'Silver is on the way to break $50/oz in 2012'

HAI: Where do you see the strongest industrial demand for silver coming from?

Morgan:  Solar is No. 1 right now and is growing rapidly, almost exponentially. It will level off probably by 2014.

HAI: Where do you think  Silver  is headed in terms of price this year?

Morgan:  I’m on record saying $60 by the end of the year. And it will probably take all year to get there. The key is to get through that $50 psychological barrier. It’s probably going to take a couple of tries. And I do believe at some point it will. Once it does that, you could see silver go up from $50 to $60 in a matter of two weeks. That’s the kind of move silver is capable of making.

HAI: Let’s talk a little bit about miners. Have the silver miners been as undervalued as some of theGold  miners?


Morgan:  It depends on a case-by-case basis, but you're right. The silver mining industry has got the biggest premium in the sector. A good silver miner producing silver at the top of the market in the last bull market sold at 50-to-1 P/E [price-earnings ratio], whereas gold miners were selling about at 35-to-1 P/E. So silver carries a premium. And you see that throughout the sector. There are some very undervalued mining stocks, including some silver stocks in this juncture.

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Central bank buying to be bulwark of gold rally

According to bank, a World Gold Council report estimating that central-bank gold purchases may have hit 450 metric tons in 2011. This means the official sector outstripped gold exchange-traded-fund demand of 155 tons last year by almost threefold.

“The outlook for central-bank gold purchases remains positive for this year, based on the likelihood that emerging-markets central banks will continue to diversify away from the USD,” HSBC said.

“If the U.S. continues to run substantial trade and current account deficits, then according to economic theory, the USD reserves of those countries that the U.S. runs a trade deficit with will rise. Since USD foreign-exchange holdings are already at record levels in many countries, we believe these nations will seek to increase  Goldreserves, in a bid to diversify their USD-laden reserves,” HSBC concluded.

There are two types of Gold: James Turk

NEW YORK (Commodity Online):  Yesterday I had the chance to share an outstanding conversation and interview with James Turk, founder and chairman of GoldMoney.com.

James is one of the leading voices of the global  Goldcommunity, and his background and network information is second to none. The topics we discussed in the interview ranged from where GoldMoney.com sources it’s bullion, to the Middle Eastern & Asian perceptions of gold, the coming “PAGE” gold exchange, plus James’ expectations for gold, silver, and mining shares in 2012.

Early on in the discussion, I asked James to comment on the ongoing  misunderstandings of the “lack of supply” in the metals markets. James said, “If you’re really looking for large amounts of metal, it’s very difficult and it’s not something that can be filled overnight[the order]…it’s something that’s going to take weeks perhaps to fill depending on the size of the order.”

When asked about the Asian & Middle Eastern perceptions of gold  James said, “In Vietnam for example if you’re buying land, you don’t pay for it in terms of the local currency, you pay for it in terms of some weight of gold that you agree on with the seller of the piece of property.” He continued by adding, “Asians are buying high carat [gold] jewelry for the same reason that we buy coins and bars—we buy it because it’s money and it’s a form of savings. Asians and Middle Easterners tend to prefer to hold their fabricated gold as a form of high carat jewelry rather than in terms of a bar or a coin…”

“I did live in Thailand in years past, I’ve also lived in the Middle East, and when you go to a “souq” [marketplace] and pick out a nice form of gold jewelry, you don’t pay for it like you might in the west. They take that jewelry, put it on a scale and mark it up by 7% and you pay for it that way. The markup you’re paying for that jewelry is just like the markup you’re paying when you buy a coin or small bar—it’s the fabrication cost.”

In regards to the pending PAGE(Pan Asia Gold Exchange) launch in H1 2012, James said, “If it’s launched the way they [the Chinese] say they’re going to launch it, and according to the mechanisms and systems they say they’re going to introduce through it, I think it will have a profound impact [on the price of gold]. The reason is that the exchange is very close to physical metal…There are two types of gold–there’s physical  Gold  and there’s paper gold, and the closer you are to physical the higher the price is.  That’s why for example the Sprott Physical  Silver  Trust is trading at a 30% premium to the Comex price–the reason is everyone knows the Comex price is paper, and that there’s really physical silver in the Sprott Physical Trust.  The PAGE exchange will probably have a similar type of impact…It will help make people understand there really are two different markets for gold–a paper market and a physical market.”

On the value of the precious metals and expectations for 2012  James commented, “With regard to gold and silver themselves, I think we’ve seen the low for the year.  I think we’re going to clear $2,000oz. on gold before too long and I think $100 silver is quite reasonable.  Something over $2,000oz. this year seems likely, and something over $50oz. perhaps as high as $100 per oz. on silver seems to me the most reasonable course...The mining stocks are still on the runway [ready for takeoff]. The runway is this trading range they’ve been in for the last couple years now…Eventually they’re going to break out of these trading ranges to the upside, and they’re going to take off. Hopefully it’s going to be the first quarter of this year because I’m expecting much higher prices on both gold and silver as we work our way to the end of the first quarter.”

