Gold bushwhacks bears - Peter Brimelow - MarketWatch
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) — Gold bushwhacked the bears last week. It’s even got gold bugs talking about gold stocks … again.
After breaking gold bugs’ hearts by plunging to a new low for the year on Thursday, gold violently reversed. Measured by the CME floor close, the benchmark gold contract GCM2 +0.08% gained $38.30 on the day. It followed up on Friday by adding another $17, for a two-day gain of 3.31%.
The NYSE Arca Gold Bugs Index XX:HUI +1.88% jumped 5.29% in these two days.
Gold stocks’ outperforming the metal is significant, because they have been atrocious this year. As of Friday’s close, HUI was down 20.5% on the year, while gold was actually up 1.4% on the year. Just a restoration of late 2011’s multiples could produce serious gains.
If gold’s reversal sticks, it will be a triumph for the contrary opinion sentiment indicators. Nothing else had been offering any comfort.
The Hulbert Gold Newsletter Sentiment Index has been negative for a record 29 days. ( See Mark Hulbert’s May 4 column. ) The previous record, which ended in early 2005, was followed by a 72% rise in gold over the next 15 months.
When MarketVane’s Bullish Consensus for gold hit 51% on Wednesday, it was at the lowest except for one day — 49% on Nov. 13, 2008 — for many years.
The far-sighted Australian bullion commentary The Privateer thinks something really significant has happened.
This weekend it observed: “What is interesting about the snap-back this week — in both the physical and paper forms of gold, including gold stocks — is that gold has once again started to rise, while other asset markets (especially stock markets) are still falling.”
Another positive voice, from an unusual source, is veteran gold analyst Frank Veneroso.
As I noted during last Christmas’ gold gap-down, Veneroso earned an important place in gold-market history for conceptualizing, in the 1990s, the importance of Eastern physical demand to the gold price, then a new factor. But for several years he had dismayed gold bugs by ignoring the metal. ( See Jan. 2 column. )
After the Christmas gap-down, I reported that Veneroso had surfaced expressing a “hunch” that efforts by “a bunch of traders” to cause a technical breakdown would be defeated by central-bank buying. And, indeed, by Feb. 23, gold had risen 14%.
Now Veneroso has circulated another essay entitled “At The Threshold Of The End Of Central Bank Independence, Gold Is Compelling.”
He writes: “It may finally become clear to market participants that the body politics around the world will demand that central banks implement debt-eroding inflations.”
“With the death of the myth of independent central banking, gold should assume a unique position as a monetary asset. I think we are very close to this point.”
This represents a tremendous shift for Veneroso, formerly a dogged skeptic about the influence of monetary matters on gold.
Gold bugs are also excited about some strange technical news about Thursday’s rally. With bearishness previously so intense, it would have been normal for Thursday’s big jump to involve considerable short covering, which would have slashed the number of outstanding contracts on the CME — the “open interest”.
But precisely the reverse happened.
As Bill Murphy, proprietor of the LeMetropoleCafe website, put it on Friday evening: “The gold open interest rose a whopping 16,891 contracts yesterday to 433,847, which is new recent high, by a substantial degree. Almost everyone thought yesterday was about short covering. … It was new buying. The sort of major-league buying brought to your attention for weeks now in this space.”
A correspondent at Le Metropole CafĂ© remarks: “If indeed gold is underpinned by some enormous strategic buyer — probably a central bank — which is what the data implies, a number of market participants will have to do some serious rethinking.”
Rethinking the value of gold shares will be top of that list.
Read the article online here:Gold bushwhacks bears - Peter Brimelow - MarketWatch
May 18, 2012
Forget Greece, #China Biggest Risk to Global Economy: Faber CNBC.com
Forget Greece, China Biggest Risk to Global Economy: Faber
Forget Greece, which is an "insignificant" economy, it is China that's posing the biggest risk to the global economy, Marc Faber the editor and publisher of the Gloom, Boom and Doom report told CNBC on Friday.
Read the Full Story here:
http://www.cnbc.com/id/47472497
May 17, 2012
Silver supply to pass the billion ounce mark this year--CPM - #SILVER NEWS - Mineweb.com
Silver supply to pass the billion ounce mark this year--CPM
Silver price increases have had a positive impact on primary silver producers as global silver mine production may hit 729 million ounces this year, and total supply over 1 billion ounces, says New York-based CPM Group.
