Obama to Call

Obama, in a speech later today in Chattanooga, Tennessee, will argue that years of budget fights have diverted attention from the need to help middle-income Americans recover from the recession, according to administration officials.

President Barack Obama, seeking to offer fresh economic proposals that could pass a gridlocked Congress, will call for a restructuring of business taxes so long as the initial revenue generated goes toward job creation.

Obama, in a speech later today in Chattanooga, Tennessee, will argue that years of budget fights have diverted attention from the need to help middle-income Americans recover from the recession, according to administration officials.

As an alternative to seeking quick passage of the deficit-reduction formula that has eluded lawmakers for two years --some combination of increased tax revenue and entitlement curbs -- Obama will propose spending more on job creation efforts. The initiatives would include help for manufacturing, worker training, and infrastructure improvements.

The programs would be funded with a one-time transition fee associated with the $2 trillion in foreign earnings that are currently held overseas, said an administration official who asked not to be identified to discuss details before the speech.

The officials declined to specify how much money would be generated and didn’t detail how it would be structured. The proposal marks a shift for Obama, who has previously called for rewriting individual and business income tax law together.

“The President will call on Washington to work on a grand bargain focused on middle class jobs by pairing reform of the business tax code with a significant investment in middle class jobs,” said Dan Pfeiffer, a senior adviser to the president.

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Gold Up, But....

INVESTMENT GOLD prices reversed an overnight drop of $10 per ounce to trade above $1335 lunchtime Monday in London, gaining in what dealers called "very quiet" trade ahead of this week's US Federal Reserve policy statement on Wednesday and Friday's US payrolls data for June.

Silver prices also rallied from an earlier drop, adding 1.9% to trade above $20.10 per ounce.

Commodities, European equities and major government bond prices held flat, with economists forecasting "no change" in either Fed policy or the key language around reducing QE bond purchases in Wednesday's announcement.

Japanese stock markets fell hard as the Yen rose on the currency markets.

"We expect the FOMC meeting and the US payrolls report will be the highlights this week," says a note from commodity and investment analysts at Germany's Deutsche Bank.

"A soft employment report would amplify the more dovish sentiment on [QE] tapering and sustain the cautious rebound in gold prices."

"Gold has made a terrific recovery," Bloomberg quotes $3 billion fund manager Donald Selkin at National Securities Corp. in New York, "but there's not too much to the upside for now.

"People are going to wait and see what the Fed is going to do."

Gold investment positions in exchange-traded funds "have continued to trickle lower," notes Barclays in London, pointing to the 23% drop from end-2012's record levels.

The giant SPDR Gold Trust shed another 5 tonnes last week, taking the bullion needed to back its shareholders' investment to new four-and-a-half year lows below 928 tonnes.

Should gold prices slip back below $1300 per ounce, warns Barclays, "an additional 160 tonnes [of gold ETF investment] become loss-making."

New gold ETFs traded for the first time in China today both slipped 1% in value as prices dropped.

Together, the Huaan and Guotai gold ETFs fell well over two-thirds short of their sponsors' investment targets, raising less than $261 million between them.

Ahead of the coming US Fed and jobs data decision, hedge funds and other professional speculators raised their "net long" position on US gold futures to a 6-week high of nearly 180 tonnes in the week-ending last Tuesday, new data from US regulator the CFTC showed Friday.

Private investors, however - the so-called "unreportable" category of speculative gold futures traders - meantime cut their net long position almost to zero, with bearish bets very nearly equal to bullish contracts.

That position peaked at 195 tonnes equivalent in October 2012, just as gold prices began their descent from $1800 per ounce.

"Short positioning had become quite extreme," says a note from Swiss investment bank and London gold market-maker UBS. So there has been "some scaling back, especially ahead of key risk events this week.

"Anticipation of the FOMC meeting on Wednesday and nonfarm payrolls on Friday is likely to deter large position-taking and result in more subdued market activity in the next few days."

Over in India - currently world No.1 for gold demand, but set to be eclipsed by China this year - prices for gold rose sharply on Monday as what local dealers called a "massive shortage" of metal due to government import restrictions bit harder.

Indian premiums over and above international benchmarks hit up to $30 per ounce, Reuters reports, quoting Bachhraj Bamalwa of the All India Gems & Jewellery Trade Federation.

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Gold Traders Most Bullish in 5 Weeks After Fed: Commodities

"If you don't believe gold could be worth more than $2000 per ounce in a few month then you will regret it."



