Concerns
about Libya, Saudi Arabia and the Middle East and North Africa continue to
dominate markets. There are growing concerns of contagion and oil supply
disruptions from the region. Oil and gold have risen and silver for immediate
delivery surged another 2.3% after climbing to $36.5375/oz, the highest price
since February 14, 1980 when silver reached a its nominal high $50.35/oz.
WTI
Crude Oil – 5 Year (Daily)
Oil
(WTI) rose 6.7% last week and contributed to silver rising 6.94% and gold
rising by 1.33%. These gains have been added to again this morning. Growing
concerns that surging oil prices will lead to further inflation and snuff out
the already tentative global recovery will lead to continuing safe haven
demand which will support the precious metals on dips.
Gold
in US Dollars – 1 Year (Daily)
Currency
debasement on a scale never seen before in modern history continues in the US
and other countries. This is leading to a real risk of stagflation and
possible even hyperinflation if sane monetary policies are not returned to
soon.
The
fiat currency experiment of the last 40 years (since Nixon came off the Gold
Standard in 1971) grows more precarious by the day. Ironically, Alan
Greenspan, the central banker most responsible for the cheap money policies
and asset bubbles of the last 20 years, has again warned about the euro and
dollar being “faulty” fiat currencies.
Greenspan
again said how gold is the ultimate form of payment and currency (see
interview and transcript of interview in News).
Reuters
Thompson CRB Commodities Index – 5 Year (Daily)
"What
the price of gold is saying is essentially that there are elements within the
marketplace which feel very uncomfortable with respect to what's going on
generally," the former Federal Reserve chairman said. "It's not an
accident that you're finding that central banks are going in to buy
gold."
Greenspan
emphasized that he isn't calling for a return to the gold standard. That's
just not doable, he said. "I do think that to get a sense of the
stability of the system, watching the price of gold is not too bad."
Gold
Gold
is trading at $1,442.40/oz, €1,028.60/oz and £884.75/oz.
Silver
Silver
is trading at $36.64/oz, €26.12/oz and £22.47/oz.
Platinum
Group Metals
Platinum
is trading at $1,832.18/oz, palladium at $811.00/oz and rhodium at $2,350/oz.
News
(Bloomberg)
-- Barnes Tells CNBC Sees Silver Prices Extremely High Over 3-5 Yrs
Peter Barnes, chief executive officer of Silver Wheaton Corp., told CNBC that
he sees silver prices going to $50 in two to three years, and will be
“extremely high” over the next three to five years and possibly
longer.
(Bloomberg)
-- Spot Silver Extends Gain, Rising as Much as 2% to $36.3125/oz
Silver for immediate delivery extended gains, rising as much as two percent
to $36.3125 an ounce in Singapore today. That was the highest level since
February, 1980.
(Bloomberg)
-- S&P GSCI Commodities Index Extends Gains, Led by Cotton, Silver
The Standard & Poor’s GSCI Spot Index of commodities rose to as
high as 728.58, the highest level since August 2008. Cotton, silver and crude
oil led the gains.
(Bloomberg)
-- Gold Nears Record on Mideast Violence; Silver at 31-Year Peak
Gold climbed, approaching a record,as violence intensified in the Middle East
and oil continued to gain, driving demand for precious metals as a hedge
against inflation. Silver reached a 31-year peak.
Immediate-delivery
bullion gained 0.5 percent to $1,437.85 an ounce at 2:07 p.m. Singapore time.
The metal climbed to an all-time high of $1,440.32 on March 2. April-delivery
futures in New York strengthened 0.7 percent to $1,437.90. Oil surged to the
highest level in 29 months.
“Rising
oil prices and escalating clashes in Libya and tensions in other key Middle
Eastern countries continued to support safe-haven buying for precious
metals,” Mark Pervan, an analyst at ANZ Banking Group Ltd., wrote in a
report today.
Concern
about rising inflation and currency debasement drove gold prices up 30
percent last year for a 10th annual gain. Asian nations from China to
Indonesia raised interest rates this year to curb rising consumer prices.
Increasing food and commodity prices have contributed to unrest that started
in Tunisia in January and spread to Egypt, Bahrain, Iran and Yemen.
Fighting
between Libyan rebels and troops loyal to Muammar Qaddafi intensified as the
opposition advanced west from the oil hub of Ras Lanuf toward the
leader’s hometown of Sirte. Some websites call for a nationwide
“Day of Rage” in Saudi Arabia on March 11 and March 20.
“A
civil war could be the unfortunate outcome and normal oil production from
Libya may not be restored in the short term,” said Ong Yi Ling,
Singapore-based analyst with Phillip Futures Pte. “Besides Libya,
investors may also watch the situation in Saudi Arabia closely. Should the
turmoil spread to the world’s largest oil exporters, we could witness
spikes in oil and gold prices.”
Rising
Inflation
Fifteen of 17 traders, investors and analysts surveyed by Bloomberg, or 88
percent, said the metal will rise this week. Two predicted lower prices.
