More Evidence Pointing to Manipulation in Gold Market? By Michael Lombardi

More Evidence Pointing to Manipulation in Gold Market? By Michael Lombardi

While I avidly follow the actions of central banks to see where the gold bullion prices may be headed next, when I look at them today, their actions are speaking louder than words.
Central banks have pretty much stopped selling gold bullion, which is very important. In 1999, a number of central banks in Europe formed an alliance and agreed that they would not sell more than 400 tonnes of gold bullion per year. The agreement was called the Central Bank Gold Agreement (CBGA). In 2004, the CBGA was renewed again; this time the limit was 500 tonnes. Once again, it was renewed for another five years in 2009, and the limit is back to the sale of no more than 400 tonnes of gold bullion per year. The table below shows how much gold bullion the central banks in Europe sold in each period of the CBGA. (Source: World Gold Council web site, last accessed October 11, 2013.)

Notice anything different? The central banks in Europe have put the brakes on their sales of gold bullion. In fact, from September 27, 2012 to September 26, 2013, these central banks only sold 5.1 tonnes of gold bullion! This is hands down the lowest amount sold since the agreement started in 1999.
When it comes to stocks, if owners of a stock aren't selling and there's a significant number of buyers who want to buy, the price of the stock usually goes up as the simple rule of economics come into play: supply and demand.
Sadly, when it comes to gold bullion prices, this is not the case. Gold bullion prices are actually going down despite less supply and more demand. The price action in the gold market doesn't make sense. What if all the conspiracy theories I keep reading about in respect to gold bullion prices being manipulated are right?
As I ponder manipulation in the gold bullion market, I heard recently that the U.S. Justice Department is looking into manipulation in the $5.0-trillion-a-day foreign exchange market. Traders in big banks around the global economy are accused of manipulating key exchange rates. (Source: Reuters, October 11, 2013.) If the biggest market in the global economy can be manipulated, why can't the gold bullion market be manipulated?
I'm sticking to my guns; the depressed prices of well-managed senior and junior gold-producing companies are a screaming opportunity for investors.

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Originally posted at Profit Confidential (c) Michael Lombardi, MBA

Paul Singer on the Fed

http://live.wsj.com/video/paul-singer-fed-should-say-weve-done-enough/D8CC69DB-E583-494C-B2E3-0067FCC5D166.html#!D8CC69DB-E583-494C-B2E3-0067FCC5D166

Art Cashin - Danger For The US & Strange Happenings In Gold

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/10/11_Art_Cashin_-_Danger_For_The_US_%26_Strange_Happenings_In_Gold.html

Did Cyprus really sel its Gold?

 

Cyprus Finance Minister Sees Gold Sale Within Next Months

http://www.bloomberg.com/news/2013-04-17/cyprus-central-bank-must-approve-gold-sale-finance-chief-says.html



http://www.zerohedge.com/contributed/2013-07-17/cyprus-resists-international-pressure-sell-gold-reserves


Gold Prices/Fixes/Rates/Vols - (Bloomberg)
 
Gold is lower in all major currencies today but remains well bid near the $1,300/oz level.
Physical demand, particularly from China, remains very robust and premiums high at over $30 per ounce overnight.
Physical gold delivered to buyers by China’s largest bullion bourse in the first half of this year almost matched the entire amount taken from its vaults in 2012  (see Shanghai Gold Exchange charts below), and was more than double the country’s annual production.
Breaths will be held prior to Bernanke’s testimony but as ever it will be prudent to ignore the noise and his often contradictory words and focus on actions and the reality of continuing ultra loose monetary policies.
Cyprus is resisting pressure from the European Commission (EC) and International Monetary Fund (IMF) to sell its gold reserves to finance its “bailout”.
Yesterday the Cypriot Finance Minister said that a sale of its gold reserves was not the only option under consideration to pay down its debt and that other alternatives were being considered.
Cyprus has 13.9 tonnes (c. 447,000 troy ounces) of gold reserves which are worth some 436 million euros at today’s market prices.
The international bailout imposed on Cyprus involved 10 billion euro ($13 billion) and therefore the Cypriot gold reserves are worth a mere 4.36% of the bailout.

"The possibility of selling gold is known, but only as an option," Finance Minister Harris Georgiades told reporters. He did not elaborate on what the alternatives were according to Reuters.
The government in Cyprus may realise that in the event of Cyprus leaving the euro and returning to the Cypriot pound, their gold reserves could provide support to the fragile newly launched national currency.
International lenders have imposed a 10 billion euro bailout on the country, which was forced to seize bank deposits in two major banks in radical new “bail-ins” to finance the sudden “bail out” in March.

Stephanie Pomboy 2012

http://www.youtube.com/watch?v=UiXKiETLFwQ

Stephanie Pomboy 2009

http://www.youtube.com/watch?v=JGJXNOy2blo

Wall Street Week 12/31/1999 - Year-End Review Part 3

http://www.youtube.com/watch?v=3_KW7ad7l28

Wall Street Week 12/31/1999 - Year-End Review Part 1

http://www.youtube.com/watch?v=Q5R0j75BZ0U

update on Gold's Correction

http://theshortsideoflong.blogspot.com/2013/09/golds-correction.html

Chart 1: GLD ETF holdings portray a picture of panic in the PM area

  Source: Short Side of Long

I received a lot of questions regarding the precious metals sector in recent weeks, esepcially since the relief rally has stopped.

This years correction in the precious metals sector has been very notable, and also quite welcome (if you are planning to invest into the sector). After all, Gold rose for 12 annual years in the row and was eventually due for a down year (or two) just based on common sense and extreme overbought levels in the monthly charts.

While many investors claim that the bull market for commodities, and precious metals in general, is over - majority of these investors were the same ones who missed the huge gains over the last 12 years in the first place. In other words, even a broken clock can be right twice a day...

