1 Dec 2012

Precious Metals — As the Smart Money Exits Too Soon

“Too little, too late” could well describe the current plight of the 'smart money' silver investor, since many seem to be arriving late to the party when the market has not even yet entered the final phase for investment demand in either silver or gold.

Of course, some investment money has trickled in to the precious metals, but to the average investor, prices are still correcting and the market’s fundamentals remain very much misunderstood.

The Financial Media Circus Aids the Manipulators

The controlled financial media continues to recruit from within its ranks those market analysts who have incorrectly predicted and portrayed precious metal fundamentals and market conditions. This has further helped to inhibit more accurate price discovery in the metal markets.

There also remains a suckling reflex among those investors that cling to the status quo, apparently unconvinced by the reality they can actually see with their increasingly blind eyes.

Such people demand the circus presentation of information by the media with little regard to its accuracy or to the long term performance of touted pundits that seem to gain instant credibility by their simple presence in print or on television.

When Silver Breaks Beyond Manipulation

On its surface, the paper silver market appears to portray a starkly different picture compared to the reality of what lies underneath or at the root of each futures contract.

When the door is officially shut on the sacrosanct social contract at the center of price discovery, and the scales tip toward public understanding, the silver market could finally see its long awaited price release.

The resulting sharp rally would probably overshoot substantially to the upside, as the silver market suddenly finds itself in a vacuum when its price finally becomes dependent upon physical supply and demand for the first time in decades.

When widespread understanding of the intrinsic value of silver instantly overwhelms available supply, the misunderstandings of this decades-long market manipulation will end.


Fundamental Price Discovery May Finally Return



In many ways this dramatic event will be symbolic and could well herald the return to fundamental price discovery in all other commodity markets. Unfortunately, most people remain totally unaware that the sudden upside risk created by systematic and manipulative underpricing has existed for many years.

Once the return to fair value occurs, the offers will finally recede, giving way to an unprecedented influx of demand for silver.

While participation in the precious metals market is currently low relative to other asset classes, a large amount of liquidity is lying in wait for the time when frustrated investors finally discover that their apparently never ending search for a meaningful yield has become all but fruitless.

At some point the realization of the importance of having a return of their money — rather than just a return on their money — will dawn upon them, but for most it will be too late to save their wealth from devastation.

Gold, Silver Rise On Concerns Of Further Currency Debasement and QE4

Today’s AM fix was USD 1,728.25, EUR 1,329.53, and GBP 1,077.87 per ounce.
Yesterday’s AM fix was USD 1,724.50, EUR 1,327.56, and GBP 1,076.47 per ounce.

Gold rose $6.40 or 0.37% in New York yesterday and closed at $1,725.60/oz. Silver fell to a low of $33.51 in Asia, and ran up to $34.36 in New York and finished with a gain of 1.51%.



Cross Currency Table – (Bloomberg)

Gold inched up on Friday, but prices saw their largest weekly drop since the beginning of November as the unease of the talks on the US fiscal cliff continue to weigh on sentiment.

Republican Speaker of the House, John Boehner said yesterday that the fiscal cliff talks made little progress, dampening the flame of optimism that he lit on Wednesday.

"Based on where we stand today I would say two things. First, despite the claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts," Boehner said after the private session with Geithner. "And secondly, no substantive progress has been made in the talks between the White House and the House over the last two weeks," Boehner commented.

US Treasury Secretary, Timothy Geithner, is Obama's chief negotiator in talks to avert the US fiscal cliff.



XAU/USD 5 Min – (Bloomberg)

Spot palladium is on course for its 5th weekly gain and a monthly rise of over 14%. Supply shortages contribute to the gain. Norilsk Nickel, the world's largest producer of nickel and palladium, said they expect the palladium market to remain in a deficit in the next few years largely due to a near depletion of Russian state supplies.



XAU/EUR 5 Min – (Bloomberg)

Spot silver is on course for a monthly gain of over 6%.

The Shanghai Gold Exchange said it will begin a trial run of OTC gold trading on the China Foreign Exchange Trading System on December 3rd, allowing interbank trading in large volumes.

The US CFTC (Commodities & Futures Trading Commission) commitment of traders is posted at 1930 GMT.

There is speculation in the markets that the US Federal Reserve will purchase more debt to help the US economy which boosting gold bullion.

While speaking at Pace University in Manhattan , Federal Reserve Bank of New York President William C. Dudley said, “I will be assessing the employment and inflation outlook in order to determine whether we should continue Treasury purchases into 2013.” Dudley also stated, “The Fed will promote maximum employment and price stability to the greatest extent our tools permit, and we will stay the course.”



Fed officials are considering whether to step up record accommodation to counteract the scheduled expiration next month of Operation Twist, a program swapping short-term Treasuries with longer-term debt. A “number” of Fed officials said at the last policy meeting that they may need to expand its monthly purchases of bonds, according to the minutes of the FOMC ’s Oct. 23-24 meeting.

Gold has returned 10% this year and silver has returned 23% year to date, driven by quantitative easing.