Gold update 3 December

It was a very volatile week for gold last week, with the price of reacting to the resurgence of the US Dollar and a weakening global oil price.

Oil is set for its biggest weekly decline in 10 months on speculation that the Organization of Petroleum Exporting Countries (OPEC) may agree at a meeting in Abu Dhabi next week to raise global production. The price of oil has come back from a record high of $100/barrel and is currently below $90/barrel.

End of month profit taking in gold is also making itself felt with an immediate dampening effect on the price. There is also speculation that a lot of hedge funds are getting in early for year end profit taking. Many funds have to show a physical return on their initial investment in order to satisfy their customers and so some may be taking profit early in order to beat the rush.

Overall the outlook is still bullish, with many of the price dips resulting in renewed buying as many investors still see gold as a safe haven investment. Lower prices for the jewellery sector (where 70% of gold is used) mean that customers are enjoying lower prices in the busiest season of the year (the Indian wedding season and Christmas) and therefore will stimulate demand into the new year.

Many analysts still feel comfortable in the long term outlook for bullion due to strengthened buying during the dips, uncertainty in the US and global economy (subprime being on everybody’s lips at the moment) and continued high demand for oil and petroleum (despite the temporary respite in prices).

Gold expos to be held in Saudi Arabia

Gold update 26 November

Last week was a quiet week with the gold price ranging from $780 to $800, until Friday when the price jumped over 4% (the highest one-day increase since July 2006) to reach $829 before dropping back to around $826. The basic elements to the increase are the oil price ($98/barrel) and the weaker US Dollar.

From Bloomberg -
17 of 25 traders, investors and analysts surveyed by Bloomberg from Mumbai to New York on Nov. 22 and Nov. 23 advised buying gold, on speculation that a weakening dollar will spur demand for the metal. Six said to sell, and two were neutral. A good indicator that bullion market is at the beginning of a bull run.

Upcoming strike?
Four more deaths in South African mines in the last 5 days have led to further calls for a national strike starting December 4th. This will increase the upward pressure on the gold price as demand will be restricted in the lead up to the Christmas season, a time of year when demand for gold in jewellery increases in western countries.

Gold demand up by 13% in the Middle East
Demand for gold in the Middle East as an investment option is up 13% over the past year - in Dollar terms this is represents a 24% increase. The increase appears to be again based on investors seeing gold as a safe haven option.

Some one stole the fish
The main suspect of a 100kg old bar theft from a Japanese tourist centre has now been convicted of stealing a gold fish from a gold mine museum.

Gold Update 19 November

Another busy week, with the gold price taking a downward turn at the end of the week due to profit taking and a stonger US dollar with weaker oil prices.

At an impressive meeting in London, seven tier 1 gold miners gave their views on their companies’ futures and that for gold itself.

Opening the conference, Anthony S. Fell, Chairman, RBC Capital Markets commented:

"The timing of this conference is excellent; we have a perfect storm which favours investment in gold bullion and gold shares as far as the eye can see. The past few years have been a major long-term positive turning point in the fundamentals for gold, and the current systemic risk in the global financial system is now a very serious and real concern which will also bring renewed focus on gold as a store of value.

"This trend will continue and accelerate as events in this credit supercycle unfold, with this prolonged bull market lasting another decade or more. In this climate, I believe gold bullion is re-emerging as an accepted alterative investment and currency."
The volume of Gold sold by traders towards the end of the week dropped off with the drop in price as many see the bargain hunting decreasing. But with the US dollar still showing no real signs of strenghtening in the medium term, this may change quickly.


Gold facial treatment 'rejuvenates skin'- heres one for those of you who like to look young....

Gold update 10 November

Hi everyone, again apologies for the intermittent updates, there is definietly a resugrence in the bullion market both here and overseas!!

An Article from the Guardian that seems to cover most of the important points at the moment,


Gold could fly further, but brace for rocky ride
Reuters Friday November 9 2007
By Frank Tang
NEW YORK, Nov 9 (Reuters) - Last November, the gold market was mostly going nowhere. This month it has been on a one-way street to 28-year highs.
The dramatic rise has been fueled by a perfect storm for bullion -- inflation fears on record crude oil prices, a tumbling dollar and safe-haven buying due to feeble stocks and credit market jitters.
Commodity experts agree that bullion will no doubt eclipse the all-time record of $850 and even test the unchartered waters of $900 or $1,000, as its stellar performance has now attracted strong market interest as an alternative investment.
"The big reason gold is in a bull market is that it has the potential to become a recognized asset class by the institutional market," said Robert Lutts, president and chief investment officer of Cabot Money Management in Salem, Massachusetts, which manages $500 million of client assets.
However, market watchers also warn that an eventual price correction could be brutal, especially if the support of a dollar slump and crude rally disappears.
David Rinehimer, director of Citi Futures Perspective in New York, said that bullion was boosted by flight-to-quality demand as global stocks were pummeled after huge write-downs in mortgage-related assets by financial institutions.
Rinehimer said that buying gold could also be a strategy to invest in the commodity markets, as bullion usually tracked crude oil. He added that the price of gold had been the most sensitive to the rising energy markets.
"Don't expect a top in the gold market until you see some indications of a top in the crude oil market. The gold market will continue to go up to new highs as long as it keeps pace with the crude oil market," Rinehimer said.
On Friday, spot gold traded around $832 an ounce, below its all-time high of $850, while most-active December gold futures were at $834, compared with the continuous spot-month record of $875.
DON'T BLAME SUPPLY
Scott Meyers, senior analyst at Pioneer Futures in New York, said that gold would for sure test the record highs set in 1980. "With crude oil heading toward $100, you got the perfect situation for the highest prices in gold ever," he said.
In contrast to oil, a lack of supply is not the reason for lofty gold prices.
Gold contracts traded on the COMEX division of New York Mercantile Exchange are currently in contango, where the price of gold that is about to be delivered is lower than for later deliveries, while the crude futures market is backwardated, which is the exact opposite to contango and a signal of supply tightness.
This is because gold is not "consumed" the way other commodities are, and there is a large above-ground inventory of gold.
Also, gold is seen as a form of currency, and the metal is boosted as an alternative to holding the dollar, which hit record lows against major currencies this week. Speculation about some central banks shifting reserves away from the flagging U.S. currency also benefits bullion.
"The market has no faith in the U.S. dollar. What we are seeing is money continuing to come out of the dollar and going into gold," said Peter Hillyard, head of metals sales at ANZ Investment Bank in London. He said gold would hit $850 on a spot basis by January.
ROCKY RIDE AHEAD
Yet, analysts also reckoned that a sharp correction could be in the making because of bullion's impressive gains in a relatively short period of time. Both spot gold and futures soared as much as $40 just this week and were up about $200 from their August lows.
"Even a $50 or $60 correction would not be that unusual, considering the extent of the move higher and the fact that you have a record noncommercial net long position in the market," Rinehimer said.
Cabot's Lutts contended, however, that the current bullion market was largely comprised of long-term investors and very few speculators or institution investors buying gold for quick profits.
The extra market liquidity provided by the popular gold exchange-traded funds should also reduce price volatility, he added.
"I think a new high to $1,000 is where we go before we stop," Lutts said. (Additional reporting by Atul Prakash in London and Chris Kelly in New York; editing by Walter Bagley)


