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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 02/22/2007 : 21:07:54
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Glad for the post Frugi, it is interesting to see how this will play out during the coming year in China (wlll Chinese gold buyers make pigs of themselves?)
Also, thanks for the information on the rat, I wonder what other symbols of the Chinese Calendar mean as far as work or jobs for the Chinese?
Another topic for the dumping ground, I guess. |
Edited by - pencilvanian on 02/24/2007 20:19:30 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 02/24/2007 : 20:15:24
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A blog site for gold news
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I wasn't sure if it was important enough to merit its own topic section.
It may have useful suggestions, it may be the same old song an dance, buy gold, get happy. Still, differing opinions makes for better informed choices. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 02/26/2007 : 18:05:05
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Big spenders go for gold in new year rush
The gold rush is reaching fever pitch in major cities across the country during Spring Festival.
In Guangzhou, capital of South China's Guangdong Province, retail sales of gold products had reached 7.82 tons since February 10, Xinhua News Agency reported on Friday.
That amount of gold could cover 100 square meters in standard gold bars, it said.
Calculated at a price of 223 yuan ($29) per gram, customers in Guangzhou had spent a record high of 1.74 billion yuan ($224 million) on gold products in two weeks.
In Beijing, a special gold ornament named "lucky balls" has attracted much attention in recent days.
Local media reported that the biggest gold store in the capital, Beijing Caishikou Department Store, every day sells thousands of such one-gram small balls, which could either be worn on the wrist or around the neck.
Chen Sufen, a customer who had just bought two gold pig-shaped pendants as gifts for friends, told Xinhua that she believed gold could bring people good luck, and also be a good investment.
A symbol of wealth and good fortune, gold traditionally has a special place in the hearts of Chinese people.
Other than tradition, a combination of other factors, including the depreciation of the US dollar, and the surge in prices of a wide range of commodities, has also fuelled the latest gold rush.
While average punters have been hit by a gold rush fever, others are keeping it cool.
Experts in Guangzhou have reminded people who want to invest in gold to wait for the post-holiday sales.
..........Wait until afte the demand dies down and buy when the prices are lower, good advice on either side of the Pacific.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 02/27/2007 : 19:56:58
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OWCH!
Boy, that fall in gold's price sure is painful. 
Here is one explanation as to why gold fell.
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Gold Falls in New York as Equity Plunge Triggers Metal Sell-Off
By Pham-Duy Nguyen
Feb. 27 (Bloomberg) -- Gold prices in New York fell as much as 4 percent after U.S. equities tumbled the most since September 2002, triggering a metal sell-off by investors.
Gold futures for April delivery fell $20.90, or 3 percent, to $666.30 an ounce at 4:38 p.m. New York time in electronic trading on the Comex division of the New York Mercantile Exchange.
Prices earlier touched $660. The metal fell $2.60, or 0.4 percent, to $687.20 in floor trading that ended at 1:30 p.m. The metal closed at a nine-month high yesterday.
The largest drop in a decade in Chinese equities sparked a plunge in shares in the U.S., Europe and other emerging markets.
U.S. Treasuries posted the biggest gain since June 2005 as the rout in global stocks and bonds bolstered demand for the safest debt.
``The Chinese fire alarm rang loud and clear across all markets,'' Jon Nadler, an investment-products analyst at Montreal- based Kitco Minerals & Metals Co., said in an e-mail. ``Who knows how many hedge funds had serious positions riding on the presumptively insatiable Chinese demand for commodities. Gold was dragged down significantly lower.''
Funds sold mining stocks and the StreetTracks Gold Trust, the exchange-traded fund, or ETF, backed by physical gold. The Philadelphia Stock Exchange Gold & Silver Index fell 6.9 percent to 137.56. The StreetTracks fund, which last week reached a record $10.5 billion, dropped as much as 4.5 percent.
``The stock market didn't collapse until after gold's close,'' said Billy Flahive, a gold trader and partner at Eagle Futures Inc. in New York. ``The liquidation got piled into gold. When they liquidate the ETF, they've got to liquidate gold bullion, so they had to come to the market. They did it after the close so it's a little dramatic.''
