Yesterday’s AM fix was USD 1,721.00, EUR 1,303.10, and GBP 1,091.80 per ounce.

Currency Ranked Returns – (Bloomberg) 

Gold ticked higher in Asia to $1,730/oz but has again shown weakness in early morning trade in Europe and is trading at $ 1,725.90.

Gold is being supported by the never ending Greek debt saga and increased tensions between Israel and Iran which has seen US crude rise above $101 per barrel.

Gold continues to consolidate between $1,700/oz and $1,763/oz. After the strong gains seen in January, more consolidation at these levels may be necessary prior to gold challenging $1,800/oz.

Significant macroeconomic and geopolitical risk and the appalling fiscal state of most major industrial nations means that all fiat currencies will almost certainly fall against gold in the coming months.

These risks have led to total gold ETF holdings rising to near record levels and the SEC filings make for interesting reading.

Cross Currency Table – (Bloomberg) 

While much of the focus has been on Paulson & Co., the hedge fund founded by billionaire John Paulson, cutting its stake in the SPDR Gold Trust by 15% in the fourth quarter, possibly of more importance is the fact that PIMCO, the Texas Teacher Retirement System and George Soros all increased their holdings of the biggest exchange-traded product backed by gold.

Paulson cut his gold ETF bullion holdings by about 600 million dollars in Q4, a reduction that was likely driven by client redemption needs as he and his fund remain upbeat on gold – primarily due to inflation concerns.

Paulson’s reduction in SPDR was offset by other important buyers such as PIMCO, which oversees $1.36 trillion and is home to the world’s biggest bond fund and significant institutional buying from the likes of the Texas Teacher Retirement System and billionaire investor George Soros.

‘Bond King’, Bill Gross recently wrote about gold as a “store of value” and PIMCO’s allocation to GLD may be ongoing as they seek to diversify their portfolios and hedge against inflation.

Soros, who once suggested gold was or would be “the ultimate asset bubble,” raised his stake in the SPDR Gold Trust (GLD), a gold-backed exchanged-traded fund, to 85,450 shares, up from 48,350 shares in the period. Soros, who had disclosed call and put options on the gold fund in the prior period, reported no such investments in the fourth quarter.

Soros’ GLD position is worth a mere $13 million, however it suggests that he is not as bearish on gold as portrayed and that he sees further upside for gold.

Eton Park Capital, run by Eric Mindich, retained its stake.

Vinik Asset Management, the Boston-based hedge fund founded by Jeffrey Vinik, who formerly ran the Fidelity Magellan Fund, held 2.6 million shares in the SPDR gold ETF as of Dec. 31, down 775,000 shares from the end of the third quarter.

Tudor Investment, the $11 billion hedge fund based in Greenwich, Connecticut, sold in entire stake of 200,000 shares of the SPDR gold ETF. Patrick Clifford, a spokesman, declined to comment.

Steven A. Cohen’s SAC Capital and New York-based Touradji Capital Management LP cut SPDR gold positions.

SAC Capital, which manages $14 billion and is based in Stamford, Connecticut, held 179,601 shares, compared with 184,601 in the third quarter. Jonathan Gasthalter, a spokesman for SAC Capital, declined to comment.

Touradji Capital, founded by Paul Touradji, sold its entire stake of 45,000 shares in the SPDR gold ETF. The hedge fund bought the securities in the third quarter. Leslie, also a spokesman for Touradji, declined to comment.

Lone Pine Capital LLC, the hedge fund run by Stephen Mandel Jr., acquired 3.75 million shares of the SPDR gold ETF.

Stevens Capital Management Holdings Ltd. sold its entire stake of 77,019 shares in the SPDR gold ETF. GLG Partners LP sold its full stake of 94,675 shares.

Overall holdings in the SPDR Trust rose nearly 2% in the fourth quarter, following a 2% gain in the third quarter.

Gold ETF holdings increased even though the price of bullion fell around 4% in the fourth quarter – showing how ETF gold demand is just one facet of global investment demand and demand for physical bullion from investors in Asia and internationally and from central banks remains more important than ETF demand.

Global holdings in exchange-traded products backed by gold were 2,390.7 metric tons, approaching a record high, according to Bloomberg data. They rose 4.8 percent in the fourth quarter and 7.8 percent in 2011. Central banks around the world added 157 tons to their holdings in the six months ended Nov. 30, World Gold Council data show.

