Sunday, November 18, 2012

Gold Traders More Bullish After Obama’s Re-Election

Gold traders are the most bullish in 11 weeks and investors accumulated record bullion holdings on speculation U.S. policy makers will add to stimulus following President Barack Obama’s re-election.
Twenty-five of 33 analysts surveyed by Bloomberg expect prices to rise next week and three were bearish. A further five were neutral, making the proportion of bulls the highest since Aug. 24. Investors boosted assets in gold-backed exchange-traded products to an all-time high of 2,596.1 metric tons yesterday, valued at $144.7 billion, data compiled by Bloomberg show.
Gold traders are the most bullish in 11 weeks. Photographer: Guenter Schiffmann/Bloomberg
Obama won the Nov. 6 election against Mitt Romney, who had criticized the Federal Reserve’s policies and said he’d replace Chairman Ben S. Bernanke, whose second term expires in January 2014. The European Central Bank kept interest rates at a record low yesterday and nations from the U.S. to China have pledged more action to boost economies. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011.
“Obama is a supporter of Bernanke and his re-election means that the ultra-loose monetary and fiscal policies by the Fed will continue,” said Daniel Briesemann, a commodities analyst at Commerzbank AG in Frankfurt. “More and more liquidity will be put into the system and therefore there’ll be inflation fears and concern about currency devaluation.”

Gold Prices

Gold rose 11 percent to $1,733.55 an ounce in London this year, heading for a 12th straight annual gain, the longest winning streak in at least nine decades. The Standard & Poor’s GSCI gauge of 24 commodities lost 1.6 percent and the MSCI All- Country World Index (MXWD) of equities climbed 8.2 percent. Treasuries returned 2.6 percent, a Bank of America Corp. index shows.
Bullion is heading for the first weekly gain in five as Obama was re-elected with the highest unemployment rate of any president returned to office since Franklin Roosevelt in 1936. The Fed said Oct. 24 it will maintain $40 billion in monthly purchases of mortgage debt and probably hold interest rates near zero until mid-2015.
Some investors buy bullion as a hedge against inflation and a weaker dollar, and the metal generally earns returns only through price gains, increasing its allure as interest rates decline. The Bank of Japan (8301) expanded its asset-purchase program on Oct. 30 for the second time in two months, increasing it by 11 trillion yen ($138 billion). The ECB said it’s ready to buy bonds of indebted nations and China approved a $158 billion subways-to-roads construction plan.

Fiscal Cliff

Investors may now focus on the so-called U.S. fiscal cliff, a combination of automatic spending reductions and expiring tax cuts that amounts to $607 billion in 2013. Democrat and Republican lawmakers say they want to avoid the recession- causing cliff, though have yet to reach a compromise. That may boost gold’s appeal as a protector of wealth, Commerzbank’s Briesemann said.
Hedge funds’ bets on a rally declined for three weeks after reaching the highest since August 2011 on Oct. 9, U.S. Commodity Futures Trading Commission data show. Speculators cut their net- long position by 7.5 percent in the week ended Oct. 30 to the lowest since Sept. 4, the data show.
While physical gold purchases in India, last year’s biggest buyer, will be stronger this quarter compared with the previous three months, demand will probably decline for several weeks after the Diwali festival on Nov. 13, Edel Tully, an analyst at UBS AG in London, wrote in a Nov. 7 report.

Physical Demand

Higher prices may curb demand, Tully said in a report yesterday. While the metal slid for four consecutive weeks through Nov. 2, the longest losing streak in more than a year, this year’s average of $1,663 is set to be a record. Bullion reached an all-time high in India in September and consumers there usually boost purchases before the wedding season and religious festivals later in the year.


  1. Anybody here on The Hive want to put forth a possible possible outcome on Gold prices vs. the Fiscal Cliff?

    My take is that if they do not implement the tax cuts and spending reductions - this will boost prices. But if they do what they should do (better in the long run) and go through with this - it will cause a sell-off in equities & commodities, including Gold.

    Comments for or against this point of view?

  2. Gold will probably go up until it is overbought at around 1780-1800. If it does reach that range, then I believe profits will be taken.

    Right now IMHO PMs seem to be range bound and I do not think anything the government does will make one damn bit of difference.

    To me to government is irrelevant. It is the market of supply and demand. We live in a fascist country ruled by Wall Street. They make the rules and Mr. Market does not take their marching orders from Washington D.C.

  3. Mammoth you mentioned the fiscal cliff and how it might affect commodities and the POG. I really don't believe that the "fiscal cliff" is anything more than a scare tactic like raising the debt ceiling. Just a concept for political leverage. We probably need to raise taxes. I think we need to provide services to the needy, but a conservative/libertarian might tell us that "what's mine is mine. Why should I pay to help them?" "Let them die off and decrease the surplus population" as Scrooge said in A Christmas Carol.

