Entries Tagged as 'Precious Metals'

NEW: Money Metals Issues 2016 Gold/Silver Forecast

Looking Ahead to 2016

NEW: Money Metals Issues 2016 Gold/Silver Forecast

By Clint Siegner, Money Metals Exchange

Looking Ahead to 2016

Forecasting today’s volatile, high-frequency machine driven and manipulated futures markets using fundamental analysis is futile, as a great many precious metals bulls will attest. To complicate matters, an obsession with Fed policy dominates all markets. Officials at the Federal Reserve are often less than forthcoming and are just as bumbling as the Soviet bureaucrats when it comes to centrally planning our economy.

Nevertheless, beneath all of the artificial influences and all of the leveraged paper, the gears of the physical market for gold and silver still turn. We can be sure prices will reflect actual supply and demand for physical metals at some point, even if we do not know when. With that in mind, here is a look ahead to 2016…

Supply Destruction

Silver production peaked in 2014, while gold production is expected to peak in 2015. Falling prices make an increasing number of mining projects uneconomic. Lower fuel costs are helping, but the average all-in cost of production for silver is estimated at around $17/oz and for gold at around $1,150/oz.

Today precious metals sell for well below than their all-in production cost. Primary producers of gold and silver will deliver less to market in 2016 given that a great many miners currently take a loss on every ounce they sell.

But there is another factor likely to decimate supply in 2016. Base metal prices, including for copper, fell dramatically this year, and the outlook is not too bright for the year ahead. The Chinese economy, the world’s largest market for commodities, is slowing. Brazil is in real trouble and economists are worrying more about the possibility of recession around the world.

Looking Ahead to 2016

Slumping demand for base metals will impact supply of gold and silver because huge quantities of these precious metals are produced as a byproduct of mining for base metals such as copper and zinc. The reorganization of Anglo-American PLC, one of the world’s largest mining conglomerates, earlier this month highlights just how difficult the current environment is for producers – regardless of which metal they are mining.

Gold and silver prices have been in decline since 2011, but it is only during the past year that average prices will finish well below even the most conservative estimates of production costs. The recent carnage in base metals will add significantly to constraints on precious metals supply in the months ahead.

Physical Demand Rising

Investment demand for physical bullion is perhaps the biggest story in precious metals for 2015. Mints and refiners spent much of the 2nd half of the year unable to keep up. Investors had to contend with higher premiums and delivery delays, finally getting some relief now as the year draws to a close.

Only time will tell if 2016 can top this year’s record. We look set to enter the New Year in much the same way we entered 2015 – with steady, but far from overwhelming buying activity for fabricated coins, rounds, and bars. Investors loaded up in recent months and now await the next catalyst.

Looking Ahead to 2016

It may be price action. Lower spot prices over the past 4 years have been a big driver of demand. And prices moving consistently higher will also inspire demand from newcomers (as we saw during the last bull cycle between 2009 – 2011). Only flat or range-bound prices typically lead to investor apathy.

As always, geopolitical events will play a big part in whether or not metals benefit from safe-have buying. In 2016, investors will be watching the ongoing saga surrounding Greece and other hopelessly indebted European nations. The U.S. is at odds with Russia in the Middle East and in Ukraine.

And recent tremors in high-yield debt markets may be advance warning that extraordinary leverage is about to rock financial markets once again. These stories, and others no one can predict, have potential to generate a flight to safety in the coming year.

Industrial demand for gold and silver may turn out to be tepid for 2016. This is less of a factor in gold markets than for silver, where manufacturers consume a good portion of what is produced annually. As mentioned above, some economists worry about the possibility of recession in the coming year. Any slump will weigh on demand for items such as jewelry and other goods. However, a lot of industrial demand comes from high-growth sectors which have proven resilient during past recessions. Electronic, solar, and healthcare related applications for silver come to mind.

Some 2016 Wildcards

Delivery defaults are possible in the futures markets. The explosion of leverage in COMEX gold futures bears watching in 2016. The number of registered bars available for delivery in exchange vaults relative to the number of paper ounces being traded shrunk dramatically to record lows in recent weeks. It’s a trend that simply cannot go on very much longer – not at the current pace of decline.

Looking Ahead to 2016

Exchange participants may convert more gold stocks from “eligible” to the “registered” category. That’s possible, though there is good reason to wonder how much physical metal the holders want to part with at current prices. The precipitous drop in registered stocks may well be signaling they are more than a little reluctant to part with it.

