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The Month in Review – January 31st, 2012
January 31, 2012
We are one month into the New Year, and what a month it has been! For those who purchased additional product during the final manipulative events of 2011, congratulations are in order! For those who continue to stand on the sidelines waiting for “a good time” to get back into the market, all you have to do is look back at price movement since December 30th. Doing that might lead the hesitant investor to say “wow…it appears that every day since December 30th was a good time to get back into this market.”
In our December 23, 2011 memo, we quoted Hinde Capital’s “HindeSight” report in which they said that all indications were that gold was beginning to bottom around the then current price level (~$1,600). We reiterated that Ted Butler, James Turk, et al. were of the opinion that the price manipulation was coming to a close and that 2012 would kick off with higher prices. Needless to say, they were incredibly accurate in their projections.
In our December 30, 2011 memo, we again stated that we believed we were seeing the greatest buying opportunity for all of 2011. Closing prices for that day appear in our Month End to Month End Close table in this memo. We quoted Ted Butler in that same memo as saying that “I know that this has been a trying time for silver investors, but it’s important to both understand what has happened…and to look ahead. The intentional price smash has created a powerful set up for the next silver rally.” Again, needless to say, silver has rallied and has outperformed gold this month.
January began just as Mr. Butler, Mr. Turk, Jim Rickards, and all of our other favorite analysts projected. Precious metals prices began rising as January opened, obliterating the artificially induced and temporary price dips we saw in the final weeks of December.
The US Federal Reserve announced this month that interest rates were now going to remain “exceptionally low” through late 2014 instead of 2013 as previously announced. The dollar subsequently got crushed and gold shot higher as a result. Expectations are that QE3, or QE to infinity, as some have called it, is just around the corner. The dollar should be crushed again as the Fed fires up the presses.
Europe’s situation remains unresolved. Greece is still in talks with its private bond holders to determine how big a “haircut” they will take. Portugal is apparently lining up to be the next country to ask for a second bailout (following in Greece’s footsteps). The other debt laden members of the Eurozone must surely be watching all of this with an eye towards finding a way out of their own crushing debt situations. Fitch downgraded several Eurozone countries this week, including Italy and Spain.
Oil continues to hover close to the $100 a barrel mark, helped by the uncertainty surrounding the state of the Iranian sanctions, particularly China, India and Europe’s implementation of those sanctions.
The euro is finishing the month up higher against the dollar, driven there by rumors that a debt solution in Greece is close to completion. The Fed’s announcement that interest rates would remain “exceptionally low” for the next three years also acted to crush the dollar against other currencies.
Friday to Tuesday Close
| January 27th | January 31st | Net Change | |
|---|---|---|---|
| Gold | $1732.00 | $1737.00 | 5.00 + 0.29% |
| Silver | $33.80 | $33.25 | (0.55) – 1.63% |
| Platinum | $1620.00 | $1600.00 | (20.00) – 1.23% |
| Palladium | $687.00 | $686.00 | (1.00) – 0.15% |
| Dow Jones | 12660.46 | 12600.90* | (59.56) – 0.47% |
Month End to Month End Close
| December 30th | January 31st | Net Change | |
|---|---|---|---|
| Gold | $1566.00 | $1737.00 | 171.00 + 10.92% |
| Silver | $27.90 | $33.25 | 5.35 + 19.18% |
| Platinum | $1400.00 | $1600.00 | 200.00 + 14.29% |
| Palladium | $655.00 | $686.00 | 31.00 + 4.73% |
| Dow Jones | 12217.56 | 12600.90* | 383.34 + 3.14% |
Previous Year Comparisons
| January 31st, 2011 | January 31st, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1338.00 | $1737.00 | 399.00 + 29.82% |
| Silver | $28.16 | $33.25 | 5.09 + 18.08% |
| Platinum | $1800.00 | $1600.00 | (200.00) – 14.29% |
| Palladium | $820.00 | $686.00 | (134.00) – 16.34% |
| Dow Jones | 11891.93 | 12600.90* | 708.97 + 5.96% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1720/1700/1680 | 32.90/32.50/32.00 |
| Resistance | 1750/1770/1800 | 34.00/35.00/35.50 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1580/1550/1510 | 680/650/625 |
| Resistance | 1600/1630/1650 | 700/720/750 |
Volatility should be expected to continue. Gold has gained over 10% so far this month and silver has more than doubled that performance. The fresh highs that analysts have been predicting would occur in 2012 may now be setting up to happen much earlier in the year than they expected. Scott Minerd, of Guggenheim Partners, said on CNBC this afternoon that he expects silver to hit $50 and gold to reach $3,000. James Turk, whom we’ve quoted so often due to the accuracy of his views of the precious metals market, said in an interview with King World News yesterday “The important point to keep in mind is while silver may look high compared to where it started the month, to me silver looks cheap compared to its upside potential over the next few months. So don’t wait for a big pullback to buy. If today is the day where you purchase silver each month, go ahead and make the buy. Don’t try to time the market.” Mr. Turk continued, saying “once silver hurdles above $35, I expect to see $68-$70 in 2-to-3 months.” Mr. Turk further continued in his discussion of silver, saying “There is, of course, no guarantee that silver will successfully hurdle $35 on its first attempt, but we need to get ready just in case it does. By ‘get ready,’ I mean we have to prepare ourselves mentally – to eliminate the emotion and watch what silver is telling us. This can be very hard to do, but it is essential. Otherwise you will miss the big moves, and it is riding these big moves to the fullest extent possible, from start to finish, where the big money is made.” Mr. Turk went on to discuss gold in the interview, saying “Regarding gold, I don’t think people realize that gold could explode from current levels. I think the potential for explosion is there and what you are going to see is not only silver on the move, but you will also see gold smash through the $2,000 level.” This month has proven out the projections of analysts such as James Turk and Ted Butler and their assertion that the fundamentals for owning gold and silver remain strong. With Greece about ready to implode, and the jobless rate across the Eurozone at its highest level since the creation of the euro, things continue to look bleak for European economies. Savers in the United States have just been informed that they will face three more years of interest rates that are below expected inflation rates, effectively meaning they can sit back and watch their savings vanish, courtesy of the US Federal Reserve. If anything, the fundamentals for owning precious metals have become even stronger over the 31 short days we’ve been in the New Year, and if analyst predictions are correct, the fundamentals may become even stronger as 2012 wears on. If you exited this market and have been sitting on the sidelines since the last manipulation event in late December, you have been missing what may be your best opportunity to get back into ownership of precious metals before global demand and financial events set off a chain reaction that may send prices higher than anyone has ever seen. Approach this market smartly and do not overextend your ability to maintain ownership of your product in such volatile times as these. According to analysts, all indications are that this market is setting up for a huge explosion to the upside. If they are correct, the time to act is before that upside explosion happens. Remember that precious metals should be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to purchase or sell.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Month in Review – January 31st, 2012
Posted by Worldwide Precious Metals on Tuesday, January 31, 2012
The Week in Review – January 27th, 2012
January 27, 2012
It was another exciting week in precious metals! Ben Bernanke was on all the mainstream media airwaves on Wednesday carrying out the Federal Reserve’s new “transparency” policy. The Federal Reserve had previously stated that “exceptionally low” interest rates would be in effect until 2013. On Wednesday, the Fed extended that timeline, saying economic conditions “are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”
The Federal Reserve’s announcement Wednesday was just another prod for those sitting with their cash on the sidelines to put it to work in something else. When asked about the pain that the Fed’s policies are causing savers, Chairman Bernanke said “we do think about that. I guess the response I would make is that the savers in our economy are dependent on a healthy economy in order to get adequate returns.” He added that once low interest rates spurred recovery, “that in turn will lead ultimately to higher returns across all assets for savers and investors.” Extrapolating from the fact that the Fed deems it necessary to keep interest rates “exceptionally low” for close to three more years, we can project three more years of punishment for those who choose to save their money instead of putting it to work in investments.
Initial claims for unemployment rose last week, moving to 377,000, but still below the key 400,000 level economists say signifies an improving jobs picture. The Federal Reserve, in their press conference Wednesday, said that it expects growth to remain modest this year and that we will see only gradual declines in the unemployment rate.
The Commerce Department released a report on Thursday showing that new home sales reached a level of just 302,000 in 2011. Economists say that annual new home sales should be at 700,000 in a healthy economy, and last year’s figure is now officially the worst year on records that date back to 1963. Adding to the pressure on the housing industry, builders also ended 2011 with their worst year on record for single family home construction.
Greece and its private creditors are ‘very close’ to a deal according to Olli Rehn, the European Union’s monetary affairs commissioner during a debate hosted by CNBC in Davos. This sentiment has been floating around the media for the last two weeks and yet there is still no deal, so we remain cautious that this weekend will prove any different.
Portuguese government bond yields hit new euro-era highs Friday, driven to that level by investor fears that the beleaguered country may soon require a second bailout, just as Greece did. If these fears come to pass, it could very well be the trigger for the chain reaction leading to the Eurozone melt-down that everyone seems to be waiting for. If Greece fails to come to a resolution and winds up in default, the fallout could be immense as a “if they don’t pay their debts then I’m not paying mine” mentality takes hold.
