5 Steps To Being A Happy Goldbug

May 30th, 2013

Jan Skoyles: 1. Ignore the mainstream media

As gold fell this appeared on Reuters courtesy of Felix Salmon: “It’s important that goldbugs are seen to not only have silly beliefs, but also to have lost a substantial amount of money. Gold is a fear trade rather 

than a greed trade — it’s defensive, and defensive investors are always particularly loss-averse. If you lose money betting on high-flying tech stocks, that’s much more likely to be money you can afford to lose than if you lose money after putting your life savings into precious metals.”

The mainstream media mob have a three-pronged pitch fork especially for attacks on gold, which they regularly like to wield about.

The first prong is the intelligence insult prong, which was recently used by Paul Krugman who wrote back in April that he hopes ‘the gold price crash will finally bring intellectual capitulation.’ Implying that those of you who have invested in gold went into the process completely blind and misinformed.

The second prong is that gold is in a bubble and the bubble has now burst continue much to their delight. Gold was clearly never in a bubble. A  bubbles requires mass participation and enthusiasm an asset, combined with the use of lots of leverage. Gold does not fit this bill – only representing 1% of global and financial assets and seldom held with leverage.

The third prong claims gold is only a fear trade and that the recent fall in the gold price shows investors are now feeling more confident about the economy and feel more wary about gold. Iza Kaminska recently wrote in the FT that it is becoming ‘ever harder to justify a role for gold’ given that the commodity landscape has now been reset.

2. Don’t listen to predictions

Speaking of the media, no-one loves a price prediction like they do. But the gold price is rarely what gold investment is all about.

Those who invest in gold, rarely do it because they see the price hitting $10,000 an ounce, but rather because they see central banks and governments making poor economic decisions which will drive the value of sovereign currencies down and therefore the gold price to new highs.

Full-time gold commentators, who have a fully vested interest in gold rarely review or amend their predictions. Few place timescales on what will happen to the gold price.Jim Sinclair who recently predicted prices of $3,500 gave no timescale of when this would happen, instead looking at debt levels and ensuing currency wars which will make way for the gold price to fly.

But of course we don’t hear about legends’, such as Mr Sinclair, predictions instead we hear about those from the likes of Goldman Sachs who right before the gold crash told clients to short gold.

Similar institutions continue to adjust, amend and scrap their gold price predictions according to short-medium term developments in the market such as stock market performances and employment numbers. They rarely regard the impact of long-term monetary easing on the confidence of those with cash in the bank. Hence why gold price predictions from high-finance are so often wrong – see this graph from Casey Research for the smoking gun.

3. Watch the fundamentals

What are the fundamentals? They’re the same ones that the mainstream media ignore. So when financial journalists are decrying the end of gold because of strong performance inthe stock market or the dollar’s strength, a happy goldbug checks behind the curtain to make sure the banks are still printing money, negative interest rates haven’t been amended, central banks continue to buy gold etc.

To help you keep an eye on the fundamentals, ask yourself the following questions:

• Has confidence returned to the financial and monetary systems?
• Are there more or less EU countries heading for financial difficulties?
• Is the Fed still pumping money and do they have a solution on repaying their debt?
• Are central banks still printing money and devaluing currencies?
• Is easy monetary policy likely to continue?
• Are real interest rates positive?
• Are central banks still buying gold?
• Are individuals across the world still buying gold?

4. Don’t speculate but instead preserve wealth

Gold bugs do not invest in gold if they’re looking to play the market, make a quick profit and take a bit of a gamble. Those looking to own gold do so as it is money which will holds its value in the future.

The unique properties of physical gold mean that it will never be completely valueless. Those who have been speculating are those who have felt the pain of the gold price drop (and are the cause of it) but those who have hung onto their physical gold have felt neither pain nor jubilation. The amount of gold in their possession has not diminished, it is only those who speculate on paper gold who would question its price.

The drive in gold prices in the last decade will be supported by the physical gold buying and hoarding which has taken place. Speculating with gold suggests that investors buy gold in the hope of being able to sell it for much more paper currency than the amount that originally bought it. Those who preserve their wealth in gold do not hope to buy more paper, they have opted for a different (superior?) currency.

5. Ignore the price

This is something we talk about a lot on the Research Desk. When we discuss the gold price this is not the same as the value of gold. This, as we said above, remains the same.