Hedge-fund
managers and other large speculators increased their net-long positions in
New York gold futures in the week ended March 1, according to U.S. Commodity
Futures Trading Commission data.
Speculative
long positions, or bets prices will rise, outnumbered short positions by
197,253 contracts on the Comex division of the New York Mercantile Exchange,
the Washington- based commission said in its Commitments of Traders report.
Net- long positions rose by 16,829 contracts, or 9 percent, from a week
earlier.
Gold
futures in India, the world’s biggest bullion consumer, rose to a
record today. Silver also reached an all-time high in the country.
India,
China
Bullion for April-delivery gained as much as 0.6 percent to a record 21,232
rupees per 10 grams on the Multi Commodity Exchange of India Ltd. and traded
at 21,192 rupees at 10:51 a.m. in Mumbai. Silver for May-delivery advanced as
much as 1.8 percent to an all-time high of 54,378 rupees per kilogram and
traded at 54,225 rupees in Mumbai.
In
China, Lion Fund Management Co., the first in the nation to invest in
overseas gold-backed exchange-traded products, has been approved to as much
as double the size of its fund raising, said a company executive today.
European
Central Bank President Jean-Claude Trichet said last week that the ECB may
raise interest rates next month to fight accelerating inflation pressures.
Federal Reserve Chairman Ben S. Bernanke has signaled he will keep the Fed on
course to finish $600 billion of Treasury purchases through June.
“Basically
you have an environment where you have rising inflation and increasing
liquidity,” Juerg Kiener, chief investment officer at Swiss Asia
Capital Ltd. in Singapore, said in an interview with Bloomberg Television.
“We have a very large physical position of gold and silver in the market.”
Cash
silver increased as much as 2.3 percent to $36.4075 an ounce, the highest
level since February 1980. Palladium added 0.8 percent to $818.50 an ounce
and platinum for immediate delivery fell 0.2 percent to $1,839 an ounce.
(Bloomberg)
-- Vietnam Stops Gold Bullion Trading and Production Licenses
Vietnam’s central bank said it is ceasing to issue licenses for gold
bullion production and trading, without giving a specific timeframe,
according to a statement on its website today.
The
State Bank of Vietam will eventually eliminate deposits in gold at banks, it
said.
Vietnam’s
banks have about 112 trillion dong in gold deposits, according to the
statement.
(Bloomberg)
-- John Paulson Hedge Funds Gain in February as Gold Price Rallies
John Paulson, the hedge-fund manager who earned about $5 billion last year,
posted gains last month in all his gold-denominated funds as the metal
rebounded from its January lows, according to a report sent to investors.
The
Paulson & Co. Gold Fund gained 13 percent in February, erasing most of
the January losses and leaving the fund down 0.5 percent for the year,
according to the report, a copy of which was obtained by Bloomberg News. The
Advantage Plus Fund rose about 7 percent in the gold share class.
Gold
gained the most last month since April as violence in Libya and other states
in the Middle East spurred investor demand for precious metals. Paulson, 55,
is betting inflation will accelerate and fuel demand for the metal in coming
years. His investors can choose to have their stakes denominated in gold
rather than dollars, meaning the value of their investment rises and falls
with the price of the bullion.
Armel
Leslie, a spokesman for Paulson, declined to comment on his February
performance.
The
dollar-denominated Advantage Plus Fund, which uses strategies designed to
profit from corporate events such as takeovers and bankruptcies, rose 2.3
percent in February, according to the report.
Paulson’s
dollar-denominated Advantage Fund gained 1.6 percent, while the gold-share
class jumped 6.6 percent. The dollar-denominated Recovery Fund climbed 3.5
percent and the gold-share class rose 7.5 percent.
2010
Gains
Paulson benefited last year from his stake in the gold- share classes of his
funds, whose gains were at least double those of the comparable,
dollar-denominated shares after a 30 percent jump in the precious metal. His
earnings in 2010 also included a portion of the 20 percent performance fee
the firm collected on its gross profit of $8.4 billion.
The
Gold Fund, which can buy derivatives and other gold- exposed investments,
jumped about 35 percent in 2010.
The
dollar-denominated Paulson Partners Fund, which invests in the shares of
merging companies, was up 1.6 percent last month and rose 8.4 percent in the
gold-share class. The dollar- denominated Partners Enhanced Fund increased
2.8 percent, while the gold-share class climbed 6.2 percent.
Paulson’s
dollar-denominated Credit Opportunities Fund rose 1.9 percent last month and
its gold-share jumped 5.6 percent.
(CNBC)
-- CNBC EXCERPTS: DR. ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN, ON
CNBC'S "SQUAWK BOX" TODAY
Following are excerpts from the unofficial transcript of a CNBC interview
with Former Federal Reserve Chairman Dr. Alan Greenspan today on CNBC's
"Squawk Box." All references must be sourced to CNBC.