Crude oil continues to be volatile, hovering just below $100 a barrel currently. The uncertainty surrounding what effect the upcoming Iranian sanctions will have on the price of crude oil is apparently the driving force behind the current volatility in crude.
Despite continued uncertainty surrounding Greece, the euro moved higher again this week against the dollar, apparently benefitting from a mass exit of the dollar after Bernanke’s speech on Wednesday. The yen moved downward for most of the week, but reversed that trend after Bernanke’s speech as well.
Friday to Friday Close
| January 20th | January 27th | Net Change | |
|---|---|---|---|
| Gold | $1664.00 | $1732.00 | 68.00 + 4.09% |
| Silver | $31.70 | $33.80 | 2.10 + 6.62% |
| Platinum | $1530.00 | $1620.00 | 90.00 + 5.88% |
| Palladium | $675.00 | $687.00 | 12.00 + 1.78% |
| Dow Jones | 12720.48 | 12655.62* | (64.86) – 0.51% |
Previous Year Comparisons
| January 28st, 2011 | January 27th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1340.00 | $1732.00 | 392.00 + 29.25% |
| Silver | $27.90 | $33.80 | 5.90 + 21.15% |
| Platinum | $1805.00 | $1620.00 | (185.00) – 10.25% |
| Palladium | $815.00 | $687.00 | (128.00) – 15.71% |
| Dow Jones | 11823.70 | 12655.62* | 831.92 + 7.04% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1700/1675/1650 | 33.00/32.00/31.50 |
| Resistance | 1750/1800/1820 | 34.00/35.00/35.70 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1600/1575/1550 | 680/650/625 |
| Resistance | 1650/1680/1700 | 700/720/750 |
Volatility should be expected to continue and possibly increase. The Federal Reserve may very well have lit the fuse on the precious metals rocket this week with their announcement on Wednesday that interest rates will likely remain at “exceptionally low” levels through late 2014. The longer Mr. Bernanke spoke and the greater the detail he provided about the Fed’s policies, it seemed the higher precious metals prices went. During his press conference, Mr. Bernanke said, when asked about inflation fears, “We’re targeting 2% inflation.” When asked by one of the reporters “Do you worry that inflation may get out of control?” Mr. Bernanke said “Inflation may move away from desired levels.” If inflation truly “gets out of control” as the reporter surmised, and Mr. Bernanke seemed to even expect, then precious metals prices may very well explode to the upside. Noted silver analyst Ted Butler, whom we quote often due to the accuracy of his predictions for silver, had this to say regarding the action this week: “If JPMorgan is not selling but is, in fact, buying, then a very different scenario could develop, similar to how I have speculated in the past. If JPMorgan is buying and not the technical funds, then a very different and bullish scenario emerges. If JPMorgan decides not to put its head back into the lion’s mouth and withdraws from manipulating silver, then a new silver chapter may have begun. Let me be clear – there is no way of determining for sure who is buying and selling today and this past Friday; only future COTs [Commitment of Traders report] will reveal that. If it turns out that JPMorgan is buying back more of its short position on these rallies that would suggest much higher prices to come and maybe real soon. This goes to the heart of the silver manipulation. Take away the big silver short and you should take away the manipulation itself. I’m not saying that is the case, just that it might be. I would play it, as I always do, like it may be the end of the manipulation, simply because if it is, there will be little likelihood of second chances to get on board easily.” Rumors are flying that Iran and India have negotiated a deal for India to purchase oil using gold, bypassing the need for dollars from the US financial system, and thereby skirting around the sanctions imposed by the US. If this rumor turns out to be true, that is just one more nail in the US dollar as the world’s reserve currency. As confidence erodes in the US dollar and other currencies across the globe, precious metals prices may take off to the upside and do so with a speed and violence none of us has seen in our lifetimes, especially if the precedent has already been set to use gold as currency for trades as India and Iran are rumored to be doing. If Ed Steer, Ted Butler, Jim Sinclair, and the numerous other analysts that we quote on a regular basis are correct, then we may have seen the low prices for 2012 at the beginning of January, and time may be running out for those sitting on the sidelines, watching their cash earn a paltry 1% if they are lucky, to get into these markets at what may be looked back on as “bargain basement” prices in the coming months. Keep your eyes and ears on the news and be aware that if prices start to move as rapidly as these analysts expect, there will be little time to react. Remember that precious metals should be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to purchase or sell.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – January 27th, 2012
Posted by Worldwide Precious Metals on Friday, January 27, 2012
The Week in Review – January 20th, 2012
January 20, 2012
Despite the Federal Reserve’s reassurances that inflation is not an immediate threat, investors flooded into 10 year Treasury Inflation-Protected Securities at a record pace this week. Investors bought $15 billion worth of 10 year TIPS at a negative yield this week. This is the first time in the 15 years since TIPS were introduced that such an event has happened and essentially means investors are paying the US government to own 10 year TIPS.
