Golden Kiwi - The NZ Mint Blog

We have moved our blog!

2010-07-12T12:19:00.001+12:00

http://www.nzmint.com/bullion/news is where you can now find our blog.

Update 29 June

2010-06-29T08:15:00.049+12:00

Gold

Gold is back around USD$1,238 (bid) / USD$1,244 (ask) after breaching USD$1,262 on Monday (in the early hours of Tuesday NZT). A large drop of more than twenty dollars after reaching the USD$1,262 in a few hours was due to profit-taking.

Reuters reports: "Gold is likely to remain pretty well supported in the current quarter. Safe-haven demand for gold remains prominent," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney, adding that Monday's decline did not represent a fundamental change in gold views.

CBA Commodities reports "We expect that safe-haven demand will support the gold price at around current or higher levels in the coming quarter. But that the gold price may fall back over the course of 2011 as improvement in the international economic environment reduces safe-haven demand."

However, thebulliondesk.com cautions "Last week's reports on the US economy suggested its recovery may stutter and traders have turned cautious in case the trend is confirmed this week."

Currency

Reuters reported that the NZD/USD opened around 0.7088 and traded a narrow 0.7067/0.7106 range for the entire NY day Kiwi tracked Aussie for most of the day slipping briefly at the NYSE open then recovering toward the London close.

NZD Gold

With currency trading fairly tightly, the NZD price has been tracking the USD price and currently gold is sitting close to our report last Friday at NZD$1740 (bid) / NZD$1778 (ask).

Economies

Take a look at this interesting and amusing video from over the ditch

Gold eases back from Monday's high

2010-06-25T17:00:00.000+12:00

Gold

The gold price dropped from Monday's highs due to profit taking and fell to around USD$1,232 before recovering to $1,242 (bid) / $1,247 (ask) on Friday morning (NZT).

All in all it has been an eventful week with reached on Monday. Typically June and July are slow months due to summer holidays in the northern hemisphere, but weak US data and a continuation of Eurozone debt issues has lead to more activity.

The Bullion Desk said in today's update "Gold prices strongly rebounded during afternoon trade on Thursday, as record high Greek credit-default swaps triggered safe-haven demand, while buying also emerged for exchange-traded funds based in Switzerland, traders said."

The Inflation Debate

"The gold market was partially supported off the Fed's widely expected promise to leave US interest rates low for an extended period of time. However, gold was also somewhat undermined by suggestions that the Fed was a little more guarded on the track of the US economy," said Nell Sloane at NS Futures. "In the near term, the gold trade will probably continue to focus on the debate over the direction of the global economy and the prospect of deflation or inflation," Sloane said, adding that resistance stood at $1,259.20 and support at $1,214.90 per ounce.

There are countless discussions going on about inflation, hyperinflation, deflation and stagflation but we found this interesting article about hyperinflation that we thought you might like.

Currency

Yesterday the NZD/USD reached a 6 week high of 0.7161 and is currently sitting around 0.7020 (ask) and 0.7125 (bid). This small decline is due to a combination of risk aversion and profit taking.

NZD Gold

Currently gold is sitting around NZD$1,740 (bid) and NZD$1,777 (ask).

Good Article - Gold and Government Bonds

2010-06-21T14:01:00.000+12:00

Economist - Why are both Treasury bonds and gold performing so well?

Gold hits fresh highs in USD, unchanged in NZD

2010-06-21T13:26:00.001+12:00

Gold
Gold has been on upward trajectory since last week and Friday's close of the New York market saw prices up at USD$1,256.60 after hitting a high of USD1,262.70 earlier in the session. After some turbulence this morning (New Zealand time) the USD spot price seems to be holding steady around $1,257 (bid) and $1,262 (ask).

Sitting steadily above $1,250, gold looks set to challenge $1,280 and $1,300. In fact, Standard Chartered Bank expects gold to average $1,300 in Q3 of this year and $1,400 in Q4.

So why the climb?

There are several reasons why gold keeps climbing. Recent data out of the US has been poor, including jobless claims. Combine this with the enduring rumours that Spain will be the next to ask for a bailout, concerns about spread of debt in the eurozone and signs of inflation in emerging markets.

But the major influence has been the announcement that the EU will stress test its largest banks.

"Some of the rationale to take gold prices higher was provided by news that the EU planned to stress-test 25 of its largest banks under a scenario of slowing economic growth and elevated stress in sovereign debt holdings," said analyst James Steel at HSBC.

