• Gold: 1,265.75 0.82
  • Silver: 19.15 -0.00
  • Euro: 1.313 0.000
  • USDX: 82.963 0.204
  • Oil: 93.28 -2.37

February 26: Gold and Silver Gain Over 1% More

Chris Mullen
|
Tuesday, February 26th
 

Close

Gain/Loss

Gold

$1613.90

+$19.30

Silver

$29.38

+$0.35

XAU

139.70

+1.20%

HUI

369.73

+1.43%

GDM

1084.26

+1.14%

JSE Gold

1944.17

+0.88

USD

81.84

+0.08

Euro

130.60

-0.17

Yen

108.76

+0.16

Oil

$92.63

-$0.48

10-Year

1.879%

-0.016

T-Bond

145.46875

+0.21875

Dow

13900.13

+0.84%

Nasdaq

3129.65

+0.43%

S&P

1496.94

+0.61%

 
 

The Metals:

 

Gold bumped up to $1601.89 in Asia before it fell to see a $10.26 loss at $1584.34 at about 10:15AM EST, but it then shot to as high as $1619.40 in the next hour of trade and ended with a gain of 1.21%. Silver surged to as high as $29.456 and ended with a gain of 1.19%.

 

Euro gold rose to about €1236, platinum gained $14.50 to $1618, and copper gained a few cents to about $3.57.

 

Gold and silver equities rose a little over 1% by midday and remained near that level for the rest of the day.

The Economy:

 

Report

For

Reading

Expected

Previous

Case-Shiller 20-city Index

Dec

6.8%

6.5%

5.4%

FHFA Housing Price Index

Dec

0.6%

-

0.4%

New Home Sales

Jan

437K

383K

378K

Consumer Confidence

Feb

69.0

62.0

58.4

 

“Federal Reserve Chairman Ben Bernanke strongly defended the U.S. central bank's bond-buying stimulus before Congress on Tuesday, easing worries monetary policymakers might be getting cold feet.

 

The Fed chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.

 

Bernanke said Fed policymakers are cognizant of potential risks from their extraordinary support for the economy, including the possibility the public loses confidence in the central bank's ability to unwind its stimulus smoothly or the potentially destabilizing effect of low rates on key markets.”

 

Tomorrow brings Durable Goods Orders and Pending Home Sales. Bernanke also testifies before the Housing Financial Services Committee.

 

The Markets:

 

Charts Courtesy of http://finance.yahoo.com/

 

Oil fell on continued worries about Italy’s inconclusive elections.

 

The U.S. dollar index rose on better than expected economic data.

 

Treasuries held on to early gains after today’s $35 billion 5-year note auction sold at a yield of 0.78% with a bid to cover of 2.85.

 

The Dow, Nasdaq, and S&P rose on strong economic data and dovish Bernanke commentary.

 

Among the big names making news in the market today were Tenet, GM, Macy’s, and JPMorgan Chase.

The Commentary:

 

In his testimony before the Senate this morning, Chairman Bernanke did his level best to assure the markets that the Fed was not about to upset the apple cart anytime soon. Even before he actually began his testimony, the transcript of his speech had been released and that was enough to send market prices all over the place.

I have seen some volatile markets in my day, but the last two days worth of price swings have pretty much been as high or higher than anything I have ever witnessed, particularly in the foreign exchange markets. To see the swings in the Yen, one would think that a Central Bank intervention had taken place. Four point handles in one day -Yikes!

What is happening is that risk trades are being unwound and just as we have previously witnessed during any unwind period, markets that were one way bets, now are seeing huge swings in the opposite directions as hedge fund computer buying and selling is on full display.

I can tell you that the Yen, which nearly everyone on the planet had been short, no matter what cross was being used, has seen a massive, and I do mean MASSIVE short squeeze, much to the consternation of the Japanese monetary authorities I might add. Watching their currency once again become the destination of safe haven plays has got to be downright infuriating to policy makers over there, who have made no small secret that a lower yen plays a major role in their strategy of defeating the DEFLATION giant that has had its heavy hand on their economy for what seems like an eon. If the Yen keeps rallying, look for them to make their displeasure known VERY VOCALLY. The new ABE government is not going to tolerate a strong yen, period!

If you are trying to trade some of these markets, either be content to snatch a few small profits if they come your way, or just get to the sidelines and let the dust settle from all this madness. "TRADE SMALL IF AT ALL", is my motto right now.

I want to add here that Italian CDS's are moving sharply higher today, surpassing even those of Spain for the first time since December 2011. Clearly, the market is becoming increasingly concerned about the developments in that nation since the election returns have become clarified. Trades/investors fear gridlock in the new government as a result of the lack of a clear majority and this is being viewed as negative to the Euro currency. As a result, the one way long bet on the Euro associated with the return of the risk trades, is now being unwound. This is causing some strange price movements in many of the crosses which are not supported fundamentally for the time being.

This brings us to gold. It is seeing some strong safe haven flows today along with the bonds and the yen. Bernanke's comments were pretty much anticipated to be gold friendly and he did not disappoint. It was interesting watching the initial reaction to those comments however. Gold at first seemed to be unimpressed as it moved down off its best levels ahead of his speech and actually went negative for a while. Then it seemed to catch a new wind and ran back up to the $1600 level from which it had initially been repelled earlier in the session. This time however it appeared that some big bids were able to take it through $1600 and off went the buy stops. The market hesitated again near and just below the $1610 level before finally blasting through it as well. This time the momentum from nervous shorts was enough to take the price towards $1620 before it finally ran out of steam and stabilized.

