Tuesday, August 30, 2011

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Do Retail Investors Drive Silver and Gold Prices with SLV and GLD?

I have suffered through several articles and listened to quite a few accomplished traders hypothesize (almost blindly) how retail investors were driving the price of silver and gold through SLV and GLD. They say "if you look at the flows in these etfs, you would see that retail investors were driving up the price of gold and silver." Flat out ridiculous, I could logically disprove this naive theory in a sentence or two, but first let us have some fun.

Part 1. Let us first take into account that GLD and SLV are only the most popular of the precious metals etfs. There are over 20 other gold etfs, at least 5 electronically traded notes (just in the US). There are 13 silver etfs not including SLV and a few etns like ETRACS CMCI Silver Total Return and Societe Generale Effekten Gmbh. All of these instruments on top of the attention grabbing, contemporary Sprott Physical Silver Trust (PSLV) and the Sprott Physical Gold Trust (PHYS). So I feel it is important to keep in mind GLD and SLV are but a part of a greater synthetic precious metals markets.

Part 2. Since the claims and and hypotheses state that retail investors were driving the price of gold and silver through GLD and SLV, let us look at the institutional ownership. GLD's institutional ownership is currently 42.7%. To put this figure in perspective, I will take the example of Exxon Mobile (XOM) which currently has an institutional ownership of 49.6%. It would not be a surprise for GLD to have a greater percentage of institutional ownership than XOM. The last time I looked up this figure for GLD it was around 50%. Is Exxon mobile largely referred to as a retail driven stock, no it is not, it is a giant $370 billion oil company.

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Friday, August 26, 2011

Australia Silver

Silver Lunar Dragon 2012 Australian Perth Mint Program Unveiled

The Perth Mint will offically launch the Lunar Series 2012 year of the Dragon Silver and Gold bullion, dates are as follows:

Australia Silver

Tuesday, August 9, 2011

Economics Theory: Market Turmoil Turns all Eyes Towards the Fed

Monday's dizzying stock market dive has heightened speculation that the Fed could take steps to ease market jitters that some fear could help topple a teetering economy into recession. The recovery is already sputtering amid weakening manufacturing activity, sluggish retail sales and European debt woes.

Economics Theory: Market Turmoil Turns all Eyes Towards the Fed

Monday, August 8, 2011

Bullion Up as Currency Debasement Accelerates

Gold in USD terms is 2.5% higher after the weekend US downgrade and is higher against all currencies and trading at USD 1,706.40 , EUR 1,195.90 , GBP 1,039.20, CHF 1,039.20 per ounce and 132,549.00 JPY. Gold’s London AM fix was USD 1,709.75, EUR 1195.21, GBP 1,040.94.

There has been massive intervention by the ECB in the Spanish and Italian bond markets. 10-year yields have plummeted by more than 12% from above 6% to 5.27% and 5.34% respectively.

Other peripheral bond markets have fallen but Portuguese and Irish yields are only slightly lower. Five-year CDS have also fallen sharply for Spanish and Italian debt but falls in other markets were slighter and the cost to ensure French debt increased by seven basis points.

Cross Currency Rates

There is increasing talk of a French downgrade and some are wondering why the UK has not been downgraded.

Gold is up 2.6% in euro terms to nearly EUR 1,200/oz which is not a ringing endorsement of the ECB’s intervention.

Non debase-able silver has surged nearly 4% and is back just below $40/oz.

European Bond Market Monitor

It is quite possible that there was also intervention in equity markets as well as European indices fell sharply on the open prior to sharp reversals and going positive early morning. If there was intervention (by the US Working Group on Financial Markets, also known as the “Plunge Protection Team”) in equity markets they were futile as equities have resumed their downward trend.

The FTSE, DAX and CAC are down 1.9%, 2.9% and 2.5% respectively and US futures are showing 2% to 3% losses.

Is this intervention another short term panacea in a long line of short term panaceas?

It certainly looks like it. Piling more debt on top of already humungous debt levels will prolong and likely deepen the global debt crisis.

It makes contagion more likely as the balance sheet of the ECB is now being infected by the peripheral European countries.

The electronic creation of hundreds of billions of euros to bail out bankrupt countries is currency debasement which has a long history of not working out to well.

What is needed is debt forgiveness and debt restructuring and a gradual deleveraging and downsizing of the balance sheets in the banking sector and financial system. Taxpayers should not be further burdened. This is unjust and will inevitably prolong and delay a recovery.

Those with little or no knowledge of financial, economic and most importantly monetary history continue to warn that gold is or may be a bubble. They should be urging diversification but alas do not understand diversification or gold.

They focus exclusively on the nominal dollar price and fail to consider the price in euros and other fiat currencies.

XAU-EUR Exchange Rate

They do not adjust for the significant inflation of the last 31 years. Gold’s real record high in 1980 was $2,400/oz.

They do not compare gold’s price performance in last 10 years with that of its last bull market in 1970’s.

Considering gold purely in terms of price is misguided anyway as what is more important is gold’s value.

Gold’s value is as a safe haven asset that cannot go bankrupt, as financial insurance and as a store of value.

Many today know the price of everything and the value of nothing. This is especially the case with gold.


Silver is trading at $39.85/oz, €27.91/oz and £24.28/oz.

Platinum Group Metals

Platinum is trading at $1,723.00/oz, palladium at $737/oz and rhodium at $1,825/oz.

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Australia Gold: Demand for Bullion at Fever Pitch

Gold-dispensing vending machines? Laws to make it legal tender? John Collett looks at the rise and rise of bullion.

The gold price is hitting record nominal price highs of more than $US1600 ($1450) an ounce, up from about $US300 10 years ago. And most analysts are forecasting the price will rise even higher, and challenge the all-time high of 1980, when it reached $US2400 in today's dollars.

Australia Gold: Demand for Bullion at Fever Pitch


Proof Quality 99.9% Pure Silver
•Original 2011 Koala Design
•Australian Legal Tender
•Limited Mintage - Only 300 Available in Australia
•Numbered Certificate of Authenticity
•Presentation Packaging

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Thursday, August 4, 2011


In occasion of the Year of the Dragon, a unique Silver coin with a real pearl will be issued. The dragon is considered to be a very strong symbol. Historically, it always represented the Chinese emperor and therefore stands for power and protection. Today, it is theultimate auspicious symbol signifying success and happiness. May the celestial Dragon bring great good luck to everyone!

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