However when we talk about the price of gold, we should instead be thinking about currencies priced in gold. You don’t even need to work it out to know that when priced in gold, currencies have plummeted in price. This week the Bank of England advisor, Charlie Bean reported that the value of the British Pound, against other currencies has fallen by 25% in the last five years. Against gold the British pound has fallen by over 90%, other major currencies have had a similar experience.

So whilst the price of gold in US dollars, British Pounds and the Indian Rupee, to name a few, has fallen slightly in the last month this is nothing in comparison to the fall of the sovereign currencies’ value against gold.

5 simple steps…

So rather than fretting about the gold price as bemoaned by the mainstream media, don’t look at short-term predictions, they’re short-sighted and rarely look at the fundamentals. The same fundamentals which affect the value of currencies, and not the value of gold.

Gold bullion is a unique savings vehicle and possibly the most divisive asset in finance. As such there is a never ending media circus around the gold market which can be distracting and stop people buying gold for the wrong reasons.

We hope these 5 key points help you find clarity amidst the talking head’s sound bites, Western central bank propaganda and general misinformation.

This article is brought to you courtesy of Jan Skoyles  from The Real Asset Co.

http://etfdailynews.com/2013/05/30/5-steps-to-being-a-happy-goldbug/

Singapore gold bar premiums hit record on tight supply

Wed May 29, 2013 3:42pm IS

Dealers quote premiums of upto $7/oz in Singapore

By A. Ananthalakshmi

SINGAPORE, May 29 (Reuters) - Premiums for physical gold in Singapore touched new highs this week as supplies proved hard to acquire, even as premiums in other Asian countries eased after gold prices bounced off two-year lows seen in April.

Dealers in Singapore, a center for bullion trading in Southeast Asia, were quoting up to $7 an ounce over spot London prices for gold kilogram bars, versus $5 last week.

Gold kilo bars continue to be scarce and some dealers, unable to fill demand, have had to stop taking orders.

"Singapore is still facing a shortage. As long as there are no ready stocks, premiums will be high," said Brian Lan, managing director of bullion dealer GoldSilver Central Pte Ltd in Singapore. "There is a huge backlog."

"Most mints and refineries have backlogs for kilo bars because of buying by banks and central banks."

Lan said premiums were high more because of supply issues than a jump in demand, which has cooled from peak levels.

Gold's biggest drop in 30 years in mid-April to a two-year low of $1,321.35 prompted frantic buying in Asia, even as investors dumped the metal in favour of stocks.

Another Singapore dealer, BullionStar, was charging a premium of 2 percent to spot prices on kilo bars.

"Most of our June allocations, which we have yet to come by, have been fully purchased. The orders we get now, we have to allocate only for July," said Zane Lim, regional manager of operations at BullionStar.

PREMIUMS EASE ELSEWHERE

Spot gold rose about $3 on Wednesday to $1,383.5, up about 5 percent since the mid-April drop. With rising prices, demand and premiums have eased.

Premiums in Hong Kong ranged between $4 and $5 an ounce over spot London prices, dealers said, off a record high of $6 last week.

"The markets see these prices as the low for the next couple of weeks, so there is not much interest," said a trader in Hong Kong. "If prices were closer to $1,300, there would be more interest."

Hong Kong is the key supplier of gold to China, the No. 2 gold buyer after India.

India has also seen premiums ease to below $5 from $15 an ounce earlier this month, as higher gold prices and the winding down of the peak wedding season has curtailed demand. (Reporting by A. Ananthalakshmi; Editing by Clarence Fernandez)

http://in.reuters.com/article/2013/05/29/gold-premiums-idINL3N0EA26520130529

Gold Prices Could Rise As Central Banks, Pessimistic Investors Lay Groundwork For Rebound: UBS

By Nat Rudarakanchana | May 28 2013 2:03 PM

Central banks and pessimistic investors are laying the groundwork for what could be a jump in the price of gold from its current level below $1,400 per ounce, according to a note Tuesday from a UBS analyst.

• 
  proactiveinvestors.co.uk

  Will gold rise above the critical $1,400-an-ounce mark?
  
  

UBS analyst Joni Teves writes that the “extreme” number of investors holding short selling positions in gold might actually encourage a “decent” price hike in the future. 

