Tag Archive: World Gold Council

Sep 09

World Gold Council Data Shows Gold to See $2500 in 2012 Or Sooner!

“In the third quarter, we are going to see strong investment numbers, because of the European crisis, the debt downgrade in the United States and poor economic figures coming from the United States which have created a concern in investors’ mind that we may be heading back to another recession,” World Gold Council Managing Director for Investment Marcus Grubb said.

“It sends liquidity into gold,” Grubb said in a telephone interview.

David Lamb, WGC managing director for jewelry, said economic gloom will hit gold jewelry appetites in western markets, but jewelry buying in India and China – which together account for 55 percent of global jewelry demand – remains very strong.

“If you add that up, because of the biggest and most dynamic move (in gold jewelry demand) eastwards, we think this year will show an overall positive trend,” Lamb said.

Given the market volatility, a falling USD and increasing demand HCM expect to see Gold trading at $2500 in 2012, Shayne Heffernan said today.

But what was surprising back then was that gold shares barely ticked upwards even at the height of the gold frenzy. Looking at the main gold equity index of that time – the Johannesburg Stock Exchange’s – that share price take-off happened several months later when companies began publishing their profit results and the (gold) penny dropped. Investors suddenly saw the effect of the high gold price on bottom lines.

Even though the gold price faded in the following three years, sinking below $US400/oz, the South African stocks maintained a lot of their gains.

 

Gold Demand and Supply – Second quarter 2011

  • Gold demand totalled 919.8 tonnes in the second quarter of 2011, down 17% year-on-year. Improved levels of demand in the jewellery and technology sectors were more than offset by weaker investment demand, which was due primarily to a decline in ETF demand from the very strong levels seen in Q2 2010.
  • The gold price reached a series of new record highs during the second quarter and the average price for the period was up 26% year-on-year and up 9% on the prior quarter. After reaching a high of US$1,541 in early May, aided by soaring commodity prices and continued concerns over the outlook for western economies, gold corrected back to US$1,500/oz. However, gold was relatively protected from the sharp sell-off that affected many commodities and the dip provided jewellery consumers and investors alike with an opportune entry point.
  • Jewellery demand of 442.5 tonnes was 6% higher year-on-year as a number of key markets posted solid growth. India, China and Turkey (which together account for over 50% of global jewellery demand) generated combined growth of 16% although this was countered by weakness in other markets, most notably those in the west. The US$ value measure of global gold jewellery demand grew by 34% year-on-year to reach US$21.4bn.
  • A 37% year-on-year decline in investment demand was almost entirely driven by ETFs and similar products. Although ETFs witnessed solid net inflows of almost 52 tonnes during the quarter (almost entirely reversing the 62.1 tonnes of net outflow from Q1), the 82% fall in demand reflects the comparison with Q2 1010, when very sizeable levels of demand were generated by the escalation of the European debt crisis, resulting in the second highest quarter on record for
    ETFs.
  • Looking at physical demand for bars and coins, the second quarter witnessed growth of 9%. The geographical distribution of this demand was widespread, with a number of countries from all regions generating decent growth. Turkey and India were the two strongest markets, chalking up growth rates of 90% and 78% respectively. China also accounted for a significant portion of the growth in global demand.
  • Second quarter demand for gold used in the technology sector was up by a modest 2% at 117.9 tonnes. This growth was wholly generated by an increase in demand from the electronics segment, which generated a record demand value of US$4.1bn. Gold used in dentistry continued to decline.
  • The second quarter supply of gold was little changed year-on-year. Mine production, the only component of supply to make a positive contribution, rose by 7% to 708.8 tonnes. Producer de-hedging exerted a modest negative influence on supply, as did the official sector. Central banks generated another quarter of net purchases, more than quadrupling the levels of Q2 2010. Recycling activity, the final component of supply, was 3% down year-on-year, as consumers in many markets held off on selling their existing ‘loose’ holdings of gold in anticipation of higher prices.

Aug 25

India is World’s Biggest Consumers of Gold Say Imports of Gold May Reach Record 1,000 Tons

Gold imports by India, the world’s biggest consumer, may reach a record this year as investors seek a haven against inflation and volatility in stock markets, a traders’ group said.

Imports may be between 950 metric tons and 1,000 tons this year, Prithviraj Kothari, president of the Bombay Bullion Association, told reporters at a gold conference in Kovalam in south India. Consumption in India rose to a record 963.1 tons last year, driving bullion imports to the highest ever at 958 tons, according to the World Gold Council.

Rising Indian imports may help extend a 30 percent rally in gold prices to a record that’s made the precious metal the second-best performer on the Thomson Reuters/Jefferies CRB Index of 19 raw materials this year. Bullion is heading for its 11th annual gain as Europe’s sovereign-debt crisis and concern that the U.S. economy may be slowing spur demand for a haven.

