Gold sheds nearly $100 for the week

Gold prices ended slightly higher on Friday but swung to a weekly loss of nearly $100, fueled by a potential slowing of the Federal Reserve’s bond purchases later this year.

Gold for August delivery GCQ3 -0.16% gained $5.80, or 0.5%, to $1,292.10 an ounce, but posted a weekly loss of $95.60.

Yields on the 10-year U.S. Treasury note 10_YEAR +1.45% pushed above 2.5% briefly on Friday and U.S. stocks fluctuated in choppy trading.

The slight rise on Friday was a consequence of buying from bargain hunters, said Vedant Mimani, lead portfolio manager of Atyant Capital’s Global Opportunities Fund.

Still, gains were subdued because of continued selling, he said. “It’s been sold pretty hard during the last two days,” said Mimani. “Now everyone is just waiting.”

Gold futures halt their fall Friday as the U.S. dollar edges lower.

The contract had plunged more than 6% during Thursday’s floor trade on the New York Mercantile Exchange, as investors continued to price in the Fed’s possible trimming of its monetary stimulus later this year. The Fed currently buys $85 billion in mortgage and Treasury debt each month as part of its efforts to spur the economy.

After settling Nymex trade at $1,286.20 an ounce, which was the lowest close since September 2010, August gold took further damage on news that exchange operator CME Group Inc. CME -0.39% was hiking margin requirements.

The CME, which owns the Nymex’s metals-trading Comex division, said following Thursday’s close that it would hike initial and maintenance margins for gold by 25%, according to reports.

The increase means speculative traders must have $8,800 to open a 100-troy-ounce position, up from $7,040, and keep $8,000 to hold the contract overnight, up from $6,400, Dow Jones Newswires said.

The new margins would come into effect after Friday’s close, CME said.

The ICE dollar index DXY +0.29% rose to 82.317 in late Friday trade. A stronger U.S. currency tends to weigh on gold and other dollar-denominated commodities, as it makes them more expensive for holders of euros, yen and other units. The relationship between the dollar and gold futures isn’t set in stone and tends to be stronger on days with big moves, said Mimani.

The dollar had rallied since the Federal Reserve’s statement late Wednesday, signaling it could slow its asset purchases this year if the economy improves further.

Gold plunges below $1,300

Traders scramble to sell gold as prices fall to lowest level in nearly three years. Photo: AP

The price action is a recouping of prior-day losses rather than a result of news, said Carlos Sanchez, director of asset management at CPM Group.

He noted that options will expire next week, which should increase volatility as the July contract will become deliverable at the end of June. As a consequence, “you may see some more activity in the silver market as opposed to the gold market toward the end of next week,” said Sanchez.

The July contract for silver SIN3 -0.72% ended up by 14 cents, or 0.7%, to $19.96 an ounce, after dropping $1.80 on Thursday.

Elsewhere in the metals complex, copper for July delivery HGN3 -1.36% settled at $3.10 a pound, up 4 cents or 1.3%, while September palladium PAU3 -0.47% rose $9.65, or 1.5%, to end at $674.75 an ounce.

July platinum PLN3 -0.10% gained $5.70, or 0.4%, to end at $1,369.50 an ounce, after losing more than $60 in Thursday’s Nymex action.

Source: http://www.marketwatch.com/story/gold-halts-its-tumble-as-us-dollar-ticks-lower-2013-06-20

Declines in Gold Prices Are Not Over Yet

The fall in the price of gold has triggered a new run on physical gold that shows no sign of abating. Record amounts of money have exited ‘paper,’ i.e. futures and ETFs, and headed straight to the bank or the mint to be exchanged for coins and bullion bars — that is, if one can get them. The strength of physical retail buying has taken dealers and mints around the world by surprise, leaving them scrambling to keep up with demand. The sudden surge is evidence of pent-up demand, particularly from China and India.

There seems to be a growing disconnect between paper and real gold. It’s very likely that the paper sellers didn’t foresee the rush to physical gold. Could it be the case that the physical market is lagging behind and will eventually catch up and sell off too? Let’s look at some of the evidence.

Physical Gold, an investment company, said there were waiting lists of three weeks for some coins, and four to six weeks for gold bars whereas previously all would have been available within a few days.

The US mint had to suspend sales of certain coins as buying increased. It sold an estimated 210,000 ounces of gold coins in April — almost three and half times more than the 62,000 it sold in March.

The Perth Mint worked overtime over the weekend to manufacture enough stock to meet orders, which are at levels last seen in the 2008 financial crisis (confirmation of the 2008 – present analogy).

There are reports that both Istanbul and Dubai are out of investment bars, according to Bloomberg, with wholesale and bulk buyers paying a premium of between $6 and $9 an ounce for kilo bars.