The SEC GLD data shows that diversification into gold continues by some of the largest hedge funds and institutions in the world.

It is worth noting that some hedge funds and institutions are on record as having sold their GLD holdings in order to own gold bars in allocated accounts.

This was done in order to avoid the transparency and scrutiny that comes from owning the GLD (quarterly SEC filings). Others such as Kyle Bass and David Einhorn have bought gold bars in allocated accounts due to concerns about the significant counter party risk in the world today.

UBS point out that looking solely at SEC GLD data as a guide to sentiment towards gold may be deceptive as “it could very well be the case that exposure to gold is merely transferred to other less-visible channels”.

Bullion dealers internationally have seen a significantly increased preference for gold bullion (coins and small and large bars) in allocated accounts in recent months – especially in the aftermath of the MF Global fraud and theft of clients assets.

Given the degree of counter party, re hypothecation and systemic risk in the world the preference for outright legal ownership of real physical metal is set to continue in the coming months.

This will rightly lead to an increased preference for legal ownership of bullion coins and bars over exchange traded vehicles and trusts with high levels of indemnification and significant counter party risk.

OTHER  NEWS
(Bloomberg) — Shanghai Futures Exchange Lowers Gold Margins to Boost Trading
The Shanghai Futures Exchange, China’s biggest metals bourse, lowered the margins on gold for trading the contract in the final month before its expiry to boost volumes and attract more investors.

The margin requirement, or the minimum amount of cash that investors must keep on deposit, will fall to 10 percent from 15 percent from the first trading day of the month before delivery, the Shanghai exchange said in a statement on its website. The margin is also lowered to 20 percent from 40 percent for the last two days before the final trading day of the contract.

Margins for contracts are initially set at 7 percent from the day they are listed on the bourse, according to the statement. The changes will be effective from March 1.

“The exchange’s move is aimed at boosting trading at a time when volatility seems to have been tamed,” Zuo Xichao, manager at Beijing Antaike Information Development Co., said by phone from Changsha today. “Lower margin requirements will make these investments easier and more attractive because trading now requires less money to be locked up.”

Gold futures on the Shanghai exchange gained 3.4 percent in 2011, climbing for the third year, as the escalating debt crisis in Europe, slowing economic growth in the U.S. and rising inflation in China boosted demand. Still the yuan-denominated gold futures gained less than the 10 percent increase last year in the spot-delivery gold traded overseas.

The June-delivery contract in Shanghai gained 0.5 percent to 352.18 yuan a gram today.

SILVER 
Silver is trading at $33.76/oz, €25.67/oz and £21.49/oz.

PLATINUM GROUP METALS 
Platinum is trading at $1,636.00/oz, palladium at $681/oz and rhodium at $1,500/oz.

Provided By Goldcore

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Crude prices edged higher yesterday as a better than anticipated economic sentiment in Germany, Europe’s biggest economy discarded energy investors’ pessimism after Moody’s Investors Services slashed the credit rating for a number of euro zone members. Some extra support for oil prices was also provided by the escalation of geopolitical tensions with Israel accusing Iran of attacks on its diplomats abroad. Like usual on Wednesday, the release of weekly oil inventories is expected to offer near term direction for the energy complex.

Moving Averages:   9 day 99.71      14 day 99.29      40 day 99.92

Technical Report

Challenging resistance around $102.00 level was too tempting for the bulls and they pushed for it in the first part of the trading session. However, more often than not in the last three months, crude failed to sustain the rally above that mark and additional selling power pushed the market price back down. It was the case again yesterday but the retracement was not enough to cancel off the initial gains entirely and crude ended the day 28 cents up at $101.31 a barrel.

DOE Stock estimates

Crude +1.3

Distillates -1.0

Gasoline +0.4

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Yesterday’s AM fix was USD 1,720.00, EUR 1,308.98, and GBP 1,087.56 per ounce.

Cross Currency Table – Bloomberg

Gold has again seen the pattern of recent days, months and years of strength in Asia followed by weakness in Europe. Gold’s 1.5% gain yesterday came as Ben Bernanke spoke regarding the slow US economy and need for continued loose monetary policy.

Gold broke through a resistance level of $1,750/oz in Asian trading as investors continue to hope for a Greek debt interim solution after the series of recent missed deadlines and gold appears to be consolidating above $1,740/oz.

