Citi: Are Gold And Silver Finding A Bottom?

"Gold advice from a bankrupt bailed out institution. Priceless."

Gold and Silver appear to be in the process of finding a bottom; however, the price action could continue to be choppy in the coming weeks. Ultimately Citi's FX Technicals group, as the following charts suggest, expect both precious metals to move much higher in the long term with the potential for Silver to be the outperformer, as was the case from 2008 to 2011.

Gold and Silver appear to be in the process of finding a bottom; however, the price action could continue to be choppy in the coming weeks. Ultimately we expect both precious metals to move much higher in the long term with the potential for Silver to be the outperformer, as was the case from 2008 to 2011.

Our original target for this Gold correction was $1,260, which was the target of the double top. This would also have resulted in the same high to low move on a percentage basis as seen in March – October 2008.

Gold has overshot that target, though only slightly (the 2008 high to low correction was 34% while this one has been 36%). The bottoming process in 2008 can still serve as a template for what might still come for Gold:

After rallying through September-October 2008, Gold made one final push down to a low 7.4% lower than the previous one

After rallying through April, Gold has made a push lower and similar move to the last one in 2008 would suggest a bottom would be put in at $1,224. The low so far has been $1,221 and consolidation seems to be taking place. Read more >>

Silver Gets Slammed

The metal fell victim to heavy selling on Monday, dragging gold down with it, on U.S. dollar strength and as investors turned more cautious on precious metals as an alternate investment, said experts.

"We feel silver weakness has been a liquidation trade as investors grow increasingly wary of precious metals and traders are forced to close positions to meet margin calls elsewhere," said Stan Shamu, strategist at trading firm IG Markets.

Silver slumped over 4 percent on Monday to $21.30 an ounce, leading gold down lower by 1 percent to $1,344 an ounce. At one point silver hit a low of $20.30, down 8.8 percent from the start of trade on Monday.

Shamu is not ruling out further downside for the precious metal, noting that he sees support at $20, a key psychological barrier for investors.

Warren Gilman, chairman & CEO of investment firm CEF Holdings, agrees that silver could face further downside pressure, even below $20.

"When we have short-term volatile trends, silver acts like gold, only it's more volatile, so it's not a surprise to see it come off," he said.

According to a Citi report, if silver makes a rebound back towards the $27-28 level it will present renewed selling opportunities. Read more >>

All Alterantive Currencies Must Be Crushed

Gold prices just entered a bear market. Down 21% from their mid-2011 highs. Today's drop is the largest since 2/29/12 - LTRO2 and takes the price of the barbarous relic back to July 2011 lows. Silver is also seeing its biggest down-day since LTRO2 as it tests 2012 lows. Must. Destroy. All alternative currencies. Read more >>

Silver Buying at 5 Year High

The U.S. Mint sold out of 2013 American Eagle silver coins at a time when investors bought the most metal in five years through the biggest exchange-traded product.

The mint’s sales are “temporarily” suspended and will resume on or about the week of Jan. 28 when inventory is replenished, it said yesterday in an e-mailed statement. Holdings in the iShares Silver Trust jumped 571.6 metric tons on Jan. 16, an increase now valued at $584 million. Prices may rise as much as 27 percent to $40.25 an ounce this year, a Bloomberg survey of 49 analysts, traders and investors last month showed.

Global assets in silver ETPs climbed to a record valued at $20.1 billion as central banks from the U.S. to China pledged more steps to boost economic growth. The stimulus is raising demand for precious metals as a hedge against faster inflation and currency debasement. Strengthening economies may also benefit silver, because 53 percent of it is used in everything from televisions to batteries, the Silver Institute says.The U.S. Mint sold out of 2013 American Eagle silver coins at a time when investors bought the most metal in five years through the biggest exchange-traded product. Read more >>

Utah to make gold legal currency

Image via WikipediaThe US state of Utah has passed a Bill that legalizes gold and silver for everyday financial transactions. Press TV talks with David Morgan, Silver Investor.com from Washington who was a party to the signing of this declaration to allow people to use gold and silver as transactional money for their everyday living expenses. He explains how this would be done. Following is an approximate transcript of the interview.

Press TV: There's a huge global insurrection against banker occupation and underneath that we see some interesting cross currents going on as well. You've just returned from the Utah monetary conference where you signed the Utah monetary declaration. How exciting - tell us all about it?

David Morgan: Utah is the first state in the union that has at law passed the fact that citizens can voluntarily transaction in the state in commerce. So in other words simply stated you can buy and sell with gold and silver as a transaction basis throughout the state.

Now, that is a little tough to do coin-wise so they've implemented a strategy that I think is very simple and one that we're familiar with - Put your gold and your silver with a depository; the bank gives you a credit on their balance sheet; they issue you with a debit card; and then you just use the debit card.

