Gold recovers on fresh demand; silver remains weak

Gold prices recovered by Rs 85 to Rs 27,310 per ten grams at the bullion market in the national capital on emergence of buying by jewellers and retailers at prevailing levels even as the precious metal weakened overseas.

However, silver remained under pressure on sluggish demand from consuming industries and fell by Rs 460 to Rs 36,140 per kg. Traders said emergence of buying by jewellers and retailers at current levels mainly supported the upside in gold prices but a weak trend in gold in global market limited the gains.

Globally, gold traded a shade lower at US $1,194.20 an ounce in New York on . In Delhi, gold of 99.9 and 99.5 per cent purity prices were up by Rs 85 each to Rs 27,310 and Rs 27,110 per ten grams respectively.
Sovereign, however, continued to be traded at last level of Rs 23,700 per piece of eight gram.

Silver ready declined further by Rs 460 to Rs 36,140 per kg on reduced offtake by consuming industries but silver weekly based delivery rose by Rs 330 to Rs 36,940 per kg on speculative buying. Silver coins also dropped Rs 1,000 to Rs 59,000 for buying and Rs 60,000 for selling of 100 pieces.

Selling your old unwanted gold is big business. You always want to get a good price. With the up-and-down prices in recent years, finding out the real experts among the flock of gold buyers can be tricky. You don’t know which one could be trusted. But good thing is that it is not like buying gold-If you know the following guide and tips and do your research, you won’t likely to be fooled or ripped off. Remember you are the one who can decide to sell your gold or not.

Two variables in the gold purchasing formula never change: the karat and weight. But the daily spot gold price can fluctuate by the hour. And the price any jeweler or gold traders is willing to pay varies widely, as they balance their profit margin.

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Please check our last article: Know how your gold value is determined before you decided to sell your gold for more information about karat and weight.

Gold buyers are not bound by any restrictions when it comes to buying scrap gold. They can give you 100 percent of that day’s gold value and make nothing, or they can give you 10 percent of the day’s value and hope to make 90 percent when they sell it. An established, reputable jeweler will generally pay at least 50 percent of the daily spot gold price.

A jeweler or gold buyer collects gold and sells it to a refinery, which often pays more than 90 percent of market value. Scrap gold is then melted down and sent on to other, larger, refineries. Stones, however, are not sent to refineries. So, it is good to ask about them when discussing your jewelry with a gold buyer.

If your jewelry has stones, pay close attention. This step separates the experts from the amateurs. Experts have a way of estimating, to a fairly accurate degree, the weight of the stones without removing them.

This means you will get a more true value of both the stones and the gold. If the stones are valuable, the jeweler should inform you of their worth, and discuss your options for keeping them. The amateurs will often guess at the weight and value of the stones, and many won’t even make getting them back an option.

A reputable jeweler will offer to remove any stones from pieces you are selling and return them to you, though there is often a price for having this work done. Some stones will be too small or chipped to be of any value, but a trustworthy jeweler will explain this to you and offer to return any stones of significance.

Even a large diamond will only have a small effect on the overall weight of a piece of gold jewelry. Don’t accept being told, therefore, that stones make up the majority of the weight, thereby reducing the amount of gold value.

When growth slows in capital markets, the bankers’ daisy-chain of credit and debt breaks down; setting in motion defaulting debt which ends in recession, deflation or, in extreme cases, a deflationary depression.

A deflationary depression is a fatal monetary phenomena where the velocity of money—circulating credit and debt—falls so low capital markets are no longer self-sustaining. This happens after the collapse of massive speculative bubbles such as the collapse of the 1929 US stock market bubble which resulted in the world’s first deflationary depression, the Great Depression of the 1930s.

money_in_the_system_1920_1940

money_in_the_system_1920_1940

Throughout history, gold and silver have offered safety in times of economic chaos. Today is no different. What is different is the response of governments and bankers to the collapse of the current economic paradigm—the bankers’ war on gold.

In the midst of the Great Depression, the US passed the 1934 Gold Reserve Act which prohibited the ownership of gold by US citizens, forcing Americans to keep their wealth invested instead in capitalism’s paper assets.

The Gold Reserve Act outlawed most private possession of gold, forcing individuals to sell it to the Treasury, after which it was stored in United States Bullion Depository at Fort Knox and other locations. The act also changed the nominal price of gold from $20.67 per troy ounce to $35. This price change incentivized foreign investors to export their gold to the United States, while simultaneously devaluing the U.S. dollar in an attempt to spark inflation. — http://en.wikipedia.org/wiki/Gold_Reserve_Act#U.S._economic_historical_narrative

The attempt to ‘spark inflation’ in order to overcome a deflationary depression is the 1930s version of today’s similarly futile ‘inflation-targeting’. The resultant rise in the consumer price index from 1934-1937 was only nominal and, by 1938, powerful deflationary pressures had again re-exerted themselves and the US and the world would remain mired in a moribund deflationary depression for the remainder of the decade.