GREENSPAN
ON OIL:
"One thing that economists have been bedeviled by over the years is that
the correlation between oil prices on a global basis, and global economic
activity is far more precise than any evidence we have that it should be, in
short, as a leading indicator, global oil prices are a very useful statistic,
the only problem is we don't know fully where all the channels are."
GREENSPAN
ON MOMENTUM:
"My view is that when oil prices get up to this area and start to move
up even higher, you do have to start to worry, but there is no question at
this stage that the momentum of this economy, leaving out the oil price
issue, leaving out the Euro problems that have emerged, and very specifically
leaving out the budget problems, this economy is really beginning to pick up
momentum."
GREENSPAN
ON MOMENTUM:
"There is no question at this stage that the momentum of this economy,
leaving out the oil price issue, leaving out the Euro problems that have
emerged, and very specifically leaving out the budget problems, this economy
is really beginning to pick up momentum."
GREENSPAN
ON FORECAST:
"The fascinating issue for forecasters is how do you factor in all of
the negatives because there are not sort of modest rises here, modest costs
here, these are big stuff on both the debit and the credit side, and how its
going to work is not all together clear-- but for the moment this economy is
moving."
GREENSPAN
ON CURRENCY:
"When you have two faulty currencies, and the euro and dollar are both
faulty, but probably almost equally faulty, so that the exchange rate between
the dollar and Euro is not really moving all that much."
GREENSPAN
ON GOLD:
"What the price of gold is saying, is that there elements within the
marketplace that feel very uncomfortable with respect to what is going on
generally, and its not an accident that you're finding that central banks are
going in to buy gold and one of the reasons is gold is historically one of
the rare media of exchange that doesn't require any collateral or backing,
counter signatures, gold is universally acceptable as a means of
payment."
GREENSPAN
ON THE GOLD STANDARD:
"I'm not saying we can or should go back on the gold standard, that
would be extremely difficult, and it would require such cast changes that
this society has made no indication that it wants to do that, but I do think
to get a sense of the stability of the system, watching the price of gold is
not too bad."
GREENSPAN
ON OIL PRICE:
"When we talk about the price that will hit us, keep an eye on brent and
not on WTI, that has got technical problems."
GREENSPAN
ON FORECLOSURES:
"I am assuming, and this is an assumption, that the foreclosures will
begin to slow down, they are beginning to slow down, but the problem that
we've had is such a large proportion of sales are distressed sales, and
clearly if you have a significant proportion in that category, the overall
price level is going down."
GREENSPAN
ON HOME PRICES:
"Ultimately what is the determinate, as far as I'm concerned, is
basically whether or not the price, excluding distressed sales, is falling,
because the other is a statistical problem, I'm not saying its not real, it
is real, but it gives you a false signal, so I'm watching the less distressed
sales, now I must admit those prices have edged down recently somewhat to my
surprise. But not enough to create where I think the problem is."
GREENSPAN
ON MORTGAGES:
"When subprime went underwater, they were very rapidly going into
foreclosure because they couldn't basically live with it, but the vast
majority of conventional conforming mortgages, even those which were
underwater, are none the less capable of being financed by the people who
live in the homes the proportion of conventional conforming homes that will
be defaulted, is really very small."
GREENSPAN
ON THE FED:
"At this point the Fed is in the position where it can contract its
balance sheet very significantly and the issue is will they be able to do it
in proper timing? They think they can."
GREENSPAN
ON BERNANKE:
"These are judgments that you have to make, I know Bernanke very well,
we worked together, Ben and I went over a number of crisises together, I know
how he functions, I have considerable trust in his judgment."
GREENSPAN
ON THE FUTURE:
"You're dealing with very difficult problems. The one thing we all
pretend we can do but we can't, is forecast, the future out there isn't very
bright."
GREENSPAN
ON DODD/FRANK:
"I look at whole series of mandates in Dodd/Frank and I think some of
them are internally contradictory, and we're going to find out if that is
indeed the case when the regulators start to implement."
GREENSPAN
ON CONSEQUENCES:
"What we're going to find is that the unexpected consequences of much of
the new regulation that's going to come as a result of Dodd/Frank is going to
have to reversed, and that's going to create very high degrees of
uncertainty."
GREENSPAN
ON TOO BIG TO FAIL:
"The purpose of a financial system is to move the scarce savings of a
society into physically productive assets, we in the United States have been
very affective in doing that, poor savings but very high rates of return. You
start moving some of that scarce savings to propping up companies, it does
not go into effective uses, and the result is output per hour slows down and
standards of living slow down. So too big to fail is critically an issue with
respect to standards of living, you have to have failures, JOE (HAVE WE
SOLVED IT?) no we have not."
GREENSPAN
ON SAUDI OIL:
"Saudi Arabia is, look- its got three and a half million barrels of
standby crude capacity, nobody else has standby capacity, so Saudi is a whole
game
Mark O’Byrne
Goldcore
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