China
Investment demand for bullion jumped 29 percent last year in China, the second-biggest buyer of gold after India, according to the producer-funded World Gold Council. China's appetite for commodities helped drive the prices of copper and crude oil to records last year.
Gold's losses may be limited should investors seek a haven from turmoil in the markets, analysts said.
``If anything, the sell-off in Chinese stocks will increase demand for gold,'' said James Turk, founder of GoldMoney.com, which had $186 million worth of gold and silver in storage for investors at the end of January.
``As investors in China get burned with stocks, they will shy away from speculative stuff, and opt for the security that gold offers,'' Turk said before the close of Comex floor trading.
Quote
``The Chinese fire alarm rang loud and clear across all markets,'' Before, it was said,"If America sneezes the world catches a cold", now If the Chinese Dragon sneezes the world catches the flu.
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Gold closes lower for first time in three sessions
Gold futures closed lower Tuesday for the first time in three sessions on concerns that China's demand for commodities in China may weaken, but prices finished well above the day's worst level as gains in oil futures and declines in the U.S. dollar fed safe-haven investment in gold.
Gold prices fell as much as $12 an ounce early on in the session after China hinted that it may tighten monetary policy, which could reduce demand expectations for commodities.
"With the strength that gold displayed in the last two weeks – knocking over resistance, consolidating briefly then edging up – the inherent strength of the market is showing itself, with investment demand leading the way," said Julian Phillips, an analyst at GoldForecaster.com, in e-mailed comments.
Gold futures for April delivery closed down $2.60 at $687.20 an ounce, staging a partial recovery from a low of $677.50. It climbed as high as $692.50 to mark a fresh seven-month, intraday high.
On Monday, the contract closed at its highest level since July as continued defiance by Iran over its nuclear program underscored the metal's safe-haven appeal. Prices have gained $6.80 over the past two sessions.
May silver fell 14.2 cents to end at $14.69 an ounce, but that's after a drop to $14.42. May copper lost 1.6%, or 4.5 cents, to close at $2.825 a pound.
Rounding out the metals action, June palladium fell by $4.90 to close at $356.60 an ounce but April platinum closed $11.30 higher at $1,253.30 an ounce.
For now, physical demand in the gold market is "unbelievable," said Neal Ryan, director of economic research at Blanchard, in e-mailed comments.
"Point to any news in the market and it's bullish for precious-metals prices moving forward," he said. The market just "needed to digest that physical selling in the London market."
Meanwhile, China was a key theme Tuesday after the Shanghai market closed down almost 9% overnight, its biggest single day decline in a decade. Concern that the government is planning restrictive measures to address fears of a bubble in the stock market and hints from the head of the central bank that it may tighten policy triggered the move.
Traders are concerned that measures that slow the Chinese economy will reduce demand for metals.
"A major downturn in Chinese equities markets and/or the Chinese economy could immediately and significantly affect the equally red-hot commodities sector (base metals, industrial materials, etc.)," said Jon Nadler, an investment-products analyst at bullion dealers Kitco.com, in e-mailed commentary.
"It could also affect some of the major global economies – that of the U.S., perhaps the most," he said. "Gold would likely not be immune from a large-scale decline in its own market sector 'backyard'."
Still, "in regards to the Chinese economy, let us not forget how many episodes we have gone through such speculation over the past few years," Peter Spina, chief investment strategist at GoldSeek.com said in e-mailed comments. "Until this event takes place, I would not throw all my weight behind such an occasion."
"Economic growth has been very aggressive and the Chinese government will continue to take measure to ensure growth is kept within check within their abilities," he said.
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Edited by - pencilvanian on 02/27/2007 20:04:00 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/01/2007 : 19:00:36
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In an almost unnoticed move in the market a dramatic event took place in January of this year.
We have long talked of the easy way for a Central Bank to accomulate gold reserves unobtrusively.
Usually we have pointed to Russia and China when this is discussed as they are the two nations that have expressed major concerns about the future of the $ and who are producers of gold. Should they decide to acquire gold for their reserves in earnest, the first move they are likely to make is to buy the locally mined gold.
