A Legend Speaks Out About The Gold & Silver Takedown

On the heels of extraordinary turbulence in the gold and silver markets, today legendary Pierre Lassonde spoke with King World News about the takedown in these key markets.  Lassonde also told KWN what to expect in the gold and silver markets going forward.  Lassonde is arguably the greatest company builder in the history of the mining sector.  He is past President of Newmont Mining, past Chairman of the World Gold Council and current Chairman of Franco Nevada.  

Lassonde is one of the wealthiest, most respected individuals in the gold world, and as always King World News would like to thank him for sharing his wisdom with our global readers during this critical period in these markets.

Eric King:  “We obviously had another smash in gold and silver.  What are your thoughts here Pierre?”

Lassonde:  “Every year in June or early July is always the point of maximum stress for gold and silver.  This year is no exception.  When I look at gold in particular, if you go back 1974 to 1976 we saw a 47% retracement in gold.

If we were to see something like that today, gold would go slightly below $1,000.  Could it happen?  Yes, of course anything can happen, but I doubt it.  A 40% retracement is slightly below $1,200.  We’re almost there on gold already….

“So my feeling is we are seeing the maximum stress right now.  I think $1,200, plus or minus $30 is where you are going to see the bottom in gold.”

Eric King:  “Pierre, what are you doing with your own money right now?  Are you buying?”

Lassonde:  “Yes.  Actually I started buying this week.  I think there are a number of gold equities that are absolute bargains.  The liquidity trap has forced a lot of funds to sell.  But money is still leaving the sector.  That’s one of the reasons you are seeing this amount of stress.

But I am absolutely 100% convinced that come September gold is going to be 20% to 30% higher than it is today and the stocks are going to be 50% higher.  So what am I doing?  Yes, now is the time to put money to work and that’s what I’m doing.”

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/27_A_Legend_Speaks_Out_About_The_Gold_%26_Silver_Takedown.html

Gold Will Continue To Go Lower, Unless Investment Demand Returns

I have never really bought the argument about the dollar and gold (GLD). Yes, many years ago there was a relationship between gold and the dollar, but that was because the world monetary system was different. Today, the amount of money in circulation has nothing to do with gold. Look at Japan — it has been printing overtime for many years now, as well as all of Asia. Why does gold have to be a function of U.S. dollar printing, and not a function of international money printing? Funny enough, gold bulls never really mention money printing in the rest of the world.

Either way, the reason why gold and silver (SLV) will go up or down is demand. Is does not matter where this demand is coming from. Demand is demand, and at the margin increased demand will raise prices. Demand destruction, on the other hand, will take prices down.

Click to enlarge image.

The chart above comes from the World Gold Council, the officially lobbying group for all things gold. As its figures show, demand for gold was down across the board in Q4 2012 year over year, with the exception of jewelry, which posted a 12% gain. However, demand from technology, investment, and even official sector purchases were down.

In fact, if we look at Q1 2013, investment demand was a whopping 50% lower vs. Q4 2012. Something else to keep in mind is this: Investment demand makes up 21% of total demand. At the margin, if you strip out 50% of investment demand, that comes out to a 10% total loss in demand for gold. While this is demand that could be made up somewhere else, the truth of the matter is that so far it hasn’t. As far as when investment demand will come back, for the time being this does not seem to be in the cards.

In a recent poll taken by Credit Suisse, over half the 185 commodity investors that participated in the poll believe that gold will be lower than $1,400 an ounce by the end of 2013. Societe Generale believes that gold holdings through exchange-traded products will probably decrease by another 285 metric tons in 2013. Societe Generale believes that gold prices will average $1,200 an ounce in Q4 2013. The firm had previously forecast a drop to $1,375 by the end of the year.

I don’t know when investment demand for gold and silver will come back. But unless it comes back, prices at the margin will continue to fall. For how long and were prices will bottom is anyone’s guess, but I think the $1,200 mark that Societe Generale mentioned is as good a guess as any. Finally, jewelry purchases from India (or China for that matter) are not enough to offset current investment outflows, in order for demand to increase enough for gold and silver prices to start rising again. That will only happen when investment demand and investment demand alone for gold and silver revives.