In hopefully what will be the final week of skewed unemployment data, initial claims for unemployment benefits were near a four year low last week. Despite claims of “seasonal adjustments”, unemployment data is always volatile and frequently erroneous during the post-holiday layoff season and so the data may not be accurate until January comes to a close.
Existing home sales rose 5 percent in December, their highest move since January of 2011. First time home buyers are still participating in the housing market at record low rates, making predicting the path of any housing recovery difficult. The outstanding foreclosure backlog also still threatens to move prices lower once they begin to hit the market en masse.
In Greece, after talks broke down last week between the debt laden country and its private bondholders, the atmosphere seemed to improve as the week wore on. The Institute of International Finance, which represents the bondholders, even went so far as to call the resumed talks “productive”, echoing a statement made by Greek Finance Minister Evangelos Venizelos on Thursday saying “The atmosphere was good, progress was made and we will continue tomorrow afternoon.” Venizelos told the Greek parliament “Now is the crucial moment in the final battle for the debt swap and the crucial moment in the final and definitive battle for the new bailout. Now, now! Now is the time to negotiate for the sake of the country.”
Crude oil continues to cross back and forth over the $100 a barrel mark. Strong economic figures out of Germany and the US helped push crude back over $100 a barrel. Forecasts from the IEA predicting a fall in demand in 2012 helped push prices back down to the upper $90’s by the end of the week however.
Amid growing tensions over proposed sanctions on Iranian oil aimed to rein in Iran’s nuclear programs, Iran warned its Gulf Arab neighbors on Sunday that they would suffer “consequences” if they raised their oil output to replace banned Iranian oil. Mohammad Ali Khatibi, Iranian OPEC Governor, said “If [they] give the green light to replacing Iran’s oil these countries would be the main culprits for whatever happens in the region – including the Strait of Hormuz. Our Arab neighbor countries should not cooperate with these [US and European] adventurers…These measures will not be perceived as friendly.”
Europe is rumored to be set to announce that the European Union will be implementing sanctions on Iran’s oil industry by Monday. Final details are purportedly still being worked out and there may be a “grace period” of between three and eight months to allow European refiners to find new suppliers, according to an EU diplomat’s statement to CNN.
The euro moved up this week, apparently trading on headlines that the debt negotiations in Greece may be coming to a successful conclusion. The yen was relatively flat for the week against the dollar.
Two different European sources corroborated to King World News this week that demand for physical gold and silver is increasing dramatically ahead of events in Europe.
Friday to Friday Close
| January 13th | January 20th | Net Change | |
|---|---|---|---|
| Gold | $1631.00 | $1664.00 | 33.00 + 2.02% |
| Silver | $29.50 | $31.70 | 2.20 + 7.46% |
| Platinum | $1485.00 | $1530.00 | 45.00 + 3.03% |
| Palladium | $635.00 | $675.00 | 40.00 + 6.30% |
| Dow Jones | 12469.96 | 12698* | 228.04 + 1.83% |
Previous Year Comparisons
| January 21st, 2011 | January 20th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1342.00 | $1664.00 | 322.00 + 23.99% |
| Silver | $27.45 | $31.70 | 4.25 + 15.48% |
| Platinum | $1822.00 | $1530.00 | (292.00) – 16.03% |
| Palladium | $816.00 | $675.00 | (141.00) – 17.28% |
| Dow Jones | 11822.95 | 12698.00* | 875.05 + 7.40% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1640/1620/1600 | 30.30/30.00/29.50 |
| Resistance | 1670/1700/1725 | 32.00/32.50/33.25 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1500/1475/1440 | 660/630/610 |
| Resistance | 1550/1575/1600 | 690/720/740 |
Volatility should be expected to continue and may increase as events come to a head in Europe and the Middle East. Despite attempts by the banks whom Ed Steer simply refers to as “Da Boyz” to smash prices of precious metals down at the end of 2011, precious metals appear to be resuming their upward climb. For a detailed discussion of the background behind “Da Boyz” manipulation of the market, including MF Global’s role in these events, we invite you to view an interview that Tom O’Brien, of The Tom O’Brien Show on www.tfnn.com conducted with Richard Love, the Founder of Precious Metals International, Ltd. You can view this interview by clicking this link: Richard Love Interview. The full Internet address for the video is http://www.pmilimited.com/video/RichardInterview.wmv for those of you who wish to forward it and share it with others. JS Kim, Chief Investment Strategist and Founder of SmartKnowledgeU said in his 2012 Precious Metals Forecast, “Though