Gold traders are the most bullish in five weeks after Federal Reserve Chairman Ben S. Bernanke said the U.S. still needs stimulus.

Nineteen analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three neutral. Gold fell 23 percent last quarter, with the decline accelerating after the Fed chairman said June 19 that bond buying could slow if the economy improves. Unprecedented money printing by central banks since the global recession boosted bullion buying as a hedge against inflation.

Gold is heading for the first annual drop in 13 years after some investors lost faith in it as a store of value. The retreat in prices to a 34-month low on June 28 spurred demand for jewelry and gold coins, diminishing supply and driving the cost of borrowing the metal to a 4 1/2-year high, according to data compiled by Bloomberg.

“With the Fed comments, with the increased cost of funding a short position and some recalibration in peoples’ thinking about the end of quantitative easing, the onus is really on the bears now,” said Ross Norman, chief executive officer of Sharps Pixley Ltd., a brokerage handling physical bullion in London. “Physical demand is supporting the market very nicely.”

Physical Demand

Jewelry and coin demand around the world surged after gold dropped into a bear market in April. The U.S. Mint sold 21,000 ounces of American Eagle coins so far this month, on course to beat the 57,000-ounce June total, data on its website show.

Demand is weakening elsewhere, with Australia’s Perth Mint saying its coin and bar sales dropped for a second month in June, falling 47 percent. Physical consumption isn’t as strong as in April, partly because India, the biggest buyer, imposed curbs on imports last month to trim its trade deficit, Standard Chartered said. Indian imports probably slid 80 percent in June and will be “weak” in July and August, the bank estimates.

Investors sold 645.45 metric tons from gold-backed exchange-traded products this year, erasing $60 billion from the value of the funds, data compiled by Bloomberg show. Holdings reached 1,983.6 tons this week, the lowest since May 2010. Billionaire John Paulson’s PFR Gold Fund tumbled 23 percent in June, extending this year’s loss to 65 percent. He owns the largest stake in the SPDR Gold Trust, the biggest bullion ETP.

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Gold Slips After 4 days

Gold prices eased Friday after four sessions of gains, yet still on track for its biggest weekly performance since October 2011 after Federal Reserve Chairman Ben S. Bernanke said the central bank's highly accommodative monetary policy would be needed for the foreseeable future.

As of (10:02 GMT+3) gold for immediate delivery fell 0.39 percent or 4.98 points to trade at $ 1,276.45 after opening at $1,266.69, having earlier hit a high of $1,298.64, and a low of $1,264.18.

Minutes from the Fed’s June policy meeting Wednesday showed many policymakers felt the stimulus program should be scaled back this year, but many wanted reassurance the U.S. jobs recovery was on solid ground.

Meanwhile, Bernanke said the bank will likely keep at least some of its easy-money policies amid high unemployment rates and low inflation levels. Bernanke reiterated that the Fed won't consider raising short-term rates until the unemployment rate reaches 6.5%.

The dollar dropped by the most since October 2011 after Fed’s Bernanke said the U.S. economy still requires monetary stimulus to bolster growth and lower unemployment, while policy makers wanted more signs the labor market is improving before slowing bond purchases.

The USDIX is currently trading around 83.05 after opening at 82.92, after hitting a high of 83.07and a low of 82.87.

In the same vein, the Bank of Japan (BoJ) kept monetary policy steady at the conclusion of its two-day meeting on Thursday, but raised its assessment of the economy. Policy makers voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion to 70 trillion yen.

Other precious metals were as follows:

• Silver dropped 0.91% to trade around $ 19.80
• Platinum lost 0.13% to $ 1,401.05
• Palladium inched 21% down to $ 717.50

China's finance minister, Lou Jiwei, scaled down growth expectations by predicting only a 7 percent rise this year, fueling worries about growth in the world’s second largest gold consumer after India.

Speaking in Washington, Jiwei said he expects growth to come in at 7 percent this year after a slew of recent disappointing trade and manufacturing figures, the official Xinhua news agency said on Friday, which would be below the government's official forecast.

The statistics bureau reports on second-quarter gross domestic product are due on July 15, with the median estimate of analysts for a 7.5 percent increase from last year

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Physical gold demand

U.S. DOLLAR gold prices rose 1.1% in Asian and London trade Wednesday morning, nearing yesterday's 1-week highs at $1260 per ounce as the rate for borrowing gold continued to rise.

Silver prices rose 1.8% from an overnight low at $19.05 per ounce.

