Florian Siegfried said mid-cycle corrections in gold tend to last up to four years. It has been more than three years now, probably 3.5 for the miners.
(Correction: Two 26-carat batches in circulation, not two 2-carat batches as previously stated) By Alex Létourneau Kitco NewsTuesday August 12, 2014 11:50 AM (Kitco News) - After finding a way to turn diamonds into an affordable investment option, InvestDiamond.com has seen a growing interest in Europe as the company looks to expand to North America. Using a specific criteria for the diamonds included in their batches, InvestDiamond has managed to bypass the main issue with diamonds being turned into an investment product –which is no two diamonds are alike and therefore impossible to attribute a fixed price to a cluster of diamonds. InvestDiamond’s physically-backed batches of similar stones are then fractioned as members place bids for as little as $15 or €11, while prices are based on real-time orders on the site and the Rapaport price. The diamonds are kept in Swiss vaults in the Freeport zone, outside of the banking system. Launched Nov. 30, InvestDiamond has “two 26-carat batches that are in circulation and we’re working on getting the third one ready,” said Linnea Bruce, project manager at InvestDiamond. Based in France, InvestDiamond has been testing the waters locally before expanding its reach to other parts of the world, with the U.S. as its next main target. “Our members are mostly in Europe – we wanted to get some feedback and stability in Europe first before we transitioned to the U.S. market,” Bruce said. One way they’re looking into capturing the attention of the U.S. market is by introducing a physically backed gold, silver and investment diamond debit card. InvestDiamond’s parent company, AuCOFFRE.com, already has a physically backed gold debit card, called the Vera Carte, that it has put into circulation and used in France over the last few years. The success of the card has led InvestDiamond to add silver and diamonds to the card as they are currently in the beta testing phase. “By year-end it should be out of beta testing and available to the general public,” Bruce said. “You can credit your account with $1,000 and have 60% backed with gold, 20% with silver and 20% with diamonds, for example.” Bruce said it can used as a regular debit card. It’s accompanied with a pin for usage and is recognized by Master Card. She also added that they hired a new card distributor, allowing the debit cards to be available for usage worldwide. “Once we get that launched in France, we’ll be looking for a partner with experience in that concept to bring it over to North America,” Bruce said. The current outlook for supply and demand metrics in the diamond space has experts pointing to diminishing supply, with a lack of new discoveries and older operations reaching the end of their mine life. On the other hand, demand is expected to continually expand as the middle classes in China and India are expected to grow rapidly over the next decade. Physically Backed Diamond Investment Site Picking Up Steam In Europe, Eyeing U.S. Market was first posted on August 19, 2014 at 3:49 pm.
In a weekly report, it said gold may surprise investors to the upside this year, due to rising geo-political risks which are likely to escalate, less than robust growth data and central banks issuing decidedly dovish messages.
The latest World Gold Council Gold Demand Trends report, covering the period April – June 2014, shows that global gold demand continues to demonstrate a return to long-term trends after an exceptional year in 2013. Total global gold demand in Q2 stood at 964 tonnes (t), 16% lower than the same period last year, as consumers and investors pulled back and consolidated their activity. Global...
Gold has mostly been irrelevant since 1971, when the U.S. finally reneged on its promise to convert U.S. dollars into gold for foreign countries. Nixon put a final end to the international gold standard, which was almost inevitable at that point.
SPOT GOLD PRICES remained supported above $1300 on Wednesday morning in London but rallied following the US retail sales data to almost $1315, a level first reached this week on Tuesday. Asian stock markets traded slightly higher, with Japan’s Nikkei extending its recovery from two-month low. Europe followed the lead and traded also higher, with the Dax gaining 1% ahead of tomorrow’s German GDP data. US retail sales were flat in July, “pointing some loss of momentum in the economy”, according to Reuters. July’s reading was the lowest since January 2014. Silver tracked gold and after dropping below the level of $20 per ounce this morning only to recover after the retail sales data release. Less than 48 hours away from the last Silver Fix, the market is impatient to know how the new London Silver Price will affect the trading. Brent crude fell to thirteen month low to $102.39 per barrel. In the currency markets, the Euro traded lower against the US Dollar, at $1.3352 this morning. Ukrainian Grivna fell to a record low in the country’s history amid the economic crisis and the Eastern Ukraine armed conflict. Russian humanitarian aid convoy resumed its journey to the south of Ukraine. Uncertainty remained about how the aid would be delivered, as Russia was thought to be using the convoy as an excuse for military action in Ukraine. “Precious metal markets were lacklustre as rising geopolitical tensions were countered with a slightly stronger USD,” says a commodity note from ANZ. Gold prices pushed above $1315 yesterday following the news that Ukraine would block a convoy of Russian trucks that carried humanitarian aid. In the evening investor appetite diminished and the EUR weakened against the USD. “It is clear that safe haven buying is providing a base of support, rather than a fillip for a move higher,” it adds pointing out that the outlook for prices remains subdued. Commerzbank emphasizes on its technical note that the market continues to see recovery off its 61.1% retracement at 1280. “Our outlook is bullish while above 1280... Resistance lies at 1335 ahead of the July high at 1345,” adds the German bank in Frankfurt. Gold prices at the Shanghai Gold Exchange traded at a premium of $2 per ounce above London quotes at session closing time in China. The Bank of England halved its forecast for average wage growth, to 1.25% this year. Following Bank’s governor Mark Carney speech on the quarterly inflation report, the Pound Sterling hit a ten-week low against the Dollar, pushing gold price in Sterling away from 4-session low to over £783. Gold futures on the COMEX were little changed despite geopolitical concerns yesterday. The most active gold contract for December delivery rose 10 cents, or 0.01 percent, to settle at 1,310.6 dollars per ounce.
