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