Author: Dorothy KosichPosted: Thursday , 17 May 2012
RENO (MINEWEB) -
Newly refined market economy silver supply is set to surpass one billion ounces for the first time in 2012, according to CPM Group's Silver Yearbook 2012.
Market economy silver mine supply was entirely responsible for the increase in total silver supply in 2011, with secondary silver declining during the year. Total refined market economy silver supply rose 22.6 million ounces to 995.1 million ounces in 2011.
After rising for nine consecutive years, total silver supply is forecast to reach 1.01 billion ounces in 2012 with nearly all of the projected increase expected to come from higher mine production.
Silver mine production in market economies was 713.6 million ounces in 2011, surpassing the 700-million ounce mark for the first time on record. Mine supply increased most strongly in China and Mexico, the two largest silver producers. Silver mine supply is forecast to reach 729 million ounces this year, up 15.4 million ounces from 2010.
"The increase in prices has had a positive impact on primary silver mine production," said the report. Silver mine supply from primary producers was 179.8 million ounces in 2011, up 7.2 million ounces from 2010.
The net increase in primary silver output came primarily from relatively few mines: Primarily San Jose in Mexico, Twin Hills in Australia and Cerro Bayo in Chile. Average silver cash costs at primary mines were $8.28 per ounce in 2011.
The top ten largest market economy silver producing countries in the world are Mexico, China, Peru, Australia, Chile, Poland, Bolivia, the United States, Argentina, and Canada.
Secondary silver supply is expected to increase to 279.8 million ounces this year, up 2.7 million ounces from 2011.
FABRICATION DEMAND
Silver fabrication demand rose 2.2% to 861.9 million ounces in 2011. The largest increase in global silver fabrication demand, in terms of ounces, came from the photovoltaic or solar panel industry, which consumed 59.8 million ounces in 2011.
However, demand for silver from the photovoltaic industry is expected to decline to 57.5 million ounces this year, "driven by a reduction in demand for new solar panels from Europe and a large supply overhang due to excess production by China," said the report.
The electronics sector is the second largest user of silver after the jewelry industry. "Silver is used to some degree in virtually every electronic item because of its excellent ability to conduct electricity," said CPM. Demand for silver from the electronics sector reached 221.8 million ounces in 2011, up 9.1 million ounces from 2010.
Silver jewelry demand is forecast to increase 1.8% to 296.1 million ounces this year. Much of the growth will come from Chinese jewelry demand, which could increase 8%.
Silver is used in biocide applications contained in medical, hygiene, cosmetic and textile producers. Demand from this sector rose to 6 million ounces of silver in 2011, up 7.1% from the previous year. Demand could rise 6.8% this year to 6.4 million ounces, CPM advised.
Silver fabrication demand is forecast to reach 879.1 million ounces this year, up 17.2 million ounces from 2011. "The main drive of growth during 2012 is expected to be the electronics sector," said the report.
INVESTMENT DEMAND
Silver investment demand remained strong last year as investors were estimated to have added 133.2 million ounces of silver to their holdings during the year, up 3.3% from 2010.
"Investors are expected to continue buying large volumes of silver during 2012," CPM forecast. "Net investment demand in silver by investors is expected to reach 131.7 million ounces during 2012, down 1.1% from 2011."
The report noted that 565.4 million ounces of silver backed exchange traded products at the end of last year, a decline of 26.5 million ounces from levels at the end of 2010.
However, CPM observed that "investors have turned net buyers of the metal in early 2012, having added 14.5 million ounces of the metal to holders at the end of the first quarter.
Total silver backing these products reached 579.9 million ounces on March 31, 2012.
Silver coin sales are estimated to have reached 88.2 million ounces in 2011, a 7% increase. "The rate of growth in total coin demand is forecast to slow in 2012 relative to sales levels in recent years, as investors become less pessimistic about the global economy, compared to recent years, and become more price sensitive," the report observed.
In India, silver demand is expected to be flat from levels seen in 2011, while Chinese investment demand has been rising sharply "helped by increased availability of silver physical and financial products and rising household income levels." However, CPM cautioned, "Expected moderation of inflation compared to 2011 coupled with relatively tight money supply could keep Chinese investment demand for silver capped."
To obtain a copy of CPM's Silver Yearbook 2012, please go to www.cpmgroup.com
Silver supply to pass the billion ounce mark this year--CPM - SILVER NEWS - Mineweb.com | The world's premier mining and mining investment website Mineweb
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