Coin News » Business News

In The Lead – You Go Your Way, I’ll Go Mine…

Jon Nadler, Kitco Metals Inc. — Mon, 25 Jul 2011 17:11:36 +0000

http://www.kitco.com/

With but hours (168 and counting down) to go before August 2nd rolls around, the political arm-wrestling matches continued without respite in Washington after having come to an American version of a Mexican standoff on Friday afternoon.

Albeit President Obama has already assured the markets that the US will not default on its obligations under any circumstances that he might be able to do something about, the markets exhibited no modicum of a trend towards calming down as yet. Separately, former President Clinton’s spouse, now Secretary of State, reassured China that the US will not go down the path of a default despite the overt fireworks taking place in his nations’ capital around the clock. [...]
Read the rest of In The Lead – You Go Your Way, I’ll Go Mine… (1,403 words)

FTC’s Gold Consumer Alert Revisions Praised by Leaders of PNG, ICTA and ANA

CoinNews.net — Mon, 07 Mar 2011 17:52:18 +0000

Leaders of three coin and precious metals hobby and professional groups are praising the Federal Trade Commission for acting on their suggested changes to the FTC’s 2010 online consumer advisory entitled "Investing in Gold? What’s the Rush?"

Some hobby and trade leaders were concerned that the original advisory contained some language that might be detrimental to reputable gold dealers and discourage collectors from acquiring gold coinage.

Representatives of the Professional Numismatists Guild (www.PNGdealers.com), the Industry Council for Tangible Assets (www.ICTAonline.org) and the American Numismatic Association (www.money.org) jointly worked on specific, proposed changes to the advisory. The FTC now has revised some of the advisory’s wording on its website, www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt186.shtm.

The group agreed from the beginning that it would only target specific, incorrect or misleading words or sentences but not ask the FTC to rewrite the entire advisory.

"We basically just made minor changes to what was posted to make it accurate and more helpful to consumers. All of us in the rare coin and precious metals community share the same priority with the Federal Trade Commission: educating consumers about coins and precious metals," emphasized ICTA Executive Director Eloise Ullman who submitted proposed revisions to the FTC.

"Useful suggestions were also received from Coin World Editor Beth Deisher and Jerry Jordan, Managing Editor of The Examiner newspaper in Beaumont, Texas who has extensively written about gold buying and selling. With clear-cut edits the FTC changed the tone of its advisory and it is a well-balanced report that now puts investing in gold in proper perspective with other types of investments," said PNG Executive Director Robert Brueggeman.

One of the most significant changes in the advisory is the section about possible future confiscation of gold. The original advisory read:

"The government cannot confiscate your gold at any time. But some unscrupulous sellers say that the government may, indeed, confiscate gold, and that ‘reportable’ transactions lead to confiscation. Other crooked sellers claim that modern bullion coins produced by the U.S. Mint are subject to confiscation while historic or collectible coins aren’t. This claim sometimes leads some people to buy historic coins at prices that exceed their value. No federal law or Treasury Department regulation supports these contentions."

The new wording reads:

"Some sellers say that the government may confiscate gold. Others say that ‘reportable’ transactions lead to confiscation. Yet other sellers claim that modern bullion coins produced by the U.S. Mint are subject to confiscation while historic or collectible coins aren’t. These claims sometimes lead people to buy historic coins at prices that exceed their value. No current federal law or Treasury Department regulation supports any of these claims."

With the FTC’s concurrence, the group now will tackle the remaining two, recently issued consumer advisories on rare coins and precious metals, "Investing in Bullion and Bullion Coins" and "Investing in Collectible Coins."

"I compliment the efforts of this group in working with the FTC. This is a good example of how different elements of the hobby can come together for the mutual benefit of the hobby and the public," said Larry Shepherd, ANA Executive Director.

In alphabetical order, the ANA, ICTA and PNG members who offered suggestions for revising the wording of the FTC advisory are:

Gary Adkins, President of Gary Adkins Associates,
ICTA Chairman and former PNG President;
John Albanese, President of Certified Acceptance Corporation President;
Jay Beeton, ANA Marketing & Education Director;
Robert Brueggeman, PNG Executive Director;
Mike Fuljenz, President of Universal Coin & Bullion and ICTA board member;
David L. Ganz, attorney with Ganz & Hollinger, P.C. and former ANA President;
Steve Ivy, Co-Chairman of Heritage Auctions and former PNG President;
Paul Montgomery, Executive Vice President of American Precious Metals Exchange and PNG President;
Clifford Mishler, ANA President;
Donn Pearlman, PNG spokesman and former ANA Governor;
Diane Piret, ICTA Industry Affairs Director;
Larry Shepherd, ANA Executive Director;
Scott A. Travers, of Scott Travers Rare Coin Galleries, former ANA Vice President and author of The Coin Collector’s Survival Manual, 7th Edition; and
Eloise Ullman, ICTA Executive Director.

Oil [Price] Spill – Monday Kitcommentary

Jon Nadler, Kitco Metals Inc. — Mon, 07 Mar 2011 16:33:41 +0000

The melt-up in precious metals (with the exception of platinum) resumed with the start of the new trading week, reflecting the the crude oil-fueled commodities rally that has gripped the world’s trading floors since the start of the Libyan upheaval.

Recent clashes in that country have turned even bloodier as Mr. Gaddafi’s forces intensified their campaign to recapture a couple of key cities along the coast. Black gold has already leapt 25% since Libya descended into the state of civil war it is now in.

Outside military intervention showed no signs of materializing, and was still under consideration, lacking sufficient consensus by global powers. This, even as the humanitarian crisis was aggravating with each passing hour, having already resulted in the exodus of more than 150,000 people to Tunisia and to Egypt. Meanwhile, some protests continued in Yemen and Bahrain, but Saudi Arabia remained relatively calm. The fear premium being reflected in nearly $107-per-barrel crude oil continued to spill over to other commodities and it remains the main source of momentum behind the fresh records being set in gold and silver prices.

