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The Week in Review – April 27th, 2012
April 27, 2012
Another week, another manipulation event it seems. The Federal Open Market Committee released its minutes from their latest meeting this week. The minutes were virtually a photocopy of the last set of minutes, and once again, precious metals plummeted during their release. The damage was quickly undone, especially after Ben Bernanke began his press conference, with metals reversing their direction to begin climbing higher off their lows as he once again reiterated that further Quantitative Easing remains on the table as an option.
Initial claims for state unemployment once again did not live up to economists’ expectations last week. The Labor Department revised the previous week’s figures upward which led to a net decline in applications of only 1,000, well below economists forecast for a decline of 11,000. The four week moving average of new unemployment claims, considered a better gauge than the weekly reports, rose to its highest level since early January.
In France, Francois Hollande appears to be in the lead over Nicolas Sarkozy for the French Presidency after last weekend’s first round of voting. Mr. Hollande announced on Wednesday that if he was elected he would seek to renegotiate the fiscal treaty agreed to last month between 25 of the Eurozone member countries. German Chancellor Angela Merkel said on Friday “The fiscal pact has been negotiated; it was signed by 25 government heads and is already ratified by Portugal and Greece. Parliaments all over Europe are about to adopt it. Ireland has a referendum on it at the end of May. It is not renegotiable.” Further pressuring Mr. Sarkozy’s chance for re-election is the fact that France’s unemployment rate jumped to its highest level since the late 1990’s.
Late on Thursday, Standard & Poor’s downgraded, for the second time this year, Spanish sovereign debt by two notches and put the country on negative outlook. On Friday S&P denied that it had not taken the recent reforms announced by Spain into account prior to announcing the downgrade with Moritz Kraemer, Managing Director for European Sovereign Ratings, saying “The downturn will be longer and deeper than previously assumed. We think that there is considerable risk in the banking system in Spain, that it might need additional resources. Given that it is quite difficult for Spanish banks to fund themselves in the interbank market, you might wonder where those resources will come from and whether private investors…would be willing to provide additional capital.” Spain’s long term debt was downgraded to BBB+ and its short term rating was lowered to A-2.
In a double blow to Spain, the overall unemployment rate hit 24 percent in the first quarter, one of the worst jobless levels on the planet, and the highest for the troubled country since early in the 1990’s. Unemployment among Spanish youth is edging up on 50%. Foreign Minister Jose Manuel Garcia-Margallo said, in a radio interview, “The figures are terrible for everyone and terrible for the government…Spain is in a crisis of huge proportions.”
According to the US Commerce Department, the US Gross Domestic Product grew at only a 2.2% annual rate during the 1st quarter of 2012, down from the 4th quarter 2011 rate of 3 percent and below analyst’s expectations of 2.5%.
Governments throughout Europe seem to be toppling right and left. In the Netherlands, the Dutch Prime Minister resigned; in Romania, the EU’s second poorest member, the fledgling 2 month old government lost a confidence vote on Friday and must now be replaced causing the IMF to halt a review of Romania’s 5 billion euro aid package; France is just a week away from its second round of voting and it appears that Nicolas Sarkozy is trailing his opponent.
Crude oil continued to hold its ground in the mid-$100 a barrel range this week despite a larger than expected increase in crude inventories.
Oddly, the euro pushed higher for most of the week against the dollar, but looks to be reversing that trend on news of the Spanish downgrade and rising Italian bond yields. The yen pushed higher against the dollar this week as well, with an announcement of further easing by the Bank of Japan on Friday seemingly having no weakening effect.
