Gold Survival Gold Article Updates:
Nov 29, 2013
- Double Bottom for Gold in NZD?
- China and Turkey still buying plenty
- A Follow Up on GLD
- Negative Interest rates on Bank deposits coming?
- USA OBR on the Way?
Double Bottom for Gold in NZD?
Gold and silver have both managed to bounce off previous lows and remain above support today.
NZD gold is up $16.61 per ounce or 1.10% on last week to $1526.00. While silver in NZ dollars is at $24.26, up just 15c per ounce or 0.62%.
You can see in the chart below that gold in NZ dollars bounced off the $1500 level which were the lows of October and may be eeking out a double bottom.
As we said last week this all depends on whether US Dollar gold heads down to retest the June lows at US$1180. We’ve read a few opinions over the week and both sides have good arguments for why the metals could go higher or lower from here.
All we can says is it looks quite positive that they haven’t gone any lower so far but only time will tell. But NZ gold is close to a 4 year low right now, so if you don’t have any then it could be a good chance to grab a position but keep some powder dry in case of further weakness.
Meanwhile NZD silver is also near the June lows – prices not seen since mid 2010. But unlike gold is right on long term support.
So this too would make a good time to take a position. And unlike in April and June demand (at least here in the west) is at much lower levels which translates into premiums above spot on all products that are much lower than April. So the price to buy at these lows is actually less than it was back in June.
China and Turkey still buying plenty
As just mentioned demand is pretty quiet here (and elsewhere in the western world too by all accounts) but China and Turkey are hitting records as of the end of October.
“New data meantime said gold imports to China rose almost 20% to a near-record monthly high in October, with 130 tonnes being shipped through Hong Kong on what local analysts and traders called “stockpiling” ahead of the Lunar New Year festivities.
Gold imports to Turkey last month took year-to-date inflows to a record, the Istanbul Gold Exchange showed on its 18-year data series, more than doubling from 2012 to 251 tonnes as buyers in the world’s 4th largest consumer nation took advantage of the sharpest price drop in 38 years.”
A Follow Up on GLD
Last week we reported that according to Reuters…
“Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded, fell 1.5 tonnes to 863.01 tonnes on Tuesday, their lowest since February 2009.
We just checked the GLD website and it is down to 860.31 tonnes today, another 2.7 tonnes gone.
Maybe Paulson and other large GLD holders are starting to exit some positions as we write as part of this washout postulated by PAMP? It seems we may need one final push lower to exit the last of the weak hands.”
Funnily enough over the weekend Bloomberg reports that Paulson reportedly said to clients he wouldn’t personally add any more gold here because the inflation he expected hasn’t shown up…
“Billionaire hedge-fund manager John Paulson told clients he wouldn’t personally invest more money in his gold fund because its not clear when inflation will accelerate, according to a person familiar with the matter.
Paulson, who has been betting that gold would rally as a hedge against inflation as central banks flood the global economy with money, has lost 63 percent year-to-date in the PFR Gold Fund, said the person, who was briefed on the returns and asked not to be identified because the information in private. The fund, which has shrunk to $370 million, with most of that John Paulson’s own money, fell 1.2 percent in October, the person said.
The hedge-fund firm will maintain the fund’s positions in gold stocks and let options related to bullion expire, Paulson said at the firm’s annual meeting yesterday in Paulson & Co.’s New York office, according to the person.”
So maybe he won’t be selling but he doesn’t sound like he’ll be buying right now either. Perhaps this is as good a contrarian signal as we will get? We note that the GLD ETF is now down to 843.21 tonnes – 17 tonnes less than last week – and probably another 17 tonnes bound for China.
GLD Holdings are at their lowest level since prior to February 2009. Down 37.5% on the 1350.82 tonnes they were at the end of 2012.
Also following on from last week was the report of yet another overnight tripping of the switch at the Comex exchange circuit breakers due to a large sell order in low volume. As ZeroHedge notes it is the 4th such incident in the past few months.
However we think the significance of this and the prior occurrence was that it only caused the price to fall $10 and didn’t head any lower as happened previously this year, when these dips lower tripped other stop loss orders. So this could perhaps be an indicator that there are few sellers left in the futures market currently?
Negative Interest rates on Bank deposits coming?
