Gold and Silver Investors Face Unusual Predicament – Manipulation
Comex Gold Futures slipped again for a fourth consecutive day as soon as US markets opened. Gold and Silver Prices tumbled to a 4 month low below the 200-day moving averages following a surprisingly strong reading on third quarter US Gross Domestic Product. Gold Prices have dipped to $1637.5 & Silver to $29.69 (at the time of writing) as alerted repeatedly in the past 4 days. What is most surprising is that all factors that have proven to make Gold and Silver stronger are proving useless. Gold Futures Prices fell on Tuesday when the Democrats & Republicans were rumored to be coming together close to a Fiscal Cliff Deal. The next day Gold and Silver lost more ground despite the fact that the Fiscal Cliff talks were floundering & stalled. Even a fresh monetary stimulus plan by the Bank of Japan did not provide any support. The US Dollar Index is further lower again, which should ideally be bullish for the precious metals, but even that seems of no help. Gold Prices have collapsed even though the very supportive Euro has been on the up move sharply. Even a higher Jobless number today has sent Gold and Silver Prices tumbling. A price manipulation amid an opportune year-end thin volume trade in Gold and Silver, seems obvious now. Fresh open interest in Comex Gold and Silver can climb massively if that is the case. MCX Gold Prices slumped to Rs. 30,433 from a rise earlier in the day to Rs. 30,969. MCX Silver March trade crashed heavily to Rs. 57,272 from Rs. 59,914 as expected after Silver broke strong support levels yesterday.
Now even a Higher Jobless claims print makes Gold and Silver Weaker:
U.S. third-quarter GDP data showed a surprisingly strong reading of up 3.1%, on an annualized basis, which is the fastest rate of growth since the 4.1% pickup in the final quarter of 2011, while the markets expected a reading of 2.8%.The US Economy grew more quickly than previously stated in the July-to-September quarter due to stronger trade, faster health-care spending and increased local government construction, the Commerce Department estimated. The Labor Department said that Initial (First-time) jobless claims rose 17,000 to a seasonally adjusted 361,000 in the week ended Dec. 15, versus a slightly upwardly revised 343,000 in the prior week. Expectations were for 358,000. The four-week average of claims fell 13,750 to 367,750, a two-month low. Continuing claims in the week ending Dec. 8 rose 12,000 to 3.22 million. Manufacturing in the Philadelphia region unexpectedly expanded in December to an eight-month high. The Federal Reserve Bank of Philadelphia’s general economic index rose to 8.1, from minus 10.7 in November. This report contrasts with data showing New York-area manufacturing shrank for the fifth straight month. Figures from the New York Fed on Dec. 17 showed the so- called Empire State index fell to minus 8.1 this month, from minus 5.2 in November.
INFLATION – Fed’s $4 Trillion Rescue Helps Hedge Fund:
Bloomberg – The near-zero interest rate the Federal Reserve charges financial firms, as well as securities purchases that will balloon the central bank’s balance sheet to almost $4 trillion next year, have made it easier for Narula’s $1.6 billion fund to thrive and more difficult for Sanchez, a former college library director, to enjoy retirement. Chairman Ben S. Bernanke’s efforts to energize the US Economy since 2008 have been credited with rousing the housing market from a six-year funk, lowering the jobless rate and putting more money in the pockets of both mortgage lenders and borrowers. At the same time, Fed policy has been blamed for starving money-savers of income and boosting certain asset prices, widening the gap between the rich and the rest of the country. Fed officials declined to comment for this story on whether their policies exacerbated inequality. After two rounds of asset purchases totaling $2.3 trillion through June 2011, the central bank began so-called QE3 in September. The Fed’s mortgage-securities purchases have bolstered demand, and the possibility of profit, for fund managers such as Narula. Hedge funds that handle mortgage securities have a 20 percent gain on average this year, according to data compiled by Bloomberg. With money gained from Fed securities purchases, investors speculated on the future prices of commodities, helping to drive up food and energy prices for consumers, said John Gnuschke, director of the Sparks Bureau of Business & Economic Research at the University of Memphis in Tennessee. After rising and falling independently for decades, prices for stocks and commodities rose “in lockstep” from 2008 through 2011, when the central bank conducted its first series of securities purchases. Twenty-two of the 24 commodities in the S&P GSCI Commodity Spot Index have gained since the recession ended in June 2009, with only natural gas and cocoa lagging. Corn more than doubled in price even before this year’s drought sent values soaring. Heating oil is up 77 percent and wheat 58 percent. That means higher energy and food prices for consumers. Commodity prices are trading above their value according to supply and demand, and the increase is because of excess money. Not everyone agrees. Growing demand in emerging countries, including China, helps explain commodity price increases, said Chris Rupkey, chief financial economist for Bank of Tokyo- Mitsubishi UFJ Ltd. in New York. Still, Sharma said the situation reflects the limits of the Fed’s main tool for influencing the economy — controlling the amount of money in the financial system. “You can print all the money you want but you can’t control where it will end up,” he said. “It ends up in the commodities sector and benefiting the wrong people.” While Higher Commodity Prices can also fuel economic growth, that effect is undercut by the fact that the U.S. is a net importer of commodities, Stiglitz said.
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