Racing to Buy Gold? Stop!

Stop, breathe, think before buying gold. Because 'how' matters as much as 'when'...   BUYING GOLD has suddenly returned as a trend, writes Adrian Ash at BullionVault.   Searches for "bullion" online rose 77% in the last week, according to Google Trends. The price has now risen over 18% against the British Pound so far in 2016, jumping Thursday to its highest price for UK investors since September 2013 at £873 per ounce.   Whether or not this surge in prices continues, new investors should beware acting in haste before making a decision to buy gold. Because the way you buy gold can be just as important to defending your savings as your timing. Gold Sovereign coins, for instance, are one of the most expensive "bullion" products on the market. Even buying 10 of these gold coins from the UK's cheapest retailer would cost you 9% more than the wholesale spot price. Selling them back would incur a loss of 10.5% at the very least.   Add the hassle of shopping around for the best buy-back price, plus the need to travel or arrange insured postage when you sell, and you can see why many coin investments never get sold, whatever the price.   Check this comparison, pulled today (Friday, 12 February 2016) at 09:00 GMT...   Who's got the very best deal?   In bullion as in everything else, it's wholesale dealers of course.    The wholesale bullion market is where professional traders and investors deal at 'spot' prices. They trade only large gold bars, weighing 400 Troy ounces and meeting the specifications of the globally-recognized London Good Delivery standard.   To retain full re-sale value, these bars must stay inside secure, market-approved vaults until they're finally sold to be melted down and become jewellery, coins or bonding wire for the electronics in your smart-phone.   Until 2005, you needed to trade at least one whole 400-ounce bar at a time to get in. That would cost you one-third of a million pounds at today's prices.   Moreover, you needed a storage account in a market-approved vault to take delivery too – but the vault door wouldn't open for less than 10 bars or so. That made the price of entry nearer £3m at current levels.    Private savers can access this wholesale market directly using BullionVault. It enables you to sell just as easily as buy, trading as little as 1 gram at a time of Good Delivery gold 24/7 at live prices.   The metal you buy is already vaulted in specialist facilities in your choice of London, New York, Singapore, Toronto and Zurich. There is a small storage charge, with insurance included (0.1% by value per month, with a minimum US$4). Counted against the cost of the bid/off spread in Krugerrand coins, you could enjoy 21 months' storage for 1 ounce of gold bought on BullionVault, or 33 months against the bid/offer cost to investors buying 1-ounce worth of gold in Sovereigns.   Thursday, by the way, saw the busiest day on BullionVault's peer-to-peer gold and silver exchange since mid-April 2013, with users buying and selling almost half-a-tonne of gold between them, and nearly 7 tonnes of silver.   All told, that was worth £15.75 million. It's this size which enables BullionVault users to share the low costs, secure storage and tight wholesale pricing which – previously – private investors were locked out of. And it's BullionVault stand-out value to self-directed investors everywhere which continues to make it the very largest provider of privately-owned gold and silver bullion online.


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'Extraordinary' Gold Bullion Curbs Best Week Since '08, NIRP + Deflation Fears Grow

