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Gold & Silver Rise as Dollar Falls, “Well Bid in Euros” as Physical Traders “Buy the Dips”

March 31, 2010 by · Leave a Comment 

By Adrian Ash, GoldSeek

London Gold Market Report

THE PRICE OF GOLD & SILVER bullion rose against a weakening US Dollar inLondon on Wednesday, ticking higher as Asian shares ended the day lower and European stock markets held flat.

“A close above $1097 today will give gold its sixth consecutive quarterly gain,” says the daily note from Mitsui’s London team.

“Silver fixes higher in Europe, gold firm,” says Reuters, repeating Tuesday morning’s headline.

The Euro rose towards a 1-week high against the Dollar meantime on the currency market, while the British Pound jumped once again to breach a near-2 week high at $1.5150.
“Spot gold in Euros remains well bid and did not even [dip to] our previously forecast €800 support region,” writes Axel Rudolph, technical analyst atLuxembourg’s Commerzbank, in his latest weekly report.

Staying “short-term bullish” on silver, “We remain medium-term neutral as long as the silver price remains contained within its three month resistance line at 17.97 and the 15.59 late-Feb. low,” says Rudolph.

Adding 7.7% against both the Euro and Pound Sterling since the start of Jan. 2010, the gold price today rose above $1110 per ounce for Dollar investors.

Silver today came within 10 cents of a 10-week high at $17.61 per ounce, some 4.1% higher from the first-quarter’s start.

“Whenever gold falls we see good physical buying coming in,” the Reuters newswire quotes one Europe-based trader.

“Even on the private customer side, there’s pretty good demand for coins and bars.”

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Toby Connor: Manipulation, fact or fantasy?

March 31, 2010 by · Leave a Comment 

11p ET Tuesday, March 30, 2010

Dear Friend of GATA and Gold:

Toby Connor, editor of the Gold Scents market letter, yesterday threw out a challenge to those who complain that the gold market is manipulated. In an essay headlined “Manipulation, Fact or Fantasy?,” Connor wrote:

“If gold is being manipulated by the powers that be, then how in the world did gold manage to rise from $250 to over $1,200? I have to say that if someone is manipulating the price of gold, they are doing a damn poor job of it.”

Yes, Western central banks increasingly are having trouble keeping gold down. But as good as gold’s run over the last decade may look, gold’s performance still badly lags the general increase in the world money supply over the last 40 years. This lag is much remarked upon and is used to disparage gold, used to argue that gold is not a good hedge against inflation. But gold has underperformed over the longer term because of the long war waged against it by Western central banks, a war whose documentation may begin with the chronology posted by Bill Buckler’s financial letter, The Privateer, here:

Connor continues: “When gold was rallying hard last November, where was the manipulation then? I didn’t hear a peep from the conspiracy crowd all month.”

eally — not a peep last November? If Connor heard nothing then, he was studiously not listening to GATA even as he seems intent on mocking GATA now. For during November GATA published 147 dispatches, many of them complaining about gold market manipulation, including dispatches with these headlines:

“A Small Report From the Front of the Gold War.”

“Gold and Economic Freedom: GATA Interview.”

“Financial Times Lets GoldMoney’s Turk Mock Paper Gold.”

“John Embry: Con Job in the Financial Markets Continues.”

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The Fed’s “April Fool’s” Joke

March 31, 2010 by · Leave a Comment 

By Jeff Nielson, Bullion Bulls Canada

Wednesday, the final day of March is supposed to mark the termination of the U.S. Federal Reserve’s mortgage-bond buying spree. You can call me a “skeptic” because I don’t believe a word of it. It’s all a matter of simple arithmetic.

As regular readers have heard (ad nauseum), the United States is currently carrying over $60 trillion in total public/private debt – a mountain of debt which exceeds the debts of all other nations, throughout history, combined. Naturally, the costs of servicing this huge mountain of debt (i.e. making interest payments) is also humungous.