Friday to Friday Close
| April 20th | April 27th | Net Change | |
|---|---|---|---|
| Gold | $1642.00 | $1664.00 | 22.00 + 1.34% |
| Silver | $31.65 | $31.35 | (0.30) – 0.95% |
| Platinum | $1580.00 | $1570.00 | (10.00) – 0.63% |
| Palladium | $675.00 | $682.00 | 7.00 + 1.04% |
| Dow Jones | 13029.26 | 13235.54* | 206.28 + 1.58% |
Previous year Comparisons
| April 29th, 2011 | April 27th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1556.00 | $1664.00 | 108.00 + 6.94% |
| Silver | $48.58 | $31.35 | (17.23) – 35.47% |
| Platinum | $1865.00 | $1570.00 | (295.00) – 15.82% |
| Palladium | $792.00 | $682.00 | (110.00) – 13.89% |
| Dow Jones | 12810.54 | 13235.54* | 425.00 + 3.32% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1650/1620/1600 | 30.80/30.00/29.50 |
| Resistance | 1670/1700/1725 | 31.50/32.00/32.60 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1550/1520/1500 | 660/630/610 |
| Resistance | 1600/1625/1650 | 690/710/730 |
Volatility should be expected to continue and perhaps increase further. The manipulation attempts against gold and silver have become so blatantly obvious that it borders on ridiculous. As John Embry said in an interview with King World News on Wednesday, “I would dare say that the manipulation [of gold] today is perhaps more blatant and there is more of it than I’ve ever seen. They [the manipulators] don’t care anymore. You see these 3 o’clock in the morning precipitous drops. You see drops when the COMEX opens and when the London PM fix is in. There are always these times they attack, and no market that wasn’t being manipulated would trade with that regularity. I am of the mind that the paper guys have overplayed their hand and they have pushed the price too low. The people in the East, in particular, the Russians, the Chinese, etc., know perfectly well the situation. They are using this as a wonderful opportunity to take on more and more physical at what I would consider to be bargain prices.” Mexico added 16.8 metric tons of gold to its reserves, Russia: 16.5 tons, Turkey: 11.5 tons, Kazakhstan: 4.3 tons, Ukraine: 1.2 tons, Tajikistan: 0.4 ton and Belarus: 0.1 ton in March according to date from the IMF. Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland, said “We expect that the recent trend of the official sector being a net buyer will continue in the medium and long term. Gold will continue to be a preferred central bank reserve asset. It is currency protection and stabilization.” Once again gold and silver were manipulated downward at the release of the Federal Open Market Committee minutes, and this time apparently wise investors were ready to take advantage of the buying opportunity. Even before Ben Bernanke began speaking at his press conference, both metals had already overcome the manipulative pressure and begun moving higher. The FOMC minutes were a virtual duplicate of the previous ones, and Bernanke made a point to reiterate at his press conference following the release of the minutes that further easing measures continue to remain on the table as tools to use in the event that the US economic recovery stumbles. On Thursday the unemployment data was worse than expected; on Friday the US GDP figures came in worse than expected; foreclosure activity is on the rise once again now that the “robo-signing” scandal is over and done with. All of these sound like stumbling blocks to us. The situation, not only in Spain, but apparently throughout the entire Eurozone, is rapidly deteriorating and the bickering between the different member countries appears to be escalating. It is becoming apparent that the austerity measures the debt laden member countries are being forced to implement are doing more harm than good, crippling their economies and sending them deeper into recession rather than doing anything to alleviate their budget deficits. Analysts such as James Turk, John Embry, Ted Butler and more continue to compare the current state of the precious metals market to a coiled spring that is reaching its release point. Their expectations are that when that coiled spring does turn loose; it will do so suddenly, violently, and in the upward direction. Wise investors appear to be following Russia and China’s example, adding physical precious metals to their portfolio as each buying opportunity is presented. 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – April 27th, 2012
Posted by Worldwide Precious Metals on Friday, April 27, 2012
The Week in Review – April 20th, 2012
April 20, 2012
It was another rollercoaster week in the markets this week, showing once again just how volatile the current environment is. It seems that many investors continue to trade on emotion and headlines rather than fundamentals.
After a week of hearing “this week’s jobs data should prove that last week’s number was an anomaly” from the media’s usual talking heads, Thursday’s release proved both economists and the media pundits wrong. The prior week’s reading of initial claims for state unemployment was revised upward by 8,000. The upward revision made for a net decline in initial claims of just 2,000, far below economist’s expectations. The four week moving average of new claims, which many view as a better gauge of the state of the jobs market, rose this week sparking fears that a recovery in the jobs market may be running into some serious headwinds.
In France, there is growing concern that Nicolas Sarkozy may lose to his Socialist challenger when the voting process, which begins this Sunday, finally comes to a conclusion in May. The stance of Francois Hollande, Sarkozy’s primary challenger, may put serious strain on the relationships Sarkozy has cultivated with Germany, Britain and the US if he should be elected in May.
Spain continues to be the latest major concern in the Eurozone. The yield on 10 year Spanish bonds was up to 6.03 percent as fears continued that Spain would not be able to reign in its spiraling debt. Luis de Guindos, Spain’s economy minister, said on Friday “We will need no money from the rescue funds to refinance the banks”, a tune that we’ve all heard before from other debt laden Eurozone countries as they were quietly getting in line for their bailouts.
