rope to hang ourselves. When the noose finally tightens, the fall will be that much more painful.

Peter Schiff
Contributing Writer, Money Morning

Publisher’s Note: This article originally appeared in Money Morning (USA). Peter Schiff is the author of the new book The Real Crash: America’s Coming Bankruptcy – How to Save Yourself and Your Country.

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From the Archives…

Four Things to Look Out for When Buying Gold Stocks
15-02-2013 – Kris Sayce

Here’s One Way to Eke More Gains from this Rising Stock Market
14-02-2013 – Kris Sayce

When Will the Inflationary Stock Boost End?
13-02-2013 – Murray Dawes

Gold Stocks: Back Up the Truck
12-02-2013 – Dr. Alex Cowie

The Next Surge in the Gold Price Looms: It’s Time to Buy Gold Now
11-02-2013 – Dr. Alex Cowie

By The Sizemore Letter

From Jeff Reeves’ The Slant:

So the Federal Reserve threw investors for a loop with talk of quantitative easing programs ending sooner than expected. The dollar surged higher, gold collapsed, stocks sold off by triple digits … this was a big deal all around.

But what exactly lies in store for investors going forward now that the headlines have hit?

Charles Sizemore of Sizemore Capital Management talked with me for a bit in this latest podcast about what investors can expect. In a nutshell, Charles doesn’t think that it is anything more than a short-term headwind because there’s still little action on the part of Ben Bernanke & Co. … even if the discussion has taken a slightly more hawkish tone.

Much ado is being made of the statement that the “risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” However, without some true hawkish action, it’s not going to mean much.

SUBSCRIBE to Sizemore Insights via e-mail today.

The post On the Slant: What to Make of the Fed’s Tightening Talk appeared first on Sizemore Insights.

Gallup World Poll Experts to Speak at 2013 Social Mood Conference

This April 13 in Atlanta, Gallup Partner Jon Clifton and Senior Consultant Joe Daly will present their research at the 3rd Annual Social Mood Conference.

Recently, Clifton spoke with us about the World Poll and how their research findings correlate with real-world events. Read the Q&A below:

Socionomics Institute: You and your Gallup colleague Jon Daly track behavioral economic indicators in more than 150 countries. Please tell us about the World Poll “

Jon Clifton: Sure… Leaders around the world were looking for additional ways to quantify the human condition. There are a lot of leaders who know now that you can’t use GDP as a proxy for the human condition. You need something else.

SI: So what is the answer, according to Gallup?

Clifton: We knew that “something else” was going to be well-being. The way that we define well being is: “How people evaluate and how people experience their lives.”

… There are two simple evaluative questions that open up our surveys all over the world:

1. Based on a scale of 0 to 10, 0 being the worst possible life and 10 being the best possible life, where do you stand today?
2. Where do you think you’ll stand in the next 5 years?

And the second piece… is how people experience their lives.

SI: Is this where you get the “Negative Experience Index”?

Clifton: Yes. We found five negative emotions and five positive emotions that work particularly well around the world, and we asked people how they are doing: In an ideal world you’d have a buzzer and you’d ask people at all times of the day.

SI: In the absence of a magic buzzer, how do you go about polling people to come up with the Index?

Clifton: We say: “Please tell us about all day yesterday. Under the negative emotions, we say “Did you feel a lot of stress, sadness, anger, pain/suffering, and worry? If respondents say yes, we average those. It could be, 60% say “yes” to anger within a country, 70% say yes to pain/suffering, etc. – we take the average of those and that’s how we come up with our Negative Experience Index.

SI: And that’s where you’ve found a correlation between mood and events?

Clifton: That’s probably where we’ve seen some of the most signal strength, in terms of indexes, because that… I think, to your question, correlates with real world outcomes.

In 2010, before the Arab Spring, the number one country in the Negative Emotions Index that we looked at was Bahrain. I think it was a surprise to a lot of us, particularly because at the time their GDP per capita was so high compared to the rest of the world. What that showed us at the time is that a lot of times analysts try to explain these data through traditional economic indicators: but when you have things based on emotions you can’t.

That’s when we started seeing that these [polls] are really measuring something different. In 2011, Iraq was number one, and in 2012… my hunch is that it’ll be Syria at number one. We know exactly what’s going on in Syria right now so that’s not a surprise to a lot of people.