If any of Europe’s major banks do not pass the stress test, the ensuing flight to safety could push gold prices even higher, while physical demand remains strong, Steel said.

Currency

The New Zealand dollar has crept still higher over the weekend, currently sitting around 0.7067 (bid) and 0.7175 (ask).

The big story in currency over the coming weeks will be China's decision to allow the yuan more flexibility. While a number of governments internationally, including the US have been asking for this for some time, in the short term, the result may not be as anticipated. If the Euro continues to fall against the USD, the yuan could actually depreciate. See the full story here China forex move could thwart U.S. hopes

NZD Gold

Again NZD gold is relatively static, with spot prices at NZD$1,755 (bid) and NZD$1,787 (ask), with the NZDUSD exchange rates offsetting another strongincrease in USD gold. This stabilises the price in NZD over the past week, due to currency strengthening along with gold prices.

No change in local gold price, despite USD$10 rise

2010-06-18T14:01:00.000+12:00

Gold

Gold surged to multi-week highs during Thursday night trading, as poor US data and continued economic uncertainty sparked safe-haven buying, sparking gold to a run towards fresh record highs. Currently sitting fairly steadily around USD$1248, the price briefly edged up to USD$1251.30 at one stage. This isn't far off the high of $1252.30 we saw on June 8th.

"We are getting close to month- and quarter-end, so I would think if not this Friday then next Friday we will see some real action," a Swiss trader said. As well, lingering doubts over the health of the eurozone, combined with end-of-week book-squaring, could add to upside pressure.

The concerns in the market are still Greece and US jobless figures. Most recently t
he US Labor Department reported weekly jobless claims rose 12,000 to 472,000 when a drop of 8,000 to 452,000 had been expected, and the Philly Fed’s index showed manufacturing growth slowed down considerably in June.
The data put a halt to a rally on Wall Street, weakened the dollar and led to a run on gold.

Currency
With a softening of the USD against the kiwi on the back of jobless claims, the NZD is sitting around .7086, which is a .5c improvement on Wednesday's figure.

NZD Gold
Gold in NZD is currently sitting around NZD$1785, which is little change from Wednesday's price, despite a jump in USD gold. An improvement in the NZD has meant that despite a USD$25 improvement in gold prices, NZD gold is actually NZD$10 less than a week ago.

Complete our survey and go in the draw to win an NZD$800 prize

2010-06-17T08:56:00.002+12:00

We have been making a few changes to the way we communicate of late. As part of these changes we are also reviewing our current website, email and social media use.

We would love to hear your feedback on the type of information you would like to see, so please fill out our survey http://www.surveymonkey.com/s/bullion. We are offering matching His and Hers coin watches, valued at over NZD$800 RRP, to one lucky winner who fills out the survey.

If you have any other questions or suggestions to help us improve the way we communicate with you, please feel free to email them through to nicola.hoogenboom@nzmint.com

Thanks and happy surveying!!!

This competition is now closed. You can view our new website at www.nzmint.com!

Gold lifts as investors move out of euro

2010-06-16T13:54:00.000+12:00

Gold
The gold price has strengthened to USD$1237 as investors move out of euros after learning Moody's downgraded several Greek banks after cutting the government's credit rating to junk.

Gold still remains relatively range bound between USD$1220 and USD$1240. The next resistance level USD$1250 was broken through on June 8th, but without strong backing this looks to be a way off from reoccurring.

Currency
Light trading of the NZD overnight saw it pick back up to just below the 0.70 mark again to 0.6933, which feels like a long way off from the lows of the last few weeks.

NZD Gold

In spite of a rise in the gold price since Monday, a stronger NZD is again making gold cheaper to buy locally at NZD$1785.

Interesting Developments

MIT in the US has found that using gold and platinum nanoparticles could make the lithium-air batteries used in electric vehicles significantly more effective. Commodity Online Story
The number of bank closures in the USA has increased significantly in the past 3 years, see this Nifty Flash Map
The fed reserve has sold 1.15bn in a Term Deposit Auction Bloomberg Story

NZ dollar up above 0.69

2010-06-14T15:17:00.001+12:00

Gold
Gold closed higher over the weekend, and has again pushed higher on Asian trading this morning. Closing at USD$1225 on Friday it has pushed through to USD$1235 on short covering and continued aversion to risk.