This is because firstly, they would not be seen in the market place, nor drive up the price.
Secondly, to the extent they bought local gold as opposed to selling it in the market, they would not accomeulate the U.S.$ for it.
We were quite surprised to see that South Africa in January did just this.
Certainly the South African Reserve Bank acted with a dash of common sense towards gold for a change.
In January, the South African Reserve Bank's holdings of gold reserves increased to 4.684 million ounces [145 tonnes] from 3.990 million ounces [124 tonnes] in December 2006.
In simple terms S.A. is switching some U.S. dollars into gold.
But perhaps more significantly as the gold market tightens and changes in supply or demand have a greater impact than before, making the market more volatile, this move meant that in January 20 tonnes of gold from South Africa did not go into the open gold market, placing more upward pressure on the gold price.
This would not affect the South African gold miners, as they would have been paid in Rands, anyway.
But a Central Bank turning buyer from seller off-market, would tighten the market by lowering supplies, just as dramatically as if it entered the market to buy.
China to rapidly increase gold production
With South Africa’s actions in mind, the market
may have wet its lips at the thought of China’s plans to produce 1,300 tonnes of gold and verify gold mine reserves of 3,000 to 5,000 tonnes in the five-year period between 2006 and 2010 [according to the State Development and Reform Commission].
In this period they intend to make efforts to readjust distribution of the gold industry, intensify gold mine prospecting, promote industrial restructuring and upgrade mining and production technology and equipment. Meanwhile, domestic gold enterprises will be encouraged to participate in international competition.
An interesting objective and one we hope they will achieve.
But don’t expect any of that gold to leave China.
There’s little chance of that happening.
Why?
We do believe domestic consumption will grow, but not to this extent unless a major reformation of the Chinese distribution system happens.
So what of the extra gold?
We believe that this will find its way into the Chinese gold and foreign exchange reserves.
After all, why on earth, would they want to sell it, they don’t want more of the U.S. $ or any other foreign currency.
Last year, China produced a record 240 tonnes of gold, a growth of 7.15% year-on-year, and its gold mine reserves increased by more than 650 tonnes. This was all used inside China.
In 2007, the gold output is projected to hit 260 tonnes and the gold mine reserves to rise 700 tonnes.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/02/2007 : 17:40:06
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POW!
Boy, these price hits on gold and silver sure are a punch in the pocketbook, at least paper profit wise.
Just keep in mind, we are not in a metals bubble until the talking heads start saying "metals have nowhere to go but up"
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Asian Stock Market Correction Bodes Well for Gold and Silver
.............(I hope something will lead to good tidings for gold and silver)
After the China stock market crash and a continuous flow of negative economic news from the USA it was no surprise to us other global markets took a hit.
The lesson learned here is direct market action or intervention by a government or central bank is not required to make a big mess.
Simple discussions of untoward economics and possibilities are usually enough to make a spark followed inevitably by a reactionary big bang.
In this instance, as we understand it, a Chinese official made only a simple remark about potentially tightening some rules to cool inflationary aspects of the Shanghai Index. This makes sense as it has been way too hot and overbought with flagrant disregard for reasonable trading rules. Our timing in reporting and warning on this situation in Trader Tracks just a few days earlier proved auspicious.
Traditional technical analysis suggests that straight-up rocket rallies are routinely followed by almost straight down corrections; of some sort.
This rule does not apply to just stock markets either but also for futures, commodities, bonds and other market sectors.
As is common in technical reactions, the Shanghai Composite regained half of its losses in follow-on trading after the big sell. The USA markets, by comparison, were not quite so fortunate in that they lost a combined total, in U.S. Dollars, of more than the total valuation of all the Chinese stock markets combined. This was not exactly chicken feed. The Dow lost all of its 2007 gains from January 1 to present date.
China immediately stepped in during the aftermath to report government officials denied any intention of imposing a tax on equity investment gains. Further, there was news the government is considering qualified foreign investors be allowed to own as much as $120 billion of domestic Chinese equities which is roughly 10% of all their market capitalization. Officials elaborated on the current policy of no market intervention and suggested the selling was a normal market adjustment or correction and nothing like the stark drama it appeared to be.