Since the number of investors betting on a price decline is at an all-time high, writes Teves, aggressive attempts to make prices fall are made “relatively more difficult.” Similarly, factors pushing up prices will obtain a more significant market reaction, as these investors scramble to cover their short positions.

In addition, central banks in countries like Russia, Kazakhstan and Azerbaijan continue to buy gold to increase their reserves.

“Buying from these central banks highlights the trend for increasing gold reserves, especially among EM [emerging markets] central banks, which we expect to remain in place this year,” says Teves in the note.

Russia added 8.4 metric tons to its reserves, Kazakhstan bought 2.6 tons, and Azerbaijan went for an extra ton of gold. In her note, Teves notes that although central bank purchases don’t directly impact prices, they boost some investor sentiment.

Still, Teves says that gold has faced problems breaking past the psychologically important price milestone of $1,400 per ounce, which suggests many investors still look to profit by selling gold at the peak of brief price rallies.

“Sentiment remains weak and there are no anticipated shifts in the macro space in the near future that could trigger a material change in investors’ current attitude towards gold,” Teves says.

http://www.ibtimes.com/gold-prices-could-rise-central-banks-pessimistic-investors-lay-groundwork-rebound-ubs-1281193#

Gold Prices Return

Is Gold Ready for an Upswing?

All indicators show gold is coming back.

By Joseph Cafariello
Monday, May 27th, 2013

As powerful as an airplane’s engines may be, the airship can be knocked around pretty severely when flying through air turbulence, in some cases dropping a hundred feet or more in a flash.

High flying gold has likewise encountered violent turbulence that has not only caused its altitude to fall and rise spastically, but may have also caused some serious structural damage to its wings.

All eyes keep looking to gold’s engines. Do they still have enough power to keep gold on its upward trajectory?

Turbulence Galore

For years, gold’s engines were firing smooth and steady, lifting gold higher and higher. Low interest rates, central bank stimulus, credit rating downgrades and expectations of high inflation drove gold steadily upward from $750 an ounce in 2008 to $1925 in 2011, a rise of 156% from trough to peak in just 3 years.

But during the last 1.5 years, gold has been flying through some pretty wicked turbulence. Inflation has not materialized and stock markets have stolen gold’s thunder, not to mention its investors.

Talk of a possible reduction of bond buying by numerous officials and commentators introduced more turbulence leading up to U.S. Federal Reserve Chairman Ben Bernanke’s testimony before the U.S. Congress’ Joint Economic Committee last Wednesday.

And after the hearing came more turbulence from a myriad of conflicting reviews and analyses ranging from “The Fed Keeps Bond Buying Alive” to “The Fed May Ease Bond Buying Soon” to “The Fed Waits For More Economic Data”.

It may be just a lot of hot air, but this can be useful to things that fly. Just as eagles conserve their energy by using columns of rising hot air to lift them higher, the consensus expectation is that the recent hot air blowing from government offices, government officials and market analysts can likewise provide gold some sorely needed upward lift.

The benefit of all this talk over bond purchase tapering is to knock out of contention two chief rivals of gold: stocks and bonds. Gold has already been hit enough recently, while stocks and bonds have not had their corrections yet. Any reduction in Fed bond buying will most likely take a bigger toll on stocks and bonds than it would on gold, with investments reversing direction and making their way back into the “metal of the sun”.

A Bloomberg survey showed 12 analysts expect gold prices to rise this week, while 9 expect them to fall, with 8 simply shrugging their shoulders. This is the most bullish they have been in 4 weeks.

Over the immediate-term, though, Ole Hansen, vice president at Saxo Bank, sees gold remaining choppy with no definitive direction just yet. “The bears have not seen any evidence of them being wrong, while the bulls got a bit of safe haven and on balance a rather dovish Bernanke,” he assessed to Bloomberg.

“Bottom line, we are still in dangerous territory having failed so far to move back above $1,414. The double bottom which is now in the making might give technical traders some comfort, but for it to be confirmed we ideally need to see a $1,432 print, so it's not yet something to lean against.”

Since Mr. Bernanke repeatedly stressed at his hearing that any decision by the Federal Reserve to decrease, suspend or end the bond buying program would be dependant upon further incoming economic data, we can likewise expect the turbulence around the gold price to not decrease, suspend nor end for at least a little while longer.

Are Gold’s Engines Damaged?

But has all this uncertainty killed gold’s upward trajectory? Or are gold’s engines still powerful enough to keep it climbing?

