GOLD PRICES steadied against a falling US Dollar on Tuesday in London, trading around $1095 per ounce as Western stock markets bucked another slump in Chinese equities to Commodity prices also ticked higher, rising from new 13-year lows on Bloomberg's index, ahead of Wednesday's expected 'no change' decision on US rates from the Federal Reserve. "It remains our view," says London-based consultancy Thomson Reuters GFMS, "that a US rate hike this year is already priced into the market. "An increase [at the Fed's September or December meetings] could well prompt a review of asset allocations that leads to an increase in gold holdings." So far in 2015 in contrast, gold investment in bullion coin slowed to its weakest level since at least 2008 on GFMS's new data, released Tuesday. "Retail investment – [meaning] demand for bars and coins – fell another 12% year-on-year" in the April-June period, says GFMS, "and is now some 63% below the Q2 2013 peak" despite strength in Europe, notably Germany. With the gold price averaging 7% below the first half of 2014, total world gold demand in H1 2015 dropped some 10% annually on GFMS's data, with jewelry and investment demand from China – the world's No.1 consumer market last year – dropping "substantially". Gold prices in Shanghai today edged higher against London quotes, pushing the premium per ounce – an incentive for new imports – up to $2.50 according to Swiss refining and finance group MKS's trading desk. Less demand for gold bullion to use in 'trade financing' means imports are likely to fall further from June's 10-month low, says GFMS. "All this gold that was used for financing," agrees Michael Mesaric, CEO of giant Swiss refiner Valcambi – sold this week to Indian jewelry corporation Rajesh Exports for US$400 million – "has been given back. "There is liquidity in the market and liquidity is cheap. There is no need to use gold anymore," Mesaric told Reuters, forecasting a drop in China's imports of perhaps 40%. Following today's 1.7% drop in the Shanghai stock market, Beijing assured Chinese investors it will continue to support equities prices after the last 7 weeks' 30% drop, with the People's Bank pumping the equivalent of $5 billion into the money market. "Physical demand in Asia remains lackluster," says one brokerage today, pointing to "both the Indian and Chinese markets." "Market participants," says a note from South Africa's Rand Refinery, "will be closely watching the Federal Reserve meeting" for hints of whether a rate rise is coming in September.
GOLD BULLION recovered a $10 loss in London on Monday to trade just shy of $1100 per ounce – a new 5-year low when first hit last week – as Western stock markets fell following the 2nd heaviest-ever drop in China's main equity index. The Shanghai Composite dropped 8.5%, reversing half of its recent bounce from June's 35% plunge. Eurozone stock markets fell over 2% as the single currency rose on the FX market, pushing the price of gold bullion for German, French and other monetary union citizens back towards Friday's new 2015 lows at €982 per ounce. Wholesale gold priced in Dollars had earlier dipped below $1090 per ounce after news of stronger-than-expected orders for durable goods in the US, but rallied with silver prices to stand unchanged by the close of London dealing on Monday. "Gold managed a late rally on Friday evening on the back of a weakening Dollar and end of week short covering," says London brokerage Marex Spectron in a note. "It is possible," says bullion bank and London market maker Scotia Mocatta, "that we will see a small relief rally in the coming days, but ultimately the risk is to the downside." "The latest CFTC [positioning] data show the extent to which gold has lost its lustre," says Chinese-owned ICBC Standard Bank's London team, "with the net speculative position still long, albeit not by much, with speculative shorts climbing to a fresh record high while longs trudge towards the exit. "While the record short position opens up the scope for a significant short covering rally," says ICBC Standard Bank, "the trigger seems somewhat elusive. "Physical purchasing activity out of Asia is also backing off and appears to be waiting for a price floor to emerge while ETF liquidation is adding to the downwards pressure." The giant SPDR Gold Trust (NYSEArca:GLD) has now shed 31 tonnes this month so far from the bullion needed to back its shares, the fastest pace since December 2013 capped that year's huge outflow of metal. Net imports of gold bullion to China through Hong Kong, adjusted for re-exports, fell in June to a 10-month low of 22.1 tonnes, Bloomberg reports. Gross imports to China were "the lowest since June 2011 according to the latest Hong Kong customs data," says Jonathan Butler at Japanese conglomerate Mitsubishi Corporation, "support[ing] our thesis that physical gold demand in China is cooling due to lower jewellery offtake amid the economic slowdown and recent stock market rout."
