Tag Archives: market updates

Oil price near $95 ahead of US jobs report

7 Jun

Oil rose modestly Friday ahead of the release of a key US jobs report that traders will examine for clues to the health of the US economy.

Benchmark oil for July delivery was up 14 cents to USD 94.90 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract gained USD 1.02 to finish at USD 94.76 a barrel Thursday.

The US Labor Department will release its employment report for May later in the day. A good result is expected, following a drop in jobless claims reported on Thursday.

Oil prices were also being supported by a weaker dollar and a bigger-than-expected drop in crude inventories reported by the US Energy Department and the American Petroleum Institute for the week ending May 31, said Matt Basi at CMC Markets in a commentary.

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Brent crude, a benchmark for many international oil varieties, rose 17 cents to USD 103.78 a barrel on the ICE Futures exchange in London.

In other energy futures trading on the Nymex:

Wholesale gasoline was steady at USD 2.851 a gallon.

Heating oil added 0.8 cent to USD 2.879 per gallon.

Natural gas dropped 0.8 cent to USD 3.819 per 1,000 cubic feet.

Silver and Gold – the imploding bubble

3 Jun

The gap between fundamentals and pricing continues to widen as value investors awaken to the speculative potential of silver. Instead of irrational euphoria and widespread participation, there was irrational despair in the form of generally poor sentiment from the outside looking in.

Recent trading in silver and gold has shown the inverse of patterns consistent with a speculative frenzy.

Instead of retail investors buying into a rising market, steady and massive accumulation has been noted on dips.

This was happening long before the April crash in precious metal prices. This is the strongest form of accumulation, because it is mostly free from emotion.

No Fear or Greed, Just Buying

The emotional nature of the market is unusually strong. No panic selling out of fear arose. Instead, the price takedown in the paper futures market was blatant and commonplace.

No greed factor was noted, as buyers continue to come into the physical market at the lower prices, despite relatively high premiums for buying physical metals.

The gap between fundamentals and pricing continues to widen as value investors awaken to the speculative potential of silver. Instead of irrational euphoria and widespread participation, there was irrational despair in the form of generally poor sentiment from the outside looking in.

Again, those who accumulate at this stage are the strongest hands, made up of users and value or contrarian investors who see through the enormous facade of the paper silver market with mostly dispassionate eyes.

These investors are a testament to silver’s tendency to remain a monetary asset, a fact that continues to worry central bankers.

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Is the CME Fueling its Own Demise?

The CME and its big commercial traders have been cheating the rest of the market in the name of liquidity.

In a real blowout, most of the selling happens in a frenzy at the bottom. The lower the price goes, the more metal will become available as the weak hands panic. The problem with this is that the weak hands just do not have any physicalto sell, as the strong hands stand ready to buy it up.

Some physical buyers will unload some or all of their holdings, but most long term precious metal investors will see the latest sell off charade for what it is: just another opportunity to add to their positions.

All of the reasons they bought these metals to begin with continue to be confirmed. The only real danger to the fundamentals (and the situation is probably past the point of repair in that regard) are fiscal changes that negate the necessity of money printing. This is highly unlikely to happen in the present situation.

For the first few years of Quantitative Easing, one could perhaps have argued that the money stayed locked up in the banking system. Now the huge amount of money being created is being spent on food stamps and the like, feeding right into the economy.

The result is a decoupling at the very least, in the absence of an outright currency collapse.

Maintain Two Markets

Two markets now seem to be operating, and the pricing difference between them may ultimately widen considerably. One is the paper futures market for the traders, while the other is the physical market for the users and retail investors.

Could this paper-physical price divergence happen without the imposition of capital controls, the banning of silver and gold ownership or other forms of confiscation?

Well, it is already happening. The big futures market players have been orchestrating the most egregious, uneconomic, selling cascades at will almost daily in front of everyone without any obligation to deliver physical metal, but no one seems to care.

This has brought the paper futures market just a flap of the proverbial butterfly’s wings away from default and panic. Controls imposed in the midst of such a crisis would only serve to further inflame the panic. A black market would develop immediately.

Just think of all the investors who bought their metal with cash, or who otherwise went undetected. It would be a nightmare going after these people to take away their metal. The relatively small silver market would be only be $500 billion in sizeeven at a price of $500 per ounce if silver inflated by more than a factor of ten.

To put this in perspective, that vastly inflated silver market would still be far less in size than the annual Federal budget deficit and is not even as large as the big bailout from 2008.

The Key is Dealers and Producers

Producers must be willing to hold back their stocks to see the prices really start to rally.
Miners are the last holdout, and they have largely remained silent about the manipulation of their product, at the expense of their shareholders.

Perhaps they are bought and paid for by the very banks that provide their cash flow accounts and financing, since it is these same banks that also profit from the ongoing price suppression.

Ultimately, these big dealers and their purported non-for-profit customers will have to pay higher prices to cover their massive shorts.

Moving out of the Dollar into Gold and Silver

27 May

Remember, only fifteen or so primary silver mines remain after decades of artificially low prices created by what, in effect, was a massive lobby to off load cheap silver into the market and the use of paper futures contracts that can be easily manipulated by money printers to maintain low commodity prices.