Thirsty? Gold-bottled vodka to be shipped to Russia

Gold Update 29 October

My apologies for the lack of an update last week, it has been an exceptionally busy time for us - with the New Zealand Mint's collectable coins flying out the door as well - especially the Sputnik 50th Anniversary coin. Check out the story here.

The past couple of weeks haven't seen much great movement in the gold price, until Friday night. Gold is now trading just over USD$790 per ounce.

This is a big movement, based primarily on a weaker US dollar and stronger oil prices. The situations in Turkey and Iran are also big influences on the price as well.

Some articles on the big move from Friday:

Bloomberg
Reuters
Reuters again
The Independent

and the Resource investor

As you can see, there are a lot more people bullish on gold now than earlier this year.

Given the predicted rates drop in the US shortly we could see our dollar (NZD$) start to climb back up again (which helps to keep the price of gold down here) so the outlook is for more movement both in the gold price and the exchange rate.

Gold interest story of the week:

Gold nanoparticles 'in new rapid meningococcal diagnostic test'

Gold update 15 October

Another busy week in the world of Gold, with the price finally breaking through the US$750 mark.

The big influences this past week - once again, is the $US Dollar ( inflation and sub-prime concerns and crude oil prices.

Coupled with next years expectation of $800/oz from Morgan Stanley the medium term strength in Gold as an investment is definitely looking good.

Given the well publicised issues with South African mining safety currently - The South African mining union (NUM)has announced their intention of holding a national strike to bring attention to the 200 mining deaths last year. South Africa is currently the largest Gold mining country in the world accounting for 11% or 275 tonnes of total 2467 tonnes mined in 2006 (source)

Another interesting announcement regarding central bank gold sales -
Germany has no intention of selling their gold

Gold can make you invisible! - well OK, only in 2 dimensions, and maybe not completely invisible, but hey, its a start :)

Gold price info 5 October

A busy week at the Mint, with lots more interest being shown in bullion.

We've ended the week with the big news of the Miners being trapped at the Elandsrand mine in South Africa. The good news is that everyone was evacuated safely.
The amazing news is there were more than 3000 miners trapped, larger than an average New Zealand town, hundreds of metres below ground.
This will have an impact upon the gold price (albeit possibly very minor) as it will affect supply for the next couple of months at least.


Oil has also been moving around , but it appears there may be a further reduction in the oil price next week with the announcement that some Los Angeles based refineries will come back on line after a power outage. From Reuters:
HOUSTON, Oct 4 (Reuters) - ConocoPhillips and Valero Energy Corp said on Thursday their Los Angeles-area refineries were expected to resume normal operations during the weekend after being shut Wednesday morning by a power outage.
Both Valero's 135,000 barrel per day (bpd) refinery and Conoco's 139,000 bpd refinery on Thursday were carefully working through processes to restart from cold shutdowns, company officials said.
Valero's refinery and Conoco's refinery are in Los Angeles industrial suburbs, portions of which were hit by the power outage, according to the Los Angeles Department of Water and Power.

Once again finance companies are hitting the news locally with another company going into recievership and the announcement that 5 Star may only pay as little as 25% back to its investors.

The upcoming wedding season in India was forecast to reach 1000 tonnes but this has been revised to break the record of 800 tonnes this year.

Central bank sales have been confirmed at 475 tonnes this year which is closer to the first years slaes under the Washington agreement.

As you are no doubt aware, one of the driving factors behind the bulish tone for Gold and Silver at the moment is the US dollar. How this impacts other economies is quite fascinating.
Some examples :Central Banks Inflation Quandary As Gold Prices in More US Interest Rate Cuts
and a more Euro centric take on the issue.

I have to admit to being a bit of an Apple Mac fan boy. But even I think this is a little too much: Introducing the Gold Macbook Pro

Gold update 01/10/2007

Gold increased in price again over the weekend, currently sitting at USD$745 per ounce. This is up just over 1.5% and is a 28 year high. The prime factor behind this upward movement is currently the weakening US Dollar, which after staging a short recovery against major currencies like the Euro, continued to drop to record lows at the end of the weak.

The other factors - oil prices ,the financial risk flight, the middle east, all continue to back up the current scenario of strong movements upwards in the price.

Overseas analysts are currently estimating between $750 and $850 per ounce by the end of 2008, but depending upon who you read or listen to that can move any where up to $1200 per ounce.

Locally the big impact is once again our climbing dollar, with the carry trades appearing to be resuming, and stronger than anticipated economic reports (GDP up 2.2% for the year) which could lead to higher interest rates towards the latter part of the year. This means that the price of gold in NZ Dollars, is once again getting cheaper (albeit slightly at the moment) even though the gold price internationally is sky rocketing.

