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April 6, 2010 / Hal (GT)

Worthy financial news to eye today.

I’m back from a week off though I must say another week off is in order. But we can’t have everything we want can we…. well, unless your in Congress or the White House, and then you just figure it’s owed to you. But that am slipping off the focus of this post: financial stuff relating to the precious metals.

Or am I slipping off focus?

Anyway I’ve several items that I think are worth looking at today. Gold right now is at $1,137.60 looking at the real time tracker ExactPrice. Silver is at $18.00. It’s been a good day so far for gold.

I’ll start off with what I think is the must read from Jim Sinclair’s Mineset: COT Data Illustrates Strong Buying Beneath Gold Market.

Here we are now, a bit more than 5 months later with a net bleed-down in the managed money category of 90,000 contracts with gold trading at $1105 the day that the most recent COT report is cut off for the past week. In other words, gold was able to absorb all that selling where hedge fund money was moving out and somehow put on another $5.00 in price over the last 5 months. That is stunning and illustrates how strong the buying is beneath the gold market.

The next is a worth read as well and shows more people are beginning to eye the manipulation in the precious metals markets and is on The Motley Fool: Is Your Safe Haven a House of Cards?

A critical exchange occurred after GATA’s Adrian Douglas chimed into a conversation with his assertion that the leveraged market for physical metal is essentially a game of “paper backing paper.” The underlying argument here is that the volume of gold traded daily at the London OTC metals exchange (LBMA) is so large (at about 20 million ounces of gold per day), that in fact the over-the-counter market for “physical” metal can not possibly be backed on a 1:1 basis by actual physical supply. As Mr. Douglas asserts: “it’s fractional-reserve accounting, and you can’t trade that much gold — it doesn’t exist in the world.”

Adrian Ash has a good read on Money Morning Australia: “China Buys Gold!”

Rising 85% by weight since 2004, China’s private gold demand has more than quadrupled in Dollars. It pretty much doubled by value in terms of both Dollars and the Renminbi in the last two years alone, rising to $13.6 billion in 2009.

Overall, China accounted for more than 14% of global gold investment and jewelry demand last year on the World Gold Council/GFMS data – a close second to the 16% of private world hoarding swallowed by India.

Expected Returns continues to be a first stop for me in the morning during my RSS feed reads. This post caught my eye today: Long-Term Rates: The Canary in the Coal Mine

We are in a Depression- there is really no other way to put it. Any unbiased observer must come to this conclusion based on the size of our debt, the rate of unemployment, and the repeated political gaffes that threaten the future prospects of our country.

Finally, there’s this item from BusinessWeek on L.A. which makes me think of Greece: L.A. to Run Out of Cash in a Month, Controller Says

The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldn’t send an anticipated $73 million payment to the city’s general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.

“The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.

L.A. isn’t the only city hurting in such a manner. It’s starting to look like pretty soon some of the dominoes are going to fall of their own dead weight and the whole thing is going to be one big mess.


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