Wednesday, February 24, 2016
Tuesday, February 16, 2016
Sunday, February 14, 2016
The move in gold, up 17% year to date, is important, according to ConvergEx's Nick Colas...
We’ll be blunt: most financial asset investors really hate gold.Anything – even leaving money in the bank – is better than owning gold since at least society has access to your capital through the banking system. Once you buy physical gold, no one has access to that sliver of your portfolio.Of course, that’s actually a feature for the owner since physical gold is no one else’s liability.So the notable rally in gold is essentially a protest vote against the global financial system, the equivalent of taking your ball and going home.This only happens when investors think central banks have lost their way, and that’s not good news. Think of gold as a super-duty dive watch. It can go places humans can’t actually even dive. The watch will outlive the person wearing it. Kind of cool, but you don’t necessarily want to test it yourself.
Finally, Colas adds...There are three reliable signs of a market bottom, where things get so bad it is safe to step in.
First, when the S&P 500 drops 5% or more in one day.Second, when the CBOE VIX Index tops 40.And third, when everything sells off for a few days and correlations for all equities approaches one.None of these events have yet occurred.
And so we wait...
As investors continue to flock to gold, pushing prices to highs last seen one year ago, one major U.S. bank says it may also be jumping on the bandwagon.
Technical strategist for Bank of America Merrill Lynch, Paul Ciana, told Kitco News that the bank went long gold at the $1,089 level as the metal formed a “rounded bottom pattern” earlier in the year.
Now that the yellow metal has breached the $1,201 level, things are starting to look even more positive, he added.
Thursday, prices rallied to levels last seen 12-months ago, with gold pushing back above $1,260 an ounce. Gold futures are up over 18% on the year, with April Comex gold settling the day up $53.20 at $1,247.80 an ounce.
“Given the fact that price action has been able to break up through resistance of $1,201, we’ve extrapolated the 200-week average to estimate an outside target of $1,315,” he said. “Our measured move projection based on the height of the channel, estimates a second target of $1,375,” he added
Ciana noted that gold may even have the “possibility” to move over $100 from there.
“We’re not making this a target but looking back at the trend over the last 5 years, there’s a large gap in the price distribution of which sometimes these gaps get filled,” he explained. “That may lead gold prices to $1,550.”
Looking at support levels, Ciana said that the under-$1,000 price tag that pundits were calling for earlier in the year ago may not be as probable given the recent upswing in gold prices.
“Sub-$1,000 was definitely a possibility 2-3 months ago, but I do not really see that as likely at this point,” he said.
By Sarah Benali of Kitco News
Tuesday, February 9, 2016
Tuesday, February 2, 2016
Friday, October 30, 2015
Monday, October 12, 2015
Sunday, October 11, 2015
Monday, August 10, 2015
For the last three weeks, gold has experienced something that has never happened before -hedge funds aggregate net position has been short for the first time in history.
However, as Dana Lyons notes, this week saw another 'historic' shift in gold positioning as commercial hedgers shifted to the least hedged since 2001... so the 'fast' money is chasing momentum and the 'smart' money is lifting hedges into them.
It’s no secret that commodities have taken a drubbing during the deflationary spiral over the past year. And precious metals have been right up front in this beating. This includes gold, which has lost over 40% of its value the past 4 years. So needless to say, there has not been much good news on that front. However, as we touched on in a piece two weeks ago, there are signs beginning to pop up that may provide a glimmer of hope for gold bugs. In dollar terms, the price of gold continues to leak, offering very little evidence of any impending stability or bounce. On the other hand, in Euro terms, gold prices reached a key juncturea few weeks ago, as outlined in that previous post. And while no bounce has materialized as of yet, gold has at least held at the level we noted.
Today’s Chart Of The Day offers another hopeful data point for gold bulls. The CFTC tracks the net positioning of various groups of traders in the futures market in a report called the Commitment Of Traders (COT). One such group is called Commercial Hedgers. As their name implies, their main function in the futures market is to hedge. And while the Non-Commercial Speculators tend to be trend-following funds, the Commercial Hedgers’ postions tend to move contrary to price trends. Thus, it is almost always the case that these Hedgers will be correctly positioned – and to an extreme – at major turning points in a market.
How is that relevant for gold? As of this week, Commercial Hedgers are holding the lowest net short position in gold futures since the launch of the gold bull market in 2001.
Does this mean that a reversal higher is imminent in gold? Not necessarily. The thing with COT analysis is that it is difficult to correctly determine when an “extreme” in Hedgers’ positioning will actually result in a price reversal. As is said regarding all sorts of market metrics, an extreme in COT positioning can always get more extreme. Plus, the COT positioning can peak well in advance of the turn. Consider the Hedgers’ maximum net short positioning in gold futures which occurred in December 2009, 21 months – and another 50% gold rally – before prices topped.