Press Release - Swiss National Bank Gold Sales
Between 15 June and 26 September 2007, the Swiss National Bank sold a total of 113
tonnes of gold. The gold sales fall within the bounds set by the second gold agreement of 8 March 2004, in which the central banks of the Eurosystem, plus the Sveriges Riksbank and the Swiss National Bank, agreed to limit their gold sales over a period of five years,beginning on 27 September 2004. The third year of this agreement ended on 26 September.
On 14 June 2007, the SNB announced that it would be adjusting the composition of its
currency reserves and would, to this end, sell a total of 250 tonnes of gold by the end of September 2009.

This gives a great indication of the market is accommodating large volumes of gold sales, and what can be expected from the central banks going forward.

G24-carat iPod hits golden notes

Gold update - 24 September

Gold is still going strong - with the price topping out at USD$739 on Friday.
It came back a touch on profit-taking towards the end of trading - but is still over the $730 mark.

The general expectation is for a period of profit-taking* and consolidation in the short term but overall the expectation is for higher prices in the future.

"On the charts gold has moved back into overbought territory and may benefit from a period of consolidation.

"However, the absence of any significant resistance levels means that gold is in uncharted territory and making its own history," James Moore at TheBulliondesk.com said.

The NZD is on the up again sitting around the 0.74 mark for the last few days. It is in a similar position to gold, where it’s a little overbought at the moment and we are currently waiting to see which way it is likely to move, but given the strengthening carry trades, it could be either direction yet. If it drops expect to see quite strong price increases in gold in NZD, as the current exchange rate position is helping to take the edge of the higher gold prices.

Current gold price drivers:
• US economy: ask anyone and they’ll have some information or an anecdote about the US economy, and where it’s heading. It’s not looking so hot at the moment, but it’s definitely not the only factor in the gold price at the moment.
• Flight from risk: There is a large movement away from high risk high return investments - towards more safe-haven investing, and protection against uncertain geo-political risk
• End of the Central bank sales for this year: Total gold sold this year - between 441 and 460 tonnes. With the ECB sales finished the price suppression pressures will ease.
• Performance: from http://www.marketoracle.co.uk/Article2209.html
Gold is one of the top performing assets of recent years and has risen 16% so far in 2007 and is on course for its seventh straight annual gain.
So far this quarter gold has rallied 13.6% in USD, from $648 to $736 USD.
So far this quarter gold has rallied 13.2% in GBP, from £323 GBP to £365.50 GBP.
So far this quarter gold has rallied 9.4% in EUR, from €479 EUR to €524 EUR.
• Oil – Oil is currently sitting at inflation adjusted highs, with supply unable to keep pace with demand. Gold is used to hedge against high oil prices.

All in all things are looking very good for a bright and shiny future (sorry about the pun) for Gold as a good safe-haven investment.


NEWS: 2007 American Eagle gold coin sales suspended

* Profit-taking = Where investors sell to take a quick profit (or liquidity) on the high, which drops the price, which then leads to more people investing with the lower price (hence the saw tooth look to the gold price on a daily basis).

Gold Price info - 14 September

Gold has spent the week consolidating above the US$700 mark and the future is looking quite strong for further growth.

It spiked to USD$715 earlier in the week and has moved down to $708 currently on a slightly stonger US Dollar, profit taking and consolidation.

Current short term effects on the price:

Oil - record highs on the oil price are helping to strengthen the current position. As you can see shortages due to weather ad the middle east, coupled with depleted gasoline stocks in the US and the end of the "driving season (also known as summer) coupled with the onset of winter and a huge demand for heating oil means that oil is unlikely to drop in price by much. Gold is used as a hedge against rising oil prices.

Foreign exchange: The US dollar hit 15 year lows against the major currencies earlier this week, and a 30 year low against the Canadian dollar on Thursday. The expectation of this improving in the short term is very slim. Reasons behind the US dollar being so weak are things like very low payroll data, a possible increase in the CPI, high Oil prices, the credit crunch and a lot of people believe running a fiat economy for 30 years will eventually catch up with you.

Risk Aversion: The credit crisis is now starting to bite world wide, with the 5th largest mortgage lender in Britain applying for financial aid from the Bank of England , and possibly another Finance company in New Zealand showing signs of trouble, more and more people are getting out of the high risk sectors of the investment markets and moving towards safe haven investments.

Gold supply: With the Indian wedding season just around the corner (November to December) and Newcrest buying out its entire forward position to trade only in Spot Gold (Next weeks announcement of a possible interest rate drop
will also help bolster the upward movement of the gold price.

NZD: has moved slightly upwards this week, this has taken some of the edge off the US$ Gold price. After the announcement of no rate change on Thursday by the reserve bank, the appeal of the Kiwi dollar once again meant an upward move against the US dollar.

Gold Price info - 10 September

Gold has broken through the USD$700 mark again. with more issues around the US dollar ( 15 year low against major currencies, an increased pressue on the US Federal reserve to drop interest rates , further weakening the US dollar) and a bullish feel coming back into the market further enhancing investment levels. Once again we appear to be seeing the downline fallout from Subprime lending and the forecast problems yet to hit.

With the upcoming Indian wedding season , we would expect to see the demand for physical Gold to increase dramatically ( as it does each year ) but especially as this year appears to have been a prosperous year for one of the largest consumers of gold.

Oil is again above US$76 which is also helping to bolster gold prices, with Gold historically increasing in price as the Oil price rises.

This should be a very busy week, and the expectation is for some solid gains in the Gold price going forward,

Ok, not too sure about you but this is beyond me - I look better with wrinkles :)

Gold price info - Update 03 September

Sorry for the delay, another very busy week at the Mint.

Another Finance company in trouble in New Zealand, lots of information available regarding the reasons why we are experiencing these issues both locally and internationally, so I won't spend too much time going over it again.
Suffice to say that Gold is again going through a resurgence as an alternative investment option for strengthening a portfolio, because of the potential growth in the gold price, and also as a hedge against the exchange rate.

