Gold update September 2

It has been another exceptionally busy month for bullion. Demand for our Gold Kiwis and Silver Fern coins have been setting records, with silver demand increasing to levels we’ve not previously seen.

Our suppliers have been able to maintain steady supply, with the only delay being in our suppliers of 99.99% pure silver having very large productions runs (therefore impacting on our delivery times for the Silver Ferns).

Gold and Silver prices took a drop in August, the main influence being shorts in the paper markets, and 5-10 year trends triggering large sales. The prices have recovered somewhat - Gold up ~$50 per oz and Silver ~$1 per oz, but the markets are quite soft at the moment.

Here’s a story on supply from Australia. Keep an eye on dropping supply from mines around the world. Peak gold anyone?

Gold update 6 August

The Gold price dropped overnight down to around USD$880. This drop comes off the back of the US Federal Reserve holding interest rates at 2% and the US Dollar sitting at six week highs against the Euro.

The other factor in this drop was the price of oil price sinking to US$118 a barrel (lowest since early May) mainly due to reduced consumer demand, reduced threat of destructive weather in the Gulf of Mexico and renewed belief in the oil reserves of the Middle East.

Locally we've seen more rumblings in the finance sector. Finance companies are once again in the news because the downturn in property markets has resulted in withholding or restricting payments to many investors. At the New Zealand Mint we’ve seen increasing numbers of people put their money in gold to protect against turbulence in financial markets.

Gold update 22 July

Gold is up at US$967 an ounce. As this article says a lot of this has been driven by demand in Asia.

Worldwide identifiable investment demand in gold has increased considerably in recent years. Since 2003 investment has represented the strongest source of growth in demand, with a year-on-year increase in value terms of 45 per cent by the end of 2006, and growth over the past five years of around 300 per cent. Gold investment attracted net inflows of approximately NZ$13bn in 2006.

In New Zealand we are seeing a huge increase in the interest in both gold and silver investments. Some investors want to protect their portfolio, others seek to move away from the ‘90s style portfolio focusing solely on equities, property or finance.

Others, as is the norm overseas, see gold as an insurance policy against future uncertainties.

In March this year, at New Zealand Mint we witnessed the renaissance in silver investment with a 300 per cent increase in silver bullion transactions and a continuation of demand not seen for many years.

Gold update 7 July

Since our last post gold is up to US$933 an ounce due to heightened inflation fears.

Although as this post says it dropped on Friday after the US dollar climbed against the Euro.

Across the board commodities just keep going up. Take a look at this New York Times story about oil production. The story is in-part conjecture about the possibility of further constricting supply – but you get the message. Part of the reason for oil’s huge price increase is on-going concerns around supply pushing up the price. The same thing is happening in other commodities.

Some commentators suggest that the gold price will taper off as the US dollar rebounds. However I’d argue that global demand for gold just doesn’t look like it’s going to taper off anytime soon. Have a look at this article by chief executive of Charteris Treasury Portfolio Managers Ian Williams who looks into the ‘super-cycle’ of commodities and finds gold is a “laggard” with room for further increases.

Gold update 30 June

Gold is up to US$928 and looks like it might break through $930 this week. It’s already breaking out of the price range we were talking about just a couple of weeks ago.

As this story says – the end of last week saw the biggest surge in gold price futures in 16 months. This was due to heightened inflation concerns mixed with the Federal Reserve not hiking interest rates to tackle the problem.

And as this story says, inflation fears in the Untied States are running up against low prospects for growth – this puts the Fed in a bind and means the prospects for gold remain strong.

Happy prospecting.

Gold update 23 June

Gold hit a three week high at close of trade on Friday. The precious metal has again broken through the US$900 an ounce mark and currently sits at $904.

This article identifies the trend as coming from increased demand for raw materials and from investors looking for a hedge against inflation.

In the US we’re seeing the renewed concern surrounding the financial markets translate to demand for safety investments says William O'Neill, a partner at Logic Advisors in Upper Saddle River, “The continued turmoil surrounding financials is attracting flight-to-safety demand. I see the metal working higher. Prices have consistently held key technical support at the 200-day moving average and are now starting to work through overhead resistance.''

NZ Mint has been in the news recently.

Have a look at this story about an amount of gold we acquired recently. In October 2006, Wayne Patterson was arrested for multiple benefit fraud. When Police raided his house, they found the gold and cash hidden in secret compartments. Some was also buried in the garden. We’ll be turning the gold into our famous Gold Kiwi coins to sell on the market.

