US Mint Reports Soaring November Month-To-Date Silver Coin Sales Surpass 2010 High Following Massive Rush Into Precious Metal
Submitted by Tyler Durden on 11/19/2010 16:09 -0500Is Max Keiser's attempt to put JP Morgan out of business working following the mother of all silver physical squeezes? The price of silver has been stable in the past few days, but if the US official precious metal seller is to be trusted, this will not last long. According to the US Mint, sales of 1-ounce American Eagle silver coins are headed for the strongest month since at least May, Bloomberg reports. More details: about 3,175,000 of the coins have been sold this month, compared with 3,633,500 in May, according to data on the Mint website. Silver futures in New York touched a 30-year high of $29.34 an ounce on Nov. 9. American Eagle coins also are available in gold and platinum. The Mint said 62,500 ounces of gold Eagles have been sold in November. What is interesting is that sales of the coins continue at an astronomic pace despite the nearly 10% premium one has to pay over spot. What is more interesting, is that the Mint has not run out yet. Yet the refreshing thing, is that instead of buying paper certficates promising that one's presumed purchases of gold is held by the DTCC, Americans are once again going straight into physical. Here is hoping Keiser's plan ultimately unravels whatever the RICO suit against JPM and HSBC leaves untouched.
Posted: Nov 19 2010 By: Dan Norcini Post Edited: November 19, 2010 at 3:59 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
China this; China that; whatever. Yesterday it was hedgies running pell mell into risk trades once they figured that the ECB’s version of QE was on for Ireland. Today there were running back out of risk trades in many of the same markets. Let’s see – Wednesday these same nitwits were selling everything that moved on fears of Chinese interest rate hikes. They were convinced deflation was on the way. Yesterday they were buying everything in sight fearing inflation was on the way. Today they are selling fearing Chinese action regarding reserves will trigger an economic slowdown.
To give you an example of the madness that these fools have unleashed in the markets consider one commodity – cotton. Wednesday it was limit down. Yesterday it was limit up. Today it is limit down once again. I repeat – anyone who trades in this fashion is a total fool. This is the reason that a large number of hedge funds are going to be gone a year from now. They have no idea what they are trading or why. They simply chase motion. Once a price moves a certain amount, their computers all see the movement and unleash a barrage of buy or sell orders depending on the direction. There is no skill, no thought, no analysis, no nothing. There is only reaction.
That brings us to gold – in spite of all this idiocy caused by hedge fund algorithms, it is holding very well. It thus far has uncovered what appears to be reasonably solid buying support near the $1330 level. As the hedgies unload it, stronger-handed buyers are picking it up. The longer it can hold this level and track sideways, the more time it will give the technical oscillators time to bottom in the oversold zone and begin a slow turn higher. That will bring in some momentum based buying.
I have said it earlier this week and will say so again – China needs commodities, especially food such as grains and beans. They are struggling with rising food prices. One needs to know that the average Chinese family spends a larger percentage of their income on food than does the average American family. That in particular is why the rulers of China are very sensitive to rising food prices. If history has taught them anything, it is that the working classes must be kept relatively placated. Rising food prices are not conducive to a happy peasantry!
In the past, they have maintained massive reserves that they will draw from to add additional supply whenever prices seem to be getting out of control. That tends to damp down the rising price for a period. However, people need to eat whether or not bank reserve requirements are higher and interest rates are higher. Since China has been drawing down their reserves at a rapid rate, the only way that they are going to be able to keep prices from working even higher is to import more. That is a simple fact.
I believe that one of the things that they are doing is attempting to trip the hedge fund algorithms into a sell mode in the commodity sector so that they can secure what they need for feedstuff and metals for that matter, at a reduced price. After all, if we all here understand how the mindless hedge fund algorithms function, is it not reasonable to suspect that so do the Chinese, whom after all, are excellent traders and who never chase prices higher. I repeat – the Chinese NEVER buy when the hedge funds are buying. They buy when the hedge funds are selling. Whom do you think the hedge fund algorithms often end up selling to?