In Greece, the top three banks in the country posted massive and record setting losses as a result of last month’s debt swap. The losses severely impacted the “Tier 1″ core capital ratios for all the banks, raising concerns that the Tier 1 ratio target of 9 % agreed to as part of the bailout conditions for Greece may be unattainable by September when it is due to be in place. In Athens, a framework for recapitalizing banks was supposed to have been announced on Friday, but it appears that details are still being ironed out with EU and IMF officials.
On Thursday, Christine Lagarde, managing director of the International Monetary Fund, speaking at the start of G20 meetings in the US which will likely focus primarily on the ongoing debt crisis across the Eurozone, said there was a “light recovery blowing in a spring wind with dark clouds on the horizon.”, perhaps a veiled reference to Spain.
On Friday, the G20 announced that “There are firm commitments to increase resources made available to the IMF by over $430 billion.” The move appears to be an attempt to keep the IMF from becoming overwhelmed in the event of an “incident” involving Italy or Spain, whose borrowing costs may soon become totally unaffordable.
There is growing concern that a slowdown in the US economic recovery is underway. Many economists have forecast that the unusually warm winter may have brought economic activity that traditionally isn’t seen until spring, forward into January and February, artificially inflating the numbers. Evidence of this is beginning to appear in the beleaguered US housing industry. Spring, which is traditionally the busiest period for the housing industry, is off to a slow start.
Crude oil stubbornly held above $100 a barrel this week, climbing back into the mid-$100 range on Friday. Fears are that the sanctions imposed against Iran may be leading other countries to purchase extra oil to stockpile in the event that the sanctions trigger a supply shortage.
The euro was on a rollercoaster this week against the dollar and appears to be finishing the week out lower. The Japanese yen appeared to fall off a cliff against the dollar this week.
Friday to Friday Close
| April 13th | April 20th | Net Change | |
|---|---|---|---|
| Gold | $1659.00 | $1642.00 | (17.00) – 1.02% |
| Silver | $31.38 | $31.65 | 0.27 + 0.86% |
| Platinum | $1580.00 | $1580.00 | 0.00 + 0.00% |
| Palladium | $642.00 | $675.00 | 33.00 + 5.14% |
| Dow Jones | 12849.59 | 13029.26* | 179.67 + 1.40% |
Previous year Comparisons
| April 21st, 2011 | April 20th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1503.00 | $1642.00 | 139.00 + 9.25% |
| Silver | $46.05 | $31.65 | (14.40) – 31.27% |
| Platinum | $1830.00 | $1580.00 | (250.00) – 13.66% |
| Palladium | $768.00 | $675.00 | (93.00) – 12.11% |
| Dow Jones | 12505.99 | 13029.26* | 523.27 + 4.18% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1630/1610/1580 | 31.30/31.00/30.40 |
| Resistance | 1660/1700/1725 | 32.00/32.60/33.00 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1550/1510/1480 | 660/630/610 |
| Resistance | 1600/1650/1700 | 680/700/720 |
Volatility should be expected to continue and perhaps increase further. Recent global events are sparking comparisons to the spring of 2011 and many news items could almost be a direct cut and paste from stories published last year. Oil prices remain stubbornly high, leading to higher gasoline prices once again this year; consumers appear to be tightening their spending once again; unemployment across the planet remains stubbornly high; global stock markets are remain extremely volatile; bond yields in the Eurozone are on the rise once again, particularly in Spain and Italy; Multiple Greek banks are in need of re-capitalization; and political changes are on the wind in both Greece and France. In recent weeks, we have commented over and over that manipulation in the gold and silver market appears to be running rampant and unchecked and has now become blatantly obvious. Last Friday’s activity at the COMEX close was another perfect example of this. With virtually no news that should have triggered such a massive sell-off last Friday, 10,000 gold contracts, valued at over $1.6 billion, changed hands just before the close. This was nearly identical to events that transpired in the silver market on April 3rd when the Fed released the minutes from the latest Federal Open Market Committee meeting. The selling in silver started immediately as the minutes were released. All of this is well documented by Patrick A. Heller in an article on CoinWeek.com titled “Major Gold And Silver Price Suppression Now A Weekly Occurrence. So What?” and can be reached by clicking the following link: Patrick Heller Article. We agree with Mr. Heller, who closed his article with “I have previously warned my readers that markets will be more volatile as we get closer to the time when I expect gold and silver prices to soar. When the US government needs to work with its trading partners and allies to engineer a major price suppression once a week, we are getting a lot closer to the day when such tactics will no