Thursday, February 28, 2013

Gold and Silver Now Legal Tender in Arizona

Arizona state senators voted to allow gold and silver to be used as legal tender in the state.

Privately minted gold and silver will now be given the same authority and status as paper money in Arizona. That means the residents of Arizona will be able to pay their bills within the state boundaries using the two precious metals.

Along with Arizona, other states have already implemented or are looking into similar proposals. While the constitution doesn't allow states to create their own currencies, there is nothing to suggest a state can't allow coins minted by private companies to be used as legal tender.

There was some additional drama in the process of confirming the bill, which came of course from a Democrat, this one being someone named Sen. Steve Farley from Tucson,

I will hand him this, he got it right on when he attacked the approval of the proposal, seeing how it makes the failing U.S. dollar look. Farley said, "I believe the bill itself ridicules our financial system." Right you are Steve. It does all of that for sure.

What he's of course referring to is the implementation of an alternative underscores the disastrous and monstrous policies of the Federal Reserve and Ben Bernanke, where they work together to debase the currency in the name of saving the economy.

The inclusion of gold and silver as a currency, every day points to these failed policies and teaches those willing to listen that Keynesianism is dead, and printing or digitizing endless amounts of dollars to prop up an economic system that should be allowed to flush itself out so it can be really healed, is what people like this Farley oppose.

In order to work out the details of the initiative, the effective date to implement gold and silver as legal tender in Arizona was pushed out till after the 2014 legislative session.

Wednesday, February 27, 2013

Gold Futures Drop as Investors Take Profits

After a couple of days of gold futures surging, investors decided to take some profits off of the table, as gold for April delivery dropped $19.80, or 1.2 percent, to close at $1,595.70 an ounce on the Comex division of the New York Mercantile Exchange.

Some media outlets suggested it was positive macroeconomic data out of the U.S. and Europe that resulted in the downturn, but that's doubtful after Federal Reserve Chairman Ben Bernanke stated he has no intention of stopping stimulus measures, which of course confirms the extreme fragile global and American economy.

Another thing is any investor that believes in any way that Europe has anything positive economically to base an investing decision upon, is setting themselves up for failure, as Europe is and will continue to be an economic basket case no matter what positive spin the financial media attempt to put on it.

For example, some news reports said gold futures fell because Italian political parties are starting to work on the possibility of forming a government. So what? Italy is working on forming a government. That's meaningless. Italy is going to have a government no matter what the news reports say. So the idea is put forward that they are working on it is considered news and a reason for gold investors to sell. That would mean gold investors bought gold because there were concerns over whether or not Italy would form a government. It's irrelevant of course.

Britain also continues to be an economically challenged area, where its economy contracted by 0.3 percent from the last quarter.

The only positive economic news in the United States continues to be the housing sector, where pending home sales in January were up a little more than expected. Other than that, most of the economic news in America is dismal.

Durable goods orders were reported as having fallen in January, a nod towards extremely weak manufacturing sector. Durable goods orders in the U.S. plunged 5.2 percent last month, where economists were looking for a drop of about 4.0 percent.

As for currencies, the euro U.S. dollar rose to $1.3101. The dollar index, which measures the U.S. dollar against a basket of currencies, was also down on the day.

Monday, February 25, 2013

Gold May be About to Break Out, Here's Why

Gold could be about to soar after recent heavy downward pressure, based upon the probability the huge number of shorts will be forced to cover their positions, resulting in a huge, upward move in the yellow metal.

Gene Arensberg, editor of the Got Gold Report, noted this in an email:

“The producer merchants, the category that includes the natural hedgers, are at their lowest net short position since 2008 at the same time that the managed money traders, the funds, are record short and at their lowest net long position since Nov. 18, 2008.

“I have not seen the COT ‘rubber bands’ so over-stretched in opposite directions as they are now,” Arensberg said, noting that extreme lows for the managed money net long positions are “usually associated with important bottoms for the price of gold.”