By Dr. Jeffrey Lewis
In terms of silver’s investment demand, the bullish metric at Sentimenttrader.com is currently at 39 percent. This is a low point that has not been seen since the mid-1990’s.

Furthermore, The Hulbert Gold Stock Newsletter Index or HGNSI recently fell to a new low of 43.8 percent, which is a record by a long shot. What that low reading indicates is that, of the stock newsletters that include coverage of mining stocks, 43.8 percent of them are now recommending short positions in gold stocks.

If these indicators are not yet signaling a bottom in precious metal prices, it really has to be close.

These lows are further exacerbated by undervalued market prices that are pushing suppliers of precious metals to sell their stocks below the current cost of production, there by resulting in further destruction of an already devastated mining sector.

Remember, only fifteen or so primary silver mines remain after decades of artificially low prices created by what, in effect, was a massive lobby to off load cheap silver into the market and the use of paper futures contracts that can be easily manipulated by money printers to maintain low commodity prices.

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The macro confidence picture

Confidence dipped considerably in the wake of the MF Global disaster, Peregrine Financial bankruptcy, and the LIBOR scandal. Confidence in the Obama administration is now also challenged by recent controversies, such as the IRS’s added tax scrutiny for conservative groups and the Justice Department obtaining several months of phone records for Associated Press journalists.

Failing institutional confidence often leads to political turmoil, which in turn can spark up the hyper inflationary tinder box. Exceptionally loose monetary policy is the set up for this scenario, but a political crisis will probably trigger the loss in confidence that will set inflation alight.

Despite a notable preference among the mainstream investing public for looking the other way, rather than facing such coming financial disasters head on, confidence in financial institutions is slowly being chipped away at by the inconvenient reality of what a fractional reserve banking really means for the security of one’s wealth.

This worrying backdrop is further exacerbated by the present state of currency warfare, as countries print money to debase their paper currencies, as well as by regular scandals and what appears to be a false equity rally based on little more than thin air.

Moving out of the Dollar into Gold and Silver

A trend has been established toward major countries like China off-loading huge dollar-denominated foreign exchange reserves. Few people know much about this because no official announcement has come out since 2009, although China has very likely accumulated a large quantity of gold.

Also,China has been a net importer of silver for a few years now, which was a major turn of events. It now seems safe to say that the BRICS are attempting to buy whatever hard assets they can with the substantial amount of intrinsically worthless U.S. Dollars they have accumulated without upsetting the commodities market and/or fomenting a political crisis. Nevertheless, recent tensions between Japan and China seem like a classic example of how this could be unavoidable.

Also, the united States have been, and will likely continue to be, very protective of their own industries. This coddling of U.S. businesses partly involves incubating and protecting them with tariffs, but this artificial life support is also being done to prevent the virtually inevitable flood of paper Dollars from returning home.

In other words, it would not be welcome for China to start purchasing large portions of major U.S. producers or even buying them outright. Of course, you can be quite sure that the Chinese are doing that just about everywhere else, including buying companies located in Australia, Africa, South America and the Middle East.

What’s fascinating about this process is that the Chinese have been setting up swap or currency trade agreements whenever they go shopping for assets among the places mentioned above. This seems like the real fly in the ointment, largely because it is the U.S. Dollar’s predominant and historical reserve currency status that provides the last remaining leg of support underpinning its value.

Mining production and supply factors

The great challenge facing miners involves verifying and proving enough ore through drilling that they are finally able to risk the construction, mining and stockpiling of overburden that is required before they finally turning the rocks they mined into tangible, real income and long lasting storable value.

Another persistent worry for miners operating in foreign jurisdictions, as many of them need to, is that their findings and operation may be nationalized once production starts in earnest. Also, if the foreign country fails to provide adequate police protection for safe operations, the end result may be nothing at all or just a big deficit where a profit was anticipated and money was spent.

Furthermore, inflation can be a two edged sword since mining and processing costs tend to go up faster than the end price of finished gold and silver does. Delivery delays for key construction and production supplies and equipment also start to arise when prices are moving sharply upward.

Most miners and investors would probably rather see a gradual long term price rise in the precious metals than all of these sudden up and down price swings, but those significant price swings have now become a fact of life in this business that miners simply have to deal with.

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Gold down 1% to near 2-week low on strong dollar

13 May

Gold fell more than 1 percent on Monday, holding near its weakest level in two weeks, as the dollar firmed against other currencies on signs of an improving US job market and as holdings in exchange-traded funds slipped again.

US labour market data has pointed to a steady recovery trend in the world’s largest economy, fuelling speculation the Federal Reserve could scale back its aggressive monetary stimulus aimed at supporting growth.

Gold fell USD 17.10 an ounce to USD 1,430.60 by 01.59 GMT, nearing Friday’s low of USD 1,420.61, its weakest since April 24. Gold has fallen more than 14 percent this year as investors switch funds into a rallying equity market and the dollar.

