Gold watching Fed and Eurozone for direction

In the Lead: “Buy the Rumor, Sell the Fact. Lather, Rinse, Repeat.”

Another very interesting metric – one that could offer further signs that something is out of kilter in the gold market — was brought to light by analysts at Briefing Research yesterday. Kitco News reporter Debbie Carlson covered the story in-depth. The upshot of the BR findings is that value of the cumulative cube of above-ground gold (near 170,000 tonnes has risen to 13.2% of estimated nominal world GDP. The figure stands at nearly $10 trillion, but the percentage it represents on NWGDP is at its highest since 1981. The ratio peaked at 18.1% back in 1970. However, BR notes that the ‘normal average has been closer to 7.4% since 1970 and that “would be equivalent to a gold price today of $999 per ounce, a decline of 44% from current prices.” (Food for careful thought, in the event you care about such cyclical market ‘trivia’ as ‘reversions to the mean.’)

Silver was still running on speculative inertia and showed a 7 cent gain (to $37.00 per ounce) in the early part of the morning following yesterday’s massive gain that unfolded despite a fairly dismal US durable goods orders report. In the same Value View Gold Report that dissects the speculative action in the euro, analyst Ned Schmidt places silver under the microscope and finds that it “is again trading like an option on Gold. [The] Price of Silver has been moved irrationally higher by traders of futures and options. Every time they have done so with any market, selling has been the best strategy. Silver is now again at a price that should be used to sell it. [The] Current market is the third selling opportunity that has developed. Rarely does a market present itself in such a way. Ignoring that offering is unwise. Looking a gift horse in the mouth three times does not make a lot of sense.”

Platinum moved $10 higher this morning (it was quoted at $1,725 per ounce) and South Africa’s labor action difficulties are still providing background support to the noble metal. Palladium was off by $2 at $718 per ounce. That unique metal has moved about 6% higher over the past month, while platinum has shown a 9% gain. Compare either one to gold’s 2.6% advance on the month. Rhodium was unchanged at $1,745 per ounce. Crude oil added another fifty cents and traded at $107.07 per barrel. It is worth mentioning that spec fever aside, every $10 gain in the price of black gold tends to shave two-tenth of a percent off of US GDP. Everything has a price.

Analysts at Johnson Matthey had estimated that the platinum market would be basically in balance in 2012 after it recorded a relatively small surplus of 195,000 ounces in 2011. That estimate however was made back in November and it did not account for the most recent developments in South Africa. It is now believed that JM may revise its estimates when it updates its reports in May. Owing to the losses in platinum production Anglo Platinum, the on-going prob­lems at Impala Platinum, we could see the platinum market swing into deficit during this year. South Africa accounts for about 77% of the world’s platinum supply.

The US Commerce Department reported this morning that America’s GDP rose at a revised rate of 3% on an annualized basis; the highest since Q2 of 2010. Economists noted that the combination of job growth, better spending, and credit creation in the US are all symbiotically coming to the aid of such improving readings. The US economy’s expansion rate in the previous quarter came in at the 1.8% level. As one observer characterized it, the US economy “looks decent.” Someone, quick, let Mr. Bernanke in on this development. His pessimism level is so…Q4.

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