Soros has sold almost his entire $800 million stake in bullion in the first quarter, well before a commodities slump blamed partly on reports he was liquidating his holdings.

Soros also slashed stakes in gold and silver mining companies during the first quarter. The firm owned 1.4 million shares of Kinross Gold at the end of the quarter, down from 4 million shares three months earlier. Holdings in Novagold Resources dropped to 3.5 million shares from 12.9 million.

Gold ended the first quarter little changed, as the spot gold prices were only $10 higher to end at $1,430 an ounce on March 31, and the SPDR Gold Trust was up 1.3 percent.

In the second quarter, gold hit a record high $1,575.79 an ounce on May 2 fueled by the outlook of low U.S. interest rates.

So far in the second quarter, SPDR Gold Trust’s bullion holdings gained only about 1 percent to 1,229 tonnes by Friday, well below its record high of 1,320.436 tonnes set on June 29 last year.

John Paulson remained invested in Gold, however many followed Soros including Eric Mindich and Paul Touradji, according to 13-F filings with the U.S. Securities and Exchange Commission that provide the best insight into where hedge funds are placing their bets.

What is most interesting is that the mass exit from Gold did little to the price. It would be reasonable to assume the exit of the big names and even bigger amounts of money would have dropped the Gold price by 20-30% however the market has shrugged off the selling indicating strong demand.

Soros, who has been bullish on gold in the past several years, cut his holdings in the SPDR Gold Trust to just $6.9 million by the end of first quarter, compared with $655 million in December, becoming the most high-profile investors to turn his back on one of the market’s best-performing assets.

He also liquidated a 5 million share stake in the iShares Gold Trust , the filings showed. His total holdings in gold-backed ETFs was $774 million as of December.

Gold rose for a tenth consecutive quarter in the three months to March, hitting record highs above $1,400 an ounce, buoyed by political turmoil in the Middle East and North Africa and lingering worries about indebted European countries.

The gains accelerated in April, but peaked at the start of this month, reaching a record $1,575 an ounce on May 2.

Prices have since fallen more than 5 percent amid the biggest commodities slump since late 2008, a move partly triggered by a Wall Street Journal report that Soros’ $28 billion fund was selling precious metals — and fuelling fears other big funds were also seeing a peak.

Eric Mindich, who runs Eton Park Capital Management, nearly halved his stake in the SPDR gold trust to $326 million for the first quarter, a filing showed on Monday.

Mindich’s fund also owned $839 million worth of call options by the end of the first quarter, compared with $1.1 billion worth of put options at the end of the fourth quarter.

Touradji Capital Management, one of the world’s largest commodities-oriented hedge funds run by Paul Touradji, sold 173,000 shares in the SPDR Gold Trust during the quarter. Those shares would be worth about $25 million at current prices.

But John Paulson, who notched up the industry’s biggest ever payout last year, kept his 31.5 million shares, or $4.4 billion stake, in the SPDR fund, remaining the biggest shareholder of the world’s largest gold-backed exchange traded fund for the quarter, according to regulatory filings.

Red’s Weekly Gold, Silver and Crude Oil Report + Recommendations

The Overall Fundamentals for the week ending 16 May 2011

Gold futures have held-up well during the recent commodity sell-off, with some of its Strong performance tied to Gold’s status as a commodity, and a currency alternative.

The safe haven status that Gold holds has dampened some of the volatility seen in the precious metals complex, especially in Silver, which many players see as more speculative in nature.

The USD price to buy Gold on wholesale markets continued to rally Friday morning, rising as high as 1516.00 oz, less than 4% off its all-time high before slipping back.

Silver prices also continued their rebound Friday morning, rising to 36.47 oz, a rise of nearly 12% from yesterday’s 11-wk low, before fading back down towards the 35.00 mark.

The Euro price to buy Gold held steady last week, even as USD Gold moved sharply, trading in a tight range around €34000 kilo (€1055 oz)

The higher Euro Gold price reflects “a renewed focus on Europe’s sovereign fiscal problems IMO.

The price to buy Gold in Pound Sterling (GBP) was £928.42 at Friday morning’s London Fix, a 2% gainer for the week and 1% off its all-time high set on May 3, as the GBP fell against the Euro following better-than-expected GDP growth figures from Germany and France

Crude Oil prices were volatile as important economic data in large economies led the market sentiment.

The front-month contract for WTI Crude Oil price rose to 100.7 in European session as growth in the 17-nation EU exceeded expectations.

Profit-taking then came on, and accelerated as US CPI rose more than the market thought it would. The benchmark contract dipped below 100, intra-day low 98.64, again.

Also, the equivalent Brent Crude contract initially rose to 114.92, but reversed after failing to retake the 115 mark.

