[[wysiwyg_imageupload:2336:]]By Julian D. W. Phillips
The Chinese mining sector is currently producing 340 tonnes a year and rising. No doubt there is every encouragement from the State for this figure to rise. We believe that no matter how high it rises, little if any of that supply will reach the world's 'open' market in London. Even global gold production is not likely to rise significantly from the current level of around 2,500 tonnes. Therein lies a development that, in itself, will change global gold market dynamics.
By Adam Hamilton
In a single week, the manic euphoria gripping silver recently was utterly obliterated. After promising such rapid wealth creation, this metal collapsed in what can only be described as a near-crash. New investors were left stunned, while leveraged speculators were slaughtered. Sadly, they could have easily avoided these devastating losses. Silver's massive reversal was both inevitable and predicted well in advance.
[[wysiwyg_imageupload:2328:]]By JW Jones
"Take calculated risks. That is quite different from being rash."
- George S. Patton -
Last week silver was the focus of incredible price swings which left many licking their wounds and shaking their heads at the trading losses they had incurred. This sell off was likely triggered by the increase in margin requirements for futures contracts, but the stunning price decline extended to all vehicles like exchange traded funds use to trade the glimmering metal.
[[wysiwyg_imageupload:2312:]]By David Galland
Today I'd like to share a couple of thoughts on the matter of the correction in commodities about which we have been so vocally warning, and which has now occurred.
After having written in early April about the possible market response to the end of QE2, specifically about it knocking the legs out from under the overbought precious metals and other commodities, the metals continued higher, causing some readers to express concern that we had led them astray. And any number of analysts opined that the market had already priced in the end of QE2 and thus, even after Bernanke's press conference, had decided it was go, go, go for higher commodity prices.
[[wysiwyg_imageupload:2296:]]By Nick Barisheff
As we near the end of the first quarter of 2011, the potential for a widening of the uprisings in North Africa and the Middle East has pushed oil prices past the $100 mark. Long before the riots began, commodity prices had risen to uncomfortable levels, having soared over 30 percent in a matter of months.
Currency creation by emerging market central banks was, and is, a major factor behind the rise in oil prices. Egypt's M2 money supply, for example, rose 13.3 percent during 2010, while China's M2 money supply increased by 17 percent and India's M3 money supply increased by 15 percent. When currency creation outpaces GDP growth, too many artificially created rupees and yuan and pounds and euros chase too few goods, and price inflation results (Figure 1).
In case you're not paying attention, the silver market has gone nuts today, surging until near $50, before collapsing to around $46. It's the most controversial, hotly-followed asset class in the world. So what's the real story.
By Ian Campbell
Gold and Silver continued making headline news yesterday and this morning, with everyone reading this likely being well aware that both breached, and so far have held above U.S.$1,500 and U.S.$45 respectively. At 11:30 a.m. ET this morning they trading at U.S.$1,504.14 and U.S.$46.02. To put these two prices in context, on January 1, only 80 calendar days ago:
[[wysiwyg_imageupload:2151:]]By Julian D. W. Phillips
If we look at the gold price in the euro, we see it holding between €1,010 and 1,020 for the last couple of weeks. In the Swiss Franc it is doing much the same. However, in the dollar it has been rising, hitting new highs at $1,475. Today it jumped to €1,026 and through $1,480. If we follow the suggestion of Robert Zoellik the head of the World Bank, that gold should be a 'value reference' for the gold price, then we cannot look at the gold price in an individual currency, we must look at the currency's value against gold. The reason for this is made clear once you look at the gold price chart in each individual currency. It actually should turn out to be a reverse chart of the currency. Thus gold stands as a 'value anchor' measuring the value of the currency more than that currency measures the value of gold. So, many investors actually do believe that their currency [such as the dollar] is measuring the gold price, but it isn't.
While 2009 was a year of physical bar disinvestment (driven by heavy Indian sales) there was a net positive swing of over 70M ounces between 2009 and 2010 which has helped hold prices at all time records