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Fed Boosts QE: Gold and Silver Jump

Dec 12, 2012 Leave a Comment

The Fed announced monetary policy at 12:30 PM EST today. For those who were paying attention and understand both Bernanke and the predicament we are in, there wasn’t much of a surprise. The Fed will boost QE with $45 Billion in monthly Treasury purchase and continue to buy mortgage bonds to the tune of $40 Billion / Month, for a total of $85 Billion. Of course, rates will continue to stay low as long as the Jobless numbers remain above 6 1/2% and inflation (the official, massaged government figure that is) remains at 2 1/2% or lower.

Here are the Fedlines courtesy of ZeroHedge:

*FED BOOSTS QE WITH $45 BILLION IN MONTHLY TREASURY PURCHASES
*FED TO KEEP BUYING MORTGAGE BONDS AT PACE OF $40 BLN PER MONTH
*FED SAYS MONTHLY PURCHASES TO TOTAL $85 BLN
*FED ADOPTS ECONOMIC THRESHOLDS FOR POLICY TIGHTENING
*FED: RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%
*FED: RATES TO STAY LOW WITH INFLATION SEEN AT 2.5% OR LESS

Best Price Silver Dealers • Best Price Gold Dealers

It really isn’t that difficult to figure out. Gold and Silver prices traded higher immediately after the release. Watch the Silver Spot Price and the Gold Spot Price for reaction to the Fed’s announcement, as well as upcoming reaction to Fed Chairman Ben Bernanke’s jawboning later today at 2:15 PM EST.

8:20 PM EST Update: Looks like the metals have reversed post-Fed gains now. Another opportunity for stackers to accumulate more physical.

Premium Over Spot Price for Silver Bullion: Coins, Bars or Rounds

Oct 14, 2012

The premium over spot price when buying silver depends on the type of silver purchased, the quantity of silver purchased, and the dealer from whom the silver is purchased.

Government issued bullion coins will carry a higher premium over spot than generic silver rounds. Quality and trust are a factor. Also, a 500 coin purchase will result in a lower premium than a 100 coin purchase. Volume discounts apply to silver, like any other commodity. Finally, a quality online bullion dealer will charge a lower premium than a less reputable dealer.

PMBull looked at the average premium over silver spot price for Coins, Rounds and Bars from 4 online silver bullion dealers to assess which factors contributed most to markup. The results are published in the tables below. Continue Reading …

Gold Price Update for 10/10/2012

Oct 10, 2012

Gold Update Icon Gold prices traded relatively flat today, despite the continued decline in the US equity markets. Weakness in the dollar may have helped to prop the precious metal up a bit. Early trading remained tight, with prices range bound in a 5 point range between $1760 and $1765 before COMEX trading began.

Volatility increased only slightly during Comex trading as gold bulls and bears struggled in a tug of war to gain an upper hand, yet the price of gold ultimately finished Comex, then also Globex, roughly where it started. Gold closed NY Globex just $1.30 lower at $1762.60 per ounce, once again showing resilience in what many believed would become a more aggressive retreat off the $1800 level.

It is clear now that gold has indeed been rejected in its first attempt to crack that $1800 ceiling. Hesitation at an important resistance point is to be expected though, and gold could still be simply consolidating gains achieved since the start of this bull move in late July. The stalled post-QE3 move in precious metals initially had commentators nervous about a pull back, yet the aforementioned resilience seems to be growing their level of confidence. One by one as each day passes, bulls are stepping up and predicting a run through $1800, with no further downside risk. Which means the downside risk is increasining.

Should a pull back from here develop, minor support as a rising trend line is visible on the daily gold spot price chart. The weekly version of that chart chart presents another rising trend line at a lower level. These support levels for gold, as rising trend lines, depend entirely on the speed of any decline that should develop. The longer it takes, the higher the support levels become. Just under these rising trend lines would be a good target for accumulating more physical gold or silver bullion, as they would be essential confirmation for pure, perhaps naive, technical traders that a more broad move lower is starting.

It is only at this point, when all have concluded that a major move lower is in progress, that fundamental demand will step in and overwhelm fresh short sellers, perhaps even triggering a major commercial short-covering rally.