We are currently at a 3 week high in the gold price, with strong sentiment during the US holiday ( Labour day) and support in the Asian and European markets. A rise in the oil price on Friday night due to another Cyclone in the Carribean causing concern about the oil platforms in that area has also helped raise the price of gold on the international market.

An earth tremor at the Gold Fields mine ( the largest Gold mine in South Africa) with one person possibly still missing, and a strike at the Lihir Mine in Papua New Guinea have also added to the current movement. Couple this reduction in supply with the announcement that the demand for Gold in India may increase by up to 50% this year and the strength behind the gold price looks like it will continue upward.

Historic find in Mongolia - with only the second Gold artifact uncovered in the homeland of Genghis Khan

Gold Price info - week ending August 24

Another bumpy week in the credit world.

In New Zealand we appear to have lost another finance firm this week (the sixth in 15 months). This is emulating the some of the issues faced in the USA currently, with the Federal Reserve talking about dropping interest rates in an effort to try and support the US economy. With the sales of gold in the previous weeks to cover cash flow shortages, we’ve seen consistent price bounce backs giving an indication of the demand for gold as a support. We’ve seen the demand for gold rise in the Middle East China and India (the demand in the Middle East has jumped by 30% in Q2 2007) which is why the price of gold is still quite static, despite the ECB sell offs, and the short position covering in the US and European markets.

Another indicator is the mining industry, as mentioned previously. In all, 161 tonnes of gold has been removed from the hedge books in the second quarter of this year, with the large companies (e.g. Newmont) preferring to trade more on the spot price rather than preset prices up to 6 months in the future.

Oil prices are still lower than the last few months which also helps to keep the gold price subdued.

The carry trades are back in the mix – it appears that with the resumption of normal trading the carry trades are back in the market, with the NZ dollar again cracking 71c.

The effect this has is to reduce the price of gold in the local market, which if you are looking to buy, is always a good thing. Bank of America buying $2 Billion of Countrywide stock has helped to bring a spark of life back in to the US market, so it looks like things may be “back to normal” in the short term. Watch this space...

Get your magnifying glasses out... a nano conveyer belt.

And don’t forget to smile while you’re out.

Gold info - update 21/8

What a week. It’s taken several days to recover, and we’re gearing up for more ructions shortly.

Gold movement last week was very much in response to the US Markets. We had relative stability until Thursday, when the Gold price dropped $20 to below $650, again tied into liquidity issues in the markets. Friday saw a return to $662 much like the previous week. The basis of this movement was the US Fed dropping the discounted interest rate (Govt to bank) by 1/2% which also affected the NZD which recovered, keeping the gold price lower in the local market. A volatile week, but support for bullion is again firming up given the uncertainty in the global markets. The US gold price has been stable since, with the US markets seeming to be in a lot better shape after the discount rate drop.

NZDUSD cross, this has been quite volatile, with last week seeing a huge drop to 0.665 at one stage. After the discount rate was dropped, and the markets calming, we’ve had a steady increase back in the exchange rate with this morning seeing us back into the 0.69 -0.70 range.

Going forward is expected to still be quite choppy, the general feeling is that the credit crisis in the US is still quite bad, with a lot worse to come, but once again, it’s a matter of when, and can it be corrected.

In New Zealand we’ve had the closure of another finance company (Nathan’s) which again reinforces the point, diversification is the safest route.

Another Golden palace – this time in Hong Kong (Chinese website)

Gold Price info - week ending 17 August

No update this afternoon I am afraid. As you know, the US/NZ dollar and the gold price have been volatile this week, and we still have a few hours trading left in the US.
I'll crunch the numbers and post an analysis Monday.

Have a great weekend

Gold Price info - week ending 10 August

“Risk reduction” is the catch phrase of the month.

Once again the sub-prime lending market and credit worries are leading the markets.

What we are seeing beginning to happen is a reduction in risk, coupled with a draw back in expenditure in an effort to secure existing lending and risk ventures.

What is the impact of this? A tightening of funding, a move from riskier investments and further investment in safe-haven products.

Short term: We’ve seen a lot of selling of gold in the past 24 hours as a move to get cash to help shore up unsecured investment. What we are waiting to see if this will then increase the buying as the price decreases (One of the many interesting things about gold – as the price decreases the demand then increases by bargain hunters buying, thus pushing the price back up).

Medium term: the move to safe haven investments will also mean a move to commodities like gold and silver, historically seen as the safe haven of investment practices, and we would expect to see a move up in the prices of precious metals.

The other major news in the gold world is the selling off of large volumes by the European Central Banks.

Central banks may be selling gold reserves to push down the price and calm investors, said James Turk, founder of GoldMoney.com, which manages $191 million of investments in gold and silver. "A rising gold price warns of troubles ahead," Turk said. "That's why central banks are capping the price of gold."

The Bank of Spain sold 25 metric tons of gold in July. It has sold a total of 149 tons in the third year of the Central Bank Gold Agreement, London-based research firm GFMS Ltd estimates. Spain sold 30 tonnes in the first year and 62.5 tonnes in the second year. Under the accord, banks in Europe can sell as much as 500 metric tonnes a year. The ECB said on Aug. 7 that one member bank sold gold worth 29 million euros the previous week after member banks sold 483 million euros worth in the preceding two weeks. The banks had reported selling 294 tons as of June 12, according to the producer-funded World Gold Council. The banks sold 497 tons in the first year and 396 tons in the second year of the five-year accord. The terms of the accord mean that the yearly gold sales will finish in September. Once the sales stop Switzerland has announced they would like to sell 250 tonnes yet, but they have declared that they will organise their sell off over a period of time to reduce the effect on the market.

The phrase “May you live in interesting times” (which is not a Chinese proverb by the way) is certainly apt at the moment.

NZD$: the New Zealand dollar is starting to slide against the US dollar as US treasury bonds pick up in the current climate, and with the oil price decreasing on Thursday night we’ve seen a lot of the earlier weeks gains and stability removed. The question is: How long will this last? It is not expected the Kiwi dollar will remain high, but it is worth noting that since we’ve dropped from the 81c high the price of gold locally has increased to over NZD$900 again.