Chart 2: Three major corrections during a secular bull market in Gold

  Source: Short Side of Long

The current correction in Gold, which from peak to trough has declined almost 40% at one point, is probably not over just yet. It is rare for markets to bottom on a V trough, similar to what we saw in early July. And while some investors will point out that the 1975/76 correction recovered from a V trough, I would like to add that back then, the price of Gold was extremely oversold relative to current conditions. Prices were down almost 50% in just over 400 trading days.

Either way, I am expecting Gold to build a base from which a new bull market rally will start in due time. These patterns and bases usually look like double or triple bottoms of some kind, so I urge investors to stay patient and let Gold do its thing. This also means that there is a possibility of prices breaking towards new lows  temporarily.

U.S. third quarter earnings warning ratio is second worst since 2001

(Reuters) - U.S. companies are warning about third-quarter earnings at a rate lower than last quarter but still at the second highest level since 2001, leaving estimates well below what they were just three months ago.
Companies issuing negative outlooks for the quarter outnumber positive ones by 5.2-to-1, the most negative since the 6.3-to-1 ratio in the second quarter.
The second-quarter ratio is the worst since the first quarter of 2001. The third quarter would be the second worst since 2001, according to Thomson Reuters data.
As a result, third-quarter earnings for Standard & Poor's 500 companies were expected to increase by 4.6 percent compared with a year ago, down from a forecast of 8.5 percent on July 1.
"I think companies have done exactly what they do in the confessional month every cycle. They try to talk the numbers down so they can engineer an upside surprise," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
S&P 500 companies have beaten analysts' earnings expectations, on average, by 67 percent over the last four reporting periods.
Technology is the sector with the highest number of third-quarter negative outlooks, with 27 warnings. Among them was Autodesk Inc (ADSK.O), which anticipates lower demand for its computer-aided design software used in construction, manufacturing and engineering.
Consumer discretionary companies have the second highest number of warnings, including Target Corp (TGT.N). Target said in August that shoppers remained cautious and that its new Canadian stores were not doing as well as anticipated.
Consumer discretionary companies, however, were expected to post earnings growth of 7.3 percent for the third quarter, the third highest of the S&P 500 sectors after financials and telecommunications, according to Thomson Reuters data.
Mike Jackson, founder of investment firm T3 Equity Labs in Denver, sees S&P 500 energy, financials and industrials as sectors more like to surprise to the upside, while utilities, telecommunications and consumer staples are the least likely.
But, he noted, "there's a lot of noise right now that's driving sector performance, and not the fundamentals."
Stock investors have been worried as the U.S. Congress, which was still in partisan deadlock on Monday over Republican efforts to halt President Barack Obama's healthcare reforms, was on the verge of shutting down most of the U.S. government, starting Tuesday morning.
(Reporting by Caroline Valetkevitch; Editing by Jeffrey Benkoe)

Nearly 50% of CFOs think shares overvalued Commentary: Surprisingly bearish finding of Duke CFO survey

http://www.marketwatch.com/story/nearly-50-of-cfos-think-shares-overvalued-2013-10-01


HAPEL HILL, N.C. (MarketWatch) — As if stock market bulls didn’t already have enough to worry about, with a looming government shutdown and the threat of a U.S. Treasury default.

Yet they do: It turns out that nearly half of companies’ chief financial officers think the stock market is overvalued.

That surprisingly bearish result is among the findings of the latest Duke CFO Magazine Global Business Outlook survey: 40.2% of chief financial officers who responded to the latest survey said they thought the stock market is overvalued and will correct downward.

Duke finance professor Campbell Harvey, one of the survey’s authors, says that he finds this high a percentage to be “striking” because CFOs “usually tell us that their stock is undervalued.”

  

Washington turmoil spooking business world

Washington's budget standoff is spooking businesses and consumers, threatening the recovery even if lawmakers avoid a government shutdown or a potentially catastrophic default on the nation's debt.

In fact, Harvey added, the Duke survey for the last several years didn’t even ask CFOs whether they thought their stocks were undervalued, since when they did ask the question in the years before that the CFOs’ answers were “stuck above 95%.”

The Duke CFO survey is conducted quarterly. This latest survey is based on a poll of 530 CFOs in the days leading up to Sept. 6. The Dow Jones Industrial Average DJIA +0.41%  on that day, it is interesting to note, closed just below the 15,000 level — about 200 points below where it trades today. So, even taking into account the market’s pullback over the last week, the decline that many of the CFOs were then anticipating has yet to materialize.

It behooves us to pay attention to this survey’s finding because, as Harvey pointed out, CFOs usually “have the best handle” of anyone in the corporate hierarchy on expected cash flows.

Though the CFOs no doubt had many reasons to believe the stock market is overvalued, one common theme may be the threat of higher interest rates. Only 7% of them believe that long-term interest rates will fall from current levels.

You might be inclined to question these results on the grounds that “talk is cheap:” It would be a far more bearish omen if CFOs, along with other corporate insiders, were backing their words with actions — aggressively selling shares of their companies in the open market. And that doesn’t appear to be the case.

I wouldn’t be so quick to dismiss the survey’s results, however. Anonymity in this case might actually induce the CFOs into being more willing to reveal their true feelings. After all, they may see their job as being a cheerleader for their companies’ stocks. Therefore, when speaking on the record, or executing open-market transactions in their companies’ shares before all the world to see, they may feel compelled to behave more bullishly than they really believe is justified.

If so, get ready for market fireworks in coming weeks and months.

Mark Hulbert is the founder of Hulbert Financial Digest in Chapel Hill, N.C. He has been tracking the advice of more than 160 financial newsletters since 1980. Follow him on Twitter @MktwHulbert.