John Paulson's Flagship Fund Had An Ugly February
The Paulson Advantage Plus was down 4.7 percent last month, and 3.5 percent Ytd.
His gold fund has lost 26 percent since the start of the year, and 18 percent in February. More on that here.
The Paulson Credit Fund, however, was up 1.3 percent in February, and up 4.3 percent Ytd. The Paulson International Fund was up 0.5 percent in February, and 7.2 percent Ytd. And the Paulson Recovery Fund was up 1.6 percent last month, and 5.8 percent year-to-date.
http://www.businessinsider.com/paulsons-gold-fund-down-10-ytd-2013-3
John Paulson's Gold Fund is down 10% year to date, according to CNBC's Kate Kelly, this after dismal performance in 2011 and 2012.
Although it's true that gold has not done so hot of late, it's still had an amazing run over the last several years.
So what happened?
Kelly explained.
"The irony is that Paulson's been absolutely right about gold from April 2009 when he first put his trade on to now the yellow metal is up more than 70%," Kelly reported. "But Paulson has never dealt with physical gold as part of his trade. He's focused instead on mining and production stocks primarily, and that's where the pain has been. Looking at a basket of 6 key holdings that he's had, their down an average 32% since he bought. The only one... that's in the black is Rand Gold Resources that's up 1%..."
Kelly added that Paulson has no intention of closing down the $900 million Gold Fund, he's now presenting it to investors as a 'Black Swan' option in case inflation hits.
http://www.caseyresearch.com/gsd/edition/lawrence-williams-pdac-the-numbers-are-there-but-the-money-isnt/
¤ YESTERDAY IN GOLD & SILVER
The gold price rallied about seven bucks by 3:00 p.m. during the Hong Kong trading session on their Tuesday afternoon...and then hung in there until the London p.m. gold fix at 10:00 a.m. Eastern time in New York.
From there, gold got sold down below it's Monday closing price about ten minutes before the Comex close. That was the low of the day at $1,571.10 spot...and from that point it rallied back about four bucks or so in pretty short order before trading sideways into the 5:15 p.m. electronic close.
Gold closed at $1,575.40 spot...up the magnificent sum of 80 cents. Net volume was a bit heavier than on Monday...around 116,000 contracts.
The silver price action was far more 'volatile'...and by 3:00 p.m. in Hong Kong it was up just over a percent...and then traded more or less sideways until the Comex open. At that juncture, the price took off, but the moment it broke through the $29 spot price mark, a willing not-for-profit seller showed up...and silver traded just under that price up until about 10:30 a.m. Eastern time before it, too, ran into the same fate as gold.
Silver's low tick [$28.45 spot] came at 1:00 p.m. Eastern time right on the button...and then, like gold, also had a sharp little rally about thirty minutes after the Comex close...and from there, also like gold, traded flat until the end of the electronic session.
Silver finished the Tuesday trading day at $28.70 spot...up 16 cents. Net volume was around 36,000 contracts.
It should be obvious to all and sundry that both metals would have finished materially higher if left to their own devices...which they obviously weren't.
Here are the platinum and palladium charts...and they are of interest as well. What should be carefully noted is that their price patterns bear no resemblance whatsoever to the price patterns of either gold or silver, as they were allowed to [more or less] trade freely.
The dollar index opened at the 82.15 mark on Tuesday morning in the Far East...and then sank to its low of the day...81.92...which came at 9:00 a.m. in London. The subsequent rally ran out of gas around 11:30 a.m. in New York at the 82.23 mark...and then slowly declined for the rest of the day, finishing the Tuesday trading session at 82.07. Not much to see here.
* * *
The CME's Daily Delivery Report for 'Day 4' of the March delivery month showed that 29 gold and 1 silver contract were posted for delivery on Thursday. Nothing to see here, either.
Another big chunk of gold was withdrawn from GLD yesterday. This time it was 270,950 troy ounces. There were no reported changes in SLV...at least not as of 9:30 p.m. Eastern time yesterday evening.