Gold and silver bears are now deafening. If that's bullish, these ratios are less clear... MARKETS make opinions, writes Adrian Ash at physical gold and silver exchange BullionVault. And right now, the gold and silver markets are making bears out of pretty much every professional trader, analyst and journalist with an internet connection. "Gold's slump is here to stay," says MarketWatch. "Silver prices will take 20 years to bottom," says this chart-watching trader. "A definite break [in silver below] $14.20 will mean further downtrend towards...even $13.15" before the next bounce, says technical analysis from French investment and bullion bank Societe Generale. "Gold could go as low as $800 an ounce," says Bloomberg, quoting a bunch of forecasters. But 30% lower isn't low enough for Germany's Deutsche Bank analysts. "Gold would need to fall towards $750 per ounce," they say, "to bring prices in real terms back towards long-run historical averages." "The yellow metal," agrees an op-ed column in India's Business Standard newspaper, "tends to have very long historical cycles. "[Even after] this substantial correction...the long-term record shows gold literally spent decades trading below $400." $400 the ounce?! For all we know, these gold and silver bears could prove right. But when everyone turns bearish, there's no one left to sell or short, meaning prices can only go up. Sadly for would-be contrarians, plenty of bloggers and private traders will already take the other side of that bet, sensing a bullish turn in gold's near-universal bearishness in mainstream finance and media. Whatever the impact or confusion of irony, silver's latest bull market never got close to its 1980 top in real inflation-adjusted terms, only managing a nominal match near $50 per ounce in spring 2011. Gold took 28 years to break its 1980 peak in Dollar terms, and never quite got there adjusted for consumer-price inflation, as this chart of the ratio shows, before turning south. Seen from the average, however, gold still ended last month some 55% above its long-term mean value for US households since 1970. So on that metric, at least, it isn't expensive or 'cheap' at present. Checking gold against other asset prices doesn't scream 'buy' or 'sell' either right now. Priced against industrial commodities, for instance, "Dear old gold is still expensive vs. all that useful stuff," says one long-time trader. But measured against US business assets – as priced by the S&P 500 index of America's biggest stocks – gold has dumped more than two-thirds of its value since the summer of 2011. Even at that top, gold never recovered anything like its peak value against US equities of early 1980. But if it is fated to keep going down from here, gold has a long way to go before matching the screaming value of the DotCom Bubble. What about real estate? Taking the house-price obsessed UK as a proxy, the average UK home – now costing some £200,000 according to the Lloyds-Halifax HPI data ($310,000) – would currently need some 286 ounces of gold. The government's more official data, based on Land Registry figures, would put it nearer 390 ounces, thanks to an average mix-adjusted house price of £275,000 at last count. Either way, that compares with the 20th century's repeated low of 100 ounces of gold to buy the average UK home. Real estate in the world's most real-estate obsessed economy got down to that price twice, plainly marking gold as dear (and housing cheap) during the Great Depression and late-70s inflationary crisis. At the other end of the graph, the peak house-price-in-gold came above 800 ounces a decade ago, when gold looked an absolute steal against Britain's way over-priced housing stock. Basis such ratios then, gold is neither cheap nor expensive right now. Traders trying to call the very bottom might be early. But the long bull market starting 2001 may alternatively just be taking a pause. A long pause yes. But gold did drop almost 50% during the long 1970s' bull market, halving from $200 to barely $100 per ounce during 1975-1976. Gold then shot 8 times higher before making its ultimate 1980 peak. That top came at $850 per ounce. For reference, silver had no such pullback.
