Net Asset Value and Premiums for Certain Precious Metals Trusts and Funds

I have added an estimate of the Sprott Physical Gold Fund.

The discounts on GLD and SLV are signalling some short selling going on as they are expanded above the mean.

The premiums on GTU and CEF indicate some optimism.

In addition, the miners are being hit today with profit taking and possible short selling.

Volatility ahead, and will most likely key off tomorrow's US Non-Farm Payrolls Report



I would not limit this quote below from Orwell to political thinking. I believe it motivates and explains most statements from analysts and economists, and of course, the vast majority of postings on the average internet chatboard. Truth is in short supply, and honest governance is an endangered species. We should all be wary of our own vulnerability to self-deception and the subtle temptations of the offered illusions of the unscrupulous.

In other words, grab something solid and hang on. lol.

"All political thinking for years past has been vitiated in the same way. People can foresee the future only when it coincides with their own wishes,
and the most grossly obvious facts can be ignored when they are unwelcome." George Orwell

Sprott Has Purchased About 9 Tonnes of Gold Bullion This Week

The Sprott Physical Bullion Trust (PHYS) is now holding 286,870 ounces of gold, with a market value of $327,003,510. The estimated net proceeds of their IPO are approximately $390,000,000, possibly higher depending on total fees for the IPO and initial bullion purchases.

They have now purchased 8.923 tonnes of gold bullion since last Friday (at 32,150.746 Troy ounces per metric tonne).

The total units outstanding are 40,000,000 for a Net Asset Value of 9.50 including cash and bullion. With the price of the Trust closing at 9.96 today, it is at about 4.85% premium according to their website.

By way of comparison, the Central Gold Trust (GTU) closed at a premium of 8.2%. This is on the high side, reflecting gold's recent run higher, and a flight to safety over recent concerns regarding sovereign debt. Gold has reached record prices in the euro and the British pound.

It will be interesting if we can see identify the drawdowns in the inventories that sourced this gold, wherever they may be. There are those who contend that the supply is coming from the unallocated inventories of bullion banks who are engaging in a kind of 'fractional reserve' gold selling to their customers.
If Your Gold Is at an LBMA Bank, You May Be Just an Unsecured Creditor by Adrian Douglas.

Let's see if the price of spot holds its levels after this unusual level of bullion purchasing in what is reputed to be a tight market.

Mutual Fund Cash Levels Near Historic Lows

The mutual funds, and those who give them their money to invest, look to be about 'all in' with regard to US equities.

As I recall, the bond funds have decent cash levels, and the piling into short term Treasuries at negative interest rates is certainly a phenomenon.

The hypocrisy and venality of the US financial sector knows no bounds, and they seem to have bought off the guardians of he public trust. The US government desperately needs to sustain confidence and the aura of recovery. They do not need a falling stock market to say the least. And yet, they have to continue funding record levels of debt issuance every month.

A lot of demand for funds, and many of the players close to flat busted.

It may be an interesting year.

SP Futures Daily Chart

The SP needs to break out of this resistance, or risk falling into a trading range, with the potential downside of a broadening top that fails and breaks lower.

The unemployment claims and same store sales tomorrow will provide some input, but the eyes of traders will be on the Non-Farm Payrolls report. I have not worked up any forecasts for it yet, but there was some concern since Larry Summers was talking the number down, based on the northeastern US snowstorms.

Was he calibrating the markets view, or setting it up, in the style of Robert Rubin who like to play the markets this way? We will know in a few days.

The pit traders are looking for an upside move to 1130, and it will take some positive jobs data to get it.

But for now the question is if the rally is consolidating its gains, or weakening for a more serious correction, or even a breakdown. Since it reached our trading objective of a 50% retracement of the big decline, the resistance here is highly significant according to any number of technical schools from Richard Russell's Dow Theory to Fibonacci retracement levels.