“The equity market is volatile and property prices are too high, driving people toward gold as an investment,” Kothari said. “The rains have been good so far, so we can expect good demand for festival season this year.”

Purchases by India, the world’s biggest user, surged 60 percent to 267 tons in the three months ended June 30, from 167 tons a year earlier, the producer-funded council said on Aug. 18. Investment demand jumped 78 percent to 108.5 tons, the second-highest quarter on record, it said.

Central Banks

Gold may top $2,000 an ounce by the end of this year as central banks’ purchases and a stalling economy boosts the appeal of the precious metal as a haven, Kothari said.

“Gold may rise to $2,000 or more by 2011 end if the global economy remains the same,” he said. “Central banks are also buying gold, which is positive.”

Holdings in exchange-traded products touched a record on Aug. 8, and central banks are adding to their reserves for the first time in a generation. George Soros, the billionaire investor, cut his holdings in the SPDR Gold Trust in the second quarter as prices rallied, while billionaire John Paulson maintained the largest stake, according to regulatory filings this week.

Global holdings of gold by governments and official institutions such as the International Monetary Fund stood at 30,684 tons last month, according to the World Gold Council. Central banks added 155 tons valued at about $8.18 billion to reserves in the first five months of the year and will be net buyers next year, according to the council.

The precious metal prices may be headed for a drop to $1,725 an ounce as early as next month, according to Jeffrey Rhodes, chief executive officer at INTL Commodities LLC.

beprepared 600x150 India is World’s Biggest Consumers of Gold Say Imports of Gold May Reach Record 1,000 Tons

Aug 19

Gold Price Vaults to Record High Investors Seek Safety, China Needs Caution in Drive Up Gold Reserves, Silver Surging Twice as Fast as Gold

Gold vaulted 1.4 percent in the first two hours of trading Friday amid mounting concerns the U.S. economy is heading into another recession and as some European lenders faced a short-term funding crunch, highlighting the risk of a banking crisis.  Nervous investors fled to the safety of core government bonds, Swiss francs  and gold, which hit a record high, with many seeking to unwind holdings of riskier assets such as stocks, commodities and higher-yielding currencies before the weekend.

European shares extended steep losses from Thursday, when they suffered their biggest daily slide in 2-1/2 years, with key indexes in Britain, France and Germany all deep in the red.

The sharp decline in stock markets is expected to have an adverse impact on household wealth, further undermining consumer confidence and demand in coming months. Heightened uncertainty over growth could also see producers delaying decision-making, hitting global output.

These concerns are likely to see investors cut exposure to stocks, commodities like metals and oil and growth-linked currencies such as the Australian dollar in the coming days.

Gold for December delivery on the CME Comex jumped $33.60 to $1,855.60, up from Thursday’s closing price of $1,822. At one point in Friday trading it reached $1,881.40, a nominal record. The inflation-adjusted record occurred in 1980 when it hit the equivalent of about $2,400.

China Adding to it’s Gold Reserves

According to data on every country’s gold reserves recently issued by World Gold Council (WGC), the United States’ gold reserves are 8,133.5 tons, accounting for 26.49 percent of the world’s total, and the Untied States is still the largest gold reserve country. China’s gold reserves are a little more than 1,054 tons, ranking sixth in the world. Although China’s gold reserve is not less in quantity, it accounts for only 1.6 percent of China’s total foreign reserves. In comparison, the Untied States’ gold reserves account for 74 percent of its foreign reserve, and even emerging countries including Russia and India have gold reserves accounting for more than 5 percent of their foreign reserves. Insiders said that it is good for emerging economies to hold more gold reserves. It is the trend that the Central Bank of China will hold greater gold reserves.

The gold purchased by every country in 2011 is three times as much as the gold they purchased in 2010.  In fact, before Standard and Poor’s downgraded the U.S. credit rating, the central bank of every country already started to gradually increase their gold reserves because of the European and U.S. debt crises and the declining confidence in the U.S. dollar and Euro. People have noticed that the countries that dumped gold in the past 20 years actually turned into net gold purchaser in 2010 because they want to realize foreign reserve diversification and reduce dependence on the U.S. dollar.

According to data issued by the WGC, governments of all the countries have purchased a little more than 203 tons of gold in 2011, three times as much as the gold they purchased in 2010. It indicates that every country is more and more regarding the gold as a tool for resisting the depreciation of paper money and global economic turbulence. Currently, China’s foreign reserves are definitely the largest in the world, but China’s gold reserves are still far less than the global average level.

