PRECIOUS METALS: Gold, Silver Surge as Fed Reveals Easing Plans

--Gold, silver surge to six-month highs after Federal Reserve announcement

--Comex December gold rises 2.2% to settle at $1,772.10 a troy ounce

--Comex December silver settles 4.5% higher at $34.778 an ounce

--Easy-money policies can boost demand for precious metals as a U.S. dollar, inflation hedge

--Platinum supported by calls for strike in top producer South Africa

(Adds details on trading halt in the seventh, eighth paragraphs.)


By Matt Day and Nicole Friedman

NEW YORK--Gold and silver climbed to six-month highs Thursday, as the Federal Reserve's announced round of bond buying sparked a retreat in the U.S. dollar and in demand for a hedge against potential inflation down the line.

The U.S. central bank said that it would buy $40 billion of mortgage-backed securities each month and that it could extend those purchases if the U.S. labor market doesn't improve. The Fed also said it would extend its program known as Operation Twist, under which it sells short-term bonds and buys longer-term bonds in an effort to lower borrowing rates.

Gold and other precious metals can gain from easy-money policies similar to the ones announced Thursday as investors seek a hedge against the inflation that can result. Such policies by the Federal Reserve also can take a bite out of the dollar, drumming up demand for dollar-denominated gold.

Gold for September delivery gained $38.50, or 2.2%, to settle at $1,769.10 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest settlement since Feb. 28. The most actively traded contract, for December delivery, rose $38.40, or 2.2%, to settle at $1,772.10.

The September silver contract rose 4.5% to settle at $34.716 a troy ounce, the highest since March 1.

The Fed also extended its outlook for low interest rates to mid-2015, from its previous outlook of late 2014. Low rates can send investors looking for higher yields into precious metals.

Trading in gold was halted by Comex operator CME Group Inc. (CME) twice Thursday as volume spiked before and after the release of the release of the Fed's statement. A CME spokesman said the exchange halted trading for less than a minute at 12:14:47 p.m. EDT, and again at 12:31:20 p.m. EDT.

The exchange uses such trading halts to prevent excessive price volatility.

The Fed's action was widely expected after Chairman Ben Bernanke and other officials hinted at the central bank's willingness to act should economic growth in the U.S. weaken. Gold futures gained 9% between Aug. 2 and Wednesday's close.

Even after those gains, "I think that you had a lot of people sitting on the sidelines just wanting to make sure there wasn't a surprise here" on Thursday, said Matt Zeman, head of trading with Kingsview Financial.

The day's gains could spark another leg higher in gold in the weeks ahead, said Adam Klopfenstein, a senior market strategist with Archer Financial Services.

Gold spent much of this summer in sideways trading, as investors worried about the global economy preferred the U.S. dollar at the expense of precious metals. That sparked some talk that gold's 11-year bull run could be set to stumble, and speculators grew cautious toward the metal.

After the Fed's announcements, "I think we're going to see a lot of the [gold] skeptics throwing in the towel," Mr. Klopfenstein said, adding that some of those traders were closing out bets on lower prices Thursday. "Gold is having an impressive run."

On top of the Fed news, platinum gained an additional price boost as labor unrest continued in South Africa four weeks after violence erupted at a mine owned by Lonmin PLC.

Platinum mine workers called Thursday for a nationwide strike across the sector to begin Sunday. South Africa produces 75% of the world's platinum, according to chemicals and precious metals company Johnson Matthey.

Platinum for October delivery settled up 1.8% at $1,679.50 a troy ounce.

Demand for physical platinum could exceed supply next year, said TD Securities, which forecast that prices would rise above $1,825 a troy ounce in the second quarter of 2013.

http://online.wsj.com/article/BT-CO-20120913-714170.html

Record Haul Of Silver Bullion Recovered From WWII Shipwreck

A record 48-ton haul of silver bullion has been recovered from a World War II shipwreck off the coast of Ireland.
The treasure, worth 1.4 million troy ounces of silver, was found on the wreckage three miles beneath the Atlantic.
The operation to retrieve the 1,203 bars from the SS Gairsoppa was the heaviest and deepest underwater mission to remove precious metal from sunken vessels.

It was discovered last September and the metal was reportedly valued at around £155 million in today's prices.
The Gairsoppa, a cargo ship, sank in February 1941, 300 miles south-west of Galway in Ireland.

It was being used by the British Government as part of its War Risk Insurance programme.