Even while the world’s largest gold ETF - the SPDR Gold Trust (NYSEArca:GLD) lost another 19.8 tons of gold last week due to redemptions with its total gold holding falling to its lowest level in over four years, the gold price stayed within its range, prompting financial services provider Macquarie Group to conclude to Reuters:

“Given the extent of these outflows - equivalent to mine production from all of Africa and South America during the same period - that the gold price hasn't completely collapsed is testament to strong retail demand for jewellery, coins and bars.”

This physical demand is growing by the month. Wolfgang Wrzesniok-Rossbach, the chief executive officer of Germany’s Degussa informed Bloomberg that while physical gold purchases outpaced sales by 4 to 1 in the first quarter of this year, over the past month purchases have outnumbered sales 9 to 1. And sales this month are on pace to double the first-quarter average.

In America as well, the U.S. Mint sold 209,500 ounces of coins last month, some 237% more than the 62,000 ounces sold in March.

Central banks for their part can’t resist these bargain basement prices either, and are expected to buy from 450 to 550 tons in 2013 as projected by the World Gold Council.

What these flows are telling us – outflows from gold funds and ETF’s, as well as inflows into bullion and coins – is that the recent plunge in the gold price is paper-driven. The sellers are mostly institutional, such as hedge funds and investment banks, lured away by greener pastures on the equity side of the fence. These short-term investors jump the fence between the two markets frequently, and just a little bit of pro-gold news can send them jumping back the other way just as quickly.

Adding more thrust to gold’s engines are the still ultra-low interest rates. Even if the Fed reduces bond purchases later this year, interest rates will still remain at all-time lows until at least 2015, not just in the U.S. but globally as well, ultimately driving gold higher as currencies slowly fall behind inflation.

“Gold should still be in demand as an alternative currency,” Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt predicted to Bloomberg. “The quantitative easing by central banks should lead to a depreciation in rates for major currencies and in the end should also lead to some inflation concerns, although this is not an issue at the moment.”

Inflation may be light at present, but it does not have to be rampant to lift gold. It just needs to rise about 1% more on average until it is just slightly above government interest rates. This creates negative real interest rates which cause currencies to slowly fall behind rising consumer prices, further boosting gold’s strength versus fiat money.

Still Pointing Up

While the engines powering gold are still fundamentally sound, we can expect turbulence to continue tossing its price up and down. Gold now being below all key moving averages – the 50, 100, 150 and 200 – might portend a revisitation of the low $1,300’s.

Other technicals, though, are telling us that any drop from here should be temporary. The chart below shows the current development of a nice double bottom (red), a formation which has repeatedly preceded market rises, especially at the end of the 2006, 2008 and 2009-10 corrections, and yet again in 2012.

The MACD (blue), for its part, serves as a further indication that gold is getting ready to soar higher.

And finally, the current time of year regularly sees rising prices toward year’s end. Since 2005, gold has risen higher from mid-year lows (green) each and every year.

Source: BigCharts.com

http://www.wealthdaily.com/articles/gold-prices-return/4325

Central Banks Boosted Gold Holdings in April

Central Banks in Russia, Kazakhstan and Azerbaijan Added to Gold Reserves Last Month, When the Metal's Price Plummeted

By CLEMENTINE WALLOP And RHIANNON HOYLE

Russia, Kazakhstan and Azerbaijan boosted their gold holdings in April, a month that saw prices plunge to two-year lows in a pullback that raised questions over the metal's safe-haven status but also offered an opportunity to buy into the market at lower levels.

The International Monetary Fund on Monday issued its monthly gold-buying report, which represents the activities of almost all central banks and is closely watched by gold investors, showing the three former Soviet republics increased their holdings by a cumulative 75% more in April than they did in March.

Official purchasing has provided important support for gold prices over the past few years. According to the World Gold Council, central bank buying represented 11.3% of all gold demand in the first quarter of this year.

Gold prices shed as much as 17% in April and ended the month 7.5% lower. It is currently trading around $1,390 a troy ounce, down almost 12% since the start of the year.

Despite overall net buying, central bank activity was also an important factor in gold's plunge, especially the news April 10 that Cyprus was considering selling 10 tons of gold from its central bank reserves to raise cash. Cyprus's move to sell its gold stoked fears other debt-laden European nations—including Italy, which has the world's fourth-largest gold reserves—could follow suit.

