Gold Trading

Breaking News – Greece Prepares for New Elections

Raul Valenzuela — Tue, 15 May 2012 00:00:00 +0000

GREECE HEADING TO NEW ELECTIONS, VENIZELOS SAYS. Euro Dropped as low as 1.2771 against the greenback, its lowest since January 18 this year, while Gold had nothing more than a slight knee-jerk reaction.

New elections in Greece. Start buying gold.

— StuartCullen (Stuart Cullen) (@StuartCullen) Tue May 15 2012

Away from the Euro into the gold?

Gold Drops – IMF Announces Major Gold Purchase After Years of Selling

Raul Valenzuela — Mon, 14 May 2012 00:00:00 +0000

The IMF wants to cover increasing credit risk, and looks at increasing gold reserves. The day also sees a major gold bottom. Coincidences coincidences….

NEW YORK — The International Monetary Fund is planning to purchase more than $2 billion worth of gold on account of rising global risks. The IMF currently holds around 2,800 tonnes of gold at various depositories

“The Fund is facing increased credit risk in light of a surge in program lending in the context of the global crisis. While the Fund has a multi-layered framework for managing credit risks, including the strength of its lending policies and its preferred creditor status, there is a need to increase the Fund's reserves in order to help mitigate the elevated credit risks,” Bloomberg quotes a report by an IMF staff while also adding that a $2.3 billion gold purchase is in the planning….

More at After years of selling it, IMF plans to buy $2 billion in gold

I Can’t Pay Taxes – It’s The Constitution!

Tim Saxton — Fri, 11 May 2012 09:45:18 +0000

A Queensland driver has tried in vain to argue it is “impossible” for him to pay a speeding fine because the Australian constitution states the government can accept only coins made of gold or silver as payment for debts.

Indeed, section 115 of the Commonwealth of Australia Constitution Act states: “The state shall not coin money nor make anything but gold and silver coin a legal tender in payment of debts.”

Leonard William Clampett tested the weight of constitutional law in Brisbane Magistrates Court in September last year, after he was snapped by a speed camera driving at 73km/h in a 60km/h zone on Wardell Street, Enoggera.

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He argued he could not pay a $200 speeding fine, because “there is no gold and silver coins in common circulation”.

“It’s logical when you look at the paramount legislation in this country, that no matter what money they [the police] request or you award them, I can’t pay,” he told Magistrate Sheryl Cornack.

“I haven’t been able to pay a lot of things over the years. Fifteen years, I haven’t paid any income tax because it’s not possible to pay it.

“I haven’t paid for instance a couple of companies. I haven’t paid Crown Law Queensland $12,500 they claimed from me, because of section 115 of the Commonwealth Constitution.

“It is paramount law in this country, but somehow or other, certain people don’t seem to catch onto that …

(Photo credit: Wikipedia)

“A state, as opposed to the Commonwealth, cannot compel you to pay in other than gold and silver coin. Fairly simple.”

Police prosecutors called on an expert from Melbourne, who was required to travel to Brisbane and review the evidence, to confirm the roadside camera was working accurately when it photographed Mr Clampett speeding.

Despite his argument, Ms Cornack found Mr Clampett guilty and ordered he pay the $200 fine, as well as $76.90 in court costs.

She also ordered Mr Clampett pay police prosecution’s out of pocket expenses, totalling $3500, in obtaining the expert witness.

But, three weeks later, Mr Clampett fought to have Ms Cornack’s ruling overturned by the Supreme Court.

He applied for a judicial review on the grounds no court had previously defined the terms of the constitution.

“My claims, and the action sought based thereon, are as well for the Queen as for myself,” Mr Clampett wrote in his application.

However, Supreme Court Justice Martin Daubney said the basis of Mr Clampett’s argument “has long been discredited”.

“None of the reasons advanced by the applicant amount to any good reason for having instituted the present application,” he stated in a written judgment, published this week.

He did not comment further on Mr Clampett’s argument regarding constitutional law.

Justice Daubney dismissed Mr Clampett’s application.

