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!