My guess is that during periods of sharp market sell offs across the various commodity markets, a change of ownership is occurring with grains, beans, silver and gold, moving into strong hands who are buying for the longer term and will continue to buy on any bouts of price weakness. The long term trend in the grains and the metals are all pointed upward, and that is why periods when prices are falling are going to continue to attract quality buying. That is where the floor of support under both gold and silver is going to come from.
As mentioned in yesterday’s post, silver has a stronger looking price chart than does gold as it has now managed to run more than $2.00 higher off an important technical support area near the $25 level on the price charts. It still needs to clear $27.80 on the upside to have a shot at another run towards $30. If it dips lower again and moves back down below $26, it will be important that it holds above $25 to cement that level as a strong floor of downside support. That will give buyers, especially from Asia, confidence to step into the market in large size.
For gold, the level on the downside to watch is $1,330. It need to hold there to forge a floor from which it can mount another climb back towards $1,400. A trip above $1,365 will spook out a few weaker shorts.
Bonds are back up today after going back down yesterday.
It seems nearly all of our markets are becoming yo-yos. In my mind this is perhaps the worst legacy of the easy money policies of the Fed and their QE foray. They have provided the huge sums of liquidity that are sloshing around in our markets. Under normal circumstances, we would not see this “free money” being used to speculate in such size. The markets would be tamer, more reliable and more closely matched to real world fundamentals. Instead we have markets which experience severe distortions in price and are wrecking havoc on legitimate hedgers and other commercial interests who have historically employed the futures markets to minimize risk exposure. Now, thanks to the machinations of these mindless wits tossing money in and out without any regard to much if anything, the legitimate hedgers are encountering hedges that are blowing up in their faces and causing them to experience the exact thing that they have been trying to avoid. The exchanges don’t seem to care because they are making lots of money thanks to the fees that they charge for every trade. The problem is that hedging interests are beginning to look more and more for some different venues to offset risk. What will happen down the road is that we will end up with less true commercial hedging leaving more and more of the funds to be trading against each other. That will not be a good thing for the long term welfare of the futures industry. But then again, who cares about the long term these days….
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
China this; China that; whatever. Yesterday it was hedgies running pell mell into risk trades once they figured that the ECB’s version of QE was on for Ireland. Today there were running back out of risk trades in many of the same markets. Let’s see – Wednesday these same nitwits were selling everything that moved on fears of Chinese interest rate hikes. They were convinced deflation was on the way. Yesterday they were buying everything in sight fearing inflation was on the way. Today they are selling fearing Chinese action regarding reserves will trigger an economic slowdown.
To give you an example of the madness that these fools have unleashed in the markets consider one commodity – cotton. Wednesday it was limit down. Yesterday it was limit up. Today it is limit down once again. I repeat – anyone who trades in this fashion is a total fool. This is the reason that a large number of hedge funds are going to be gone a year from now. They have no idea what they are trading or why. They simply chase motion. Once a price moves a certain amount, their computers all see the movement and unleash a barrage of buy or sell orders depending on the direction. There is no skill, no thought, no analysis, no nothing. There is only reaction.
That brings us to gold – in spite of all this idiocy caused by hedge fund algorithms, it is holding very well. It thus far has uncovered what appears to be reasonably solid buying support near the $1330 level. As the hedgies unload it, stronger-handed buyers are picking it up. The longer it can hold this level and track sideways, the more time it will give the technical oscillators time to bottom in the oversold zone and begin a slow turn higher. That will bring in some momentum based buying.
I have said it earlier this week and will say so again – China needs commodities, especially food such as grains and beans. They are struggling with rising food prices. One needs to know that the average Chinese family spends a larger percentage of their income on food than does the average American family. That in particular is why the rulers of China are very sensitive to rising food prices. If history has taught them anything, it is that the working classes must be kept relatively placated. Rising food prices are not conducive to a happy peasantry!
In the past, they have maintained massive reserves that they will draw from to add additional supply whenever prices seem to be getting out of control. That tends to damp down the rising price for a period. However, people need to eat whether or not bank reserve requirements are higher and interest rates are higher. Since China has been drawing down their reserves at a rapid rate, the only way that they are going to be able to keep prices from working even higher is to import more. That is a simple fact.
