Daily Market Report 2/15/13

GOLD

Today was an exciting trading day in the US and European precious metal markets. It appears many of the professionals shorted Gold/Silver on Monday, knowing the Asian markets were closed the entire week for the Lunar New Year holiday. The professional floor traders were able to drive the Gold price under $1,600, and Silver below $30 this morning before covering their shorts. With Asian precious metal markets closed, traditional bargain buyers of precious metals out of the picture, this was a very profitable short sale. CME trading volume today for the most active April Gold contract was an extraordinary 23 million ounces, indicating a bottoming out of the Gold market. Since Monday is a holiday in the U.S., Tuesday will confirm that today’s market trading was the final weak hands clean out before we see a major Gold/Silver rally.

At 11am PDT today, Gold is trading at $1,608 per ounce, down $27 on very high volume. 

SOROS LOWERS HIS U.S. GOLD HOLDING, WHILE PAULSON IS UNCHANGED

Soros Fund Management LLC reduced its Gold investment by 55% as of December 31 from three months earlier, while John Paulson of Paulson & Co., one of the largest corporate Gold investors, holdings were unchanged at 2.18 million troy ounces in the last quarter of 2012.

WORLD GOLD COUNCIL REPORT MAJOR INCREASE IN 2012 OF CENTRAL BANK GOLD BUYING

The World Gold Council reported that central banks (with the exception of China who didn’t report) purchased 145 metric tonnes in Q4 2012, and over the whole year they bought 534.6 tonnes, the highest level of demand since 1964. Russia was the biggest central bank buyer, following Vladimir Putin’s instructions, and adding 75 tonnes to its inventory at a cost of about US$77.5 million (if they bought it evenly over the year). Russia now has central bank Gold holdings of 957.8 tonnes. The next biggest buyer was Brazil who bought 34 tonnes, the Philippines bought 33.6 tonnes, South Korea purchased 30 tonnes, and Iraq added 24.1 tonnes to its central bank holdings.

SILVER

This morning, the Silver market traded very actively reaching a low of $29.75 per ounce on CME contracts of over 31 million ounces. I explained the professional floor trader’s short sale above. I read an interesting article this morning by Byron King on the 2013 Silver shortage and I have provided a link to the article here: http://www.mintstateGold.com/investor-education/2013_Silver_shortage/ 

At 11am PDT today, Silver is trading at $29.90 per ounce, down $0.57 per ounce on very heavy trading.