The boat carried 83 crew and two gunners but only one officer survived the evacuation to reach the shore after it was hit by a German torpedo.

The silver belongs to the UK after the Government paid £325,000 to the owners of the cargo.
It was recovered by deep ocean exploration firm Odyssey Marine Exploration.

Greg Stemm, Odyssey chief executive, said: "Our capacity to conduct precision cuts and successfully complete the surgical removal of bullion from secure areas on the ship demonstrates our capabilities to undertake complicated tasks in the very deep ocean.

"This technology will be applicable to other modern shipwreck projects currently being scheduled as well as our deep ocean mineral exploration activities."

The haul has been moved to a secure location in the UK.
The firm will also try to rescue 600,000 ounces of insured silver believed to be on another shipwreck, the SS Mantola, 100 miles away from the Gairsoppa.

Odyssey said the recovered Gairsoppa haul was about 43 per cent of the insured silver bars, or a fifth of the total silver cargo which its research indicated may have been on board.

The deep sea operation will feature on television specials on the Discovery Channel in the US and Channel 5 in the UK.


http://www.businessinsider.com

Where Do Olympic Gold Medals Come From?

The 2012 Olympic games will begin on July 27 in London, awarding top athletes with medals for their achievements.

World-class athletes around the globe dream of having gold medals placed around their necks with their country’s national anthem blaring on the sound system in celebration of their hard work and dedication.

But are these golden prizes actually made exclusively of gold? And what are the silver and bronze medals given to all the second- and third-place finishers really made of?

JCK spoke to Kennecott Utah Copper, a division of Rio Tinto Mines, which provided the metal used to create the 4,700 medals awarded at the 2012 Olympic and Paralympic Games. Advisor of communications Kyle Bennett explained: The gold medal is made of 92.5 percent silver, 1.34 percent gold, with the remaining percentage copper; silver medals are composed of 92.5 percent silver, and 7.5 percent copper; bronze medals consist of 97 percent copper, 2.5 percent zinc, and 0.5 percent tin.

The medals started out as iron ore in the Bingham Canyon Mine in Utah. The ore was extracted through a 24-hour, 7-days-a-week process of drilling, blasting, loading, hauling, crushing, and conveying. Valuable materials were then filtered during the concentration process. The smelting process—which entailed heating and melting the copper concentrates—removed the copper from the other elements in the ore. During the refining process, precious metals—including gold and silver—were separated from the copper.

Rio Tinto then shipped the gold, silver, and copper to the Cookson Precious Metals Group, where the metal was pressed into flat discs. The Royal Mint in London inscribed the medals with the official design of the Summer 2012 Olympics, which was designed by David Watkins, jeweller and professor of goldsmithing at London’s Royal College of Art.

The Olympic Committee’s pledge to be the most eco-friendly games to date played a key role in Rio Tinto’s involvement in producing the medals. “Our commitment to sustainable development is an integral part of how we do business and one of the reasons we are able to sponsor the greenest games ever,” Bennett says. “We can trace every gram of metal we produce back to the mine to ensure the metal meets our stringent standards.”

-www.jckonline.com

Price points, enhanced design drive silver sales

The price of silver has fluctuated since the summer, rising again in October and reaching an approximate $31 an ounce as of Dec. 13. With the price of gold still high ($1,630 an ounce as of Dec. 13) and more designers taking silver styles in new directions, many independent jewelers are noticing an increased interest in silver from their customers.

Here, jewelers share how silver sales are faring at their stores, what they’re carrying for inventory and how they’re advertising the metal to consumers.

Silver sales are going well for Aaron Penaloza, who co-owns C. Aaron Penaloza Jeweler in San Antonio, Texas, with his wife Mary.

“We’ve always done fairly well with silver, but we’re carrying more of it now, because it’s filling better than it was two years ago,” he said. “You can get a bolder look in silver that is just not affordable in gold anymore.”

Penaloza carries silver jewelry from brands such as Thistle & Bee, Alwand Vahan, Lorenzo, and Angelique de Paris, as well as silver estate jewelry, which the jeweler said is selling well. Most silver buyers have been self-purchasers, Penaloza said, but he has seen customers shopping the metal for Christmas.

“The price points are not as high as diamonds or gold, so silver has always been a good alternative to them,” Penaloza said. “Now with silver and gold combinations, the price points are getting up there, and people are interested.”