GOLD BULLION retreated 2.5% from yesterday's sudden 12-month highs above $1260 per ounce in Asia and London on Friday, curbing its strongest weekly surge since December 2008 as European stock markets rallied from their worst-ever start to a year.   "The extraordinary run up in gold prices over the last few days," says bullion analyst Jonathan Butler at Japanese conglomerate Mitsubishi, "has been largely the result of a resurgent fear trade as central banks around the world consider negative interest rates in response to persistently low inflation."   Joined last year in applying negative rates by the European Central Bank, and last month by the Bank of Japan, the Swedish Riksbank yesterday imposed a heavier negative interest rate policy of minus 0.5% on deposits from commercial banks.   Federal Reserve chair Janet Yellen told lawmakers Wednesday she wasn't sure negative rates would be legal for the US central bank. But she refused Thursday to rule out using NIRP in her second day of semi-annual testimony.   "Negative interest rates," says Butler at Mitsubishi, "effectively remove the opportunity cost of holding gold [as a non-yielding asset] and bullion becomes a hedge against falling bond yields...when countries pursue unconventional stimulus policies."   "Strong bullish momentum in gold and silver prices," said a new note Thursday from Dutch bank ABN Amro's analyst Georgette Boele, "[mean] we have been clearly wrong on the outlook...because of our call of US Dollar strength, higher US Treasury yields, and an improvement in sentiment."   The Dollar rallied on Friday to push the Euro back 1 cent from yesterday's new 4-month high, while 10-year US Treasury bond prices retreated, driving yields higher from this week's near-4-year lows.   Japan's Nikkei stock index fell for the 7th of 9 sessions in February so far – closing more than one-fifth down for 2016 to date at its lowest level since October 2014 – but European equities ralled from their new 18-month lows, led by a 17% jump in Commerzbank after the German financial giant issued better-than-expected quarterly earnings.   Major gold miners including Barrick (NYSE:ABX) are due to report their quarterly earnings next week.   Crude oil meantime bounced almost 7% Friday from yesterday's new 14-year lows. Silver retreated with gold bullion, dropping back from Thursday's 4-month high of $15.95 per ounce but holding 4.7% gains for the week.   "Amid the chaos," says Albert Edwards, strategist at French investment bank Societe Generale, "the most significant market mover since the start of the year has been the collapse in US inflation expectations – to below the level for the Eurozone!"     "Banks were not the problem" during Japan's post-bubble 'lost decade' of the 1990s, Edwards goes on.   "Banks were a symptom of a problem and that problem was deflation...largely attributable to the surge in the Yen in the previous few years – a surge of exactly the same order of magnitude as that seen in the US Dollar over the past few years."   "At a minimum," says US fund management giant Pimco's chief of US strategies Scott Mather, "NIRP is a contributing factor to the financial market volatility of the past few months.   "Contrary to current central bank dogma, NIRP is [also] possibly one of the major catalysts behind the tightening in global financial conditions," Pimco's Mather goes on, "[thanks to] widening of credit and equity risk premiums, increased volatility and reduced credit availability from a more stressed bank system."


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Gold Price Jumps 4%, 'Targets $1420' as Euro Banking Crash Sends US Bonds Back to Mid-2012

GOLD PRICES shot higher yet again Thursday, surging 4.1% to hit 12-month highs near $1250 per ounce as world stock markets fell hard yet again, and the US Dollar hit fresh multi-month lows on the FX market following Fed chair Yellen's comments on delaying further interest-rate hikes.   Hong Kong's first trading day of the new Year of the Monkey earlier saw the Hang Seng index drop over 3.8%.   Shanghai's markets re-open Monday.   Crude oil meantime sank 3.5% towards new 14-year lows at $26 per barrel. Major government debt prices jumped as the cost of insuring European banks' bonds leapt, driving 10-year US Treasury yields down to their lowest since August 2012 at 1.57%.   Five-year CDS insurance on the debt of German financial giant Deutsche Bank jumped to all time record highs.     "We continue to view the [gold] market as a base from a longer term perspective," says weekly technical analysis from German bank Commerzbank, pointing to "a large falling wedge pattern which offers an upside measured target to $1450 longer term."   Short term, "One shouldn't rule out a $100 move either way," said a bullion-bank's trading note Thursday morning.   "If so, the gold selling from miners might recede – although we still see some chunky volumes trading at the [London benchmark] gold auction."   Thursday morning's LBMA Gold Price auction opened with the largest volume of sell orders in more than a week, some 70% above the daily average of Q4 2015, when gold prices stood 10% below today's level.   The size of those offers then fell – and demand rose to meet them – as the suggested price was lowered to find a balance at $1223.25 per ounce, the highest morning 'fix' since mid-May 2015.   The afternoon auction – held at 3pm London time – then drew the heaviest bid volume to buy gold for at least 3 months, totalling 2.6 times the Q4 2015 average at a price of $1241, a new 12-month high.   Gold priced in Euros meantime hit its highest level since May 2015, jumping 4.1% from last week's finish to hit €1095 per ounce – a price first seen in June 2011 amid the worsening Greek, Portugal and Ireland debt crisis.   "I believe that in the Eurozone, structurally, we are in a much better place than we were a few years ago," said Eurogroup chief Jeroen Dijsselbloem before a meeting of finance ministers from the 19-nation currency union on Thursday.   "That also goes for our banks."   Italy's prime minister and finance chief were set to complain about the new 2016 regime for so-called banking "bail ins", the Financial Times reports, describing the rules – requiring a minimum 8% write-off of a bank's unsecured creditors and larger depositors before any state aid can be given – as "an increase in instability, rather than stability."   Chinese banks may suffer losses 4 times the size of US banks' during the 2006-2011 crisis, reckons hedge-fund manager Kyle Bass, with non-performing loans threatening $3.5 trillion of equity.   London-based trust fund provider ETF Securities said Wednesday it has seen "a surge in demand" for exchange-traded products backed by gold, with inflows totalling $720 million so far in 2016.  