The latest IMF report has been eagerly anticipated, as investors waited to see whether central banks would have shunned gold as prices fell, or if they would come into the market to buy. While it isn't clear when in April the banks purchased the metal, the buying activity signals some central banks' expectation that gold can hold its value over the long term.

"I think the news [of central bank buying] will help to steady the gold price decline," Beijing Antaike gold analyst Yvonne Wang said by telephone. "It shows that some people still have faith in gold."

Altogether, the IMF data shows central bank holdings rose 972,000 ounces last month. This much gold would have been worth some $1.5 billion at the beginning of April and $1.3 billion at the 27-month low of $1,321.50/oz reached April 16.

Central banks tend to buy slowly and hold gold over long periods rather than moving in and out of the market on a day-to-day basis, which helps buffer spot prices from their activity.

The data show Russia bought 269,000 troy ounces last month, taking its reserves to 31.8 million ounces. Kazakhstan added 85,000 ounces, bringing its stocks to 4 million ounces. The Republic of Azerbaijan bought 32,000 ounces, increasing its reserves to 129,000 ounces.

April marked the fourth consecutive month of purchases by Azerbaijan's central bank, which had no gold in its reserves in December.

Holdings at Turkey's central bank rose 586,000 ounces in April to 13.73 million ounces. It has started accepting gold as collateral from commercial banks, which analysts say is the main reason for recent increases rather than purchases.

Central banks in emerging-market countries have increased their holdings over the past few years in reaction to the sovereign-debt crises affecting reserve currencies like the U.S. dollar and the euro. This has helped shore up gold prices by absorbing supply.

While some central banks and many retail buyers have taken advantage of lower prices for physical metal, some investors remain wary of gold futures following six weeks of heightened volatility in the market.

Fund managers' short positions—bets that the price will fall—in gold were at a record 79,416 contracts in the week ended May 21, Commodity Futures Trading Commission data showed Friday.

Speculative investors added 1,454 long positions--bets that prices will rise—against 4,985 short positions, the CFTC said.

Given the large number of short positions and recent heavy liquidation from gold exchange-traded funds, gold has limited upside for now, according to Antaike's Ms. Wang.

"Gold is still lacking drivers that will push it higher," she said.

http://online.wsj.com/article/SB10001424127887323855804578508223601870406.html

More people Buy Gold Bars, Coins, Jewellery

Saturday, May 25, 2013

Dubai: While investors are dumping “paper gold” in the form of exchange traded funds, people have shown an increased appetite for the physical metal.

As the statistics released by World Gold Council would show, goldbugs are beefing up their stocks of bars, coins and jewellery amid the price decline.

Worldwide demand for bars and coins went up from 342.5 tonnes in the first quarter of 2012 to 377.7 tonnes in the same period this year. Gold jewellery demand increased from 490.8 tonnes to 551 tonnes during the same period.

“The fundamental reasons for holding gold among this community are unchanged over time. They value gold for its role in preserving wealth and hedging against inflation over the long term,” the World Gold Council said.

On the jewellery front, Indians and Chinese led the buying frenzy, contributing a combined 62 per cent of the first quarter global jewellery demand. Gold purchases were particularly upbeat during the Chinese New Year and, in the case of Indians, purchases were driven by preparations for the April wedding season.

In the Middle East and Turkey, demand for gold jewellery registered a 4 per cent increase. “Growth in the UAE largely represented purchases of 22-carat gold among expatriate Indian consumers, while improvements in other markets across the region were predominantly indicative of a positive response to the declining gold price,” said the report.

By Cleofe Maceda Senior Reporter

http://www.zawya.com/story/More_people_buy_gold_bars_coins_jewelry-GN_25052013_260510/

Gold traders bullish after Ben S Bernanke’s stimulus signal

LONDON: Gold traders are the most bullish in a month after Federal Reserve ChairmanBen S Bernanke signaled record stimulus will continue until the economy improves. Twelve analysts surveyed by Bloombergexpect prices to rise next week, with nine bearish and eight neutral, the highest proportion of bulls since April 26. 

Prices rose 58 percent since 2008 as the Fed led central banks in debt purchases . Bullion is poised for its first weekly gain in three and trading and investment company Degussa Goldhandel GmbH said demand this month will be double the first-quarter average. Investors sold 467 metric tons valued at about $20.9 billion from exchange-traded products this year as some lost faith in gold as a store of value amid an improving U.S. economy and rally in equities. 