The Libyan situation has prompted the Obama administration to consider resorting to the US’ Strategic Petroleum Reserve in an effort to curb the potential economic reverberations that the resultant spike in energy values is engendering. The emergent US economic recovery stands a realistic chance of being derailed if $100-$115 oil remains on the price boards for an extended period of time, or if $140+ crude were to rematerialize, complete with $5 per gallon gasoline, just as spring and summer roll around. The latest,2.35% advance in WTI crude (to $106.55) and the 2.2% rise in Brent crude (to $118.50 pbbl) have ignited fears that consumers will stop consuming and that employers will halt employing folks.

Precious metals trading got off to a flying start on Monday, with gold prices rallying by $11.10 per troy ounce, and they were initially quoted at $1,443.90 on the bid side of spot after having touched early highs at a new, $1,445.90 per ounce record. Gold trading positioning continued to show a rise in open interest for the latest reporting period (ending on March 4) and the net speculative length in the yellow metal is at its most robust thus far in 2011. Gold ETF balances however continued to experience some on-going leakage in their underlying tonnage, despite the recent, headline-making ascent in the metal’s value.

Over at the PDAC event in Toronto (amply covered by Kitco News), the mood is quite upbeat; no surprise, following the performance that gold and silver turned in during 2010. However, at least one speaker on Sunday sounded a bit of a cautionary alarm when dissecting the picture in gold, as it relates to macro funds. Heavy courtship by hedge funds and similar spec players has propelled bullion values to stratospheric levels in each of the past two year, at least. However, the behavior of said players is precisely what was on the mind of JP Morgan strategist Michael Jansen as he addressed the crowd of diggers yesterday:

"We are a little bit concerned about the signs of some fault lines emerging in the market. For one thing, there has been a shift by wholesale investors and some funds out of gold and back into equities, which now "look quite cheap" compared with the yellow metal. We have received a lot of feedback at the significant wholesale investor level, or the big macro funds, and they are generally starting to pull back their exposure to gold and get more exposure towards equities. We see equities emerging from a multi-year funk and moving into a two or three year bull market. And that obviously reduces the need for a portfolio hedge like gold."

Mr. Jansen also threw a bit of cold water on the assertions that we are in some kind of ‘peak gold‘ condition, as his firm believes that mining output of bullion will increase by about 3 to 4 percent in 2011 and in coming years as well, continuing the pattern we have already revealed to you in these columns over the past three years. With margins such as the current ones being enjoyed by the majority of the PDAC’s attendees, such a little fact should come as no surprise. Mr. Jansen also noted that the steepening Treasury yield-curve is prompting some gold market players to begin shifting out of the metal and into equities that now appear to be "cheap."

Also from the stages of the PDAC, and focusing on the same idea of changing interest rate conditions, comes word that while the current low real interest rate conditions are still conducive to the types of gains we have recently witnessed in the metals’ (and other commodities) complex, the changing trend in same could have some deleterious effects on prices.

GFMS Chairman Philip Klapwijk alluded to the fact that the "froth" we are experiencing in certain commodities, and precious metals in particular, could be "taken out" when more countries begin to hike rates as India and China already have. Thus, we advise, keep an eye on the ECB and the Fed for the latter part of this year, and in 2012.

Silver prices soared to a high of $36.79 per ounce, and then opened at $36.66 on the spot market with a gain of 99 cents. Whilst silver-oriented ETFs reported a robust inflow of ounces, the open interest in the white metal did show a decline on the aforementioned reporting period, and it was the first such shrinkage since near the end of January. Copper prices, also showing signs that they have vaulted way ahead of fundamentals-based levels, were indicating that heavy speculative trading is afoot on the COMEX.

Platinum and palladium opened on the mixed side this morning, with the former showing a $3 decline to $1,838.00 the ounce and the latter ticking higher by the same amount, to reach $813.00 per troy ounce. ETFs specializing in the noble metals showed increased in platinum balances but some outflows from palladium ones. Overall however, the PGM niche seems to indicate the same heavy-handed speculation that is currently defining oil, copper, and silver and it could result in sizeable price shifts should conditions around the world turn on the proverbial dime.

Such turns were already manifest later this morning, when oil halved its earlier gains, and gold prices fell into the red just one hour after having opened with the aforementioned robust gains. A market rumor related to a possible deal between Mr. Gaddafi and Libyan rebels by virtue of which he might be granted ‘safe passage’ from his country (another sandy beach spot soon to be occupied by a deposed despot?) sapped values across the commodities’ complex in a hurry.

Thus far, rumors only, but it does show just how much of this house of commodity cards is built on emotion and conjecture. Volatility remains very much on the scene as spec funds exhibit intense activity and will not shy away from profit-taking at any moment. At last check, platinum was down $12, palladium fell $11, and silver was ahead by only 44 cents. Chalk it up to …oil. Oh, and the US dollar clawed its way back to 76.33 on the trade-weighted index.

Something else may have also contributed to the emergent profit-taking (aside from new records being etched into certain books) in metals this morning; the words of Dallas Fed President Richard Fisher. He said that under "certain conditions" he might vote to truncate the Fed’s QE2 asset purchase program:

"I remain doubtful enough as to its efficacy that if at any time between now and June, it should prove demonstrably counterproductive, I will vote to curtail or perhaps discontinue it." Mr. Fisher repeated that he would vote against extending or enlarging the purchases "barring some frightful development."

Well, Libya is a pretty frightful development at the moment, one would say (especially if they happen to be long oil or gold). However, the type of really frightful "development" that is on Premier Wen Jiabao’s mind is more important in terms of needing to be paid attention to. We are talking about inflation and the risks it might pose along several fronts, not the least of which would be the social one.

The Chinese Premier, in his opening speech at the annual National People’s Congress taking place in Beijing pledged to rein in spiking consumer and property prices, and he said that this anti-inflation fight is now the nation’s top priority. China’s leader is well aware that rising prices for everything might well mean rising tempers among the masses and a rising risk of such tempers flaring up into events similar to those now taking place in the MENA region.