Arensberg added that together, funds have slashed their long gold positions by almost 36 percent to a 42,810 contract net long position.

It is also thought the short position is much larger because this data only represents Tuesday of last week.

Gold for April delivery settled Monday at $1,586.60 an ounce  on the Comex division of the New York Mercantile Exchange, up $13.80, or 0.9%. That's the largest one-day move for gold futures in February.

Thursday, February 21, 2013

SPDR Gold Trust (GLD) Rocked with Biggest One Day Outflow

SPDR Gold Trust (GLD) reported it experienced its biggest gold outflow of gold for one day since August 2011. Gold bullion held by the ETF fell by 20.77 tons on Wednesday when the market made a big correction.

Much of this was the result of the orchestrated move by the Federal Reserve to allow the appearance some of its members are questioning whether it should continue with its quantitative easing policy even if it doesn't reach its unemployment target.

A hedge fund rumor floated throughout the day that one had to sell a lot of gold to cover itself. That proved to be unfounded, although combined with the Fed minutes and uncertain economic outlook made for the perfect storm to drive the market and price of gold down.

After the outflow of gold, SPDR currently holds about 1,300 tons of gold. The highest amount it has held as in the last month of 2012, when the total reached 1,353 tons.

Most of this is benign, but it did plant the concern in some investor's heads that the bull gold run may be nearing an end; undoubtedly one of the reasons the Fed released the minutes.

SPDR Gold Shares closed Thursday at $152.62, gaining $1.18, or 0.78 percent.

Will Gold Jump Soon, or Do We Have to Wait a Little Longer?

The little games being played by the Federal Reserve in having comments alleging it may quit printing before it reaches its unemployment goal, is a hoax of course, as since the latest round of endless stimulus, nothing at all has improved in that regard, making it not only unlikely to happen, but points towards the Fed trying to manipulate the markets because it knows the response it would have to the minutes from the meeting they fed us.

With that in mind, it's possible in regard to the price movement of gold, that the usual move it has made over the last several years may not happen as quickly this year. Normally the weakest gold has been from 2010 through 2012 has been during the months of February to April, which by that time it has started to gather strength.

That could definitely happen again this year, but there has been so much money thrown into the economy, that it could result in it taking a little longer to transpire in 2013.

So while there are some that are pushing investors to put their money in industrial metals, it could pose some danger over the long haul, but could be a good move in the short term.

The problem is the sentiment could quickly turn over the next several months, and to get caught when it turns negative could cause some painful downturns. At this time we're already seeing some cracks in the economic dam after the robust beginning of the year, and it appears there is nothing that will change that any time soon.

No matter what the Fed says, there is no way in this weak economic climate it's going to stop making funny money.

What the minutes of the Fed probably are meant to do is try to shore up the dollar while helping consumers by trying to push down prices. The effect won't last for long.

The bottom line is gold prices could jump as they have over the last several years sometime in the next month or so, or it may be on pause for a little longer. Either way, the price of gold will go higher, as all the fundamentals remain in place for it to do so.

Wednesday, February 20, 2013

Gold: U.S. Audit of New York Fed isn't U.S. Gold

The alleged audit of gold in the Federal Reserve Bank of New York is a hoax, based upon the fact that the gold held in the Federal Reserve Bank of New York isn't held on behalf of the U.S., but mostly on behalf of foreign governments.

U.S. gold reserves are reportedly held at Fort Knox, which has never been audited. So the question becomes, why did the U.S. go through this meaningless exercise? The answer is to confuse the general public as to the real gold reserves held by the U.S. and to take pressure off of the Fed and the government.

Those critics of the Fed will now probably believe there has been a full audit of gold held by the U.S., when in fact only gold held in New York was audited, with the real alleged U.S. gold reserves held in Fort Knox receiving no attention; it isn't even allowed to be seen.

