The Gold, Silver Morning Smackdown Becomes A Smackup As Surge Continues

After recovering 50% of its record plunge last night, gold continues to rise this morning, topping $ 1450. Silver is even more exuberant this morning testing up to post-crash-low highs around $ 23.90. What is more interesting is that for three days in a row, instead of the seemingly ubiquitous morning smackdown of precious metals, we have seen a sudden desperate demand for silver and gold in the US morning.

 

 

Silver is lagging gold’s recovery for now…

 

Charts: Bloomberg

Zero Hedge

The Gold, Silver Morning Smackdown Becomes A Smackup As Surge Continues

U.S. Mint Suspends Some Gold Coin Sales After Demand Surge

Scott Olson/Getty Images NEW YORK — The U.S. Mint said it has suspended sales of its one-tenth ounce American Eagle gold bullion coins as surging demand after bullion’s plunge to two-year lows depleted the government’s inventory.

This marks the first time it has stopped selling gold product since November 2009, dealers said. A spokesman for the Mint did not return calls seeking confirmation of that milestone.

The U.S. Mint, one of the world’s leading gold and silver coin producers, halts coin sales from time to time as it runs out of coin blanks to meet increases in demand. So far in April, the U.S. Mint has sold 175,000 ounces of American Eagle gold coins, putting it on track to challenge a high of 231,500 ounces set in December 2009.

Since last Monday, U.S. gold coins have been flying off dealers’ shelves as retail investors snap up bargains after bullion’s historic plunge in price and into bear territory.

Michael Kramer, president of Manfra, Tordella & Brookes (MTB), a major U.S. coin dealer in New York, has been inundated by orders from existing and new wholesale and retail customers. “It’s panic. This is one of the busiest times in quite a while. People think gold’s at the lows and they want to take advantage,” he said in an interview.

In contrast, investors bought bullion coins after the 2008 economic crisis for fears that they might miss out on gold’s next rally.

Even after a small recovery this week from two-year lows of $ 1,321 per ounce, gold prices are down 16 percent year-to-date and are off 26 percent from the record highs of $ 1,920 per ounce set in September 2011.

In a memo to its authorized purchases sent late Monday, the Mint said that it continues to offer the one-ounce, one-half ounce and one-quarter ounce coins.

While the one-ounce American Eagle gold coins remain the most popular size, year-to-date demand for the one-tenth ounce coins has been up over 118 percent compared to the same period in 2012, the Mint said.

The spike in gold coin sales often reflects a desire among mom-and-pop investors to have physical metal as a store of value in troubled economic times.

Many analysts expect bullion to post its first annual loss after 12 consecutive years of gains as investors seek out better returns in other assets. U.S. equities have hit record highs.

Gold exchange-traded funds have also been hit by a big wave of redemptions as institutional investors pull cash out of precious metals and retail investors seek physical coins and bars.

In addition, the Mint has been allocating its silver coins since late January due to strong demand and limited inventory.

(Reporting by Frank Tang and Josephine Mason; Editing by Gary Hill and Bob Burgdorfer)

DailyFinance.com

U.S. Mint Suspends Some Gold Coin Sales After Demand Surge

GLOBAL MARKETS-Stocks rise on Japan"s liquidity surge, oil slips

Thu Apr 11, 2013 3:37pm EDT

* Surprise decline in U.S. unemployment benefits buoys equities

* Record drop in PC sales pulls U.S. tech shares lower

* MSCI world equity index up 0.5 percent to five-year highs

* Yen remains under pressure from BOJ stimulus

By Herbert Lash

NEW YORK, April 11 (Reuters) – World equity markets rallied for a fourth day on Thursday, lifted by a surprise drop in Americans seeking unemployment benefits last week, while crude fell on a cut in global demand forecasts as U.S. oil supplies hit a two-decade high.

Japan’s aggressive monetary easing and signs of a growing recovery in China also lifted equity markets, with the Dow Jones and S&P 500 stock indexes setting fresh intraday record highs.

The 42,000 drop in initial claims for state unemployment benefits to a seasonally adjusted 346,000 could ease fears of a marked deterioration in U.S. labor market conditions after a surprise stumble in job growth in March.

“This data is especially welcome on the heels of last week’s jobs report, and it just adds to the tremendous demand that there continues to be for equities,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York. “The money that has been waiting for a pullback is running out of patience.”

Adding to investor optimism was an improved forecast from retail executives and analysts for same-store sales in April after last month’s ho-hum start to spring due to cold weather.

Wall Street rose despite news of a 14 percent plunge in personal computer sales in the first quarter, the sharpest drop in two decades of record-keeping, which pulled Microsoft Corp. , Intel Corp. and other technology-related shares down.

