Gold and silver

Here are a couple of articles about silver and gold.  For information.

 

JPM and Goldman See $1,800/oz Gold By Year End – Iran, Middle East and Inflation Risks Cited

Mark OByrne

Max Keiser,

6 September, 2012

JP Morgan and Goldman Sachs have overnight revised upwards there year
end forecasts to $1,800/oz and $1,840/oz respectively.

JPMorgan said in a note published today that it expects gold to move
toward $1,800/oz by year end, citing negative real interest rates in
the U.S., sovereign risk in Europe and instability in the Middle East.

Today’s AM fix was USD 1,708.50, EUR 1,355.09, and GBP 1,074.53 per ounce.
Yesterday’s AM fix was USD 1,689.50, EUR 1,349.23 and GBP 1,065.26 per ounce.

Silver is trading at $32.55/oz, €25.94/oz and £20.55/oz. Platinum is trading at $1,582.50/oz, palladium at $644.80/oz and rhodium at $1,025/oz.

 

Cross Currency Table – (Bloomberg)

Gold edged down $1.70 or 0.1% in New York yesterday and closed at $1,693.60. Silver fell off in Asia then rallied to a high of $32.35 in New York trading, and finished with a loss of 9 cents.

Gold rose in all major currencies today and topped $1,700/oz in London for the first time since March on speculation ECB will announce further monetary easing. While gold rose 1%, silver surged another 2%.

Bullion rose ahead of the ECB policy meeting and “Super” Mario Draghi’s speech where investors expect to hear announcements on further short term bond buying and possibly an interest rate cut.

Some market participants remain dubious that Draghi’s can resolve the crisis and gold’s rise today may be an indication of that.

Indeed, expectations that ‘Super Mario’ will save the day and in one fell swoop save the euro from collapse are plain silly. At best, Draghi may again manage to buy time by once again ‘kicking the can down the road.’  Thereby, creating much larger problems down the road.

The ECB will announce its decision on interest rates at 12.45pm BST (1.45pm CEST), followed by a press conference 45 minutes later.

BOE will also announce its own decision on monetary policy at noon BST. The 2nd estimate of eurozone 2Q GDP was released this morning and at 0.2% the contraction was in line with estimates.

Volatility can be expected today and we would not be surprised if gold came under pressure during Draghi’s announcement as has happened on previous occasions.

However, all dips in gold should be used as buying opportunities.

 

XAU/EUR Exchange Rate Daily – (Bloomberg)

Gold at €1,355/oz, just 2.5% from the record high of €1,390/oz, is a sign of a continuing lack of trust in the euro and in Draghi’s stewardship at the ECB.

Investment and diversification demand for gold remains robust as seen in the gold holdings in exchange-traded products or trusts rose to a record for a second straight day. The amount increased 2.85 metric tons, or 0.1 percent, to 2,470.67 tons, data tracked by Bloomberg showed.

G21 Gold Price Daily – (Bloomberg)

 

Research houses, analysts and banks are revising their estimates for year end 2012 gold prices higher.

They believe that concerns about inflation and demands for gold as a store of value should lead to higher gold prices by the end of 2012.

JP Morgan and Goldman Sachs have overnight revised upwards there year end forecasts to $1,800/oz and $1,840/oz respectively.

JPMorgan said in a note published today that it expects gold to move toward $1,800/oz by year end, citing negative real interest rates in the U.S., sovereign risk in Europe and instability in the Middle East.

Goldman Sachs sees gold at $1,840/oz by end-2012.  Goldman cite the supply side fundamentals and monetary policy easing which are very supportive.

So said Jeffrey Currie, head of commodities research at Goldman in an interview with Linzie Janis on Bloomberg Television.

Currie believes monetary policy easing and FOMC pursuing QE3 “will be critical to putting upward pressure on gold prices”.

Goldman remain most bullish on oil as a trade due to supply issues and the “situation in Iran”.

XAU/GBP Exchange Rate Daily – (Bloomberg)

Bank of America Merrill Lynch have said this morning that gold may reach $2,000/oz by yearend.

Bank of America Merrill Lynch analysts Sabine Schels and Michael Widmer said in an email report that gold prices may climb to $2,000 an ounce by the end of the year because the Federal Reserve probably will announce a third round of bond buying.

“Loose monetary policies with a scope for more aggressive balance-sheet use in the U.S. and Europe will keep real rates in most reserve currencies low (or negative) in 2012,” the analysts said. “We continue to believe this will allow investor demand for gold to remain strong.”