Equity markets slipped while commodities rose with major government bond prices, nudging 10-year US Treasury yields further back from Monday's 2.73% - their highest level since August 2011.

Interest rates on weaker Eurozone debt rose, however, after ratings agency S&P cut Italy's long-term credit to BBB, just two notches above "junk" status.

"There has been some [gold] borrowing interest recently," the FT quotes Swiss bank UBS's precious metals strategist Joni Teves.

"It's related to the demand for physical," with premiums in Shanghai continuing to hold $40 per ounce above London's benchmark.

"As wholesalers, refiners and retailers of investment products are scouring for the metal to make physical products," agrees consultancy CPM Group's head Jeffrey Christian, speaking to Reuters, "some of them are actually borrowing the gold in advance."

After falling into negative territory for the first time in 5 years on Monday, the forward rate offered by London bullion banks fell further to -0.12% on 1-month swaps today.

The offered rate is paid to borrowers who are willing to swap cash for gold, and so bear the cost of storage and lost interest payments for the period of the swap.

Data from trade association the London Bullion Market Association show gold offered rates were last negative - meaning that gold owners are demanding payment, rather than offering it - in November 2008, after the collapse of Lehman Brothers.

One-month rates have only been negative on 12 trading days in the LBMA's twenty-four year records.

The most negative rate - meaning the highest rate demanded by large gold owners - came at -4.53% in September 1999, when European central banks agreed to cap their annual gold sales. A sharp jump in gold prices forced a scramble amongst gold mining companies who, after a near two-decade bear market, had borrowed and sold gold for fear of further price drops.

The rising price and cost of borrowing gold led to the near-bankruptcy of Ghana miner Ashanti.

"[The negative rate] is important news," says refining and finance group MKS's daily note.

"It has piqued people's interest" in buying gold to profit from a squeeze on bearish traders, the FT quotes a senior bullion banker, with the turnaround in the gold borrowing rate helping support prices after the worst quarterly drop in three decades.

Barring a spike in May this year, the overall return to large gold owners for offering metal for a 1-month swap and earning the interbank interest rate on the cash received hit its best level since February 2009 at 0.30% annualized.

Meantime in Asia on Wednesday, gold retailers in India - the world's No.1 consumer market - agreed Wednesday to suspend further sales of gold coins and investment bars, meeting a government plea for help in reducing gold bullion imports.

The All India Gems & Jewellery Trade Federation, which this week proposed a gold-deposit banking scheme to "mobilize" existing households stockpiles and so reduce gold imports, said more than two-in-three of its 40,000 members have agreed to the ban.

Physical gold demand from wholesalers in China, the world's No.2 consumer, was strong overnight according to dealers.

Looking at recent weak economic data from China, "A hard landing could shake faith in the government," says a note on gold investing from Barclays Research, and lead to a big fall in Yuan-denominated assets.

"[That] could mean gold becomes important for domestic investors to hedge what they may view as a greater set of risks than previously," reckons Barclays commodities analyst Sudakshina Unnikrishnan.

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Gold Recovered Further as Chinese Inflation Data Triggered Inflation Hedge

Gold price continued to recover on Tuesday with the benchmark Comex contract rising to as high as 1258. While the overall picture remains benign, China's headline CPI in June has raised the need for inflation hedge. Headline inflation rose to +2.7% y/y in June, up from +2.1% a month ago. The reading on monthly basis stayed flat, indicating the improvement from a year ago was driven mainly by the price weakness last year. The low non-food inflation signaled that the output gap continued to grow.

Yet, more banks have revised lower their forecasts for the yellow metal. Scotia Capital cut its gold price forecasts for this year to US$ 1400/oz from US$ 1550 and 2014 to US$ 1300 from US$ 1700. With strength in the US dollar and improvement in global economic outlook, the yellow metal's appeal as the safe haven asset has dropped. According to Scotia Capital, gold's development is reminiscent of "a period similar to the 1970s when the gold price is expected to pause and the next move upward will be driven by inflationary expectations”. Meanwhile, "mine output is forecast to slow down and decline longer term. This is due to lower grades being mined coupled with the deferral of the projects”. Meanwhile, silver price is expected to drop to US$ 23.5 from previous projection of US$ 27 in 2013, before falling further to US$ 21 (previous: US$ 31) in 2014.

This was in contrast with Deutsche Bank's more bullish view. The bank believed that "major part of the gold price correction has already occurred". Moreover, it stated that "the extent of the price correction today is still some way short of the percentage declines that occurred in 1980-1” It, however, has classified "events over 30 years as significantly different since at that time, US short-term interest rates rose to 20% with real interest rates also rising rapidly".

