Gold Prices Get Boost From China

Gold prices are rising today despite the strong dollar mostly due to strong Chinese imports of gold which during the last quarter of the last year , China imported a 103 tons of gold in the month of November 2011 alone , it was all in anticipation of the Chinese new year which starts next week

歐銀死抱資金 加劇歐債危機

經濟日報專訊】歐洲央行隔夜存款額昨再創新高，反映歐洲銀行對銀行體系信心奇缺，寧蝕息亦只願將錢放在央行，不買國債或向同業與實體經濟放貸。歐銀還債高峰期已臨，歐央若未能盡快提振銀行體系信心，恐衝擊金融市場與經濟。

銀行融資難 更要保資本

歐洲央行去年底以年息一厘的極低息，豪擲近四千九百億歐元貸款予歐洲銀行三年，即變相以貨幣量化寬鬆手段，冀紓解銀行資金短絀，並谷銀行為賺息差， 用資金掃歐豬國債或向實體經濟放貸。但事與願違，歐央隔夜存款額昨高逾四千八百億歐元，顯示銀行將從歐央貸來資金，寧願蝕四分三厘年息，大舉存回歐央。歐 洲銀行甘願蝕息，實屬理智決定，底因有三：

其一，銀行信不過交易對手。歐債惡火續燒，令銀行深怕交易的對手銀行會受累周轉困難，甚或倒閉，令貸款成為危害自身的毒債，故死抱資金不肯拆借，此卻加劇信貸緊縮問題。

其二，應付還債壓力。歐銀今年首季有數千億計歐元債務到期償還，年中又要滿足巴塞爾Ⅲ資本充足率，及歐盟提高資本比率規定，更擔心資本不足會被評級機構降級，淪為下一間淪陷銀行，故融資需求空前巨大。

其三，資金缺口巨大，但缺乏集資能力。歐債危機衝擊下，一方面是大批存款從歐豬國銀行外逃，另一方面投資者畏歐銀如蛇蠍，不願投資，例如意大利裕信銀行日前須以股價四成三的大折讓，才能籌得資金。

歐洲銀行現四面楚歌，自然現金為王，死抱手中資金，心中才能不慌，故歐央千辛萬苦放出巨資，銀行轉身卻存回歐央。

此情況類似美國聯儲局○八年底以量寬手段，大購銀行手上資產，冀恢復銀行借貸能力，但銀行信心不足，依然惜貸，如美銀及摩通等在○九年首季放貸額按年大減六成一，直到聯儲局續力推量寬，銀行水浸日甚，才逐漸回復信心，釋出資金。

歐央要放水 更要振信心

歐洲銀行還債高峰期已臨近，若有銀行無力還債，勢引起歐洲金融體系大震盪。危機當前，關鍵是歐央既要按計劃續推三年期再融資操作（LTRO），向歐 銀大開金庫之門外，更要紓緩歐債問題，減低銀行虧損，並提振銀行信心，紓緩資金緊張，否則歐洲一旦出現嚴重信貸緊縮，歐洲以至環球金融與經濟將在劫難逃。

Eric Sprott: "Who is not Getting the Silver?"

Let's have a look at the supply side...

銀幣真與假

The arrows show the discrepancies. The lower arrow shows a "V" shaped vein which is missing on the fake and the upper arrow shows a vein going out to the edge of the leaf which is missing on the fake. The Number 1 has a different font on the fake. There's obviously other missing and incorrect leaf veins on the fake also but these 2 were pretty obvious.

Silver Price Ready to Explode

 

www.moneymorning.com.au/

In the last eight years the silver price has increased close to five-fold, from US$6 / ounce to US$29 / ounce.
It hasn’t been an easy ride for investors.
The price crashes intermittently when the trade gets overcrowded. With just $50 billion of silver bullion above ground, it is a very small market and gets crowded easily. The Silver price has had four major crashes in the last ten years but has still increased five-fold.

Source: Goldprice

In the first half of 2004 it fell by 36%.
Then during the first half of 2006 the silver price fell 38%.
In 2008 it fell for most of the year with the peak to trough fall a colossal 61%.
Then in 2011, from its April peak to its low point in late December, silver lost 48% in price.
But between these savage dips, silver has surged.
The net result is, if you invested US$10,000 in silver at the start of 2004, it would now be worth US$48,309.
Last year left a bad taste in the mouth for many silver investors. The 48% correction was brutal. And now there’s a lot of negative sentiment around silver.