Raising U.S. interest rates by even 1% would cost the U.S. economy an extra $600 billion per year in additional interest payments. This is roughly equivalent to a 5% drop in GDP, even before factoring in the “multiplier effect” of draining that huge amount of capital out of the economy. With the entire U.S. economy still teetering on collapse, the U.S. obviously cannot afford to voluntarily absorb such a blow to its economy.

Meanwhile, with U.S. debt currently ranked as being “riskier” than European debt (according to premiums paid on credit-default contracts), with the rest of the world’s “surpluses” having shrank dramatically, and with many other countries also issuing large amounts of debt (with lower risk attached to it), the demand for U.S. debt has plummeted.

It is the most elementary principle of supply and demand that if you increase the supply of something and reduce demand that prices must fall. Indeed, either increasing supply or decreasing demand should cause the price of U.S. bonds to fall. The fact that U.S. Treasuries remain near their maximum, possible price (and other U.S. debt is similarly over-valued) is economic proof that the Federal Reserve is very active in buying-up this debt with its newly-printed Bernanke-bills.

Thus, the circumstances are crystal clear: there is much too much supply of U.S. bonds/debt, that debt is grossly over-priced, and demand is plummeting. If the Federal Reserve was to stop “buying bonds” on Wednesday, then on Thursday, April 1st, we will see U.S. interest rates shoot higher. This is not a “prediction”, it is a “calculation”. As I said before, it’s all simple arithmetic and elementary economics.

US Mint Bronze Medal Prices Raised

March 31, 2010 by · Leave a Comment 

Women Airforce Service Pilots Bronze MedalCollectors will now pay a few dollars more for 3-inch, 1.5-inch and 1.3125-inch bronze medals made and sold by the United States Mint.

The US Mint, as mandated by law, produces a variety of medals ranging from Presidential, First Spouse, Historical, Humanitarian, Cultural and Military.

The 1.3125-inch First Spouse bronze medals were the first to undergo an increase. Prices were raised 57.1 percent from $3.50 to $5.50 on March 18, 2010. These medals bear the likeness of the companion First Spouse Gold Coins.

Read the rest of US Mint Bronze Medal Prices Raised (119 words)

© for Coin News, 2010. |
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Gold, Silver, Metal Prices Commentary – 3/31/2010

March 31, 2010 by · Leave a Comment 

Bullion update ... Come, Mr. Tallyman

Good Day,

Although range-bound conditions still prevailed during the overnight market hours, gold prices were able to repair yesterday’s closing losses and return to near the $1110 value zone following a fresh decline in the US dollar.

Indian buyers remained cautious last night, exhibiting signs that $1100 or lower would still be their preference when setting out to buy dowry-related baubles. That might be a bit difficult in view of the fact that April and May’s wedding season could keep price tags on the elevated side. A lot still depends on ETF-related demand overseas, and how the market shapes up in the wake of action in the currency markets (read: the dollar-euro tango).

Read the rest of Gold, Silver, Metal Prices Commentary – 3/31/2010 (1,068 words)

© Jon Nadler, Kitco Metals Inc. for Coin News, 2010. |
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GATA’s Murphy, Douglas, and Powell interviewed by King World News

March 31, 2010 by · Leave a Comment 

8:17a ET Wednesday, March 31, 2010

Dear Friend of GATA and Gold (and Silver):

GATA Chairman Bill Murphy, board member Adrian Douglas, and your secretary/treasurer were interviewed for a half hour this week by Eric King of King World News, discussing the U.S. Commodity Futures Trading Commission’s hearing on futures trading in the precious metals, the CFTC’s failure to act on advance notice of a silver market manipulation, and the general objectives of and prospects for the gold and silver manipulation schemes. You can find the interview at the King World News Internet site here:…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Wall Street cabal seen derailing swaps regulation

March 31, 2010 by · Leave a Comment 

Traders ‘apparently own the regulatory apparatus.’

By Herbert Lash, Reuters

NEW YORK — A major crisis is building in the derivatives market yet a cabal on Wall Street is blocking the formation of a clearing house that could stop the next financial meltdown, a senior official with the Kauffman Foundation said on Tuesday.