The plunge marks a new milestone in the apparent ebbing of the PC age as computing goes mobile via tablets and smartphones.

The Dow Jones industrial average was up 71.12 points, or 0.48 percent, at 14,873.36. The Standard & Poor’s 500 Index was up 7.07 points, or 0.45 percent, at 1,594.80. The Nasdaq Composite Index was up 5.33 points, or 0.16 percent, at 3,302.58.

MSCI’s all-country world index rose 0.63 percent, a day after posting its second-best gain of the year.

European shares rose as bumper gains for asset managers benefiting from this year’s equity rally lifted financial stocks.

Fund managers and traders said even if there was a pull-back it would not be enough to stop European equity markets from gradually rising higher over the course of the year.

The FTSEurofirst 300 index of leading regional shares closed up 0.56 percent at 1,192.87.

The euro zone’s blue-chip Euro STOXX 50 advanced 0.5 percent to 2,674.33.

Italian and Spanish government bond yields crept higher as investors took profits on recent gains in lower-rated debt, which has been driven by demand for yield in an easy monetary policy environment.

Since the Bank of Japan unveiled its radical stimulus program a week ago, the dollar has gained about 7 percent, yields on major government bonds have fallen and MSCI’s world equity index has hit levels last seen in June 2008.

The latest gains in equities have been helped by evidence of an economic recovery in China – notably signs of growing domestic demand and easier credit – and by indications from the European Central Bank last week that it may cut rates.

“The stronger-than-expected Japanese liquidity surge has led us to reassess our views on risky assets,” said Salman Ahmed, fixed income strategist at Lombard Odier Investment Managers.

The benchmark 10-year U.S. Treasury note was up 3/32 in price to yield 1.7947 percent.

Brent crude oil fell below $ 105 per barrel, not far above an eight-month low, after analysts cut forecasts for global oil demand growth and U.S. crude oil stocks increased to their highest in more than two decades.

Brent futures for May delivery settled down $ 1.52 at $ 104.27 a barrel. U.S. crude futures fell $ 1.13 to settle at 93.51 a barrel.

The dollar hovered close to a four-year high against the yen, with gains above the key 100 yen level highly expected given the massive amount of bonds the Bank of Japan plans to buy to buoy its economy.

While the pace of the rally has slowed due to option barriers at 100 yen, most analysts believe it is only a matter of time until that mark is reached.

The dollar has not risen above 100 yen since April 2009.

The dollar was up 0.12 percent at 99.89 yen.

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Reuters: Bonds News

GLOBAL MARKETS-Stocks rise on Japan"s liquidity surge, oil slips

UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You’ve Still Got a Chance"

UK Independence Party (UKIP) leader Nigel Farage makes the same common sense plea that I have been stating for some time. Farage says “Get Your Money Out of Spain While You’ve Still Got a Chance“.

The UK Independence Party leader said that the European Union had “crossed a line” by trying to extract funds from savers under the terms of the abandoned Cypriot bail-out.

Mr Farage said: “Even I didn’t think that they would stoop to actually stealing money from people’s bank accounts.

“There is going to be a big flight of money and that flight of money won’t just be from Cyprus, it will be from the other eurozone countries, too. There are 750,000 British people who own properties, or who live, many of them in retirement, down in Spain.

“Now that we see the EU are prepared to resort to anything to keep alive their failing euro project, our advice to expats living down in the Mediterranean must be, ‘Get your money out of there while you’ve still got a chance’.”

Surge in Support for UKIP

The latest poll shows Ukip only 10 points behind Tories.

The Conservatives and Liberal Democrats have suffered a double blow as Nigel Farage’s UK independence party soared to 17% in the latest Opinium/Observer poll, and a large majority of voters have said they believe coalition economic policies are harming the country.

Labour has dipped by 2% to 39% – also a likely victim of the UKIP bounce – while the Tories are down by the same amount to 27%, one of their lowest ratings of recent years.

The personal ratings of the leaders of the three main parties in parliament have all dropped, with David Cameron’s having fallen by 8 points in two weeks from -18% to -26%. That of Labour leader Ed Miliband has dropped 5 points in a fortnight to -20% while Nick Clegg’s rating has crashed a further 7 points from -46% to an alarming -53%.

But the findings on the economy will reverberate most at Westminster. Just 20% of all voters now believe the government’s economic policies have been beneficial to the economy, against 58% who say they have been harmful.

