Another day, another week, another month and another quarter. It is hard to believe that we have now reached the halfway mark for 2013 and it has been anything but boring. The next quarter should be just as volatile as the German elections take center stage and political uprisings are beginning to change the international landscape. The unemployment data from the U.S. will bring even more volatility than usual as the FED has now raised the importance of JOBS as the mainstay financial focus … again. As Europe debates a unified banking system, one gets the feeling that EU banking problems are simmering just below the surface and the issue of BAIL-INS is making large depositors extremely nervous. The GOLD has been thrown overboard as the instrument of being a store of value, but as the $1200 level succumbed to selling pressure, the SILVER and PLATINUM performed admirably.
If one wants to buy an out of favor asset, SILVER/GOLD may be a place to trade. Do your technicals and see if you can establish a comfortable risk profile for yourself. I am just bringing attention to the fact that while GOLD tumbled silver was dragged down. More importantly, as I noted last night, THE GOLD/YUAN CROSS AT 7150 YUAN TO AN OUNCE OF GOLD MAY PROVIDE A LEVEL FOR THE GOLD TO HOLD. Again, the GOLD/YUAN was at 7150 the day of the IMF gold sale to INDIA on November 2, 2009 and although in U.S. dollar terms the price was $1048, for Chinese buyers the 7150 YUAN level may bear more importance. Just bringing attention to a level that may prove supportive.
***Two biggest losers last week were the FED and the Swiss National Bank. As U.S. long-term rates rose, the FED‘s balance sheet of $3.5 trillion in assets got pummeled on a mark-to-market basis. I wonder if the U.S. Treasury will remit the money the FED sent to it last year. But when you have a printing press you have the ultimate realm of OPM (other people’s money). The Swiss National Bank also took a drubbing as its portfolio of international currency and bonds had to fall dramatically in value. The SNB turns over its profits to the CANTONS but I wonder who absorbs the losses. Hey, Ben Bernanke and Thomas Jordan: Just double down on your bets and make a few more speeches. The FED and Swiss both appear to suffer a trader’s dilemma. That is, when a trade becomes a long-term investment. If the SNB bought Aussie dollars at 1.05, they have to love the currency at 0.9300. If the FED bought 10-year notes at 1.70% yield, at 2.3% they are a gift.