Source: http://seekingalpha.com/article/1511282-gold-will-continue-to-go-lower-unless-investment-demand-returns

Shanghai Gold Volumes Surge 55% As Singapore and Indian Brokers Sold Out

Today’s AM fix was USD 1,384.50, EUR 1,074.01 and GBP 919.14 per ounce.
Yesterday’s AM fix was USD 1,379.00, EUR 1,067.42 and GBP 913.43 per ounce.

Gold fell $13.70 or 0.98% yesterday to $1,381.00/oz and silver finished down 1.59%. Download FREE Guide to Gold here.

Gold edged higher today supported by strong physical demand internationally and especially in Asia.

Demand in the physical market continued to hold prices near $1,400/oz as the recent drops in the spot market encourage buyers internationally to accumulate bullion.

The paper gold market remains volatile and is likely to get more volatile but this is not deterring physical buyers and premiums remain strong in most markets.

Premiums in India and Hong Kong have fallen from the very high premiums of recent days but Singapore, Shanghai, Dubai, Turkey and western markets continue to see high premiums.

Overnight the volume for the Shanghai Gold Exchange’s cash contract surged 55% to 15,641 kilograms from a two-week low of 10,094 kilograms on May 27.

The Shanghai Futures Exchange announced yesterday that they will begin after-hours trading for gold and silver futures within one or two months.

In Singapore, gold coins and bars are being sold at high premiums compared to the spot price as there is not enough supply in the market to meet the strong demand.

Reuters quoted one broker who said that most of the bullion dealers in Singapore were sold out of bullion and that “everybody is buying and no one is selling.”

In India, certain states have either seen coin stocks fall to very low levels and others have actually run out of gold coins.

The drop in gold prices in April led to a surge in bargain hunting in India and globally which is continuing with prices below $1,400/oz.

In Hyderabad, a city of nearly 7 million people , gold and jewellery shops in the city have dwindling stocks of gold coins and bars. Some have completely run out of stock of the best-selling gold coins while others are having to ration their remaining stocks.

The gold rush is expected to continue for some time, due to delays in jewellery and coin shops receiving supplies of coins from banks and bullion brokers.

This is creating a delay in the entire supply chain.

The U.S. Mint sales of gold coins were the highest in 3 years after demand surged on the recent price drop.

Yesterday, the U.S. Mint resumed sales of their 1/10th ounce gold coin after the mint ran out of inventory last month and suspended sales amid record demand.

In the U.S., there are difficulties in sourcing British Sovereigns (0.2345 oz), Chinese Pandas (1 oz) and Australian Kangaroos (1 oz) in volume.

The Royal Mint (UK), The Perth Mint in Australia and other mints are seeing record levels of demand.

This morning The World Gold Council confirmed the very strong demand being seen globally and especially in Asia.

Asian gold demand from this April to June will reach a quarterly record as bullion buyers in China, India and the rest of the region take possession of supply freed up by selling from exchange-traded funds (ETFs), the WGC said.

“Asian markets will see record quarterly totals of gold demand in the second quarter of 2013,” WGC Managing Director Marcus Grubb said in a report released this morning.

Gold demand in India, the world’s largest buyer, is heading for a quarterly record after prices fell to a two-year low in April, The World Gold Council said.

“Even if ETF outflows continue in the United States, 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.”

A long term view remains vital to protecting and growing wealth today.

It remains prudent to ignore the poorly informed analysis of the speculators who have been responsible for much of the destruction of wealth in recent years.

Few of them predicted this crisis and most do not understand the importance of diversification and the importance of gold as a safe haven asset. Nor do they know that gold remains nearly half its inflation adjusted high of $2,500/oz seen in 1980 (see chart) and the ramifications of that for the gold market in the coming months and years.

Those who continue to focus on gold’s academically and historically proven safe haven qualities as an important diversification will again be rewarded in the coming months.

Source: http://www.zerohedge.com/contributed/2013-05-29/shanghai-gold-volumes-surge-55-singapore-and-indian-brokers-sold-out