The EuroZone’s GDP expanded +0.8% Q/Q in Q-1 Y 2011, higher than consensus of +0.6% and +0.3% in the prior Q.

On annual basis, growth rose +2.5% from +2.2%. The market was anticipating a lighter gain of +2.2%. So, strength in core economies, in particular Germany and France, offset the weak peripherals.

GDP rose +1.5% Q/Q in Germany and +1.0% in France, compared with corresponding forecasts of +0.90% and +0.60%, as exports led. The Strong report fired speculations that the ECB will raise the main refinancing rate in coming months.

The optimism then dampened as rising US inflationary pressures reminded players the negative impacts of high Crude Oil prices,and this action caused some anxiety that the US Fed might unwind its monetary easing measures.

Both the headline and core CPI eased from last month, but rose in annual terms. Headline CPI came in +3.2% Y-Y in April, up from +2.7% in the past month. The market anticipated a modest rise to +3.10%.

The core reading increased +1.3% Y-Y in April, in line with expectations, following a +1.2% growth a month ago.

Just like in prior months, the major source was rising energy and food prices, rising fuel costs are hurting demand.

The International Energy Agency (IEA) said that with gasoline price ‘at 3.70 gal in April, retail prices are now well in the $4+ gal mark that typically triggers a fall in vehicle-miles traveled, and gasoline demand will disappoint this year, rising seasonally but declining on a yearly basis if retail prices remain at their current levels’.

Separately, the University of Michigan Confidence was released, showing a higher-than-expected improvement to 72.4 in May from 69.8 last month.

The Overall Technicals
Gold

The correction in Gold took the shape of ZZ and I now believe now a new Iimpulsive wave (IM) has started suggested the Elliott count will remain valid as far as trading continues above 1462.00, and preferably above 1480.00 areas with 4 hr closing.

A clear break of the 1507.00 mark will drive it towards 1523.00, and a break there will be a positive move. We should all know that the 3rd wave is always the sharpest, and longest, in many cases, compared with other IM waves. So, the Bullish POV in still favor for now.

The general trend over the short term basis is to the Northside targeting 1600.00, the psych mark, as long as areas of 1430.00 remain intact on weekly closings.

Support: 1500.00, 1494.00, 1480.00, 1477.00, 1474.00

Resistance: 1507.00, 1513.00, 1523.00, 1537.00

Recommendation Based on the charts and explanations above is buy Gold around 1505.00 gradually targeting 1537 +. Stay tuned…



Silver

The structure of the 5th wave is not clear yet, but I see silver trading below the 34.80 zones. There are worries about the 5th wave in that it may be a short on after achieving the 1st and 2nd technical targets of the Bearish wave.

There are technical attempts to move South once more in here, but I prefer standing aside until the structure of the 5th wave becomes more clear.

The trading range for now is: Key support at 30.25, and Key resistance at 38.50.

The general trend over short term basis is to the Southside targeting 26.65 as far as areas of 48.50 remain intact on weekly closings.

Support: 34.00, 33.75, 33.30, 33.05, 32.45

Resistance: 34.80, 35.10, 35.65, 35.90, 36.80


Recommendation Based on the charts and explanations above my opinion is to stand aside until a clearer sign appears signaling the next upcoming big move. Stay tuned…

Crude Oil

Crude declined steeply Thursday, and returned Friday to stabilize slightly above 96.60. The Stochastic is biased to the Southside, and accordingly I believe Crude will attempt to move to the Southside again. A daily closing below 96.60 will signal that Crude Oil could move South to test 91.00 at least.

The Major support is at 92.00, and the Major resistance at 102.20.

The short term trend is to the Southside IMO, with steady daily closings below 109.75 targeting 85.40.

Support: 98.00, 97.70, 96.60, 95.05, 94.30

Resistance: 99.40, 99.85, 100.40, 101.05, 101.80

Recommendation Based on the charts and explanations above my opinion is selling crude around 98.80 and take profit in stages at 95.05 and 92.00, and setting a stop loss with daily closing above 100.40 may be appropriate daily. Stay tuned…

China says any attempt to direct MENA region chaos to China will get nowhere

Chinese Foreign Ministry spokeswoman Jiang Yu said Friday that any attempt to direct the Middle East North Africa region chaos to China, and change the development path chosen by the Chinese people will get nowhere.

Jiang made the remarks when asked to respond to US Secretary of State Hillary Clinton’s comments concerning China published Tuesday by the The Atlantic Magazine.

In an interview with the magazine in early April, which focused on the Middle East – North Africa region, Ms. Clinton said China was “worried” and “trying to stop history, which is a fool’s errand.”