longer work. John Hathaway, manager of the Tocqueville Gold Fund, feels that gold is very close to the bottom here. In an interview with King World News, Mr. Hathaway said “What I think we’ve been through here is a lengthy correction from the peak of last August, when gold rose to above $1,900 an ounce. We’ve had a couple of debt ceiling increases since then. The fundamental issues continue to be what they were last August, it’s just that they are off the front pages.” Mr. Hathaway continued, saying “Now we know that on February 29th, Bernanke stated that the Fed’s work was done. But I would have to put that in the category of all other Fed forecasts. They didn’t see the 2008 credit meltdown and they didn’t see the housing collapse. So the Fed has not been all that great at making judgments about what the future holds. But the market took his statement as gospel and said quantitative easing is a thing of the past, as of June 20th. I believe the Fed will have to print more money to support the bond market. We’ll just have to wait and see.” Maintain your ability to participate in what may well turn out to be another record setting year in the precious metals markets. Look for buying opportunities to add more metals to your portfolio and do not over-extend your ability to maintain ownership of your product. 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – April 20th, 2012
Posted by Worldwide Precious Metals on Friday, April 20, 2012
The Week in Review – April 13th, 2012
April 13, 2012
This week started with a continuation of the DJIA’s worst losing streak of the year following last Friday’s less than stellar March employment data report.
Initial claims for unemployment surged higher last week hitting a two month high of 380,000. The prior week’s data was also revised higher by 10,000 as we suspected might be the case. Ryan Sweet, a senior economist at Moody’s Analytics, said “The increase [in claims] caught our attention, but the next few weeks will be very telling. If claims continue to tick higher then it will be a signal that the sword over the jobs market is real.”
The University of Michigan/Thomson Reuters initial US consumer sentiment index reading for April showed an unexpected decline apparently due to continued escalation of gasoline prices. Geopolitical concerns such as continuing tensions between Iran and the rest of the world, and an ongoing economic slowdown in China may also have added to consumer fears as well.
In Europe, Spain continues to have central bankers around the world afraid that it is becoming the next great threat to the global financial system. Spain’s stock markets and shares of its largest banks continued to decline this week. The thing that has these central bankers so concerned is the fact that Spain’s three largest banks have combined assets totaling roughly $2.7 trillion while the country’s GDP is only around $1.4 trillion. This means Spain’s three largest banks combined are nearly twice the size of Spain’s entire economy. Talk about too big to fail! The Eurozone couldn’t possibly print up enough money fast enough to save these banks if they begin to go down.
The International Monetary Fund released its Global Finance Stability Report this week in which it said “Safe-asset scarcity could lead to more short-term volatility jumps, herding behavior, and runs on sovereign debt. In the future, there will be rising demand for safe assets, but fewer of them will be available, increasing the price for safety in global markets.” According to the Financial Times, “The Fund identified $74.4 trillion of potentially safe assets today, including gold, investment-grade government and corporate debt, and covered bonds.” The FT continued, saying “But it [the IMF] warned that 16 percent of the potential safe government debt supply to 2016 could disappear if governments continued to borrow at current rates and hence made their debt more risky.”
According to RealtyTrac, first time foreclosure notices in the US rose 7 percent in March, the third month in a row foreclosure notices have increased. Despite the increase in first time notices, overall foreclosure activity appears to have fallen despite a backlog of foreclosures that remain in the wings of most banks as a result of last year’s “robo-signing” scandal.
In Asia, China’s economic growth appears to have slipped to its lowest level in nearly three years in the first quarter. An increase in industrial production and retail sales however has re-opened the debate on whether China’s economy will experience a “hard landing”, an abrupt and sudden economic slowdown, or a “soft landing” which would be a continuation of the gradual slowdown that has been ongoing for some time now.
Crude oil maintained its grip on the lower $100 a barrel range again this week apparently held there by an unexpected increase in crude supplies and a report released by the International Energy Agency that contained a projected demand that was weaker than analysts expected.
The euro slowly climbed higher against the dollar this week. The Japanese yen also moved sharply higher against the dollar this week.