James concluded by saying, “The key point Tekoa is that gold, silver, and the mining stocks are all undervalued assets, and you rarely go wrong when buying undervalued assets–but sometimes it requires a lot of patience.”


Source:  bullmarketthinking 

Now gold looking bullish for first half of 2012

Gold touches six week high as technicals turning more bullish

By Ben Traynor
The U.S. dollar cost to buy  Gold  hit a six-week high of $1,677 an ounce Monday morning in London, as stock markets, commodities and the euro all pushed higher and U.S. Treasury bond prices dipped.

" Near term technical have turned more bullish [for gold]," says the latest technical analysis from Scotia Mocatta, though it sees " psychological resistance looming at $1,700."

The price of buying gold in euros however fell to €41,375 (€1,287 per ounce), down slightly on Friday's close, as European finance ministers met to discuss Greek debt and a proposal to relax banking rules.

The difference between long contracts to buy gold and short contracts held by noncommercial gold futures and options traders on New York's Comex exchange, the so-called speculative net long, rose for the second week running in the week ended last Tuesday, according to the latest data from the Commodity Futures Trading Commission.

There was no change last week however in the volume of gold held to back shares in the SPDR Gold Trust (ticker: GLD), the world's largest gold ETF.

Silver meantime hit $32.82 per ounce Monday morning–1.8% above Friday's close.

" Growing investor confidence is evident in [silver] ETF positioning," reports Standard Bank commodities strategist Marc Ground this morning, citing ETF purchases of 341.8 tonnes in the past week.

One London broker reported Friday that the Sprott Physical  Silver  Trust (ticker: PSLV) bought around 311 tonnes of silver last week.

Shares in New York-listed PSLV meantime gapped lower at the start of Wednesday morning's trade, opening 9.4% down on the previous day's close, a result of " the instantaneous premium evaporation in PSLV," says Gene Arensberg of GotGoldReport, which had previously warned its readers that the shares' premium to PSLV's net asset value could disappear " at the drop of a hat."

" Ouch for the faithful PSLV buyers," says Arensberg, " and shame upon the managers of PSLV for allowing the premium to get so out of whack to the upside."

Eurozone finance ministers meantime met in Brussels on Monday, where they were expected to discuss the terms of Greek debt restructuring, with negotiations in Athens over recent days having failed to produce a deal.

" I remain quite hopeful [of reaching agreement]," Charles Dallara, managing director of the Institute of International Finance, which is negotiating on behalf of banks that hold Greek debt, said Sunday.

The IIF made an offer on Friday to accept voluntary private sector involvement that would amount to losses on Greek bonds of around 65–70%, according to press reports. Dallara described it as " the maximum offer consistent with a voluntary PSI deal."

A sticking point is the size of the coupon on new bonds that will be swapped for existing ones. Both sides were thought to be close to agreeing an annual rate of between 4% and 4.5%, newswire Bloomberg reported.

Germany and the International Monetary Fund, however, want to see this cut to 3%, according to the New York Times, citing officials involved in the talks.

" I believe that the private sector can accept a lower coupon than the 4% average, but the question then is: will the PSI still be on a voluntary basis?" one senior Greek banker told newswire Reuters.

Any deal that is not voluntary risks triggering payments on credit default swaps, which payout in the event of default. Failure to agree debt restructuring meanwhile also risks jeopardizing Greece's second bailout without which it will be unable to pay €14.5 billion of maturing bonds on March 20.

Also at today's Brussels meeting, German finance minister Wolfgang Schaeuble, along with his French opposite number Francois Baroin, will call for relaxation of banking rules, according to the Financial Times.

The pair will ask for elements of Basel III—the regulations on how much capital banks must hold, due to come into force in 2015—to be loosened for banks that own insurance companies, such as French banks Societe Generale and Credit Agricole. They also propose a three-year delay for the deadline on disclosing leverage ratios, in contrast to UK regulators, who have called for disclosure ahead of schedule.

Baroin meantime has confirmed that France's proposed financial transaction tax—one of the issues that led to British Prime Minister David Cameron walking out of European Union talks in December—will not apply to government bonds.

The U.S. Federal Reserve meantime could make the historic move of announcing a specific inflation target when it gives its interest rate decision on Wednesday, Reuters reports.

Also in the US, Newt Gingrich, who last week said the United States should consider returning to theGold  standard, won South Carolina's Republican presidential primary on Saturday. One of his opponents, Mitt Romney, has subsequently bowed to calls to release his tax returns.

China has seen a " New Year's rush" to buy gold to mark the Year of the Dragon, which begins today, the FT reports.

" Some customers just walk in and buy a bunch of 100g gold bars all at once," it quotes one manager at Chines bank ICBC.

" People like to give them away. . .companies come in too to buy gold bars for presents."

ICBC, the world's largest bank by stock market cap, announced last week that 2.33 million Chinese citizens use its gold accumulation program, which currently holds 22 tonnes of gold.



Source:  BullionVault