Also check out this article we did for Herald on Sunday. All your gold questions answered!

Gold update 5 June

Gold is currently sitting at US$879 an ounce.

There has been some speculation as to where the gold is going in the near future. This is what John Reade, the head of metals strategy at UBS AG, says ``From a short-term perspective, gold is neutrally positioned at $890" He notes that is in the middle of its recent range of $850 to $930. "The metal is searching for fresh direction with crude and the dollar off their recent highs, but still-present talk of inflation rising again supporting the metal."

This article takes a look at whether the current price movements are part of a commodities bubble or correction.

And this article quotes South Africa's Chamber of Mines who said on Tuesday that the country's gold production fell 15.6 percent to 52,228 kg in the first quarter of 2008compared to the fourth quarter of last year. This kind of reduction in supply should continue to give strong price support.

Gold update 22 May

Gold has had a solid rise over the past couple of week and is up over US$932 at the moment.

This is due to weaknesses in the US dollar and record oil prices.

As Peter Spina, an analyst at GoldSeek.com, puts it: "Capital seeking shelter from monetary debasement will continue to deviate to preservation assets such as gold and silver."

This article also notes that rising fears of inflation have driven up the price.

As we’ve said a number of times on this blog, gold acts as an inflation hedge. There is a pretty lively debate about whether gold or oil is a better inflation hedge. This author examines the arguments and comes out in favour of holding each in your portfolio. No prizes for guessing which side I come down on.

In other gold news. Check this story out. Scientists at North Carolina State University have cut off the ends of a failed HIV drug and stuck the resulting molecules onto gold nanoparticles which then stopped HIV from infecting lab-cultured white blood cells. Interesting.

Gold update 5 May

I’ve had a couple of enquiries about the mid-term trend for gold so I’ve attached a graph showing the price going back to August last year.

Gold has been on a bit of a wild ride recently. It’s currently sitting on about US$863 per ounce after last week reaching a four month low of $845.

We saw a lot of trading in gold when it reached its March peak. Gold’s drop from that high has been driven by profit taking, better than expected employment figures from the US and a slight recovery in the US dollar verse the Euro.

The funny thing is that with gold at a near four month low, many people now say it’s a good time to buy into the precious metal.

On the other hand, as this article says there are still strong selling pressures in the market which could drop the price again.

This article points out we are entering a time of increased physical demand for gold because of the Akshaya Thrithiya festival, celebrated across southern India. It marks the biggest gold buying season outside the post-harvest festival of Diwali in October.

And now for your odd gold news story of the week. If you’re a gold miner who is sick of dark and tight spaces underground, perhaps you could chuck it in and become an ‘urban miner’.

The article says: A tonne of ore from a gold mine produces just 5 grams (0.18 ounce) of gold on average, whereas a tonne of discarded mobile phones can yield 150 grams (5.3 ounce) or more, according to a study by Yokohama Metal Co Ltd, another recycling firm.

Gold update 17 April

Gold has been up and down over the past couple of weeks. It’s currently sitting at around US$945 an ounce.

After dropping at the beginning of the month, we've seen gold pick up in the last couple of days. Yesterday gold picked up 2% after falls in the US dollar and further evidence of the weak US market saw investors head toward gold as a safe investment.

Mark O'Byrne, executive director at Gold and Silver Investments Ltd said, "With oil and commodities surging, the dollar continuing to weaken and economic growth slowing, gold's best friend stagflation is a real and growing threat to much of the global economy."

In the story, O'Byrne says that gold should test $950 "as investors realize that inflation is not some short-term phenomenon, but rather a medium and possibly long-term problem yet to be priced into the market."

He is probably right. It's widely known that gold is a hedge against inflation, and with this story pointing out inflation hitting 3.4% in NZ, we're seeing a number of investors putting some of their portfolio in gold.

On a related note - check out this graph (from here). It shows how even though the price of oil has climbed against the dollar and the euro - the price of oil in gold has stayed the same. Shows how closely commodity prices are linked.

Gold update 27 March

Gold dropped from historic highs over the past week and now sits at US$954-955 an ounce.

Gold bottomed out at US$905 last Friday before recovering to its present level. The drop was mainly due to large profit taking when gold hit its record high.

Heading toward the end of a financial quarter, many large financial institutions sold down parts of their holdings to take advantage of the high price. The rebound on Wall Street and the US dollar’s rally also contributed to the drop.