Gold & Silver Hit New Multi-Year Lows as ETF Trusts 'Dishoard', Money Managers Choose 'Better Paying' Assets
GOLD and SILVER prices dropped to new 5 and 6-year lows respectively for US investors on Friday, falling as European stockmarkets lost earlier gains and commodity prices fell to new multi-year lows. "Gold and silver remain dominated by expectations of US rate hikes," says one bullion bank's commodities team in a note. "Gold has always had a dual nature as a currency and a commodity," adds Matthew Turner at Australian bank Macquarie separately. "At present it is not desired in either form. The Fed remains on course to raise rates, while physical markets are lacklustre." "To some people," says Leon Westgate at Chinese-owned ICBC Standard Bank's London office, "gold is either a pseudo-currency or pseudo religion. "We view gold as somewhere to park your cash in moments of fear when you don't know what else to do with it. [So] we believe that gold will likely remain in a bear market going into H2 2015, mainly as a result the continuing lacklustre...environment." Crude oil meantime fell further below $50 per barrel in London trade, with copper – to which silver prices correlate when not tracking gold so closely – falling to new 6-year lows. "Ultimately," says this week's analysis from London-HQ'ed consultancy Metals Focus – looking at the People's Bank of China's gold bullion reserves update last Friday – "we believe continued Chinese purchases will be supportive for prices at the margin. "At the same time, however, it is hard to see investors become excited, especially as the news is now priced in and also given conventional assets such as equities and US Treasuries continue to offer better returns." Gold, silver and other precious metals funds this week saw $1.1 billion pulled out, according to data from Bank of America Merrill Lynch. The giant SPDR Gold Trust (NYSEArca:GLD) shed 23 tonnes from the bullion needed to back its exchange-traded shares in the week-ending Thursday – the fastest outflow since July 2013 marked the end of that spring's gold price crash, and taking the GLD's holdings to the smallest level since September 2008 at 684 tonnes. From its 2004 launch to the peak holdings of end-2012, the GLD accumulated an average 3.1 tonnes per week. Gold prices rose a compound weekly average of 0.3% against the Dollar. Now in mid-2015, "With a positive outlook for global growth, a rapidly strengthening Dollar and hawkish statements from the Fed, investors are seeking returns from other asset classes," says J.P.Morgan Asset Management's Nandini Ramakrishnan, quoted by Portfolio Adviser. Global gold demand won't outstrip supply until 2017, says ICBC Standard Bank's Westgate, the first such "deficit" since 2012. But that forecast "could be partly countered by a decline in central bank purchases and a continuing liquidation of ETFs," he adds, coupled with an increase in scrap supply in the medium- to long term." "With a coming rate hike from the Fed," says London market-maker and benchmark price participant Societe Generale's sales desk, "asset managers are clearly re-balancing portfolios. "Gold ETFs are facing high levels of exits, and physical gold is being dis-hoarded." Silver's largest exchange-traded trust fund, in contrast, continued to hold investor interest this week, with the iShares Silver Trust (NYSEArca:SLV) needing 10,227 tonnes of bullion to back its stock, near a 1-month high and little changed from the start of this year.
The government fixed import tariff value on gold at 354 per 10 grams, down from 376 per 10 grams earlier.
Gold Prices Fail at $1100 Again, Silver Firmer, as 'Clear Bear Market' Explained by 'Established Arguments'
GOLD PRICES rallied but failed to hold above $1100 per ounce in London trade Thursday, dropping below that level for the fourth time this week after breaking that new 5-year low on Monda. Silver held firmer, keeping the Gold/Silver Ratio – the simple measure of their relative prices – beneath 74, well below this month's new 6.5-year high of 77 ounces of silver per 1 ounce of gold. Asian stockmarkets closed Thursday higher but European equities fell as the single Euro currency rose to 1-week highs on the FX market above $1.10 to the Dollar. That pushed gold prices for Euro investors back below €1000 per ounce, a 15-month high when reached amid the return of the Greek debt crisis this January. Writing "to anyone who’s still bullish on gold," an op-ed column at MarketWatch says that gold prices "clearly peaked above $1900 an ounce back in 2011. "Since then, its trend has been down...a secular, or long-term, bear market. The last secular bear market for gold lasted 20 years." "Established arguments explain gold's current bear market," says precious metals analyst Robin Bhar at French investment and bullion bank Societe Generale, pointing to "tightening" US monetary policy, a rising Dollar, lack of inflation, falling oil prices, a retreat in the "fear factor" around geopolitical risks, better yields on other assets, bearish trends on gold price charts, and a "reduction in emerging market physical demand." Chinese gold imports likely totaled some 107 tonnes in June, says analysis from Australian bank Macquarie – "down from 134 tonnes in May...the lowest since September...[but] hardly a weak number" against 60 tonnes in the same month last year. Over in India – now the world's No.2 consumer nation behind China – "The steep fall [in gold prices] has created fresh pressure on bullion dealers and jewellery manufacturers," said India Bullion and Jewellers Association president Mohit Kamboj at a press conference yesterday, warning how "severe stress" from anti-gold government policies is now being compounded by a tightening of bank credit to the industry in response to the price drop. "Despite still weak demand seasonally," writes senior strategist Koen Straetmans at the multi-asset team of $218 billion Dutch investment managers NN IP – switching to 'overweight' precious metals and cutting positions in agricultural commodities – "prices may find price support in the near term. "Indian physical demand improved somewhat on an above average Monsoon in June. US retail coin sales also rose in June, while some 'safe haven' demand can equally be expected in China [if] the Chinese stock markets take another leg down."
