Tuesday, September 14, 2010

Silver taking investor precedence over gold as GSR breaks downwards?

By Lawrence Williams: There has been a very significant amount of bullish comment on silver in the media and by analysts of late and at last it seems to be paying dividends for silver investors. Yesterday silver may well have made the breakthrough above $20 an ounce the market had been looking for - and all this when gold had weakened meaning that the gold:silver ratio (GSR) may have started falling back towards more average levels which would be very positive for silver in the short to medium term.

Many analysts make the point that the historic GSR has been nearer 15 than the current 62.5 (gold at $1250, silver at $20), but then the role of silver has changed dramatically since those days from being a true monetary metal to one which is driven more by industrial demand with precious metals overtones. The only time in recent years when the ratio got down to this kind of level was in 1980 when the Hunt Brothers were trying to corner the silver market and the metal reached a heady $50 an ounce. Given the fate of the Hunt Brothers this is a level unlikely to be repeated in the foreseeable future, but investors and analysts feel that the recent year average in the GSR of around 55 may be attainable again - and at the current gold price this would put silver at around $22-23 at the current gold price, which is a much more realistic target. And, of course, if the gold price does continue to move upwards as many are still predicting, then silver could be dragged up to even higher levels.....read on

Safe haven buying sees gold flirting with record highs

By Amanda Cooper (Reuters): Gold rose on Tuesday to within less than 1 percent of record highs after weak German data knocked equities and the euro, prompting a flurry of safe-haven buying, while silver and palladium touched multi-month highs.

Palladium, used mainly in autocatalysts, struck four-month highs as a combination of fund buying and growing prospects for industrial demand lifted prices.

Spot gold XAU= was at $1,253.85 an ounce by 1055 GMT, up from $1,245.25 the day before. U.S. gold futures for December delivery GCZ0 were last up $8.40 an ounce at $1,255.50.

"All four precious metals are really keeping a very close eye on the U.S. dollar right now and if the dollar doesn't 'shape up,' as such, this safe-haven buying will continue in the precious metals," said Afshin Nabavi, head of trading at MKS Finance.

A raft of economic data from both the euro zone and the United States should offer further proof of the health of both regions and will be particularly important in whetting investor appetite for gold.

"People will be looking at that for some direction, but overall, I would say given the economic situation in the U.S. as well as ongoing geopolitical tensions we are pretty much on our way towards breaking $1,265 and thereafter, up to $1,300," Nabavi said.


The euro slid against the dollar EUR= after an indicator of German economic sentiment fell unexpectedly in September.

The dollar extended losses on Tuesday to hit 15-year lows against the Japanese yen and plumbed nine-month lows against the Swiss franc, another key safe-haven asset, while euro zone government bond yields also declined.

Gold is on track for a near-14 percent rise this year, fuelled primarily by investors seeking an alternative to volatile currencies, equities and some sovereign bonds as economic data has cast doubt on the global growth outlook.

Although the price is now less than 1 percent below late June's record-highs, the market is now in the full throes of the buying season in some of the world's biggest consumers.

Commerzbank analysts said outflows of metal from some of the larger exchange traded funds, such as the SPDR Gold Trust (GLD), reflected a shift by investors towards higher risk assets.

"Given the substantial overhang of speculative long positions, profit-taking is now possible by short-term oriented financial investors if this sluggishness in prices continues.

The risk of position squaring increases for each day that gold prices are not able to overcome the record high of $1,265," Commerzbank said in a daily report.

Offering gold support on Tuesday was a decline on theequities markets, where major European indexes tilted into negative territory. [.EU]

Across the rest of the precious metals complex, silver traded at its highest in 2-1/2 years, helped by robust Chinese industrial output and firm base metals, although the safe-haven effect boosting gold was also a driving force. [MET/L]

Spot silver XAG= was last at $20.27 an ounce, up from $20.02 the day before and on course for its third consecutiveday of gains.

In the platinum group metals, palladium XPD= hit itshighest in four months, trading above $540 an ounce.

"We're getting better noises coming out of the euro zone about projected growth and industry and obviously, palladium is quite tightly linked to industry," one European trader said.

Palladium, which is predominantly used in the production of auto catalysts, is on track for a 33 percent increase this year and is one of the top performers of the commodities complex.

Palladium was last at $538.50, up from $524.95 on Monday,while sister metal platinum XPT= was last quoted at $1,568.00 an ounce, up from $1,543.65 the day before.

Russian palladium inventory exhausted by 2011?

By Rhona O'Connell: Mr Anton Berlin, the Marketing Director for Norilsk Nickel, has noted, in a presentation given at ETF Securities Ltd, that the market consensus is that there will be no sales of palladium for the Russian state stockpile in 2011.

While not committing himself to a personal view, he pointed out that while the size of the Russian stockpile, which is held by the Ministry of Finance, is a state secret and that there are therefore no valid data available, annual sales in 2007 to 2009 were a "fraction of historical values" and that this is believed to be an indicator that the reserves are approaching depletion.

Two years ago the government announced what it would be selling a quota over the following three years. This has also suggested to some in the market that Russian state inventories are approaching exhaustion.......read on

Northam Platinum Strike has entered its second week

From Timeslive: A strike by more than 8000 mineworkers at Northam Platinum has entered its second week, the National Union of Mineworkers (NUM) said on Tuesday.

"While the company had claimed to be losing over a 1000 ounces per day equivalent to R1 million, they failed to show good cause by living up to workers' demands," the union said in a statement.

Workers have demanded a 15 percent wage increment and a R3500 living out allowance.

According to the NUM, the parties would meet on Wednesday at the Commission for Conciliation, Mediation and Arbitration (CCMA) in Polokwane.

"This strike will continue to cause havoc to Northam's financial performance. It is up to them whether they want a resolution or not," said Zwelitsha Tantsi, the NUM 's chief negotiator at Northam.

A Global Yuan Is A Threat To The Dollar But Good For Gold!

By Julian Phillips: A number of the world's biggest banks have launched international road shows promoting the use of the Yuan to corporate customers instead of the Dollar for trade deals with China. HSBC and Standard Chartered are offering discounted transaction fees and other financial incentives to companies that choose to settle trade in the Yuan. Both banks are now capable of doing Yuan settlement in many parts of the world. All the other major international banks [such as Citigroup and JPMorgan] are rushing to join the fray with their own road shows. Beijing wants this to happen now. Chinese central bank officials are backing the banks in their efforts. Next year and beyond should see the Yuan standing next to the Euro and the U.S. Dollar on foreign exchanges.

Cross-border trade in Yuan totaled Yuan70.6 billion [$10 billion] in the first half of the year, 20 times the Yuan3.6 billion recorded in the second half of 2009. The eventual potential of global Yuan settled trades is 40 times this new level at $2,800 billion worth of goods and services settled in the U.S. Dollar and the Euro.....read in full