Gold slips as fund shift seen intact, TOCOM jumps on yen

Gold edged lower on Monday
after rising by the most since November in the previous session
on poor U.S. jobs data, with funds expected to continue cutting
bullion holdings for better investment yields elsewhere.
But gold futures in Tokyo jumped almost 5 percent to near
all time-highs, marking their sharpest daily rise since
September 2011, after the yen dropped to near four-year lows on
reports the Bank of Japan would begin buying longer-dated bonds
immediately to beat deflation.
Spot gold had dropped 0.2 percent to $1,578.94 an
ounce by 0642 GMT, also hurt by a firmer dollar versus a basket
of currencies.
Gold climbed nearly 2 percent on Friday after data showed
U.S. employers hired at the slowest pace in nine months in
March, backing expectations the Federal Reserve would sustain
its bullion-boosting monetary stimulus programme.        
But Monday's price drop shows the fund shift out of gold
remains intact with the U.S. economy generally expected to
perform better in the longer term, said Joyce Liu, investment
analyst at Phillip Futures.
"People are really pulling funds out of gold for better
investments such as equities and real estate in emerging
economies," said Liu.
"The kind of rally that we saw from 2009 to 2011 is no
longer going to be there anymore. We are more or less used to
having so much money flowing around in the economy."
Liu said she sees gold testing a support level of $1,530,
possibly over the next two weeks. 
Gold hit a 10-month low of around $1,539 last week and is
down nearly 6 percent this year. In contrast, the S&P 500 stock
index has gained almost 9 percent.    
    Others are more bearish on gold's prospects.
    "The lack of investment interest is currently a key drag on
the market," Credit Suisse analysts said in a note.
    "With technical momentum turning negative, there is a risk
for a shift lower towards $1,520 and ultimately $1,500, which is
a critical technical area that needs to hold for the sideways
trend to remain intact."
    U.S. gold futures were up 0.2 percent at $1,579.10
an ounce.
    Bullion holdings at the world's major gold exchange traded
funds continued to fall, hitting their lowest
since August 2012. 
    In Tokyo, gold futures surged as much as 4.8 percent to
5,025 yen ($51.71) per gram, near the record high of 5,081 yen
touched in February, as the yen faltered. 
    The most-active February contract on the Tokyo Commodity
Exchange closed up 4.5 percent at 5,015 yen, the biggest
single-day percentage increase since Sept. 27, 2011.
    The Japanese currency slid to 98.85 versus the dollar, its
weakest since June 2009, on reports that the central bank would
buy 1.2 trillion yen ($12.35 billion) of government bonds with a
maturity of over five years this week, showing a sense of
urgency never before seen in the BOJ. 
    "If the yen goes up to 100 then we have quite a good chance
to try higher prices for TOCOM gold," said Yuichi Ikemizu,
branch manager for Standard Bank in Tokyo.     
    Last week, the BOJ promised to inject about $1.4 trillion
into the economy in less than two years, a gamble that sent bond
yields plummeting as prices rose on the prospect of massive
purchases of debt by the central bank. 

  Precious metals prices 0642 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1578.94   -2.56   -0.16     -5.71
  Spot Silver        27.30    0.00   +0.00     -9.84
  Spot Platinum    1539.24    8.24   +0.54      0.28
  Spot Palladium    729.72    3.31   +0.46      5.45
  COMEX GOLD JUN3  1579.10    3.20   +0.20     -5.77        19847
  COMEX SILVER MAY3  27.25    0.03   +0.09     -9.87         3473
  Euro/Dollar       1.2984
  Dollar/Yen         98.54

  COMEX gold and silver contracts show the most active months
 ($1 = 97.1700 Japanese yen)


PRECIOUS-Gold stretches gains as weak U.S. data hits dollar

Gold extended gains on
Tuesday, with the dollar dropping after disappointing U.S. data
stoked concerns about a patchy recovery in the world##Q##s largest
    But investors were loth to build positions too much ahead of
payrolls data on Friday, which will shed more light on the
strength of the U.S. pickup. 
    Gold hit an intraday high of $1,603.60 an ounce and
was steady at $1,599.20 by 0655 GMT. It rallied to a 1-month
peak in March on worries about fiscal stability in Europe, as
politicians scrambled to clinch a bailout for Cyprus.
    "I think sentiment is neutral. (Gold) can##Q##t break through
$1,620-$1,625, but on the downside, we can say $1,590-$1,585
seems to be the floor," said Ronald Leung, director of Lee
Cheong Gold Dealers in Hong Kong.
     "I think the U.S. economy will still continue to recover.
The economy in the U.S. is still improving - of course,
sometimes the pace is fast, sometimes it##Q##s slow."  
    U.S. factory activity grew at the slowest rate in three
months in March, indicating the economy lost some momentum at
the end of the first quarter. 
    But other recent data pointing to a strengthening economy
has helped push stocks to record highs on both the Dow and S&P
500. In theory, strong stock markets should prompt investors and
speculators to ditch gold and shift to equities. 