Utah Expands Legal Tender in the State (mb50.wordpress.com)
States To Use Gold and Silver as Legal Tender (activistpost.com)

A Different Kind of Gold Rush

Raul Valenzuela — Sun, 06 May 2012 12:14:47 +0000

It’s Gold Rush again in California, this time though it is Gold from the sky. California’s Gold Country is once again full of lively saloons, fortune hunters jockeying for prime spots and astounding tales of luck

In the week since a fireball shot across the sky and exploded, scattering a rare type of meteorite over California’s Gold Country, these hills have drawn a new rush of treasure seekers.

In the Gold Rush town of Rescue (elevation and population both 1,400), Salveson, a wife and mother of two, read a local news article about the meteorites. The area scattered with them, about three miles wide and 10 miles long, included Henningsen Lotus Park, where she walks her dog every morning. She noted what to look for: a rock that seemed out of place — different from anything around it. It would be dark and delicate.

On Wednesday, near the end of her stroll with Sheldon, Salveson picked up a rock the size of a spool of thread that seemed to match the description.

She walked over to a group with metal detectors.

“I opened my hand and they all let out a collective gasp,” she said.

The geologists, as they turned out to be, wrapped the 17-gram stone in foil and told Salveson to get it into a bank vault.

For the full story see:

http://www.latimes.com/news/local/la-me-meteorite-search-20120501,0,5730445.story

The Dollar & Gold Have Eyes on Europe

Raul Valenzuela — Sat, 05 May 2012 20:42:34 +0000

Friday saw heavy selling pressure coming into risk assets, specifically equities and oil. However, the real driving force behind the selling pressure is likely the result of several unrelated economic/geopolitical events. Clearly the unemployment report had an impact on price action, but strangely enough it would appear to those more in tune with reality that market participants want lower prices so that the next quantitative easing program can be initiated.
Another key development in equities price action as of late has been selling pressure in Apple (AAPL). A few weeks ago we witnessed a sharp downturn after prices surged higher into a blowoff top. Earnings came out and prices jumped again and we have watched Apple’s stock price drop considerably since.
Friday saw sellers circling the wagons pushing the tech behemoth down around 2.25% as of the scribbling of this article. When AAPL was rallying it helped the Nasdaq Composite and the S&P 500 grind higher. Now that it has clearly given up the bullish leadership role, it now appears to be a drag on the price action of domestic indices.
Additionally there was a mountain of economic data released out of Europe overnight which was entirely negative. Spain, Italy, France, Germany, and the Euro-area in general saw their Service PMI readings all come in below expectations. Europe is moving into a recession which whether economists want to acknowledge it or not has implications on domestic U.S. markets. The Eurozone as a whole is the largest economy in the world. Clearly the European economy is slowing, and our exports to Europe will slow as well.
This leads me to the final data point which is still unknown. What will the outcome of the French and Greek elections over the weekend mean for the Eurozone’s geopolitical ties as well as the potential impact on the Euro currency itself?
The answer to that question will likely not be known until late Sunday evening; however by the time U.S. markets open this coming Monday the cat(s) will be out of the bag. This final question leads me to the real topic of this article. The question I want to know is what impact these elections could have on the value of the U.S. Dollar Index as well as gold?
As an option trader, I am always focused on the volatility index (VIX) as well as implied volatility on a number of underlying assets. I came across the following chart courtesy of Bloomberg which appeared in an article posted on zerohedge.com. The chart below illustrates the differential between European Union equities’ implied volatility levels and the EUR/USD currency pair.

