Hedge funds bullish gold bets surge to 13.8m ounces

The gold price ended higher Friday after bullish positions held by large investors soared again.

By the close of regular trade on the Comex division of the New York Mercantile Exchange, gold futures for June delivery – the most active contract – rose to $1,335 an ounce but remained sharply off for the week.

On Monday the metal hit a high above $1,380, the best level since June and up 14.8% since the start of the year.

Long positions – bets that the price will go up – held by so-called managed money increased to 151,939 lots in the week to February 18 according to Commodity Futures Trading Commission data released after the close of business on Friday.

At the same time short positions, indicating weaker prices ahead, were cut by 7,563 to just under 13,510, which translates on a net basis hedge funds holding 138,429 lots or 13.8 million ounces, the highest in more than a year.

The 12.5% jump was the sixth week in a row that large investors increased bullish positions and more significantly it showed fresh buying, compared to the increases of previous weeks which were to cover short positions.

In December 2013 longs fell to a paltry 26,774 lots while shorts held by large investors peaked at more than 80,000 lots, the highest since 2007, back when gold changed hands for $700 an ounce.

It's not only gold derivatives that are finding favour from the smart money in 2014.

Holdings of SPDR Gold Shares – the world’s largest gold ETF holding more than 40% of the total – on Friday shot up 4.2 tonnes, bringing year to date gains to 18.75 tonnes.Investors in gold-backed ETFs are also returning to the market in droves after 2013 saw net redemptions of a staggering 800 tonnes.

While the additions have been fairly modest it is in sharp contrast to last year when GLD recorded only 17 days of inflows over the course of the 12 months and almost 540 tonnes left the fund.

In the week to 14 March global gold ETF holdings rose 12.3 tonnes the biggest move since November 2012, taking total holdings to 1766.4 tonnes, the highest level since December 27 and more than 30 tonnes above the lows for the year.

Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012.

But I personally feel it will touch $ 1285 or $ 1261 before any Big upside move. In Weekly Charts Bearish Engulfing Pattern is formed which means correction may be to Fibonacci 38 or 50 % .

Would America Go To War With Russia?

Would America Go To War With Russia?

Vice President Biden was in Warsaw last week to reassure our eastern NATO allies that they have the support of a “steadfast ally.” But if Russia moved against Poland or the Baltic States, would the United States really go to war? Or would we do nothing and effectively destroy the NATO alliance?

President Obama has ruled out a “military excursion” in Ukraine. America is not obligated legally to take action against Russia for annexing Crimea. We would not go to war if Russia mounted a large-scale invasion of Ukraine to restore the ousted, pro-Moscow government of Viktor Yanukovych, currently under U.S. sanctions. And we would not even send troops if Ukraine was partitioned, or absorbed by Russia. Americans have no interest in such a conflict, and no stomach for it.

NATO allies are a different matter. The North Atlantic Treaty is a mutual-defense pact, and Article 5 says that an armed attack against one member state “shall be considered an attack against them all.” This is a clear red line. The only time Article 5 has been invoked was in the wake of the September 11, 2001 terrorist attacks, and most NATO allies sent troops to support the efforts in Afghanistan and Iraq.

Could the current crisis expand to touch NATO? The developing situation in Ukraine has been compared to Germany’s absorption of Austria in 1938, or the subsequent partition and dismemberment of Czechoslovakia. Hillary Clinton compared Russian president Vladimir Putin to Adolf Hitler, which by extension puts President Obama in the role of British prime minister Neville Chamberlain, who famously failed to achieve “peace in our time” at Munich.

Push the analogy further. The Second World War was sparked by Warsaw’s resistance to Berlin’s demand to annex the Polish Corridor, a small stretch of land—smaller than Crimea—separating the German provinces of Pomerania and East Prussia. Hitler responded by invading Poland and partitioning it with the Soviet Union. Britain and France had pledged to defend Polish independence, and two days after Germany invaded, they declared war. In his war message,Chamberlain explained that Hitler’s actions showed “there is no chance of expecting that this man will ever give up his practice of using force to gain his will. He can only be stopped by force.”

This may or may not describe Mr. Putin, as Mrs. Clinton alleged. But if similar circumstances arise in the near future, will the United States honor security guarantees made to Poland and the Baltic States when the Russian threat was only a theory?

