By Investment U
Barron’s reported this week that the Trading Commission’s weekly “Commitments of Traders” report – essentially commercial shorts on gold by gold miners, which has been the single-most accurate measure of gold’s price movement – is more bullish now than when gold was $300 an ounce. The highest bullish indication in 11 years!
Despite having dropped like a rock for most of 2013, demand for gold is exploding and it is giving off signs of another move up.
There has been a big increase in demand in Asia for physical gold. Edmund Moy, chief strategist at Morgan Gold, said in a recent MarketWatch article that lower gold prices have spurred a huge shift of physical gold from the U.S. to Asia, China especially.
And, according to Mark O’Byrne, of Gold Core, there was a 55% drop in gold inventories in one week in July at Brinks, one of the Comex’s storage companies.
Gold inventories are being exported to China at a rising rate, gold coins are at premiums, and there is a huge premium on the Shanghai Gold Exchange as well as record deliveries.
In the first six months of 2013 the Shanghai Exchange supplied 1,098 metric tons of gold as compared to 1,139 tons all of last year. O’Byrne says the market has not yet recognized the significance of this demand shift.
All of this gold has to be going somewhere!
And, this increased demand is coming at a time when the world’s largest producers of gold are announcing production cutbacks.
Based on China’s and India’s increasing demand, and lower worldwide production, O’Byrne is looking for a new bull market in the yellow metal by the end of the summer.
If I have learned anything about gold over the last 30 years, it is that it makes absolutely no sense… it sometimes appears to trade opposite the dollar, but that changes too… and it runs when everyone is looking somewhere else.
Watch gold!
The EU Is Climbing Back
Next up, speaking of bottoming and moving up, Barron’s says the EU is looking much healthier. They reported this week that economic indicators are signaling improving conditions.
Their purchasing managers index hit a 16-month high with marked improvements in Ireland, Spain, France, Italy and the Netherlands.
Business confidence improved in Germany in May and consumer confidence in Italy hit its highest level in a year.
Germany, the U.K. and Ireland are expected to see the strongest gains in 2014. Ireland, according to Barron’s, could see a 2.2% growth spurt in 2014. And Italy, Spain and Portugal, the weakest of the Union, could also exit the recession in 2014.
Nigel Bolton, the CIO and head of EU Equities at BlackRock in London, said the EU is particularly attractive, and fund flows into EU equities have risen for three consecutive weeks.
Analysts expect consumer-driven and hotel stocks to perform well in the next 12 months, and, on a P/E basis, EU stocks as a whole are cheaper than both U.S. and Japanese equities.
The unaddressed internal problems in France and Italy – the second- and third-largest economies in the EU – will still be a drag on the recovery. But ECB Chairman Mario Drahgi’s pledge to do whatever is necessary to defend the euro will go a long way to prevent any sovereign debt crisis, which has been the biggest impediment to a solution to the five-year dip.
The ECB umbrella appears to be working and that means opportunity for the contrarian-minded.
The EU!
The “Slap in the Face” Award: Radio Silence
This one will kill you.
The U.S. Marshal Service has a problem.
The Marshals are responsible for protecting judges, who put very dangerous people in jail – and these people have very dangerous friends who aren’t in jail yet. And they are also responsible for protecting people in the witness protection program, all of whom are on death lists of our less-admired citizens.
It seems the way these sheriffs communicate very sensitive, life-and-death messages within their agency is by encrypted radios. Encrypted means even if you can monitor their frequencies the transmission comes across garbled and unintelligible, so they are secure.
Well, it seems about 2,000 of these super-secret radios are missing. But wait: The higher-ups in the agency say they aren’t missing, not really, it’s just that no one knows where they are. That’s according to a recent Journal segment.
They may have been lost or given to other law enforcement agencies, but they aren’t missing. It’s just a case of poor recordkeeping, not missing radios.
Well, that sounds good except for the fact that one of these not-missing radios recently showed up for sale on eBay.
And, it seems after the Journal started requesting information under the Freedom of Information Act about this story, there was a directive within the U.S. Marshals to answer the requests by phone only, not email – and let’s hope not on the encrypted radios.
Article By Investment U
Original Article: Keep an Eye on Gold