Separately, Australia & New Zealand Banking Group Ltd. said there are “upside risks” to its forecast for gold to end the year at $1,720 an ounce. Commenting in a report today, they said that “gold prices are set to continue their rally, and the increasing likelihood of policy action is creating upside risks.”

Capital Economics see gold rising to $2,000/oz due to demand for gold as a protection of wealth.

The Capital Economics forecast is interesting as they are conservative and were quite bearish on gold up until relatively recently.

Capital Economics remain bearish on silver and say silver will end the year at about $32 an ounce.

We differ with them regarding silver which we remain bullish on in the medium and long term and believe the inflation adjusted silver high of $150/oz will be reached in the coming years.

A close above $1,700 today could lead to a sharp move to challenge the next psychological resistance at $1,800/oz.

Given the now strong technical and strong fundamentals $1,800/oz and €1,400/oz gold could be seen as soon as this month – rather than by yearend.

Forget JP Morgan, PEAK SILVER IS HERE!

The Doc

Max Keiser,

6 September, 2012

The world doesn’t yet realize it, but the forces coming down on the gold and silver markets are truly unbelievable. These forces can’t be comprehended by any type of charting.

Presently, much of the focus in the gold and silver community is in the MANIPULATION & FINANCIAL SYSTEM. However the physical forces coming down on the market are MUCH GREATER!!

NO ONE HAS A CLUE HOW TO PRICE GOLD AND SILVER IN A PEAK ENERGY ENVIRONMENT….ZIP…NADA….ZILCH!

From SilverDoctors‘ Contributor SRSrocco:

According to the 2012 World Silver Survey, primary silver production declined compared to 2010:

 

Here we can see that primary silver production fell from 30% in 2010 to only 29% in 2011…this was due to a few big primary silver mines ore grades fallen substantially. According to the 2012 World Silver Survey:

Another significant factor pushing up costs upwards in 2011 was the lower grade of ore processed. Among the larger mines, grades fell significantly at Arcata (-29%), Alamo Dorado (-29%), Fresnillo (-16%) and Pallancata (-13%)

These FOUR mines belong to Hochschild Mining in Peru, Pan American Silver and Fresnillo. I have taken their data from their annual reports to show how much this primary silver decline has come from just these 4 mines:

And here is Fresnillo shown in a 7 year chart:

This turns out to be an average 5% annual decline of silver ore grades at Fresnillo. Furthermore, in the first half of 2012, silver production at Fresnillo has done the following:

Fresnillo 1H 2011 = 16.9 million oz

Fresnillo 1H 2012 = 13.7 million oz

This is a staggering 21% decline in silver production in just 1 year. Again, this is just from Fresnillo Plc’s Fresnillo mine and not its new Saucito mine. This would probably put Frenillo’s overall ore grade in 2012 to somewhere between 8-9 oz per tonne.

FOLKS… no one in the mining community is really paying attention to this stuff. Let me tell you, these physical forces coming down on the future silver supply are really going to make the price of silver head up to levels no one can imagine.

The analysts think we are going to see much higher silver production in the next 10 years…. I believe we will peak here very shortly. As I stated in my previous post, silver ore grades are falling faster than the top gold miners.

THIS HAS NOTHING TO DO WITH THE SUPPOSED NOTION THAT SILVER MINERS ARE MINING DIFFERENT ORE GRADES FOR PROFITABILITY….that is complete rubbish when we look at the facts.

I am currently working on another article to prove my position in this matter. For miners to change mining ore grades for profitability…. they must mine HIGH ORE GRADES when the price of silver is low, and mine LOW ORE GRADES when the price of silver is high. I can assure you all, this is not taking place.

Lastly, 71% of silver came as a by-product of base metal and gold mining in 2011. If we are going to rely on future base metal production for the lions share of silver production… we are in a world of hurt. If you think gold and silver ore grades are falling…. base metal mines are falling just as well.

I just can’t tell you enough just how much these PHYSICAL FORCES coming down on the market are going to make the price of gold and silver today look really silly compared to the prices or values in the future.

BY THE WAY….DID ANYONE READ THIS FROM JIM WILLIE’S NEWEST ARTICLE:

The Jackass forecast is that from the global mine output factor alone, the physical precious metal prices will rise, while the mining stock share prices will fall. Output risk joins jurisdiction risk and dilution risk for the mining companies. For every mining stock winner, expect 20 to 30 losers.

Here are silver prices for the last 25 days

 
and gold....