Traditionally gold is quieter in June and July during the summer holiday period in the US. Combine this with the DuanWu holiday (also known as the Dragonboat Festival) throughout China and SE Asia and we may see weak movement in the gold prices until Thursday when Asian countries comes back from holiday.

Currency
The NZD increased against the USD at the end of the week, increasing from around 0.65 back up to 0.69, partially due to the increase in the OCR rate, and more confidence in the riskier markets - making the NZD$ more attractive to FX investors again.

NZD Gold

Despite a USD$15 rise in the gold price since Friday's update, NZD gold is only up $4 to $1800 on a stronger kiwi dollar.

Interesting articles

Should you buy or rent?

New Zealand dollar puts a shine on local gold prices

2010-06-11T12:03:00.001+12:00

Gold

Gold is down to US$1220 as investor become more optimistic regarding economic growth.

"With a favourable Spanish auction result overnight, a much stronger than expected Chinese export tally and an upward bias in many global equity markets, it would seem like the flight to quality angle in gold is still being tamped down," said broker Nell Sloane at NS Futures.

Following yesterday’s positive comments by [US Federal Reserve chairman Ben] Bernanke on the US economy, profit-taking in gold continues apace," analyst Walter de Wet of Standard Bank said. "Scrap selling has re-emerged with gold above $1,230, which has capped rallies."

"However, we maintain that dips should be bought," he added. "China’s foreign reserve holdings and, by implication, global liquidity are set to increase further, confirming that the longer-term upward trend in gold remains in place."

Gold logged an all-time high of $1,254.50 per ounce on Tuesday as fears the eurozone debt crisis could spread to the UK caused investors to look for a safe haven.

Currency

Yesterday the RBNZ increased the OCR by 25 basis points, to 2.75%, a move that was widely expected. There is an expectation that rate increases will continue to rise, provided that the sovereign debt crisis does not effect local funding costs.

The result of the OCR increase has been a rally of the New Zealand dollar, which was up against major currencies this morning and currently sits around 0.684 against the US dollar.

NZD Gold

Due to favourable exchange rates, the NZD gold price is down almost NZD$90 on Wednesdays price to NZD$1796, despite a much smaller fall in the USD spot price. This is good news locally, as gold becomes better value in local currency, providing good opportunities to buy.

Update 9 June 2010

2010-06-09T16:43:00.000+12:00

Gold

Spot gold rose to a lifetime peak of $1,252.30 per ounce overnight as poor European economic releases compounded already fragile investor mood before settling back despite another brief run-up to $1,245.20/1,246, still up $5.30 from the previous session.

Last time we provided an update the gold price was at USD$1208, so why the big change? Firstly, there was a large upward swing late Friday (Saturday New Zealand time) due to poor jobs figures in the US, which sent the dow tumbling and gold right up. Secondly, the European debt crisis seems to be getting worse, not better, with Hungary joining the list of possible defaults.

Analyst Walter de Wet of Standard Bank commented "While we could see some profit-taking, especially in the physical market as gold targets new highs, we do not expect a steep decline in the gold price as we did in May," he added. "Globally risk remains high, and gold and the dollar are reaping the benefits."

Gold also set new lifetime highs across a multitude of currencies as risk aversion surged, including Canadian dollars, the yuan, Swiss francs, sterling and the euro, while also setting multi-month peaks in Australian dollars and rupees.

Currency

The New Zealand dollar has dropped from last week's 0.68 and has been trading at around 0.66 for much of this week. Tomorrow all eyes will be on the Reserve Bank as the decision on whether or not the raise the OCR is made.

NZD Gold

Spot gold in is up around NZD$1885, which is a $120 increase on the price given in last Friday's update. This is however is still a way off the NZD$1950 we saw in February of last year when the dollar was around USD$0.50

Update 4 June 2010

2010-06-04T16:45:00.000+12:00

Gold has fallen back today, with the spot price falling to USD$1208 on confidence a US economic recovery is taking hold, which convinced tired long holders to take profits.

In New Zealand currency the dollar has risen to 0.684.

$NZD Gold: The rise in currency and drop in USD gold has resulted in a drop in the local gold price to NZD$1765.

Update 2 June 2010

2010-06-02T19:16:00.001+12:00

Gold has rallied over the past 7 days, with USD spot gold now at $1225. This is largely due to continuing Sovereign debt concerns in Europe, as well China's concerns surrounding the that currencies it is being paid in are risky.