The other issue is this is an audit by the government. There should have been an independent auditing firm brought in.

Finally, the audit didn't include any claims that are made against the gold, which is another way of saying there wasn't a full audit done at all.

All of this speaks to the fact this was all done for the purpose of public consumption, which now will largely believe the gold reserves of the U.S. have been audited, while the real gold in New York was gold held by other countries.

Thursday, February 14, 2013

Paulson Holds Gold, Soros, Robertson Sell

Hedge fund managers were cautious in the latest quarter in reference to their gold investments, with John Paulson holding onto his gold investments, while George Soros sold some of his and Julian Robertson sold all of his fund's stake in Market Vectors Gold Miners ETF.

Paulson didn't sell any of Paulson & Co.'s 21.8 million shares in SPDR Gold Trust, of which the fund is the biggest shareholder in.

With the price of gold dropping, that obviously had a negative impact on the value of Paulson's stake in SPDR, as it fell from a value of $3.75 billion to $3.54 billion in the fourth quarter. During the fourth quarter spot gold prices dropped about $100 an ounce, or close to five percent.

Paulson also held onto stakes in major gold miners AngloGold Ashanti and Barrick Gold (ABX), among a number of others.

George Soros cut his position in SPDR Gold by over 50 percent from the 1.32 million he held in the third quarter to 600,000 shares in the fourth quarter.

Via Tiger Management, Julian Robertson held onto his stake in the Junior Gold Miners ETF.

All of this isn't entirely unexpected, as it was thought that gold could drop in the short term while rebounding as the year goes on.

This should be the case, with gold and other commodities jumping once the equities market begins to correct.

At this time gold is pressing down towards the $1,600 an ounce mark, with some believing it'll go below that in the not-too-distant future.

Thursday, February 7, 2013

Gold Drops on Draghi's Comments

For better or worse, what comes out of the mouth of European Central Bank (ECB) President Mario Draghi can move the markets, and that's the case Thursday with gold, the euro, and the U.S. dollar.

The euro zone has foolishly been kept in the back of minds of many investors, as the mainstream media has been extremely lax in its understanding and reporting on the condition of the region. Much of that is based upon the desire for social engineering by radicals and the Obama Administration, which is trying hard to take the focus off the dangerously weak global economy and on many irrelevant side issues, which are starting to look circus-like in nature in comparison to the challenges we economically face.

What drove most of the response from the market were the comments that there are more negative risks in Europe than there are positive ones. That resulted in the euro plummeting almost 1 percent against the U.S. dollar.

Even though Draghi said he thinks economic activity will be stronger in the latter part of 2013, that largely fell on deaf ears because it's far less likely because of the negative risks he sees.

Another comment from a different source, this time Federal Reserve official Jeremy Stein, concerning the fact that low interest rates could produce risks to financial stability, also weighed on gold and silver.

Gold futures for April delivery settled at $1,671.30 an ounce, dropping $7.50 an ounce.

Monday, February 4, 2013

Gold Will Rally in 2013 with or without Inflation says Analyst

Senior economist at Longview Economics, Harry Colvin, said gold will rally from $300 to $400 an ounce in 2013 whether inflation comes or not.

Colvin said this in an interview on CNBC:

Everyone is always bearish at the lows, that's the time to buy it, we're going to get a good rally this year I think.

When challenged on there not being much in the way of inflation by Bob Parker, senior advisor at Credit Suisse, Colvin responded with this:
We don't need inflation  for a gold price rally. We haven't had inflationary pressures in recent years. The only inflationary pressures we have is from QE pushing commodity prices up.

Gold's gone sideways for sixteen months, that's because the balance sheet in the Fed has gone sideways for the last sixteen months. The balance sheet is about to expand rapidly. And with that we're going to get a rally in the gold price, it's going to go hard this year and probably into the next.

If he's correct, we'll see gold approaching the $2,000 an ounce mark this year.