The need for disclosure in the swap markets is enormous, yet the will to act is missing because of a small cadre of special interests, said Harold Bradley, who oversees almost $2 billion in assets as chief investment officer at Kauffman.

“There is no incentive from the moneyed interests in either Washington or New York to change it,” Bradley told the Reuters Global Exchanges and Trading Summit in New York.

“I believe we are in a cabal. There are five or six players only who are engaged and dominant in this marketplace and apparently they own the regulatory apparatus,” he said. “Everybody is afraid to regulate them.”

U.S. and European officials are trying to craft new rules to regulate the $450 trillion private derivatives market in broad efforts to avoid another financial crisis.

Policy-makers generally agree that most standardized derivatives should be traded on exchanges or cleared through a clearinghouse, which would assume the risk of a default.

Bradley said those efforts fall short. There needs to be a national market system for fixed income and credit with displayed prices and the posting of open interest and market positions, he said.

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Cornering Gold: True or False?

March 31, 2010 by · Leave a Comment 

Karl Denninger submits:

Janet Tavakoli has written an interesting piece over at Huffington Post related to the gold market and a potential cornering attempt:

First, let your greed overcome all regard for the stability of the global market, and overcome your aversion to illegal activities.

Pump up the gold story. Get your friends to tell retail investors to buy some gold every month. Get your buddies in the financial business to offer exchange traded gold funds (ETFs) that claim to buy physical gold. This will sound safe to retail investors, but in fact, the ETFs are very risky. This will serve your purpose when you are ready to start a panic. These particular ETFs will allow the “gold” to be commingled with the custodian’s gold, and the custodian can lease out the gold. Moreover, the “gold” custodian can give it to a sub custodian that the manager doesn’t know. The sub custodian can give it to yet another sub custodian unknown to the original custodian. The manager will never audit the gold, and the gold is not “allocated” to a particular investor. Since this is an “exchange traded” gold fund, investors will probably assume the gold is regulated by the Commodities Futures Trading Commission (CFTC), but it isn’t. By the time investors wake up to the probability that there is very little actual gold backing their investment, your plan will be ready to execute.

That could be a problem, right?

Zero Hedge has run a piece on alleged manipulation of the market (specifically, selling short an insane number of contracts – which would obligate you to deliver – when you have no possible way to do so.) This, however, isn’t necessarily manipulation per se, nor is the assertion that these are “financial” (that is, we trade ‘em for money, not to actually buy or sell physical gold) assets false. They in fact are; if I sell short a S&P 500 Futures Contract I can assure you that I do not deliver a basket of 500 stocks to the buyer if I’m right (or wrong!)

However, the elements of a scam – which could be the intended outcome – are indeed present. The person buying or selling a futures contract can have either the intent of actually taking (or making) physical delivery or they can be a pure speculator on price, intending to execute the opposite trade prior to expiration (and thus pocketing either a profit or a loss thereupon.) So long as the person executing a futures trade is required to post margin on all underwater positions nightly (and provided the market is honest, they are) the “pressure” on them as the market moves the wrong way tends to force correction toward the mean – and is counter-cyclical against imbalances.

But the buyer of an ETF is likely in a different circumstance. Unlike the sophisticated speculator (like me) who buys and sells futures contracts on things like the S&P 500, currencies, gold and even oil without the intent to take delivery of a thousand barrels of crude in my driveway (that would be kinda messy, especially if the barrels were not included – and they’re not!) many if not most ETF purchasers are under the belief that they are buyingactual physical gold or silver that someone is holding for them in a vault somewhere.

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American Buffalo gold proof coins sell out

March 31, 2010 by · Leave a Comment 

The US Mint has announced that it has sold out of the 2009 batch of American Buffalo gold proof coins.
It reached the 50,000 sales mark at the start of this week after being launched several months late in October last year.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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China’s appetite for gold ‘insatiable’

March 31, 2010 by · Leave a Comment 

The demand for gold jewellery and bullion as an investment is ever-increasing in China, it has been suggested.
"A country with an insatiable appetite and a shortfall of supply against demand," Rhona O’Connell, writing for Mineweb, states.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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