Silver’s price point is driving customer interest at Sarah Leonard Fine Jewelers in Los Angeles, according to Gail Friedman, graduate gemologist and co-owner of the store, said.

“Silver is very fashion-forward and it’s a great price point, and people notice that,” Friedman said. “As much as yellow gold is selling, [customers] are still into white metals. It’s attractive to them.”

The store carries a variety of different lines in silver, and “they’re moving,” Friedman said. Sterling silver jewelry with colored gemstones has been particularly successful for the jeweler, especially Tacori’s 18K925 line.

“That’s a big part in our store, we sell quite a bit of that,” Friedman said of the brand’s line. “The plain silver doesn’t sell as fast as the silver with stones--most people want some stones in it.”

Highlighting silver’s relatively lower cost to customers has been a successful marketing tool for one jeweler.

“Our silver sales are up dramatically,” J. Dennis Petimezas, president of Watchmaker’s Diamonds & Jewelry in Johnstown, Pa., said, “and I’m promoting silver dramatically.”

Petimezas’ promotion highlights price points, not discounts, which he said is easy to do because of the relative cost of silver as opposed to gold.

“We’re a destination store, so one someone arrives here, they do other shopping as well,” the jeweler said, “they come in because of the perception of value, and it leads to other sales.”

Petimezas has also incorporated “value added” promotions into his business, offering premiums for purchases at certain dollar points. For example, if a customer came in and spent $100 on jewelry, they would receive a $10 iTunes card. The gifts got as luxurious as an iPad2.

“It worked out great,” Petimezas said. “Discounting is out. Value adding is in.”

When it comes to stocking silver inventory, Petimezas doesn’t stick to specific brands but rather looks to see whose manufacturing style he thinks is important.

“The days of buying from salesmen who stop by, those days are gone,” he said, “we look to see who has a large supply of many styles of silver, and now we’re selling pearls and silver, and colored stones and silver, and it’s making an impact.”

Petimezas said that virtually anything he has in gold, he can offer in sterling silver.

“We’ve doing silver hoops with black diamonds and champagne diamonds, and it hits those very important price points,” he said.

Petimezas said that successful jewelers must remain at the forefront of marketing and advertising to stay on top.

“It’s possible the jewelry pie will get smaller before it gets bigger, and if it gets smaller, you have to be sure your slice gets bigger,” he said.

-National Jeweler

Silver Prices to Rise

Silver prices could rise to $50 an ounce or higher by the end of 2012 as investment demand surges, according to the Thomson Reuters GFMS.

Fabrication and industrial demand for silver are forecast to increase by about 4 percent in 2011 to a new record high, with further, modest growth predicted for 2012, Philip Klapwijk, global head of metal analytics at Thomson Reuters GFMS, said in its “Interim Silver Market Review” at an annual meeting of The Silver Institute.

The report stated that industrial off-take is set to rise despite the Japanese earthquake, weak economic growth in western economies and the end of stock replenishment. It noted that jewelry demand is likely to edge higher despite stronger silver prices, while silverware and photography will weaken further. However, demand for coins and medals are set to establish a new record high, achieving the largest gain, in volume terms, of any category of fabrication demand in 2011.

Thomson Reuters GFMS stated that further noteworthy gains are forecast for mine production and scrap in 2011, although these will be countered by a heavy fall in government sales and, to a lesser extent, producer hedging.

The London-based precious metals consultancy said that the value of world investment is projected to reach a new high of $10 billion in 2011 on a net basis and conditions are likely to remain highly supportive of further growth in investment demand in 2012, underpinning additional price gains.

“However, downside risks remain, including the potential for the sovereign debt crisis to precipitate a liquidity crunch, impacting the 'real economy,'" it warned.

Investor activity underpinned silver’s moves this year, which saw it rally near $50 per ounce in April before correcting sharply in both May and again in late September. The main factors driving these price moves were those impacting gold, namely the Eurozone sovereign debt crisis, inflationary fears, loose monetary policies and a weak U.S. dollar.

The report said that world investment in silver, including coins and medals, will reach a projected 278 million ounces in 2011, a slight drop from 2010. The investment, however, will set a new record high in value terms and further gains are projected for 2012, it noted.

Thomson Reuters GFMS forecast the annual average price of silver at $35.66 an ounce in 2011, up by 77 percent year-on-year. It expects prices to reach an annual average of over $45 per ounce in 2012.

-Rapaport