Near term, the ability to recover its "16" handle and hold on to that has got to make the bears disappointed. What needs to be seen however is whether or not the physical market will be willing to chase prices at these higher levels or whether that demand will drop off. It was certainly amazingly strong below $1580 as evidenced by the premiums quoted by John Brimelow's Gold jottings.

So much depends on the market's view toward risk once again. The Central Bankers had to have been quite pleased with their handiwork as they had managed to herd the entire global hedge fund community into leveraging up those RISK TRADES and making one way bets in favor of equities and pretty much out of favor of safe havens. The fact that the US bond market would not break down significantly in the face of this "All's Clear" mentality certainly has to be taken into account however. While one safe haven - gold - was being jettisoned, the bond market was tracking sideways. Yesterday and today that market moved higher with the result that interest rates dropped lower once more.

We will want to closely monitor this relationship between the US bond market and the US equity markets to see what kind of clues we can glean to as where market participants are positioning themselves as they look ahead.

The day is not yet over but while the S&P 500 is in positive territory, it is certainly down off its best levels of the day as I type these comments. If this index closes into negative territory at the end of today's session, LOOK OUT, is all that I can say. What major elixir will Ben have to provide it at this point seeing that he has already administered his potion this morning.

Let's see how things settle out today. Trying to draw too many conclusions before the day's trading is over is not the course of wisdom on a day like this one.

Lastly, to see how risk aversion is back in vogue as concerns the Eurozone, Gold priced in both Euro and British Pound terms is quite strong today and is moving smartly higher. Its biggest gain is in terms of the Euro which has suddenly seemed to have fallen out of favor with the leveraged crowd.

In US Dollar terms, gold has given a short term buy signal on the charts. There is heavy resistance lurking ahead of it beginning at today's high near $1620 and extending to $1630. If there is enough buying in the physical market overnight, there is a chance that another bunch of buy stops sitting just above $1625 could be vulnerable.

I am including a chart of the metal to show the dip in the ADX which indicates that the near term downtrend in the market has been broken. If gold can climb back above $1640, it will have pulled off quite a feat, especially seeing that Goldman Sachs just lowered their 2013 price estimate for the metal.

 

Quite frankly I do not like trading spike bottoms because the risk/reward on the trade can oftentimes be rather discomforting. I much prefer and will prefer in gold, were it to retest the $1600 level to at least see if it can hold that. Markets that show huge losses, followed by huge gains, can suddenly and abruptly turn right back around and show huge losses again. That is the nature of those beasts. More well behaved, or if you will, more orderly markets, are much more to my liking as a trader. My gunslinging days are over as the highs are too often followed by periods of excessive lows and depression. Give me a market that tips its hand a bit more clearly and allows one to at least leave the screen for a few minutes.

The HUI has managed to fill the first and lowest downside gap on its price chart. This index has dropped so sharply and is so oversold that it is well beyond due for a bounce. Let's see how high it can carry. Anything that stops short of 390 is going to be a disappointment. If it is going to give us any protracted strength, that is the least it will need to clear.- Dan Norcini, More at http://www.traderdannorcini.blogspot.com/

 

GATA Posts:

 

 

Gene Arensberg: Market tremors continue as funds flow back into gold

Swiss vault operator wants U.S. gold bugs out

Big changes in gold COT strike Arensberg, Turk, Lundin as bullish

Jeff Nielson: A golden opportunity with miners, Part 2

 

The Statistics:

As of close of business: 2/25/2013

Gold Warehouse Stocks:

10,383,004.460

-204,916.881

Silver Warehouse Stocks:

161,880,037.988

+554,352.605

 

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 

Product name

Total Tonnes

Total Ounces

Total Value

New York Stock Exchange Arca (NYSE Arca) AND Singapore Exchange (SGX) AND Tokyo Stock Exchange (TSE) AND Hong Kong Stock Exchange (HKEx)

SPDR® Gold Shares

1272.848

40,923,329

US$64,889m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra)

Gold Bullion Securities

138.13

4,441,056

US$7,088m

London Stock Exchange (LSE) AND NYSE Euronext Paris AND Borsa Italiana AND Frankfurter Wertpapierbörse (Deutsche Börse - Xetra) AND NYSE Euronext Amsterdam

ETFS Physical Gold

152.66

4,908,200

US$8,004m

Australian Stock Exchange (ASX)

Gold Bullion Securities

11.16

358,789

US$573m

Johannesburg Securities Exchange (JSE)

New Gold Debentures

42.45

1,364,715

US$2,214m

Note: Change in Total Tonnes from yesterday’s data: SPDR subtracted 7.826 tonnes.

 

COMEX Gold Trust (IAU) Total Tonnes in Trust: 215.30: -0.59 change from yesterday’s data.

 

Silver Trust (SLV) Total Tonnes in Trust: 10,602.76: No change from yesterday’s data.

 

The Miners:

 

Entree Gold’s (EGI) pulled permit, Royal Gold’s (RGLD) new board member, Gold Resource’s (GORO) dividend, Kimber’s (KBX) sample results, Comstock’s (LODE) NI 43-101 Technical Report, SilverCrest’s (SVL.V) drill results, and First Majestic’s (AG) fourth quarter results were among the big stories in the gold and silver mining industry making headlines today.

 

WINNERS

1. Allied Nevada

ANV +4.28% $20.46

2. NovaGold

NG +3.99% $4.17

3. Midway

MDW +3.60% $1.15

LOSERS

1. Tanzanian Royalty

TRX -7.88% $3.39

2. Solitario

XPL -4.68% $1.59

3. Revett

RVM -3.54% $1.91

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

Please see Yahoo’s Mining/Metals News Wire for all of today’s mining news.

 

- Chris Mullen, Gold Seeker Report

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Additional Resources for today’s Gold Seeker Report can be found:

© Gold Seeker 2013

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