Commodities

Precious metals were slightly lower in Asian trading overnight, but are essentially flat in New York compared to yesterday. The dollar is a bit softer today, as is oil. Wall St. opened down for the third day on the good news that U.S. durable goods orders were better than expected. The market is in the perverse situation where good news is feared, because it raises the possibility the the Fed will stop pumping $85 billion a month into the bond market. Precious metals will likely assume a holding pattern today, minus any big developments, ahead of the three-day Memorial Day weekend in the U.S. In Asia, the Nikkei recovered from a selloff that triggered breaks in trading, but volatility is still considered high. Mainland Chinese stocks closed slightly up for the week, while Hong Kong stocks continue to slide on light volume. In Europe, data shows that Germany is barely on the positive side of economic expansion, which is more than can be said of many of their compatriots in the EU. The euro recovered slightly against the dollar, but euro stocks were down. Should the Fed end stimulus this year, we are likely to see a large correction in equities. The big question for precious metals will be “how far will inflation rise, fueled by the $4 trillion the Fed pumped into the money supply?” Long-term investors in gold believe that there is little to no chance that inflation will be contained once the banks stop holding on to the QE money they have stacked up. by David Peterson Filed under: Market News Tagged: German economy, global precious metals market, Japanese economy, quantitative easing, U.S. economy

Silver stackers like watching the charts. They are happy when silver goes up, because their stack is worth more, and they’re happy when it goes down, because then they can buy more! Now you can get free silver while showing off your market savvy, in Gainesville Coins’ “Spot On!” Silver Giveaway” by The Coin Explorer! Each month, The Coin Explorer will select a silver coin, bar or round from the Gainesville Coins vaults. The first person who guesses the spot silver closing price on the last Friday of the month as shown on the Gainesville Coins website will be the winner! This month’s prize is the 1 oz 1981 Silver Trade Unit minted by Continental Coin from U.S. Strategic Stockpile silver obtained from the U.S. Assay Office in San Francisco, California. The entry deadline this month is Wednesday, May 29, 2013, 5 PM Eastern Time. Contest Rules Entries must be submitted as a reply to the appropriate contest post on the Gainesville Coins blog (gainesvillecoins.wordpress.com) The person with the earliest correct guess of the closing spot price for silver for the last Friday of the month as reported on the Gainesville Coins website will be declared the winner. In the event that no one gets the exact closing price, the first person with the closest entry (over or under) will win. Only the last guess per entrant will be deemed valid. Deadline for entries is 48 hours before the New York exchange close on the last trading Friday of the month. A valid email address must be supplied when registering on the blog. Gainesville Coins will not rent or sell any email addresses, but will use the email supplied to verify the winner. No purchase necessary to enter. Open to U.S. residents aged 18 years or older only. Only the last entry for each participant will be deemed valid. Not open to Gainesville Coins employees or contractors, or their families. Filed under: Gold & Silver at Gainesville Coins Tagged: contest, Gainesville Coins, spot silver prices

Platinum and Palladium: A Fundamental Shift By Jeff Clark, Senior Precious Metals Analyst Platinum is a precious metal, as is palladium, though to a lesser degree. However, like silver, both are also industrial metals. Unlike silver, it's their industrial use that is the primary price driver for both platinum and palladium – and that use is undergoing a fundamental shift. The largest source of demand for platinum and palladium is the automotive industry, for use in autocatalysts. In turn, the fortunes of the auto industry are sensitive to the health of the world's major economies. We've been bearish on platinum-group metals for years, primarily because we weren't convinced a healthy – much less roaring – world economy could be sustained when so many governments continue spending beyond their means. We reconsidered the market last year, when strikes in South Africa – home to 75% of global platinum production and 95% of known reserves – threatened supplies. But as we wrote last December, the strikes ended without great impact on long-term supply. Since then, however, the fundamentals of this market have changed. Others may disagree with our economic outlook, which is still bearish, but it's due to supply issues – not demand – that our interest is now drawn to these metals, and particularly to palladium. Here's a look at global supply against auto-industry demand for both metals. Approximately 55% of platinum and the bulk of palladium supply was used

