Category Archives: Gold/Silver
Sales of silver coins by the U.S. Mint are on track for their best year since statistics began being kept, according to data on the mint’s website. Bloomberg reported in June that sales had already reached $24.03 million ounces. The mint set a one month record with sales of 7.5 ounces in January. Sales had to be suspended that month for over a week. Acting director Richard Petersen said that demand for gold and silver coins remains at an “unprecedented level.”
The brisk sales reflect both bargain prices and investor confidence in paper currencies. Silver has led the way in spot price declines over the past year. Silver futures are down 28 percent in 2013. Gold also remains well off its one year highs with spot prices in the 1300s, down from $1,790.30 in September 2012.
Larry Summers, erstwhile Treasury Secretary and President of Harvard University, is in the news again. Ryan Grimm of the Huffington Post is reporting the President is considering Summers for the Federal Reserve’s top job, much to the consternation of virtually everyone outside the hedge fund community. Back in May, I wrote a piece when Summers was rumored to be in the running for the job, and I feel that the piece is even more relevant given the president’s apparent desire to ruin the economy even more by appointing Larry Summers to chair the Fed. After all, when you’ve destroyed your university’s endowment, gambled its cash reserves on derivatives, ensured that derivatives would remain deregulated so your friends could gamble at 40:1 leveraging, why not move on to managing our monetary policy next? What could possibly go wrong?!
Without further adieu, I give you Larry Summers: Failure will get you everywhere, printed below. The piece originally appeared on dustinstockton.com. Enjoy!
U.S. jobless claims came in at 360,000, beating economist’s projections by 20,000. Continuing unemployment claims were higher than the projection of 2.955 million, with a total of 2.977 million. Bloomberg explained it away as a seasonal re-tooling in the automotive industry, and noted that import prices were declining. Nothing to see here, folks, because Bernanke isn’t in any real hurry to taper off QE. The stock market certainly hopes so!
State personal income declined in the first quarter of 2013 by 1.2 percent, after a pickup in the fourth quarter of 2012. The U.S. net international investment position, which is the measure of foreign owned assets in the U.S. versus U.S. owned assets abroad, was negative $4.277 trillion, as the value of foreign-owned U.S. assets grew by $394.2 billion, while U.S. owned foreign assets declined by $19 billion.
LONDON (MINEWEB) -
Much is made by commentators of the historical gold:silver ratio (GSR) being around 16:1, while the current ratio is more like 55:1, with the implication being that silver will return to its historical ratio to gold. If this were to happen overnight it would put the current silver price at a little over $100 an ounce – in the writer’s view this won’t happen, even in the long term, although there is definitely room for silver to appreciate more than gold in percentage terms in the days, months and years ahead, particularly if the gold price makes a rapid climb towards the $2,000 level which many do expect.
The reason we do not see the GSR returning to 16:1, is that silver is nowadays an industrial metal with an important investment element, while historically it was, like gold, a monetary metal. But true silver-based coinage is long behind us, while the world’s Central Banks do not see silver as forming a part of their reserves. True gold coinage, where the face value represents the metal content, does not exist either, but at least Central Banks continue to maintain gold as a key element in their holdings – although interestingly it is mainly the Western Central Banks which retain the high gold ratios in reserves, rather than the Middle Eastern and Asian ones where traditionally one might expect a greater propensity to hold gold as a monetary asset. There does seem to be a move to rectify this in the East, which is gold price positive, but there is huge ground for these banks to make up to bring gold percentages in their holdings anywhere near European and American ratios – perhaps itself a positive factor for the yellow metal.
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Last Friday’s sharp upwards move in the gold price appears to have survived a few days of North American and European exposure intact, despite a significant negative in the shape of reduced Indian demand. This because the weak rupee means the gold price is at virtually record levels in local currency terms in the subcontinent, which has been the world’s largest buyer of gold for many years. Although latest figures are not yet definitive enough to see this as a permanent position, China may well have overtaken India as the key global consumer – and with a seemingly ever-rising trend in Chinese imports, and in Chinese production that does not leave the country, it could well be consolidating its world leadership position in gold demand.
But can the Chinese demand surge of the past few years be maintained in the face of an economic slowdown in that country of more than 1.3 billion people? Even a slowdown in China probably means higher growth than in the Western world and with inflation fears key amongst the country’s newly wealthy (by Chinese standards at least) and a predisposition to buy gold as a store of wealth anyway, there is at least the prospect of Chinese demand being maintained, if not actually increased.
Fear and uncertainty weighed heavily on the markets Friday as investors who viewed almost everything as too risky embarked on a sell-off. Despite the overall negative sentiment and the release of a slew of weak manufacturing data, silver had a bullish day, closing up nearly $1.00 at $28.68 on the New York spot market. Can investors expect gains for silver to be sustained amid a slowdown in manufacturing?
Of late, silver has been trading with industrial commodities. As a result, the metal has been susceptible to concerns about global economic conditions and prices have been in a downtrend. However, on Friday investors ignored reports that suggest the world’s factories are slowing down.
“The rate of expansion in global manufacturing production slowed sharply in May, as growth of total order books remained lackluster and international trade volumes posted a marginal decline,” said David Hensley, director of global economics coordination at JP Morgan.
Gold and silver were down sharply as European Union leaders are due to meet in Brussels tonight. Recent EU monetary policy initiatives have run out of steam and the economically depressing effects of austerity measures are biting, which has led to political turnover amid the EU effectively experiencing its second recession of the past four years.
Spot gold was down 1.66%, bid at $1,542.20 an ounce as of 11:00 a.m. Prices reached only as high as $1,565.60 and as dropped as low as $1,533.50, according to Kitco market data. The London afternoon reference price was set at $1,549, a whopping $33.50 an ounce below Tuesday’s afternoon reference price.
Spot silver was showing a 2.94% loss, bid below $28 at $27.37 an ounce. The morning high as of time of writing was $28.02, with the low reaching $27.04. Wednesday’s reference price was set at $27.76, 31 cents an ounce below Tuesday’s price fix.
Today’s EU summit in Brussels will be the first for new French President Francois Hollande, whose election is seen as adding to the impetus for the EU to take pro-growth and job-creating fiscal and financial actions. No firm policy actions are expected to be announced since today’s meeting is scheduled as preparation for another summit meeting at the end of June.
After remaining quiet for much of the day, gold and silver received a sharp pullback on Wednesday after the Federal Open Market Committee released its latest statement. The Fed’s April minutes closely resembled the March minutes, but precious metals still experienced a very brief and sell-off.
Members of the Federal Reserve’s policy-making committee once again held its key interest rate near zero percent, citing lingering concerns about significant downside risks and deflation. The FOMC statement explained, “To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to .25 percent and currently anticipates that economic conditions-including low rates of resource utilization and a subdued outlook for inflation over the medium run-are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.” Nine out of 10 Fed officials voted to keep the current easing measures in place, but with no indication of further easing programs.
This week the Economic Policy Subcommittee of the Senate Banking Committee will hold a hearing on the shortfall in retirement savings in America. This shortfall has many causes including inadequate savings, financial mismanagement, unrealistically high projected returns by pension plans, and public policy that is hostile to investment.
One of the most important causes of the shortfall is the Federal Reserve’s zero interest rate policy which offers retirees and near-retirees almost no interest on savings held in the form of bank accounts, Treasury bills, or money market funds. ………….