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Gold Investment Demand: Why Prices Are Surging

Gold prices are surging because big investment, not jewelry demand, is jumping...   GOLD INVESTMENT showing on your radar? asks Adrian Ash at BullionVault.   You couldn't ask for clearer proof of what drives the metal higher or lower.   New figures today show gold jewelry demand worldwide hitting 11-year highs in the back half of 2015. Prices were falling, hitting new 6-year lows against the Dollar.   Today's market action, in contrast, sees gold enjoying its strongest start to a year since the blow-out of 1980, while global stock markets fall harder than...well, than ever.   Who's buying gold, in other words, matters far more than how much they buy. And gold of course matters most when big money-managers are buying a lot.   Compare Indian households, for instance. Famously the 'sink of the world' for bullion since ancient Rome complained about the drag it created on the empire's balance of trade, they bought their third heaviest total on modern records in 2015.   That's according to this morning's new Gold Demand Trends report from mining-backed research and market-development organization World Gold Council. The data come from specialist analysts Metals Focus. Jewelry demand in India, the world's No.1 consumer market, "rebounded in the second half of the year," they say, taking annual demand to its highest level since 2010.   World gold prices also reached 2010 levels last year, but only by falling, not rising.   Indeed, "November and December were particularly upbeat" for Indian gold demand, the World Gold Council says, "as Dhanteras (the first day of the 5-day Diwali festival, which heralds the start of the wedding season) was immediately preceded by a drop in the gold price.   "Price-sensitive consumers therefore took the opportunity to make their purchases at lower levels."   Over in China – now vying with India as the world's heaviest consumer-gold market – last year's drop in jewelry demand was slowed by the late-year drop in prices. Fourth-quarter demand slipped only 1% compared to the last 3 months of 2014. US households meantime – the world's third heaviest jewelry buyers – raised their gold necklace and bracelet demand once again, up by 3% from the approach of Christmas in 2014 to mark the 8th consecutive quarter of growth.   Again, that came on the lowest quarterly-average gold price since the end of 2009. You get the picture.     Gold jewelry demand does help support prices, of course. The price crash of Spring 2013, for instance, found a floor at $1180 per ounce as Western investor selling met a surge in Asian household buying. The global market did clear. Only, it cleared a few hundred dollars per ounce below where those Western money managers would have preferred.   Investment demand also features in today's new Gold Demand Trends report for the end of 2015. And looking at gold bullion bars and coins, it shows a 1.1% annual rise, increasing to 1,011 tonnes on Metals Focus' data to account for almost one ounce in every four of total demand worldwide.   That compares with just one ounce in every eight back when gold's first 21st century bull market really got started in 2002. The return of retail investment demand remains a key feature of the global market.   But one other key component of gold investing – demand from money managers using proxy vehicles such as the SPDR Gold Trust (NYSEArca:GLD) – continued to slide from its record peaks of 2010-2012. Whereas now, amid the financial turmoil of early 2016...?   "I spent last week in the US," says a note from Swiss investment and bullion bank UBS's global head of precious metals strategy, Edel Tully, "and the topic of conversation was gold, gold and more gold – from current clients, clients that haven't been active since the tail end of the bull run, clients of my FX/equity/rates colleagues, and potential clients.   "In other words, everyone wanted to talk about gold. I haven't seen such interest in years."   Investment trading in gold derivatives also counts, by-passing physical demand and supply almost entirely but clearly impacting the price of actual metal day-to-day. Because if the price of futures contracts referencing gold is rising, then the current price for physical metal will surely rise too, even though those paper bets almost always settle for cash, never for metal itself.   The opposite happened in 2015. Money managers, as a group, turned "net negative" with their gold-price bets for the first time since at least 2006, when these figures from US regulator the CFTC were first gathered.   Add this to 2015's continued loss of interest in gold-backed ETFs, and – as the World Gold Council put it today – "The Western speculative investor-led price drop...spurred consumer demand for gold."   That consumer demand included all those retail bars and coins picked up at 6-year discounts by private investors and savers. Today that looks a smart move, jumping ahead of the money managers now panicking into gold after withdrawing and then fleeing since the price top of 2010-2012.   Early bird investors can, if they wish, now sell at the highest prices in over 12 months if they wish. Provided they chose to buy the right kind of gold in the right, market-ready location.   Coin and small-bar owners, in contrast, will have to shop around for the best offer from retail outlets, physically travelling to hand over their property – or mail it insured (if they can) – and accepting the below-market prices which the retail end of the industry pays.   Looking at current prices, however, doesn't say for sure which they're now headed. For that, a better indication comes from asking yourself what the players who matter are likely to do.   Gold prices aren't driven by consumers or savers buying gold because it is gold. What counts is demand from people who buy gold because it isn't anything else.    Gold isn't debt. It isn't equity, and it certainly isn't cash. Nor is it particularly useful to industry (technology demand fell 5% in 2015 to account for less than one ounce in every 13. Demand from dentists for gold fillings fell the same amount, hitting new modern-era lows). In a world glutted with debt, equities and industrial commodities, that makes gold suddenly look very useful for doing what people everywhere have always used to do – storing value when other things fail.   Worsening volatility and losses are forcing money managers to reconsider their exit from gold since it peaked with the last global financial crisis in 2010-2012. What matters most to gold’s direction from here is what happens to other asset prices.