Let’s hope there is a run on Spanish banks. The sooner this mad experiment in the eurozone ends, the better.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com 

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You’ve Still Got a Chance"

JGBs surge on speculation BOJ will buy more long bonds

Mon Mar 4, 2013 2:17am EST

* Speculation Kuroda-led BOJ will step up buying in 20- and 30-year bonds

* Investors sceptical Kuroda can boost inflation to 2 pct in 2 yrs

* 30-year yield down 9.0 basis points, biggest daily fall since mid-2010

* Japanese investors buying ahead of March 31 book-closing

* JGB futures hit record high, 5-year yield at record low

By Hideyuki Sano

TOKYO, March 4 (Reuters) – Japanese government bonds surged on Monday, with yields on long maturities posting their biggest fall in two and a half years, on speculation the Bank of Japan will step up buying of long- dated bonds under a new governor.

Sharp gains in longest maturities came even as Haruhiko Kuroda, Bank of Japan Governor nominee, vowed to end Japan’s deflation and lift inflation to two percent in about two years, reflecting investors’ doubts monetary policy can deliver the magic number.

“Of course buying 10-year bonds yielding just 0.6 percent makes no sense at all if inflation is to rise indeed to two percent in two years,” said a trader at a major Japanese brokerage.

“To me, the market seems a bit overheated now. But you can’t go short in this market,” he added.

The 30-year bond yield fell 9.0 basis points — its biggest daily fall since mid-2010 — to 1.675 percent, its lowest level since August 2010.

The decline came even after its 14.5 basis point fall last week, its biggest weekly decline since December 2008.

The 20-year yield fell 8.0 basis points to 1.490 percent , breaking below its 2010 trough of 1.510 percent to hit its lowest level since August 2003.

“Speculation is rising that, under Kuroda, the BOJ will buy more in 20- and 30-year bonds. If that happens, maybe the 20-year yield could fall to around 1.2 percent,” said a trader at a Japanese bank.

Unlike the Federal Reserve, which buys a large amount of long-dated government debt, the BOJ’s bond buying has long been centred on short maturities. It fears that having a large amount in long-dated bonds on its balance sheet will jeopardize its policy flexibility in the future.

The central bank currently plans to buy a total of 41.6 trillion yen in bonds this year — 20.0 trillion yen in an asset purchase programme and 21.6 trillion yen as a part of money market operations.

Of the total buying, however, only 1.2 trillion yen is in maturities between 10 and 30 years, about three percent of its total bond buying.

In his confirmation hearing in parliament on Monday, BOJ nominee governor Kuroda said bank was not buying the right volume or type of assets, although he did not specifically mention buying in super-long bonds.

RUSH BEFORE BOOK-CLOSING

While many Japanese investors are sceptical of Kuroda’s pledge to boost inflation, their latest foray into longest maturities also reflected the need to put their portfolio in order by March 31, the end of financial year, traders noted.

Some of them had been underweight on superlongs maturities precisely for fear that Prime Minister’s Shinzo Abe’s loose monetary policy plan might spark future inflation.

“Right now, all they care is how they look like this financial year. They don’t care about inflation that may or may not happen in two years,” said the Japanese brokerage trader, adding the market could change its course after the turn of new financial year.

The yield on the benchmark 10-year JGB fell 5.5 basis points to 0.600 percent, its lowest level in nearly 10 years, even ahead of Tuesday’s 10-year JGB auction. The Ministry of Finance plans to sell 2.4 trillion yen ($ 25.7 billion) of 10-year JGBs.

The price of 10-year JGB futures, which reflects the cheapest-to-deliver seven-year sector, rose 0.27 point to 145.32 , an all-time high.

The five-year yield dipped 2.0 basis point to 0.095 percent , a record low.

Painfully low yields on shorter maturities, a result of Abe’s campaign for aggressive easing, is another reason forcing investors to buy buying longer-dated bonds to earn income.

“There’s no point buying five-year bonds. So by default, they are buying long-dated bonds even though that isn’t a healthy investment strategy,” said Tohru Yamamoto, chief bond strategist at Daiwa Securities.

In addition to domestic factors, JGBs also had tailwinds from concerns about global economy, stemming from U.S. spending cuts and from Italy’s political crisis that threatens euro zone stability.

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Reuters: Bonds News

JGBs surge on speculation BOJ will buy more long bonds

Italians Head to Voting Booths, Election Ends 9:00AM EST Monday; Surge for Grillo and "The Apathy Factor" Will Doom Bersani Coalition

Voting booths are open in Italy though 3:00PM Monday (9:00AM EST). Exit polls will trickle in soon after but early exit polls could be misleading. If the result is close will may not know for over a day.

The Wall Street Journal offers this Italian Election Guide.

Italian voters can cast ballots Sunday and until 0900 ET  Monday, after which exit polls will provide quick but approximate insight into the probable result of the election.

The center-left coalition led by Democratic Left leader Pier Luigi Bersani was five percentage points ahead of Silvio Berlusconi’s center-right coalition according to the average of polls before a blackout on such surveys kicked in two weeks ago, giving it clear front-runner status.