A US coin shop said that sales of Krugerrand have increased 468% last week as investors rush to get the precious metal at what they see as a bargain rate.

The Financial Times wrote that Asia is witnessing one of the strongest waves of physical gold buying in 30 years. “Buyers Scour Asia for Physical Gold,” proclaimed the headline.

Swiss refiners have run out of kilo gold bars (cost: around $48,000). There is now a one-month wait for delivery.

Physical stocks of gold held at CME Group’s (NASDAQ:CME) Comex warehouses in New York have dropped to a near-five-year low in a further sign that gold‘s price crash unleashed a frenzy of demand, according to a Reuter’s report.

Well…you get the point. The gold bugs are coming out of the woodwork and they want the kind of gold they can bite between their teeth. World over, private investors have taken advantage of the dip to pounce on physical gold. Keep in mind that there is some effort that goes into buying physical gold. It’s not like placing an order online for the purchase of ETF shares. Most physical gold buyers are not in it for the short term — they plan to hold on.

At my firm, we have always advocated physical gold over the paper kind for long-term investments. If your investment time horizon is more than a year, you want to purchase the physical metal, not somebody’s promise to pay you some money down the line based on the price of the metal. For short-term trades, however, ETF shares are OK.

To see what is in store for the price of gold in the following weeks, let’s turn to the chart section. We will start with the yellow metal’s medium-term chart .


A closer look shows us that gold has actually corrected to its previous support level (declining, dashed line) and verified this as resistance. At this time, it could just be a pause within a rally, but generally the main short-term trend here is down, although we have had a correction of about one-half of gold’s recent decline. It seems now that the move to the downside will continue and the RSI suggests this is clearly possible.

Source: http://www.minyanville.com/sectors/precious-metals/articles/Declines-in-Gold-Prices-Are-Not/5/7/2013/id/49679

Gold “Coins Are Probably Of More Value Than Anything Else” – CME President

In a remarkably candid interview, the President and Executive Chairman of CME Group Inc, Terrence Duffy, told Bloomberg TV that today gold buyers “don’t want certificates … They want the real product”.

When asked by Cristina Alecci at the Milken Institute 2013 Global Conference in Los Angeles on Bloomberg Television’s “Street Smart.”about gold, Duffy says

“What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real gold. That’s going to show you, people don’t want certificates, they don’t want anything else. They want the real product.”

“I think that is the value of gold.”

“Whether you are going to own mining stocks are anything else. I think the coins are probably of more value than anything else.”

The CME Group Inc or Chicago Mercantile Exchange is the world’s largest futures exchange company. It owns and operates large derivatives and futures exchanges in Chicago and New York City, as well as online trading platforms. It also owns the Dow Jones stock and financial indexes, and CME Clearing Services, which provides settlement and clearing of exchange trades.

The CME‘s President’s comments were noticed by Mike Krieger of Liberty BlitzKrieg and featured on Zero Hedge.

Slowly but surely, gold coins and bars value as safe haven assets, unlike gold futures and other paper and digital forms of gold, is being realised.

All paper forms of gold, particularly leveraged ones, should be avoided due to counter party and systemic risk.

The exception to the rule regarding certificates are Perth Mint Certificates. They are in effect warehouse receipts which are fully backed by physical gold, silver and platinum – ounce for ounce – from the AAA rated government of Western Australia.

Mints from the U.S., Great Britain and Australia have all seen a surge in demand after gold futures fell 13% in mid April.

The U.S. Mint’s gold coin sales have reached their highest level since December 2009.

Gold coin sales at the U.S. Mint in March were 62,000 ounces, while in April sales reached 209,500 ounces and back in December 2009 they recorded 231,500 ounces of coins sold.

Silver-coin sales in April were 4.2 million ounces up from 3.36 million in March.

The price drop has shifted investor sentiment out of gold backed ETF’s and into physical gold.

The yellow metal has fallen 12% this year, even after an 11% gain from $1,321.50/oz on April 16.

Demand was so strong after the price retracement that the U.S. Mint ceased sales of its .10/oz gold coins on April 23.

In Australia, consumers were cueing in lines ½ of a kilometre to purchase gold coins. In jewellery stores in China and India they had their stock depleted in a day, according to The World Gold Council.

The heightened demand brings premiums that investors are paying to have the precious metal in their hands.

In India they are paying 5 times the amount before the price drop in April. In Singapore and Hong Kong consumers are paying nearly $3/oz, said to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.

In the U.S., the Arizona Senate passed legislation to make gold and silver accepted as currency, and it now goes to the governor for approval. This is a further step by citizens to protect themselves against the lack of control and collusion in the current international monetary system.

Source: http://www.zerohedge.com/contributed/2013-05-01/gold-coins-are-probably-more-value-anything-else-cme-president