Is Silver Pricing

Is Silver Pricing In The Next Monetary Supernova, Or Will It Be The Cause?

By Jeffrey Lewis

If the pricing in the world’s commodity and financial markets accurately reflected anything but the culmination of decisions made by high frequency trading systems, then the recent price action in the silver market might have something meaningful behind it. In an alternative parallel universe, the recent rally in silver might actually be ‘pricing in’ the next major monetary event.

The Fed’s second round of quantitative easing was announced on November 3, 2010. Nevertheless, the price of silver had failed to break through the psychological $20 level by mid-September of that year, after having been stuck trading around the $18 level for what had seemed like an eternity to most traders.

The Technical Picture Shows Silver Approaching Key Trend line

The series of charts below show silver’s price action over each year from 2009 to date. In recent months, silver has been consolidating within what looks like a descending triangle pattern that is now approaching its apex.

Silver’s price has also just pushed above a long-term downtrend line that forms the declining top line of this triangle pattern, which is drawn through the successive highs seen on April 24th, 2011 and February 26th of this year. If its current $30.13 level is broken convincingly to the upside, this trend line will then provide support for a rally even higher in silver.

What Does This Silver Price Action Signify?

Although no one really knows where the price of silver is headed in the short-term, the recent near-term trend has been quite bullish for silver. As much as it feels as though it is about time for silver to make a substantial move, most of you should be pre-conditioned for what might come about as early as tomorrow or next week.

Sentiment in the silver market has been soft for many months, and it will probably remain fragile over the coming month. Furthermore, open interest in silver contracts has increased steadily; even as open interest in gold futures has fallen. In addition, the net short of the four largest banks has increased as well. This means plenty of room exists to trigger a sharp sell-off, as the market has seen before.

Although the price of silver will someday pass through its fair value based on supply and demand fundamentals, it is unlikely that this appreciation will happen gradually or in an orderly manner.

Any meaningful upward trend in silver will surprise everyone, including those of us who have been studying and following the day-to-day price action and news in silver for years. While it is difficult to not feel optimistic about silver in the short-term, since for the price of silver to take off without any news feels quite constructive. Nevertheless, no one really knows.

Continue Reading Article At Seeking Alpha

Gold steadies…

Gold steadies after stimulus hopes spark 4-1/2 month high

By Jan Harvey

LONDON | Mon Aug 27, 2012 7:26pm IST

(Reuters) – Gold prices hit their highest since mid-April on Monday, buoyed by speculation that the U.S. Federal Reserve may be set to unveil another round of monetary stimulus, but then steadied on caution ahead of a key central bankers’ meeting later this week.

In platinum, world No.3 producer Lonmin (LMI.L) LONJ.L reported violence spreading to more of its operations, raising concerns of deadly unrest flaring again after 44 people were killed amid labour strife this month.

Bullion investors are keenly awaiting a gathering of central bankers at Jackson Hole, Wyoming, beginning on Friday. Previous meetings have signaled that more policy easing is in the pipeline.

In a letter seen by Reuters on Friday, Federal Reserve Chairman Ben Bernanke told a Congressional oversight panel that the Fed has room to deliver additional stimulus measures. While recent U.S. data has been mixed, economists remain concerned about unemployment and the pace of the recovery.

Further stimulus in the form of quantitative easing – the printing of new money to buy bonds – would tend to benefit gold because it would boost liquidity while keeping long-term interest rates low and stoking fears over the potential for inflation.

Spot gold hit a 4-1/2 month high at $1,676.45 an ounce before steadying in holiday-thinned trade to $1,668.91 an ounce at 1337 GMT, versus $1,669.74 on Friday. The metal rose 3.4 percent last week, its biggest one-week rise since late January.

“Volumes are rather thin so far this morning, with London out for Bank Holiday,” Alexander Zumpfe, a trader at precious metals house Heraeus, said. “Gold is on the edge to trade through the upper side of its four-month range. It needs a more convincing break of the $1,675 level before a test of $1,700 is back on the cards.

“With further monetary easing possible, the environment remains supportive. However, after last week’s relatively steep run-up, a failure of a break through $1,675 might end up in some profit-taking before the metal continues trading higher.”

On the currency markets, the euro pared early losses against the dollar to rise 0.1 percent after an influential survey of German business sentiment proved not to be as bad as some had expected. A softer dollar tends to support gold. <FRX/>

The looming recession across the euro zone kept European shares and the single currency under pressure. Moves were capped, however, ahead of the Jackson Hole meeting and possible stimulus measures. <MKTS/GLOB>

After that, the next meeting of the policy-setting Federal Open Market Committee (FOMC) on Sept 12-13 will be in focus.

U.S. gold futures for December delivery were down $1.10 an ounce at $1,671.70.

Continue Reading At Reuters

Silver Hoard Near..

Silver Hoard Near Record As Hedge-Fund Bulls Recoil: Commodities

By Nicholas Larkin - Aug 14, 2012 1:10 PM ET
At a time when hedge funds are the least bullish on silver in almost four years, investors’ holdings are near a record, siding with the analysts predicting a rally as central banks move to bolster growth.

Speculators cut bets on higher prices by 72 percent since the end of February, mirroring changes in their copper wagers, which turned bearish in May, U.S. Commodity Futures Trading Commission data show. Silver held in exchange-traded products climbed for three months and is now valued at $16.2 billion, according to data compiled by Bloomberg. Prices will average $33.02 an ounce in the fourth quarter, 18 percent more than now, the median of 13 analyst estimates compiled by Bloomberg show.

Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Photographer: Akos Stiller/Bloomberg

Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Investors and analysts are bullish on expectations central banks will do more to stimulate economies, expanding consumption and increasing the allure of precious metals as a store of value. Prices tripled as the Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011.

“Since the beginning of the year it has reacted more like a base metal than a precious one,” said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “The main negatives are still in industry. We’re waiting for more quantitative easing, and that would be really positive.”

Comex Bourse

After tumbling 29 percent in the four months to the end of June, silver is now little changed for the year at $27.76 on the Comex bourse in New York. The LMEX index of six industrial metals from aluminum to zinc fell 5.2 percent as gold advanced 2.5 percent. The Standard & Poor’s GSCI gauge of 24 commodities rose 1.6 percent since the start of January and the MSCI (MXWD) All- Country World Index of equities gained 8 percent. Treasuries returned 2.1 percent, a Bank of America Corp. index shows.

Silver is the most volatile metal tracked by Bloomberg and the price swings are masking what are already historically high prices. While the metal is trading 44 percent below the 31-year high of $49.845 set in April 2011, it averaged $30.37 since the start of January, on track for the second-highest annual level after last year’s $35.27. The two-decade average is $9.97.

For Coeur d’Alene Mines Corp., which gets about 65 percent of its revenue from extracting the metal, that will mean a 35 percent jump in profit to a record in 2012, according to the mean of six analyst estimates compiled by Bloomberg.

Continue Reading At Bloomberg


Silver: How low can we go

Aug. 2, 2012, 12:13 p.m. EDT

Silver: How low can we go?

By Avi Gilburt

Until now, I had been expecting a strong rally in the metals. In truth, I had initially expected it to begin in the spring. However, here we are in the summer, and we have not seen the parabolic rally that I have been expecting. Yet, we seem to be slowly “leaking” downwards, which is not the usual manner in which the metals move. However, I am still of the opinion that it will likely begin in the not-too-distant future.

I have said in numerous articles in the past that if either of the metals breaks down below their December 2011 lows, it would cause me to re-evaluate my position on them. Since that time, silver has nominally broken down below its December 2011 low, and has invalidated my immediate bullish pattern. While I will not go into detail about the Elliott Wave pattern I am following, I will say that it looks likely that one more low in silver will yet be seen, and the start of that last decline may begin within the next two weeks.

From a technical perspective, the RSI is developing the right amount of positive divergences, which support the Elliott Wave count that points me to one more low and further positive divergences. I have noted them on the silver futures daily chart below.

Also, the sentiment regarding the metals is beyond bearish. These levels have not been seen in decades, and it tells us that silver is ripe for a reversal, but still may need one more washout drop to trigger the reversal. While many have been attempting to pick this bottom in silver, sentiment continues to drop. It is for this reason that I have only suggested a 25%-30% position so far in the metal, since we suggested to exit in the 37 region.

Continue Reading: Marketwatch

New York Fed audits

New York Fed audits its stash of gold bars; results unknown

August 4, 2012 12:15 am

By Andrew Tangel / Los Angeles Times

NEW YORK — For decades, the U.S. government has stashed gold five stories beneath Manhattan in a vault under the Federal Reserve’s fortress near Wall Street. Or has it?

Some conspiracy theorists suspect that the billions of dollars’ worth of bullion might have been looted in a dramatic heist, a la the movie “Die Hard: With a Vengeance.” Others claim that the gold has been used in a shadowy government transaction, or swapped with gold-painted bars. It’s even caught the attention of politicians such as Texas Rep. Ron Paul and members of Germany’s Parliament.

Now, all of us may finally get some answers. The federal government has quietly completed an audit of U.S. gold stored at the New York Fed. The effort included drilling small holes in the bars to test their purity. The Treasury Department has refused to disclose what the audit has revealed so far, saying the results will be announced by year’s end.

But as a former top Fed official said, the testing may finally prove that “Goldfinger didn’t sneak in at night” and take the gold.

“The calls for audits are saying, ‘We don’t trust the government for the last 200 years,’ ” said Ted Truman, a former assistant Treasury secretary and Fed official. He called perennial questions about the country’s reserves “the gold-bug equivalent of the birther movement,” which questioned President Barack Obama’s stated birthplace.

The Treasury’s auditing operation, including drilling, is a first for the New York Fed. The department’s inspector general previously audited and tested only gold it keeps under heavy guard at Fort Knox, West Point and the U.S. Mint in Denver. These three locations hold 95 percent of the country’s bullion.

In New York, about $21 billion in U.S. gold is locked inside the Fed’s vault. It is stored alongside bullion from three dozen other nations and organizations such as the International Monetary Fund. All told, about 23 percent of global official gold reserves are stored in the central bank vaults.

The audit, which began in January, took place 80 feet below the Fed’s limestone and sandstone Italian Renaissance building in Manhattan’s financial district. Visitors to the vault make their way through a steel and concrete entrance where a 90-ton door rotates open.

Inside, a massive scale is ringed by 122 blue cages that hold about 530,000 gold bars – 34,021 of which belong to Uncle Sam. The auditing team counted the U.S. stash, selecting more than 350 bars from which to extract samples for assaying.

The process involved employees of the Mint, the Treasury inspector general’s office and the New York Fed. It was monitored by employees of the Government Accountability Office, Congress’ investigative arm.

The bars were first weighed on an electronic scale, then transferred to a table mounted with a long, thin drill used to burrow into the gold, said a person familiar with the operation who was not authorized to speak publicly.

Continue Reading: Post-Gazette