Thus, it is tough to time trades with accuracy based on the COT report. However, one thing we can say in the gold bugs’ favor: what had mostly been a headwind for gold for the past decade or so is no longer the case. While it may not make an immediate impact, the “smart money” Commercial Hedgers are now more aligned with them than at any point since the bull market began in 2001.
More from Dana Lyons, JLFMI and My401kPro.
Sunday, August 9, 2015
“Gold’s father is dirt, yet it regards itself as noble” So goes a Yiddish proverb. Trouble is, it has not lived up to the proverb’s meaning: gold, like other commodities, has taken a beating over the past month.
Unlike many commodities, it has few industrial uses. A big chunk of demand is for investment. Gold held in exchange traded funds — a typical investment instrument — has fallen 40 per cent since a 2012 peak.
The recent gold price fall means more trouble ahead for gold miners. The all-inclusive cost to produce gold is about $1,100. If gold prices fall below $1,000, some gold reserves (assets) would be unprofitable to recover and need to be written down, putting pressure on the more indebted miners.
Gold cannot fall forever. Even so, listed gold miners should at some point be cheap. One early buy signal is when it costs less to buy mines on the stock market than to build them. Building a gold mine from scratch can be measured, crudely, by the cost of the investment (including debt) an ounce of gold produced. An average new mine would cost $2,500 an ounce of annual output, estimates RBC. Yet the larger listed gold miners still have an average enterprise value to production of $3,600.
More traditional valuation metrics tell a similar story. Despite the precious metal’s fall, the two largest miners by market value, Barrick Gold and Newmont Mining, still trade at double their forward price earnings multiples of two years ago.
Even if gold prices keep falling, it is far too early to sift the dirt for glitter.
Thursday, July 30, 2015
Sunday, July 26, 2015
The Indian Government today announced cut in import tariff value for gold and silver . The import tariff value of gold was slashed by nearly 6%, in accordance with prices of precious metals in the international market. Meantime, tariff value on imported silver has been left unchanged.
The Central Board of Excise and Customs (CBEC) issued notification in this regard reducing the gold import tariff value to $354 per 10 grams. The import tariffs are being slashed from the existing $376 per 10 grams. Meanwhile the import tariff value of Silver has been kept unchanged at $498 per kilogram.
The government move to lower the import tariff value is in primarily on account of weakening gold prices in the global and domestic markets. The possibilities of US Fed raising rates by September this year have also hit the sentiments badly for gold.
Meanwhile, gold prices edged lower on Singapore session today, on the back of rising dollar strength and higher US interest rate hopes. The prices slipped to five-year low level of $1,084.80 per Oz. Many brokerages have downgraded their earlier forecasts on gold prices. For instance, Macquarie has cut its gold price forecasts by 7% to 15% from this year through 2019, signaling a possible long term down-trend for the yellow metal. The investment firm has cut its gold price estimate for the current year to $1,152 per Oz from the earlier $1,249 per Oz.
The gold in India declined almost Rs 320 per 10 grams to Rs 25,050 per 10 grams on declining demand from retail buyers. Industrial demand for gold also remained weak. Silver too witnessed significant fall on lack of demand. The prices dropped by Rs 380 per kg to touch Rs 33,950 per kg.
Tariff value is the base price on which the customs duty on imported gold or silver is calculated and it further helps prevent under-invoicing.
Tuesday, July 21, 2015
Thursday, June 11, 2015
The production of almost all major metals by Peru reported robust growth in Peru during the month of April this year. While the output of copper, gold and zinc reported significant increase during the month, silver production declined, in accordance with the official government data released yesterday.
According to data released by the Energy and Mines Ministry, copper production rose 18.5% from 103,410 mt in April last year to 122,506 mt in Apr ’15. The decline in copper output from Freeport-McMoRan's Cerro Verde was offset by increased mine output from Antamina, Southern Copper, Toromocho and Antapaccay mines.
The increased output from Newmont and Barrick gold mines contributed to the 15% growth in gold production during April this year. The gold production totaled 379,504 Oz in Apr ’15, in comparison with the output of 330,273 Oz during the same month a year before.
Silver production dropped marginally by 0.4% over the year from 9.57 MOz to 9.53 MOz in April. The output from Antamina mines dropped significantly, whereas Buenaventura and Volcan reported rise in silver production during the month.
Zinc production rose 17.7% from 97,128 mt a year before to 114,323 mt in Apr ’15. Lead output too rose 27% from 97,128 mt to 114,323 mt over the previous year. Lead output witnessed sharp increase in Antamina, Volcan and Milpo. Molybdenum output too jumped 45% to 1,632 mt in April 2015.
Meantime, tin production by Minsur- the country’s only tin producer, rebounded sharply in April this year, rising nearly 15% from 1,438 mt in April 2014 to 1,654 mt in April this year.