Hedge Funds Taking Profits in Gold

Cassie Bastien

2/21/2017 9:24:54 AM

Daily Gold & Silver Market Report – 02/21/2017

According to latest trade data from the Commodity Futures Trading Commission, hedge funds took profits in Gold for the first time in three weeks as prices hit nearly a three-month high. “Strong U.S. economic data, speculation the U.S. administration will deliver fiscal stimulus, along with [Federal Reserve] statements pointing to possible imminent rate hikes convinced specs to materially reduce Gold length,” TD Securities Head of Commodity Strategy Bart Melek said. Mitsubishi Precious Metals Strategist Jonathan Butler said investor interest in Gold is tied strongly to President Donald Trump. SMMNewsMetal.com Neils Christensen said, “While Hedge funds have limited their exposure in Gold, they continue to see potential in Silver, increasing their speculative positioning.” According to analysts from Commerzbank, “Speculative financial investors have played a major part in the 13 percent rise in the Silver price since the beginning of the year,” adding that Silver’s net length is now at its highest level since September. “While safe-haven demand for Gold has been fairly muted so far, Silver continues to enjoy rising demand with the recent surge in industrial metals,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Why Silver Bullion Might be the Buying Opportunity of the Decade

CommodityTradeMantra.com says there are multiple reasons to add physical Silver to your portfolio. One of those many reasons is because Silver is simply real money, unlike paper investments that do not carry the same benefits. In addition, Silver is a tangible or “hard” asset, meaning you can literally hold it in your hand. Unlike paper profits, digital trading and currency creation, Silver is one of the few assets you can carry around in your pocket. Another reason to add Silver to your portfolio is because it is relatively cheap. Commodity Trade Mantra said it is 1/70^th the price of Gold and is much more practical for your everyday smaller purchases. Silver is also used for industrial purposes, including electronics, medical applications, batteries, solar panels and much more. Jeff Clark with Commodity Trade Mantra said, “Due to [Silver's] rare characteristics, the number of industrial applications for Silver has skyrocketed. In fact, industry now gobbles up more than half of all Silver demand.” Silver bullion demand is growing around the world, with virtually all major government mints seeing record sales levels. With all of that being said, Clark said, “It’s hard to find an asset with a greater distortion between price and fundamentals.”

Hints of March Rate Rise May Drive Dollar Higher

Reuters Reporter Patrick Graham said, “The dollar rose broadly on Tuesday after two Federal Reserve policymakers pointed to a potential U.S. interest rates rise next month,” causing investor attention to focus on the bullish fundamentals of the world’s biggest economy. One of the biggest parts of recent drops in the euro are signals the Donald Trump administration is unhappy with the dollar's strength and, as Graham reports, “worries that a sometimes chaotic first month in office does not bode well for the delivery of tax reform and new spending.” Nonetheless, solid economic data and rises in U.S. inflation have led Federal Reserve policymakers, including Chair Janet Yellen, to promise a rise in interest rates in the near future. Neil Mellor, a strategist with Bank of New York Mellon in London, said, “Fundamentals have started to take a greater slice of the attention again, not least because of Janet Yellen's message last week. Whether it will stay like that is the big question.” Graham said, “Much attention has focused in recent days on risks around France's elections. One poll on Monday, while an outlier, showed the gap between centrist favorite Emmanuel Macron and far-right anti-EU nationalist Marine Le Pen shrinking to 16 points.” Gavin Friend, a Currency Analyst with National Australia Bank in London said, “We are still two months away from the French election but there is clearly some safe haven buying as we get nearer.”

• A more than half percent gain in the U.S. dollar drove the biggest fall in the euro in more than a month.
• Tuesday morning, the dollar was up 0.6 percent against the New Zealand dollar, 0.5 percent against the Australian dollar and 0.7 percent against the Swiss franc.

At 10:42 a.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,240.10 Down $0.30
• Silver, $18.12 Down $0.01
• Platinum, $1,005.40 Down $0.40
• Palladium, $773.50 Down $7.70

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