Tuesday’s decision was postponed again, as Greek’s grapple to accept austerity and reform measures in exchange for a 130 billion euro loan from the EU and IMF.

Gold Spot $/oz – 3 Days (Bloomberg) 

A conclusion to the deal may see a short term dip in gold bullion prices, hurting the safe haven appeal for gold momentarily. Greece is the one country getting headlines in the Eurozone today; however the other PIIGS will have their own restructuring to deal with soon.

Mohamed El-Erian, CEO and co-chief investment officer of bond fund giant PIMCO, said investors should be underweight equities while favoring “selected commodities” such as gold and oil, given the fragile global economy and geopolitical risks.

Over the long term gold will reward investors who own gold as part of a diversified portfolio. Trying to time purchases and market movements is not recommended – especially for inexperienced investors.

New research from Credit Suisse and London Business School entitled ‘The Credit Suisse Global Investment Returns Yearbook 2012’ continues to be analysed by market participants.

The 2012 Yearbook investigates data from 1900 to 2011 and looks at how best to protect against inflation and deflation, and how currency exposure should be steered. The chief findings are that bonds do well in deflation and benefit from currency hedging, and equities are not a perfect inflation hedge, but benefit from international diversification.

Gold Price ($/troy ounce) 

The report shows that gold offers a timely inflation hedge and long term holders of gold should expect a positive correlation to inflation – gold is one of only two assets since 1900 to have positive sensitivity to inflation (of 0.26).

Only inflation-linked bonds had more – 1.00, as expected.

By contrast, when inflation rises 10%, bond returns have fallen an average 7.4%; Treasuries fell 6.2%, and equities lost 5.2%. Property fell by between 3.3% and 2%.

Importantly, gold managed to increase its value across both extreme inflationary and deflationary scenarios.

The academics from LBS analysed 2,128 individual years in 19 major countries (1900-2011), finding gold rose 12.2% in the most deflationary years – when average deflation was 26%.

Also of note is the fact that gold also rose marginally in the most inflationary of those years, when CPI was jumping on average by 18%.

The only negative in the report regarding gold was the fact that gold’s returns from 1900 to 2011 were poor – with real returns of only 1.3% a year, compared to shares’ 5.4% (MSCI World USD) and bonds’ 1.7%.

However, it is important to note that of course equities outperformed gold.

It would be astonishing if they had not as gold was money & fixed at $20 per ounce until 1933 and $35 per ounce until 1971. Therefore, it is not a fair or noteworthy comparison.

More importantly, in recent history and in the modern era since 1971, when the Gold Standard ended and gold became freely traded, gold has outperformed the benchmark S&P 500.

One of the authors of the report, Paul Walsh said the lesson for investors was that while equities are still better long term investments – equities lost 12% of their real value in years when average annual inflation was highest (at 18%).

“Gold has given returns that are not very high, but when you have had inflation, gold has been a good asset to have” he said.

While the report noted that gold has been volatile – it is important to note that gold is only marginally more volatile than global equity benchmark indices (less volatile than emerging market indices and far less volatile than individual shares)  and this volatility is only since the end of the Gold Standard in 1971 when gold became not just money but a tradable asset.

Credit Suisse Research On Gold Interpreted Very Differently 

There appears to be significant discrepancy in how the research is being analysed and interpreted by different journalists.

The Wall Street Journal ( ‘Investing for Inflation (and Deflation)’ ) wrote how the report was broadly positive on gold showing that: 

“since 1900, gold gave an average 1.1% real annual return for U.K. investors. On average, gold performed positively during periods of inflation and modest deflation and performed well in severe deflations.

Not bad. But it came with a substantial cost.

One, it doesn’t yield anything, all those gains came in price performance. Two, it came at the expense of considerable market volatility. Overall, bonds and bills did worst with inflation and best with deflation. Equities weren’t much of an inflation hedge, though housing and gold largely kept pace with inflation. The only surefire inflation hedge is index-lined bonds.

Though with these, there’s the risk of government default.

In terms of outright performance, equities delivered by far the biggest real annualized returns, 5.4% against 1.7% for bonds and about 1% for bills and housing. But this return came only because investors were willing to accept substantial risks.

The standard deviation for equities was nearly 18%. They may not have been much of an inflation hedge and they demand strong stomachs from investors, but equities were the best way to invest over the very long run.

Whether they continue to be over the next century is another question entirely.”