There was another sales report from the U.S. Mint yesterday. They sold 3,500 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 113,500 silver eagles. Ted Butler mentioned on the phone yesterday that it was obvious that the mint was producing silver eagles at maximum capacity. I hope you're getting your share, dear reader.
Over at the Comex-approved warehouses on Monday, they reported receiving 470,494 troy ounces of silver...and shipped 145,428 troy ounces out the door. The link to that activity is here.
Yesterday I received an e-mail from the CEO of an excellent junior silver producer which I've owned shares in for many years. He pointed out that despite the big hit his and every other silver producer's stock had taken on Monday, that their company was doing just fine, thank you.
That's no surprise, of course, as it's a terrific company...but he picked the wrong moment to e-mail me, as I was still thinking about the tirade I wrote about the precious metal mining companies in 'The Wrap' section of Tuesday's column. If there ever was a case of being in the wrong place at the wrong time, this was certainly it. Here is my reply...
Hi Xxxxx,
Thanks for your kind e-mail this morning.
I know that your company, plus others, are selling for ridiculously low prices.
However, I'm not allowed to comment on any one company, as I'm not an analyst. You'd have to take that up with Jeff Clark or Louis James.
I know you read my column every morning, so you will have noted that the entire sector is being abandoned by the investing public...and has nothing to do with your [or anyone else's] assets in the ground...or your excellent company-specific news.
The issue is that the mining industry will not deal with the real problem out there...which you know about all too well...and that's the outrageous short positions held in all four precious metals by a handful of banks...JPMorgan Chase, Bank of Nova Scotia...and HSBC USA.....plus a couple of minor players. Note the attached "Days of World Production to Cover Short Positions" chart.
If those obscene and grotesque short positions weren't there, the prices of all four precious metals would take your breath away, as they would be many multiples of what they are now...and we wouldn't be having this discussion, as the mining companies would be talk of the town...and the executives of same would be like gods. As a cursory glance at the chart will show you, these outrageous short positions exist in only four commodities...the precious metals...and your metal in particular, silver.
You, or a group of silver mining companies working together, are going to have to bell this cat sooner or later. This is where your real fiduciary duty lies...and I know I can speak for all of your stockholders, the real owners of your company, the sooner you get started the better. And if the idea of confronting the "will of Mordor" is too much for you or the industry, there are other ways that you can make a difference. Withholding production or buying into offerings from Sprott or Central Fund of Canada would be a good place to start.
* * *
selected news and views.....
Fallout from 'Untouchables' Documentary: Another Wall Street Whistleblower Gets Reamed
A great many people around the county were rightfully shocked and horrified by the recent excellent and hard-hitting PBS documentary, The Untouchables, which looked at the problem of high-ranking Wall Street crooks going unpunished in the wake of the financial crisis. The PBS piece certainly rattled some cages, particularly in Washington, in a way that few media efforts succeed in doing.
Now, two very interesting and upsetting footnotes to that groundbreaking documentary have emerged in the last weeks.
The first involves one of the people interviewed for the story, a former high-ranking executive from Countrywide financial who turned whistleblower named Michael Winston. You can see Michael's segment of The Untouchables at around the 4:20 mark of the piece. The story Winston told during the documentary is essentially an eyewitness account of the beginning of the financial crisis.
Matt Taibbi is not a happy camper here...and rightly so. The headline says it all...and it's definitely worth reading if you have the time. I had no space for this Rolling Stone posting in my Tuesday column, so here it is today...and I thank Australian reader Wesley Legrand for bringing it to our attention.
FSA admits slow response to Libor but denies failure
England's Financial Services Authority which, on Tuesday, released the findings of an internal audit into its handling of the scandal, said employees "at all levels of management" were aware of "severe dislocation" in the Libor markets from summer 2007 to early 2009, years before it launched a formal investigation in 2010.
The audit, which reviewed 97,000 documents, threw up "instances where information available provided some indication low-balling might be occurring" but insisted that no information available to the watchdog could have indicated that traders were manipulating the key rate for their own financial gain.
It blamed its sclerotic response on preoccupation with the ongoing financial crisis and the fact that it had no formal regulatory responsibility for Libor, but stopped short of admitting to major regulatory failure.