But – believe it or not – when negative sentiment builds to this point it is often the best time to invest. As Warren Buffet says, “be greedy when others are fearful and fearful when others are greedy.”
There are also some clear signs this latest correction is now finished.
The main sign comes from the silver futures market.

It is now cheaper to buy a silver futures contract than real, physical silver. Silver rallied more than 60% the last time we saw this happen towards the end of 2010. As I write this, physical silver is US$28.98 / ounce. A silver futures contract is $28.93 / ounce.

This 5-cent difference may sound like small bickies but it is very important. Futures contracts are usually higher than the price of the commodity. Not so much as a price predictor but more to reflect the cost of storing the commodity and the opportunity cost of the capital. 

When the futures price dips below the commodity price like this, even by just 0.2%, it is a clear signal to expect higher prices. The market calls this ‘backwardation’. 

The silver market went into backwardation a few weeks ago on 28 December 2011. The next day, silver started a three-day bounce that increased the silver price by 12%. This included silver’s biggest one-day move in over three years – a 6.6% jump.

Backwardation tends to happen when there is a shortage of a commodity. The result is a much higher commodity price, which encourages people to sell. Backwardation was in play during the last silver rally that drove the price from $25 / ounce to its peak of $49.50 / ounce.

This is a very exciting development for silver investors. It’s also good to put the silver market in some historical context to see what the next few months could bring.

Like gold, silver tends to set its low point for the year in the first six weeks of the year.
In six of the last 10 years, the low price for the year was set by 8 February.
With a significant correction behind us, and backwardation now in play, it’s easy to imagine we may see the 2012 low point for the silver price very soon. That’s if we haven’t seen it already.
Compared to its recent precedents, the 48% correction in 2011 was bigger than those in 2004 and 2006 and was only smaller than the 61% fall we saw in the GFC of 2008.

What would happen if silver fell further and matched the drop we saw in the GFC?
We would see it down at $19.50/ounce. It’s hard to imagine given the current set up, but anything can happen with silver. I’m a buyer of silver at current prices. But if silver fell this far I would buy even more! The silver price has more than tripled since its GFC drop.

Since 2008′s correction, the silver price has more than tripled

Click here to enlarge

Source: Slipstream Trader

Something I’ve written about in Diggers and Drillers for a while is that you should watch for the cost of buying silver through a bullion dealer to break away from the spot price. The tangible, physical stuff should command a premium. Buying physical silver is very different to buying ‘paper silver’ through a commodities exchange. There is a lot of doubt that silver bought this way is backed by the real stuff. Since the collapse of MF Global, investors have woken up to this.

One way to measure what premium physical silver should be trading at is to watch the price of the Sprott Physical Silver Trust (PSLV) against the spot price of silver. The market believes that Sprott’s fund carries the silver it claims and isn’t a bad proxy for the real value of silver.

So it’s interesting to see Sprott’s silver trust surge in value against the silver price recently. The chart below shows just that. I’ve divided the value of a unit of the Sprott Physical Silver Trust by the silver spot price; my ‘Sprott-to-spot’ index. Since the start of December, the relative value has increased by more than 20%.

‘Sprott-to-spot index’ shows physical silver is commanding a growing premium

Source: Stockcharts, D&D edits

What does this actually tell you? Investors struggle to buy large amounts of silver, and are prepared to pay above the market price for physical if they trust you have it.

For the average investor, we may find that buying bullion from dealers may start coming with extra costs, which reflects its true value above the spot price.

2012 also brings the likelihood of more money printing from the Fed, and possibly the ECB. This is not something you can bank on. But either would be bullish for precious metals prices. As the money supply of the major currencies of the world increases, the price of hard assets, such as gold and silver, rise to reflect their value.

So the stars seem to be aligning for a big year. Silver normally bottoms out at this time of year, the correction looks finished, the metal has gone into backwardation, and physical metal is now priced at a premium.

I expected big things from silver last year based on the fundamentals. All those fundamentals are still in place, and now we have everything you have just read about today on top of that as well.
With a painful correction now out of the way – and the price knocked back down – the silver market looks ready to explode again.