CFTC Ends Silver Investigation

The gold price gained 0.8% overnight as fears over the US debt ceiling have prompted some safe-haven buying. Concerns that the US government could ‘shut-down’ on October 17th grow increasingly realistic as Congress remains divided over raising the $16.7 trillion statutory limit on government borrowing. Treasury Secretary Jack Lew said yesterday that by bid-October the government’s coffers will be dry, with just $30bn left in the account.

The Republican Congress members have announced that a vote may come as early as Friday.

We have seen this situation before, each time it becomes a game of politics rather than a lesson about economics. Both parties like to play with each other a bit, before raising the debt ceiling. Never does anyone ask if this merry-go-round is a realistic way to run the world’s biggest economy.

Whilst gold has made some gains in the past two-trading sessions, prices remain subdued ahead of the Chinese national holiday. Gold is, however, expected to make some gains now that the import/export backlog in India is being cleared.

Silver remains subdued, despite gold’s rise and improved data from China.

More cop out predictions

Today’s award for Biggest Cop-out Prediction Ever goes to Deutsche Bank who yesterday said that the delayed tapering would be most relevant and beneficial to the precious metal sector. The ongoing bond-purchases “will not only stem the rise in real yields but also remove important interest rate support for the U.S. dollar. On this basis, we expect this will introduce a strong floor to gold prices and may even provide some upside risks given the potential of additional weakness in the U.S. dollar,”.

Thai spot gold exchange

Yesterday the Bangkok Post reported that seven Thai gold futures dealers have proposed to the central bank that a spot gold exchange be organised in Thailand. The Bangkok Post reports that the move comes after the central bank expressed concerns that ‘the amount of foreign exchange transactions in gold trading was greater than the actual gold import and export value, indicating potential foreign exchange speculation.’

One of the seven proposers is YLG Bullion and Futures. We mentioned them in yesterday’s Daily Nugget; their gold imports are set to reach 200 tonnes this year, have been just 96 tonnes last year.

CFTC ends silver trading probe

Those of you who have been following the CFTC’s five-year long silver manipulation investigation will not be surprised to hear that it has been closed. ‘7,000 staff hours’ have not been able to find any evidence of wrongdoing. Reuters quoted GATA Chairman Bill murphy, “We believe that the U.S. government is part of the trading operation. In essence, you are not going to have the CFTC turns against its own government.”