The top ten this year will also have a lot of countries in the Middle East and North Africa, where we always see negative emotions very high. But we also have countries like Greece and Italy that’ll probably be in the top 15 as well…

SI: This is fascinating to us, to be able to see how some of your well-being measures suggest a change in mood that precedes events. What will you and Mr. Daly present at the Social Mood Conference?

Clifton: What Joe and I will talk about is exactly how we’re measuring these things. We’ll talk about how we actually do the data collection: some of the questions we ask… and the findings. We’ll go through some of the positive emotions, some of the negative emotions and also what we’re seeing from our [additional] evaluative feeds.

Some really interesting findings come from those: things that happened before the Arab Spring, particularly with our “Thriving” metric… We’ll discuss how that probably showed a more accurate picture of the state of the human condition than a lot of the other indicators…

As I mentioned earlier, GDP per capita isn’t a proxy for the human condition. When it was established, it was established for something very specific. So when people use it for that, it’s probably being used in the wrong way. What we’ve tried to do is to get a more accurate picture…

SI: That sounds like it syncs up nicely with one of our basic premises: that events are not causal. We’re glad to hear that you’re planning to dig further. That’s big. Thank you very much for sharing and for previewing a bit of what you gents will present at the conference this spring…

Clifton: I look forward to coming down there and spending some time with you and your team.

Register now to hear more from Clifton at the 2013 Social Mood Conference >>

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This article is syndicated by The Socionomist, a publication of the Socionomics Institute, and was originally published under the headline Gallup World Poll Experts to Speak at 2013 Social Mood Conference. The Socionomist is designed to help readers understand and anticipate waves of social mood. Copyright © 2012 Socionomics Institute.

“Are you new to Aiken,” said an attractive 70-something woman with a
soft cotton accent named Sissy. We were coming out of the Willcox
Hotel. She spotted us as visitors and offered help.

She was wearing a floppy hat. She admired our hats. We admired hers.
Later, we learned that she is known locally as the “hat lady.”

“Come on. I’ll take you on a little tour.”

Elizabeth and I looked at each other… each startled. We have
traveled the world. Never before had a complete stranger ever offered to
show us around without some kind of ulterior motive.

Yesterday was a holiday. We are down here in South Carolina accompanying Elizabeth, who is doing horse competitions.

We were supposed to be in Mumbai. But we got to Dulles airport and
realized that we lacked a visa for travel to India. Seizing the
opportunity, we walked around the corner to the US Airways counter…
and took a plane to Charlotte, N.C., where a snowstorm stopped our
progress. Almost.

The plane to Augusta, Ga., was delayed… delayed… and delayed
again. Finally, we got fed up and rented a car… joining Elizabeth in
Aiken, S.C., at midnight.

Getting What You Deserve

This is just the way life is meant to be. You don’t always go where you intended to go, but you always end up where you ought to be.

Which raises a number of deep and disturbing issues. If you always
end up where you ought to be, why strive to go anywhere at all? Won’t
you still get where you were supposed to go? Surely, that wouldn’t work.

You have to try to get somewhere in life. If you don’t, you’ll never
get anywhere. If you don’t try to get anywhere, of course, you’re not
likely to get anywhere. And then, nowhere is where you ought to be…
but not where you want to be.

Are you following us, dear reader?

No matter.

In her competition on Sunday, Elizabeth won a blue ribbon.
“Eventing” it is called, with three parts: cross country, dressage and
jumping. Elizabeth won the blue ribbon because she worked on her riding
for many years. Had she not striven she would not have won. In the
winner’s box would be where she ought not be.

Effort pays off. But that doesn’t mean you always get where you want to go.

That is true in investing, too. You don’t always get what you want,
but you always end up with what you ought to get. That is, you get what
you deserve.

What’s Up With Gold?

Last week, stocks bounced around getting nowhere. But on Friday, gold sank… and seems to be heading below $1,600/oz.

Uh oh! How come, if central banks
are flooding the world with cash and credit, gold does not rise? Does
not gold anticipate inflation? Aren’t investors — especially the
central banks themselves — accumulating gold to protect themselves
from the degradation and degeneration of their money?

Apparently not.

Which merely makes the question marks bigger. Is there something wrong with our theory? Does printing press money NOT cause consumer price inflation? Is there something else important going on?