Important gold news: Seeing that gold is an inert substance, its one of the few metals you can safely eat: Tasting evening presents 24-carat gold food

Or wear? (GBP140, 000 for a dress? Belongs with the handbag from the other week!! )

Gold Price info - week ending 03 August

Gold spot price ranges
USD: 660 - 668
NZD: 874 - 885
NZDUSD: .7551 - .7688

The gold price has been quite stable this week.

The range of movement has been fairly contained between US$659 and $669 this week (that is between NZD $860 and $875)

Oil prices and the weaker dollar are still the major factors behind the scenes with the US dollar firming up slightly against the Euro towards the end of the week, but the spectre of Sub-prime lending is still casting a large shadow over all.

The US economy is still struggling and the concern regarding the high oil price is starting to show. Oil reached another record at $78.77 a barrel, and the concern is currently that this is not likely to drop.

Locally the NZ Dollar has also been fairly flat, with no more major movements after last weekends 5c drop.

StreetTRACKS Gold Trust – the worlds largest Gold ETF (exchange traded fund) reached a record high on Wednesday, showing that the demand for gold investment is still high.

Stop work Strikes by South African gold workers have once again come up. If this continues (and this is an ongoing issue) it may push prices up, as supply will obviously decline from the largest gold producing country in the world.

Interesting story of the week: Don’t forget to check your wife’s handbag for those hidden treasures!

Gold Price info - week ending 27 July

Gold spot price ranges
USD: 660.00 - 685.50
NZD: 853.45 - 869.25
NZDUSD: .7779 - .8135
It’s been a busy week for gold, first starting with a strong increase in price to US$686/oz on Monday and Wednesday, only to have this reversed down to a low of $660 on Thursday night trading, recovering to $666 during the day.
The price of gold should also been seen in light of New Zealand Dollar exchange rate movements. We started the week just below 0.80c, reached a high of 0.8135 before the turnaround after Dr Bollard announced the .25% hike in interest rates. Currently the Dollar is trading around the .785 mark (after going below .78 early today.)
What is the cumulative effect of these movements on the price of gold in NZ dollars? Not a lot. We’ve sent the spot price move within a $20 margin between $850 and $870.

Looking forward the general feeling amongst gold bullion brokers is still quite positive, with the end of the Indian Monsoon season approaching; the expected demand for gold is likely to increase.
The current outlook isn’t for huge spikes in price but a more controlled growth in gold price. With strikes possible again in South Africa, supply and demand are still strong influences in the future price of Gold.

Gold doors to a bank in Oman
There is a bank in Oman which has gold doors. The gilding of doors goes back to ancient times when fire gilding and later mercury gilding techniques were used on alloys containing gold to produce a gold-rich surface layer. The famous Corinthian Bronze of the Roman Empire is an example of this used in the great gate of Herod's Temple in Jerusalem.

Gold Price info - week ending July 20

Gold spot price ranges
USD: 662.60 - 677.50
NZD: 837.27 - 854.98
NZDUSD: .7862 - .7957

A very strong week for gold, the price has increased by 4% since the previous week. Again the main factors influencing the price - oil and the weaker US dollar.

Again the sub-prime lending market in the USA is causing issues, with Fed Gov Bernanke mentioning that the current sub prime losses are in the $50 - 100 billion range. The first major casualty being the Bear Stearns hedge fund essentually going bust. They alone controlled nearly 10 billion in mortgage related securities and credit derivatives.

Oil continues to rise, again because of a shortage of gasoline supplies in the US during the Summer driving season. Coupled with OPEC refusing to raise output, and Iran reducing the amount they export in August, this may continue to be an issue.

In New Zealand the exchange rate is still the talk of the town. With Dr Bollard possibly raising interest rates again, the expectation is for another increase in the exchange rate. However Dr Cullen may intervene, but that is yet to be seen... An indication of how the exchange rate is making the price lower in New Zealand - Since January the Gold price in US$ has risen by 7%. in NZ$ it has increased by only 2%. This is highlighted by the chart above I will extrapolate on it further next week.

Microphone Check : A sad story where John Laws of radio 2UE has had his Gold microphone stolen.

Gold price info - week ending July 13

Gold spot price ranges
USD: 653 – 669.00
NZD: 838.00 – 861.00
NZDUSD: .7842- .7878

Chart showing relative prices for Gold Spot in USD and NZD (NZD on left)

Gold has had a stronger week this week; primary factors are the rising oil prices and the weaker US Dollar. Currently it is trading above the upper resistance of US$665 with an expectation of further growth.

Oil prices are reaching record prices because of several factors: issues in oil producing countries like Nigeria (civil unrest and kidnappings), Iraq and Iran (continuing issues in Iraq, terrorism, American strength in the Persian Gulf increasing). US Gasoline shortages have corrected but now Crude is starting to become an issue. Market watchers in the past have explained that strong crude supports gold two ways - due to inflationary implications of higher energy costs, and because large speculators often move into metals at the same time they are going long in crude futures.

The other major influence on the gold price has been the US Dollar weakening. The Big issue here is the Sub prime lending market and the belief that this is going to continue to cause issues in the future. This has led to a significant weakening against the other major currencies – record high for the Euro - 1.3798 - and a 26 year high for the Pound peaking at 2.0134 early in the month. Gold often moves inversely to the dollar, with market participants seeking hard assets when the greenback is weak.

Locally we saw a drop in the NZDUSD cross earlier in the week (.772) but as you can see this has picked back up and is well on the way back to the previous record highs. Driving this is the high interest rates which are appealing for the global Carry trades. The expectation is here is for continued strength in the NZDUSD cross (also aided by the weaker USD), but the big question is for how long?

