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Markets
have recovered somewhat from the recent sharp sell offs despite the worsening
nuclear situation in Japan. Gold and silver have made very tentative gains
from the falls seen yesterday as commodity and equity markets (and the Nikkei
in particular) have stabilised somewhat after the recent sharp falls.
 
Precious
metals experienced margin-related selling yesterday as traders on the COMEX
liquidated contracts. This again shows gold's benefit as an important source
of liquidity to financial markets in a crisis.
Today
could see further selling on the COMEX, but physical demand for bullion
remains robust with continuing safe haven demand due to geopolitical,
macroeconomic and now real environmental concerns.
While
gold and silver fell by more than 2% and 4% respectively yesterday, physical
demand remains very robust - particularly in Asia. Premiums on gold bars in
Shanghai were quoted at $5.43 over spot yesterday and Indian ex duty bullion
bar premiums were $5.16 (London AM fix) and $4.08 (London AM fix). In Vietnam
gold traded at $33.08 premium to world gold.
While
Singapore spot prices remained at $1.00 over world gold, one dealer told
Reuters that "supplies are still limited". In Hong Kong, premiums
for gold bars were offered in a wide range from 90 cents over spot London
prices to as high as $1.70. Reuters comments that this is "reflecting an
illiquid market".
Premiums
on silver eagles (1 ounce) in the wholesale market have been rising gradually
in recent days which suggests that the surge in demand seen for silver
bullion coins (partly due to Max Keiser's 'buy silver' campaign) continues
and may be leading to a less liquid market for silver bullion coins.
Japan
is struggling to avert a full blown nuclear meltdown and it is highly
imprudent to suggest that there will not be serious economic ramifications
from the tragedy.
It is
already leading to further currency debasement with the Japanese having
injected trillions of yen into markets in recent days and further damaging
their already precarious national balance sheet. Japan doubled an
asset-purchase program to 10 trillion yen ($124 billion) on March 14.
The
Bank of Japan added 5 trillion yen ($62 billion) to the system again today
after pouring in a record 15 trillion yen on March 14 and 8 trillion yen
yesterday in one-day funding. That comes to some $360 billion in the last 3
days.
It
seems almost certain that Japanese investors and institutions will sell a
large quantity of their US Treasurys (nearly $900 billion) which will lead to
higher US interest rates. The last thing the over indebted, fragile US
economy can handle. This may explain the dollar's recent sickly performance
and failure to make any gains in recent days despite market panic.
Concerns
of contagion in Eurozone debt markets are now rightly being superseded by
concerns of nuclear contagion in Japan. However, Portugal's downgrade and
Ireland's 10-year government debt hovering over 9.5% strongly suggests that
the worst is far from over in the eurozone debt crisis which should lead to
higher gold in euro terms in the coming months.
Gold
Gold is
trading at $1,400.11/oz, €1,004.67/oz and £871.58/oz.
Silver
Silver
is trading at $34.38/oz, €24.67/oz and £21.40/oz.
Platinum
Group Metals
Platinum
is trading at $1,709/oz, palladium at $705/oz and rhodium at $2,350/oz.
News
(Bloomberg)
-- Gold Bulls Likely to Return on Price Dips: Technical Analysis
Gold will probably attract buyers on declines toward $1,325 an ounce with the
medium-term bull trend targeting a record $1,460 to $1,500 an ounce,
according to technical analysis from Barclays Capital.
"Failure
to hold above support in the $1,390 area was not unexpected," according
to a report from analysts including Phil Roberts. "We would look to buy
any dips toward support in the $1,325 area. Our greater view remains
bullish."
Bullion
for immediate delivery traded little changed at $1,396.63 an ounce today
after dropping to $1,381.22 yesterday, the lowest level in a month. The price
climbed to a record $1,444.95 an ounce on March 7. Asian shares climbed for
the first time in five days, rallying from declines stoked by the risk of
geopolitical tensions in the Middle East and radiation leaks from a nuclear
power station after Japan's strongest earthquake on record.
"A
close back above $1,405 would encourage our bullish view, although breaking
above $1,435 is needed to confirm new highs through $1,445," the report
said. "Breaking below the 50- and 100-day averages near $1,380 would
increase the risk of a deeper fall toward $1,360."
In
technical analysis, analysts study charts of trading patterns to try to
predict changes in a security, commodity, currency or index.