GOLD BULLION prices hit new 5-year lows against the US Dollar in London trade Wednesday, falling again through $1100 per ounce as world stock markets also dropped once more. Crude oil fell below $50 per barrel, but major government bond prices rose, edging yields lower. Gold priced in Sterling again dipped beneath £700 per ounce, a level last seen in February 2010. "It was a volatile day for gold" during Asian trade Wednesday, says Swiss refining and finance group MKS, noting of the Shanghai Gold Exchange that "once again volumes were fairly sizeable at about 3.5 times what we were seeing last week." "On my weekly chart I have $1045 then $975 as next big supports," says another trading desk. Gold bullion needed to back shares in giant exchange-traded fund the SPDR Gold Trust (NYSEArca:GLD) shrank almost 20 tonnes in the week-ending Tuesday, the fastest drop since December 2013 and taking the ETF to its smallest size in 8 years at 689 tonnes. A growing number of analysts and pundits noted Wednesday how current levels mark a 50% retracement of gold's 10-year gain from $250 to $1900 per ounce between 2001 and 2011. "Liquidation continues," says one London bullion bank's dealing desk, "with more selling seen [in Comex gold futures and options] and a lack of real buying coming from Asian players." At the retail level, "Our sales are up by 20% to 30%," the Wall Street Journal quotes a manager at one of Hong Kong’s oldest gold jewelry stores. But such physical purchases "will take time to filter through" to wholesale prices, notes one analyst, and while "we are due for consolidation, gold could retest the $1080-1045 area given the sour sentiment and general summer slumber" typical of key Asian markets in July and August. "There hasn't been any rush to buy," Bloomberg quotes Mehul Choksi, chairman of India's biggest jewelry retailer, Gitanjali Gems Ltd. "People will wait 15 to 20 days to see how prices behave." Most gold retailers in the key Middle Eastern center of Dubai "are not hedged" against falling bullion prices, says Rolf Schneebeli, CEO of advisory Gold Services, speaking to GulfNews. "I can imagine that they are now not really eager to sell," he says, "[because] their current stock has been devalued." Further up the supply chain, the "plunge" in gold bullion below $1100 already "puts approximately 10% of gold miners in loss-making territory," says a note from commercial intelligence consultants Wood Mackenzie, measuring mine costs on a "total cash cost plus sustaining capex" (TCPS) basis. "The quest for production growth – especially in the latter portions of the bull market," says Ryan Cochrane – "meant that many gold miners developed increasingly marginal projects and paid excessive premiums. After this "acquisition-driven production growth [was bought] through the extensive use of debt and highly dilutive equity financing," Cochrane goes on, "production may [now] begin to decline and higher prices will be required to justify the next round of large capital expenditures." "There are a few mines that should close," specialist news-site Mineweb quotes equities analyst Kerry Smith at Haywood Securities, "but [mining] companies are always reluctant to do this as it incurs lots of costs and negative good will with the unions. So they subsidize them as long as they can. "Gold would probably need to stay at these levels for another six months to stimulate shutdowns." "General managers," agrees Chuck Jeannes, CEO of world No.1 miner by market cap, Goldcorp Inc (NYSE:GG), "are really good at keeping their mines alive. "But the more you do that, the more you harm the long-term success of the asset."
Silver production for the quarter ended 30 June grew by 2.7% to 11.3 million ounces, while gold production rose 16.8% to 181,985 ounces.
Based on unrounded data, the average daily gold production for U.S. mines was 509 kg in March 2015, 543 kg in February 2015, 541 kg in January 2015, and 577 kg for full-year 2014.