Today’s AM fix was USD 1,593.25, EUR 1,219.39 and GBP 1,051.23 per ounce.
Yesterday’s AM fix was USD 1585.00, EUR 1225.83 and GBP 1061.05 per ounce.
Gold was marginally higher yesterday and silver marginally lower.
Gold rose just 20 cents and closed at $1,588.50/oz. Silver fell 15 cents
to close at $28.75/oz.
Silver is trading at $28.80/oz, €22.40/oz and £19.20/oz. Platinum
rose to $1,587.25/oz, palladium to $771.00/oz and rhodium stayed at
$1,250/oz.
Gold continues to trade just below resistance at the $1,600/oz level
but appears to be consolidating at these levels after the recent price
falls. Investment sentiment towards gold is the worst we have seen it
since the start of the secular bull market in the early 2000’s.
This is bullish from a contrarian perspective as the "froth" and less
informed, speculative buyers have been washed out of the market as
happens in the course of all bull markets as they climb a “wall of
worry”.
Conversely, sentiment in stock markets is increasingly “irrationally
exuberant” after the Dow Jones industrial average reached new record
highs and extended its winning streak to 10 days on Thursday, a string
of gains last seen in late 1996.
Retail investors are piling into the stock market again in the false
belief that the worst of the economic crisis is over. Alas, those who
are not properly diversified may again be in for a rude awakening.
Holdings of SPDR Gold Trust (March 2007 to Today) - Bloomberg
Holdings of SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, had fallen 3.432 tonnes so far this week, on
course for an eleventh week of decline, although holdings were unchanged
at 1,236.307 tonnes from a day earlier on March 14.
The CFTC’s very unusual announcement through “people familiar with
the matter” that it is examining various aspects of gold and silver
price fixings in London, including whether they are sufficiently
transparent, continues to be digested.
The London gold fixing is conducted twice a day by five banks:
Barclays Plc, Bank of Nova Scotia (BNS), Deutsche Bank AG, HSBC Holdings
Plc and Societe Generale SA. The pricing started in 1919 and was
conducted in a meeting held at N.M. Rothschild & Sons Ltd.’s
offices. It began taking place by telephone in 2004.
Deutsche Bank, Scotiabank and HSBC conduct the silver fixing by phone once a day at midday. The first settlement was in 1897.
The price fixing story has been picked up by the non specialist
financial media internationally including by many publications and media
groups who very rarely cover the gold market and nearly never cover the
silver market.
It is now in the public domain and the story could result in the gold and silver markets receiving more scrutiny and coverage.
Overnight, CFTC commissioner Scott O'Malia said that the CFTC has
engaged in "a couple" of conversations about whether the daily setting
of gold and silver prices in London is open to manipulation akin to
Libor.
Separately, CFTC commission member Bart Chilton said interest-rate
rigging means other benchmark-pricing mechanisms such as gold and silver
may need reviews. “Given what we have seen in Libor, we’d be foolish to
assume that other benchmarks aren’t venues that deserve review,”
Chilton said.
He continued "given the clubby manipulation efforts we saw in Libor
benchmarks, I assume other benchmarks - many other benchmarks - are
legit areas of inquiry."
Concerns have previously been expressed by investors due to the
admission that leverage in gold trading in the London bullion market -
the ratio between metal traded and metal actually existing - was as much
as 100 to 1. This means that the so-called physical market may not be
so physical at all.
The enforcement division of the CFTC began pursuing allegations of
manipulation of the New York metals exchange, the COMEX silver market in
September 2008 (the COMEX is a division of the New York Mercantile
Exchange or NYMEX). Chilton said in August that there had been “devious
efforts” to move prices of the precious metal through the concentrated
short positions of a few banks.
Many of these same banks continue to have massive concentrated short
positions on the COMEX and investors have alleged that banks have
manipulated prices lower in order to profit.
Gold in USD – (5 Day) - Bloomberg
Thus, it is surprising that such allegations are being made without a
formal investigation being planned and without the CFTC completing
their investigations of manipulation on the COMEX.
The charge of manipulation at the London AM Fix may be unfounded but
it is certainly a distraction from the real risk of manipulation on the
COMEX by banks through the use of futures contracts.
Regulators might better serve investors and the wider public by
concluding their investigations of manipulation on the COMEX and coming
to definitive conclusions.