In currencies the NZD has weakened against the USD on light volume, as markets took in concerns about USD funding in Europe, trouble in the Middle East, and an ECB report saying that European banks may have EUR€195 billion in write downs.

This has resulted in an increase in the local gold price rising to NZD$1816.

Looking forward, analysts are predicting increases, especially due to concerns over sovereign debt.

"Gold remains well supported above $1,200 [and] dips are buying opportunities," analyst Walter de Wet of Standard Bank said. "We believe that gold will touch record highs in dollar terms soon and also see it trading above $1,300 in [the third or fourth quarter]."

The interesting thing has been that gold has not been following traditional trends.

Walter de Wet goes on to say "Financial strain in the eurozone has pushed the euro to successive multi-year lows against the US dollar, sending it as low as 1.2110 on Tuesday. This has not, however, weighed on gold’s movements, with the metal mostly detaching from its historical inverse relationship with dollar/euro fluctuations."

"Since the Greek sovereign debt crisis, we have had a breakaway from the short-term correlation between the dollar and gold," Citi said. "That is because the Greek/European crisis enhances global systemic risk to the financial system (a positive long-term driver for gold)."

Update 31 May 2010

2010-05-31T14:23:00.000+12:00

$USD Gold: Gold spot is sitting at around USD$1217, which is slightly up on the USD$1215 we saw Friday morning last week.

US gold futures closed higher on Friday as news that Fitch had downgraded Spain’s credit ratings triggered a rash of safe-haven buying.

"Despite government debt and associated interest costs remaining within the AAA range, Fitch anticipates that the economic adjustment process will be more difficult and prolonged than for other economies with AAA-rated sovereign governments, which is why the agency has downgraded Spain's rating to AA+," Brian Coulton, head of EMEA sovereign ratings at Fitch, said in a statement.

"Everything seemed to be settling down ahead of the long weekend and then the debt crisis in Europe surfaced again with the downgrade to Spain. It had never really gone away, just put on the backburner, and as we saw, it quickly went from a simmer to a boil," said a trader in New York.

"As long as people are nervous, gold prices will rise," he added.

"Prices could get up to $1,225 when the market reopens on Tuesday after a three-day weekend, or they could suffer a quick correction and fall to around $1,200 if investors get rid of long positions to make up for losses in other markets," he said.

"It could go either way. On the one hand, you have people buying gold because they see it as a safe investment. On the other, with prices still relatively high, the temptation to take profits is there," he said.

Deutsche Bank recently upgraded its forecasts for gold prices to $1,450 per ounce in 2011 and $1,600 per ounce in 2012, but expected merely modest strength from gold in the near term as the market grapples with deflationary fears over the next quarter.

"After that, investors could again begin to worry about future inflation," Deutsche Bank said.

"Massive turnover has once more been seen on the PM gold fix on Friday, with traders suggesting one or more funds may be closing out its position - possibly option-related - as May draws to a close."

"Turnover stood at 695 bars per side, or around 278,000 ounces, with traders in London and Switzerland noting extremely heavy volumes this week. Gold fixed at $1,207.50 per ounce today."

"Often, central banks do business on the PM fix to get official prices - but traders said it was more likely related to funds - and options - today. Comex options expired on Tuesday and over-the-counter business on Wednesday."

NZD$: Expect moves in the NZD to be determined initially by those of the EUR which should move lower to start the week. Topside for the NZD will again be limited to resistance around 0.6850 in the short-term with current NZD/USD rates sitting at 0.6740.

NZD gold: The price of NZD gold has remained reasonably unchanged over the weekend, with the Memorial Day long weekend in the US delaying any reaction to recent news.

Looking forward we can expect some concerns over the failure of 5 banks in the US http://www.nytimes.com/2010/05/29/business/economy/29bank.html, and three US cities on the brink of bankruptcy http://money.cnn.com/2010/05/28/news/economy/american_cities_broke.fortune/

Update 28 May 2010

2010-05-28T10:23:00.002+12:00

Gold started the climb back up from its dip earlier in the week, breaking through USD$1210 to peg at around USD$1215 this morning. Physical demand is the main catalyst behind the resurgence, with investor demand for bullion starting to drive the price further up.

Demand for gold in physical form has increased dramatically (similar to what we saw in 2008 at the beginning of the financial crisis) as investors move away from risk based investments and into wealth based and safe haven products (gold being the most popular of this category). This is most apparent with the increase we are seeing in US and European based buyers of gold here in NZ.