(Bloomberg)
-- Gold Advances From One-Month Low as Asian Shares, Crude Recover
Gold advanced, recovering from the lowest level in a month, as Asian equities
and oil rebounded after the twin risks of geopolitical tensions in the Middle
East and Japan's strongest earthquake shook investor confidence.
Immediate-delivery
bullion rose 0.4 percent to $1,401.63 an ounce at 3:13 p.m. in Singapore,
after slumping as much as 3.2 percent to $1,381.22 yesterday, the lowest
level since Feb. 17. The April-delivery contract in New York added 0.6
percent.
"There's
some bargain-hunting after not only gold but commodities saw a sharp sell-off
across the board as investors sought the safety of cash," said Park Jong
Beom, senior trader with Tongyang Futures Co. in Seoul. "A rebound in
stocks also brought some relief to investors."
The
Standard & Poor's GSCI Index of 24 commodity futures tumbled 3.8 percent
yesterday, the biggest drop since July 29, 2009, on concern that a nuclear
accident outside Tokyo may threaten the global economy. Asian stocks jumped 3
percent after a 5 percent decline yesterday, the most since November 2008,
while oil in New York rebounded from a two-week high.
"Financial
markets stay focused on Japan's nuclear power crisis and the impact it could
have on the global economy," said Ong Yi Ling, Singapore-based analyst
with Phillip Futures Pte. "While gold could be caught in a widespread
sell-off of risk assets as investors convert holdings to cash, the safe-
haven properties of gold could help support prices."
A
second fire in as many days broke out at a Japanese reactor hours after more
quakes struck a country battling to avert a nuclear meltdown following last
week's 9.0-magnitude temblor and tsunami.
Bahrain
Protests
The Saudi Arabian-led military intervention in Bahrain failed to end
demonstrations in the island-kingdom, while in Libya, Muammar Qaddafi,
appearing with a small group of supporters on state-run television, vowed to
fight rebel "rats" and said "we are going to destroy
them."
"Geopolitical
tensions are likely to continue to set the tone of trading in the near
term," Barclays Capital's analysts including Gayle Berry wrote in a
report yesterday. "We retain a positive view on gold as many of the
long-term investment drivers remain intact amid low interest rates."
The
Federal Reserve yesterday reaffirmed its plan to buy $600 billion of
Treasuries through June. In an upgrade of the central bank's economic outlook,
Chairman Ben S. Bernanke and his colleagues removed language that the
recovery is "disappointingly slow" and that "tight
credit" is holding back consumer spending.
Palladium
for immediate delivery increased as much as 1.2 percent to $712.75 an ounce
before trading at $705. The metal slumped 5.6 percent yesterday. Platinum
dropped 0.8 percent to $1,685.73 an ounce, following a 3 percent loss. Cash
silver rose 0.6 percent to $34.44 an ounce after sliding 4.7 percent. Prices
touched $36.7525 on March 7, the highest since 1980.
(Bloomberg)
-- Yen Libor Jumps to Highest Since December 2008 on Quake Damage
Yen borrowing costs between banks in London jumped to the highest level in
more than two years as lenders hoarded the currency after the nation's worst
earthquake.
The
London one-day interbank offered rate, or Libor, for yen loans climbed 38
basis points to 0.491 percent yesterday, the highest level since Dec. 9,
2008, according to the British Bankers' Association. Libor for one week
gained 9 basis points to 0.206 percent, the most since April 16, 2009, while
the rate for three-month loans added about one basis point to 0.2 percent.
"During
yesterday's London trading, pressure increased to swap currency from dollars
to yen," Yoichi Muto, director at the Tokyo branch of Commerzbank AG.
"Some foreign banks couldn't help but raise rates and secure funds
because certain financial institutions were hoarding yen and not
investing."
The
yen was at 80.85 per dollar as of 1:47 p.m. in Tokyo from 80.72 yesterday in
New York.
The
Bank of Japan added 5 trillion yen ($62 billion) to the system today after
pouring in a record 15 trillion yen on March 14 and 8 trillion yen yesterday
in one-day funding. It doubled an asset-purchase program to 10 trillion yen
on March 14.
(Bloomberg)
-- Vietnamese May Be Holding 500 Tons of Gold, Lao Dong Reports
Vietnamese people may be holding about 500 tons of gold at home, Lao Dong
newspaper reported, citing the Vietnam Gold Council.
Economic
instability may have prompted people to keep gold, according to the report.
Our
prayers and good wishes are with the people of Japan in this tragic time
Mark O’Byrne
Goldcore
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