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Gold demand resilient in 2015 as central banks and consumers spur strong H2 recovery

Global gold demand in 2015 was virtually flat compared to 2014 at 4,212 tonnes (t), according to the World Gold Council’s latest Gold Demand Trends report. Despite a challenging start to the year, gold demand rebounded in the second half of 2015 as a result of sustained buying from central banks and a strong second half from China and India. This was particularly evident in the retail...


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2015年黄金需求强劲,受央行与消费者推动,下半年需求强势回暖

世界黄金协会(World Gold Council)最新发布的2015年全年《黄金需求趋势报告》数据显示,2015年全年黄金总需求为4,212公吨,与2014年相比基本持平。尽管开年面临诸多挑战,各国央行持续购金以及中国和印度下半年强劲的市场需求,促使全球黄金需求在下半年回暖。 黄金需求在以金条及金币为主的个人零售投资领域表现尤为明显。中国与欧洲市场领跑金条与金币需求,美国市场亦不甘落后。这是由于在经济疲软、市场动荡,以及地缘政治冲突持续的大背景下,投资者抓住了金价走低的机遇入手黄金。 2015年全球黄金投资需求为878公吨,同比去年815公吨上涨8%。金条与金币需求维持平稳,因为投资者抓住了第三季度金价走低的机遇购买黄金。黄金ETF减持放缓,全年减持规模从2014年的185公吨缩减到2015年的133公吨。2015年第四季度延续该些趋势,...