Thinking hard about these questions does not guarantee success. It
only guarantees that we will not DESERVE to lose money… which is the
best we can do.

Back in the Carolinas…

Still, yesterday was a national holiday. We didn’t think about it
too much. And we weren’t in Paris. We weren’t in Manhattan or London.
We were in the Carolinas… and Sissy was just being friendly.

Aiken is a horse town. It’s warm in the winter months and not too
hot in the summer. It attracts sportsmen from the northern states,
including those from Maryland. Back at the turn of the century, rich
people came down on the train from New York and built mansions. They
established horse trails… parks… and elegant hotels.

Sissy showed us where the Whitneys and the Graces lived. She showed
us the court tennis building (one of the oldest in the country) and the
new train station (rebuilt on the old model).

We saw the tunnel of live oak trees over East Boundary Street… and the new theater.

“This used to be cotton fields, when I was a child,” she explained.

“My people worked in the textile mills,” she said, pointing out the
modest house where she was raised. “I met my husband in high school.
His family had a family that went back to the original land grant.

“I’ve seen a lot of changes in this town. And now look at all these
‘for sale’ signs. We got hit hard by the financial crisis. It could
take years to recover… and maybe it will never be the same.”

Regards,

Bill

http://www.billbonnersdiary.com/

By Lucy Cain

If you have ever been part of a forex currency trading platform, you know how intense it can get. Many times you find yourself starring at a screen with graphs and watching the lines go up and down until you are ready to make your profit or cut your loss. Recently, IronFX has partnered with the world’s leading provider of social trading to liven up the way you “stare” at the screen.

ZuluTrade was launched in 2008 as a peer-to-peer online trading network. The way it works is simple. It receives compensation for each trade made from brokers connected to their network. Clients can connect with one another and discuss strategy as well as allowing investors to mirror the trades of professional investors, something Warren Buffett would never allow. The concept is basically Facebook for Forex. They show you trades of professionals as well as those who are the highest performers. A quick check of their website while writing this article shows that the top 5 traders for the day had profited approximately $475K.

So what does ZuluTrade have to do with IronFX? IronFX traders are now allowed to be part of the ZuluTrade platform and take part in all of the benefits of the social trading platform. Users of IronFX can now customize any of the 55,000 traders’ strategy in the network including receiving copies of the experts’ trades directly into their account. In a 2012 press release, ZuluTrade CEO Leon Yohai stated, “IronFX is a perfect fit with ZuluTrade as its devotion on developing in-house solutions customized to each client’s individual needs, matches our own enthusiasm for developing and advancing the most sophisticated Forex autotrading platform available. Furthermore, IronFX’s “One Account, Ten Platforms” trading functionality for maximum efficiency is on par with ZuluTrade’s “One Platform, 60 Brokers” offering. We believe that this collaboration will be beneficial for everyone, but mostly for IronFX and ZuluTrade users.”

By partnering with ZuluTrade, IronFX is furthering their goal of bringing technology and transparency into the online trading platform. They have always been behind cutting edge technology that they develop in-house specifically based on their client’s needs. They seem to focus more on retaining their current clients than they do on churning out maximum profits. It shows in the recent platform upgrade which made it easier for client’s to invest and keep track of their positions and trades. Pursuing this goal has caused them to become one of the fastest growing FX brokers and they have the awards to prove it. In addition to winning several awards from World Finance Magazine for being the fastest growing FX provider, they also can boast of China Financial Awards as best FX service provider and European CEO Awards as Fastest Growing FX Broker.

So what’s next for these two companies? Well, ZuluTrade simply will keep doing what they do best. For IronFX, they are securing their future in the financial service industry by continuously improving their usability and transparency.

About the Author

Lucy is a graduate of the School of Business at Southwest Florida College. She is originally from Austin, Texas but spends her time traveling around the country. She has been a freelance writer since 2011 and her specialty is in forex currency trading and binary option trading. She has worked in the finance field since 2008 and has written numerous articles on alternative forms of investments.
See more articles by Lucy Cain

By www.CentralBankNews.info

By Lucy Cain

Binary options have not been around for all that long. After the SEC ruled that they could be traded in the United States, several binary option brokers sprung up offering them to customers in the U.S. It is a relatively new industry and one that investors have flocked to as an alternative to conventional stock trading.

