July 10th 2013
I’ve got a crazy busy day ahead so it’s…..
Right to the breaking news that matters…
Silver – The Light At The End Of The Tunnel – The most common interpretation of this shift is that the large bank (presumably, but not directly confirmed as JP Morgan) has closed out its silver short positions (at a nice profit, no doubt), and is now positioning itself for a bullish silver reversal. This is certainly what the bank appears to be doing in the futures market, although its participation through “paper” products based on silver’s spot price, rather than on the underlying metal itself, makes it difficult to know for sure.
JP Morgan’s role as SLV custodian may also be involved in the recent changes, as the SLV has, surprisingly, not seen much in the way of net outflows over the past six months, despite silver’s lackluster performance over the same period. Contrast this to the GLD gold ETF that has lost close to 23% of its underlying gold holdings since the beginning of the year. Also noteworthy is the fact that the latest COT report for gold, as reported by Bloomberg, shows that the ‘Commercials’ have reduced their net short gold position to 35,200 contracts. The ‘Commercials’ haven’t carried this low a net short position in Comex gold futures for more than 10 years.
Gold Can Do Very Well Without Fed Purchases: Have We Forgotten 2002 Through 2008? – It seems the attention span of many investors is not much more than a few months. It was only a few short months less than one year ago that gold was the right place to put your money, now the gold market is absolutely dead according to many pundits. In fact, many media outlets are declaring this latest jobs report to be “the death of gold” because it means that the Fed will begin pulling back its bond purchases and it will eventually mean the end of Quantitative Easing (QE).
The argument goes that by ending QE purchases the Fed will be printing less money – which means less inflationary new dollars into the system and thus it is bad for gold. In addition, Fed tapering will signal that the U.S. recovery is at hand, so investors will no longer need gold as a hedge against financial stress.
The problem is both arguments are just plain wrong and neglect historical facts. But unfortunately many investors have bought these arguments hook-line-and-sinker and have not really thought out if the arguments hold weight, with the consequences being that many of them will miss out on a golden opportunity when the fundamental flaws in the argument are exposed. Investors have a tremendous opportunity. The financial markets are herding together on the tapering bandwagon and punishing gold and silver based on an assumption that tapering is bad for gold.
As we have discussed earlier, fundamentals remain strong for both gold and silver. But investors and hedge funds have joined together to jump on the bearish trade, with the media declaring the gold market over and forecasting ever lower prices where they expect gold to end up. The stage is set for the real fundamentals to take hold – when they do we will see an epic short covering as investors realize that maybe tapering is not quite the anathema for gold that it was made out to be.
Now is the time for investors to aggressively accumulate physical gold and silver.
MUST READ – Game Over – “It’s All A Farce, The Fed & German Gold Is Gone” – Today one of the savviest and well connected hedge fund managers in the world shocked King World News by taking us once again on a trip down the rabbit hole that was nothing short of breathtaking. Outspoken Hong Kong hedge fund manager William Kaye spoke with KWN about the missing Fed and German gold, where it has gone, and how much gold the People’s Bank Of China (PBOC) really owns. This interview is going to stun readers around the world. Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in his remarkable interview.