If holders of silver and gold futures contracts start standing for actual delivery of more metal than the COMEX has available to deliver, or should traders even begin to seriously entertain that possibility, we’ll see some fireworks.

Leading Republican candidates are making noises about sound money. Donald Trump, Ted Cruz, Rand Paul, and Ben Carson all have questioned the wisdom of Fed policy. Republicans everywhere are critical of federal debt and deficits and have been for decades now. Given the Party’s atrocious record of turning the talk into actual policy, we should remain skeptical that any elected Republican leader will actually achieve reform.

But there can be no doubt that the sound money issue is gaining traction. We can’t rule out someone in the crowded field of candidates tapping into the popular outrage over out-of-control borrowing and spending. Should ideas like reinstituting gold backing for the dollar gain serious momentum in the campaign, the metals markets could perk up.

 

seigner

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

Top 5 Precious Metals to Invest In

Gold in Bullion and Coins

Gold

Following the recession of 2008, investors have found a better way to protect their investment by pouring their hard earned money into precious metals. Here, we’ll be discussing the Top 5 Precious Metals to Invest In worldwide.
Gold
Over the last decade, we’ve witnessed a descending trend in gold prices. However, the fact that gold outlays better than other types of investment is because of its trustworthiness, as it is not as prone to fluctuating prices. The factors that are responsible for its prices are the US dollar value, supply and demand, and interest rates.
The most common uses of gold are for investment, electronics, dental treatments, and the obvious one, jewelry.
Silver
Investing in silver is a reliable way of making sure that you have a stable capital investment. It’s a much better way of preserving assets regardless of the position the financial system is in and it is particularly well suited for holding in tough economic times.
This passing year, 54% of the total silver demand was for industrial uses, which ranged from automobile industries to electronics. Another factor that affected demand for silver was the solar explosion in Japan. China was reported to have imported most of the world’s silver last year, about 1,154 tons.
The most common uses for silver are electronic devices, water filtration, Silver Oxide Batteries, piping, and solar panels.
Platinum
Platinum is one of the world’s scarcest metals. Platinum provisions are concentrated to the region of South Africa, which results in about 80% of the total provisions. Meanwhile, Russia has about 11%, and North America has about 6%. This metal holds high significance as a manufacturing material; its prices are however, fairly unpredictable due to limited suppliers. For this very reason, investors find it an attention grabbing investment.
The value of platinum is about twice of that of gold, which fluctuates according to the supply and demand. In harsh economic times, the value decreases due to fall in demand, and has been known to decline even below the price of gold. To give you a fair idea, the high and low of platinum prices for the year 2014 were $1,178 and $1,520.
Palladium
Palladium is a metal that is in the same group as platinum. In addition to the supply and demand factors it shares with platinum, palladium is affected by the following three factors; the crises in Ukraine, vigorous venture demand, and the vehicle industry. 40% of the palladium is mined in South Africa, while Russia produces about 44%, and the rest is produced by Canada and US based mines.
Rhodium
Up until a couple of years ago, rhodium was the most posh metal around, with the price of an ounce touching $10,000. Not only is it a 100 times rarer than gold, but apart from that, it is imperative for use in the automotive industry, as its application as a catalytic converter is unparalleled.
Nevertheless, the trio of platinum, palladium, and silver are the most in demand in the current times, with the demand being driven by industrial needs rather than being used as a safety investment. Continued manufacturing in industries will also only improve their appeal in the upcoming years.

Mover Mike Hit 2,000,000

After an incredible June, Mover Mike hit 2,000,000 page views. I have been blogging since 2004 and it is nice to see that more people are finding this blog. Sometimes, I have considered quitting, thinking why bother, no one reads me. However, conservative fiscally, Libertarian socially, this blog joins many others who don’t like the path the U.S. is on.

No longer can we discuss things rationally and heatedly.  Now it seems the play book says to ignore the message, savage the messenger. We are seeing that currently with Trump and we read that Hillary hasn’t answered the press questions in two weeks. AND…more and more people are considering leaving the country.

Mexico”sends” their unemployed to the U.S.. How long will 93,000,000 unemployed and under employed wait to move south? How long will the drought stricken  in the south west wait to move? What happens when the U.S. becomes like Greece and can’t feed the 43,000,000 on EBT?