Therefore, we read with no degree of surprise that Standard Bank’s commodities analytical team writes this morning that "given that Chinese consumer and inflation numbers are set to be released this Friday, we could see another round of monetary tightening in the next few days. Looking at the PBOC’s actions in the past this will most likely come in the form of an increase in the reserve requirement. However, we have determined that raising reserve requirements are the bluntest in their effect on commodity prices. At worst, we would expect a knee-jerk sell off in reaction to news of an increase in the required deposit ratio."

Keeping an eye on all types of combat (in Libya, in the crude oil pits, by longs versus the shorts, by the bulls versus the bears, and the emergent anti-inflation battle by central bankers and national leaders) we remain at our post

Until tomorrow

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America

www.kitco.com and www.kitco.cn
Blog: http://www.kitco.com/ind/index.html#nadler

Gold Prices Advance, Silver Jumps $1 and Tops $35

CoinNews.net — Fri, 04 Mar 2011 23:10:41 +0000

U.S. gold rebounded Friday, although prices fell short of the record high reached on Wednesday. Silver was on fire, jumping $1 on the day and closing above $35 an ounce for the first time since 1980.

Violence in Libya coupled with rising protests in other North African and Middle Eastern countries were pegged for gains in safe havens like gold and silver.

April gold prices rose $12.20, or 0.9 percent, to close at $1,428.60 an ounce on the Comex in New York.

"There are still a lot of moving parts in the Middle East and North Africa," said Adam Klopfenstein, a senior strategist at Lind-Waldock in Chicago, according to Bloomberg. "People want to be long gold and silver going into a weekend where’s there’s a lot of macro risk in the market."

Gold was traded as low as $1,413.80 and as high as $1,432.80. Gold prices rallied 1.4 percent this week and they are up 0.5 percent for the year.

"Gold and silver’s rally into the end of the week and continued unrest in North Africa and the Middle East is expected to give precious metals a firm start for next week’s trading," noted Debbie Carlson of Kitco News. "The situation in Libya remains unsettled and so market analysts said precious metals prices will continue to add some risk premium even as gold and silver trade to new highs."

Silver prices for May delivery surged 2.9 percent to settle at $35.327 an ounce. Silver ranged between $34.205 and $35.365.

"Ultimately, the reasons why silver is going up are related to gold," Bill O’Neill, partner of LOGIC Advisors, said and was quoted on Reuters. "Make no mistake, if gold reverses direction and starts to go to a bear market, silver will follow with a vengeance."

Silver soared 7.4 percent this week. The metal is up 14.2 percent in 2011.

Platinum prices for April delivery rose $4.90, or 0.3 percent, to $1,837.90 an ounce. Prices ranged between $1,827.80 and $1,846.70. Platinum advanced 1.9 percent this week and it is 3.4 percent higher for the year.

Palladium was the only precious metal to decline in New York on Friday. Palladium prices for June delivery lost $5.00, or 0.6 percent, to close at $809.80 an ounce. It hit an intraday low of $800.00 and a high of $822.80. Palladium rallied 3.1 percent this week, however. It is up by 0.8 percent in 2011.

Earlier London PM fixing prices were mostly lower Friday as compared to the previous PM fix. Gold was the exception with its fix of $1,427.00 an ounce, marking a gain of $5.50. Silver retreated 10 cents at $34.430 an ounce. Platinum and palladium fell the furthest. Platinum was fixed $13 lower to $1,828 an ounce and palladium was set back $6 to $811 an ounce.

All London precious metals registered gains on the week. Increases were 1.7 percent for gold, 5.8 percent for silver, 2.1 percent for platinum and 3.3 percent for palladium.

US bullion coins have been relatively quiet this week, based on United States Mint published figures. The last time American Silver Eagles advanced was on Monday. They rose by a sound 575,000 for the day, which turned into their weekly increase as well. One-ounce American Gold Eagles advanced 6,000 on Wednesday and 5,000 on Monday, giving them a weekly pick-up of 11,000. For a recap on how United States Mint bullion coins did during the month of February, read:

Gold Eagle Bullion Coin Sales Fourth Best – CoinNews.net
Silver Eagle Bullion Sales Break Record – SilverCoinsToday.com

The latest United States Mint bullion sales figures follow.

U.S. Mint 2011 Bullion Coin Sales
	Prior Weekly Gains	Weekly Gains	March	2011 Totals
American Eagle Gold Coin (1 oz)	9,000	11,000	6,000	209,000
American Eagle Gold Coin (1/2 oz)	7,000	0	0	13,000
American Eagle Gold Coin (1/4 oz)	0	0	0	18,000
American Eagle Gold Coin (1/10 oz)	0	0	0	120,000
American Eagle Silver (1 oz)	842,500	575,000	0	9,662,000

Take Two Coins and Call Me in the Morning – Friday Kitcommentary

Jon Nadler, Kitco Metals Inc. — Fri, 04 Mar 2011 15:45:14 +0000

The final trading session of this most eventful week began on a relatively upbeat note in precious metals, following yesterday’s rather minor (1.5% from the recent high in gold) setback, which, for now, we will refrain from calling a "correction."

Crude oil rising past $103.00 on the back of continuing skirmishes in Libya, and a US dollar apparently stuck near the 76.40-76.50 zone on the trade-weighted index (and still at nearly a four-month low against the euro) gave rise to scattered early buying, but metals players were still cautious ahead of the 8:30 AM release of the US Labor Department’s employment data for February.

Spot gold dealings opened with a $3.60 gain on Friday morning, and they were quoted at the $1,418.90 indication price. Silver spot added 30 cents to open at the $34.53 level while platinum rose $3 to start the session off at the $1,828.00 mark per ounce. Palladium dropped by an equivalent amount, to open at $810 the troy ounce, while rhodium remained unchanged once again, and was quoted at $2,380.00 per ounce. Apple iPad junkies can now rejoice, as the Kcast Gold Live app can be with them 24/7365 wherever they might find themselves, and offer them the above-mentioned quotes, up to the minute.