For those not already familiar, binary options are simply an option that has a fixed payout as opposed to a payout determined by the magnitude by which the underlying security is traded. If you look consider a regular stock option, the price is determined by how much the stock goes up or down. For instance, Wal-Mart stock could fluctuate a few dollars per day which would also fluctuate the value of any option for Wal-Mart stock. A binary option is fixed and pays when a stock hits a specific performance indicator. For example, you could purchase a binary option that pays $100 when the price of Wal-Mart stock hits $50 per share. The value of the binary option is valued at $100 once Wal-Mart hits that specific price point.

Some of the brokers who offer binary options are regulated by CySEC,  the financial regulatory arm of the Cyprus government. Others are fly by night companies who spring up and are gone as quicker than they arrived. Binary options have grown in popularity and some of the original companies have stood the test of time (a short time) to become established with investors and others in the world financial market. For those who want to remain a player in the binary options market, they must be willing to be transparent.

That is exactly what some brokers are currently doing. In January, one of the world’s largest trading companies, Banc de Binary, announced that they will seek to become a regulated broker in the United States. There is currently no official regulations for binary option brokers in the United States. According to their CEO Oren Laurent, they are working with the United States Commodity Futures Trading Commission to become a regulated broker. In fact, Banc de Binary was the first standalone binary option broker to be licensed by CySEC and has always been on the forefront of transparency.

So what exactly is the future of binary options? For an industry that has only been around for four to five years and has increased in popularity at one of the fastest paces than any other traded commodity, it is safe to say that they will be around for years to come. Although regulated in many countries, the top companies will be those who seek regulation everywhere it is available. For some such as Banc de Binary, seeking regulation where it is not even offered is a clear sign of transparency and a clear indicator that they want to be part of the future of binary option trading.

About the Author

Lucy is a graduate of the School of Business at Southwest Florida College. She is originally from Austin, Texas but spends her time traveling around the country. She has been a freelance writer since 2011 and her specialty is in forex currency trading and binary option trading. She has worked in the finance field since 2008 and has written numerous articles on alternative forms of investments.

 
See more articles by Lucy Cain

By Chris Vermeulen, TheGoldAndOilGuy.com

Gold and silver along with their related miners have been under a lot of selling pressure the last few months. Prices have fallen far enough to make most traders and investors start to panic and close out their long term positions which is a bullish signal in my opinion.

My trading tactic for both swing trading and day trading thrive on entering and exiting positions when panic trading hits an investment. General rule of thumb is to buy when others are extremely fearful and cannot hold on to a losing position any longer. When they are selling I am usually slowly accumulating a long position.

Looking at the charts below of gold and silver you can see the strong selling over the past two weeks. When you get drops this sharp investors tend to focus on their account statements watching the value drop at an accelerated rate to the point where they ignore the charts and just liquidate everything they have to preserve their capital. A few weeks ago I posted my outlook on precious metals which seems to be unfolding as expected: http://www.thegoldandoilguy.com/articles/precious-metals-miners-making-waves-and-new-trends/

Gold Bullion Weekly Chart:

The price and outlook of gold has not really changed much in the past year. It remains in a major bull market and has been taking a breather, nothing more. Stepping back and reviewing the weekly chart it’s clear that gold is nearing long term support. With panic selling hitting the gold market and long term support only $20 – $30 dollars away this investment starts to look really tasty.

But if price breaks below the $1540 level and closed down there on a weekly basis then all bets are off as this would trigger a wave of selling that would make the recent selling look insignificant. And the uptrend in gold would now be over.

Silver Bullion Weekly Chart:

Silver price is in the same boat as its big sister (Yellow Gold). Only difference is that silver has larger price swings of 2-3x more than gold. This is what attracts more traders and investors but unfortunately the masses do not know how to manage leveraged investments like this and end up losing their shirts.

A breakdown below the $26.11 price would likely trigger a sharp drop back down to the $17.50 level so be careful…

Gold Mining Stocks – Monthly Chart:

If you wanna see a scary chart then look at what could happen or is happening to gold miner stocks. This very could be happening as we speak and why I have been pounding the table for months no to get long gold, silver or miners until we see complete panic selling or a bullish basing pattern form on the charts. We have not seen either of these things take place although panic selling is slowly ramping up this week.