In currency, the NZD$ has dropped against the US throughout the week, only to pickup over a cent on trading last night. This is due to the Chinese reiterating their level in investments in Europe will not change, so fueling risk based appetite in the Asian markets. With the NZD/USD at around 0.68, gold is still lower in NZD than it was much of this week, despite a higher USD gold price with current spot rate around NZD$1920.

New Zealand Mint has had a busy May with total buy and sell dollar volumes more than double that of any other month this year.

Update 27 May 2010

2010-05-27T14:01:00.002+12:00

In a month that has seen a significant jump in the gold price, New Zealand Mint has seen this translate to the trading desk.

With all of the turmoil in international markets, an NZX market correction and a 5 cent devaluation of the New Zealand Dollar, gold is certainly the performer in May, outshining the rest of the market.

Indeed trading volumes have increased significantly for the Mint, May has seen trading at 225% of January-March figures and the month hasn’t even finished! Just this week alone has seen a significant jump, with only 3 days worth of trading figures, the Mint is already 213% above the weekly average in January-March.

Even with gold hitting record prices this month, just shy of $1250, buyers are clearly seeing value in making a long term investment in gold.

Update 26 May 2010

2010-05-26T14:59:00.000+12:00

Sorry for the delay in proving this update, we have been very busy, with Monday and today the busiest days this year!

And it is not just us, Bloomberg reports “Since the last week of April, exchange-traded products have been adding bullion at a pace not seen since the first quarter of 2009, in the wake of the collapse of Lehman Brothers Holdings Inc. Buying rose as European policymakers agreed on an almost $1 trillion emergency loan package to prevent sovereign defaults.”

Jitters around Europe have continued to cause volatility in markets, with gold prices going as low as US$1170 in the past week and the New Zealand dollar going as low as USD$0.66.

Afternoon trading on Monday (New Zealand time) saw gold prices start to rise again, with gold at intraday highs over USD$1190. The last 24 hours has seen gold once again break through USD$1200, and the NZ dollar down to 0.6640 pushing the NZ gold price to $1820 and higher.

"Uncertainty remains and fears over eurozone debt troubles prevail for the moment," broker VTB Capital noted. "We still maintain that the downside in gold will remain limited and especially if flight for safety returns."
Gold has been rising despite a rise in the USD$, again indicating that Gold is now being viewed more as an independent currency, rather than an alternate to the USD$ (historically gold has performed inversely to the USD$)
Liquidity is the key word globally. With a Bloomberg report stating “Companies have issued $47 billion of debt in May, down from $183 billion in April and the least since December 1999, data compiled by Bloomberg show.” The report goes on “Investors are fleeing all but the safest securities on concern European leaders won’t be able to coordinate a response to rising levels of government debt from Greece to Spain, while U.S. legislation threatens to curb credit and hurt bank profits. The rate banks say they charge each other for three-month loans in dollars has almost doubled since February.”
This uncertainty has meant that while the response to the budget has been largely positive, the NZD$ has been under pressure as buyers pull out of the currency markets. This trend follows the move away from the AUD$ as investors shy away from risk based products. The implication for $NZD gold is that while we are not seeing the highs of late last year, when kiwi currency was low against the greenback, $NZD rated gold is close to last week’s highs, despite the lower USD$ price.

Update 19 May 2010

2010-05-20T10:11:00.000+12:00

Gold dropped below $1,190 an ounce on Wednesday, as extreme volatility of the euro and losses in global equity markets prompted profit taking after rallies to record highs last week. The announcement that Germany will ban naked short selling of Government bonds and equities and naked CDS in government bonds sending the market in to a spin. There remains a significant chance that the measures could garner support/implementation from the larger euro area states. Indeed, according EU Financial Services Commissioner Michelbach, extending the short-selling ban BEYOND Germany was discussed in Brussels yesterday: “Of course, it’s all about sending symbolic headlines to markets right now to flank the rescue package. We’re in touch with European Union partners but we need to get the UK on board. This has to be EU-wide to be effective.”

For USD$ gold: "When we hit all-time highs, everybody thought gold was going to shoot straight up to the moon. Now, a lot of people decide to take their profits, and the big banks just put in sell orders that hit the market," said COMEX gold floor trader Dominick Cognata."I don't think the selling is over yet, I think we still have another $20 on the downside."