Louis Golino at CoinWeek has posed an interesting question, in light of the success of the Royal Canadian Mint’s “$20 for $20″ silver coin program: Should the U.S. Mint set the face value of gold and silver coins closer to the melt value? Right now, the 1 oz American Silver Eagle bullion coin has a face value of $1 and retail value of $27, and the 1 oz American Gold Eagle bullion coin has a face value of $50 and a retail value of $1,500. the proof versions cost more. Golino cites recent examples by the Royal Canadian Mint and the Paris Mint attesting to the success of raising the face value of gold a silver coins closer to the melt value, then selling them at the face value. He notes that the RCM reported that the “$20 for $20″ program, where 8 gram silver coins with a face value of $20 (CDN) were sold for $20, brought in 67,000 new customers. Half of these customers have purchased additional coins through the RCM site. One possibility Golino raises, is that having a higher face value on bullion coins may make non-collectors more comfortable with purchasing gold and silver coins for the first time, especially in light of recent drops in precious metal values. One commenter noted that this approach is better used on limited edition series like the RCM and PM are doing, instead of a continuing series such as the Silver Eagles and Gold Eagles. Filed under: Contemporary Coins Tagged: bullion coins, gold coins, La Monnaie de Paris, Royal Canadian Mint, silver coins, U.S. Mint

Here’s a little teaser for next Monday’s “The Coin Explorer,” when I review the “Famous City Squares” colorized silver coin set from the Perth Mint, as well as two silver coins from the Paris Mint’s proof silver “UNESCO World Heritage” series – Versailles and the Taj Mahal! by The Coin Explorer Filed under: Gold & Silver at Gainesville Coins Tagged: colorized coin, Gainesville Coins, silver coins, The Coin Explorer

Commerzbank reports that platinum ETF holdings hit a record high of 198 million ounces yesterday, noting “platinum ETFs have been seeing noticeable inflows over the past few weeks.” Platinum ETF holdings are up 18% in the last three weeks, even as gold ETFs continue to see marked outflows. Several factors play into this: Platinum demand in China has surged recently, as platinum jewelry becomes more fashionable. UBS reports that net platinum imports for China totaled 8.9 tonnes last month, a 29% increase year-over-year, and a 14% increase from March. Part of this increase was fueled by the mid-April drop in precious metals. Labor unrest in South Africa is another factor. Strikes and labor violence last year in the nation dropped worldwide platinum production 10%, and worldwide palladium by 11%, underscoring the fact that 80% of all platinum mining occurs in South Africa. The current demands of labor unions in contract negotiations, combined with the low price of platinum making several mining operations unprofitable even now, virtually guarantees more work stoppages. On a related note, President Mugabe of Zimbabwe, who recently seized 51% of all platinum mining operations in his country, is going ahead with the seizure of part of the land leased to platinum miner Zimplats. This has been used by some in the South African mining unions to call for seizure of mines  in their country, or at least seizure and nationalization of any mines that operators take out of production due to being unprofitable in the current economic climate. Lastly, Russia (who owns most of the palladium deposits in the world) and South Africa announced that they are looking into forming a cartel to control the platinum group metals – a “PGM OPEC.” All these factors point to a continued restriction in platinum supply, a situation that will only get worse if the automotive industries of Europe and China improve. It will take time for any idled mines to be brought back into production. Filed under: Market News Tagged: China, ETFs, platinum, platinum production, Russia, South Africa, Zimbabwe, Zimplats

Gold is seeing some safe haven demand this morning as stocks are down, with reports in Asia that the premium for gold bars has hit an all-time high, due to a local shortage of the physical metal. The specter of the quantitative easing “punchbowl” being taken away, raised by Fed Chairman Ben Bernanke yesterday during Congressional testimony, has caused stock markets worldwide to swoon. Adding to the downer, the HSBC Chinese flash PMI for May recorded the first contraction in seven months. The reported 49.6, against an expected 50.5, continued the downward trend of April’s reading of 50.4. Analysts were expecting 50.5, as the second quarter is traditionally a strong period for Chinese manufacturing. The pessimistic news caused markets throughout Asia to go negative, and depressed base commodities. The Nikkei index in Japan dropped 7.3%, the largest one-day correction in two years, as the yen hit a two-week high against the dollar. The bad news out of China only heightened the sour mood in Europe, which was already depressed over the possibility that the U.S. Fed would stop quantitative easing. European stocks and the common currency both declined, despite the Eurozone Markit PMI improving to 47.5 for May. Yes, it marks 18 straight months of economic contraction, but it is a three-month high for the index, which came in at 47.0 last month. In the U.S., stocks are poised to continue their downward momentum on the back of the contraction in Chinese PMI. One spot of good news in the U.S. economy is the unemployment numbers. First-time jobless claims last week came in at 340,000 new applications, 23,000 less than the week before. The four-week moving average was 339,500, essentially unchanged from the previous week’s 340,000. Continuing unemployment claims fell 112,000 to 2.91 million. These numbers do not include those people whose unemployment has run out, or have stopped actively seeking employment. by David Peterson Filed under: Market News Tagged: ben bernanke, Chinese economy, economic policy changes, European economy, quantitative easing, unemployment