Stay tuned, dear reader. I hope to cover it and provide some answers. Thanks for reading Mover Mike

Why Gold?

fed_spending

From Hebba Alternative Investments:

File this “Closing the Gap” graph under why you own gold.  Why is that?  Well notice how our defict reduction has pretty much been related to increasing revenues – spending hasnt fallen at all.  If stock markets start to fall, then revenues will fall and the budget gap will increase again – we havent done anything structurally about government spending in any way, shape, or form.

This Is What Gold Does In a Currency Crisis

by John Rubino on December 16, 2014

To say that gold is in a bear market is to misunderstand both gold and markets. Gold isn’t an investment that goes up and down. It is money in the most basic store-of-value sense. Most of the time it just sits there, and when its price changes in local currency terms that says more about the local currency than about gold.

But when currencies collapse, gold shines.

Consider the above from the point of view of a typical Russian. The ruble is tanking (no need to understand why — all fiat currencies go this way eventually and the proximate cause is almost irrelevant). Russians who trusted their government and kept their savings in, say, a bank account, are losing their shirts. But those who own boring, doesn’t-pay-interest, in-a-bear-market gold have seen their capital appreciate in local currency terms by about 60 percent in just the past month. They’re not “making money,” but they are preserving wealth.

Russian gold price Dec 2014

This is how it has gone always and everywhere when governments have destroyed their currencies. In the Roman Empire, revolutionary France, revolutionary America, most of Latin America in the 20th century, and now big parts of the developing world, local currencies evaporate but gold just sits there, buying the same amount of stuff as ever, impervious to the games governments play.

It won’t be long before this chart is replicated in a whole lot of other places. But by then it will be too late to prepare. The gold will be gone and those who trusted their governments will have to make do with promises.


Gold Price Charts Widgets

It all started with an innocent email from someone I follow on Linkedin suggesting I take a look at a gold widget. It said, “Please find below our gold spot price widgets. Updated every minute and available in 119 currencies, they will allow your visitors to precisely monitor the evolution of the gold price.” What followed was an interactive gold chart going back 10 years. The chart shows strong support at $1,200

Gold in Bullion and Coins

Gold

I then went to Market Club to see latest pricing of gold. Hmmm $1222! I noticed that Silver was $17.75. The ratio between gold and silver ranges from 15 to 85. Quickly dividing $1222 by $17.75 yielded 68.81. I Googled gold/silver ratio and found Gold Silver website showing the ratio in various time periods:

Gold Silver Ratio History Charts

30 Day gold silver ratio 5 Year gold silver ratio
60 Day gold silver ratio 10 Year gold silver ratio
6 Month gold silver ratio 20 Year gold silver ratio
1 Year gold silver ratio 36 Year gold silver ratio
2 Year gold silver ratio

While the ratio is very high right now, it is still shy of 85, but it sure looks like something to watch closely. Suppose you are bullish on gold and think price could go to $2,000 per ounce. From this price that is a 64% increase. If the ratio stays the same between gold and silver at 68.81, silver would sell at $29. What if the ratio declines to qa more reasonable level. based on the charts a more reasonable level would be 45. If gold went to $2,000 45 times the price of silver, silver would sell at $44.44, a 150% increase.

That is exciting to me!

U.S. Military Reliant On Russian Rocket Engines

“The Air Force said it has begun looking for alternatives to the RD-180 rocket engines for its Evolved Expendable Launch Vehicle program — the fourth largest line item in the U.S. defense budget — now that Russia has threatened to cut off the technology in its tit-for-tat struggle with the U.S.

“Lawmakers and national security analysts said they were aghast that the military allowed itself to become so dependent on Russian military technology during an era of uneasy relations.

“What were we thinking? It’s clear now that relying on Russia for rocket engines was a policy based on hope, not good judgment,” said Michael V. Hayden, a four-star Air Force general who headed the National Security Agency and the Central Intelligence Agency before his retirement in 2009.”

Rocket Engines are not our only vulnerability. Our semiconductors are made overseas and rare earths primarily come from China.


Lakeview Earth Quakes

Lakeview earthquake activity

Lakeview earthquake activity

There has been a swarm of quakes 65 miles from Lakeview, OR, centered on the extreme north west corner of Nevada between the Dheldon Study area and the Massacre Rim Study area. So far in the last 7 days there have been a total of 69 earthquakes and in the last 30 days, 16 quakes of 2.5 magnitude or greater have occurred.  The largest occurred today and measured a 3.2.