Well, the February US joblessness rate came in at its lowest level since April of 2009 and it revealed a gain of 192,000 positions in February. The figure did miss the analysts’ estimates that had called for a gain of 218,000 jobs, but the overall US unemployment rate fell by one-tenth of a percent from January’s 9% level. Thus, early caution among commodity players dissipated somewhat on account of the 26,000 jobs-created-discrepancy between the USLD report and previous expectations, and the crowd set out to buy more gold and silver with a tad more confidence.

We are looking at probably another weekend ahead of which players might not want to go home without a safety lining in metals. However, book-squaring activities and any possible geopolitical developments could still make for a volatile session. Libya, oil, and the US dollar remain the top items on market participants’ minds.

Also on market participants’ minds this morning, were continuing reverberations from comments made by Mr. Trichet the other day. The ECB’s head sounded an even more than normally hawkish tone on Thursday as he intimated that interest rates in the euro zone could rise as early as April. Albeit the IMF warned against such a move, the ECB appears to have its mind made up that inflation -along the lines of its current trend- is not a welcome guest in the region’s economy. The word-pair "strong vigilance" was used by Mr. Trichet in his news conference, and analysts pointed out that this is historically the telltale sign of an imminent rate move.

Mind you, similar "signs" are also coming, not from the mind of M. Night Shyamalan, but from the US Fed at this time. Bloomberg reports that the Fed’s policy makers appear to be in favor of an "abrupt" ending to the QE2 program, when the end of June rolls around. The FOMC meets in eleven days, and that is about halfway through the bond-buying period that was instituted back in early November of last year. The Fed’s move came on the heels of a poor jobs and economic indicators’ scene in August, and it was seen as causing spec funds to run amok with certain commodity prices, drunken with the prospect of the ultra-cheap money environment that the Fed created for them for another six months or so, at least.

Now, however, the US economic picture has brightened considerably, and it has become fairly clear (at least to some) that the risks implicit in a prolonged easing stance are beginning to outweigh its benefits, especially when it comes to QE2 being "morphed" into QE2.5 or QE3 after mid-year. Even the full-run of QE 2 has come under questioning by some Fed members, but that fact has not stopped hard money newsletters from assuring their audiences that the Fed will continue with its current policies for, basically, …ever.

Reuters reports that according to Charlie Morris, head of absolute return at HSBC Global Asset Management, "the financial and geopolitical backdrop has not deteriorated enough for gold to show off its safe-haven credentials and it remains firmly a risk trade, while the chance to get into silver may have passed." Mr. Morris recently cut his fund’s level of exposure to gold. Mr. Morris also opined that "we’re at a crossroads and it’s a very complex time because on the one hand, you want to protect yourself against inflation, but those trades are extremely overcooked."

The HSBC fund manager has adopted a "defensive view of the world" and believes that gold "is not the best way to profit from that stance." However, HSBC Global Asset Management remains bullish overall on gold, even if it does not envision gold as the cure-all for what ails the world at the present time. And, while gold might be a good enough value to become a buyer near $1,340- $1,350 for Dennis Gartman, the famed newsletter editor remains on the sidelines of the market, for the time being, citing risks of further retreats in the yellow metal.

Someone else who shares that view is Mr. Bernanke. Whether or not related to the state of Utah’s proposed legislation to allow its denizens to use gold and silver coins as an alternative "legal tender," Mr. Bernanke commented that he dismisses the notion of the gold standard returning to the U.S., anytime soon.

The Fed Chairman noted in his testimony before the Senate Banking Committee that gold "did deliver price stability over long periods of time, but over shorter periods of time it caused wide swings in prices related to changes in demand or supply of gold. So I don’t think it’s a panacea."

Mr. Bernanke also remarked that the modern world could not re-adopt gold as its currency standard for one simple reason: there just is not enough gold in the world to effectively support the U.S. money supply. Of course, that’s the same reason for which Rep. Ron Paul has not only called for the abolishment of the Fed, but also for the return to the gold standard. While that debate goes on, what follow, are excerpts from our previous (in collaboration with the CPM Group) study "That was then, this is now" on the topic of said standard, monetary policy, and the prospects for gold’s return as currency:

"The issue of gold’s role in a monetary system has been resurrected in U.S. political discussions this past year, after having been dormant for more than two decades. Two developments have led to this. One has been the seemingly relentless decline of the dollar’s exchange rate in currency markets. The other has been the candidacy of Ron Paul as a Republican candidate for President of the United States. While Rep. Ron Paul was seen as having little chance of garnering the candidacy let alone the Presidency, he tapped into a wellspring of conservative discontent over financial management of the U.S. economy.

This was the first time that gold has played a role in U.S. Presidential politics since the Republican platform on which Ronald Reagan ran in 1980 carried a platform calling for a return to a watered-down gold standard for the dollar. That cynical proposal did not become a major issue during the campaign, and silently disappeared after the election.

The position of many advocates of a gold standard is that the Federal Reserve System ought to be abolished, that the U.S. government should allow private banks to issue currency as they see fit, and that the U.S. government should extract itself from the control of money supply in the United States. The problem is that the "good old days" never really existed. In the 65 years between the U.S. Civil War and World War One there were 16 recessions in the United States.

The concept and history of money and monetary policy in the United States always has been a point of strong opinions. When people have strong opinions about a topic, they often feel that it is acceptable to distort history and reality in order to justify their point. Thus, advocates of private banks issuing private money sometimes misquote Thomas Jefferson.

Jefferson famously said: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."

In order to try to distort history and misrepresent one of the most knowledgeable American forefathers, people omit the word "private" from the preceding quotation, attempting to convince would-be supporters that Mr. Jefferson was opposed to the concept of a federally organized banking system, as outlined in the U.S. Constitution and envisioned by the founders of the nation. In fact, he was opposed to private banks having unrestrained capacity to issue money and build up debt, the very thing that caused much economic destruction in the period before the Civil War.