Mr. Biden stood with Estonian president Toomas Ilves Tuesday to “reconfirm and reaffirm our shared commitment to collective self-defense, to Article 5.” He wanted to make it “absolutely clear what it means to the Estonian people” and that “President Obama and I view Article 5 of the NATO Treaty as an absolutely solemn commitment which we will honor—we will honor.” Shortly thereafter, Moscow “expressed concern” about the treatment of ethnic Russians in Estonia. Mr. Putin justified his actions in Crimea as “restoring unity” to Russian people. Estonia’s population is 25 percent ethnic Russian, compared to 17 percent in Ukraine, mostly in the north and east part of the country. Suppose anti-Russian riots “spontaneously” broke out in Estonia. What would the United States do if Moscow invoked a “responsibility to protect” these people and bring them “back” to the Motherland? Would President Obama take military action against Russia over a small, secluded piece of a tiny, distant country? Would it be like the Polish Corridor in 1939? This is highly doubtful—highly doubtful.

Aren’t we obligated by treaty to intervene? Mr. Biden mentioned the “absolutely solemn commitment which we will honor.” It was so important he said it twice. However, Article 5 says that NATO members pledge to come to the assistance of the attacked state using “such action as it deems necessary, including the use of armed force.” It doesn’t take a White House lawyer to see the gaping loophole—President Obama can simply deem that the use of U.S. force isn’t necessary. He can walk back the red line, as he did with Syria. Stern talk and minimal sanctions would follow, but Estonia would lose some, if not all of its territory. And in practical terms it would mean the end of NATO, which is one of Moscow’s longstanding strategic objectives. Mr. Putin’s chess game does not end in Crimea.

WEEK-IN-BRIEF BASE METALS

A large delivery of aluminium into warehouses in Rotterdam was linked by market sources to JP Morgan's sale of its physical commodities business to trading firm Mercuria after late-night talks. 

Does state control in China distort the aluminium market in China? One US trade lawyer argued it does.  

There were other theories too on the boost to aluminium stocks - as well as one large delivery of zinc, which never materialised, which proved that stocks are still worth talking about.  

Earlier, a large zinc short position had led some to question whether it was covered.  

A large miner agreed higher treatment charges for zinc this year compared with last.  

MMG confirmed it is in talks with Glencore about the purchase of the Las Bambas copper project in Peru.  

The Australia-based miner plans to raise the limit on the amount of copper concentrates it can sell to controlling shareholder China Minmetals.  

A spot deal for copper concentrates in China demonstrated the effects of Jinchuan's declaration of force majeure on concentrate shipments. 

The Chinese company said it would focus on nickel after a furnace outage. 

Gold Completes Golden Cross for the first time in 13 months

For the first time in 13 months, gold's 50-day moving-average is above its 200-day moving-average. This so-called "golden cross" occurred in Feb 09 before gold surged over 100% in the following years (but also occurred 'falsely' in September 2012.

Some technicians are reflecting on the last big run that gold had...

Congress Last 5 Years, Choose Your PM Gandhi Vs Modi, Congress Or BJP.

» These are just a few of the scams that have rocked India and shamed our nation in the last 5 years

» The cumulative loss to the National Exchequer is to the tune of INR 3.74 lac crore +

• » Sharp drop in agri growth rate is serious cause for concern - since 70% of India´s families are dependent on rural incomes
• » Agriculture´s share in India´s economy has progressively declined to less than 15% due to the high growth rates of the industrial and service sectors

• » The last five years have seen an unprecedented rise in corruption levels in India - which can be attributed to lack of transparent laws, abuse of discretionary powers and a governance and moral deficit
• » The Transparency International Index 2013 proves that India – with Rank of 94 and a score of 36 - is perceived to be a highly Corrupt Nation

• » Gender-based violence has been acknowledged as a widespread and persistent challenge in India - so much so that a girl is raped in India every 22 minutes
• » Its important to note that some states like Gujarat have the lowest RPL ratio (rapes per lakh population) in the country, at 0.8

» BJP led NDA govt had maintained the Inflation rate at a record low of 3.6% - which in the last 10 yrs has spiralled out of control completely

• » The Govt´s inability to control the prices of essential food products, petrol and diesel etc has disproportionately hurt the living conditions of the poor and the middle class

• » The BJP led NDA govt created 22 TIMES MORE JOBS ( 60.7 mn jobs from 2000-2005) than the Congress led UPA Govt ( 2.7 mn jobs created from 2004-2010)
• » Gujarat registered the lowest rate of unemployment of 1% in the survey 2011-2012

• PLAY THE GAME ( POWER PLAY ON MONEY-CONTROL WHERE YOU CAN BUY SELL POLITICIANS) CHECK PRICE OF POLITICIANS HERE 
• 
  

Showing Europe's Mutually Assured Economic Destruction As EU Plans More Sanctions

With senior German officials expecting discussions among leaders at the EU Summit to solely focused on a second round of sanctions against Russia (and warnings that they "must avoid a spiral of sanctions"), we thought it worth drilling down on just how mutually-dependent the two regions are. As Acting-Man's Pater Tenebrarum notes, the following infographics suggest tit-for-tat sanctions could be a really big problem for Europe and why the EU's leaders are probably quietly praying for the crisis to simply go away.