Some have suggested that this may be a an attempt by Wall Street
banks to discredit the London gold and silver fixing and rivalry between
Wall Street and the City of London over control of the precious metals
market may be at play. London has long had a monopoly regarding the
benchmark gold and silver prices and the physical settlement of gold and
silver at the London AM Fix.
The UK’s GMT time zone gives it an advantage when it comes to the
global pricing of bullion due to it being between time zones in Asia and
the Americas resulting in it capturing end of day trade in Asia and
start of day trade in the U.S. Those fixings are used to determine spot
prices for the billions of dollars of the two precious metals traded
each day – by both industry and investors.
Today, many governments and central banks and certain banks are
openly intervening in many markets – especially bond and foreign
exchange markets – therefore it would be naive to completely gold and
silver manipulation.
For the sake of investors and the proper functioning of markets it is
important regulators investigate allegations to the full and banks are
not seen as too big to investigate and “too big to jail” as was recently
admitted by none other than the U.S. Attorney General .
Regulation and enforcement is important as is a proper rational
debate. Increasingly governments, banks and central banks are distorting
financial markets and the free market through constant interventions.
In the western world, we have seen interest rates cut close to zero,
capital injections and bailouts, lending guarantees, saving and deposit
guarantees, favouring certain banks and institutions over others,
banning short selling and the banning of certain sovereign credit
ratings.
At the same time competitive currency devaluations are taking place
globally with central banks debasing currencies and many outright
interventions in currency markets in order to lower the value of
national and supranational currencies in competitive currency
devaluations.
Japan is the recent glaring example of this and Switzerland’s
‘pegging’ of the Swiss franc to the beleaguered euro is in the same
vein.
With governments surreptitiously and openly manipulating their
currencies, they and the banks they have bailed out and work closely
with, have an interest in not seeing their currencies fall sharply
versus gold and silver.
This would be a vote of no confidence in fiat paper currencies and
government and central banks stewardship of these currencies. They are
also a vote of no confidence in bankers, banks and the financial system.
Ultimately, manipulation or no manipulation, gold and silver prices
will be determined by supply and demand and the free market purchases
and sales by people and companies all over the world.
Investors should fade out the noise and continue to own both gold and silver bullion as foundation safe haven assets.
NEWS
Japan’s Pension Funds Will Increase Gold Investments, MUFJ Says
(Bloomberg) -- Mitsubishi UFJ Trust and Banking Corp.’s
Kazuhiko Inaba tells conference in Singapore that the funds will
increase investments in gold through ETFs.
● Gold is important to Japanese pension funds for portfolio
insurance, says Inaba, senior chief manager of frontier strategy
planning and support division
● Japanese govt debt will continue to rise, so hedging against JGBs important for pension funds, Inaba says
Gold Price Now Is Not Excessive, Deutsche Bank’s Lewis Says
(Bloomberg) -- We don’t view the current level of the gold
price as excessive, Michael Lewis, Deutsche Bank’s global head of
commodity research, says at conference in Singapore.
“It’s expensive but not substantially misaligned with other commodities,” Lewis says
When measured in real terms and versus physical and financial assets,
gold price needs to move in excess of $2,100 an ounce to move into
territory that can be considered extreme, Lewis says
Silver Institute Sees Record Industrial Demand in Coming Year
(Bloomberg) -- Says industry widening use of the metal is
expected to avg more than 483 m oz from 2012 to 2014, accord. to report
on its website.
IShares Silver Trust Holdings Unchanged at 10,704 Metric Tons
(Bloomberg) -- Silver holdings in the IShares Silver Trust,
the biggest exchange-traded fund backed by silver, were unchanged at
10,703.60 metric tons as of Mar. 14, according to figures on the
company’s website.
================================================================================
Mar. 14 Mar. 13 Mar. 12 Mar. 11 Mar. 8 Mar. 7
2013 2013 2013 2013 2013 2013
================================================================================
Million Ounces 344.129 344.129 344.129 342.292 342.292 342.292
Daily change 0 0 1,836,369 0 0 0
--------------------------------------------------------------------------------
Metric tons 10,703.60 10,703.60 10,703.60 10,646.48 10,646.48 10,646.48
Daily change 0.00 0.00 57.12 0.00 0.00 0.00
================================================================================
NOTE: Ounces are troy ounces.
SOURCE: iShares Silver Trust