Chinese banks are not permitted to make loans to buy stocks and they are checking further to examine loans that might potentially fall into this category. We noticed too, that before this major selling event transpired, the Chinese Central Bank had imposed new rules for bank capitalization requiring a 10% minimum. Once again, this is only good bank and lending policy but when taken in the context of overly frothy markets in lending and growth, negative thoughts immediately enter the minds of economic analysts and observers thinking the worst is about to appear. In this case it was created by mere out loud potentials that set the fire-
kind of like yelling fire in a crowded theatre.
Another mistake in analyzing the USA market response was to blame China for instigating the wreckage in America. We say nothing was further from the truth as a whole sub-set of negative situations has been set-up for years in the States creating an imminent whack on our trading head. In our view, if China had not had an accident, we certainly would have found another one originating from New York or Washington policy. The list of nasty choices lying back in the economic and trading weeds is almost endless.
Very subtly and quietly, several nations throughout the world have been raising interest rates to combat and slow the outrageous inflated growth created by USA money printing helped as well by Japan’s and a few others. China has scheduled an important meeting next week of the Chinese People’s Congress to review the state of their economy which is probably a good thing as they might increase interest rates a tad which is the easiest way to slow down this 150mph trading train.
We watched a little of the Chopper Ben testimony in Congress as his talk worked overtime to smooth anticipated economic bumps. The words of an old quotation immediately came to my mind; "Me Thinks He Protesteth Too Much." Our reaction was Benny was a little too vociferous in his denial of problems and way too much Pollyanna talk was moving through the room. Maybe we are too cynical but Ben is darn worried and we think he sure better be. Ben’s got a sleepy-eyed demeanor which is perfect for these silly meetings as he is obviously quite shy of this wild fiscal adventure just over the horizon.
Meanwhile, our beloved Commerce Department back-tracked on some key numbers saying,
Whoops, looks like our economy is really weaker than we expected and reported.
No kidding.
Housing sales continue to fall like a stone along with the next 500,000 related jobs headed into oblivion. But, the one that really made our hair stand on end this week was news that miscellaneous derivative and mortgage- backed bonds totaled more than all the USA government T-Bills, Notes and Bonds combined by a huge margin.
We can assure you with absolute conviction this is not good whatsoever.
Some of these pie-in-the-sky, Pollyannish, ivy-covered dudes from academia (is that a new vine or a nut?) are in for a rude awakening when the hard landing arrives and rampant speculation evaporates into the vapors of crash and burn markets.
Other recent observations tell us taxes by states are increasing in failing attempts to balance budgets which they are required to do by law.
Banks are carrying way too low balances for loan loss reserves while holding overly abundant real estate precarious portfolios.
GDP is largely a figment of Washington’s imagination. We suggest real GDP is probably a minus 1-2 %.
When the stocks bellied-up this week, overly liquid hedge funds dove to the bonds.
Only problem here is the junk bonds are getting junkier and corporates and not exactly in the premium category either except for a handful of the best ones.
Yields are going lower and our dollar is sinking further into the subterranean darkness while the Euro and Swiss return to favor with new rallies. Even the over-printed Yen has been recovering as it too is perceived to be a somewhat better fiat currency than America’s.
Energy in all sectors found new support and is moving steadily higher as USA drivers begin to chirp about prices, and unleaded moves into rally. Base metals regained some price footing but will stay firm only as long as Asia keeps buying for manufacturing. That manufacturing lasts only as long as American Sheeple keep pumping the plastic and credit buying. We see no guarantees on this one and in fact see consumer credit as a whimpering basket case.
What Does All This Mean for Asian Gold And Silver?
When Americans stop buying Asian stuff from China, Japan, and Korea, those economies will suffer with sharply declining sales.
That’s when the idea of a safe haven flight will inspire those folks to buy gold and silver with both hands.
Keep in mind they are more disposed to buy precious metals than Americans anyway.
We think a stuff-selling-slowdown of goods to Americans shall be the catalyst to promote gold and silver rallies of historic proportions.
