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This blog discusses The Perth Mint's bullion coins and bars, providing information about our latest designs, mintages, sales volumes and sell outs. On a broader front, we share relevant research and opinions for anyone interested in gold and silver bullion investing.

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Asian Demand For Gold To Keep Rising - WGC

Topics [ gold trading invest in gold ]

RESEARCH AND ANALYSIS

Demand for gold in Asia, already growing before the mid-April price fall, will increase sharply in Q2 2103, the World Gold Council (WGC) predicted this week.

Indian gold imports are expected to reach 350-400 tonnes in the second quarter, 200% higher than a year earlier and almost half of last year's total imports.

‘Extremely elevated levels’ of gold imports from Hong Kong into China, which reached 160-170 tonnes in April alone, could end well up on expectations at 880 tonnes for the year.

In Market Update for Second Quarter 2013, WGC said that research carried out in May indicated that sentiment towards gold in the world’s two largest markets remained extremely positive, with 70% of consumers in India and China anticipating a stable or increasing price in the next 12 months.

The response contrasts with US investment markets, which saw 350 tonnes flow out of gold-backed ETFs between the start of the year and the end of April.

“Even if ETF outflows continue in the US, it is quite likely that the gold previously held in ETFs will find a ready market among Indian, Chinese and Middle Eastern consumers who are taking a long-term view on the prospects for gold,” managing director of investment, Marcus Grubb said.



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Gold Price “Recessions"

Topics [ gold trading silver gold ]

BLOG WATCH

Bullion Vault’s Adrian Ash has a piece on the fact that gold has just recorded three monthly losses in succession. He notes that “three consecutive months of falling gold prices are rare however you count it. Since 1957 in fact, they've struck only 65 times in a total of 661 three-month periods.” Given its rarity, he says a “ ‘two months max’ [trading rule] made for a great signal to buy gold on pullbacks, most recently in Jan. 2010 (your last chance below $1100) and April 2009 (last chance below $900).”

Of course, past performance is never a guarantee of future performance and this “rule” is just a probability bet which requires ongoing investor and central bank buying to work, as Lawrence Williams indicates with this rhetorical question:

“… given the apparent liquidations out of gold ETFs and of long positions on COMEX coupled with supposedly fragile Indian and Chinese demand, how come the price is even managing to remain where it is? Can Central Bank purchases perhaps be running at a higher level than seen so far - certainly the March figures when known Central Bank buying accounted for 58 tonnes of the stuff suggests that this is indeed increasing.”

Download today’s full Blog Watch (pdf 271kb) for more reviews, including:

TRADERS ON EDGE

Is Dan Norcini correct in his King World News interview to interpret the 7500 gold futures contract “fat finger” trade as “yet another takedown attempt”?

SILVER JEWELLERY ON THE UP

Mineweb reports that Indian exports of silver jewellery to the US are up 52% in March compared to March 2011. What’s driving it?

BETTER OFF IN GOLD BULLION RATHER THAN GOLD STOCKS?

Amine Bouchentouf at Hard Assets Investor website feels that gold stocks will continue to underperform gold bullion in 2012.

AUSSIE GOLD VS S&P 500

I’m a bit puzzled by what Natixis chief economist Evariste Lefeuvre (from FT Alphaville) says about AUD/GOLD and the S&P 500.


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Dark Inventory

Topics [ gold market gold prices gold trading ]

BLOG WATCH

FT Alphaville observes that “something strange is going on with commodity inventories” as “official stocks are rising across numerous commodities, but analysts and traders swear fundamentals remain tight” with prices not falling, as would normally be expected in such a situation.

The explanation is that much of the inventory is being used “as collateral for bank loans. With financing for such trades relatively plentiful, traders say that only a fraction of the metal in bonded warehouses is available for sale.”

They feel that the “market may be under appreciating the influence of commodity encumbrance … giving rise to a situation whereby inventory is being withheld from willing buyers, creating something akin to an artificial squeeze” which will reverse at some point, pushing prices down.

This is news for commodities markets because as discussed yesterday, these markets usually have little in the way of inventory relative to new supply – unlike gold. I would thus characterise the fact that larger amounts of inventory are being withheld from the market means the affected commodities are becoming more “gold like” in terms of their supply/demand dynamics.

Blogger Chris Cook made a similar observation last year, concluding that “most commodity markets have become completely perverted by the entry into the market of a new breed of fund investors … passive 'inflation hedger' participants who are aiming to avoid loss, rather than actively seeking transaction profit.”

The effect of this financialisation “is that market participants who believe that market prices are actually set by producers and consumers are unaware that financial supply and demand are sending false signals” and in addition, such inflation hedging investors have to compete with firms who have “asymmetric knowledge about the Dark Inventory thereby created” by the financial products these firms operate.

FT Alphaville conclude that “massive pockets of concentrated wrong-way risk may be appearing as a result. Exactly not what the futures markets were invented for.”

Chris Cooks’ position is that this domination of a futures market by investors who hold massive stocks versus end producer/user volumes will not last, resulting in a price drop.

However, if

a)    the gold market has a 5,000 year history of investor demand dominating industrial uses; and

b)    that this will not change as 170,000t of stock isn’t going anywhere; and

c)    futures markets were not invented for this

then the conclusion is we should shut down all gold futures markets? It would certainly make many in the gold blogosphere happy, given the fat gold finger trade story included in today's Blog Watch.

Download today’s full Blog Watch (pdf 192kb) for more reviews, including:

FAT GOLD FINGER

Blogger The Fundamental View takes exception to the way this recent event was picked up by the gold blogosphere

GOLD SHARES

On the issue of gold mining shares failing to perform relative to gold, Paolo Lostritto, mining equity research analyst with National Bank Financial has an interesting explanation.

WHEN A TRADE IS OBVIOUS, IT IS OBVIOUSLY WRONG

Blogger The Short Side of Long sees gold and silver as “beautifully setup to be a contrarian trade of the year.”

 



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Buyers React With Gusto To Precious Metal Price Dip

Topics [ buy gold online buy silver online gold prices gold trading silver prices ]

WEBSITE INFORMATION

Buyers swooped on the opportunity to buy gold and silver at The Perth Mint on Monday.

In line with international exchanges, Perth Mint gold and silver spot prices dropped sharply for a second consecutive day.

Gold neared AU$1,600 per ounce while silver fell briefly to below AU$30 per ounce.

Staff on the bullion sales desk in The Perth Mint Shop reported a substantially increased volume of buyers.  “It’s been crazy busy all day in here,” one member of the team reported to us as the day drew to a close.

Meanwhile, the bullion sales website handled its biggest ever one-day total of visits and set a new one-day record for sales and client registrations.

Perth Mint buyers certainly appear to believe that the market is in nothing more sinister than a corrective phase.

Meanhile, according to analysis reported by Reuters, the gold ‘bull run’ is not yet broken.

“..the most critical price points needed to maintain the post-2008 rally at around $1,500 an ounce have held firm for now, according to analysts who study candlestick charts and historical trends to predict prices,” it said.

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