Raising interest rates or curbing bond buying too soon would endanger the recovery, Bernanke said May 22. While prices entered a bear market last month and hedge funds are making the biggest ever bet against the metal, the slump is boosting purchases of jewelry and coins. 

"Gold should still be in demand as an alternative currency," said Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt. "The quantitative easing by central banks should lead to a depreciation in rates for major currencies and in the end should also lead to some inflation concerns, although this is not an issue at the moment. As long as institutional investors are selling gold ETP holdings, this will probably outweigh robust retail demand ." 

The metal fell 17 percent to $1,390.03 an ounce in London this year after climbing the past 12 years. Gold is the third-worst performer in the Standard & Poor's GSCI gauge of 24 commodities, after silver and corn. The S&P GSCI dropped 4 percent since the start of January and the MSCI All-Country World Index of equities rose 9.2 percent. Treasuries lost 0.6 percent, a Bank of America Corp. index shows. 

Bullion rose as much as 2.8 percent and then fell as much as 1.6 percent on May 22 after Bernanke expressed concern to Congress that federal budget cuts were blunting the recovery. He said the pace of bond purchases could be reduced in the next few meetings if the jobless rate keeps dropping. Many Fed officials said more progress in the labor market is needed before paring the $85 billion in monthly purchases, minutes of their last meeting showed the same day. The metal, which reached a twoyear low of $1,321.95 April 16, gained 2.2 percent this week. Purchases outpaced sales by nine to one after prices began the slump in mid-April , compared with four to one in the first quarter, said Wolfgang Wrzesniok-Rossbach, the chief executive officer of Degussa. 

Sales this month will be about double the first-quarter average , he said from Frankfurt. The US Mint sold 209,500 ounces of coins last month, compared with 62,000 ounces in March, its website show. Sales totaled 52,000 ounces so far this month. Central banks also may help boost demand for bullion as they expand reserves. Nations from Brazil to Russia added 534.6 tonnes last year, the most since 1964, and may buy 450 to 550 tonness this year, according to the World Gold Council in London.

http://economictimes.indiatimes.com/markets/commodities/gold-traders-bullish-after-ben-s-bernankes-stimulus-signal/articleshow/20257470.cms

Gold Set to Shine Again: Pro

Published: Thursday, 23 May 2013 | 6:02 PM ET

By: Bruno J. Navarro

Continued quantitative easing will be supportive of gold, Francisco Blanch of Bank of America Merrill Lynch Global Research said Thursday.

"The bounce in gold overnight kind of shows that if we have a bad equity market movement, whether it's Japan or somewhere else, investors are going to get back to gold," he said. "I think that's the main point that we've learned over the last 24 hours."

On CNBC's "Fast Money," Blanch said that his bullish view of gold depends on what the Federal Reserve does.

"I think this market is very fickle," he said. "It's very QE-dependent."

Blanch also said that he expected demand for crude oil to decline.

"The global economy is slowing down," he said, particularly in emerging markets. "Broadly, energy markets are experiencing some downside pressures. I'm a little bit concerned in more downside risk in oil I don't think that's going to change until we have a catalyst that gets economic activity ramping up in the emerging world, and right now there doesn't seem to be any."

Trader disclosure: On May 23, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Steve Weiss is long AAMRQ; Steve Weiss is long UAL; Steve Weiss is long AIG; Steve Weiss is long HIG; Dan Nathan is long VIX JUN 16/20 CALL SPREAD; Dan Nathan is short IWM; Dan Nathan is long CAT JUN 87.5/80 PUT SPREAD; Dan Nathan is long IBM JUN 205/295/285 PUT FLY; Dan Nathan is long JNJ JUN 87.5 PUTS; Anthony Scaramucci is long AAPL; Anthony Scaramucci is long BAC; Anthony Scaramucci is long GS; Anthony Scaramucci is long JPM; Anthony Scaramucci is long MS; Anthony Scaramucci is long WMT; Anthony Scaramucci is long GOOG; Josh Brown is long VAW; Josh Brown is long F; Josh Brown is long IEO;

