chapman's latest on precious metals

  1. dub
    31,964 Posts.
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    Extracted from his weekly summary, read at .




    A total of 43 commercial banks have ordered 171 tons of gold from Russian producers. Last year 51 bankers ordered 194.5 tons. Russia only produced 180.5 tons last year. Production fell 7.2% year-on-year to 126.12 tons in January-September this year, and could total 183 tons as a whole.

    Dehedging by gold mining companies slowed in the third quarter from the second quarter although the book fell 1.0 million ounces to 52.8 million ounces. They dehedged 1.3 million ounces in the first quarter and 2.7 million ounces in the second quarter. The leading dehedgers were in the Americas.

    Thus far this year, Turkey’s gold imports of 244.4 tons are running 14.8% ahead of 2004. That is very good considering gold prices are much higher.

    The Shanghai Gold Exchange is launching night sessions for trading. The exchange allows only institutional investors to trade in gold. Individuals can use commercial banks in their deposit accounts, but cannot own real gold, only paper gold. That is expected to change.

    Indian gold exports doubled this year and are expected to expend 30% next year.

    Peru produces 10% of the world’s silver, yet physical silver is impossible to find in Peru. Silver warrants on the Lima Exchange are trading at a tremendous premium to spot.

    This week platinum prices traded up to $955 an ounce to a 25 1/2-year high. Over the past 17 months prices have risen 24%. Presently net long positions rose to 73% of open interest, the highest on record for any commodity. This just shows your what unregulated hedge funds can do to markets. Prices have been rising since October 2001, having increased by 129% from a low of $415. The fundamentals are there and sales look to be 3.6% higher at 7.54 million ounces while supply should increase 4% to 7.49 million ounces. The big question next year is how vehicle sales hold up?

    The euro in terms of gold is trading at 398. A move through 400 would be tantamount to gold breaking out to $512 an ounce.

    Chinese jewelry buyers have been buying palladium jewelry as an alternative to platinum and its high price. They gobbled up a 600,000-ounce surplus this year and if demand stays at current levels there would be a 60,000-ounce deficit. These events were not foreseen by anyone. They just developed over the last year. Inventory should be exhausted in seven years.

    The gold suppression cartel is very upset that Argentina has been a gold buyer and China continues to buy. On Friday, we heard a rumor that the Central Bank of South Korea is now a buyer and the other elitist central banks are really upset. This is reflected in the gold open interest, which is not far from making new highs. Despite a stronger dollar and lower oil and gas prices, gold has moved back from $457 interday to $470 December in Friday’s aftermarket. This is remarkable. Just two weeks before it dropped from $478. Gold is not going to be stopped from achieving $512 shortly. Platinum finished the week at $965 and should break $1,000 soon. Then, the hedgies will sell and buy gold and silver with the profits.

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