“So far, nothing in the market bodes well for an upside in gold. Gold needs to break above USD 1,487 to show an upward correction,” said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

“CFTC data shows an increase in bearish bets in gold, so that sends another bearish signal to retail speculators, who have no idea what the funds’ view on gold is. There’s probably some technical selling because we’ve broken below USD 1,440.”

US gold was at USD 1,429.80 an ounce, down USD 6.80. Hedge funds and money managers trimmed their bullish bets in gold futures and options in the week to May 7 on weaker bullion prices and outflows in gold exchange-traded funds, a report by the Commodity Futures Trading Commission (CFTC) showed on Friday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), said its holdings fell 0.24 percent to 1051.65 tonnes on Friday after they rose slightly on Thursday. The holdings were within sight of a four-year low.

Cash and US gold futures plunged to around USD 1,321 on April 16, their lowest in over two years, after worries about central bank sales and a drop below USD 1,500 led to a sell-off that stunned investors, prompting them to slash ETF holdings

Asian shares eased on Monday with sentiment hit by selling in commodities due to a strong dollar, which rose to a fresh 4-1/2-year peak against the yen on the back of growing confidence in the US economy.

Bullion hit an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank’s money-printing to buy assets would stoke inflation.

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MCX SILVERM down 32% in June series

8 May

MCX SILVERM June contract was trading at Rs 44856 down Rs 30, or 0.07 percent, at 11:07 hours IST. The SILVERM rate touched an intraday high of Rs 45020 and an intraday low of Rs 44842. So far 5797 contracts have been traded. SILVERM prices have moved down Rs 21429, or 32.33 percent in the June series so far.

MCX SILVERM August contract was trading at Rs 45563 down Rs 41, or 0.09 percent. The SILVERM rate touched an intraday high of Rs 45750 and an intraday low of Rs 45563. So far 192 contracts have been traded. SILVERM prices have moved down Rs 11599, or 20.29 percent in the August series so far.

MCX SILVERM November contract was trading at Rs 46742 up Rs 140, or 0.30 percent. The SILVERM rate touched an intraday high of Rs 46742 and an intraday low of Rs 46742. So far 1 contracts have been traded. SILVERM prices have moved up Rs 936, or 2.04 percent in the November series so far.

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Gold rises more than 1% to near two-week high

26 Apr

Cash and US gold futures rose more than 1 percent to the highest since April 15 above USD 1,484 an ounce on Friday, extending Thursday’s gains after a recent plunge in prices triggered bargain hunting and a surge in physical buying.

Premiums for gold bars soared to multi-year highs in Asia after a spate of physical buying ran down supplies, with dealers in top consumer India expecting a surge in imports this month.

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Source: Moneycontrol

Indian Buyers Snap up Gold: April Imports Seen Rising

23 Apr

Premiums for gold bars soared to multi-year highs in Asia on Tuesday after a spate of physical buying led to supply constraints, with dealers in top consumer India expecting a surge in imports this month.

Purchases of gold bars, coins, nuggets and other products picked up pace after a brutal selloff drove down spot gold prices to their weakest in more than two years at around USD 1,321 last week. A rise of more than USD 100 since then has failed to dent buyers’ appetite for the metal.

“People are stocking for weddings and they will last till July,” Kumar Jain, vice-chairman of Mumbai Jewellers Association. “Imports would had been more if supply was not an issue,” said Jain, who expects shipments to India to double to 70 tonnes in April from a month ago.

In Mumbai, premiums for gold bars jumped to their highest in two years at USD 10 an ounce to the spot London prices due to rising demand. Gold jewellery forms an essential part of gifts at Indian weddings and festivals.

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“Imports have been phenomenal since April 15. Banks are getting the lion’s share in this profit,” said Daman Prakash Rathod, director with MNC Bullion, a wholesaler in the country’s southern city of Chennai.

In other parts of Asia, premiums for gold bars rallied to their highest since late 2008 in Singapore and touched an 18-month peak in Hong Kong.

“I think we can say there’s no immediate gold coming into Hong Kong for the time being,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

“If you have time to wait, maybe they can deliver it to you in one or two weeks.”

Hong Kong dealers were charging gold bars at premiums of USD 3 an ounce to the spot London prices, their highest since October 2011. The former British colony is the centre for bullion trading in East Asia and China’s main source for gold imports.

Gold bars were quoted as high as USD 3 an ounce in Singapore — a level last seen in October 2008, with dealers witnessing steady buying interest from local buyers, Indonesia as well as India.

Singapore and Hong Kong dealers get their supply from Japan and Europe, where suppliers were also struggling to cope with demand from Asia.

But in Tokyo, premiums slipped to 50 to 75 cents an ounce to the spot London prices from USD 1 last week as buyers paused for breath.
“The market has come down a little bit. Last week, there was a huge demand for gold from the general public, but we don’t see much this week,” a dealer in Tokyo said.

Gold, which has dropped about 15 percent this year, has been caught in a tug-of-war between physical buyers seeking bargains and wary investors cutting exposure to it on worries about central bank sales and prospects of easing inflation.

Investors were still licking their wounds after spot gold posted its biggest-ever daily loss in dollar terms last Monday, taking many ardent gold investors and bulls by surprise.

Source: moneycontrol