Many analysts also expressed concerns that a slowdown in the US would lead to reduced consumption of raw materials such as gold.

Gold has now recovered to healthier levels as concerns remain around the uncertainty of the global credit crunch.

In other news – if all the stresses of the uncertain financial times are getting to you, perhaps you could consider going in for a 24 carat gold facial – only US$300 a pop.

Gold update 19 March

It’s been a pretty big week for gold. After hitting US$1000 an ounce last week the price rose to US$1012 on the back of the news that America’s fifth largest bank Bears Stearns was bought by JPMorgan for $2 a share (after trading at $150 a share 12 months ago). Investors took flight and bought up gold as a safe haven investment.

Profit taking has seen gold drop to US$988-$990 today.

Media interest in gold’s rise has been intense over the past week and the NZ Mint featured on TV3 News and Sunrise to talk about international factors influencing the price of gold and how New Zealand investors are investing in the precious metal.

We expect the price to remain healthy as uncertainty in world markets continues.

Gold hits US$1000

You would have heard the news.

It dropped away a touch after breaking through the US$1000 mark and is now trading at US$995 a troy ounce.

As you can imagine we are pretty busy here at the NZ Mint. It's a good day to be in the gold business.

Gold update 13 March

Gold has been up and down over the past week. It hit a high of US$992.95 before dropping back down.

Gold is sitting at US$983 after increasing by over $9.65 in the past 24 hours.

It’s up this week due primarily to oil hitting US$110 a barrel and the US dollar hitting record lows against the euro.

Long term we should see decreasing supply affect the price. The Chief Financial Officer of Newmont Mining Group Russell Ball said that the gold mining industry is in for a “1 to 2 percent decline for at least the foreseeable future. I would see that as the next 10 years" – with increasing global demand, that kind of supply reduction will push up prices.

Gold update 6 March

Gold is up at US$985 at the moment and looks set to head for even greater highs.

There has been a sense with analysts that this run on gold would end and the price would settle back down around the $850 mark.

However more and more analysts are now saying that gold looks well supported at current prices and should crack that magic US$1,000 in the near future.

In an article on the Financial Times website John Reade precious metals analyst at UBS says, “We have argued regularly that fundamental support for gold lies between $700 and $750, yet gold stubbornly refuses to correct despite occasional periods of dollar strength, crude softness and the waxing and waning of risk appetite.”

The article reinforces what we have been seeing here at the NZ Mint for a while; people are turning to gold as a safe haven investment in turbulent economic times. Global inflation remains high, supported by high oil, metal and agricultural prices – and as gold is an inflation-proof store of value, savvy investors are putting a part of their portfolio in the precious metal.

Last year gold’s value increased 31 percent and this year it has already risen 15 percent. Reade predicts gold to reach $1,025 an ounce in one month’s time and $1,075 in three months. Given current demand, those levels look increasingly likely.

Fun gold fact of the day: the biggest gold nugget ever found was in Victoria Australia and was called the ‘Welcome Stranger'.



It weighed 2316 troy ounces or 72.04 kg. After smelting, 2268 ounces were obtained from the nugget. At today’s prices that would fetch a cool $2.2million. Crikey.

Gold update 25 Feb

Gold hit a record high last week of US$953.75 an ounce. It has now consolidated around the US$947-948 mark.

As this report says, the continuing weakness of the US dollar and recession fears in the world’s biggest economy are driving worldwide interest in gold.

We’ve seen increased demand here at New Zealand Mint as people look for a safe investment option.

However, perhaps all the renewed interest in gold is because of those little famous gold statues that will be given out at the Oscars this evening. As this story says, they’re more valuable than ever…

Gold update 13 February

Currently gold is trading at US$905 an ounce after dropping from over $920 yesterday.

Last Saturday the Group of Seven (G7) nations approved the sale of gold stocks held by the International Monetary Fund (IMF) to raise money for the financial organisation. More info here.

This is significant in that the IMF holds a whopping 103.4 million ounces of gold worth about $92 billion at current market value. Selling a portion of that stock would surely push prices down around the world as the supply of gold increased.

However, any sales of IMF gold must be approved by 85 percent of the votes held by its members and the US has 17 percent of the total votes, which gives it veto over the organisation’s decisions.

Given that the US Congress has to approve IMF gold sales, and that they are in the midst of an election campaign, and that the US economy is looking shaky - it is unlikely that the IMF will be selling its gold anytime soon. Still it is interesting to see an organisation like the IMF contemplate capitalising on the high gold price.