They have the savings and unlike spendthrift Americans, they have the desire and buying power for gold and silver.
Further, Asians are busy setting-up new trading vehicles for futures, physical metals, precious metals ETF’s and stocks.
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Zimbabwe gold mining on the brink of collapse
March 02 2007 at 04:25PM
Harare - Zimbabwe's gold mining companies have been pushed to the brink of collapse due to a fixed exchange rate and soaring production costs, a leading gold producer said on Friday.
Miners sell gold to the Reserve Bank at ZIM$16 000 per gram, which is about $64 (about R470) at the official exchange rate and $2 on the black market. They may retain 70 percent of their earnings in foreign currency while the remainder is surrendered to the central bank at the official exchange rate.
The Zimbabwe dollar is officially pegged at ZIM$250 against the US dollar, but trades more than 30 times weaker on the black market, while the ZIM$16 000 per gramme price for gold has been fixed at current levels for five months during which inflation has risen by almost 400 percent.
Falcon Gold (FalGold), a Zimbabwe Stock Exchange listed mining company, warned in a statement to shareholders that the industry could no longer sustain operations in the face of rising costs and falling revenues.
"Without a realistic increase implemented shortly, this company, in fact, the whole gold mining industry in Zimbabwe, faces imminent collapse," FalGold chairperson Gary Perotti said in the statement. "No business can sustain an environment where rapidly increasing costs are matched against fixed revenue."
Miners were disappointed the central bank did not devalue the currency last January. Overall mining contributes 4 percent to Zimbabwe's gross domestic product. "The mining sector, and in particular gold mining, has been dealt a huge blow with regards the monetary policy... it was a non-event in terms of Zimbabwe dollar devaluation or any increase in the gold support price," Perotti added.
South Africa's Halogen Holdings this week completed the $4,5-million sale of its majority stake in FalGold - which has an estimated 2,5-million ounces in gold ore resource - to Central African Gold, which is listed on London's Alternative Investment Market.
Several mines have closed amid a worsening business environment characterised by exchange rate problems, inflation at almost 1 600 percent and serious foreign currency shortages that have made it difficult to import equipment and spares.
Jitters over President Robert Mugabe government's plans to take control of foreign-owned mines have also seen limited exploration and mine development.
Mining output declined by 14,4 percent, while gold deliveries to the central bank were 18 percent down to just under 11 tonnes last year.
Gold production, which accounts for 51 percent of total mineral output, was 21 tonnes in 2004.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/02/2007 : 17:46:48
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Markets – Gold – Markets sell off
This week, gold sold off along with the general financial markets.
The reason is that funds/investors had been playing the Yen carry trade for a long time, and the Yen strengthened during the Chinese stock crash.
Then, funds/etc, having to cover margins sold their most liquid and profitable positions to cover margins. That is hitting gold, even as markets continue down.
So, the story is that the Yen carry is unwinding, that is causing market liquidations, that is causing gold liquidations now this week.
Gold is way down, the US stock market barely stabilized, but is way down, Japan has not stabilized, down 250 or so.
What is happening is market – gold – market sell offs.
The whole thing is a leverage/liquidity issue.
As leverage flees financial markets, the Yen strengthens because of the Yen carry, then as more is cleared, the Yen strengthens. Then of course markets sell off more – leading to more market sell offs and Yen strengthening. But this is not only about the Yen carry. Market leverage has built for 5 years to ridiculous levels. Next week or so, we will see hedge fund crises.
Derivatives are now a huge question as well, and with hedge funds and investment banks, there will be emerging gigantic losses. Look for Amaranth to be a toy scenario.
Gold is getting hit because it is a liquid asset to cover margins.
This is not fundamentally a gold market sell off
it is a liquidity sell off.
This is anticipating further financial market sell offs next week.
This is market-gold-market sell off this week. The second phase starts next week – the second market sell off phase.
But, the next shoe is due to drop next week – that is – if the US and Japanese PPT teams cannot stem the crisis. Make no bones about it, there is a critical market liquidity crisis right now in all world financial markets. They may or may not stem this.