On the dataflow, UK's industrial production stayed slat m/m in May, down from +0.1% in April and market expectations of +0.2%. Manufacturing production contracted -2.9% y/y in May, deteriorating from a downwardly revised -0.9% drop a month ago. Consensus forecast was a -1.5% decline. Visible trade deficit widened more than expected to 8.5B pound in May from 8.2B in April. Later today, Canada would report housing starts which probably slipped -5.09% to 190K in June.

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WARREN BUFFETT THINKS GOLD INVESTING IS STUPID?? What do you think?

'Anyone watching from Mars would be scratching their head' over our obsession with the precious metal

Perhaps my favorite take on gold investing comes from Warren Buffett, the iconic investor behind Berkshire Hathaway (NYSE:BRK.A, BRK.B). Delivered at Harvard in 1998, it goes a little something like this:

(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.

The idea is simple: There is no use for gold, only some arbitrary “value” we place on it. Sure, gold was historically used as currency — but why not Cowry shells, which were one of the earliest forms of currency in China? Just because it’s rare and some people value it doesn’t mean that gold is an “investment,” especially to someone like Warren Buffett who is concerned with statistics like book value and cash flow.

More recently, in 2009, he echoed these thoughts in a CNBC interview. He was asked, “Where do you think gold will be in five years and should that be a part of value investing?”

I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola (NYSE:KO) will be making money, and I think Wells Fargo (NYSE:WFC) will be making a lot of money and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that.

For the record, gold was around $900 then, and has tacked on about 45%; Coke stock is up 100% and Wells Fargo is up 200%. That doesn’t include dividends, or subtract the cost of ownership that Buffett points to.

Another great line from Warren Buffett about gold came in October 2010, when he told Ben Stein:

You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils (NYSE:XOM), plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?

Gold is right back to where it was in late 2010 when that interview aired, at around $1,350 an ounce. Meanwhile, XOM stock is up 35% not counting dividends, and farmland continues to appreciate at a rapid rate. (For instance, one report says Iowa farmland just jumped 17% in six months).

It’s hard to tell what the future holds for gold prices. I remain very bearish based oncascading risk of redemptions out of asset-backed ETFs like the SPDR Gold Shares(NYSE:GLD) and the iShares Gold Trust (NYSE:IAU).

But one thing is for sure: Buffett will continue to sit out the gold rush. And in the long run, you could do much worse than follow his lead.

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US Oil (WTI) Makes New 2013 High…Sees Key Resistance At $103.55/65

Crude Oil has yet again made a new 2013 high, above $99.00 from June 19th, as turmoil in the Middle East has surfaced once more. However, it is not conflicts in Syria but rather the millions of protestors in Egypt who want President Mohammed Morsi to resign immediately. Besides elevating the amount uncertainty in global markets, this has caused oil to rally because of heightened fears around a potential closure of the Suez Canal and thus leading to major supply disruptions. It is estimated that 2.5 million barrels of crude oil pass through Egypt each day – Combined between shipping through the Suez Canal and the Suez-Mediterranean (Sumed) pipeline.

Technically, US Oil's move above the key $96.65/85 level set the stage for a further advance. continuation higher. The ensuing break to a fresh 2013 high, followed by the psychological & barrier/option related $100 level and then the critical $100.35/75 level of resistance (convergence of the April 2012 low & Sept. 2012 high) suggests there is room for a continuation higher. Furthermore, the daily RSI break above the noted 60/65 level validates the bullish momentum witnessed in price. Accordingly, we would not be surprised to see a test of the $103.55/65 area over the coming sessions – Convergence of long-term triangle resistance (drawn from the 2011 high) & the 78.6% retracement (of the 2012 decline). Depending upon whether this level remains intact or breaks, it would determine if the longer-term Elliot wave count (wave-D) is favored with a pullback towards wave-E or if the previous triangle and inverted H&S breakouts should be preferred and thus enacting their respective measured move objectives.

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Gold Prices Bounce Ahead of Non-Farm Payrolls Data

GOLD PRICES bounced $10 per ounce from a 1-week low of $1233 per ounce in London trade Friday, holding unchanged from last Friday's finish as financial traders awaited the latest US jobs data.

Non-Farm Payrolls were expected to show growth of 165,000 US jobs in June.

"[Gold prices are] looking towards payrolls for direction," Reuters this morning quoted ANZ Banking Group analyst Victor Thianpiriya.