  4. I'm with QB as far as the "fiscal cliff" being just another buzz-phrase scare tactic. Like the debt ceiling "crisis" and so many other things that the cable TV nooz programs keep harping on. It's all part of the disaster capitalism zeitgeist that Naomi Klein wrote about in her book with that title -- convince people that there is a fiscal crisis, always something having to do with the "money world" but not so much the real world of factories and hospitals and products and people -- and you can con them into accepting shittier lives so that rich bastards can grab more money and power. It used to be for Third World dirt-holes, now it's for peripheral European countries and coming soon to some States United near (many of) you Hivers.

    All this "Politicians Who Cried Wolf" BS is starting to wear thin with even rusted-on Republican voters, though. You can spin a story only so many times before it's seen as the con it is. My mother, who I use as a gauge of what a typical conservative is thinking, is starting to sound more like me when she talks about the Betrayus affair and a lot of other media-hyped issues. She doesn't quite understand the nuances, because she's almost 80 and just getting sick of being alive, but she knows that a load of crap is being peddled. When the "my mom" demographic is starting to realize that the Great and Powerful Wizard is merely a humbug behind the curtains, the scam is unraveling.

  5. As far as the POG goes, the more I read Max Keiser, Jesse, ZH and others who have specifics about price suppression techniques using naked shorts, futures contracts, etc., the more I'm convinced that there is massive market manipulation. Stuff like the graphs Jess has about the number of contracts sold at X price within minutes, to smash the POS down, f'rinstance. I don't care what the listed price on the "market" is. (I put market in quotes because I consider it a fake, more and more.) I want to have something real, that will have to be stolen by thieves who are willing to at least do the physical work of finding where I keep stuff, breaking in and hauling it away. That's more physical effort than it takes John Corzine's minions to do some keystrokes to make $1.2 billion disappear. I am less scared of thieves in the real world than of thieves in the "market."

  6. QB says:

    Gold will probably go up until it is overbought at around 1780-1800. If it does reach that range, then I believe profits will be taken.

    Right now IMHO PMs seem to be range bound and I do not think anything the government does will make one damn bit of difference.

    To me to government is irrelevant. It is the market of supply and demand'

    Agree completely. At the moment we are rangebound, but we may have put in a higher low at 1670 - reamins to be seen.

  7. The Contrary IndicatorNovember 19, 2012 at 11:43 AM

    Queenbee, it appears Gold likes your latest thread, as it is up $20 this morning.

    You are the opposite of a Contrary Indicator.

  8. Thanks Mammoth. Mugabe thanks for agreeing, but you could have also told me I was full of it. Bukko you are spot on as I do not allow the likes of Corzine's of world to hold my gold on paper. Mammoth if I am not the contrary indicator then I must be the confirming indicator? LOL

    No I was serious it will go up and down in those ranges and then something will send it higher, but I see no indicators (contrary or confirming) that we are there yet. Maybe another year or so.

  9. The one thing I do know is that very few people own gold or silver, but they do own FB and Apple. They are all lemmings IMO.

    Darvas if you are looking in let us know how things are going in LA or call me. I miss our chats. Last I heard from you not so good. I think the only way I will ever get a job from home is to create a niche and go on The Shark Tank.

  10. Mammoth I am not agreeing or disagreeing with this guy. I just think you might find it interesting
    The Forces that will Push Silver Over $100

  11. Although I understand the authors concept i.e. peak oil with drive up the price, people will buy far more gold andd silver paper that the real stuff. SLV and GLD may one day be uncovered as a ponzi scheme, but by then I believe most of us over 50 will be dead. Ergo my opinion is 100.00 silver will not happen in my lifetime despite his charts and opinions on shale oil.

  12. Hi all, and thanks for the great comments, as usual - no filler here!

    Godl and silver, IMHO, would need a theme to push them to new highs (>$1950 gold, >$50 silver), and that would have to involve a lot of money printing from Ben/currency devaluation.

    The problem there is that almost all major nations are printing their currencies as fast as they can push keys on their keyboards. And they are all stuck there now, the moment they stop printing so much they will crash.

    Central Banksters are really the only support for the markets, and if they take the crutch away look out below.

    So I don't really see the shiny metals soaring out of sight in any particular currency, like the $, unless others stop printing their currency while the US carries on, for example. That scenario may come to pass in the next few years, but not in the next few months, I would think.

  13. We are in the seasonally strong part of the year, allegedly, yet, as was pointed out above, gold/silver seem to be range bound, and seem to lack the sustained push to break out.

    It's always like that though, the price can refuse to move for years, then one day, seemingly out of the blue, it rockets up.

    Probably a good argument for the buy'n'hold strategy, really. Buy it on the dips, and just keep your allocation until you feel the peak is in or you need the money.

    This gold Bull should have about 4-5 years left, give or take, and then it will be all over. As the real heart of this Depression still lies ahead (sovereign defaults and collapse/capitulation), it's too early to think the price of gold and silver in most currencies have peaked yet.

  14. I have to agree GAW as long as every major currency is printing and the banks are all that is left supporting the market we will go no where. However the day the music stops you had better have a seat with your name on it.

  15. Mammoth from what I can read on silver has a range between 31-35. Barring some major event or inventory shortage I expect that selling at 34-35 range is a smart idea and then buy it back on the dip. My Magic 8 ball can see no further into the future as I dropped it.