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DadaOrwell
Penny Sorter Member
99 Posts |
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n/a
deleted
479 Posts |
Posted - 03/02/2007 : 23:45:44
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Whether or not the Plunge Protection Team can stem this crisis, is indeed the qwestion.
What exactly is the nature of the crisis? I find this to be the most interesting of all.
If Liqwidity is the problem, why has there been too much recently and then suddenly too little?
This seems at least on the face of it as a contridiction.
AH, but Liqwidity is just a code word for cash!
Money = Debt
Debt = Money
It has taken me years to absorb this crucial and simple FACT.
So, now the qwestion becomes,
Is there too much, or too little money/debt or,
Is there too much, or too little debt/money?
Well, put thaaaat way ...
Debt is Bad for the bottom 90% of humanity.
Debt is good for the top 1%.
I feel like I am in the limbo zone between 90% and 99%.
Is debt good for me?
Will this crisis pass without inflicting any real pain?
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Paul Craig Roberts urges people to
DUMP DOLLARS! |
Edited by - n/a on 03/02/2007 23:47:37 |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/05/2007 : 18:23:33
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Ouch,
Gold down again, but misery loves company,
the Dow and NASDAQ are both down too.
All the same, seeing precious metals take a hit like this hurts, paper profits or not.
For those of you buying gold and silver, better keep the Tums and Maalox handy, since it is gonna be tough on the ol' ulcer.
Maybe this is a good time to put more money into nickels or pennies/cents and a little less in gold and silver.
No matter what happens, though, a gold or silver coin is still going to have a value, unlike a block of stock that can go to zero.
What will happen to gold and silver prices if a recession hits?
I guess that as precious metal prices decline during a recession, everything else will decline in prices as less spending takes place.
Don't dispair, we are all in this metals boat togehter, lets hope this boat doesn't turn into a submarine.
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Gold Futures Fall, Erasing This Year's Gains, on Equity Slide
By Pham-Duy Nguyen
March 5 (Bloomberg) -- Gold in New York fell, erasing this year's gains, as investors sold the metal to cover losses in global equity markets. Silver also declined.
Gold is little changed this year after gaining as much as 8.5 percent. Prices fell 6.2 percent last week following a global sell-off of equities wiped out $1.8 trillion in world market value. Investors who own gold in StreetTracks Gold Trust, an exchange-traded fund, sold about $617 million last week.
``You've got some wealth deterioration in the stock market,'' said Frank McGhee, head metals trader at Integrated Brokerage Services LLC in Chicago. ``Gold is a store of value and it's convertible. People who need cash raise it through gold.''
Gold futures for April delivery fell $2.90 or 0.5 percent, to $641.20 an ounce at 12:21 p.m. on the Comex division of the New York Mercantile Exchange. Prices earlier declined to $635.10, dropping for the fifth session in a row, the longest slump since mid-September.
Silver for May delivery fell 20 cents, or 1.5 percent, to $12.76 an ounce. Prices have dropped 1.5 percent this year after climbing as much as 15 percent.
Japanese stocks dropped today by the most in almost nine months, wiping out more than $166 billion in share value. Europe's Stoxx 600 index has fallen 7.7 percent since last week.
``In this type of market, people get nervous,'' said Graham Birch, who helps manage about $8 billion in precious-metals equities at BlackRock Investment Management in London. ``People are looking to put a bit of money back in the bank.''
Concern of a global slowdown may also hurt demand for gold, analysts said. About 67 percent of gold was purchased for jewelry last year, according to data from the producer-funded World Gold Council.
``Jewelry is not something people need, it's something people want,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``Long term, I remain very negative on gold.''
Gold also fell as oil dropped below $60 a barrel, reducing the metal's appeal as an inflation hedge.
Gold can recover should ``stocks start rallying,'' McGhee of Integrated Brokerage said. ``It's all based on liquidity needs.''
Last week's decline in global markets was a ``healthy correction,'' said Frank Holmes, chief executive officer of U.S. Global Investors Inc. in San Antonio, which manages the $875 million World Precious Minerals Fund.