Interesting news: Remeber the shipwreck in the news recently? More developments in the sunken treasure world - Odyssey shipwreck intercepted by Spain

An interesting spin to the weekend barbie - Sizzle sausages on a gold barbeque

Gold price info - week ending July 6

Gold spot price ranges
USD: 657 – 647.00
NZD: 827.00 – 844.00
NZDUSD: .7870- .7760

A steady week for gold. We are seeing a compressed price range, with the main emphasis being on expectation of growth rather than immediate rises.
A stronger US dollar has seen downward pressure on gold; this can be seen by the drop below $650 and recovery after the July 4th holiday period.

The NZD again is the major player in the local market, with no sign of the Reserve bank intervening despite the 78c mark being reached. We have calculated that if you took the exchange rate back 1year ( .6300 ) you would expect to see a 22% increase on today’s price. A great argument for hedging!

Newmont mines announced this morning that they had scrapped their entire 1.85million oz gold hedge position. This is expected to push prices up, but appears to be still being digested by the markets. Watch this space.
Once again oil is hitting the headlines, this time because of the issues in Nigeria, including a series of kidnappings of oil workers, which coupled with the gasoline stock issues in the US and the continuing problems in the gulf; we are starting to see the oil prices creep upwards, which in turn adds impetus to the upward gold price.

Again the over all consensus is a period of consolidation prior to more upward growth for the bullion market.
Reefton gold mine opening
Don’t throw away your cell phone – $340 million worth of gold in them.

Gold price info - week ending June 29

Gold spot price ranges
USD: 652 – 639.00
NZD: 871.00 – 851.00
NZDUSD: .7576- .7703

Yet another busy week, with a big range of movement on the currency front. We experienced a large drop midweek, primarily because of a release by the Reserve Bank explaining their reasoning for the intervention in the NZD exchange rate, and strong talk from the Bank of Japan regarding the carry trades. This then picked back up and we’ve seen record highs of over .77 in the last 24 hours. The expectation is the NZDUSD exchange is still going to keep climbing. The question is for how long? The effect this has on the gold price locally: gold is once again looking like the great currency hedge, despite the gold price increasing Thursday/Friday we’ve not seen much increase in the NZ price of Gold.

Gold has had an up and down week too, with the drop in price midweek, primarily caused by a drop in the oil price, and a move away from US investors to Treasury Bonds. This movement is being caused by better than expected economic data, but we still have more news coming this weekend, so things may change. However the oil prices increased last night, and with the prices being a their lowest point since January / February, a lot of physical buyers came back into the market yesterday, which has pushed the price back up to the mid 640’s with an expectation of a continued rise. The bargain buyers appear to be adhering to the old adage, buy on the dip.

Supply issues have been popping up again, with Russia announcing a 1% reduction in year on year supply, which coupled with the rumblings of the Labour strike in South Africa (which may still be on) and the worries about the declining production and increasing demand in Asia and the Middle East is likely to continue to be a long term factor in the prices.

A recent study by GNS Science and the New Zealand IER; has shown that there may be Gold deposits in the Far North (amongst $5 billion dollars of metallic mineral deposits) Coupled with the positive news from Heritage Gold of more finds in Waihi can only be good news for the local economy.

Looking for a way to use your gold? Have a look at the Emirates Palace Hotel. It cost more than $US3 billion dollars to build, with its golden rooftop domes to its gold-leaf lobby mosaics. The Flag poles are made of gold and the 1,002 chandeliers with Swarovski crystal made of, you guessed it, Gold.

At $US11,000 per night it rates itself as a 6 or 7 star equivalent “palace”.

And what would you wear to a place like this? How about General Ulysses S. Grant's sword at US$1.6m?

Gold price info - week ending June 22

Gold spot price ranges
USD: 661.90 – 649.30
NZD: 874.00 – 855.00
NZDUSD: .7650- .7525

A busy week – the Reserve bank has again intervened with the exchange rate locally, it doesn’t appear to be having much impact however with record highs recorded on the NZDUSD cross. This of course makes it a good time to look at buying gold in New Zealand dollars, as the high exchange rate suppresses the price.

Gold movements: The stronger US dollar and US Treasury bonds have kept the price fairly static, there is currently a strong support above $650/oz and we’ve seen a period over $660 later in the week. The long term prognosis is still quite positive with demand being predicted high enough to easily absorb the future sales by the Central bank (Swiss Natural bank selling 250 tonnes for example).
Oil prices have also played a part - with the crude prices dropping back below $70/barrel with the strike in Nigeria not expected to have a large impact on the market.

A labour strike in the gold mines in South Africa has been postponed until after talks are held on July 2. The labour demands are for 15% wage increase as well as 61 other demands. This could have quite an impact so would be well worth watching.

The lower prices seen over the last month are being viewed as a consolidation period, prior to another bullish growth period in the gold market. With the increase in investor interest towards Gold and Silver, and the demand for alternative investments increasing, there is a positive attitude to the medium and long term view for the strength in the precious metals.

Following on from last weeks article about Egypt reviving some of their Gold mines -
Clue to Egypt's Gold Source Discovered

Gold price info - week ending June 15

Gold spot price ranges
USD: 654.60 – 643.95
NZD: 884.00 – 859.00
NZDUSD: .7628 - .7465

A quiet week on the gold news front, with the main drivers being the New Zealand Reserve bank impact on the dollar on Monday, and the US Treasury Bonds becoming flavour of the week again.

The latter half of the week has seen the oil price rise again, primarily because of concerns in the US gasoline supplies. This has brought the Gold price back up over the $650 mark, and the Euro strengthening slightly against the Greenback helping. It has been noted that recently the strength of the Euro vs. the Greenback has been a good indicator of the gold price movement, as the Euro strengthens investor move out of US$ holdings and into gold. This is a fairly recent occurrence but interesting none the less.

Central bank sales: The Swiss National Bank has announced that it will be selling 250 Tonnes of Gold from its reserves by the end of September 2009, but they have chosen an approach that will avoid market unrest.

Supply and demand are still factors in the long term price: Dubai imported 15% more gold in the first quarter of this year than in 2006.

