Tag Archives: gold news

Cheap Gold and Silver prices – the deal of a lifetime?

20 Jul

Eerily, perhaps the worst precious metals market sentiment currently exists that has been observed since the early 1970’s.

mcx gold silverThe gold and silver markets have fallen dramatically in the wake of the FOMC signaling an end to its controversial Quantitative Easing or QE programs. The pricing in of such FedspeakQE taper-talk has also triggered a yield spike in southern Europe that could deepen that region’s existing debt crisis.

Furthermore, sharply rising interest rates have resulted as billions of investors exit perhaps the largest financial bubble ever seen. The end of cheap real estate refinance has finally arrived as mortgage rates are now approaching five percent.

Rising government bond rates mean more money that will increase the chances of stealth inflation. The Fed acting to crush the effects of inflation may even lead to more money printing.

Other background factors

In addition, rising oil prices have been cutting in to already lofty equity valuations, as fallout from the “Black Swan” in the Gulf of Mexico expands. Gasoline prices are already rising.

The public has also been caught largely off guard by embroiling social unrest in various parts of the world. This dissatisfaction is indirectly the result of exporting inflation that is collateral damage from currency depreciation wars.

A dead precious metals mining sector has been cutting off any “perceptual” idea of supply as paper metal prices are now well below the cost of production. New supply matters little for gold. For silver, by the time the sector catches up with demand, there will be no silver left.

Precious metal prices suffer despite bullish fundamentals

Offset by an unprecedented and record breaking surge in physical demand for silver, from silver coins to international demand. Yet, eerily, perhaps the worst precious metals market sentiment currently exists that has been observed since the early 1970’s.

Bullion banks are currently long buyers by every indication, yet they are still maintaining a concentrated short position in the futures market. This could be an intentional effort to suppress physical metal prices by selling paper so that they can accumulate real metal more cheaply.

In short, it is unfathomable how low the precious metals markets are by any measure. Technically, the market could still go lower, but does this change the likelihood that investors have now been presented with what seems to be the precious metal buying opportunity of perhaps multiple lifetimes?

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Hours before the Minutes, Gold flat

10 Jul

Perpetual gold bulls liken Ben Bernanke, the US Federal Reserve Chairman, to one who delivered the bull market in gold with one hand and grabbed it back with the other; 2011 had seen gold futures rallying all the way to $1900 levels on QE steroids only to dip below the $1200 levels very recently.

Gold updates

Past two days had seen a slight uptrend in gold, marked by buying at lower levels and some short covering. However, hours before US Federal Reserve is about to come out with the minutes of the Federal Open Market Committee meet, which held in June, the futures are trading flat.

FOMC meeting minutes are scheduled to be released by 11.30 PM IST. This would be followed by a speech of Ben Bernanke sometime around 1.40 AM IST, Thursday.

Gold on the Globex platform of Comex for delivery on August 13 was seen trading at $1,245.05/oz, a loss of $0.85 or 0.07% as of 11.04 AM IST. Gold on India’s MCX for delivery on August 05 was seen trading at Rs.26008, almost flat.

It looks to be a wait-and-watch mode as far as gold investors are concerned.

Perpetual gold bulls liken Ben Bernanke, the US Federal Reserve Chairman, to one who delivered the bull market in gold with one hand and grabbed it back with the other; 2011 had seen gold futures rallying all the way to $1900 levels on QE steroids only to dip below the $1200 levels very recently.

The QE measures or Quantitative Easing measures—bond buying by Federal Reserve—had made gold rally to insane levels, and when June 2013 saw Bernanke announcing tapering of the measures provided the job market recovers, sent gold to a nadir.

It is the FOMC that takes a collective decision on whether or not to continue with the QE measures. It is worthwhile to note that positive job data that came in recently has taken the glitters off the eyes of QE advocates.

“The U.S. dollar is still rallying and Treasury yields are still trying to find a top. It’s still a pretty negative environment for gold.” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore to Bloomberg News.

Besides, the rout in the currencies of emerging markets has added to Dollar strength.

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