Anyone suggesting a return to the old ways of organizing and regulating a banking system and financial markets owes it to themselves and to those to whom they speak to know better the historical record of economic dislocations generated during such systems’ operations. The free banking period in U.S. history was an era of massive swings in economic volatility, far greater than those experienced since the 1940s, incorporating periods of massive depressions and recessions; hyper-inflation and massive deflations; economic destruction that destroyed humans, companies, and communities; and lightly to totally unregulated financial markets that make the villainy of recent banking scoundrels seem like misdemeanors."

Have a pleasant weekend, whatever standard you might prefer to be on.

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America

www.kitco.com and www.kitco.cn
Blog: http://www.kitco.com/ind/index.html#nadler

Gold and Silver Prices Fall 1.5%

CoinNews.net — Thu, 03 Mar 2011 23:36:27 +0000

U.S. gold broke away from an all-time record while silver prices fell from their more than three-decade high. Each of the metals declined 1.5 percent on Thursday.

Factors analysts attributed for pulling down prices and spurring profit-taking were weaker oil prices, potential peace mediation in Libya and a warning by the European Central Bank that it could raise interest rates soon to clamp down on inflation.

April gold prices fell $21.30 to settle at $1,416.40 an ounce on the Comex in New York. It ranged between $1,412.20 and $1,436.90. Gold closed at $1,437.70 on Wednesday, its best settlement ever.

"Obviously, you have the European talk about higher interest rates down the road and a stalling crude rally, which are weighing on the market now," Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC, said, according to Reuters. "You have everything that at least set us up for a day of profit taking."

"Peace, if it happens, may be bearish for gold and silver," said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. "It is time again to head to the sidelines in gold and precious metals."

"I think there’s going to be a rally tomorrow going into the weekend. Today’s selloff presents a good buying opportunity," Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago, said and was cited on MarketWatch.

Silver prices for May delivery declined 50.8 cents to finish at $34.327 an ounce. Silver traded as low as $34.04 and as high as $34.96. Silver prices settled to $34.835 on Wednesday, its best closing since 1980.

Platinum prices for April delivery lost $26.30, or 1.4 percent, to $1,833.00 an ounce. It ranged between $1,821.10 and $1,854.40.

Palladium prices for June delivery retreated $7.85, or 1.0 percent, to $814.80 an ounce. Prices traded from $811.85 to $824.80.

Earlier London PM fixing prices fell across the board as well. The PM gold fix price was $1,421.50 an ounce for a loss of $14.00 from its previous PM fixing. Silver was $34.53 an ounce, down 22 cents. The platinum fix was $1,841 an ounce for a loss of $5. Palladium declined $4 with its fixing of $817.00 an ounce.

United States Mint bullion coin sales continue to be tame in their March start. No additions were published by the Mint Thursday. The Silver Eagle total has remained the same for three-straight days. The single bullion coin to show an improvement this month, the one-ounce Gold Eagle, advanced 6,000 on Wednesday. The latest bullion sales figures from the United States Mint follow.

U.S. Mint 2011 Bullion Coin Sales
	March	2011 Totals
American Eagle Gold Coin (1 oz)	6,000	209,000
American Eagle Gold Coin (1/2 oz)	0	13,000
American Eagle Gold Coin (1/4 oz)	0	18,000
American Eagle Gold Coin (1/10 oz)	0	120,000
American Eagle Silver (1 oz)	0	9,662,000

An Edging in Hedging – Thursday Kitcommentary

Jon Nadler, Kitco Metals Inc. — Thu, 03 Mar 2011 15:56:12 +0000

The hitherto easy going in gold’s climb to new records ran into a couple of difficulties overnight and this morning, as talk of a Hugo Chavez-brokered Libyan mediation plan and a couple of other important market impact factors prompted some profit-taking sellers to do just that and drag prices to just under current support levels. This took place even as Mr. Gaddafi‘s airborne forces bombed rebel-held oil refining targets near the town of Brega.

The irony of Mr. Chavez proposing to defuse the trouble in Tripoli should not be lost on the reader. The man was at the front of a 1992 Venezuelan uprising that bears certain striking similarities to those currently on display in Libya’s revolt of the masses against a corrupt leader. Since that time, Mr. Chavez himself has been said to have built up certain dictator-like powers.

The International Criminal Court over in The Hague opened an enquiry into Mr. Gaddafi’s actions and alleged (but very likely verifiable) crimes against humanity by stating that "there will be no impunity in Libya" and that "No one has the authority to attack and massacre civilians." Somewhere between 1,000 and 2,000 people are thought to have been killed thus far in the civil war that Mr. Gaddafi’s recalcitrance has engendered.

Ed. The on-going Libyan violence has give rise to calls for outright military intervention, despite a few hold-outs such as Russia and Turkey declaring it as "unthinkable." What appears more unthinkable is that the world once united (well, almost unanimously) against, and intervened to remove, certain individuals named Saddam Hussein or Slobodan Milosevic. The Colonel may not be in possession of nukes, but he has enough other lethal stuff at his disposal with which to wreak humanitarian havoc upon Libya’s denizens. Thus, a "no-fly zone" might be a good starting point in the process of excising the Gaddafi cancer from Libya.

At any rate, any small whiff of potential peace breaking out in Libya was quickly conducive to an overdue dip in crude oil prices and to a corresponding (at least in percentage terms) pullback in gold as well this morning. However, gold prices were also seen reacting to a couple of other factors which (absent the Libyan events) would have made for similar drops on a market day such as today. Let us examine them in order of appearance on the news scene:

First off, the ECB decided that despite the threat of inflation posed by the mini oil-shock currently being witnessed in the markets, the decision it needed to make as regards interest rates this morning was to leave them untouched. This, as the mini oil-shock presents another, larger potential danger to the common economic zone’s welfare: that of a double-dip.

The prospect of a fresh economic contraction carries a lot more weight with central bankers of all stripes than that of a rise beyond "target" levels in inflation for a short time. At the moment, the line of thinking appears to be that perhaps crude oil won’t climb to economically-destructive levels such as $120 or $140 and that even if it does so, it will not be for more than a brief period; one which should not translate into more than a transitory mini-spike in regional inflation levels.