ETF Securities Ltd (ETFS) in a weekly report said that gold rose 2% as investors took a more risk averse stance in the face of rising asset volatility.
THE GOLD PRICES cut the last weekly gain to $1309 per ounce, holding in a tight range Monday morning amid the easing of geopolitical risk in Ukraine and the Middle East. A three-day ceasefire came into effect between Israel and the Palestinians in Gaza at 21:00 GMT last night, after a day of intense diplomacy in Egypt. Last Friday, the gold traded as high as $1323 following the news that U.S. President Barack Obama authorized air strikes against militants in Iraq but came under heavy selling pressure in early NY trade as Russia's Defence Ministry said it had finished military exercises in southern Russia, which the United States had criticised as a "provocative" step amid the Ukraine crisis. The Dow surged some 185 points on Friday, although the gain in the S&P-500 was far more muted. The reduced tensions also helped pare back some of the earlier gains seen in oil prices. “While it appears as though concerns are fading, as long as geopolitical risks still exist in the background, gold will continue to be supported,” said Zhu Siquan, an analyst at GF Futures Co. from Guangzhou, China. “We’ll get some buying on headlines but we’re not going to see large investor interest.” The physical gold Holdings of the giant gold ETF, the SPDR Gold Trust fell 0.2 percent to 795.86 metric tons on Aug. 8. For the week, the holdings contracted 0.8 percent, the most since the period to May 2, and erasing this year’s gain. Speculative traders last week cut their overall bullish position – net of bearish bets – down 12.5% from the previous week, for the 2nd week running to a notional 448 tonnes of gold bullion, new data from US regulator the CFTC showed after Friday’s close. Overall, the total number of gold futures and options contracts now open fell further from last week's 5-year low. Kevin Grady, owner, Phoenix Futures and Options, said Some market participants may have exited bullish positions because the trades weren’t working, but they were staying on the sidelines and not putting on bearish trades. “No one is getting short right now because of moves like we saw earlier last week (gold rallying sharply). You can’t do it because of that,” Gold prices in Shanghai closed Monday slightly lower in the Yuan, but extended their $1.66 per ounce premium above London quotes of $1307. Economic data this week may sway gold’s direction, market watchers said. It’s a heavy week, with key reports slated for release from China, Europe and the U.S. Over the weekend, China’s consumer price index (CPI) rose by 2.3pc year-on-year in July, beating the 3.5pc target set by the government. Wednesday brings U.S. retail sales. Eurozone, French and German gross domestic product data is due Thursday and the New York Federal Reserve’s Empire State index is scheduled for Friday.
Facts, figures, pros and cons for choosing or adding silver to gold... SILVER INVESTING is often seen as merely an offshoot of the gold market, writes Adrian Ash at BullionVault. If you like gold's trajectory, or so the theory runs, you've got to love silver. The cheaper metal has no life of its own, simply tracking the direction of gold prices. History says that's true to some extent. But as this price chart shows, silver has twice outpaced gold many times over, first during the 1970s and then again in this early 21st century bull market. With silver moving less quickly in 2014 so far, but with faster swings in between, this month also brings a new process for the world's daily benchmark price – replacing the 117-year old London Silver Fixing. Silver is therefore making headlines of its own, and many people investing in gold today wonder whether they should include silver, switch into the cheaper metal, or leave it out of the holdings entirely. BullionVault can't advise you on which metal will prove a better investment long term. If we knew, we wouldn't offer or invest in both ourselves. But the notes below, we hope, should help inform your own research and choice in weighing up silver versus gold investing. Correlation No other tradable asset prices move as closely with each other as silver and gold. They've moved in opposite directions on fewer than 25% of all trading days since 1968, and only once split direction 7 days running. The average 1-month rolling correlation – a measure of how closely two things move together – is 0.63, a "statistically significant" link. Volatility Being much smaller than the gold market (one-tenth the size in London's wholesale dealing, and one-fifth the size in Comex futures), silver moves much faster when money comes in or out. For every 1% move in gold – up or down – silver moves 3% on average. That's why some London dealers call it "the devil's metal". Silver prices can move very fast – up or down – and hit short-term traders very hard, especially if they're using derivatives (futures, options, spreadbetting) to get leverage. Still, silver's extra spice, relative both to gold investing and mainstream asset price moves, has drawn a lot of "hot money" traders already in 2014. That trend looks set to continue as hedge funds and other speculators seek a fast return. Physical use Unlike gold, physical silver is primarily an industrial metal today. Indeed, US industry and lobby group the Silver Institute calls it "the indispensable metal", but that makes it vulnerable to the economic cycle. Silver use is rising worldwide, with demand growing by one fifth over the last