Let’s keep watching and see how things play out. Feel free to contribute your thoughts in the comments below, and don’t forget to check out updated precious metal news and blog feeds on PMBull’s new Gold and Silver News section.

Silver Price Update for 10/9/2012

Oct 9, 2012 Leave a Comment

Silver Update Icon Silver prices dipped hard into the London close, before a sharp V-shaped move higher in COMEX trading materialized. This was followed by sideways action for the rest of the day on Globex. Despite the early swoon lower that looked to be the start of a major decline, selling abruptly halted and buyers appeared once again, leaving a nice long tail on the hourly silver spot chart. Silver prices finished NY Globex trading down just $0.08 at $33.90 for a smallish decline of only 0.24% on the day.

Was this morning’s dip a head fake for bullion banks to begin covering their massive short position at a lower level, or was it an attempt to start a waterfall selling event in order to profit from that short position? It was probably neither. Metals were likely reflecting conditions in the currency and equity markets. Investors are nervous, and any massive global sell-off will likely take gold and silver lower (although the subsequent recovery from a major global sell-off may only be experienced by the precious metals). Some may argue that these conditions could very well be used to trigger and extend said waterfall sell-off attempts.

Will the September 26th post-Fed QE to Infinity Low hold, to be followed by a short squeeze that will drive silver to new highs in the current bull move? This is very possible and if it does hold, those panicked out of silver in this morning’s volatile action will be kicking themselves. Volume on the snap-back rally was weak relative to volume in the take-down, but it is difficult to place a lot of faith in traditional TA indicators these days.

Mr. Furguson over at TFMetalsReports stepped out on a limb this morning and flat-out stated that he is not of the opinion that silver will experience a sharp pull-back. Nervousness in the blogosphere appears to be high, and PMBull is rooted in general contrarianism, so the reasons cited by Mr. Ferguson for his stance are certainly appreciated here. Demand for physical in London remains strong. Gold prices have hit new highs when priced in Euros (and gold priced in Dollars tends to lag by about 4-6 weeks). Major moves lower in the past came at the tail end of Fed QE activity, not at the beginning. Finally, the banks have added shorts during this consolidation phase in silver, so if silver buyers remain resilient and no capitulation begins to present itself, the banks are going to have to cover a ridiculously high level of shorts, propelling silver prices higher.

The rest of this week should be interesting, as today’s move lower appeared to be more aggressive than others we’ve seen over the past few weeks. With other markets teetering on a cliff, it will be fun to see if another miracle rally can develop, and if not, what gold and silver’s response will be during a major equity market correction or crash.

Buy Gold & Silver: The Fed’s Monetizing Debt

Sep 18, 2012

TF Metals Report Logo A Clear Explanation of the Federal Reserve’s QE to Infinity and What it Means: Last Thursday, the Fed satisfied the markets (at least for the moment) with its long awaited announcement that another round of QE will begin. Market reaction was swift and immediate, with gold and silver prices shooting higher. Indeed, gold and silver had already started their run weeks before the announcement because anybody with a calculator already knew the Fed had no choice but to pump further and that QE was certainly imminent. The only real debate was whether it could occur before the election or not. Just look at the impact of the announcement on the current gold spot price and silver spot price for a clue as to what the markets think.

Turd Furguson over at TFMetalsReport has provided a succinct and clear explanation of the Federal Reserve’s plans to engage in massive, non-stop and unending Quantitative Easing, and what it really means. First, he addresses each of the three primary actions that the Fed has stated it will take:

The maintenance of extraordinarily low rates through 2015
The continuation of Operation Twist to the tune of $45 Billion per Month through the end of this year
The purchase of mortgage-backed securities (MBS) to the tune of $40 Billion per Month with no no specific target amount or end date

Turd’s interpretation is interesting, and certainly seems to make sense. He believes that most in the media are dropping the ball with respect to what these actions mean. According to him, these Fed actions are not designed to support the mortgage market or help average Americans purchase homes, as we will be told by Fed apologists. Rather, the MBS purchases are designed to further support the primary dealers who hold these securities, the value of which are rather questionable. Continue Reading …

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