we can mark 2011 as a win for the global banking cartel as they collapsed open interest in gold and silver futures repeatedly throughout the year by raising initial and maintenance margins for gold and silver futures (once raising margins on silver futures a ridiculous five times in just 9 days when silver broached $50 an ounce) and by also using the MF Global bankruptcy to force involuntary client liquidation of gold/silver futures at the end of the year, I am confident that all the banking shenanigans of 2011 has set the stage for a spectacular year ahead for PMs in 2012.” Egon von Greyerz, Founder and Managing Partner at Matterhorn Asset Management in Switzerland, told King World News this week “I look at the banks here in Europe and they are an absolute mess, even before the French downgrade. We deal with French banks and they’ve had their lines cut by billions and billions. They couldn’t trade, and that was before the downgrade. It must be even worse for them now. This is what you are seeing in a lot of banks around Europe. This just confirms we are very near a massive package of QE here because if they don’t do it there won’t be any banking system left here in Europe. Because of that I’m seeing big buyers coming into gold and even bigger buyers becoming very interested.” When asked about silver, von Greyerz stated “There are shortages of silver. It’s more difficult to get hold of silver. We can see the intervention [manipulation], every day in the silver market. It trades down in Europe and then up in the East. In spite of that the trend is clearly up. I can see silver exploding in the next few months. It should double in price in the next three to six months.” In a separate, corroborating interview with King World News, their anonymous “London Trader”, said “The demand for euro gold here in London is so intense it’s shocking to some of the players. This is what has left some market participants in the US wondering why the price of gold has risen along with the dollar. It’s because demand in the Eurozone is unimaginably strong. The euro physical gold demand is off the charts and it is creating shortages for metal, in size, here in London. The physical gold market is actually being drained by euro gold buyers. People are converting their euros to gold and there is only a finite amount of physical gold available. Again, that’s why you are seeing the dollar and gold rallying together.” As world governments continue to devalue their fiat currencies through massive QE, owning physical precious metals becomes increasingly important and these price levels may be the lowest we see for 2012 if analysts are correct. Remember that precious metals should be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to purchase or sell.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – January 20th, 2012
Posted by Worldwide Precious Metals on Friday, January 20, 2012
The Week in Review – January 13th, 2012
January 13, 2012
It was yet another interesting week in the news. This week, the size of the US Debt finally surpassed the size of its GDP. The US has now joined the ranks of nations who owe more than their economy can possibly produce.
Rumors were flying this week that the likelihood of further Quantitative Easing by the US Federal Reserve was increasing. Two new voting members on the Federal Open Market Committee are “dovish” individuals who support further stimulus in the form of QE. Should the Fed follow the path that the market is expecting, further QE plans would be announced in the Spring and would likely take the form of purchasing Mortgage Backed Securities in an attempt to aid the beleaguered housing industry.
December’s retail sales numbers came in weaker than expected, despite deep discounts offered by most retailers in an attempt to draw in shoppers. Initial claims for unemployment benefits rose to 399,000 last week, just as we expected, as temporary workers that had been hired for the holiday season were let go. We expect at least one more week of skewed data as the temporary holiday hiring and firing pattern unwinds before the jobs numbers become somewhat accurate once again. Despite the above statistics, the Thomson Reuters/University of Michigan initial reading on Consumer Sentiment is at its highest level since May.
4. On Friday Les Echos, a French newspaper said (without citing its sources) that Standard & Poor’s will cut the credit ratings of Italy, Spain and Portugal by two notches and will downgrade France and Austria by one notch. One Eurozone source told Reuters “Remain alert tonight when US markets close.” Joerg Kraemer, chief economist at Commerzbank, said “The consequence [if France is downgraded] is that the EFSF [European Financial Stability Fund] cannot keep its triple-A rating.” Standard & Poor’s declined to comment on any of the reports however late on Friday, the French Finance Minister confirmed that S&P had indeed downgraded that country by one notch as reported.