We’ve noticed negative interest rates have been mentioned this past week more than once. Firstly a representative from the European Central Bank (ECB) inferred that one of the tools still in their kit could be to make the deposit rate it charges banks negative. Supposedly this would be to force banks to loan money instead of just depositing it with the ECB. Source.
Next we noticed a report on US banks warning they may have to charge depositors if the Fed lowers the interest rate it pays banks for holding excess reserves with them. Source.
Even though the talk of “tapering” continues, our guess is we will see more QE yet and these reports show the possibility of banks actually charging people to hold their money is not out of the question, although may be a way off yet.
USA OBR on the Way?
Looks like the US is beginning to formalise its own Open Bank Resolution (OBR). (See here if you want to know about the NZ Reserve Bank’s OBR or depositor haircut policy)
“Bernanke Says Failing Bank Process Needed to Reduce Crises …
Federal Reserve Chairman Ben S. Bernanke said a process under development that would allow regulators to take down a failing bank will help ensure investors discipline weak firms and prevent them from taking risks without consequence. “As we try to make the financial system safer, we must inevitably confront the problem of moral hazard,” Bernanke said today in remarks at an International Monetary Fund conference in Washington. “Market discipline can only limit moral hazard to the extent that debt and equity holders believe that, in the event of distress, they will bear costs.” – Bloomberg
This to us sounds a lot like our OBR, where the Central Bank can shut down and put a freeze on depositors funds, then reopen fast but only giving depositors access to a limited amount of their deposits. More evidence we reckon of the Central Planners getting ready for credit crunch part 2.
We’ve got a number of articles posted on the site this week…
First up is The Greatest Opportunity in 30 Years which shows just how undervalued gold and silver stocks are compared to the metals themselves. The extremes are quite surprising… even if it may take some cajones to pull the trigger and buy.
We don’t feature too much about platinum and palladium but this is an interesting one on just how far out of whack the supply and demand for them have become. However note that here in NZ unlike gold and silver, platinum and palladium do attract GST so that is a downside to buying them.
As mentioned early we still think we are heading for Credit Crunch 2.0. This article shows just how they managed to paper over the cracks of the financial system. And how changes in accounting rules in 2009 were key in achieving this.
The past few weeks we’ve discussed various ways in which the end game could play out. (By the way – if you want to read past issues just go to the website and look for “Weekly Wanderings” in the menu bar near the top to find past weekly newsletters). While we’re not sure it is the most likely, we hope for a “free market” in money to evolve. This article from Sandeep Jaitly who we’ve mentioned many times in the past outlines how gold and silver as money could work based upon how they did in the distant past.
Last week we published our summary of Jeff Berwick’s (of The Dollar Vigilante) presentation at the Sydney Gold Symposium.
This week The Daily Bell published an interview with Jeff that covered some of the points he covered in Sydney as well as some expansion of these ideas. It has links to a number of the products Jeff has on internationalising yourself and your assets and so is worth checking out if you have any inclination towards that.
Jeff Berwick on Practical Solutions to a Collapsing World Order
Also, speaking of Gold Symposium presenters, Chris Powell of GATA appeared in a couple of places this past week.
In an interview with King World News he elaborates on a number of the points he made in his recent presentations here and in Sydney. King World News Interview
And also a video interview with Greg Canavan of the Daily Reckoning Australia is worth a look if you prefer watching to reading. As Greg actually hits Chris with a couple of curly questions in areas where he doesn’t agree with GATA. Greg Canavan interviews Chris Powell
Well, that’s about it for this week. As we said earlier both metals in NZ dollar terms are close to 3 to 4 year lows. While that may not be good for those that have bought in that time (patience is a must in gold and silver), it is handy to anyone with some excess monopoly money to exchange for some real stores of value. As ever, let us know if you have any questions or would like a “demo” quote to see how the buying process works.
1. Email: email@example.com
2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
3. or Online order form with indicative pricing
Have a golden week!
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We are not financial advisors, accountants or lawyers. Any information we provide is not intended as investment or financial advice. It is merely information based upon our own experiences. The information we discuss is of a general nature and should merely be used as a place to start your own research and you definitely should conduct your own due diligence. You should seek professional investment or financial advice before making any decisions.