Well, if this isn't a "major regulatory failure" then I don't know what is. It sounds like the CFTC with silver and gold! This short article appeared on thetelegraph.co.uk Internet site during the London lunch hour yesterday...and I thank Roy Stephens for bringing it to my attention...and now to yours.
George Osborne is defeated 26 to 1 on E.U. bonus caps
EU finance ministers overruled British opposition to the banking remuneration caps and "technical negotiations" over the detail of regulations to begin next week ahead of a final decision next month.
Michel Barnier, the European Commissioner for financial services, hailed a "crystal clear" deal allowing the EU to impose a bonus limit of 100 pc of salary, or a maximum 200pc after agreement with shareholders, from January 2014.
"The caps are fixed," he said. "These caps will be the basis of our work from now on. All the main points have been approved and will not change."
The caps will also apply to all European bankers working in New York, Hong Kong, Singapore or other overseas branches, again overriding British concerns.
This is another story that was posted on The Telegraph's website yesterday afternoon GMT...and it's also courtesy of Roy Stephens.
Greece Will Monitor Bank Accounts
Trying to find innovative ways to fight tax evasion, Greece’s General Secretariat for Information Systems has completed an application that will allow the state’s monitoring and collection mechanism to access the country’s banking system via an online connection and let the government have access to depositor bank accounts.
The application, which will let the Finance Ministry troll through the accounts of all depositors suspected of tax evasion means online inspectors can scour through records of deposits, loans, credit card use and other data without permission from the account holder.
Until now, the law did not allow even investigators to check bank records, but Greece is under intense pressure from international lenders putting up $325 billion in two bailouts to find tax cheats and up tax revenues.
Wow...talk about invasion of privacy. If I had a bank account in Greece, I'd close it. This very short story appeared on the Greek Reporter website yesterday...and it's worth skimming. I thank Ulrike Marx for sending it.
Cypriot crisis deepens as 'haircut' fears drive capital flight
Capital flight from Cyprus has accelerated since eurozone politicians began threatening losses for bank depositors, and may have reached 12pc of the country's GDP over the last month.
Cypriot sources say lenders hemorrhaged €1bn in deposits over the first two weeks of February, heightening fears that mere talk of "haircuts" is deepening the banking crisis as rescue talks drag on between the EU-IMF Troika and the island's new leaders. The Bank of Cyprus reported deposit losses of €1.7bn in January.
Brussels has warned against haircuts for depositors, a drastic move avoided in bail-outs for Greece, Ireland, and Portugal.
Cypriot finance minister Michael Sarris told eurozone colleagues on Monday night that such action would shatter confidence and set off a fresh spasm of the EMU debt crisis.
This must read Ambrose Evans-Pritchard story was posted on thetelegraph.co.uk Internet site early yesterday evening...and is another article from Ulrike Marx.
Reserve Bank of Australia quietly increases banks’ bailout buffer
In a globally unique policy, the Reserve Bank of Australia will supply banks with a permanent bailout facility worth up to $380 billion by 2015.
The policy has been designed by the RBA to help banks satisfy stringent new liquidity tests which simulate “acute stress scenarios” that deny banks funding for 30 days under the post-GFC rules, Basel III.
Local regulators argue that insufficient liquid assets such as government bonds meant they had no choice but to give the banks a new taxpayer-backed “line of credit” that could be tapped at a cost just above the RBA’s cash rate. Smaller building societies and credit unions are not subject to the liquidity tests and will not, therefore, have access to the bail-out fund.
Remarkably few people inside or outside financial markets are familiar with, or understand, this “committed liquidity facility”, which will be managed by the RBA.
Obviously the RBA has seen the handwriting on the wall for that country's economy...and is preparing in advance for the inevitable bust. The country's real estate market has been heading south for a couple of years already, but still has a long way to go. I thank Swiss reader B.G. for sharing this Australian Financial Review story with us.
Three King World News Blogs/Audio Interviews
The first blog is with Ron Rosen...and it bears the title "Look at This and You Will See We Are Very Close to a Bottom". The second blog features Citi analyst Tom Fitzpatrick. It's headlined "Silver and Gold to Spike as Oil to Surge a Stunning 63% - 82%". The audio interview is withGerald Celente.