: EU Stocks

Chart Courtesy of Bloomberg

It is rather obvious that EU stocks and the EUR/USD implied volatility levels have diverged. Generally speaking, when volatility increases it means that price action will typically move lower. The higher levels of volatility, the lower the price the underlying will move. There are exceptions to that rule such as earnings reports or key headlines which drive volatility higher, but generally speaking high volatility levels correlate with uncertainty and risk.
What is particularly troubling about the chart above is that the EUR/USD currency pair is seeing reduced implied volatility. This essentially means that the market is not expecting any major moves in the currency pair amid all of the poor economic numbers coming out of Europe.
For those not familiar, the EUR/USD currency pair reflects the value of the Euro against the Dollar. Thus, if the EUR/USD is rising, this means that the Euro is moving higher against the Dollar. The opposite is true when EUR/USD is selling off.
At present implied volatility levels are quite low by comparison to European equities. The zerohedge.com article entitled “Is EURUSD Volatility About to Explode?” shares the following statement to readers, “The last two times this has occurred (in the last year), EURUSD implied vol has rapidly caught up to equity’s risk.”
What that statement means is that it is becoming more likely that implied volatility of the EUR/USD currency pair is going to increase back in par with European stocks. If that takes place, which based on recent data is likely, the intraday volatility in the EUR/USD will increase thus intraday price ranges and sharp moves will become more prevalent.
The long story short is if implied volatility picks up in EUR/USD then it is likely going to be quite beneficial to the U.S. Dollar. The largest concern for Fed Chairman Ben Bernanke has to be the potential for a monstrous move higher in the U.S. Dollar should an unforeseen event arise in Europe. An event such as a disastrous auction or the discussion by German Parliament about leaving the Euro could both help push the Dollar much higher than anyone expects.
A higher Dollar is negative for risk assets and Mr. Bernanke does not like the word deflation at all. None of the central banks around the world like deflation because it means all of the debt they are holding and helping to prop up has a much more significant intrinsic value. If the Dollar is worth more, Dollar denominated debt is also more expensive to pay off.
The U.S. Dollar Index has languished for several weeks, but recently the greenback started to reverse higher and at this time has managed to push above major resistance levels overhead on the daily timeframe. The daily chart of the U.S. Dollar Index is shown below.

Dollar Index Daily Chart

If the Dollar remains firm into the bell on Friday which appears likely, the results of the two key European elections over the weekend could provide the ammo needed to really force the U.S. Dollar higher or lower depending on market sentiment. It appears the Dollar wants to go higher currently, but a sharp reversal is not out of the question.

The key level to watch is the 80.76 price level on the U.S. Dollar Index futures. If that level gets taken out, the Dollar could extend to recent highs and beyond should the situation in Europe begin to unravel.
If the Dollar surges what will that mean for gold? Generally speaking most readers would expect gold and silver to move lower on Dollar strength. For a time, that would likely be true, but if a real currency crisis plays out gold and the Dollar might rally together as citizens would try to move their wealth into safe, liquid assets.
Under that type of scenario, gold and silver could both rally along with the Dollar. When the moment finally arrives where the Euro begins to selloff sharply, physical gold and silver will be tough to acquire in Europe.
In the short to intermediate term, gold will likely continue to drift lower searching for a critical bottom. The weekly chart of gold futures below demonstrates the key support and resistance levels that may have to be tested before a major reversal can play out.

Weekly chart of gold futures

Make no mistake, I remain a gold bull in the long term. However, in the short run the Dollar has the potential to outperform gold under the right circumstances. Ultimately it is important to recognize the distinction between selling pressure and what would likely happen in a full blown currency crisis in Europe which is possible, if not ultimately inevitable.
The price action over the weekend on Monday will likely be telling and we could see the beginning of a major move in a variety of underlying assets depending on the election results. Clearly times have changed when U.S. market participants are concerned about what is going on in Europe more so than domestic issues. Unfortunately, we live in very strange times.

Courtesy of JW Jones of http://www.optionstradingsignals.com/

Even Paper Money Will No Longer be On Paper… And Some Words of Caution About Paper Gold

Raul Valenzuela — Sun, 22 Apr 2012 21:57:56 +0000

In case you needed more reasons why you should not trust paper money, and much less paper gold, have a read below. Paper Gold may be linked to massive international scams and yet another alternative is being offered to replace paper money!

Italian financial police have seized U.S. securities with face values of about $1.5 billion and gold certificates worth more than 3 billion euros ($3.96 billion) as part of an investigation into a possible international financial scam.

The police said on Saturday the “million-dollar” operation was a last step in the probe, which centered on the use of bearer Federal Reserve debt securities dating back to the 1930s as a guarantee for loans or other opaque cross-border transactions….

More at Holders of treasuries and paper gold may have their own tungsten to worry about

With the explosion of devices equipped with encrypted technology, it should be only a short period of time before both paper currency and the rest of coins in circulation go the way of the Canadian penny….