“It is inappropriate for anyone to relate or compare China to some west Asian and North African nations facing turmoil,” Jiang said. “And any attempt to direct that turmoil to China, and change the development path chosen by the Chinese people will be futile.”

China stops diesel exports to stem shortage at home

China will suspend diesel exports to ensure domestic supply as demand for the fuel rises due to the ongoing power shortages across the country.

China will suspend diesel exports in the near future, other than to Hong Kong and Macao, China’s top economic planning body said in a notice Friday.

The National Development and Reform Commission (NDRC) also called for increased production of Crude Oil by-products, and ordered dealers not to artificially raise the price of petro-chemicals through hoarding.

The notice came as the country enters its peak period for diesel use on seasonal demand from the agriculture and fishing sectors.

Meanwhile, power shortages have pushed up diesel demand as factories use diesel powered generators to maintain production.

Many factories in Zhejiang Province, one of the country’s major manufacturing bases, installed diesel powered generators after the power shortages in Ys 2003, 2004 and 2005.

The power shortages are not only due to recent rising Coal price, but also a drought in China’s south which has reduced the country’s hydro-power resources.

Experts believe reforming the power pricing mechanism is the best way to resolve the power crisis.

Different from the power crises last decade, China has sufficient installed capacity, but a high percentage of generators are not operating, said Yu Yanshan, deputy head of the general administrative office of the State Electricity Regulatory Commission (SERC).

Power prices are largely fixed but Coal prices fluctuate according to the market so power companies face profit losses when Coal prices rise, Yu said.

Both private and state owned plants want to make money and if they can not, they are reluctant to produce, he said.

Raising power prices will help alleviate the shortages, but if this can not be done because of inflation concerns, then more measures could be made to control coal prices, Yu said.

China Petrochemical Corp (Sinopec Group), the country’s biggest Crude Oil refiner by capacity, said on April 19 that it had suspended exports of Crude Oil products to guarantee domestic supply.

The NDRC has urged domestic Crude Oil refiners to increase imports of Chemical Light Oil (CLO), used to produce Oil products.

China’s Oil products imports declined year on year 5.57% to 3.22M tons in April, while the total imports in the 1st 4 months hit 14.25M tons, up 18.3% Y-Y, according to the General Administration of Customs.

A total of 2.05M tons of Oil products were sold overseas in April, less than 2.57M tons a year earlier and down about 20.5% over last month. The exports came to 8.63M tons in the 1st 4 months of Y 2011, down 9.2% Y-Y.

Obama wants US Crude Oil production to speed up

The US President, facing continued public unhappiness over gasoline prices, is directing his administration to speed up US Crude Oil production by extending existing leases in the Gulf of Mexico, Alaska’s coast and holding more frequent lease sales in a federal petroleum reserve in Alaska.

Mr. Obama said Saturday that the measures “make good sense” and will help reduce US consumption of imported Crude Oil in the long term.

However, he acknowledged that the new measures will not help immediately to bring down gasoline prices at the pump now over US$4 a gal in much of the Nation.

The Oil industry praised President Obama’s move as a 1st step but said much more was needed to boost Crude Oil production as part of a broader energy strategy.

“If given access to Key shale reserves, if we can get the Oil sands pipeline built that will allow us to import more Crude from Canadian Oil Sands, and if we can access areas of the US that are currently “off limits”, our industry can create over a million new jobs and generate over US$194B in revenue,” said Erik Milito, Director of the American Petroleum Institute.

President Obama’s announcement followed passage in the Republican-controlled House of 3 bills, including 2 this week, that will expand and speed up offshore Oil and Gas drilling.

Republicans say the bills are aimed at easing gasoline costs, but they also acknowledge that will not be immediate.

Previously the Obama White House announced its opposition to all 3 bills saying the measures would undercut safety reviews and open environmentally sensitive areas to new drilling. But Obama is adopting some of the bills’ provisions.

Answering the call of Republicans and Democrats from Gulf Coast states, Obama said in his weekly radio and Internet address Saturday that he would extend all Gulf leases that were affected by a temporary moratorium on drilling imposed after last year’s BP Oil spill. That would give companies additional time to begin drilling.

The administration has been granting extensions case by case, but senior administration officials said the Interior Department would institute a blanket 1 yr extension.

In the weekly Republican message, Alabama Rep. Martha Roby said it’s time for Washington to get serious about the challenges facing the country, including straightening out its finances and tackling the gas price issue. She praised the House for passing measures to expand domestic energy production “because when we’re talking about energy, we’re talking about jobs.”

“The greatest threat to our economy, job creation, and the future of our children is to do nothing,” Roby said. “We have to act. It is what we were sent to Washington to do.”