Old gold is good gold: In some instances after 2000 years of inactivity Egypt is reopening gold mines to revive their gold industry. Reuters Link

Invisible braces: Need braces for your teeth? How about Invisible Gold braces
WGC article

Gold price info - week ending June 8

Weekly outlook: continues to be good medium to long term.

Gold spot price ranges
USD: 673.40 - 658.60
NZD: 905.53 - 876.13
NZDUSD: .7565 - .7435

Current influences on price:

A strong rally in US Treasury bonds has pushed the prices down at the end of the week, primarily due to exceptionally high yields and a weaker Euro and GBP.

Interest rate rise in New Zealand (8%) and Europe (4%) and the USA to try and curb inflation, coupled with rising oil prices are all working in favour of gold investment for the medium to long term.

The interest rate hike on Thursday saw the NZDUSD exchange rate spike to a record high, which once again makes gold purchasing very cheap, and excellent hedge option at the moment.

Sentiment in long term Gold investment is still very positive, with global demand increasing – according to the world gold council.

Year-on-year demand increased by 4% globally, despite a 17% increase in the spot rate. Demand in China increased by 31% from last year, and in India increased by 50%! At the same time world supply dropped by 3% (South Africa and Peru both making double digit negative decreases). The important thing to note here: Gold production is decreasing despite higher prices. This indicates that it is getting harder and more expensive to mine gold, which will continue to push the price upwards.

A new tri-metal exhaust catalyst that uses gold, developed for diesel engines, that can reduce harmful emissions by up to 40% has been unveiled in South Africa. This is seen as a positive for both diesel engines (as the catalyst can be tuned for different applications by using different amounts of metals: Gold; Palladium; Platinum) and for the gold market.

The Bank of Spain sold another 28 tonnes of gold in May after having sold 40 tonnes in March and another 40 tonnes in April. In three months and via an unannounced sales program, Spain has sold over 25% of its total gold reserves into the market. The interesting point is that this might not necessarily be being done to grab the best price... no, this "sales program" which has merited no public comment from the bank could be forecasting a much larger problem on the horizon in the fiat currency of Spain. This fire sale of gold reserves looks much more like an attempt to raise quick cash to solve banking and housing issues rather than a program of diversification.
The 133 tonnes in total sales over the past 3 months has not included the 37 tonnes in sales from the ECB (European Central Bank) umbrella organization as of yet. Looking at updated figures this morning showing less than 2 tonnes of sales last week by ECB captive banks, that 37 tonne figure has yet to show up in reports. So all told, the gold market in the last 3 months actually digested 170 tonnes of gold sales from ECB banks. There are no updated figures yet on banks outside of the ECB system because they report on a 3-6 month lag.
For a point of reference, even during the Bank of England and Bank of Switzerland gold sales from 1999-2004, no three-month tally during has been as high as 170 tonnes of sales into the market. The fact that the price has held up during this sharp increase is nothing short of remarkable and should highlight for even the market novice the underlying strength in the market.
UBS has put out a new research note stating that they see ECB sales reaching the quota of 500 tonnes this year. This has been revised up from the 400 tonnes of sales they had been expecting. The significantly increased sales in a short time period have kept the prices bottled up, but have not satiated demand in the market. If you can figure out what's affecting prices, then it's easy to pin point that during a period of increased bank sales, it is an opportunity to buy. As has been proven after every major set of bank sales in the last decade, the price eventually goes higher after the sales are done

Bear Stearns Cos, the largest broker for US Hedge funds is expanding its commodities business to meet growing demand for investments in the metals markets.

Tired of having small change in your pocket – how about a Million dollar coin?

Gold price info - week ending June 1

Weekly overview - still positive medium and long term

Gold Spot price ranges:
USD: 652- 665
NZD: 893 - 907
NZDUSD: 0.7250 - 0.7330

Current influences on price:

A strong rally in pricing by gold and silver at the end of the week, primarily due to weak US economic data, GDP at 0.6%

Positive US Economic data being released this week has kept the price of Gold subdued, with the expectation of the US dollar strengthening keeping the Gold price in the low $650’s. Oil prices are also subdued, again not pushing the prices forward, however as mentioned last week the gasoline prices in the US are at record highs and climbing. Despite this gold has finished on upbeat notes several times this week, once again reaffirming the long term belief in Gold as an investment for the future.

The price of Gold has leapt from an average of $300 in 2002 to around $660 currently and isn’t expected to decline. Rob Mcewen, Chairman and CEO of US Gold, talking to Timesnow.com said: “I see it going much higher. It reached its floor at $250 in 1999 and 2001. I think it's moving in 3 stages. The first stage we have already completed where it went from $250-$440 by the end of '04. Right now i think it's in a stage going from $440-$850 testing the old highs by the end of '08 and then '09, '10 it is going significantly higher 2,000-5,000 dollars an ounce."

Gold sales in China increased by 15% to $87 Billion in April.
Record numbers of American Eagle and Gold Kiwi gold coins are being snapped up by investors across the world. This is due to the coins having a high gold content and investors are specifically looking to purchase gold coins in order to acquire a secure investment so that currency fluctuations are offset. This is also the finding at New Zealand Mint, with the Gold Kiwi coins being the general preference of investors, as the .9999 Gold coins are GST free, and a sound base to a solid portfolio. DeMeritt of Lear Financial, the parent company of Gold Central, stated: "This is the best way for the small investor to enter the gold market with an investment in gold coins."

Currency news
Late flurry of news released at the end of the week, primarily the US GDP at 0.6% down from 1.3% (and the expected 0.8%). This means once again, that the NZDUSD exchange rate is back over the 73c mark, and is holding strongly. This is good news for bullion investors as this means the price of Gold in New Zealand is being held lower than against offshore currencies.

Mining news
South African gold production fell by 7.6% to 62,806 kilograms (2,019,276 troy ounces) in first quarter 2007 compared to first quarter 2006 as grades mined in the quarter declined by an average of 12.9%.
About 8% of production came from marginal mines, the SA Chamber of Mines said in a statement.
This is backed up by an industry insider predicting that China will become the largest gold producer in the world by 2010, according to Interfax-China.