So to the merchants, Wal-Mart as an example, you simply swipe your debit card, the transaction goes down to the spot price that day whatever the spot price for gold or silver is and then at the end of the month they reconcile the account based on what you purchased during the month.

Once this is implemented I think it's going to catch on and then of course it sets a standard I think for other states to come along and do the same thing. There are 11 states that have proposed gold and silver in transactions, but Utah is the only one that has passed it in the law so far.

Press TV: If you have your account based in gold and silver and you're using it as your go-to savings account and checking account, you have protection against the government printing up lots of fiat-dollars and inflating the purchasing value away from your currency - so why wouldn't anyone not want to do this?

David Morgan: I do believe it's going to catch on - it's hard to say; there's a argument about Gresham's law that good money chases out bad - that you're only going to save the good money. But I don't think this is necessarily true and I don't have time to go into all the arguments, but I interviewed Larry Hilton who wrote the bill - he's a lawyer in Utah - and basically there's lots of reasons why you would want to use physical gold and silver in a transaction. More...

Whistleblower Maguire - This Will Destroy Gold & Silver Shorts

Image via WikipediaThis morning London whistleblower Andrew Maguire told King World News that the launch of the new gold and silver exchange in China will destroy the remaining gold and silver shorts. Maguire stated, “The launch of this new gold and silver exchange has flown under the radar, but certainly has my attention. I firmly believe we are marking a pivotal point that will in very short order affect current precious metals price discovery dynamics. We now have an additional factor to be vended into the supply demand equation. This factor will ultimately destroy the remaining short positions in both gold and silver.”

Maguire continues:

“China is keen to diversify their cash holdings and is also encouraging citizens to make investments in gold and silver. The Pan Asia Gold Exchange is another step in this direction by opening up ease of access to physical gold and silver to their bank customers. This physical backed exchange is going to be a big game-changer.

Just look at the scale of this to get an idea of how massive this game-changer will be, The Agricultural Bank of China has over 320 million retail customers and 2.7 million corporate customers and has integrated its customer account information system with this platform.

By creating the first ever rolling spot contract, Chinese bank customers will for the first time have ease of access to 10 ounce gold contracts in Renminbi directly from their bank accounts and with the click of a mouse. To give a further idea of scale, if just 1% of their customers bought a single 10 ounce contract, that would equate to 1,000 tons of physical gold being drawn down....More...

Source Says Asians to Squeeze Silver Shorts

A King World News contact out of London has confirmed that, “Massive Asian buying is going to squeeze the shorts in the silver market. Any reactions in the price of silver will be heavily purchased, and these buyers will take delivery of physical silver.” The source who wishes to remain anonymous agreed with Eric Sprott that this squeeze could take the price of silver to $50 in a matter of months.

I have recently been discussing a coming commercial signal failure with John Embry, James Turk and Eric Sprott. As previously mentioned, this is an extremely rare event but when it occurs it is a sight to behold. More...

John Embry Sees Hyperinflation If Fed Continues On QE Path, Expects Silver At $50

zerohedge.com

Veteran PM expert, Sprott's John Embry, whose observations on the lack of a bubble in precious metals we posted recently, and which came just before the CFTC's own disclosure that there may be extensive manipulation in the silver market, as well as a lawsuit filed against JPM and HSBC for silver price manipulation, shares his latest thoughts with Eric King in a traditionally contrarian insightful interview. In a nutshell, Embry is confident the current Fed policy will lead to hyperinflation, and that he would not be surprised if silver hit $50 within the next few months.

Full interview can be heard here.

Gold Krugerrands Run Out

Image via Wikipedia

Patrick A. Heller
For some time, I have been warning that apparently plentiful supplies of gold and silver bullion-priced coins and ingots could quickly evaporate. Last Thursday we saw the first signs of a looming shortage of physical metals when just about all U.S. bullion wholesalers were unable to accept orders for the South Africa Krugerrand. One primary distributor said they expected coins in a few weeks, which I think means that they are waiting for a shipment of freshly minted coins from the South Africa Mint. My own company had to discontinue accepting new orders until we could lock in a supply.

Tens of millions of Krugerrands have been struck since they were introduced in 1967. They are not rare. If demand for physical gold is so strong (and the World Gold Council last week reported that global third quarter demand was 15 percent higher than the second quarter) that they are no longer available, we could quickly see a domino effect where other gold and silver bullion-priced products also become sold out.

We may see some temporary price dips this week as the gold and silver options expire. However, I fear that there is little time to lock in physical precious metals at reasonable premiums for quick delivery.

Marc Faber – U S Dollars Will Be Worthless