Therefore, gold is of great significance to preserve a country’s financial security. The United States holds about 8,100 tons of gold reserves; Germany, 3,400 tons, and France and Italy each, 2,500 tons. These countries have paid high costs for their gold reserves, showing that they have drawn particular attention to the strategic importance of gold reserves.

Silver Surge

For all the well-deserved attention being paid to the rocketing price of gold, the price of silver was rising early Friday at more than twice the rate of gold as Indian investors piled into the white metal. Although silver has not been setting record highs in recent weeks, as has gold, it was surging at 8:35 a.m. EDT in electronic trading on the CME Comex division of the New York Mercantile Exchange.

Silver for September delivery, the most actively traded contract, jumped to $41.79 from Thursday’s closing price of $40.68, a 2.79 percent gain.  Gold, meanwhile, rose to $1,844.80
from Thursday’s closing price of $1,822, a 1.25 percent gain.

Meanwhile, iShares Silver Trust, an exchange-traded fund that is backed by physical silver jumped in premarket trading 3.38 percent.

 

Aug 18

Gold Hit Record Highs $1,827 on News of Fall in Existing Home Sales, Freddie-Mac lowering rates, 10-Year US Bonds Droppes Under 2%

Gold rallied to its second record high in a week on Thursday, driven by growing investor unease over the outlook for the U.S. economy after data showed an unwelcome pickup in inflation, and over the lack of resolution to the European debt crisis.

Asset such as stocks, corporate bonds, industrial commodities and higher-yielding currencies slid after investors lost more appetite for risk, to the benefit of gold, government bonds and the dollar itself, which many resort to in times of extreme market nervousness.

Although gold remains off its inflation-adjusted peak above $2,000 struck in 1980, it is one of the top performing assets this year, up by over 25 percent versus a 15-percent loss in U.S. blue-chip stocks <.SPX> or a 7.7-percent decline in the price of copper.

So far in August, the price has risen by more than 11 percent, putting it on track for its biggest monthly gain since November 2009.

Growth in the United States, which last week lost its top-notch credit rating, has been patchy, while European leaders struggle to contain the spread of the debt crisis that has forced Greece, Portugal and Ireland to seek emergency funding and now threatens to swamp Italy and Spain.

Spot gold was up 1.6 percent on the day at $1,816.09 ounce by 2:00 p.m. BST, having hit a record $1,817.90 and was on course for a 9 percent gain over the last two weeks, its best two-weekly performance since mid-February 2009.

GOLD IN DEMAND

Demand for gold has been fairly evident through increases in holdings of the metal in exchange-traded funds and rising open interest in U.S. gold futures, building on a decline in the second quarter of the year.

The World Gold Council said in a report on Thursday overall gold demand fell 17 percent in the second quarter to 919.8 tonnes, as growing interest in jewellery, coins and bars failed to offset a sharp decline in ETF buying.

Investment in ETFs fell by more than 80 percent on the same quarter last year, although inflows this year are up by a net 6 percent, with most of that investment materialising in the last month, according to ETF data monitored by Reuters.

In Europe, plans from France and Germany to move towards fiscal union in 2012 got a chilly response from other euro-zone countries and failed to reassure investors worried about the region’s debt crisis and weakened economies.

The U.S. Federal Reserve Bank is taking a closer look at the U.S. units of Europe’s biggest banks, concerned that a euro zone debt crisis could spill into the U.S. banking system, the Wall Street Journal reported.

The $2.5 trillion (1.51 trillion pounds) U.S. money market funds industry — which supplies short-term dollar funding to banks — has retreated from the euro zone in recent months, concerned that the continent’s debt crisis is spiralling out of control.

In other fundamental news, Venezuelan President Hugo Chavez said the country will nationalize its gold industry and is moving its international reserves out of Western countries.

Existing home sales fell 3.5 percent

Existing home sales unexpectedly dropped in July as cancellations of pending contracts continued to depress buying activity.

The National Association of Realtors said on Thursday sales fell 3.5 percent month over month to an annual rate of 4.67 million units. June’s sales were upwardly revised at a 4.84 million-unit rate.

Economists polled by Reuters had expected sales to rise 3.8 percent to a 4.90 million-unit pace. Compared to July 2010, sales were 21 percent higher.

Major stock benchmark indexes fell more than 4 percent on a morning of downbeat economic data that also included mid-Atlantic factory activity. Investors snapped up U.S. Treasuries on fears over a global economic slowdown.

NAR Chief economist Lawrence Yun said the fallout rate of contract sales for properties on the market continued to average 16 percent for a second straight month, higher than the 10 percent average seen during the same period in 2010. The uptick was a result of difficulties with mortgage financing and home appraisals, he said.