``People are trying to guess the bottom,'' said Holmes. ``The economies overall are strong.''
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UPDATE 4-Gold tumbles to 6-week low as investors flee
Excerpts
LONDON, March 5 (Reuters) - Gold tumbled to its lowest in six weeks on Monday as the carnage on equity markets infected sentiment for the precious metal and investors sold to cover their losses, analysts said.
..........By 1530 GMT gold had trimmed earlier losses as U.S. stocks bounced and was at $638.80/639.55, still a loss of around seven percent since a nine-month high of $689 an ounce on February 26. Analysts said the correlation -- the strength of the relationship -- between gold and equities has become more positive in recent years because of the greater involvement of investors in commodity markets.
So, when risk-averse investors sell their holdings in times of turbulence, gold is included, despite its traditional role as a haven against equity market turmoil, economic and political uncertainty and inflation.
"The correlation between markets is rising and there has been a knock-on impact on gold from equity markets," said Tariq Salaria, analyst at Standard Chartered.
"It isn't something we've seen in the past, but as we move forward we'll see more of it."
CHEAP YEN
Traders said gold has been sold over the last week to pay for losses on equity markets.
"Some people have had to take their profits on gold to meet margin calls on stocks," a trader said. "It's the good for bad trade ... It started last week when China stocks collapsed."
Investors have for years been able to borrow yen at low interest rates and invest the proceeds in higher yielding riskier assets -- known as the carry trade.
But Japan's move to raise benchmark interest rates to a decade-high 0.50 percent last month has been read by markets as a sign that the era of the cheap yen is drawing to a close.
"Conditions are set to remain volatile in the week ahead with traders likely to be sensitive to further selling pressure," TheBullionDesk.com said in a research note.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/07/2007 : 18:08:58
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Now this IS news.
South Africa's gold mining supply, down the lowest it has been since 1922?
South Africa, one of the biggest gold producers on earth, with gold prices as high as it is, their production is down?
One can only wonder how this will effect prices in the future.
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South Africa’s gold output at 84-year low
By Chris Flood
Published: March 7 2007 18:29 | Last updated: March 7 2007 18:29
South Africa’s annual gold production has sunk to its lowest level since 1922, extending the decline from the world’s biggest source of the yellow metal that has also helped drive an almost continuous rise in prices this decade.
Production levels have fallen steadily since 1973 as higher grade ore has been gradually depleted. However, with higher gold prices encouraging more costly extraction techniques from deeper mines and lower ore grades, falling production volumes could begin to slow or stabilise.
Gold output from South Africa fell 7.5 per cent in 2006 to 275.1 tonnes. This means the country’s annual output has now halved over the past 10 years.
Roger Baxter, chief economist at South Africa’s Chamber of Mines, said that if certain key projects were successful, the rate of decline in the country’s gold production was likely to slow or possibly stabilise.
The mining of lower grade deposits that would have been uneconomic to pursue previously has seen the average grade of ore mined in South Africa fall by 9.3 per cent last year.
However, to extract gold from these sources, companies are facing increasingly challenging conditions with workers having to operate in extremely high temperatures at ever greater depths below the earth’s surface.
This is putting significant upward pressure on costs. Total production costs (including capital expenditure) rose 20.8 per cent last year in rand terms.
“[Companies] have the flexibility to mine lower grades to break-even with costs as a result of the higher gold price,” Mr Baxter said. But he was unsure how soon higher capital spending would feed into increased production because developing a mine from a new discovery to full production takes about eight years.
The industry is still suffering from cut-backs in exploration budgets and a dearth of new discoveries between 1997 and 2001.
John Reade, head of metals strategy at UBS, said South Africa would remain an important gold producer, but higher capital expenditure was likely only to slow its long-term decline.
South Africa remains the world’s largest producer, but its share of global mine production has now shrunk to about 11 per cent from 50 per cent in the early 1980’s.
Falling output from South Africa has contributed to a steady decline in global production and an almost continuous rise in the gold price since 2001. Gold averaged just over $271 a troy ounce in 2001 and Goldman Sachs expects the price to reach $750 by the end of this year from just under $650 currently, helped by further weakness in the dollar.