While Reuters (”Gold not a reliable inflation hedge-study” ) interpreted the report’s findings regarding investing in gold in a more negative manner:

“Gold prices have been too volatile to play a reliable role as a hedge against inflation, a study of financial assets over the past 112 years showed on Tuesday.

While inflation does not reduce gold’s real value, it has no yield or income flow and the precious metal has given a far lower long-term return than equities.

In the period since 1900, gold gave a real return of 1.1 percent in sterling terms and its value fluctuated widely, the study published by Credit Suisse and London Business School’s Elroy Dimson, Paul Marsh and Mike Staunton.”

Bloomberg reported:

“ While gold can be viewed as a hedge against inflation, the metal has given a “far lower” long-term return than equities, according to a study by the London Business School and Credit Suisse Group AG.

“For that reason it is unlikely that institutions seeking a worthwhile long-term real return will invest heavily in gold,” authors of the report e-mailed today said. “The purchasing power of gold has fluctuated over a wide range.”

The Financial Times (“Investors are turning to equities” ) reported:

“Gold offers better defences against both inflation and deflation than shares. But its price is very volatile, and for years at a time it failed to live up to its promise, falling as inflation soared. The truth is that investors worried about inflation have no good options.”

At Goldcore, we are privileged to also have access to excellent research on gold from Trinity College Finance Professor, Dr Constantin Gurdgiev, who wrote an academic paper with Dr Brian Lucey, also of Trinity College Dublin, showing gold is a proven hedging instrument and safe haven.

Dr Constantin Gurdgiev opinion regarding this research on gold follows:

“While gold price volatility and correlations reversals with other assets do occur and can be detrimental to short- and at times even medium-term hedging, data shows that in the long run, gold is the instrument providing the best risk cover for investors concerned with preservation of wealth.

This is not to say that other assets, held in a diversified portfolio are inferior to gold in terms of either returns, risk-adjusted returns, or in terms of providing hedging opportunities over medium and short-term investment horizons. However, no other asset class provides as many hedging opportunities as well as safe haven outlets vis-a-vis other asset classes and inflation, as gold.

While gold does not deliver a dividend yield, unlike equities, gold does not suffer from survivorship bias.

It is also important to note that many equities do not provide regular dividends, either. Observed returns on equities are often estimated under the assumption that an average investable portfolio originally allocated is identical to that held on average at the time of closing portfolio simulations.

Instead, many equities fail with a downside value of zero. Gold, throughout the centuries, remains there – unchallenged by risks of delisting, bankruptcy and even, with modern storage options, repudiation and expropriation.

In addition, physically held gold is not a claim on a residual value of the underlying undertaking, as equities are, but a fully owned asset with no risk of subordination of the claim. Thus, investors in equity are subject to risks of dilution and ultimately, of total principal loss. These risks are not associated with gold ownership.

No matter how one slices the data, a diversified portfolio of equities, gold, fixed income and other asset classes, coupled with strict passive rules for loss management and profit booking in the case of investors pursuing mixed strategies, is the best alternative available to ordinary investors in the current markets.

Until some dramatic financial instrumentation invents an asset that holds real value in the face of many incremental and catastrophic risks, while supplying high degree of liquidity, portability and safety of ownership, gold will remain a core component of a well-diversified portfolio.”

Dr Constantin Gurdgiev is Adjunct Professor of Finance with Trinity College, Dublin, and non-executive member of the Investment Committee of Goldcore, Ltd.”

OTHER NEWS
(Bloomberg) — European Union governments are moving toward stiffer sanctions on Syria, including a freeze on the central bank’s assets and a ban on imports of phosphates and precious metals, an EU official said.

A consensus exists in the 27-nation bloc to toughen the sanctions against President Bashar al-Assad’s regime, with details to be ironed out in time for approval on Feb. 27 by EU foreign ministers, the official told reporters in Brussels today on condition of anonymity.

Taking sanctions on Iran’s central bank as a model, the EU is working to craft the Syrian monetary curbs so as not to hobble Syria’s trade completely, the official said.

A cutoff of phosphates imports will shut down a key source of revenue for the regime because Syria relies on European customers for 40 percent of its phosphates sales, the official said.

The official gave no figures for Syria’s income from gold and other precious metals slated for the ban.

By contrast, a proposal by one EU government for a ban on commercial flights to and from Syria has found little support, said the official. He didn’t identify the government behind the idea.