    U.S. gold for June was at $1,599.80 an ounce, down  
 $1.10 after hitting a high of $1,604.30.   
    "Offering some support going forward, is the renewed turmoil
in Europe in the wake of the Cyprus debacle and the Italian
political stalemate, coupled with the fact that budget
uncertainties in the U.S. and the debt ceiling debate remain
unresolved," INTL FCStone said in a monthly report.  
    "We see these crosscurrents in place for a little while
longer and expect a trading range market in gold of roughly
$1,560-$1,635 over the next month."
    The yen rose to a one-month high against the dollar as the
U.S. data prompted investors to sell the greenback, while
Japan##Q##s Nikkei stock average fell 1.1 percent to a nearly
four-week low on Tuesday.   
    The firmer Japanese yen dragged down gold contracts on the
Tokyo Commodity Exchange (TOCOM), with no signs of
buying related to tensions in the Korean peninsula. 
    Gold bars remained on par with spot London prices in Tokyo.
Premiums for gold bars were little changed in Singapore and Hong
Kong at $1.20 to $1.50 an ounce to spot London prices.

    "We saw buying interest from the general public on TOCOM
this morning, but then it disappeared. They don##Q##t want to buy or
sell because of the matters concerning North Korea," said a
dealer in Tokyo.
    "But of course if North Korea decides to use nuclear
weapons, then it will affect the market big time." 
    The United States has positioned a warship off the Korean
coast as a shield against ballistic missile attack as South
Korea##Q##s new president vowed swift retaliation against a North
Korean strike amid soaring tensions on the peninsula.

  Precious metals prices 0655 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1599.20    0.80   +0.05     -4.50
  Spot Silver        27.98   -0.03   -0.11     -7.60
  Spot Platinum    1587.00   -3.59   -0.23      3.39
  Spot Palladium    771.00   -8.00   -1.03     11.42
  COMEX GOLD JUN3  1599.80   -1.10   -0.07     -4.54        12006
  COMEX SILVER MAY3  27.95    0.01   +0.02     -7.54         4003
  Euro/Dollar       1.2856
  Dollar/Yen         92.88

  COMEX gold and silver contracts show the most active months

Marc Faber “You Don’t Own Gold And You Are In Great Danger”

Today’s AM fix was USD 1,674.50, EUR 1,234.88, and GBP 1,058.47 per ounce.
Yesterday’s AM fix was USD 1,666.25, EUR 1,230.70, and GBP 1,057.20 per ounce.

Silver is trading at $32.08/oz, €23.76/oz and £20.40/oz. Platinum is trading at $1,677.50/oz, palladium at $736.00/oz and rhodium at $1,200/oz.

Cross Currency Table – (Bloomberg)

Gold rose $13.80 or 0.83% in New York yesterday and closed at $1,676.50/oz. Silver slipped to a low of $31.24 in the morning, but it then ran up to a high of $32.24 and finished with a gain of 2.01%.

Gold hovered nearly unchanged after surprise GDP figures showed that the U.S. economy contracted and the U.S. Federal Reserve maintained asset purchases. Platinum is on track for its most stellar month’s performance in a year.

The U.S. GDP was -0.1% for Q4 and it was expected at 1%. This was its largest drop since 2Q 2009 as U.S. military defence spending plummeted. The Fed left their $85 billion bond-buying stimulus plan intact, citing the monetary stimulus was critical to decrease unemployment, however mentioned this lull in the U.S. economic recovery was temporary.

Investors will be watching the nonfarm payrolls data out tomorrow.

Gold reached multi year highs in Japanese yen again overnight.

TOCOM‘s December contract, reached a record 4,944 yen a gram or 153,000 yen per ounce. Gold as climbed more than 6% this year on a weakening yen after Prime Minister Shinzo Abe called on Japan’s central bank to ease policy even more aggressively.

XAU/JPY 5 Year – (Bloomberg)

Reuters reported a dealer in Tokyo saying “Of course a weaker yen attracts buyers, but I think we shall wait for the price to hit 5,000 yen before we see some selling.”

Gold Silver Ratio, Quarterly – (Bloomberg)

India’s government announced it does not have plans to for additional taxes or curbs on imports of gold as it waits to see the impact of recent tax increases, said a finance ministry official yesterday.

Respected CNBC financial journalist Maria Baritromo interviewed Marc Faber, a contrarian Swiss investor and publisher of the Gloom Boom and Doom Report.

“You said a minute ago that markets go up and down, doesn’t gold go up and down too?” said Baritromo.

“Yes it does go up and down but I am fearful of a systemic crisis, wars and so on and it is because I am fearful that I own gold,” said Faber.

Maria Baritromo and Marc Faber – (CNBC)

Faber then asked Baritromo if she owned any gold. Her response was that I own earrings and jewellery.

Faber relied, “Sorry to say you are in great danger because you don’t own any gold…but you have a golden personality!”

This tiny snippet of an interview highlights what research at GoldCore has been saying for years. Although many people think gold is a huge bubble like the housing market that burst, it is simply not the case.

How many people do you know that diversify their portfolios with precious metals like silver and gold bullion? Systemic risk is defined as “financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries”. This is akin to the effect of the proverbial pebble when dropped in the pond, it ripples outward.

The global marketplace is interconnected and potential danger across the pond such as the Lehman Brothers catastrophe affects investors across the world. Bullion investment is a proven hedge to diversify against systemic risk.

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This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O’Byrne
Exective Director



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WINNERS MoneyMate and Investor Magazine Financial Analysts 2006