How Chinese Consumers Helped Gold Slump

April 23, 2014 at 09:43


China is becoming much more influential on the global gold market. Its consumers invested heavily in gold jewelry and bars last year to make the country the world's largest gold market. In the past, investors would predict gold prices based on India's performance, and now they have to factor in China. A recent slump in gold price was linked to behavior in China. The country greatly slowed the growth of its money supply, and that slowdown reduced investment in gold. This caused prices to slump, brining about a downturn, much like what happened to copper. Demand for gold in China increased sharply in 2013, but demand is not expected to be a great this year. This is...

Barrick Gold chief hails benefits of Newmont merger

April 23, 2014 at 09:35


Peter Munk, the founder and chairman of Barrick, has hailed the potential benefits of merging the world’s largest gold miner with its US rival Newmount, saying that investors should welcome the cost cuts and lower political risk that a combination could deliver. Barrick of Canada, and Newmont had been in advanced merger talks, according to people familiar with their plans, but the discussions stalled – frustrating attempts to present a deal to investors before both companies’ annual meetings this month. The attempts to broker a merger come as the gold mining sector is under severe pressure to cut costs and restructure, reversing a dash for growth that took place as th...

Physical Demand Will Support Gold Prices

April 22, 2014 at 09:26


A recent report from Thomson Reuters GFMS has forecast an average gold price of $1,225 an ounce for 2014. The report has a bearish view on gold due to waning demand from investors. While this will put pressure on prices, gold prices should find support at around $1,200 an ounce due to physical demand. In fact, a stronger price floor is one of the reasons for recent uptick in M&A activity in the gold mining sector. In its annual gold survey, Thomson Reuters GFMS said that there was consensus that gold prices would continue to decline over the coming month and years. The report noted that appetite for gold as an asset class was expected to be dampened by the tapering...

Playing gold? Keep an eye on silver

April 22, 2014 at 09:23


Gold prices fell to a near-three-week low on Monday amid sharp exchange traded fund outflows, continuing to erode mild gains posted in the first quarter of 2014. For those with an eye on silver the erosion of gold's recent gains should come as no surprise. Comex silver has led gold prices since 2011 and it's not about to give up that leadership role. The lag between silver and gold prices has been reduced but silver continues to lead price developments. Looking at silver gives traders a leading advantage when it comes to anticipating the behavior of gold. I offer no explanation as to why this relationship exists. What is more important is the trading advantage c...

Poorer Americans pick gold over stocks

April 22, 2014 at 09:17


You can keep your gold and stocks because there’s no place like home for my money. That seems to be the gist of a recent survey from Gallup, in which Americans picked real estate as the cream of the the long-term-investment crop. Their other choices were gold, stock and mutual funds; savings accounts and CDs; or bonds. Some 30% of those polled picked real estate, versus 24% each for gold and stocks, while 14% gave savings accounts/CDs the nod and just 6% said bonds were the way to go. The bond drag is not too surprising considering how investors have been selling  funds like the Pimco Total Return Fund. Bonds have also been a consistent nonfavored option in the Gallup ...

China opens Beijing to gold imports

April 21, 2014 at 13:21


China has begun allowing gold imports through its capital city, sources familiar with the matter said, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves. The opening of Beijing as a third import point after Shenzhen and Shanghai could threaten Hong Kong’s pole position in China’s gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying. China does not release any trade data on gold. The only way bullion markets can get a sense of Chinese purchases is from the monthly release of export data by Hong Kong...

China Doesn't Need Much Gold To Create Dollar Alternative

April 18, 2014 at 14:01


Although the idea of Classical money — in practice, a gold-based currency — is not popular today in the U.S., it actually has quite a lot of support elsewhere. Both China and Russia are clearly making moves in that direction, even if perhaps in the form of contingency plans should the present dollar-based system become unusable. However, this trend has been handicapped to some degree by the notion that enormous amounts of gold bullion need to be accumulated in vaults before any new currencies are introduced. There are two basic reasons for this idea. The first is that this was the way it worked during the last incarnation of the world gold monetary system, the Brett...