Brussels (DPA) — EU sanctions on Syria to target central bank, gold and phosphates
European Union foreign ministers are expected to approve a new round of sanctions against Syria in two weeks’ time, targeting its central bank and exports of phosphates and gold, a diplomat said Wednesday.

The EU was also preparing a meeting with the Arab League and the United Nations, replicating one of the panels set up last year in response to the crisis in Libya, the source said, while at the same time excluding any military option.

“Syria is not Libya,” he said.

Russia and China blocked a critical United Nations Security Council resolution last week, reportedly out of concern that it could give leeway for a military intervention of the type that was mounted in Libya on the basis of another UN resolution.

“The Lybian precedent is on everybody’s mind,” the EU diplomat said, adding that India, Brazil and South Africa, as well as some Arab states, had expressed “reserves” on the issue.

EU diplomats were working to freeze the Syrian Central Bank’s assets and to ban EU imports of Syrian phosphates, gold and other precious metals, the source indicated.

“A suspension of these imports would have quite a strong economic effect,” he said.

One EU country was even suggesting a ban on commercial flights to Syria, but the proposal was contentious, the diplomat said, pointing out that it might complicate deliveries of humanitarian assistance.

The new sanctions would likely have an impact “on the daily economy” of Syria but “we are left with very little options,” the EU source said, referring to President Bashar al-Assad’s defiance in the face of mounting international isolation.

Since March, when the Syrian regime started a bloody crackdown against opposition protesters, the EU has included dozens of Syrian officials – including al-Assad – in a visa ban and asset freeze list, and imposed arms and oil sector embargoes on the country.

The EU is also preparing contingency plans for the evacuation of more than 1,000 Europeans in Syria, and is due to allocate 3 million euros (4 million dollars) in humanitarian aid, another senior source from the bloc said.

SILVER
Silver is trading at $34.31/oz, €25.85/oz and £21.58/oz.

PLATINUM GROUP METALS 
Platinum is trading at $1,646.00/oz, palladium at $701/oz and rhodium at $1,400/oz.

Provided By Goldcore

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News that Dow Jones reached a record high, last seen on May 2008 sparked a quick and sharp rally in crude prices as optimism over the US economy was seen to keep oil in high demand. A weakening US dollar on renewed hopes that Europe could solve its troubles also added support for the energy sector. Later today, the US Department of Energy will release its weekly inventories report, offering guidance regarding the possible short term direction and investors will be keen to see if this time the numbers will confirm the positive oil demand implied by the Nonfarm payrolls.

Moving Averages:   9 day 98.10      14 day 98.49      40 day 99.07

Technical Report

Initially, WTI crude moved down attempting to test support at $95.43. However, additional buyers joined just below the $96.00 mark triggering a very steep and quick rebound, pushing the market price through the 9 and 14 days moving averages. The day finished with a $1.50 gain at $98.41 where the 40 days moving averages offered good resistance but only temporally as this morning’s rally surpassed that indicator. And with that we are back in sideways territory as swings around the current level have been seen since mid Nov last year.

DOE Stock estimates

Crude +2.7

Distillates -0.9

Gasoline +0.1

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Cross Currency Rates – Bloomberg   Gold rose $10 in Asian trading to reach $1,730/oz as investors nervously watch Greece. Just prior to European markets opening gold began to fall and has fallen below the lows in Asia and testing short term support at $1,712/oz.

The labyrinthine debt crisis rumbles on with European and Greek policy makers continuing to appear somewhat lost and lost for answers.

Gold Spot $/oz – 5 Days (Bloomberg)   The Greeks delayed their decision yesterday again. Greek party leaders face crunch talks again today to secure a new international bailout and avoid a chaotic debt default.

European and Asian shares saw some looses as investor concern grows as to whether Greece would eventually be resolved or trigger contagion across the euro zone which already has many countries with increasingly shaky economies.   Investors are also awaiting a rate decision by Australia’s central bank later today.  They are expected to keep with the loose money policy and ease interest rates.

Major bullion banker, HSBC, said it was keeping its 2012 gold forecast for $1,850/oz due to central banks accommodative money policies.

Platinum output in South Africa is likely to decline this year due to the increase of labour and safety stoppages, which supports the metal prices but increases the costs for producers.   While Chinese imports from Hong Kong were down sharply in December, the annual figures show a remarkable increase in 2011, Chinese gold imports from Hong Kong – tripled from 2010. There continues to be suspicions of Chinese official sector gold bullion buying.