Gene Arensberg has an article out on the COMEX price smash where he concludes that: "in order for the initial 124 tonne sale to have occurred “legally” it would have had to have been 14 traders, all with zero orders open, all acting simultaneously, all acting independently, in their own self-interest, without colluding with each other to “sell-for-effect” or conspiring to foment a price smash. In actuality, the chances that there were 14 traders who held zero open orders all acting independently, all throwing their full allowable 3,000 contracts into the gold market within a few minutes of each other are infinitesimally small."Gene notes that hedge members have a bona fide hedger exemption "to sell more than the limit, but not without filing paperwork with the exchange" which means that "whoever blew out the gold market on April 12 is already known to the CFTC (and what documentation they used to back up their trade)."Now I would have thought that position limits would still apply to the person whom the hedger was executing for. A quick google search brought up this 20 page client update document from a law firm. Reading through the first few pages I was confronted by stuff like this:"To qualify as a bona fide hedging transaction under the Final Rule, a transaction or position must (1) represent a substitute for transactions made or to be made or positions taken or to be taken at a later time in a physical marketing channel, (2) be economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise, and (3) either (a) qualify as one of the eight enumerated bona fide hedging transactions under the Final Rule and arise from the potential change in the value of (x) assets a person owns, produces, manufactures, processes or merchandises or anticipates owning, producing, manufacturing, processing or merchandising, (y) liabilities a person owes or anticipates incurring or (z) services a person provides, purchases or anticipates providing or purchasing, or (b) qualify as a “passthrough swap.”"Eyes glazing over? Same here, so I then proceeded to the scroll/skim through reading method. My lay person summary: plenty of loopholes for someone to do what they want and have the CFTC running around in circles.Now you know why the CFTC investigation into silver has been going on for years without any result.As I said in response to this question: Do you think Bart Chilton of the CFTC is imagining things when he says its happening, or maybe he wants to be loved by the Goldbug crowd?:"Consider that the CFTC has to deal/manage/politic two types of market participants – producers, who want prices to be high and consumers, who want prices to be low. I have seen the theory that Bart’s role is to play to or appease the consumers, which in the case of PMs means they want high prices. I really don’t know if this is the case or he is just straight up. Either way he is often very careful in what he says, and keep in mind the difference between manipulation and suppression. Bart talks of manipulation, not suppression."To that I'd add the CFTC has to deal with a complex set of rules and regulations. When regulations get this complex market fairness and transparency is actually harmed, and the only ones who benefit are those big enough to have lawyers able to work out the loopholes.What the market needs is straightforward commonsense rules that everyone knows in advance, just like Kid Dynamite points out in this post on cancelling trades. Or just drop the pretence and go free-for-all law of the jungle. Having interest rates this low doesn't help, as speculators have minimal cost in holding a position for a long time (until it blows up) or taking on large positions. This just adds to the volatility. Time to give up on the CFTC being able to control this, just like Ted Butler did.BTW, Perth Mint once had a new hire in our Treasury department suggest we should trade on COMEX. That got laughed at (and that was before MF

As far as we can ascertain the demand for physical silver is alive and well with reports of people queuing to buy it while a number of suppliers, including the mints have been selling all that they could produce of the popular coins and bars. And yet the price of silver falls in the paper market which highlights the disparity between the physical and paper markets. The Silver Chart: The above chart of silver prices shows that it has been two years since silver flirted with

Join Michael Maloney in the GoldSilver.com boardroom as he answers this week's most popular question - just what is going on with gold and silver?