Silver and particularly gold rose sharply on the release of the higher than expected UK inflation data. It showed that UK inflation quickened to 26 month highs at 4.0%. Currency debasement and higher food and energy prices are leading to an inflation surge in both developed and emerging markets.
Gold in British Pounds - 1 Day (Tick)
The extent of the surge is being masked as the figures in the UK and internationally underestimate real inflation. Increasingly many economists are concerned that official statistics are misleading and hide the true increase in the cost of living (see 'Official statistics hide true increase in cost of living' in News today). A double-digit jump in food prices pushed China's inflation higher in January - seeing consumer prices rise 4.9 percent, driven by the 10.3 percent jump in food costs.
The Chinese inflation data appears to be even more misleading and manipulated than that in western economies. Many governments are attempting to manage consumers perceptions regarding the significant increase in the cost of living as fiat currencies are debased.
Silver is now less than 2% from its 30 year nominal high of $31.25/oz seen at the start of the year and looks set to challenge and surpass this level in the coming days due to continued robust physical demand (both investment and industrial) and the fact that the futures market is seeing some big money go long again after the recent correction.
Silver remains in backwardation with spot trading at $30.68/oz while the July 11 contract trades at $30.55/oz and the December 14 at $30.40/oz.
Gold is trading at $1,372.60/oz, €1,013.66/oz and £851.08/oz.
Silver is trading at $30.67/oz, €22.65/oz and £19.01/oz.
Platinum Group Metals
Platinum is trading at $1,832.00/oz, palladium at $833.00/oz and rhodium at $2,400/oz.
(Bloomberg) -- Soros Cuts Stake in Monsanto, Leaves Gold Shares Unchanged
Billionaire investor George Soross hedge fund cut its stake in Monsanto Co. and left its bet in gold unchanged, according to a quarterly filing with the Securities and Exchange Commission.
The $27 billion Soros Fund Management, based in New York, cut its shares in the St. Louis, Missouri-based agricultural company to 3.29 million shares from 6.52 million in the previous quarter, according to the regulatory filing. As of Dec. 31, the shares were worth $229 million.
Soros, who called gold the ultimate asset bubble, left his gold bet little changed.
(Bloomberg) -- Paulsons SPDR Gold Holdings Unchanged at 31.5 Million Shares
Paulson & Co.s SPDR gold holdings were unchanged at 31.5 million shares as of Dec. 31 compared with three months earlier, according to a U.S. Securities and Exchange Commission filing.
(Bloomberg) -- Gold Advances in Asia as Chinas Inflation Fuels Hedge Demand
Gold advanced in Asia on speculation rising inflation across the globe will fan demand for the metal as a store of value after Chinas consumer prices exceeded the governments 2011 target for a fourth month.
Immediate-delivery bullion rose 0.3 percent to $1,365.43 an ounce at 1:46 p.m. Singapore time after falling as much as 0.2 percent. Gold for April delivery was little changed at $1,365.70 after weakening as much as 0.3 percent to $1,361.30 an ounce.
The market is directionless given that theres no immediate incentive to influence traders, said Paul Yamamura, Tokyo-based trader with Sumitomo Corp. Gold prices may gain steam after some consolidation on inflation fears.
China last week joined India, Indonesia, Thailand and South Korea in boosting interest rates as Asian policy makers sought to cool the economies leading a global rebound. Chinese consumer prices advanced 4.9 percent in January from a year earlier after a 4.6 percent gain in December, todays report showed.
Asian stocks were little changed after yesterdays biggest jump in more than two months and the Dollar Index, a six- currency gauge of the dollars value, fell 0.2 percent after rising for three days. Gold usually moves counter to the dollar.
Assets in gold-backed exchange traded products stood at 2,020.19 metric tons, snapping six-day decline, according to data compiled by Bloomberg from 10 providers. Holdings have shrunk 4.5 percent from the record 2,114.6 tons on Dec. 20.
Platinum for immediate delivery rose 0.4 percent to $1,836.25 an ounce and spot palladium increased 0.2 percent to $836.30 an ounce. Silver was little changed at $30.64 an ounce.
(Financial Times) -- Largest bond fund cuts US government holdings
The worlds largest bond fund sharply cut its exposure to US government-related debt in January, before US bond yields rose this month to their highest level in almost a year.
Pimcos Total Return Fund, run by Bill Gross, a founder of Pimco, reported that its holdings of US government-related securities fell from 22 per cent in December to 12 per cent in January.
The proportion of US government-related holdings, which includes US Treasuries, is at the lowest level held by the $239bn fund since January 2009 when it held 15 per cent of its assets in the category.
(Financial Times) -- Silver miners start hedging on price falls
For a decade, hedging has been a dirty word among precious metals miners.
After committing to sell much of their future gold production at fixed prices when the market was in the doldrums, some of the largest gold miners have since spent billions of dollars buying their hedges back.
I am pleased I will never have to answer another question about the hedge book again, said AngloGolds chief executive, Mark Cutifani, when he completed the process of closing the companys legacy hedges last autumn.
Not so fast. Hedging has made a comeback.
In the past two months, at least five miners have executed silver hedges to protect against a fall in prices, bankers say.
Deutsche Bank estimates that in excess of 100m ounces may have been hedged. That is several times the size of total outstanding hedges in late 2010, estimated at about 20m ounces, and 15 per cent of annual silver production.
Does the rash of activity herald a return to widespread hedging for precious metals miners?
That question is of critical importance for investors in gold and silver, as well as the miners own shareholders.
Large-scale gold and silver hedging would be a bearish signal for the precious metals, because it directly increases selling pressure in the market and indicates a lack of confidence in the sustainability of prices.
Advisers and bankers have been warming to the idea of hedging.
Editor's note: This is misleading. A minority of advisers and bankers are warming to the idea
Amid a growing consensus that a more positive economic outlook and rising interest rates in developed economies will damp investment demand for precious metals, some are counselling miners to start looking for cover.
Editor's note: This is a very questionable non evidence based assertion
Id certainly advocate gold and silver miners doing some prudent hedging at these higher prices, Nick Moore, head of commodity strategy at RBS, says.
A return to hedging may seem to be a natural shift in the cycle. (...)
Editor's note: This article is quite selective and ignores the primary economic fundamentals of the silver market especially concerning supply and demand with huge demand, both industrial and investment, being seen in China, wider Asia and internationally. Mines that hedge their silver production forward (by selling in the futures market) are at risk of incurring sharp losses should the silver price rise to its 1980 nominal high of $50/oz or higher. The nominal high of more than 30 years ago will likely be reached given the current global macroeconomic situation of geopolitical instability, rising inflation, negative real interest rates and global currency debasement and given the tiny size of the physical silver market.