"A downside surprise to the non-farm payroll numbers will result in sharp short-covering as the market remains short."

Speculative traders in gold futures last week extended record-high levels of bearish bets on the gold price.

Chinese gold buyers, in contrast, imported the second-largest volume of bullion on record in May, new data showed Friday.

Net imports of gold bullion to China through Hong Kong totaled almost 109 tonnes, the Hong Kong Census Bureau said, greater by more than one third from April.

Over the 1st five months of the year, China's net gold imports stood at twice the level of 2012.

Across in India meantime – likely to be overtaken by China this year as the world's No.1 gold consumer – "It is difficult to sell even 5 kilograms per day as the marriage season is almost over," said Chennai wholesalers MNC Bullion to Reuters on Friday.

Fighting both the typical gold summer lull of Chaturmas and new government curbs on imports of gold bullion, India's major retail chains "are aggressively promoting diamond jewellery" says the newswire, as well as expanding overseas in Singapore and Dubai.

"Gold has been the traditional form of savings among Indian households for many years," says B.Venkatesh, founder of financial advisors Navera Consulting, writing in The Hindu.

"Buying gold gives you a feeling of comfort...Gold is accepted at all times, [giving] you feeling that it is a 'safe' asset."

European stock markets meantime failed to follow Asian shares higher on Friday, while weaker Eurozone bonds recovered more of the week's drop.

Silver prices bounced with gold, but held 1.8% down for the week ahead of the Non-Farm Payrolls data.

The US Dollar rose again vs. the Euro and Sterling, touching 5 and 17-week highs respectively after the European Central Bank and Bank of England both confirmed their record-low interest rates for the foreseeable future on Thursday.

"The stronger Dollar is adding to the downward drag in metal prices," says Standard Bank's daily note.

"Even if the NFP data comes out below expectations, we would look for rallies in gold and other precious metals to fade."

Ahead of June's US Non-Farm Payrolls data, both Euro and Sterling gold prices were heading for their first weekly gain in six.

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Gold Up As Investors Weigh Safe-Haven Demand Against Stimulus Fears

Gold edged higher on Wednesday after a 1 percent drop in the previous session as investors weighed prospects for increased physical demand against reduced monetary stimulus speculations from the United States Federal Reserve Bank.

As of 2:36 ET, gold for immediate delivery edged 0.01 percent or 0.08 points higher to trade at $ 1,244.94 an ounce, after opening at $1,242.81. Earlier it hit a high of $1,249.11 and a low of $1,241.72.

Reports showed physical buying has improved in China, with volume on the Shanghai Gold Exchange’s benchmark contract topping 14,000 kilograms per day since June 25 – more than three times last year’s daily average. Gold premiums in Hong Kong are seen as a guide to demand in China – the largest consumer after India in 2012.

Gold received a boost also by the growing unrest in Egypt as rising tensions in the Middle East typically increase gold’s appeal as a safe haven investment. President Mohamad Mursi defied protests demanding his resignation.

Other precious metals were as follows:

• Silver rose 0.30% to trade around $ 19.50
• Platinum fell 0.39% to $ 1,363.50
• Palladium edged 0.20% lower to $ 687.25

Federal Reserve officials sought to calm investors by assuring them the Fed won`t start trimming its bond purchases until the economy has strengthened. Officials said Tuesday the central bank was likely to continue supporting the economy through its stimulus program.

The head of the Federal Reserve Bank of New York confirmed stimulus will likely continue to support the economic recovery despite market worries that it was soon pulling back. While Fed Board Governor Jerome Powell said the Fed`s easy monetary policy will likely be warranted for some time amid high unemployment and low inflation rate.

Investors are waiting for the U.S. nonfarm payrolls data due on Friday to determine the strength of the U.S. economic recovery. Investors have been taking their cues from U.S. jobs data as they attempt to gauge when the Federal Reserve will begin to slow the pace of its bond buying program this year.

The USDIX dollar index is currently trading around 83.80 after opening at 83.82, having so far hit a high of 83.84 and a low of 83.74.

Traders shifted their focus to the monetary decisions due Thursday by the two giant European central banks as they will announce their monetary decisions for July. The Bank of England (BoE) and the European Central Bank (ECB) are set to announce their policy decisions, with analysts expecting them to maintain their policies.

Gold traders will closely watch ECB and BOE where a looser monetary policies would support gold`s rally, as investors fearing higher inflation resulting from such policies resort to bullions as a hedge against inflation.

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