CPI_1922_1940

CPI_1922_1940

Although the devaluation of the US dollar against gold by the Gold Reserve Act didn’t ‘spark’ the inflation bankers hoped would end the 1930s depression, it would cause large amounts of gold to flow into the US Treasury after 1934 as foreign sellers took advantage of the US Treasury’s offer of a 70% higher price for gold.

US_Gold_Reserves_1930_today

US_Gold_Reserves_1930_today

In 1944, this unprecedented flow of gold to the US allowed the US to make the dollar fully convertible to gold, officially making the US dollar the world’s reserve currency at Bretton-Woods. However, due to excessive military spending, the US would overspend its entire hoard of gold by 1970, forcing the US to suspend the gold backing of the US dollar in 1971.

When the US ended the gold convertibility of the US dollar, the US also set in motion capitalism’s end game; as the removal of the bankers’ golden fetters (which previously tied money creation to gold reserves) now allowed governments and banks the fatal freedom to print money and create credit without limits.

US_Money_Supply_1959_2010

US_Money_Supply_1959_2010

http://www.financialsensearchive.com/fsu/editorials/bms/2006/0511.html

The final link between the dollar and gold was broken. The dollar became nothing more than a fiat currency and the Fed was then free to continue monetary expansion at will. The result… was a massive explosion of debt. — John Exter quoted in Gold Wars, Ferdinand Lips, Foundation for the Advancement of Monetary Education, New York, 2001

federal_debt_after_gold_standard_1966_2013

federal_debt_after_gold_standard_1966_2013

It was the explosive growth of money and credit after 1971 that would set in motion Ludwig von Mises’ ‘crack-up boom’. Excessive money printing and credit creation would lead to a series of larger and larger speculative bubbles which inevitably would culminate in monetary chaos.

The credit boom is built on the sands of banknotes and deposits. It must collapse… If the credit expansion is not stopped in time, the boom turns into the crack-up boom; the flight into real values begins, and the whole monetary system founders. — Ludwig von Mises, Human Action, 1949

GOLD AND DEFLATIONARY DEPRESSIONS
Although the ownership of gold by US citizens was outlawed in 1934, the shares of Homestake Mining, the world’s largest gold mining company, acted as a proxy for gold during the Great Depression giving investors the same protection gold has given throughout history in times of monetary distress.

[Shares in] Homestake Mining.. rose from $65 per share in 1929 to more than $300 per share in 1933 and then climbed to a $480 bid and $534 ask in December of 1935…During the next six years after the 1929 stock market crash, Homestake Mining paid out a total of $128 in cash dividends. Its dividend in 1929 was $7 per share which then climbed to a staggering 1935 dividend of $56 per share…Homestake Mining earned a compound rate of return of 35% per year from 1929 thru 1935, excluding dividends.[bold, mine] — http://www.worststockmarketcrashes.com/featured/homestake-mining-after-the-1929-crash/

Today, the world is on the verge of another, even greater deflationary depression than the 1930s Great Depression. But governments and bankers have pooled their considerable resources to hide that truth from the public in order to protect their vast wealth and power achieved through their use of paper money and leveraged debt.

Nonetheless, powerful deflationary forces unleashed by the collapse of today’s even larger speculative bubbles—the 1990 Nikkei bubble, the 2000 dot.com bubble, the 2008 US real estate bubble and the serial global real estate bubbles—are again moving through global economies; and, just as in the 1930s, the velocity of money is now so low capital markets are no longer self-sustaining.

Velocity_M2_1960_2014

Velocity_M2_1960_2014

If today’s investors knew that gold provided not only safety but explosive profits in times of economic chaos, the bankers’ paper markets would have emptied long ago as the majority of investors would have bought gold at the first sign the bankers’ house of cards could go up in flames.

But most investors didn’t know and didn’t buy; and, because of the bankers’ ongoing war on gold, they still haven’t.

This is the time of the vulture, for the vulture feeds neither upon the pastures of the bull nor the stored up wealth of the bear. The vultures feeds instead upon the blind ignorance and denial of the ostrich. The time of the vulture is at hand. — DRSchoon, Time of the Vulture, 3rd ed. 2012

In The Price of Gold and the Art of War, Part I and Part II, I explained how the bankers’ war on gold forced down the price of gold between 1980 and 2000. Next, in The Price of Gold and the Art of War, Part IV, I will explain gold’s price rise after 2000, how the bankers’ responded and how high the price of gold could go in the bankers’ end game.

In my current Dollars & Sense video on youtube, The Economy 2014/2015, I explain the economy in terms that can hopefully be understood by most observers, see https://www.youtube.com/watch?v=YHQNYUdEsGc&feature=youtu.be

As we continue to move deeper into uncharted territory, I believe that good times will succeed the bad times, that love will replace hate and that peace and goodwill towards men and women will prevail.

