|
 |
|
|
|
Silver Leads Rebound in PMsby Peter A. Grant
Nov 29, AM 
Gold is slowly recovering from yesterday's sharp sell-off, underpinned by bargain hunting and fresh hopes of a deal to avert a drop over the fiscal cliff. The White House has dispatched Treasury Secretary Geithner and senior White House aide Rob Nabors to meet with Congressional leaders, presumably with the hope of moving the debate along. Optimism, and therefore risk appetite, have been buoyed somewhat by the move.Silver has taken the lead in precious metals, retracing all of the recent short-term losses and setting a new high for the month at 34.40. With gold better, but lagging, the gold/silver ratio is being driven back toward 50. Presumably, the disparity springs from the upward revision in Q3 GDP from 2.0% to 2.7%. Silver being primarily an industrial metal would tend to benefit more from economic growth. However, the upward revision actually missed expectations of 2.8% and is largely attributable to inventory building. Inventories are now seen as adding 0.8% to Q3 GDP, versus -0.1% in the preliminary read. There is now heightened risk of inventory draw-down weighing in Q4. In fact, Goldman Sachs immediately nudged their Q4 forecast modestly lower from +1.7% to +1.5%. I suspect the latest gains in silver — at least relative to gold — may prove fleeting. Nonetheless, the new seven-week highs in silver may bolster confidence in the gold market in the wake of yesterday's aggressive selling in the paper market. Rather than silver dropping back toward gold, the yellow metal may instead catch-up to silver. The market is still searching for answers as to why there was so much selling at the COMEX open on Wednesday. Reportedly, 7800 future contracts — the equivalent of 24 tonnes of gold — were sold right at 8:20am. CME Group spokesman Damon Leavell confirmed later in the day “There were no fat finger trades or technical errors. This was a market-driven sell-off.” CNBC speculated that it was the result of momentum driven funds liquidating, which caused a cascading affect as sell stops were triggered. There certainly was a lack of momentum and follow-through in the wake of last Friday's gains, but funds generally don't exit positions in quite that way. There may have been additional short selling from computer driven algorithms. But whatever the reason, we've seen physical buyers step in time and time again to support this bull market in the face of paper selling. The latest bout of paper selling may once again prove to be a gift — an early Christmas gift if you will — to physical buyers. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Friday November 30
website support: sitemaster@usagold.com
Site Map - Privacy - Disclaimer
The USAGOLD logo and stylized gold coin pile are trademarks of
Michael J. Kosares.
© 1997-2012 Michael J. Kosares / USAGOLD All Rights Reserved
(from USAGOLD.com) --