Exit polls in 2006 and 2008 underestimated votes cast for Mr. Berlusconi, but unless Italy’s 51 million eligible voters shifted dramatically in recent days, Mr. Bersani should  – even with fewer than a third of the ballots cast – win a plurality, meaning his coalition will be awarded a majority of seats in the 630-seat lower legislative chamber.

Shift Has Taken Place

The Journal says “unless Italy’s 51 million eligible voters shifted dramatically in recent days, Mr. Bersani should  win a plurality.“

I suggest such a shift has taken place. The open question regards turnout and apathy, not a shift, per se.

Loser’s Penalty

In the Chamber (the lower House of parliament) the party with the largest plurality in the national vote gets a majority (54%) of the seats. In the Senate (the upper chamber of parliament) each of 17 Italy’s regions operate independently and the winner of each region gets a majority (55%) of the region’s seats.

There are 315 seats in the Senate. Lombardy, Italy’s largest region gets 49 seats and the winner will take 27 seats (55%). The other parties will split the remaining 22. Second place may only get 10.

The Journal sums it up this way.

“If Mr. Bersani wins all 17 regions, his coalition will have 178 seats and a commanding upper-house majority. However, if he loses Lombardy, the most populuous region, he will have only 162 seats. If he wins Lombardy but loses Veneto – a near certainty given polling trends – and also loses Sicily – to Mr. Grillo rather than Mr. Berlusconi – the center-left will have 159 Senate seats, a razor-thin majority.“

Not So Fast

I am not convinced Bersani wins the Chamber, let alone the Senate. Some 22-25% of Italians were undecided in the election polls before blackout two weeks ago. Since then, I suggest (based on crowd turnout and social media comments) that there has been a surge for Beppe Grillio and Silvio Berlusconi.

The last election polls before the blackout look like this:

• Bersani center-left 34.5%
• Berlusconi center-right 29%
• Beppe Grillo’s Five-Star Movement 19%
• Monti Civic Choice 12%.

Given the number of undecided voters, Bersani can easily drop 3% or more (and I suspect more). If Berlusconi and/or Grillo gets a huge percent of the undecided votes, Bersani can easily drop  to second or even third place.

Senate Coalition Unlikely

Monti is a lost cause and I doubt he gets more than 10%, making a Senate coalition unlikely if not impossible.

I commented on the possibility of a win by Berlusconi or Grillo in Germany Warns Against “Silvio the Savior” (And That May Backfire); Fake Horse Race Odds Get Around Blackouts.

Reader “AC” who is from Italy but now lives in France writes …

Hi Mish

After a hung parliament, the next most likely outcome may very well be the Five Star Movement (M5S) getting an absolute majority. Rage against the political class is extremely high in Italy, everything that looks “new” is getting votes. Grillo was able to catch the sentiment shift with extremely populist proposals even though his economic program is quite incoherent if not blatantly preposterous.

Grillo support comes from the youngest part of the population.

Undecided voters may not vote at all (in Italy you do not have to register to have right to vote, you are registered by default) or they will probably shift massively to Grillo. The outcome will depend on whether the undecideds stay home.

How Grillo’s parliament members will react as newly elected officials is a real unknown. Grillo himself will not be in the Parliament, and his party will be quite young. None of them have much political experience, even not in smaller city councils.

What they will do? How they will react? Nobody knows. That’s the most “fascinating” thing of M5S, completely new people of a completely new party managed in a completely new way. Grillo and his candidates never did a single minute of TV interview during the whole campaign. They decided to ignore completely TV (but TV has not completely ignored them). This also is completely new, probably new in the modern world.

I do not think Berlusconi will be able to win this time. He has definitely lost a part of his voters, those that expected from him to keep his past promises.

The hung parliament is the most likely outcome, as I said months ago, and I do not even think that Bersani and Monti together will have majority.

Last but not least: Monti has declared yesterday that Merkel was not comfortable with Bersani as Prime Minister, but Merkel officially denied the minute after. Really a strange declaration from a man like Monti that made of international credibility its main “value proposition”.

Regards

AC

The Apathy Factor

I expect a surge of voter enthusiasm for Grillo that will take votes away from Bersani and Berlusconi. Somewhat paradoxically, I also expect a surge in apathy where voters stay home.

The apathy I refer to is not on the Grillo or Berlusconi side, but apathy for Bersani and Monti. Certainly the campaign by Monti is anemic. Thus, unless there is a late surge of energy for Bersani (and I highly doubt there is), Bersani is going to come up short.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Italians Head to Voting Booths, Election Ends 9:00AM EST Monday; Surge for Grillo and "The Apathy Factor" Will Doom Bersani Coalition