Fed’s Record Setting Money Supply Splurge Spurs Gold’s Rally

The surge in the U.S. money supply in recent years has sent gold into a series of new record nominal highs.

Money supply surged again in 2011 sending gold to new record nominal highs.

Money supply has grown again, by more than 35% on an annualized basis, and this is contributing to gold’s consolidation and strong gains in January.   The Federal Reserve’s latest weekly money supply report from last Thursday shows seasonally adjusted M1 rose $13.2 billion to $2.233 trillion, while M2 rose $4.5 billion to $9.768 trillion.

(Bloomberg) — Gold may challenge and exceed $2,000 an ounce this year though it is unlikely to stay much above that level, said Tom Kendall, the head of precious-metals research at Credit Suisse AG’s securities unit.

The consensus estimate that gold will reach $2,000 this year prices in “bad outcomes” for the European and U.S. debt crises, Kendall said in a presentation at the Investing in African Mining Indaba in Cape Town today.

(Bloomberg) — Speculators raised bullish bets on commodities to a 12-week high on signs that global growth will boost demand at a time when shortages are forecast for everything from copper to palladium to cocoa.

Money managers expanded their combined net-long position across 18 U.S. futures and options by 11 percent to 823,917 contracts in the week ended Jan. 31, Commodity Futures Trading Commission data show. That’s the highest since Nov. 8. Gold wagers surged the most since September 2009, silver holdings rose for a fifth week and cattle bets climbed to a 10-week high.   (Bloomberg) — BNP Paribas SA raised its 2012 price forecasts for palladium to $835 an ounce and for platinum to $1,770 an ounce.

Mine supply estimates were lowered for this year, with palladium output falling 1 percent, Anne-Laure Tremblay, an analyst at BNP Paribas, said in a report e-mailed today. Platinum will be in surplus this year while palladium is in shortage, she said. Palladium was previously forecast to be $725 an ounce this year and platinum was $1,610, according to the report.

(Bloomberg) — Azerbaijan natural gas flow to Turkey halted due to technical failures, according to state-run Anatolia news agency.   There was also a drop in the amount of gas coming from Iran, the news agency said. Breakdowns at compression stations in Azerbaijan and Iran triggered the shortages, Anatolia reported, without saying how it got the information.   Turkish Energy Ministry officials told the news agency that power plants using natural gas switched to diesel and fuel oil to generate electricity. There are no cuts in gas services to residential buildings or industrial plants, ministry officials said, according to Anatolia.

(Bloomberg) — A policy of nationalizing mines would not be a “smart strategy” for South Africa and changes to taxes or ownership will only be made after extensive consultation with the industry, Trevor Manuel, the country’s planning minister, said.

While a study into nationalization of mines commissioned by the country’s ruling African National Congress has recommended against the policy, it has proposed increased taxes, a party official who has read the document said last week, declining to be identified because it hasn’t been publicly released. Manuel is a member of the ANC’s Economic Policy Committee, which has discussed the study.

“It doesn’t call for nationalization, it calls for new partnerships,” Manuel told the Mining Indaba conference in Cape Town today. “Given the long lead time the industry deserves policy certainty.”

The ANC commissioned the study after calls by it youth wing for nationalization because it said the country’s black majority isn’t benefiting enough from the industry that is the world’s biggest producer of platinum, chrome and manganese. Anglo American Plc, Xstrata Plc, BHP Billiton Ltd. and Rio Tinto Group own assets in the country

“If you want then to take away those property rights you’re going to have to pay for it and if you pay for that you’re not going to be able to pay for health, education or anything else,” Manuel said, adding that the constitution protects property rights. “The country does not have the resources. It clearly is not a smart strategy.”

While elements of the study could concern the mining industry, the proposals will undergo extensive debate before they stand a chance of becoming policy, he said.   “There are proposals in there that would worry many people,” he said. “It’s important not ever to confuse proposals with adopted policy.”

The ANC study will be discussed and may influence policy arguments at party conferences in June and December.

SILVER

Silver is trading at $33.35/oz, €25.41/oz and £21.09/oz.