The NZD dropped 2 cents last night ( bottom of 0.666) which means in NZD$ terms the price of gold has actually increased slightly ( ~ .3% ) with the currency drop, primarily as investors pulled out of risk based investments ( including Gold ) due to the German Ban.

Here is what the picture looks like in $USD

Here is what the picture looks like in $NZD

Update 19 May 2010

2010-05-19T12:36:00.000+12:00

The gold price dropped from its highs on Monday, trading as low as USD$1215 before pulling back up to USD$1225 at close of the US markets.

"Gold fell... in Europe due to profit-taking, but it is likely to remain supported due to continued concerns about sovereign debt contagion and currency risk," broker GoldCore said. "Many retail investors remain wary of bubbles and we have seen some retail buyers taking profits in recent days," it added. "Sentiment remains mildly bullish but there is no sense of a frenzy, mania or panic buying."

The NZD/USD has continued to drop, from 0.71 0.72 last week to around 0.68 0.69 at present. This drop was primarily due to risk aversion in the currencies markets (again attributable to the Eurozone crisis). This means NZD$ rated gold has increased from NZD$1880 for a gold Kiwi on Friday, to currently around NZD$1930.

Interesting articles:

Banks dump Greek debt on the ECB as eurozone flashes credit warnings – Evan Andrews Pritchard at the Telegraph talks about sales of Sovereign debt and how it may affect the ECB - Telegraph
An interesting article from an Argentinean economist relating the Greek crisis to the Argentinean crash of 2001 Voltairenet
Is Japan the next one to watch in the sovereign risk race? Seeking Alpha

Interesting videos:

Global gold rush as currencies weaken TV3
Ron Paul: why gold and silver YouTube

Update 14 May 2010

2010-05-15T09:57:00.002+12:00

Spot gold prices pulled back a little overnight primarily due to profit taking, but the bullish sentiment for gold remains, with concerns over the success of the austerity measures in Europe not being effective.

"It is a whole different ball game. People are concerned that such a sacrosanct institution like the ECB can say one thing and do the opposite thing two days later," analyst Robin Bhar of Credit Agricole.

The European Central Bank said it had decided to purchase government bonds as a means to shore up the euro and prevent the spread of contagion from Greece to other southern European nations on Monday in an about-face that broke its prior stance. It also broke trust in the institution said Bhar, heating sentiment towards gold and spurring physical trade.

Overall sentiment is still positive for gold with any dips in the price being a good opportunity for buying, and global trade is still very brisk especially in Europe.

New Zealand Mint has been in the Media a bit this week:

NZI Business Gold still an attractive investment:

http://tvnz.co.nz/business-news/nzi-business-may-14-gold-still-attractive-investment-3-01-video-3541410#

Interest Double Shot Interview: Mike O’Kane from NZ Mint on the pros and cons of Gold:

http://www.interest.co.nz/ratesblog/index.php/2010/05/13/double-shot-interview-mike-okane-from-nz-mint-on-the-pros-and-cons-of-gold/

Radio New Zealand News Further rise in gold price tipped:
http://www.radionz.co.nz/news/stories/2010/05/10/124803c3fd04

Newstalk ZB Greece leaves investors going for gold:
http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=175465

3News Emirates Hotel gets Midas touch as gold prices soar - see NZ Mint's Mike O'Kane on gold demand
http://www.3news.co.nz/Emirates-Hotel-gets-Midas-touch-as-gold-prices-soar/tabid/369/articleID/155629/Default.aspx

Update 12 May

2010-05-13T06:40:00.000+12:00

Flight to gold sees financial markets struggle
By NZ Mint head bullion dealer Mike O’Kane.

Turmoil is good for the price of gold and again financial markets are struggling against a tide of opinion that the Euro bailout package may not succeed.

At USD$1,233 overnight, gold hit its highest price ever and some analysts are predicting USD$1,250 by the weekend. The previous record price of USD$1,227 was when the NZD / USD was around 0.54.
So for Kiwi gold buyers, the relatively high NZD$ rate is helping to offset these record gold prices making it cheaper to buy here than in most countries. As an aside, gold has also hit record highs in Yen, Euro, USD$ and GBP.

Analysis
Overall financial markets globally are struggling as investors move to safe haven investments. This can be seen by the fall in US government bond yields, and the surge in the gold price.

Sovereign risk concerns are still at the forefront of most markets’ concerns, especially in Europe, so instead of moving to the normal safety of government issued bonds or the Euro, investors are moving to gold.

