 |
|||
|
|||
|
|
||
April 08, 2009 | By: Mark Anthony |
 |
The news over the weekend was that the IMF is going to sell 403.3 metric tons of gold. Wow! 400 tons of gold!
Except that this is old news. The IMF has been making a lot of noise about selling 403.3 metric tons of gold for nearly a year now (some say for over a decade!). So what exactly is new? They never sold an ounce of gold. I will believe the IMF gold sell when it happens.
But such an expired old joke was enough to knock gold's price down $25 on Monday, or -2.8%. Silver was down even more, -5.0%. Was the IMF going to sell silver as well?
There must be too many speculators and not enough serious investors in gold and silver. If you are serious about buying gold and silver as safe haven assets, then you should buy the physical metal, take delivery and hold for long term as an insurance for your financial security. Monday's gold/silver plummet proves that speculators still dominate the gold market; sentiments, rather than fundamentals, are still the driving force behind gold price. Even James Sinclair, the most outspoken gold bug, got so frustrated that he almost gave up attempts to persuade people to demand gold delivery from the COMEX.
Meanwhile, London based ETF Securities had just made US filings for platinum and palladium trusts. Read the SEC filings for platinum and palladium. This is the first step in introducing the ETFs for physical platinum and palladium into the US market. This is extremely important and very bullish for platinum and palladium, as demand from US investors could absorb a considerable amount of available PGM metals, and could trigger panic hoarding by industry users as they fear a looming shortage due to booming investment demand.
Jim Rogers summed up successful investment in three words: Skeptics, Curiosity and Persistence. My favorite precious metal is palladium as my study convinced me, this metal has the most bullish supply/demand fundamentals among all precious metals. Norilsk Nickel (NILSY.PK) in Russia supplies 45% of the world's palladium. So every day I watch closely for any news coming from Norilsk Nickel in Russia.
As I watched, the news from Russia keeps getting better for the palladium bull story:
- Russia could suspend platinum/palladium export due to bureaucratic confusion. The confusion was due to conflicting laws and presidential decrees. The unspoken truth is if the Russians have a high incentive to export, the bureaucracy can be sorted out quickly. But as current prices of palladium and platinum are so low, there is absolutely no incentive for the Russians to speed up the exportation of the precious metals. Logically, they would rather drag their feet on the issue, and watch the metal prices skyrocket in an ensuring shortage. Then they can resume the exportation at much higher prices.
- Norilsk Nickel is in bad financial shape due to low nickel and copper prices. If they run out of cash, they may have to shut down mining operations. This could send palladium price skyrocketing due to the supply disruption. Norilsk lost a total of 90.15 billion roubles in the second half of 2008, or US$2.65B. They wasted US$2B in cash on a controversial stock buyback program just a few months ago. And now they are re-selling the buyback shares for a mere US$350M cash. Even worse, they can't find a buyer. Things at Norilsk got so bad that the Russian Government launched an investigation into their finances.
In a previous article I discussed why fundamentals of palladium are getting better. The recent scientific break through in Low Energy Nuclear Reaction (LENR) could attract more investment interest in palladium as it will become a critical strategic metal for the future energy needs.
Besides buying physical palladium, you can buy shares of two mining stocks: Stillwater Mining(SWC) and North American Palladium (PAL). People have complained about the difficulty in buying and selling physical palladium, as the premium is too high and the buy/sell spread is too wide. Complain no more, folks! You will soon be able to directly buy and sell shares in a palladium ETF, just like GLD for gold and SLV for silver.
I am not a big fan of any ETF. Why invest in physical precious metals, if the metals are not in your direct control, and free of counter-party risks? Many people questioned whether SLV really holds the silver. But to their credit, SLV has been tracking the silver spot price rather precisely so far. So long as SLV continues to track the silver spot price, you may feel safe to hold SLV positions. But just don't hold for too long. Holding physical metals is still the safest investment, when there is so much mistrust in the system.
As for other commodities, crude oil's price has already bottomed as OPEC's production cut is beginning to take effect. You may buy some US Oil Fund, (USO) on dips. Meanwhile, I believe it is time to massively load up on the US Natural Gas Fund, (UNG), as there is very little further downside. Natural gas producers are cutting production aggressively at current price levels. From an energy point of view, current natural gas price is equivalent to roughly $23 per barrel oil. That's rather cheap compared to the price of crude oil. Unfortunately, for oil and gas, you have to buy the ETFs as it is impossible to take physical delivery of these two commoditites.
Full Disclosure: The author is heavily invested in SWC and PAL, and holds positions in silver stocks SSRI and PAAS. I also hold positions in AAUK, USO
and UNG. I am also heavily invested in shipping stocks EXM, EGLE, DRYS, TBSI, and GNK.
To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold to find out more. You may Sell Gold to us too.
[ Back To Home ]
Buy Gold & Sell Gold - Singapore Gold Bullion Dealer