5. In Greece, talks between the debt laden country and its creditor banks have apparently come to a standstill and may be in danger of collapsing. The Institute of International Finance, which is leading the talks for private bond holders, said “Discussions with Greece and the official sector are paused for reflection. Unfortunately, despite the efforts of Greece’s leadership, the proposal put forward…has not produced a constructive consolidated response by all parties.” A source reportedly close to the Greek task force team in charge of negotiations, said “It is important to remind all parties that the consequences of failure would be catastrophic for Greece and the Greek people, Europe and Europeans.”
Amazingly, crude oil dipped below $100 a barrel this week apparently mostly on news that the EU would likely delay any ban on importing Iranian oil until countries such as Greece, Italy and Spain can work out some alternate supplies. The delay in implementing the Iranian oil embargo is expected to be at least six months.
The US imposed sanctions on one Chinese oil company and two Singapore oil companies that supply refined crude oil to Iran. The move by the US State Department is purportedly designed to target Iran’s energy sector and choke off their oil revenues. A senior Obama administration official told reports, on condition of anonymity, “We do mean to close down the central bank of Iran.” In an interview with King World News, James G. Rickards said “President Obama sanctioned the central bank [of Iran] about a week ago. The Iranian currency, the rial, dropped 30 percent in a single day. Hyperinflation has broken out in Iran. This is financial warfare.”
The euro continued its downward spiral against the dollar this week, pushing to new lows amid further turmoil in the Eurozone. The yen traded only marginally lower against the dollar this week.
Friday to Friday Close
| January 6th | January 13th | Net Change | |
|---|---|---|---|
| Gold | $1617.00 | $1631.00 | 14.00 + 0.87% |
| Silver | $28.70 | $29.50 | 0.80 + 2.79% |
| Platinum | $1405.00 | $1485.00 | 80.00 + 5.69% |
| Palladium | $615.00 | $635.00 | 20.00 + 3.25% |
| Dow Jones | 12359.92 | 12346.30* | (13.62) – 0.11% |
Previous Year Comparisons
| January 14th, 2011 | January 13th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1360.00 | $1631.00 | 271.00 + 19.93% |
| Silver | $28.30 | $29.50 | 1.20 + 4.24% |
| Platinum | $1810.00 | $1485.00 | (325.00) – 17.96% |
| Palladium | $790.00 | $635.00 | (155.00) – 19.62% |
| Dow Jones | 11787.38 | 12346.30* | 558.92 + 4.74% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1625/1600/1550 | 29.25/29.00/28.50 |
| Resistance | 1650/1680/1700 | 30.00/30.50/31.00 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1450/1400/1375 | 620/600/580 |
| Resistance | 1500/1550/1580 | 650/675/700 |
Volatility should be expected to continue. It is important to keep several factors in mind as we approach year end. 1. The CFTC is supposed to begin enforcing their new position limits in January, so this is the last window of opportunity for JP Morgan et al to manipulate prices downward in an effort to bring their short positions in line with the new limits; 2. As the Eurozone crisis escalates, money has been flooding out of the Eurozone into US Bonds which has had the result of temporarily driving the US dollar higher; 3. Funds and individual investors both will be selling losing positions for end of year tax purposes. They may also be selling their big winners to lock in gains for the year and pad their quarterly reports. Keep in mind the fundamentals that continue to suggest that gold and silver should both be powering higher as the media spins this latest downward price manipulation in a negative light. Credit rating agency Fitch placed multiple Eurozone countries on watch for a downgrade, saying that after the EU summit last week, it had concluded that “a ‘comprehensive solution’ to the Eurozone crisis is technically and politically beyond reach. Of particular concern is the absence of a credible financial backstop. In Fitch’s opinion this requires more active and explicit commitment from the ECB to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States.” Peter Grandich, editor of The Grandich Letter, backed up his firm belief that the gold market is headed higher by offering a wager to 3 prominent analysts who have been negative of late. Mr. Grandich offered a $1 million wager with Dennis Gartman of The Gartman Letter, CPM Group’s Jeff Christian and Kitco Metals Jon Nadler that gold would see $2,000 before it saw $1,000. His offer is good until midnight on December 31 and Mr. Grandich has arranged for a New Jersey law firm to hold the funds in trust. Mr. Nadler responded to the wager by saying “Peter Grandich is not worthy of my time, or of my attention. He is a desperate man, desperately seeking attention.” It is noteworthy that Mr. Nadler, whose opinion of Mr. Grandich’s predictions seems to be so low, did not take the bet. Mr. Christian responded with “We [CPM Group] have thus been saying that gold possibly could touch $2,000 before it touches $1,000 so taking Grandich’s bet would be ‘betting against my own views.’” Mr. Gartman gave the kindest response to Mr. Grandich’s bet. Mr. Gartman, who the media has trotted out as bearish on gold since he sold his personal positions last week, sent a personal note to Mr. Grandich which he concluded with “This then should hardly