Buy gold, buy silver, have faith.

Gold Prices Manipulated For Past Two Years?
Michael Lombardi

December 11, 2014
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Since the beginning of 2013, gold’s price action has been irrational. The fundamentals are getting better for gold in respect to demand and supply, but we see sudden, wild swings, often to the downside, on no news and for no apparent reason.

Those who closely follow precious metal prices will agree with me on this: many times in 2014, it was common to wake up in the morning to new gold prices that are sharply down. When you look into the price action, you find a mysterious seller. He sells a significant amount of gold contracts on the paper market at times when not many participants are around to buy…so prices plunge.

This phenomenon begs the question: is gold’s price being manipulated?

Before jumping to any conclusion, it must be noted that other markets have been rigged and manipulated as well.

Rigged: Currency Market

Look at the currency market as an example. On November 12, news came hot off the press that five global banks—The Royal Bank of Scotland Group plc (NYSE/RBS), JPMorgan Chase & Co. (NYSE/JPM), Citigroup Inc. (NYSE/C), HSBC Holdings plc (NYSE/HSBC), and UBS AG (NYSE/UBS)—were being fined $4.3 billion for their participation in manipulating certain currency markets.

More fines are likely to come against the banks as civil and anti-trust cases follow them.

Concerning this, Britain’s Treasury Minister said, “It’s completely disgusting…,” adding, “I think taxpayers will be horrified…I don’t know if corruption is a strong enough word for it.” (Source: “Six banks fined $4.3-billion for ‘disgusting’ currency manipulation,” The Globe and Mail, November 12, 2014.)

To put some perspective on how big the currency market really is, according to the Bank of International Settlements, in April of 2013, trading in the foreign exchange market averaged $5.3 trillion per day. This amount has increased over years. In 2007, it was only $3.3 trillion. (Source: Bank of International Settlements, September 2013.)

Manipulated: Key Interest Rate Benchmarks

This isn’t all.

A while back, a number of major banks were alleged to have manipulated interest rates for a very long time. Traders at these banks were accused of rigging the London Interbank Offered Rate (LIBOR)—an interest rate at which major banks lend money to each other short-term.

While investigation into the LIBOR manipulation is ongoing, regulators from the U.S. and U.K. have fined seven banks and brokerage firms so far. (Source: The Telegraph, October 7, 2014.)

The LIBOR affects many different financial products that the average consumer uses, including, but not limited to, credit cards, mortgages, and student loans. According to the Federal Reserve Bank of St. Louis, 45% of prime adjustable rate mortgages are benchmarked to the LIBOR.

Can Gold Be Manipulated?

The answer is very simple: yes.

Understand this: the gold market is much smaller than that of the currency or interest rate markets. While average volume in the currency market is $5.3 trillion a day, according to the London Bullion Market Association (LBMA), average daily trading volume on the over-the-counter gold market is just $224 billion. (Source: World Gold Council web site, last accessed December 5, 2014.) In other words, the gold market is just 1/25 the size of the currency market.

The smaller the market, the easier it is to manipulate it.

Regardless of whether or not there’s manipulation in the gold pits, I remain bullish on the yellow metal. Its fundamentals continue to impress me. And I believe world central banks will have to do a lot of new money printing to stimulate their economies. Manipulation and irrationality can only last for so long, though.

As I have been saying throughout all of 2014, the current low prices of senior gold producers are a bargain.

Growing industrial applications for silver will increase demand for the metal by 27% within the next four years, according to a report released Wednesday by the Silver Institute.
Sydney.Gold.Traders.News20141211_SI-chart
The report, written by CRU Consulting, a London-based metals consulting firm and published by the Institute, said silver demand is expected to grow by 142 million ounces by 2018 compared to 535 million ounces used in 2013. More than half of the demand will come from electrical and the electronics sector.

The report highlighted eight specific sectors where they see silver demand growing in the next four years: batteries, ethylene oxide, medical, bearings, nanotechnology, automotive, printing and silver inks, and photovoltaic solar panels

“Along with technological improvements, more and more applications of silver have been invented, and more importantly, commercialized; such as nanosilver, solar cells and printed inks,” the CRU analysts said in their report. “Looking ahead, we are bullish on the industrial applications of silver, which will support the total silver demand in the long run. As technologies develop, a variety of new applications are emerging that have the potential for mass consumption, bringing with them prospects for augmenting industrial silver demand,”

Sydney.Gold.Traders.News20141211_SI-map
The report did not look at silver usage within the photography sector, which accounts for only a small part of overall demand. In total, the report noted that industrial demand for silver in 2013 accounted for almost half of total physical demand world-wide of 1.81 billion ounces.