Trade between the EU and Russia (via RT)

Trade between Russia and Germany (via Der Spiegel) – Russia is Germany's 11th largest trading partner

A list of German companies with big exposure to Russia (also via Der Spiegel)

International exposure to Russian debt (via Reuters)

Here are details on selected bank exposures (via Reuters):

SOCIETE GENERALE:

France's second-biggest bank had exposure of 22.4 billion euros to Russia at the end of June, according to the European Banking Authority's (EBA) data. That equated to 15.7 billion euros in risk-weighted assets.

SG Russia, which includes Rosbank and other insurance and financial operations, made operating income of 239 million euros last year, almost double 2012 despite a 41 percent jump in losses from bad debts. The bank said it had 13.5 billion euros of outstanding loans in Russia and deposits of 8.5 billion in the country at the end of 2013.

SocGen's equity in its Russian business accounted for 7.7 percent of its group total, Morgan Stanley analysts estimated.

UNICREDIT:

Italy's biggest bank by assets had exposure of 18.6 billion euros to Russia at the end of June, the EBA data showed.

The bank said its revenues from Russia were 372 million euros in the fourth quarter, up 80 percent from a year earlier.

UniCredit's equity in its Russian business accounted for 2.7 percent of its group total, Morgan Stanley estimated.

RAIFFEISEN BANK INTERNATIONAL:

The Austrian lender said it is Russia's 10th biggest bank, with a loan book of 10.2 billion euros, 2.5 million customers and 192 outlets. Its Russian assets represent 12 percent of the group total, and the Russian unit made 507 million euros in the first nine months of last year, most of the group's total.

The EBA data showed Raiffeisen had a 13.2 billion euro exposure to Russia at the end of June.

Raiffeisen's equity in its Russian business accounted for 15.6 percent of its group total, Morgan Stanley estimated.

OTP BANK:

The Hungarian bank's exposure to Russia was 4.4 billion euros at the end of June, the EBA data showed.

BANK OF CYPRUS:

Its exposure to Russia was 1.6 billion euros at the end of June, the EBA data showed.

But apart from that - should be fine?! And this on the heels of Ukraine appearing to fold on any further action suggests Western powers have put themselves in a red-line-crossing MAD box...

CME Group to launch energy, metal weekly options in April

March 20 (Reuters) - U.S. derivatives exchange operator CME Group Inc said on Thursday it will launch shorter-term weekly energy and metal option contracts beginning in April in a bid to boost trading volume.

Chicago-based CME Group said it will launch crude oil, natural gas, gold, silver and copper weekly options on the trading floors and the Globex electronic platform effective Sunday, April 13 for trade date Monday, April 14.

The options, which expire on Fridays, offer participants greater flexibility to manage risk and speculate around major U.S. economic indicators such as the monthly nonfarm payrolls, said Miguel Vias, CME Group's director of metal products.

Vias said the products also offer a new opportunity to arbitrage with the options of the SPDR Gold Trust , the world's largest gold exchange-traded fund. The gold ETF options also expire on Fridays.

"Structurally, they fit a need that the market doesn't have right now," said Vias. "If we start to get volatility in the short term, they offer people a real opportunity to protect themselves and to speculate."

CME Group said the new products are based on the popular weekly options in other asset classes such as interest rates, equities and agricultural products.

In 2012, CME Group also launched short-term gold options, which offer daily expiration five business days forward. Those options are rarely traded due to low interest.

COMEX gold options floor trader Jonathan Jossen said the weekly options could very well boost trading volume for the CME Group because new option products are likely to increase trading flows to its existing monthly options.

The new product could also help the CME Group win market share from the over-the-counter option market, which offers more customized products in terms of duration and strike prices, traders said.

"If it was to catch a following and have open interest and market makers providing liquidity, I would be interested to participate in that market," said Albert Ng, a market maker in COMEX gold options and portfolio manager at Aurum Options Strategies.