be construed as being bearish; I have simply chosen to stand aside, and that my friend is why I’ll not take up your bet. I simply cannot see gold trading to $1000/ounce…” With all of these noted analysts saying they expect precious metals to continue their climb, the recent price dip may be offering the last great buying opportunity before events in the Eurozone and the US cause prices to explode higher. John Hathaway, manager of the Tocqueville Gold Fund, told King World News in an interview this week “Basically, we have to take our cue from gold when looking at silver. The things that are going to drive gold are going to drive silver, but as always, silver will get a bigger percentage move. Don’t lose sight of the long-term rationale for investing in precious metals and that is monetary debasement. I see nothing to suggest anything has changed. I listened to [Jim] Sinclair’s interview and he was saying there is no way that austerity is going to last as something that is politically acceptable. I couldn’t agree more with him.” Mr. Hathaway continued in his interview with “The bigger picture is gold continues to be in a long-term bull market. This correction is well within the confines of what you can tolerate to say gold is still in a bull market. Frankly, this is exactly what we need to set up a base for going to new highs. I think we are going to be done with this by the end of the year.” One final important statement from Mr. Hathaway’s interview with KWN is “Therefore you can’t time it if you are dispirited in gold or the mining shares. You just can’t get in ahead of that moment when everything goes ballistic. You have to be in already and endure the pain that we are all feeling.” In other words, by maintaining ownership of your precious metals in this market, by not overextending your ability to stay in it through temporary price corrections, when the trigger is pulled that sends prices ballistic, you’re already on board and strapped in for the ride of your life. Remember that precious metals should be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to purchase or sell.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – January 13th, 2012
Posted by Worldwide Precious Metals on Friday, January 13, 2012
The Week in Review – January 6th, 2012
January 6, 2012
Welcome to 2012, and what a fantastic start so far for silver and gold! The naysayers that were out in force talking the price of precious metals down as we ended 2011 are doing some serious backpedalling this week as the metals resumed their upward climb.
Dennis Gartman, who said last week on Thursday “if [gold] prices come down another $15 overnight, I’m going to start buying again”, said on Thursday of this week on CNBC that he missed an opportunity to get back in. In his daily investment letter on Thursday, Mr. Gartman said “The bear run that began in August has now officially ended, for the string of lower lows and lower highs is over. This does not help us in hoping for/expecting/indeed demanding some weakness into which to buy, but it does give us ’permission’ to become officially bullish once again.”
Unemployment was lowered to 8.5% last month and job creation was better than expected. The fact that the statistic showing those who had “given up”, employable individuals that have chosen to leave the workforce entirely, closed out 2011 at a record high shows that that unemployment figure may not be accurate. The increase in job growth may lead these individuals to re-enter the search for employment again, and the higher participation rate would drive that figure higher once again. We also now enter the period of time when temporary employees that were hired for holiday help begin searching for permanent work again. Next week, or perhaps the following, should see a more accurate job market picture.
In Europe, talks of banning Iranian oil imports across the EU may have deeper consequences than anyone is predicting. Greece currently imports roughly 30 percent of its domestic oil from Iran according to the International Energy Agency. Paul Stevens, economist and emeritus professor at Dundee University in Scotland said this week in an interview with CNBC “Let’s assume the European Union is stupid enough to go along with the US in imposing sanctions on Iran. That would only mean 250,000 barrels of heavy sour oil not coming into the EU. But the impact that would have on countries like Italy and Greece would be enormous, and the Greeks are not going to slit their own throats for the sake of an EU sanction when Iran is the only country willing to offer them oil on favorable terms. It would utterly destroy the Greek economy.”
The average rate on a 30 year fixed mortgage feel to 3.91 percent this week according to troubled mortgage giant Freddie Mac. The record low rates are doing little to aid the embattled housing industry however. Many either are unable to take advantage of the rates due to tight lending conditions that continue to force contract cancellations or have already taken advantage of lower rates and refinanced in 2011 and see no need to go through the process again.
Oil fluctuated back and forth this week, trading on headlines, but maintained its level above $100 a barrel. Escalating tensions between Iran and just about every other country on the planet may act to push oil prices ever higher as the EU joined the growing list of countries that are considering banning the import of Iranian oil.