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Gold Bullion Fails to Rise 1st Time in Feb' as Yellen 'Cautious' on Fed Rates

GOLD BULLION failed to rise above yesterday's lowest prices for the first time in February on Wednesday morning in London, trading 1.5% beneath Monday's 7-month high of $1200 per ounce ahead of US Federal Reserve chief Janet Yellen giving semi-annual testimony to Congress.   With the Fed chair expected to express "caution" about raising US rates after this year's financial turmoil so far, European stock markets rose for the first time in 8 trading sessions, and commodity prices also gained, led by a bounce in crude oil from near 14-year lows beneath $28 per barrel.   US government bond prices slipped, edging 10-year Treasury yields higher from yesterday's new 12-month low of 1.72%.   Ten-year yields have now fallen by one-quarter since the Fed finally raised its key interest rate from 0% in mid-December.   Trading in Fed Funds futures contracts now puts the odds of a second hike being delayed until at least February 2017 at almost two-in-three.     "Gold needs a bit of impetus up here if it is to move higher," says a note from London brokerage Marex Spectron, "and I doubt that Yellen will provide that."   But "as long as equities get battered," says one London bullion bank's sales-desk, "we shall continue see gold out-performing."   The twice-daily LBMA Gold Price auction found a morning clearing price at $1183.40 per ounce, failing to beat both the previous day's AM and PM benchmarks for the first time in February, and only the 6th time in 27 trading days of 2016 so far.   Down 0.6% from Tuesday afternoon's benchmark, this morning's benchmark – which saw the volume of bullion matched at this regulated 'tatonnement' auction of gold retreat from yesterday's pop to a 1-week high – also marked the sharpest PM to AM drop in more than a month.   "Fearful savers have driven up the gold price by flocking to the safe haven investment," reported today's edition of the Daily Mail, the UK's biggest selling newspaper behind red-top tabloid The Sun, and publisher of the world's busiest news website.    "The pace and magnitude of gold's early February rally has been impressive," says Swiss investment and bullion bank UBS analyst Joni Teves.   Cautioning that $1200 is a "key psychological level" and the market "may need to consolidate and digest" the New Year's 12% surge, "Macro conditions remain supportive for gold," says Teves – the most bullish LBMA gold price forecaster in 2016's survey.   "Dollar weakness also helps."   The Dollar rallied from near 4-month lows versus the Euro ahead of Fed chair Yellen's testimony Wednesday, while New York equity futures pointed higher after yesterday's sharp reversal and losses.   For gold bullion, "It seems that $1200 marks fairly formidable resistance," says a trading note from Swiss refiner MKS's Asian desk, "with profit-taking likely to be thick above that."   But gold prices should now "remain supported" MKS adds, "provided the shift out of risk continues [plus] the belief the Fed will avoid any further hikes this year."


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$1200 Gold 'Breaks Downtrends', Defies 2016 Price Forecasts as Equities Sink, Dollar Falls

GOLD PRICES recovered most of a 1.1% overnight drop from yesterday's 8-month high of $1200 per ounce in London trade Tuesday, rising back to $1198 as European stock markets slumped again, and the Dollar fell on the FX market, following a 5% plunge in Japanese equities.   China and most of Asia remained shut for the Lunar New Year, the heaviest consumer gold-buying spree outside India's autumn festival of Diwali.   Major government bond prices rose, pushing 10-year US Treasury yields down to new 12-month lows at 1.73%, while US crude oil held below $30 per barrel – a level seen on the way up in 2002.   Gold's peak at $1200 on Monday was barely 2.5% below the peak 2016 price forecast on average last week by professional analysts competing in trade body the London Bullion Market Association's annual survey.   Now averaging $1109 since 1st January, the 2016 price in Dollars so far stands $6 per ounce above the average LBMA gold forecast for the full-year.   "Gold has staged a rapid and steep recovery" from late-2015's drop to the key level of $1045, says a new technical analysis of gold price charts from French investment bank and London bullion market maker Societe Generale.   "Last month, gold formed a definite bullish candlestick formation at $1045 levels," SocGen says, pointing to a monthly Morning Star – deemed a key reversal pattern by technical analysis – plus "confirmed bullish patterns in the form of double bottom and inverted [head and shoulders] after which the recovery has accelerated."   "It has now breached above a multi-year descending trend line...and is likely to head towards key resistance at [the] down-sloping channel drawn since 2013 at $1225...which also corresponds with last May highs."   "We really think something interesting is happening here," said materials sector analyst John Bridges at US investment and London bullion bank J.P.Morgan to Bloomberg earlier.   "It's exciting to see some of the longer-term downtrend lines broken."   SocGen's charts show the latest jump in gold prices breaking through both the 2015 downtrend (joining last year's May and October highs) and a longer downtrend starting 3.5 years ago (joining October 2012 with October 2015's high).   Fundamentally, Bridges at J.P.Morgan goes on, and "even though quite a lot of money has been spent in the gold [mining] space over the last decade, there's not a lot of new capacity.   "Gold production is rolling over."   Global gold mining output set a new all-time record in 2015 – the seventh in a row – according to specialist analysts Thomson Reuters GFMS, but the final 3 months of the year saw the start of what will prove a protracted decline.   Reuters today quoted data from a Russian lobby group saying the world's No.3 gold producer nation grew output by 2% in 2015, overtaking No.2 Australia with 294 tonnes.   Gold investment demand through leading ETF proxy the SPDR Gold Trust (NYSEArca:GLD) meantime rose again Monday on the spike to $1200 per ounce, requiring 703 tonnes of bullion to back the product – its largest quantity since July 2015, but still have the amount needed for the GLD's peak holdings of end-2012.   The US Dollar fell Tuesday to 3.5-month lows against the Euro, pulling the price of gold for German and French investors 1.4% below yesterday's spike to July 2015 levels.