According to the report, of the eight sectors, the strongest demand for silver will be for photovoltaic solar panels. The report expects that 109 million ounces will be used in solar panels by 2018, up from 88 million ounces consumed in 2013. The analysts said the compounded annual growth rate for this sector was 4.5%

Michael DiRienzo, executive director of The Silver Institute, said since 2012 there has been strong demand for solar technology throughout the Asia-Pacific region, most notably in China, which the report noted accounted for about 54% of global silver PV demand.

DiRienzo added that they also saw strong demand for solar panels in South America and Africa.

“Looking ahead, the Middle East and North Africa represent huge untapped potential as this technology becomes more affordable, and the Indian government aims for India to become a global leader in solar energy over the next three decades,” he said.

West Africa has seen growing demand for solar power; According to recent news reports, since 2009, some villages in Burkina Faso, Mali and Benin have successfully used solar panels to generate electricity as these isolated communities are not part of any national power grid. The project is supported by the UN Development Program.

Although solar panels represent the strongest demand, the sector to see the biggest growth in the next four years will be for silver inks. According to the research demand for silver inks for print was around 2 million ounces, which is expected to grow to 4 million by 2018. The analysts noted that the compounded annual growth rate for this sector was expected to be around 14.9%.

“Printed silver inks are a relatively new technology that has not yet been fully commercialized. One application, within radio frequency identification devices, has already been accepted by the market but another application in the printing of electric circuits, is still at a trial stage,” the report said.

Traders and investors were spooked a bit Tuesday due to several world developments—and the gold and silver markets were keen beneficiaries. Gold and silver prices ended the U.S. day session sharply higher and hit six-week highs Tuesday. Safe-haven demand, short covering and bargain hunting were featured in the yellow metal. Importantly, Tuesday’s price action on the charts is the strongest evidence yet that the gold and silver markets have put in near-term bottoms, if not major lows. February Comex gold was last up $37.00 at $1,232.00 an ounce. Spot gold was last up $28.30 at $1,233.00. March Comex silver last traded up $0.849 at $17.125 an ounce.

World stock markets were under pressure Tuesday, led by sharp declines in Asian shares, as “risk-off” trader and investor attitudes were prevalent in the market place. The falling price of crude oil remains in the spotlight of the market place this week. The big drop in oil prices recently has traders and investors uneasy–even though lower gasoline prices at the pump will support economic growth by increasing consumer spending in other areas.
Nymex and Brent crude oil futures prices hit five-year lows Tuesday. Brent fell to $65.37 a barrel and Nymex fell to $62.25. Both markets have rebounded from their intra-session lows.

Asian stock markets saw strong selling pressure Tuesday from a move by Chinese officials to tighten regulation of its domestic bond market. And in the European Union, notions that Greece could pull out of the union if more liberal leaders are elected added to the anxiety in the market place.

The other element mentioned as somewhat unsettling was a report that the Federal Reserve at next week’s FOMC meeting could sound a more hawkish tone on U.S. monetary policy.

The World Bank on Tuesday forecast the Russian economy to contract by 0.7% in 2015. The Russian ruble continues under pressure this week and is at a record low versus the U.S. dollar. Reports Tuesday said the Russian central bank is adding more gold to its reserves as the ruble deteriorates.

The London P.M. gold fix was $1,227.00 versus the previous London A.M. fixing of $1,206.50.

Technically, February gold futures prices closed nearer the session high and hit a six-week high today. Price action today produced a bullish upside “breakout” from the recent choppy trading range and the bulls gained good upside momentum today to strongly suggest a near-term market low, and possibly a major market low, is now in place. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the October high of $1,256.20. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at $1,184.00. First resistance is seen at today’s high of $1,239.00 and then at $1,250.00. First support is seen at $1,221.00 and then at $1,210.00. Wyckoff’s Market Rating: 4.0

March silver futures prices closed nearer the session high and hit a fresh six-week high today. Prices also scored a big and bullish upside “breakout” from the recent choppy and sideways trading range, to suggest a near-term, if not a major, market low is in place. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $17.825 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at this week’s low of $16.165. First resistance is seen at today’s high of $17.23 and then at $17.50. Next support is seen at $16.81 and then at $16.50. Wyckoff’s Market Rating: 4.0.

March N.Y. copper closed up 405 points at 292.55 cents today. Prices closed nearer the session high and scored a bullish “outside day” up on the daily bar chart today. Short covering was featured. A lower U.S. dollar index today also supported copper. A bearish pennant pattern has formed on the daily bar chart. The bears still have the firm overall near-term technical advantage. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at 300.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the contract low of 277.75 cents. First resistance is seen at today’s high of 295.05 cents and then at 297.50 cents. First support is seen at 2.9000 cents and then at today’s low of 286.55 cents. Wyckoff’s Market Rating: 2.5.