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DadaOrwell
Penny Sorter Member
99 Posts |
 Posted - 03/07/2007 : 18:46:51
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I don't understand why you guys would be upset about gold prices going down, that's just an additional buying opportunity. I didn't take very good advantage of this dip because of limited disposable cash this month but I sure wanted to. The more volitile a metal is the more potential it has to kick ass after you buy the dip.
I define a dip (in this bull market) as gold coming within 2 percent of its 200 day moving average. A good sell point would be the 11% mark.
at today's price gold is about 3% above its 200dma so I think of it as decent buying territory.
Want freedom?
Move to New Hampshire!
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/07/2007 : 19:52:31
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Gold & silver owners are not so much upset as suprised that PMs would fall so fast, though gold and silver tend to bounce back qucikly.
It can be troubling, paper profit wise, to see the prices fall, though as you mentioned DadaOrwell, it is a buyer's market when the prices fall.
As the topic section says, Hang Tight, because volatility is still a factor in pricing. |
Edited by - pencilvanian on 03/07/2007 19:53:45 |
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n/a
deleted
132 Posts |
Posted - 03/07/2007 : 20:20:20
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Gona pick up some 90% and other stuff
this weekend at a coin show so
im hopeing prices go low.
With my luck they will shoot for the moon.
"To the uninformed, pocket change.
To the informed, an investment." |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 03/12/2007 : 17:30:59
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More on the South Africa story
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South African gold production decline to slow in 2007
By: Tessa Kruger
Posted: '12-MAR-07 19:49' GMT © Mineweb 1997-2006
JOHANNESBURG (Mineweb.com) --The rate of decline in gold production in South Africa will slow this year. In fact, production could even stabilise as local gold producers are increasing capital expenditure and investment in developing brownfield sites.
SA Chamber of Mines chief economist Roger Baxter said today that gold producers have started to respond positively to challenges around sustaining production in the country.
The companies have not only increased their capital expenditures by 26% to R5.9 billion (US$801 million) in 2006, but have also committed R10 billion (US$1.3 billion) to the development of brownfield operations over the next ten years.
Baxter said higher capex spend in 2006 was partially to catch up with cutbacks on capital spend in 2005 when the gold price averaged around R90,000 per kilogram.
But the increase also involved new capital spend that will open up new mining areas, while investment in brownfield sites will expand ore bodies and extend the lives of existing gold mining projects.
“The industry is responding positively to issues that have been highlighted as stumbling blocks to continued gold production in the country.
“This bodes well for the local gold industry in the short to medium term,” he added.
Baxter said the Chamber had noticed the positive response by the industry from the last quarter of 2006, although last year saw higher capex spend on the back of a strong gold price.
Local and international industries were grappling with cost pressures across the spectrum, including labour, production and capital costs, and they had to ensure that input costs did not erode gains on the pricing side.
The findings of the Monitor Group – consultants appointed by the Department of Minerals and Energy (DME) to highlight challenges to the long-term sustainability of the industry - pointed to the key drivers of production decline in SA, but were not absolute in terms of the industry’s future.
Baxter said the fact that South Africa mined lower grades in 2006 was not a sign of a declining industry, but rather a sign of greater flexibility in grades allowed by a higher gold price.
“We are not losing our ore body, the higher gold price provided us with a larger economic mineable reserve.”
The Chamber said last week that the average grade mined by SA producers declined by 14.2% year-on-year in 2006.
This came in a year that saw gold production falling to its lowest level since 1922, and 7.5% lower than 2005, to 275 tonnes.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 12/24/2009 : 14:48:59
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I just happened to find this post I started from way back.
Here we were pondering what gold would do back in 2006 (will it ever get to $700???)
Looks like we are still in for a bumpy ride, only now the price goal is $1,200 and up.
If the past 3 years have taught us anything, it is to take the price fluctuations in stride, sit back and enjoy the gold and silver show.
Its like a roller coaster, where is the next big spike, where is the next big fall? Just hang on and enjoy the ride.
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Topic |
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Bullion Prices, Hang Tight
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