Across Asia, China, Japan and South Korea all announced that they were seeking ways to lessen dependence on Iranian oil. US Treasury Secretary Timothy Geithner will be traveling to both China and Japan next week to discuss US sanctions on Iran, as well as the state of the global economy.
The euro continued its downward trend against the dollar this week, pushing lower as talk of a recession across the Eurozone ramped up. The yen, which appears to have gone completely off the news radar, pushed to its highest levels since November against the dollar.
Friday to Friday Close
| Dec. 30th 2011 | January 6th | Net Change | |
|---|---|---|---|
| Gold | $1566.00 | $1617.00 | 51.00 + 3.26% |
| Silver | $27.90 | $28.70 | 0.80 + 2.87% |
| Platinum | $1400.00 | $1405.00 | 5.00 + 0.36% |
| Palladium | $655.00 | $615.00 | (40.00) – 6.11% |
| Dow Jones | 12217.56 | 12372.86* | 155.30 + 1.27% |
Previous year Comparisons
| Jan. 7th 2011 | Jan 6th 2012 | Net Change | |
|---|---|---|---|
| Gold | $1368.00 | $1617.00 | 249.00 + 18.20% |
| Silver | $28.67 | $28.70 | 0.03 + 0.10% |
| Platinum | $1735.00 | $1405.00 | (330.00) – 19.02% |
| Palladium | $755.00 | $615.00 | (140.00) – 18.54% |
| Dow Jones | 11674.76 | 12372.86* | 698.10 + 5.70% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1610/1590/1550 | 28.60/28.00/27.25 |
| Resistance | 1630/1650/1680 | 29.50/30.00/31.00 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1400/1376/1350 | 610/600/575 |
| Resistance | 1440/1455/1500 | 640/670/700 |
Volatility should be expected to continue. This week, we once again pass along some quotes from Ted Butler, printed in Ed Steer’s Gold & Silver Daily. Mr. Butler writes “The big commercial shorts had a near death experience when the price approached $50 in April. They were at the end of their rope and needed to do something in a hurry. That’s why they rigged prices lower; so they could buy and save themselves. These well-connected commercials knew, perhaps for the very first time, just how tight the silver market had become and how close we were to a profound physical shortage. The key is that the silver shortage wasn’t caused by excessive speculative buying or a bubble or a mania. The extreme tightness and near shortage in silver was a result of the gradual and cumulative impact of normal investment buying over the past five years. There is nothing to suggest that the long term and steady silver investment buying has ended.” Mr. Butler continued, saying “Because there was no bubble or mania in silver, there was no bubble to burst. The orchestrated takedowns of the price by the big commercial interests were simply so that these commercials could buy and rid themselves of silver short positions. That’s done now. That means that the silver market is now in the best possible shape.” Mr. Butler concluded with “The major pressure of selling has passed… and the way seems clear for higher prices. By the time the next chapter in the silver story plays out, $50 could look cheap.” James Turk, in an interview with King World News this week said, regarding a silver chart showing the price of silver over the last two years, “Because it is a descending flag pattern, the breakout pattern has now moved down to $37.50, but $35 is the more important resistance level. Once these two levels are taken out, that three month move to $70 begins. So as I see it, just keep accumulating physical silver here. The fundamentals for silver continue to remain very bullish and only time will tell if silver is the next Apple [a reference to Apple’s stock performance displayed on a long term chart. Apple’s stock price increased over 70 times over the years spanning 2002 to present, despite 5 major corrections to the downside]. I continue to expect that silver will go much higher and reach my $400 per ounce forecast…” Regarding gold, Mr. Turk said “Over here in Europe, the euro and the worsening European bank crisis are inevitably leading many people to the gold market as a safe haven. Consequently, I think it’s safe to assume that the low for gold is in place. In fact, Eric, we’ve probably seen, this week, the low price in gold for the year. In other words, onwards and upwards from here with a price well over $2,000 within sight.” Wise investors ignored the hype and fear that was being thrown around as 2011 came to a close and viewed the manipulations and maneuverings that took place in the precious metals market as buying opportunities. If Mr. Butler, Mr. Turk, and even Mr. Gartman are correct, the decade long bull market in gold and silver is expected to continue in a spectacular fashion in 2012. If prices explode the way Mr. Butler and Mr. Turk expect, current prices, and even last April’s high prices may seem like bargains when viewed in hindsight. Remember that precious metals should be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually own the physical products and to hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.
Trading Department – Precious Metals International, Ltd.
This is not a solicitation to purchase or sell.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – January 6th, 2012
Posted by Worldwide Precious Metals on Friday, January 6, 2012
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