• 1 hour Mexico Kickstarts War On Junk Food
  • 9 hours How America Could Go Green Right Now
  • 1 day Russian Prestige And American Politics: The COVID Vaccine Race
  • 1 day Is The Silver Rally Over Or Just Getting Started?
  • 2 days Alibaba-Backed Tesla Competitor Set To IPO In The U.S.
  • 2 days Emerging Economies Could Get Left Behind In Race For COVID Vaccine
  • 3 days Dead Malls Could Be Amazon’s Next Target
  • 3 days Unpacking Biden's Energy Plan
  • 3 days Russia Aims To Become World's Top Gold Producer
  • 4 days Global Tech Stocks On Edge Over Trump TikTok Ban
  • 4 days Cobalt Squeeze Threatens The Electric Vehicle Boom
  • 5 days COVID Has Sparked A Surge In Cybercrime
  • 5 days Precious Metals Bulls Still Have Plenty Of Room To Run
  • 6 days The U.S. Has The Tech To Go Green, But Will It Use It?
  • 6 days Massive Losses Force Russian Commodities Giant To Slash Dividends
  • 7 days Markets Up On Stimulus Hope
  • 7 days UK To Invest In Europe's First Geothermal Lithium Recovery Plant
  • 8 days TikTok Takes Center Stage In US-China Tech War
  • 8 days Are Semiconductor Stocks Overvalued?
  • 9 days Jobs Report Doesn’t Say Much Amid COVID Uncertainty
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Gold and Silver Are on the Starting Blocks

A strange start to the year and a strange end to a volatile week, so we take a whiz across the air waves in order to get a "feel" of whats going on, so this will be a mixed bag of data. The first eye catcher is this:

Eric Sprott - Expect $50 Silver, Gold Possibly $2,150 by Spring.

What follows is brief summary of an interview that he gave to King World News.

Eric Sprott recently launched a silver fund and so entered the market to acquire 15 million ounces of physical silver, to his surprise it wasn"t readily available and in fact it took 10 weeks to get his order filled. Another order placed for 1 million ounces has been given a delivery period of around 2 months. The silver that he received looks to have come directly from the refiners as it is so new. This again tells us that that the supply side is indeed very tight. On the subject of China Eric drew the listeners attention to this interesting dynamic; In 2005 China exported 100 million ounces of silver, fast forward to 2010 and China imported 100 million ounces of silver, thats a 200 million ounce turnaround in an 800 million ounce market.

Other influential factors included:

One of China"s major banks has offered their customers a facility whereby they can save a portion of their savings in gold, they then had to open one million accounts which required 10 tones of gold to satisfy the demand. He then ponders the outcome if this idea were to spread throughout China and further afield, say to India. What is the effect if we get an extension to QE2 or even a QE3? The current meeting at Davos were the possibility of a 100 trillion dollar fund is being considered. The UK, where economic confidence remains rather weak. (The Bank of England supremo, Mervyn King talks of the UK being in a depression.) Over in the United States the social security department has announced a 45 billion dollar overspend for 2011.

There appears to no hiding place as the currencies via for pole position in a race to the bottom. Rallies are no longer based on an individual currencies merits, but rather just how slowly the other fiat currencies are falling apart.

In India,China, Asia and many other countries throughout the world the concept of receiving money for doing nothing is laughable. For the western world to remain remotely competitive, welfare, social security, bailouts, handouts, freebie benefits are existing on borrowed time, you have been warned. Securing your own financial independence has now reached a critical stage, think, plan and implement new ways to supplement your income.

Now, just what was the reason for gold prices taking a dip recently, we take a quick look at a possible scenario as proffered by Zerohedge from an original piece by the WSJ, as below:

Over the past several weeks there had been rumors that the reason for the precipitous drop in gold was primarily driven by a hedge fund liquidating its futures positions. This has now been confirmed: "Yeah, that was just me liquidating my spread position," Mr. Daniel Shak, [of SHK Asset Management] 51 years old, said in an interview. "I had a significant, fully margined position. The dollar amount of the gold liquidation was very small, it was just a lot of contracts." Of course in the extremely jittery gold market, the kind of persistent marginal gross selling of contracts was all that was needed to spook weak hands into a consistent dump of the precious metal, which as we pointed out was beyond overdone. Judging by this morning"s jump in the PM complex, SHK"s liquidation is now not only over but about to promptly reverse as daytrading momos realize they were duped by one single guy. Look for gold to resume its upward advance as investors realize that the gold dump was nothing more than an ongoing futures position liquidation.

A huge trade by a tiny hedge fund has sent shudders through the gold market.

Thanks to the nature of futures trading, Daniel Shak"s $10 million hedge fund held gold contracts valued at more than $850 million, more than 10% of the main U.S. futures market, and the equivalent of South Africa"s annual gold production.

It just goes to show how sensitive this market can be when the above action has such an impact. No doubt there are other contributing factors that also lent weight to the movement in gold prices but this will suffice for now.

Finally, you might want to catch the UKIP leader Nigel Farage - interviewed about the EURO on Russia Today, where he expresses his views regarding the lack of compatibility of some of the member states with the one size fits all currency. Italy could be the next candidate for a bailout, despite the soothing words from the Eurocrats.

 

 

For disclosure purposes our political support lies with UKIP, even though they have yet to get one candidate elected to the British Parliament.

And finally, yes we are almost done, for New Zealand readers, the movie Inside Job is being released across the country at selected cinemas, so take your partner for a surprise evening out, otherwise you will have no-one to explain it to you later.

Have a good un.

 


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

 

Back to homepage

Leave a comment

Leave a comment