decade. Investing played a big part in that. But the metal's greatest use for modern society comes from industry, and most especially because it is the most conductive element to heat and electricity. New and exciting uses continue to be developed, but as a key input into many fast-growing technologies, silver is also subject to "thrifting", where manufacturers work to reduce the amount of silver needed per unit. This has happened most dramatically in photo-voltaics, where the quantity of silver used to gather and conduct electrical energy in a solar panel has been reduced by up to 80% in some applications since the big price spike of 2011. Demand-led price rises, in short, can prove their own cure. Gold/silver ratio Some people trading precious metals today like to follow the gold/silver ratio. This simply measures how many ounces of silver you could buy with one ounce of gold. So at a silver price of $20 and gold $1300, the ratio would stand at 65. Historically, the ratio has gone from as low as 12 in medieval Europe, to 15.5 times during Great Britain's 18th century Sterling standard, and then as high as 100 during WWII and then the late 1980s as this chart of the Gold/Silver Ratio shows: Trading between gold and silver, some BullionVault users – as well as other investors – hope to grow their long-term holdings of precious metals. They sell what they think the gold/silver ratio says is expensive, and buy the other metal, before switching back as the ratio changes. This can of course prove risky in cash terms, because even if you get the ratio trade right, you would lose monetary value if both metals fell in price. Gold vs. silver trading costs There are also dealing costs to consider. Swapping between physical gold and silver investment on BullionVault is cheaper than any comparable service we know. But you'll still incur two dealing fees of 0.5% maximum each side, plus the dealing spread (between buying and selling prices) if you accept the current best price to transact quickly. Alternatively, there's price risk inbetween completing both sides of the trade if you set your own quote, and wait for another user to accept your price. Because physical silver is so much larger than gold for the same dollar-value, storage fees for silver are also higher. (See Bullionvault's full tariff here.) North American and especially European investors must also consider sales tax. Because unlike gold, silver is deemed an industrial metal for VAT purposes. So small bars and silver coins bought for your personal possession add 20% to the cost of silver investing in the UK, for instance – a tax you can escape buying Good Delivery metal inside secure, specialist London vaults using BullionVault. But choose to take that metal into your possession, and you'll trigger that 20% tax as well as losing direct access to the deep liquidity of the professional wholesale market. End of the Silver Fix It's unclear how the end of the London Silver Fix, and the start of the new daily London Silver Price, may affect pricing from mid-August. Most likely there will be no impact on the underlying trend, but this midday event does represent the deepest single moment of liquidity in the trading day. So acceptance (or rejection) by the largest buyers and sellers (think industrial users and miners) should be reflected in how the new output prices stand relative to other "spot" and futures contracts prices. The current process has been used for almost 120 years. That proves its value, we think, rather than automatically qualifying it for the scrapheap. However, a separate administrator, plus auditable order trails from the major participants, should reassure regulators and key users of the London market that the new process is transparent and reliable. If so, it may reduce volatility around the midday event. But another theory says that, with traders scared to share information or deal at the Fix anyway, the current "scandal" has reduced daily movement in prices. So fresh confidence, and trading volumes, might help volatility in silver prices recover further from their recent pre-financial crisis lows. Also note that the Gold Fix is likely going the same way, with the member banks of that process inviting proposals similar to the new CME/Reuters joint bid which succeeded in replacing the Silver Fix. Bottom line? Most common of the noble metals, resistant to corrosion and oxidation, silver also has the highest electrical and thermal conductivity of any element. So where it has been used to store wealth for 5,000 years, and was the foundation of most coined money systems before the mid-19th century, silver today finds 65% of its end-user demand from productive applications. That's why the depressionary collapse of late 2008 saw Dollar prices fall nearly 60%, whilst gold fell only 30% before turning sharply higher as the ultimate – and comparatively "useless" to industry – store of value. But silver had already risen 5 times over during the half-decade before the financial crisis began, and it then shot another 5 times higher again to peak in spring 2011 near $50 per ounce – the all-time high hit in 1980 when Texan oil barons the Hunt brothers famously tried to corner the market, hoarding silver as a hedge against the strong inflation then destroying bond and stock investments. Today's long-term silver investors seem happy to build their positions, awaiting a similar surge sometime in the future. It might arrive sooner than later if hot-money action in the derivatives market keeps growing like it has in 2014 so far.