The financial media would have you believe that everyone and their dog has given up on the precious metals market. But as Peter Schiff humorously remarked the last time we were down at these levels: The PM bull market is dead! Long live the PM bull market!
On this week’s show, we discuss the recent action in the metals & markets, including:
Testing of $22/silver and $1320/gold next week, with the potential for a capitulation spike low as soon as Sunday’s Globex session- silver could see a spike low to $18-$20, & gold a $1200 handle
Examination of fundamentals: Nothing has significantly changed
Physical versus paper demand trends in both the West and Asian markets
George Soros and another documented case of financial media spin
By The Doc & Eric Dubin
When examining physical off-take of gold in Asia, demand dwarfs the number of real and hypothecated paper ounces being “sold” out of the combined Western-based LBMA, the COMEX and the total exchange traded product universe. We note “sold” in quotation marks because the story gets even more convoluted when examining instruments like GLD. For example, a hedge fund could easily take delivery of physical gold associated with GLD shares and stash physical bullion in a private vault without the need to report the second half of that transaction under 13F SEC filing requirements. While we can’t be certain just how many ounces have moved into private vaults via this transmission mechanism, it’s most certainly the case that not all of the trumpeted sales out of GLD have in fact been actual, net sales. But don’t hold your breath waiting for the financial media to report this fact.
Speaking of our dear friends in the mainstream media, you have no doubt read about George Soros selling part of his GLD position for the quarter ending March, 2013. What you haven’t heard from anyone is that Soros Fund Management, LLC actually INCREASED its net exposure to gold. Yes, that’s right. We have a lie of omission by the lapdog financial media.
I pulled the raw numbers of out the SEC’s EDGAR database today to fact-check all the mainstream reportage and was surprised to see an increase in GDX and GDXJ mining share ETF positions that more than offset the relatively small reduction in Soros’ GLD. Even more to the point, mining shares are a leveraged bet on bullion, and Soros even trimmed positions in GDXJ and replaced it with a greater leveraged position in the form of call options tied to the GDXJ.
Visit Google’s news search engine and execute a search for SOROS GOLD. Just prior to recording this evening’s show the results were telling. There was only one small mention of Soros linked to GDX and the story actually had the numbers wrong and was basically speaking to the risk of being exposed to mining shares. The overwhelming reportage this week about Soros has been about his sale of GLD as proof that the gold (and silver) bull market is dead. Never mind the fact that Soros increased his exposure to gold related assets.
We also discussed gold’s monthly chart, and the fact that gold is just now touching the long term up-trend line:
We’ll be diving into the numbers behind this paper versus physical dynamic in the days ahead. Stay tuned. But for now, without further delay, enjoy this week’s show! — Eric Dubin
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