Thus, the ECB’s benchmark rate was left unadjusted, at one lonely percent, for the 23rd consecutive month. In earlier days, the euro had made sizeable advances against the US dollar on bets that the ECB had reached the end or near-end of the ultra-low interest rate road and was prepping to make a graceful exit from that environment in the not too distant future (like August), or perhaps even sooner.

That said, the euro did not exactly roll over and die, and neither did the dollar’s mini-rally last too long against it, as Mr. Trichet planted a well-timed little word bomb in his news conference this morning. He alluded to the possibility that the ECB will…raise rates. Not in August, mind you, but the month of April of 2012. Mr. Trichet also fired off the "V" word in his media chat.

That’s "V" as in "strong Vigilance" when it comes to inflation and how to behave towards it. The mention of a specific month within which to commence moving rates around was good enough however to spark a reversal of the pattern we saw when the rate decision announcement was issued. However, the trend-change did not seem to help gold from still remaining on the downside by double-digits.

The second news item to undermine gold’s recent oil-driven rally was the fact that US initial jobless claims came in at a three-year low this morning. The headline figure, 368,000 (down 20,000 on the reporting week) appeared to confirm that the US economic recovery remains in place and that the current oil disturbance is not bad enough to tilt the equation back into recession mode.

With first-time jobless claims continuing under the pivotal 400,000 mark for the past month and with their falling 27% since last August (when the "R" alarm was once again sounded and QE2 was hatched as a consequence) confidence has risen that tomorrow’s employment data courtesy of the US Labor Department might contain some equally good news. That’s the kind of news that gold and other precious metals players generally do not welcome.

Gold spot prices traded over a $21 range of from $1,416.60 to $1,437.50 and silver gyrated over an 84-cent range as the sellers (and very few buyers) duked it out in the first hour of trading on Thursday. Platinum and palladium players also took some profits (albeit much smaller than their gold and silver-oriented counterparts) and eased.

The former traded at $1,836 (down $12) and the latter at $815 (down only $1) as the complex took cues from a 1.05% decline in black gold and was seen focusing on that development more than on the 0.14 drop in the US dollar index. The stock market, on the other hand, cheered the jobless claims data, the rise in US QIV productivity (2.6%), the Fed’s upbeat outlook on muni-bonds, and the February US retail sales figures (which came in at better-than-anticipated levels) with a 152-point rally out of the morning’s starting gate.

In the world of normal, historically valid inverse asset correlations this rally in equities did have reason to cause a fairly sizeable decline in gold. It appears that Dennis Gartman’s retreat to the "sidelines" in gold was (at this juncture) rather well-timed. The economist and publisher of the Gartman Letter scaled back to an "insurance-only" position in the yellow metal early today.

Finally this morning, speaking of "insurance" of sorts, we offer you the highlights of the latest report on gold hedging by the world of miners. The ABN AMRO review of Fourth Quarter hedging/de-hedging activities finds more of the same as well as some new patterns worth noting in this important component niche of the gold market.

First of all, the study reveals that the ten-year trend in the decline of hedging remained alive and well on the quarter, falling by 1.7 million ounces, to 4.7 million ounces- the largest such decline in four quarters. Major producer AngloGold Ashanti in fact unwound its hedge book completely in October, following similar uber-confident cues coming from Randgold Resources and Barrick. At this juncture, almost all major gold producers have unwound their gold hedge books. Is that a "good" thing?

ABN AMRO says that "we consider this bearish for the gold market since de-hedging has been a significant element of gold demand over the past decade. In fact with the gold price expected to reach new record highs this year and expectations that prices may ease from 2012 and beyond, the global hedge book could begin to rise again — albeit modestly if the majors maintain their no hedge policy. This would not only be an indicator that the gold market bull run has ended but would in itself be doubly bearish, as gold supply through forward sales adds downward pressure on prices."

However, not every miner is as confident as the majors have shown to be, as regards gold prices "to the Moon" scenarios for years to come. Some are (quietly perhaps?) beginning to see the wisdom of protection against such potential slides in the value of gold. Take Minera Frisco, for example. It turned out to be the single largest hedger in 2010 — adding 1.4 million ounces to the global hedge book. The list also added names such as: EnviroGold, Orvana, Red 5Ltd, Range River Gold, plus Golden Star Resources and others.

The collective increase in hedging amounted to a 21% gain last year and hedging activity has now been rising in each year that has passed since 2009. Without taking anything away from the potentially gold-price-bearish implications of the massive, decade-long decline in producer hedging, the ABN AMRO report concludes on a bit of an ambiguous note by pondering whether or not the emergent hedging trend is a game-changer:

"The rise in new gold hedging programmes might be due to the possibility that high gold prices have moderated shareholder resistance to hedging, or it could signal a sea change in the attitude of producers that would be compounded should the gold price begin a sustained slide. In many cases the new hedging is due to projects requiring financing, with lenders stipulating some security in prices for future production before agreeing to provide loans."

Until tomorrow, hedge your bets.

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America

www.kitco.com and www.kitco.cn
Blog: http://www.kitco.com/ind/index.html#nadler

Gold Extends Record, Silver Misses $35 by 2.5 Cents

CoinNews.net — Wed, 02 Mar 2011 21:15:39 +0000

U.S. gold extended its record high for a second straight day on Wednesday. Silver prices reached a fresh 31-year high with its best point just 2.5 cents shy of $35 an ounce.

Investors edgy over inflation and unrest in the Middle East and North Africa sunk their money into safer bets, like gold and silver.

April gold prices advanced $6.50, or 0.5 percent, to close at $1,437.70 an ounce on the Comex in New York. It traded from a low of $1,428.20 to a high of $1,441.00. Gold is up 1.1 percent in 2011.

"The bullish breakout to a fresh all-time high has put gold in an outstanding technical position to extend its advance into record territory," Richard Ross, global technical strategist at Auerbach Grayson said, according to MarketWatch. "The triple top breakout reinforces an already bullish picture and has opened the door to a test of $1,461 an ounce in the short term and $1,634 an ounce by year end."