I believe that one of the things that they are doing is attempting to trip the hedge fund algorithms into a sell mode in the commodity sector so that they can secure what they need for feedstuff and metals for that matter, at a reduced price. After all, if we all here understand how the mindless hedge fund algorithms function, is it not reasonable to suspect that so do the Chinese, whom after all, are excellent traders and who never chase prices higher. I repeat – the Chinese NEVER buy when the hedge funds are buying. They buy when the hedge funds are selling. Whom do you think the hedge fund algorithms often end up selling to?
My guess is that during periods of sharp market sell offs across the various commodity markets, a change of ownership is occurring with grains, beans, silver and gold, moving into strong hands who are buying for the longer term and will continue to buy on any bouts of price weakness. The long term trend in the grains and the metals are all pointed upward, and that is why periods when prices are falling are going to continue to attract quality buying. That is where the floor of support under both gold and silver is going to come from.
As mentioned in yesterday’s post, silver has a stronger looking price chart than does gold as it has now managed to run more than $2.00 higher off an important technical support area near the $25 level on the price charts. It still needs to clear $27.80 on the upside to have a shot at another run towards $30. If it dips lower again and moves back down below $26, it will be important that it holds above $25 to cement that level as a strong floor of downside support. That will give buyers, especially from Asia, confidence to step into the market in large size.
For gold, the level on the downside to watch is $1,330. It need to hold there to forge a floor from which it can mount another climb back towards $1,400. A trip above $1,365 will spook out a few weaker shorts.
Bonds are back up today after going back down yesterday.
It seems nearly all of our markets are becoming yo-yos. In my mind this is perhaps the worst legacy of the easy money policies of the Fed and their QE foray. They have provided the huge sums of liquidity that are sloshing around in our markets. Under normal circumstances, we would not see this “free money” being used to speculate in such size. The markets would be tamer, more reliable and more closely matched to real world fundamentals. Instead we have markets which experience severe distortions in price and are wrecking havoc on legitimate hedgers and other commercial interests who have historically employed the futures markets to minimize risk exposure. Now, thanks to the machinations of these mindless wits tossing money in and out without any regard to much if anything, the legitimate hedgers are encountering hedges that are blowing up in their faces and causing them to experience the exact thing that they have been trying to avoid. The exchanges don’t seem to care because they are making lots of money thanks to the fees that they charge for every trade. The problem is that hedging interests are beginning to look more and more for some different venues to offset risk. What will happen down the road is that we will end up with less true commercial hedging leaving more and more of the funds to be trading against each other. That will not be a good thing for the long term welfare of the futures industry. But then again, who cares about the long term these days….
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
Why Pimco's Purchase Of Another $30 Billion In MBS (Much Of It On Margin) May Be Very Bad News For Bank Of America (And Taxpayers)
Gold/Silver Ratio: Silver Going Higher?
Submitted by Tyler Durden on 11/19/2010 11:58 -0500A topic we covered extensively in the past makes a second appearance, this time courtesy of Abigail Doolittle and The Weekly Peak, whose weekly musings focus on the much fabled ratio between the price of gold and silver. Some observations:
- 323 B.C. – The ratio stood at 12.5 upon the death of Alexander the Great.
- Roman Empire – The ratio was set at 12.
- 12th to 17th Century – The ratio was around 12.
- End of 19th Century – The nearly universal, fixed ratio of 15 came to a close with the end of the bi-metallism era and England’s attempt to demonetize silver and conceivably because the country had little of the precious metal.
- 1980 – At the time of the last great surge in gold and silver, the ratio stood at 17.
- 1991 – When silver hit its lows, the ratio peaked at 100.
- 2003 - 2007 – This part of the bull market in silver caused the ratio to drop to 45 from 80.
- 2008 – The ratio rose back to 80 on the Great Recession.
In the midst of Currency Confrontation, why are Gold and Silver falling?
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COT Gold, Silver and US Dollar Index Report - November 19, 2010
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Bullets In The Back: How Boomers & Retirees Will Become Bailout, Stimulus & Currency War Casualties
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![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
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