For Francisco Blanch
BofA Merrill Lynch Research personnel (including the analyst(s) responsible for this report) receive compensation based upon, among other factors, the overall profitability of Bank of America Corporation, including profits derived from investment banking revenues; BofA Merrill Lynch Global Credit Research analysts regularly interact with sales and trading desk personnel in connection with their research, including to ascertain pricing and liquidity in the fixed income markets;

For Craig Johnson
Analyst Certification—Craig W. Johnson, CFA, CMT, Senior Technical Analyst; The views expressed in this report accurately reflect my personal views about the subject companies and securities referenced in this report. In addition, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report; Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

http://www.cnbc.com/id/100763231

Asian gold premiums hit new highs as Europe urged to start "aggressive QE"

BY ADRIAN ASH

May 22, 2013

Bullion prices rose throughout Asian and early London trade on Wednesday morning, touching $1,398 per ounce for the third time this week and recovering 4.4% from Monday's one-month low.

Silver rose more steadily, and was capped below $22.80 as energy prices slipped and agricultural commodities held flat.

Tuesday's retreat in the gold price today pushed gold bar premiums in Hong Kong to new record highs says Reuters, hitting $6 per ounce over and above international benchmark prices.

"Singapore premiums rose to $5 per ounce," the newswire adds, with Asian demand continuing to outstrip local supplies of gold kilo bars – the preferred investment form in the Far East.

"Expect to see more choppy trading in gold heading into Bernanke’s speech," says one bullion broker in a note, pointing to the Federal Reserve chief's testimony to Senate today on U.S. monetary policy.

Asked yesterday on Bloomberg TV whether the Fed will start to cut its $85 billion program of monthly quantitative easing, New York Fed President William Dudley said "It really depends on how the economic outlook evolves...It's too soon to make that determination."

Even if the U.S. central bank does slow its purchases of government debt and mortgage bonds with newly created money, Dudley said the Fed would only be "adding less stimulus" rather than actually "tightening" monetary policy.

"[Bullion] market participants, reading between the lines of Bernanke’s testimony, might infer a signal about an early end to quantitative easing," warns Standard Bank in London. "That would keep gold under pressure."

"Given the level of negativity in the atmosphere," says London market-maker UBS, "a much stronger move is needed [in the gold price] to materially threaten the resolve of shorts" – meaning speculative traders who now hold a record number of bets that gold will fall on the U.S. futures market. "Many shorts still feel comfortable given the persistently weak sentiment. There may well have been a good chunk of shorts initiated or re-established near this week’s highs."

Dudley's colleague James Bullard, president of the St. Louis Fed, meantime warned Europe yesterday that it needs to start quantitative easing to avoid a long, Japan-style depression.

"You should worry about it, and then take policy action to avoid it," said Bullard. "One way to get stuck would be to be passive in this situation and not take some aggressive action to try to get inflation back."

"Europe can draw lessons from Japan on the dangers of half measures," agreed Bank of Canada governor Mark Carney yesterday in his final speech before moving to lead the U.K.'s Bank of England in July.

Japan's banking crisis began in 1989. More than two decades later, "to end its debilitating legacy," says Carney, "Japan has just embarked on a bold policy experiment" – doubling its balance sheet with the most aggressive 'quantitative easing' yet seen.

"Governments have [already] been engaging in...printing money," says Marshall Gittler, former head of forex at Deutsche Bank Private Wealth Management and now head of forex strategy at UK brokerage IronFX, writing for CNBC. "But until [bank] loans have been made, [new central bank] reserves are just potential money."

Challenging former UBS analyst and now precious metals strategist John Reade at Paulson & Co. — who wrote in the Financial Times last month that "the expectation of global paper currency debasement makes gold an attractive long-term investment" — Gittler says that

"While the gold bugs wait for hyperinflation, the global economy slides first into disinflation and then, who knows, perhaps deflation."

Gold trading in India — the world's No.1 consumer nation — meantime eased off Wednesday, according to local reports.

After last month's festival season and the imposition of new import controls by the central bank in a bid to cut India's trade deficit, gold prices edged lower today, even though "supplies are difficult to get and premiums are still high" for gold bars according to one major dealer.

About the Author

Adrian Ash

Adrian Ash runs the research desk at BullionVault. Formerly head of editorial at Fleet Street Publications – London's top publisher of financial advice for private investors – he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to a number of investment websites.

http://www.resourceinvestor.com/2013/05/22/asian-gold-premiums-hit-new-highs-as-europe-urged?ref=hp