More at Unbanking America: Entrepreneur Develops Alternative to Paper …

Some related tweets

Our founding fathers knew that a FIAT money system (paper backed by nothing) was worthless. That’s why the Constitution backs a GOLD stndrd

— OccupyYourTown (Citizen Doe) (@OccupyYourTown) Sun Apr 22 2012

Article 1 of the Consitution gives Congress the power to create money and dictates that it should backed by Gold and Silver – not paper

— OccupyYourTown (Citizen Doe) (@OccupyYourTown) Sun Apr 22 2012

Bet u didnt notice … the paper money our govt prints is a joke. Invest in gold! http://t.co/1lgdhDSC

— SDotRizzy (Sherisa Renea) (@SDotRizzy) Sun Apr 22 2012

India signals its central bank will join other inglorious bastards spewing paper diarrhea while pounding on Gold and Silver #buythedip

— TorPost1 (TorPost1) (@TorPost1) Sun Apr 22 2012

Still Questioning Gold Price Manipulation?

Raul Valenzuela — Mon, 16 Apr 2012 00:00:00 +0000

In case you have missed it, here is some essential reading on the matter of gold price manipulation and where gold price should really be were it let ride freely!

GoldMoney founder, Free Gold Market Report editor, and GATA consultant James Turk notes that investment analyst Doug Casey asks in his latest newsletter to see the evidence of gold market manipulation. Turk obliges at length, citing GATA's work, in an essay titled “Some Answers to Doug Casey's Questions,” posted at the FGMR Internet site here:

http://www.fgmr.com/some-answers-to-doug-caseys-questions.html…

More at Casey asks for and Turk delivers the evidence of gold market manipulation

Gold and Silver Prices Weekly Outlook for April 16-20

Raul Valenzuela — Sun, 15 Apr 2012 22:41:18 +0000

It’s was a good year so far for bullion traders as the prices of both gold and silver didn’t do much or well during passing months. Last week gold price started off strong but soon changed direction and decline and finished the week only slightly above its initial starting price for the week. Silver price has done even worst and declined on a weekly scale. The renewed fears and concerns in Europe and the possible slowdown in the U.S labor market may have been among the factors pulling gold and silver prices up during last week. This sentiment may continue this week as there are several U.S related reports including housing starts, Philly Fed and existing home sales. If these reports will be positive or better yet very positive then I speculate bullion prices will decline; alternatively if ECB President will talk of another LTRO or SMP, and if Germany will continue to show growth (on Tuesday German ZEW economic sentiment report and on Friday German Business Climate Survey) then the Euro may rally which will bring gold and silver prices up again. So which of these events will prevail in affecting bullion? When in doubt go with the U.S especially when it comes to gold and silver.

Here is a short overview and a forecast for the upcoming week of April 16^th to 20^th; this includes a short description of the main news items, public speeches, and events that may have affect precious metals prices during last week.

In this projection I use charts and a fundamental analysis to examine how the upcoming events and financial publications during the upcoming week may affect the daily percent changes of gold and silver prices.

Gold price slightly increased during last week by 1.85%; Silver price, moderately fell on a weekly scale by 1.07%;

During last week the U.S jobless claims showed an increase in initial claims; this news may have helped precious metals prices to rise. But by Friday China’s GDP came out and showed a growth of only 8.1% – the lowest since 2009. This news turned the direction of gold and silver and they sharply decreased on Friday.

The U.S PPI and CPI also were published on Thursday and Friday, respectively but didn’t seem to have much effect on bullion prices.

During last week the Euro edged down against the U.S dollar by 0.15% (on a weekly scale); on the other hand, other “risk” currencies such as the Australian dollar slightly appreciated against the U.S dollar during said time. The opposite direction of the Euro/USD compared with the direction of AUD/USD may have been among the factors to pull gold and silver prices into different directions and thus present an unclear trend during last week for both metals.

The video link above provides a broad outlook for the main news, public speeches and events that may affect gold and silver prices during the week of April 16^th to April 20^th; the video includes reviewing the main reports, events, decisions and news items that will come out during the upcoming week. Some of these reports and events include: U.S. retails sales monthly report, U.S housing starts, Canada’s rate decision, ECB President speech, MPC meeting, Philly Fed Manufacturing Index, U.S existing home sales monthly update and U.S. jobless claims weekly update (just to name a few).