"You have political problems all over the world, a Federal Reserve bank that still erred on the side of easing rather than tightening, rising commodities prices in general, and growing disdain for fiat currencies generally," Dennis Gartman, author of the Gartman Letter, an daily investment newsletter, said and was quoted on Reuters. "It will be illogical for gold not to be going higher," he said.

Silver prices for May delivery surged 40.8 cents, or 1.2 percent, to settle at $34.835 an ounce — its best closing level since 1980 when prices reached as high as $50.35 an ounce. Silver ranged from $34.35 to $34.975. The metal has risen 12.6 percent this year.

"Tensions in the Middle East, inflation concerns along with the weaker U.S. dollar index are also supporting the silver market. The silver bulls have the strong overall near-term technical advantage," wrote Jim Wyckoff of Kitco News.

"There are no early technical clues to suggest a market top is close at hand. Prices are in a steep five-week-old uptrend on the daily bar chart. The next downside price breakout objective for the bears is closing prices below solid technical support at $33.00. Bulls’ next upside price objective is producing a close above solid technical resistance at $36.00 an ounce," added Wyckoff.

Platinum prices for April delivery added $14.20, or 0.8 percent, to $1,859.30 an ounce. It traded as low as $1,829.20 and as high as $1,865.50. Platinum has climbed 4.6 percent in 2011.

Palladium prices for June delivery ended up $5.95, or 0.7 percent, to $822.65 an ounce. Prices ranged from $809.80 to $826.10. Palladium is up 2.4 percent this year.

Gains in earlier London PM fixing prices ranged from 1 percent for gold and platinum to 1.1 percent for silver and palladium.

The PM gold fix price was $1,435.50 an ounce for an increase of $14.75 over its previous PM fixing. Silver was $34.750 an ounce, up 38 cents. The platinum fixing came in at $1,846 an ounce, registering a gain of $18. Palladium was $9 higher at $821.00 an ounce.

Higher precious metals prices appear to be depressing United States Mint bullion coin sales, at least for now. The only gains published by the Mint during the first two days of March are for the one-ounce American Gold Eagles. They rose 6,000 on Wednesday. The latest bullion sales figures from the United States Mint follow.

U.S. Mint 2011 Bullion Coin Sales
	March	2011 Totals
American Eagle Gold Coin (1 oz)	6,000	209,000
American Eagle Gold Coin (1/2 oz)	0	13,000
American Eagle Gold Coin (1/4 oz)	0	18,000
American Eagle Gold Coin (1/10 oz)	0	120,000
American Eagle Silver (1 oz)	0	9,662,000

Tripoli Trouble-Trades Thriving – Wednesday Kitcommentary

Jon Nadler, Kitco Metals Inc. — Wed, 02 Mar 2011 17:04:29 +0000

Global traders and investors continued to place the Libyan unrest (now a de facto civil war) and crude oil supply-related worries at the centre of their collective focus as the midweek market sessions opened for action this morning.

Reflections of such thought patterns were not difficult to glean; one look at the second day of sizeable losses in the Saudi equity markets (another 4% gone) as well as the spike in the premium insuring Saudi sovereign debt default told the story perhaps even better than the $100+ price tag attached to a barrel of black gold.

The rout in the stock markets certainly was not contained to only Libya’s neighbor(s); prices fell hard in New York on Tuesday (Dow down 1.38%) and in Tokyo (Nikkei down 2.4%) this morning. Meanwhile, the US dollar hovered near a four-month low (@76.58 on the index) as speculators eyed tomorrow’s ECB rate decision (or at least its jawboning) and it did not receive much in the way of -assistance’ from the upside surprise in February private payrolls.

ADP reported more jobs added (217,000) in the US last month than had been forecast by analysts, giving traction to the perception that the American labor market is indeed on a better footing. Friday’s Labor Department jobs scene numbers will come under intense scrutiny, to be sure. Until then, the gyrations in crude and Mr. Bernanke’s second day of testimony in front of the SBC will remain on top of the market agenda. As of yesterday, Mr. Bernanke did not give concrete indications as to what the Fed might do after it completes its bond buying QE2 program; one which followed a $1.7 trillion QE1 process of purchases of mortgage-backed debt and Treasuries.

The ADP report aside however, the latest sharp jump in EU producer prices has fueled speculation that the ECB will move on interest rates, and do so sooner than the Fed — thereby boosting the euro at the expense of the greenback. On a -normal’ day, the ADP data would have been good enough to lift the dollar; however the continuing melt-up in oil prices presented a significant enough obstacle for the US currency.

Said melt-up in black gold has had speculators and newsletter editors abuzz with doom/gloom projections of a cave-in in the world economy, with particular emphasis on the several peripheral nations which were mentioned every hour, on the hour, last summer (the PIIGS). As soon as the trouble in Tripoli became headline material,assurances of $200+ oil and a world of utter stagflation were the topics that most of the numerous newsletters landing in the average reader’s mailbox started to drum about (incessantly).

Of course, not everyone agrees on that kind of Armageddon-ish view of the world, even if they might not sign on to the school of thought that sees the current MENA turmoil as relatively short-lived. For instance, ING Bank’s chief international economist Rob Carnell believes that

"unless we see oil moving substantially higher from here, it’s hard to start thinking about oil-induced recessions or anything like that. If we start getting up to $140 to $150 a barrel, then we can return to those sorts of questions."

Thus, we come to gold (hovering at or just above Tuesday’s fresh record) which continues to receive its share of safe-haven bids and highly speculative interest while market participants of both stripes remain glued to the latest reports of attacks and/or counterattacks coming from Libya. The yellow metal came to within $0.50 of the $1,440.00 (spot offer) mark this morning. Silver certainly did not lag gold’s performance; in fact it rose by about twice as much in percentage terms (0.5%) to come to within 7 pennies of the $35 level.

Platinum and palladium both advanced this morning as well, with the former showing an $8 gain to the $1,849.00 level and the latter rising $6 to reach $821.00 per ounce. Reports that US February auto sales rose by 27%, outperforming even the most bullish forecasts of automotive analysts helped solidify the gains in the noble metals’ complex. The annualized pace of American car sales (based on February’s stellar figures) is now running at 13.4 million units.