A 1987 Mineral Land Assessment report found no precious minerals, but didhave this to say about the geology:

“No surface manifestations of the postulated caldera (U.S. Geological Survey and U.S. Bureau of Mines, 1984) were found in the study area, and possible caldera-associated resources could not be evaluated. Elsewhere in the Basin and Range, calderas are associated with disseminated gold, mercury, and uranium epithermal mineralization (Rytuba, 1981). Exploration for undiscovered subsurface resources would be expensive, and it is unlikely that disseminated deposits could be profitably mined by underground methods.” (emphasis added)

The word caldera caught my eye. Is this area just restless or do we have volcano stirrings?

Inflation: Higher And Higher We Go

Economics / Inflation
Jul 08, 2014 – 10:48 AM GMT
By: Darryl_R_Schoon

Economics
In the end game, truth is found only at the margins

In Time of the Vulture: How to Survive the Crisis and Prosper in the Process(2007, 2012 3rd edition), I wrote about inflation and its root cause:

In a credit-money system, over time the constant infusion of increasing amounts of credit will inevitably lead to higher and higher rates of inflation. Because common knowledge of this fact is not in the best interests of those benefiting from the system, it is hidden away. And in the US, hiding the real rate of inflation is done the old-fashioned way, by lying about it.

Prior to the 1990s, the cost of a basket of standard goods and services was compiled. This was called the consumer price index, the CPI, and any rate of increase was considered to be the actual rate of inflation. However, in the early 1990s, this began to change.

Perhaps the old method of tracking inflation seemed outdated or quaint, much like the Geneva Accords [which outlawed torture], to Alan Greenspan and Michael Boskin, the chief economist under President Bush Sr., and a newer way of calculating the CPI was needed.

What was needed was a way that would show a slower rate of increase rather than the actual rate, a way that would save the US government money by lowering social security payments and Medicare benefits tied to the CPI, a way that would convey to global investors that all was well in America, that inflation was under control.

The government keeps changing the rules

Changing the way inflation is calculated

Irrespective of what the newly reconstituted CPI says about inflation, its effects cannot be hidden. Remember Motel 6? A low cost motel chain started in Santa Barbara, California in 1962 whose advertised price was a part of its name, $6.00 per night for accommodations.

I recently checked the prices Motel 6 charges, forty-four years later. The current room rates of Motel 6 at three different locations in Santa Barbara are:

1962 2006

Motel 6 location #1 $6.00 $105.99 an increase of 1,767 %

Motel 6 location #2 $6.00 $82.99 an increase of 1,383 %

Motel 6 location #3 $6.00 $61.99 an increase of 1,033 %

Home prices are also higher as advertised in Morris County New Jersey.

1966 2006

Three bedroom home $15,900.00 $399,900.00 an increase of 2,515 %

Four bedroom home $19,000.00 $624,900.00 an increase of 3,289 %

Marijuana also shows a similar increase in price since the 1960s.

1966 2006

One lid of pot $10.00 $250.00 an increase of 2,500 %

The cost of attending college at the University of Minnesota also rose.

1968 2004

Cost per unit $8.25 $183.00 an increase of 2,218 %

THE DIFFERENCE IN PRICES

BETWEEN THEN AND NOW

IS DUE TO INFLATION

INFLATION IS THE INCREASING COST

OF GOODS AND SERVICES CAUSED

BY THE CONSTANTLY DECLINING

VALUE OF PAPER MONEY OVER TIME

THE MORE MONEY YOU PRINT

THE LESS IT’S WORTH

ECONOMICS – SHILL OR SCIENCE

Gold/Oil Ratio Redux

I continue to monitor the Gold/Oil ratio (GOR). The last time I wrote about it was December, 2008. At that time Gold closed that day at $837 and Oil closed at $42.36. That is a GOR of 19.75.

Here’s the chart at that time:

Gold/Oil Ratio chart

20-Year History of GOR

Notice there were two peaks, a three step drop, a double bottom and then a BIG rally. We are experiencing the same thing again.

Gold/Oil Ratio from 2011

Gold/Oil Ratio from 2011

We don’t see the first peak in 2011, then we have a three step drop, a double bottom and then… I think we may be setting up for another rally in Gold (and Silver). Oil is now at $106, Gold is $1,317. At a GOR of 20, assuming Oil stays the same, Gold could be trading at $2,120. With all the chaos in the world, suppose Oil goes to $150. Gold could then be $3,000. Silver is currently $21. At $2,120 Gold Silver could be $141; At $3,000, Silver could be $200.

No guarantees, of course.

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