PLATINUM GROUP METALS

Platinum is trading at $1,615.25/oz, palladium at $690/oz and rhodium at $1,400/oz

Provided By Goldcore

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Gold continued to retrace as uncertainty over Greek sovereign debt pushed investors into the safety of the US dollar. The yellow metal posted a sharp rally during January but the danger that at any moment something nasty could kick off requires caution so the odd profit taking is not really a surprise. Even if on the long term many investors expect gold to keep on rising, on the short to medium term things look different now with daily developments dictating the next immediate direction. Overall, gold lost $4.80 to $1720.10 and further drops towards the $1700.00 mark are definitely possible.

Moving Averages:   9 day 1732.82        14 day 1712.24       40 day 1644.06

Silver Overview

Silver finished near flat at $33.611 after testing again support around $33.000 mark. A relative calm in the stock market also kept investors on the sidelines. Like gold, the bullish momentum for silver is losing steam with further consolidation on the cards. On the downside $33.000 seems to be holding while any rally above $34.000 was difficult to sustain so far.

Moving Averages:   9 day 33.614    14 day 33.065      40 day 30.512

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The euphoria over the positive impact the US employment report might have on the energy sector was short lived as yesterday the WTI contract declined again. The re-emergence of US crude oversupply seems to put downward pressure on WTI crude prices but at the same time, demand for Europe’s Brent contract is getting stronger thus widening the gap between the two to over $19.00. Not only that an embargo on Iranian oil led to concerns over crude supplies in Europe but now there are reports of heightened demand for Brent crude from Asia.

Moving Averages:   9 day 98.00      14 day 98.49      40 day 99.00

Technical Report

WTI crude resumed its downtrend yesterday, losing 93 cents to $96.91 as bears regained control. The chart also points downward as the short term moving averages have crossed below the longer term ones. At the same time, within $97.50- $98.00 range we can see solid resistance building up making it harder for the bulls to push for a rebound. So, the sellers have the edge at the moment with the next strong support seen within $95.00 – $95.50.

The short term trend is bearish, the medium term trend is sideways and the long term trend is bullish

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The early plunge in the single currency against the US dollar was triggered by reports in the media that Greek Prime Minister Lucas Papademos failed to strike a deal with political leaders over spending cuts and lowering the minimum wage. Sensing the danger and to save the day, Chancellor Angela Merkel went on German television saying ‘the EU cannot accept a Greek bankruptcy’. The comment reversed the trend and the euro closed 36 pips higher at $1.3130. So, this game of pushing and pulling goes on but the rally which started mid January seems to be stalling.

Moving Averages:   9 day 1.3138     14 day 1.3092    40 day 1.2974

AUD/USD  Overview

Yesterday, the Australian dollar posted a decline versus the greenback, 55 ticks to 1.0724 largely on the back of a government report indicating a surprise drop in retail spending, adding further support for a cut in interest rates. However, surprise-surprise despite widespread expectations for a 0.25% slash, the Reserve Bank of Australia left the benchmark interest rate on hold at 4.25%. Consequently, investors reacted quickly this morning pushing the Australian dollar to a new 6 months high at 1.0810.

Moving Averages:   9 day 1.0687     14 day 1.0621      40 day 1.0343

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Australia took the markets by surprise by leaving their benchmark interest rate on hold at 4.25% overnight. A 25bp cut was expected following the November and December cuts to help whether the implication of the Euro zone crisis but confidence stemming from China and America’s ability to deal with the storm was enough of a reason not to cut at this juncture as it was felt that commodity demand from the regions would be sufficient to stimulate growth. This pushed the AUD to its highest level in 6 months against its US counterpart and has also helped with risk trades this morning, keeping EUR propped above 1.3100.

Attention today will focus on German industrial production and unsurprisingly the bond auctions. Today, it’s the turn of the Netherlands, the UK and Greece who look to sell 5bn Euros, 4bn Pounds and 625m Euros respectively.

Chart of the day: EURGBP Daily   It can be argued that GBP has somewhat underperformed against the EUR of late and failed to fully capitalise against its weakness. This could be due to market perception waning that we’re an appropriate haven for flows as our own domestic economy struggles to cope against the European fallout. EURGBP has pivoted 0.8300 recently and seems to have settled back in to its trend channel. With the BoE announcement on the horizon, I’ll be looking for clearer directional bias.

Provided By vimpopat.com

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Yesterday’s AM fix was USD 1,720.50, GBP 1,097.40, and EUR 1,310.06 per ounce.