For further reading:

Tags: Gold prices forecast, silver price outlook April 2012

Gold and Silver Prices Finished the Week Falling –Recap April 13th

Raul Valenzuela — Sat, 14 Apr 2012 22:19:33 +0000

Precious metals prices changed direction and after they had sharply rose on Thursday, they have finished the week falling. Crude oil prices also changed direction and slipped. Natural gas prices (spot price) also declined while the future price remained flat. The Euro traded sharply down against the U.S. dollar, along with many other currencies including the Australian and Canadian dollar.

Here is a summary of the changes in precious metals and energy commodities for April 13th, 2012:

Precious Metals:

Gold price sharply declined by 1.21% to $1,660.2; Silver price also decreased by 3.49% and reached $31.39. During April, gold edged down by 0.7% and silver by 3.37%.

The Euro/USD fell yesterday by 0.83% to 1.3078; furthermore, the U.S Dollar sharply depreciated against other exchange rates such as the Aussie dollar.

Oil and Gas:

WTI price slipped by 0.78% to $102.83 per barrel; Brent oil also decreased by 0.15% to $121.58 per barrel;

Following these changes, the difference between Brent and WTI oil prices settled at $18.75/bbl. During the month, WTI declined by 0.18% and Brent oil declined by 1.8%.

The Henry Hub future (May delivery) remained unchanged again at $1.98/mmbtu; the Henry Hub spot price declined to $1.86/mmbtu; the difference between the spot and future reached $0.12/mmbtu, i.e. Contango. A Summary of Changes for April 13th:

The table below includes: closing prices, daily percent changes, and daily changes:

For further reading:

Tags: Gold price, silver prices

Does Gold Investing Pay?

Raul Valenzuela — Fri, 13 Apr 2012 21:24:18 +0000

Gold Investing yields no income. But does it make life cheaper in future…?

WHAT’S THE POINT of investing?

Plenty of people below 50 today – and a good many older – might well wonder, says Adrian Ash at BullionVault.

Two stock market crashes, two recessions and a global house-price slump make the last decade a worse advert for investing than One Direction are for clean-living youth. Yes, silver and Gold Investing stand out in contrast, but they don’t actually yield any interest. Nor do cash, bonds, Treasuries or stocks anymore.

But while the point of investing might be hard to see today, its purpose is plain:

“Investing [is] the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future.”

So says Warren Buffett, grand old sage of stock-market investing, defending his methods (and attacking Gold Investing despite its 10-year outperformance of everything else but silver) in his recent letter to shareholders. Put another way, investing aims to make life cheaper in future, in terms of what you’ve already amassed today.

Put in $10 and get $20 back – with inflation failing to eat all your gains – and you’re ahead. Like Buffett says, it’s real purchasing power that matters. So here’s what US citizens have been up against over the last 65 years.

In the raw, this chart says you now need $2.30 to enjoy the quantity of goods and services you got for 25¢ back in 1957.

Few people keep their spending cash under the mattress, however, and time was banks paid interest. So here’s how holding cash in the bank has performed as a way of beating the cost of living. The chart also shows how Gold Investing compared, too.

As you can see, putting cash in the bank has helped defeat inflation over the long term, even after you’ve paid tax on the income. But it hasn’t stopped the cost of living from rising in between, and it hasn’t worked anywhere near as well as Gold Investing instead – again, with tax deducted from the nominal gains, just as Warren Buffett reminds us (and applied at the current 28% rate across time to keep things simple).

Of course, the official Consumer Price Index is subject to doubt. The methodology has mutated so much, it’s hardly the same index today as it was in the late ’90s, let alone six decades ago. So here’s how the same two investments – cash on deposit and gold, both after tax – have helped cut the cost of commodities, as measured by the CRB Continuous Commodity Index.

Yes, the CCI index has also been subject to change, but the raw inputs remain the most heavily used natural resources (crude oil, copper, wheat etc) and the computational changes are tiny next to the mutation of the official Consumer Price Index.

As you can see, Gold Investing has indeed paid off over the long run. It’s also beaten cash-in-the-bank, too. But not always. Gold has lost purchasing power – the purpose of investing, remember – when cash has gained it. Gold has become more valuable in terms of “stuff” when cash has lost value.

Looking to make Gold Investing pay today…? Slash your costs without risking your property by using world #1 online, BullionVault…