Couple that bit of good news from the demand side with the report that Russian palladium shipments are scraping along a 15-year bottom in ounces (half a million in 2010, versus the 20-year average of 1.3 million) and you have the ingredients with which to account for the metal’s rise to such lofty price peaks. Do we hear $900? Going once…

Platinum market fundamentals-oriented conditions appear to also point into the direction of a developing deficit, with projections of a shortfall of from 200 to 300 thousand (in 2012-2014) ounces as offered up by Lonmin Plc CEO Ian Farmer at an industry conference on Tuesday. Indeed, quite the contrasting picture in supply/demand fundamentals that one might find when scrutinizing the metrics of the gold and/or silver markets at the moment. Lavish attention from the world of ETFs has not hurt the noble group metals, either.

When it comes to ETFs, and the fact that they embody a good chunk of what hedge funds are up to, these days, it is certainly worth noting that there is an apparent trend-change underway in the niche. Goldman Sachs’ Hedge Fund Trend Monitor observed that the average hedge fund long portfolio fell 0.7% to 2.2% as at year-end 2010.

The mammoth GLD fund was populated by no less than 121 hedge fund investors (with Paulson and Soros leading the pack) as of the end of last year, and it showed long positions at $8.6 billion versus short ones at $2.2 billion. The IAU (a better performer than the GDX and the GLD) contained 9 hedge fund investors as of 12/31/10 (long ownership at $116 million versus short at $35 million). A continued watchful eye is in order in this sector as such an investor class has undoubtedly been a pivotal factor in the shaping of price charts as well as perceptions among "small" investors.

The above-mentioned sector is certainly set for some intense scrutiny originating from a …different direction; that of US regulators. Coming soon, to a hedge fund "theatre" near you, will be "unprecedented" requirements to disclose, well, everything. On the list: risk exposure metrics, detailed lists of trading counter parties, creditor lists, and so on. Enter the Financial Stability Oversight Council. FSOC Members include Messrs. Bernanke and Geithner (as Chairman) — for starters. In addition to Geithner and Bernanke, the council’s 10 voting members include the chairmen of the Federal Deposit Insurance Corp., the SEC and the Commodity Futures Trading Commission (CFTC).

"The FSOC will be after a lot of information," Amy Friend, managing director of Promontory Financial Group in Washington, said at a Feb. 25 seminar at the U.S. Chamber of Commerce. "The Fed may come knocking on some doors, and people need to know how to talk to the Fed." — Noted Bloomberg this morning."

"So, Mr. Herbert Hedge, tell us about your billion-dollar gold bet…"

Until tomorrow,

Jon Nadler
Senior Analyst

Kitco Metals Inc.
North America

www.kitco.com and www.kitco.cn
Blog: http://www.kitco.com/ind/index.html#nadler

Gold Prices Hit All-Time Record, Silver Surges to 31-Year High

CoinNews.net — Tue, 01 Mar 2011 22:28:19 +0000

U.S. gold prices captured an all-time high and silver prices soared to a new 31-year high on Tuesday as a weaker dollar, rising oil prices, inflation concerns, and turmoil in the Middle East and North Africa added to the investment appeal of precious metals.

April gold prices added $21.30, or 1.5 percent, to settle at $1,431.20 an ounce on the Comex in New York. Gold ranged between $1,409.80 an ounce and $1,431.50 an ounce.

"The continued violence in the Middle East is bringing in new buyers and spurring gold to new territory," Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said and was cited on Bloomberg. "The rush to economic health is fading. Crude above $100 is an energy tax that will force governments to put more money into the system. Our old fear of stagflation returns."

"What gold needed was a catalyst, and it found it in the form of tensions that are surfacing in the Middle East and rising oil prices, which served as an inflationary threat and also led to political instability," Mark Luschini, chief investment strategist of Janney Montgomery Scott, was quoted on Reuters.

Silver prices for May delivery advanced 60.7 cents, or 1.8 percent, to close at $34.427 an ounce — its best settlement price since 1980 when the Hunt brothers attempted to corner the silver market and prices were driven above $50 an ounce. Silver on Tuesday traded as low as $33.790 an ounce and as high as $34.570 an ounce. The metal is up $1.50, or 4.6 percent, since Friday and has shot up 11.3 percent in 2011.

"Tensions in the Middle East are also supporting the silver market. The silver bulls have the strong overall near-term technical advantage and gained more power Tuesday," noted Jim Wyckoff of Kitco News.

"The next downside price breakout objective for the bears is closing prices below solid technical support at last week’s low of $31.705. Bulls’ next upside price breakout objective is producing a close above solid technical resistance at $35.00 an ounce," added Wyckoff.

Platinum prices for April delivery ended up $35.90, or 2.0 percent, to $1,845.10 an ounce. It ranged between $1,806.00 and $1,846.70.

Palladium prices for June delivery rallied $17.10, or 2.1 percent, to finish at $816.760 an ounce. Prices ranged from $798.05 to $819.00.

Precious metals prices jumped in earlier London PM fixings as well. The PM gold fix rose the least in percent terms. It was higher than the previous PM fix by $9.75, or 0.7 percent, with a fixing of $1,420.75 an ounce. Silver was up 88 cents, or 2.6 percent, at $34.370. The platinum fixing was $24 higher, or 1.3 percent, at $1,828 an ounce. The palladium PM fix climbed $22, or 2.8 percent, at $812.00 an ounce.

The United States Mint reported no bullion coin sales on Tuesday. The latest bullion sales figures as published on Monday follow.

U.S. Mint 2011 Bullion Coin Sales
	February	2011 Totals
American Eagle Gold Coin (1 oz)	72,500	203,000
American Eagle Gold Coin (1/2 oz)	12,000	13,000
American Eagle Gold Coin (1/4 oz)	16,000	18,000
American Eagle Gold Coin (1/10 oz)	100,000	120,000
American Eagle Silver (1 oz)	3,240,000	9,662,000