There will be some very frustrated gold bugs if they take another 33% hair cut in value… You can view some of my trading charts, setups and analysis free at my stockcharts.com list. Be sure to vote for me chartlist each day so I know its of value: https://stockcharts.com/public/1992897

Precious Metals Trend and Trading Conclusion:

In short, the precious metal sector remains in a cyclical bull market. That being said and looking at the daily charts the prices have been consolidating and are in a down trend currently. Until we see some type of bottoming pattern or price action form it is best to sit on the side lines and watch the emotional traders get caught up and do the wrong thing.

The next two weeks will be crucial for gold, silver and miner stocks. If metals cannot find support and close below the key support levels things could get really ugly fast. If you would like to receive my daily analysis and know what I am trading then check out my newsletter at: www.TheGoldAndOilGuy.com

Chris Vermeulen

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 21 Feb, 08:00 EST

The PRICE of GOLD bounced off a fresh 7-month Dollar low on Thursday morning in London, rising after their worst 1-week drop since May 2012 amid what one analyst called “a proper sell-off on the precious metal markets.”

Prices for Eurozone gold investors fell to a 16-month low at €1172 per ounce, despite a further 1¢ drop in the single currency to its own 6-week low of $1.3166.

European stock markets meantime fell hard after worse-than-expected manufacturing data.

Asian equities closed 1.4% lower as the People’s Bank of China withdrew liquidity pumped into the money-market ahead of last week’s Chinese New Year holidays.

Minutes from the US Federal Reserve’s latest policy meeting, released on Wednesday, “suggest that the quantitative easing programs could be cut,” reckons UBS Equities global-commodity analyst Tom Price, speaking to India’s CNBC-TV18 today.

“That means that primary driver – inflation – is just not there to support the gold price.”

Rising prices on 10-year US Treasury bonds today pushed their interest rate below 2.00% for the first time in a week, an all-time low when first hit in September 2011.

Overnight in Asia, gold prices hit their lowest Dollar level since 11 July 2012, dipping beneath $1557 per ounce and down 6.3% from the start of this month.

In the world’s two biggest gold-consumer nations, Indian gold prices also hit a 7-month low, while gold traded in Shanghai hit its lowest Chinese Yuan level since May last year.

Silver meantime hit a 6-month low of $28.56, down more than 10% from the start of February.

Platinum prices this morning traded 4.3% below Wednesday AM’s London Fix.

Palladium prices – which rose by nearly one-third between Nov. and Feb. – today stood 6.2% lower from yesterday morning.

“The continued outflow of medium term and macro money from bullion [has] intensified,” writes Moudi Raad at refinery group MKS Pamp in Geneva.

“Gold is struggling to find the marginal buyer right now,” says Credit Suisse’s Tom Kendall, who announced the End of an Era for Gold at the start of this month, with gold prices having peaked in mid-2011 and so looking “significantly overvalued [now] the acute phase of the global financial crisis is probably over.”

“The problem with gold and silver,” says Citigroup analyst Jon Bergtheil in a new report, “is that they are very ‘long cycle’ metals, and there is a significant risk that we have recently seen the peak of such a long cycle.”

Bergtheil raised Citigroup’s 2012 and 2013 price forecasts in October 2011, a month after gold prices hit their current all-time Dollar high of $1920 per ounce.

“If [gold and silver prices] ARE in the process of peaking now,” says the latest Citigroup view, quoted by Barron’s, “then history suggests that they could go into hibernation for a very long time.”

Wednesday saw trading volumes in US precious-metals contracts jump dramatically, notes Commerzbank.

Turnover in gold futures was 67% higher than the 6-month average, with silver volume at 160%, platinum “nearly double” and palladium “more than three-fold”.

Trading in the oil market was also “extremely high”, says Eugen Weinberg’s team in Frankfurt, with the plunge in energy prices “suggest[ing] that financial investors, and allegedly even a hedge fund, have liquidated long positions.”

The world largest exchange-traded silver trust fund, the iShares Silver ETF, meantime added 18 tonnes to the 10,522 already backing its shares on Wednesday.

But holdings in the $70 billion SPDR Gold Trust (ticker: GLD) however fell at the fastest pace since 24 August 2011, down by almost 21 tonnes to 1299 tonnes.

The first drop below 1300 tonnes in 5 months, that fall took total holdings in the GLD 4% below December’s record.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.