According to the news source, the editor of gold investment report Goldletter International, Morino G Pieterse, made the comment at the Western China Mining Summit 2007 in Chengdu.

Mr Pieterse pointed to the fact that between 1997 and 2006 production of gold in China increased by 162.8 tonnes to 247.2 tonnes.

"China's gold output surpassed Australia's last year, is due to surpass US production this year and will surpass South African production within two years," Mr Pieterse told the news source.

He also noted that while gold production in traditional producing countries such as South Africa has declined over recent years, output from emerging gold producing countries has increased from 17.7 per cent of global production to 29.8 per cent in the last ten years

Closer to home, the owners of Solomon Islands' only gold mine say their operation will begin gold production in June 2008, eight years after it was shut down by militant fighting. During its one year of operation between 1999 and 2000, Gold Ridge Mine produced 30 per cent of Solomon Islands GDP. Gold Ridge Mine manager, Val Buenic, says the new operation will be 30 per cent larger than before.

Mr Buenic says the operation will employ between 400 to 500 locals and will be on a larger scale than the previous operation."The project should be in production on 30th June 2008," he said."We're a year away from pouring our first gold. "The stage of the project right now is we're refurbishing the accommodation village on the site ... we're about to begin two new relocation villages for the landowners."

Interesting story of the week:

Thieves steal an 80kg $1,000,000 gold bathtub from the men's bathroom of a Tokyo hotel. The odd news is the ladies bath is still there.
Stolen Golden Bathtub

Gold price information - week ending May 25

Weekly overview - still positive medium and long term

Gold Spot price ranges:
USD: 653.85 - 674.30
NZD: 914.72 - 900.10
NZDUSD: 0.7315 - 0.7239

Current influences on price:

A lack of exploration spending and the failure to discover any significant sized deposit is helping to keep prices buoyant Ian Cockerill CEO of Gold Fields Ltd (Worlds 4th largest mining company) told Reuters
Current annual consumption is around 85 million ounces per year, but this is not being replaced by the mining industries.
According to Cockerill: "Gold has in the past decade become the barometer of the geo-political state of the globe. With the increasing hostilities over the last 10 years, we have seen sentiment come under gold from the prices of around US$200/oz In November 200 to the current range of US$600-$700 an ounce. "
Prices are currently being suppressed due to large amounts of selling by the Central Banks with around 120 tonnes being sold in the last 10 weeks. Once these sales are finished it is expected that the gold price will increase.
Base metal prices dropped significantly late last week and early this week, which had an impact on the precious metals markets, bringing the gold price down temporarily.

Asian Markets:

Gold hoarding is becoming common in India, but even more so in China where gold purchases were around 270 tonnes in 2006 and spending on gold for investment and jewellery is stronger than ever before.
The Year of the Gold Pig has had an impact on demand as it is an auspicious year to buy Gold. This has resulted in a 27% year on year rise in consumption of gold jewellery.
The World Gold Council - WGC- has announced Q1 Jewellery spending increased to US$12bn, 38% up on last year.

Currencies:

USD vs. EUR A weaker USD against the EUR is helping to push the gold price higher as investors move away from the US dollar again. Higher oil prices are helping to subdue the USD.

USD vs. NZD NZDUSD has dropped below the .73 mark, good US economy data being released is helping to keep the NZD down. With the lower NZD this is helping to keep the gold price stable, with any drop in price being flattened out with a reduction in the exchange rate. Should the gold price increase or the exchange rate drop further we would expect to see a healthy increase in the NZD gold price.

Gas prices in US - New record reached this week - Highest ever Gas price in the US - $3.20/gallon, this is higher than the inflation adjusted price during the oil crisis of the 70s. This is expected to increase due to the lower than normal levels due to reduced refinery output.

Interesting news of the week:

A shipwreck has been found with 500,000 silver coins an estimated value of around $500m. So far the sites of the wreck (possibly off the Scilly Isles) or the name of the wreck haven’t been released, but the news of the "Black Swan" has caused quite a stir. For interesting reading have a look here - The Black Swan

Thanks for reading, have a great week.

Gold price information - week ending May 18

Welcome to the New Zealand Mint blog. We’ll be posting weekly updates on gold prices and the factors influencing them.

This week:

Weekly overview: A positive outlook - good time to buy, good time to hold.

Current influences on the price:

The NZ dollar remains high against the US. While normally the NZ dollar drops when the US dollar drops, Australian and Japanese investors are investing in New Zealand, maintaining the high rate versus the US.

This is good news for New Zealanders looking to invest in gold as gold prices are quoted in US dollars.

US interest rates are being held at 5.25%, and this has removed some strength from the exchange rate, but investors are now reacting to Bank of England rate rise of 0.25% and Euro central bank indication that there will be a rate rise there in June. This will further act in favour of the NZ dollar.

It’s also important to note that the US trade deficit has increased again - $6.2Bn since February with major companies like Wal-Mart posting their worst sales month ever. This would anticipate a further weakening in the US dollar going forward.

Oil Inventories in the US - A large rise in US oil inventories has led to reduction in investments by funds wanting to mitigate risk in the US. This has removed some of the impetus behind the Gold price. It is still rising, but not as quickly as it was. The US$700 level is still to be broken.

Interesting upcoming news – A predicted bad hurricane season for the Gulf coast of the US will have an impact on the US oil reserves – meaning many will head to gold as a hedge.

Demand for gold from the Jewellery industry is currently subdued, but is expected to pick up again when the Jewellery season begins. This will increase the price as the Jewellery sector currently uses around 80% of the gold mined each year.

Also worth noting: The Bank of Spain sold 80 tonnes (2.6 Million ounces!) of Gold in March and April which, with the increased supply, is helping to keep the price subdued in the short term. Current expectation is for a very strong medium term.

South African Gold output dropped by 10% year on year for March.

The weekly Spot range - Monday through Friday: High $NZD909 Low NZD$899.

Thanks for reading. If you have any questions, please email me Michael (at) newzealandmint.com.