Cross Currency Table – Bloomberg

Gold edged higher in Asian and again in European trading today. Gold has broken through all major moving averages and Fibonacci levels this week due to a weakening dollar and geopolitical concerns regarding Iran and the European solvency crisis.

Euro gold appears to be breaking above resistance which should lead to new record highs above €1,359/oz.

Gold at €1,315/oz is now just 3% below the record high from September 2011. The correction and consolidation of recent months was necessary and healthy, and the intractable Eurozone debt crisis should result in further falls in the euro and €1,400/oz gold is likely.

Dennis Gartman, economist and newsletter writer, said he is buying more gold priced in euros after he “returned to this trade” last week. It is “time to add to the trade and we are doing so this morning,” he said today in his daily Gartman Letter.

“Mission Accomplished” As Venezuela Welcomes Home Final Shipment Of Repatriated Gold Bars
Venezuela repatriated 160 tonnes of gold that was held abroad with the last shipment, 14 tonnes , arriving from Europe at the Caracas airport today.

Declaring the process a “mission accomplished,” government officials and state news crews met the 14-ton load at a Caracas area airport and heralded the televised event as a boost to national sovereignty.

“In two months, we’ve brought 160 tons of gold valued at around $9 billion back to Venezuela,” Central Bank President Merentes said on state television from the Caracas airport. “Today marks the last day of the mission.”

Venezuela has the 15th largest holdings in the world, according to the World Gold Council. Venezuela will leave around 15% of its reserves, (50 tons), outside of Venezuela for financial transactions, said Merentes.

CFTC Data
CFTC data shows speculators are gradually beginning to enter the gold futures market again.

Fund managers increased their bullish bets in Comex gold futures and options in the week ended Jan. 24, according to Friday afternoon data from the Commodity Futures Trading Commission (CFTC).

Reuters Global Gold Forum

The net non commercial gold position rose for a third week in a row – by 6,194 contracts to 142,223 lots versus an overall decline in total futures OI. This marks the longest stretch of gains in CMX net non-com futures OI since July/Aug last year. Money managers raised their gold holdings by more than 8,000 lots to 117,156 contracts, also the largest weekly increase since mid-November.

This raised their net long position 8.5% to 126,937 contracts, from 116,978 a week earlier.

The managed fund net long position represents around 12.6 million troy ounces of gold.

Importantly, the recent increase in net long positions are from multi month record low levels after the liquidation seen after gold’s sell off from nominal highs over $1,900/oz.

This suggests that gold should see further gains in the coming months as these positions continue to be added to.

Silver Surges 21% in January – Silver Demand Is “Diminishing A Supply Surplus”
There continues to be no coverage of silver in the non specialist financial media and little coverage of silver in the specialist financial media. However, both the Financial Times and Bloomberg cover silver today which might be a harbinger of short term weakness.

The majority of articles on silver are bearish and most bank analysts remain bearish on silver again in 2012 – as they have been in recent years. Prices will average $37.50/ounce in Q4, according to a survey of 13 analysts by Bloomberg.

The lack of coverage of silver and consequent “animal spirits” in the silver market is of course bullish from a contrarian perspective.

Analysts look set to get the silver market wrong again as recent rocketing industrial demand for silver, from solar panels to batteries to medical applications and growing investor demand for coins, and small & large bars is “diminishing a supply surplus” according to Nicholas Larkin of Bloomberg.  This has led to silver’s best January gains in 30 years with silver up over 20% from below $28/oz to nearly $34/oz.

Barclay’s estimates that manufacturers will need a 2.5% increase of the metric tons used last year and investment demand continues to grow due to risks posed by both inflation and systemic risks.

Silver like gold – cannot go bankrupt and will always have a value.

Silver supply shortages are something we and other analysts who are bullish on silver have been warning of for some time. This is because the silver market is small versus the gold market and tiny versus equity, bond, currency and derivative markets.  This is why we believe silver should rise to well over its nominal recent and 1980 high of $50/oz in the coming months.

While focus has been on silver’s fall from $50/oz last year – there is very little focus on silver’s long term performance and how silver has massively outperformed most asset classes in recent years

SILVER
Silver is trading at $33.55/oz, €25.46/oz and £21.26/oz.

PLATINUM GROUP METALS
Platinum is trading at $1,614.00/oz, palladium at $683/oz and rhodium at $1,325/oz

Provided By Goldcore

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