Friday to Friday Close
| April 5th | April 13th | Net Change | |
|---|---|---|---|
| Gold | $1628.00 | $1659.00 | 31.00 + 1.90% |
| Silver | $31.75 | $31.38 | (0.37) – 1.17% |
| Platinum | $1595.00 | $1580.00 | (15.00) – 0.94% |
| Palladium | $643.00 | $642.00 | (1.00) – 0.16% |
| Dow Jones | 13064.14 | 12849.59* | (214.55) – 1.64% |
Previous year Comparisons
| April 15th, 2011 | April 13th, 2012 | Net Change | |
|---|---|---|---|
| Gold | $1485.00 | $1659.00 | 174.00 + 11.72% |
| Silver | $42.60 | $31.38 | (11.22) – 26.34% |
| Platinum | $1795.00 | $1580.00 | (215.00) – 11.98% |
| Palladium | $768.00 | $642.00 | (126.00) – 16.41% |
| Dow Jones | 12341.83 | 12849.59* | 507.76 + 4.11% |
* Current at time of writing
Here are your Short Term Support and Resistance Levels for the upcoming week.
| Gold | Silver | |
|---|---|---|
| Support | 1645/1614/1568 | 30.97/30.58/30.10 |
| Resistance | 1660/1684/1714 | 32.11/32.40/33.24 |
| Platinum | Palladium | |
|---|---|---|
| Support | 1585/1548/1500 | 628/608/585 |
| Resistance | 1618/1648/1690 | 649/668/708 |
Volatility should be expected to continue and perhaps increase further. The Federal Reserve made a huge show this week of parading officials out on the airwaves and adding to the confusion about whether further stimulus was, or was not, still on the table. The media is choosing to spin it that such a flurry of public statements must surely mean that further stimulus measures are less likely. Everyone else is taking a “wait and see” approach. There are simply entirely too many unknown variables in the world these days to make assumptions based on the public statements of a few individuals in a single country. The simple fact of the matter is that nothing operates in a vacuum. The failure of just 3 Spanish banks could wreak financial Armageddon across the globe in this interconnected world, and such an event would surely prompt the Federal Reserve to engage in more Quantitative Easing, “Operation Twists”, “Sterilized” QE or whatever other ridiculous moniker they want to hang on the monetary printing spree that would ensue. The “paper shorts”, as James Turk calls “Da Boyz”, appear to be doing their best to scare people out of the market, but that appears to be getting harder and harder for them to do given that every time they attempt it, the support holds. As James Turk put it in an interview with King World News this week: “It has been a rough couple of weeks, Eric. That is not unusual over a holiday period, like the 4-day weekend here in Europe. Liquidity usually dries up during these periods, so short-term volatility can often be the result. And we have seen that in both the precious metals, with gold again testing support at $1650, silver is testing support under $32.” Mr. Turk continued in the interview, saying “This short-term volatility is particularly obvious in silver. The intraday charts the past few days have some large swings, which result from the big shorts pushing the paper market around to see if they can dislodge some longs. This is particularly to see if they can pick up some physical metal from the weak hands. The paper shorts never go on holiday. They have too much at stake, and they use periods of limited liquidity to hit the market hard to try to shake people out. The shorts are now being forced to retreat, and I have been waiting for another catalyst that will send both precious metals higher, Eric.” Mr. Turk finished his interview with a chilling observation: “Governments and the people who have come to rely on them do not realize that the socialism game being played for so many decades is ending. Economies cannot exist when the number of tax eaters are greater than the number of tax payers, but that has been the case in Europe for a while now. Some 52% of France’s GDP, as one example, comes from government spending. That is not sustainable, and with the private sector shrinking pretty much throughout the Eurozone, the growing burden being placed on it is making matters even worse. We know from history that socialism brings about the end of empires. It also destroys a nation’s currency. This is why it is so important for KWN readers around the world to protect themselves with physical gold and silver.” The panic that the paper shorts are failing to produce may be presenting wise investors with the perfect buying opportunity to acquire more metals for their portfolios. 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 overextend your ability to maintain ownership of your precious metals over the long term.
Trading Department – Precious Metals International, Ltd.
© 2013, Precious Metals International Ltd.
www.wwpmc.com
The Week in Review – April 13th, 2012
Posted by Worldwide Precious Metals on Friday, April 13, 2012
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