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Gold Price Jumps to 2013 Crash Low at $1180 as Stockmarkets Sink on Chinese New Year

GOLD PRICES jumped on Monday to $1180 per ounce – the 2013 crash low – reaching new 3-month highs as world stock markets sank over 2% to mark the start of the Chinese New Year, writes Steffen Grosshauser at BullionVault.   With China and many regional Asian markets closed for the week-long New Year's holiday, gold priced in Dollars initially slipped $10 overnight from Friday's finish near $1174 – its highest weekly close since October.   But gold then surged as London dealing began, extending last week's 5% rally – its best weekly performance since July 2013 – to trade more than 11% higher from New Year's Day in January.   Spring 2013 had seen gold's worst quarterly slump in three decades, cutting Dollar prices by more than 25% between April and end-June to reach $1180 – a level then touched again at the end of December that year.     "[Investors] have been coming back to gold," Bloomberg quotes Jeff Sica, president of Circle Squared Alternative Investments in New Jersey, blaming "a greater likelihood of more economic turmoil not only here [in the US] but in Europe."   Besides the "improving macro picture" for gold, says US brokerage INTL FCStone's Ed Meir, "The most obvious tailwind is the improving technical picture, where prices took out [January's] double-top resistance at $1110, paving the way for a mini-breakout on the charts."   "The higher prices go," says London broker Marex Spectron's David Govett, "the more they attract investor demand, ETF demand and spec[ulative] buying.    "I and many others have tried to stand in the way of this rally [since New Year's Day] too many times and have been proved wrong."   The quantity of gold bullion needed to back shares in the SPDR Gold Trust (NYSEArca:GLD) – the world's largest ETF by value at its 2011 peak, overtaking the stockmarket SPY – rose yet again Friday to reach its largest level since mid-October as investor demand saw the number of shares in issue grow another 0.7% on the day.   Using Comex futures and options, hedge funds and other money managers raised their bullish betting on gold price gains – net of bearish bets as a group – to a three-month high in the week-ending last Tuesday, latest data from US regulator the Commodity Futures Trading Commission said after Friday's close.   Swelling 4% as bearish bets shrank 10%, however, the number of bullish contracts held by the Managed Money category remained at less than three-quarters its average size of the last decade.   The number of bearish bets that gold prices will fall, in contrast, currently stand near 2.5 times their 10-year average.   Silver tracked gold prices higher to mark the Chinese New Year on Monday, rising above $15 per ounce for the first time since early November.   Unlike gold, however, the large iShares Silver Trust (NYSEArca:SLV) saw its holdings drop last week as investors cancelled shares.   'Managed money' traders in US Comex futures and options also grew their bearish betting faster than bullish contracts on last week's data.   That capped the overall "net bullish position" of speculative money managers just below the previous week's 3-month high, and holding some 27% larger than the last 10 years' average.


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