PDAC – The numbers are there, but the money isn’t
I’ve been attending PDAC meetings since the late 1970s and have seen it through a number of major downturns and subsequent recoveries, but I don’t think I’ve ever seen such a downbeat convention as it is proving to be this year.
What sets it apart is an underlying feeling that this time the downturn may have longer to run.
This year’s PDAC is seeing plenty of visitors, but a dearth of capital which will lead to serious shortages ahead, and ultimately far higher metal and stock prices.
The visitors did indeed come, but what seems to be lacking is the money needed to finance exploration and mine building. Few juniors can raise any capital at all, except perhaps in minuscule amounts, and at a high cost, which may enable them to stay solvent for another couple of months until the long awaited upturn happens….. if it does.
When it does come, which it surely will at some time, it may well be too late for a number of junior explorers, and perhaps for some operators working too close to the margins given that precious and base metals prices are currently at lower levels than they have been for some time. The global economy still seems to be far away from any kind of serious and sustainable recovery sufficient to drive at least the industrial sector higher, while precious metals should be a different story but the short sales merchants seem to be intent on keeping prices down for whatever reason and for the time being, at least, they seem to be winning this battle.
Mineweb's General Manager and Editorial Director Lawrence [Lawrie] Williams filed this story from the PDAC meeting in Toronto in the wee hours of this morning Eastern Standard Time...and it's a must read from beginning to end.
¤ THE WRAP
But whatever happens - on the paper markets for precious metals and/or on the stock and bond markets - the REAL situation has not changed. In fact, it has worsened. A year ago, the US government would NEVER have allowed such a thing as a "sequester" to actually go into effect, no matter how brief its duration might be. But the fear of the consequences of their actions is growing. Don't forget, Gold broke decisively below its uptrend line in late 2008 in the Lehman panic. It could easily do that again. But a low Gold price in the face of what has happened SINCE late 2008 is MUCH less sustainable than it was in late 2008. - Bill Buckler, Gold This Week...02 March 2013
It was obvious [except to the most mentally challenged] that the $1,600 price mark in gold...and the $29 spot price in silver were not going to be broken to the upside. What little gains there were during the Tuesday trading session, vanished in a blizzard of paper once the London p.m. gold fix was in...led by the high-frequency traders from JPMorgan et al during the New York trading session.
The only thing I'm grateful for...which I mentioned yesterday in this space...is that we didn't get another big price spike in both metals like we got on Tuesday of last week, so this Friday's Commitment of Traders Report should show what the true state of affairs is in both gold and silver...and I'm expecting to see further improvement in both metals.
I'd like to think that we've seen the bottom, but that won't be known for sure until we're looking at it in the rear-view mirror, because as long as "da boyz" figure there are more technical funds longs left that they can get to liquidate, they'll continue pounding away at the price. If that's their plan, they'll have to set new low prices for this move down in both silver and gold...and that may be a very tall order at this point. We'll see.
With both the metals and their shares...along with the sentiment...at absolute rock bottom, it's only a matter of time before a rally of some substance develops...and that juncture we'll find out in short order whether the three or four big bullion banks that are controlling the price in all four precious metals, are prepared to short this next rally as well. A rally of that type began on Tuesday of last week...and you can see how far that one was allowed to get.
In overnight action, the usual rallies in early Far East trading got capped on their Wednesday...and the precious metal prices had been trading lower since then. As I write this paragraph, London has been open for about forty-five minutes...and both gold and silver have been sold back down to their closing prices in New York yesterday afternoon. Volume is average...and the dollar is trading in a tight range around the 82.00 mark...mostly unchanged from yesterday.
I haven't the foggiest notion as to how the precious metals will trade in New York today...but as Lawrence Williams pointed out in his commentary from the PDAC earlier this morning..."the short sales merchants seem to be intent on keeping prices down for whatever reason and, for the time being at least, they seem to be winning this battle."
That they are.
See you on Thursday.
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