In other news pointing to the ongoing strength of gold, Japan’s top bullion house Tanaka Kikinzoku Kogyo K.K. announced it bought a record amount of gold last year.

You will recall me saying that gold is a good hedge against inflation. You might be interested in this article that shows gold performing better than housing as an asset that holds its value in times of prising prices.

Finally – six-year-old strikes kilo of gold.

Year of the Rat

Yesterday was the first day of the Chinese New Year and to celebrate the New Zealand Mint produced a number of limited edition one ounce legal tender silver commemorative coins.
The coins feature an engraved representation of the first animal of the Chinese zodiac in relief colour on a blue background bearing the inscription “Year of the Rat 2008”.

There was a story on the coins in the NZ Herald today - you can read it here.

And you can pick up the coins here.

Happy Year of the Rat!

Gold update 4 Feburuay 2008

It has been a while since my last post. And you'll see from the graphs above that the price of gold has increased out of site during that time.

With the increase in value, we here at the NZ Mint have seen a dramatic increase in interest from everyday investors. I can tell you work has been really busy the past few weeks (hence my lack of posts...).

In the past three weeks gold has risen from about US$860 an ounce to US$911 today. Looking back to Christmas last year, we've seen the gold price jump over a US$100 during that time.

The most important reason for this has been the weakness of the American economy. Many pundits are picking the USA to slump into recession this year. And in such times gold becomes attractive as a safe haven investment.

In the past two weeks the US Federal Reserve has cut interest rates by 1.25% in order to try to starve off that recession. The cuts meant more money is available to chase gold and as a result investors have turned to the precious metal for safety.

In this country there has been a lot of media interest in gold's rise: I appeared on TV3's Sunrise programme to talk about factors affecting the price of gold and the New Zealand Mint featured in the NZ Herald to talk about the gold price.

I'll continue to keep an eye on the price of gold and keep you up to date right here.

In other news, when you buy gold - this is what you're buying - gold atoms magnified a zillion times under a microscope. Pretty huh?

Gold update 09/01/2008

Gold broke through USD$880 last night on more safe haven investment. With the current political and economic environment looking less and less positive, more investors are moving in to Gold as a safe haven. As this demand increases so to will the price.

Oil prices moved back up to near $97/barrel again with the increased threat of violence in Nigeria and the expected drop in US crude holdings.

With the increased tension between the US and Iran in the Persian Gulf, many people are looking to protect their interests in case of further incident.

The Financial Times has just released an article about gold being the new global currency - here

Gold update 08 January 2008

Welcome to 2008. And we've started the year off with a bang. The gold price has increased by over USD$25 since Christmas, breaking the magic high of $850 quite convincingly off the back of oil pumping through the historic $100/barrel mark.

In the last 24 hours......

The gold spot price was choppy in trading last night, peaking at above USD865/oz before slipping lower again as oil prices declined. The gold price is showing to be quite strong at the upper end with the ongoing strength maintaining the upward movement.

Of note, the Shanghai Futures Exchange will begin trading gold futures contracts from 9 January.

Crude oil prices fell sharply in overnight trading to around USD95/barrel. The drop in oil prices occurred quickly but it is hard to identify a specific reason. Continuing worries about the US economic outlook and the anticipation of mild weather conditions (relative to normal) in the US north east may have helped prices.

There were news reports that five Iranian boats made aggressive manoeuvres against three US navy ships in the Strait of Hormuz but these did not appear to have a lasting impact on oil prices. CNN article

"We had some profit taking pressuring gold lower but sentiment is still very positive for the next two to three weeks, because the dollar is expected to weaken further and we are seeing fresh inflows of asset reallocation in precious metals," Frederic Panizutti of MKS Finance said.

The dollar rebounded versus the euro on Monday as investors feared high inflation pressures in the US may prevent the Federal Reserve from cutting interest rates again at the end of the month. A stronger dollar makes gold more expensive in other currencies, therefore discouraging buying.

"The gold market is closely watching the euro and crude for direction at the moment. For the bull run to continue in the next week one of the two must continue to show strength. If not, expect to be trading the range with resistance at $869 and support at $855 for now," broker Macquarie said.


Recession in the US 2008? According to this Bloomberg article the odds are better than 50/50 that we'll see a recession in the coming year.... If a recession eventuates, or even if the US economy simply remains weak, it should translate into support for gold as investors seek a safe haven.

Hoping Santa left you one of these..... 24Ct Gold nokia 8800