Volatility in the gold price is expected as we break through to new levels, but given the bullish attitude towards gold as a long term investment, the overall trend is expected to be up.

Update 11 May

2010-05-11T14:23:00.000+12:00

The gold price has held around the USD$1200 mark after news of a European bailout package caused the international stock markets to recover some lost ground overnight.

"Gold held up well around the $1,200 area after the soaring stock market and ensuing euro bailout was evaluated by the markets," said George Gero at RBC Global Futures.

The ECB, IMF and EU put together a $1 trillion rescue package over the weekend and allayed fears that Greece’s debt crisis would contaminate other countries. The ECB even agreed to buy government bonds directly from EU member nations, a move previously ruled out because of fears of inflation. The overall consensus is that with a bailout of this level, money printing is about to go into overdrive in the Euro zone, a year after a similar move was introduced in the USA. Gold, historically anti-inflationary, is expected to trade within ranges over the short term, until the inflationary repercussions start to bed in – then the gold price should start to pick up sharply again.

"Gold outperformed the dollar last month, though both posted solid gains," said investment manager Andrew Karsh at Credit Suisse. "As a result, we are seeing the asset class continue to gain favour among investors in the current environment”

Stock markets around the world were positive after the announcement – the DJI was back up around 400 points

In NZD$, the focus remains overseas with the Euro, with commentators anticipating a small dip, but nothing too large or untoward.

The NZD$ gold spot price remains reasonably steady after Friday's spike.

Update 10 May 2010

2010-05-10T09:10:00.000+12:00

Gold consolidated its gains on Friday trading - closing over 4% higher over the week, with the equities markets (DJI and Nasdaq in particular) wiping off all their gains from this year, as concerns over the spread of the Greek crisis continue. Hitting USD$1213 before pulling back at close of trade, the Gold Spot is currently USD$1208.

Standard Bank recently said in it's monthly report on precious metals "The escalating concerns over the risks of contagion of the Greek financial problems have cast a heavy cloud over the euro and even raised some issues about its relevance as a reserve currency."

The report went on to say "When added to reservations about the size of the US budget deficit, as voiced by Federal Reserve chairman Ben Bernanke, this has laid the foundation for golds rejuvenation as an asset of last resort."

Darran Grabham, an Analyst for Standard Bank added "Gold will find support at $1,150 and then $1,120, but over the long run, gold could reach $1,325 per ounce, with the next step at $1,240"

Hussein Allidina from Morgan Stanley wrote in an e-mailed report yesterday. "We like owning gold and expect further upside as sovereign risks intensify and real rates remain anchored."

"Increasing sovereign risk is lifting appetite for gold."

Commentators appear to see prices lifting, at least in the short term.

A recent Bloomberg update stated "Gold may target its previous record as concern that financial turmoil will spread from Greece across Europe prompts investors to seek refuge in the metal"

"While contagion fears persist, gold should remain well supported and we expect gold to test its December 2009 high above $1,200 an ounce," analysts including New York-based Hussein Allidina wrote in a note to clients yesterday.

Another Bloomberg source stated "H3 Global Advisors, a Sydney-based commodities and hedge-fund manager, is banking on golds advance to $1,500 an ounce in the next year and reducing its exposure to industrial metals such as nickel."

One trader in New York said Greeces debt problems were not entirely responsible for golds recent rise, adding that liquidity has dried up around the world. "It is now clear that there is no money of any sort available at the sovereign level."

Locally, the Kiwi dollar climbed slightly against the USD, with the agricultural commodities sector providing a good backdrop for future strength, but still very range bound between 0.71 and 0.72. This has tempered NZD$ priced gold, with the spot rate dropping its high of NZD$1700 to NZD$1680.

Update 7 April

2010-05-07T10:24:00.000+12:00

The gold price passed though USD$1200 an ounce as investors sought safe havens from the financial unrest in Europe and significant drops in the DJI and Nasdaq overnight.

The primary question at the moment, is whether this price increase will continue, or trigger a round of profit taking at the end of week trading tonight.

The Dow Jones dropped by 400 points on overnight trading, and then due to what has been described as “fat finger technical issues” dropped another 600 points in 25 minutes, before paring the overall loss to 450 points.

Concerns over the debt positions of more Euro countries (Spain, Portugal and Italy are being looked at closely) and the reaction to the Greek Austerity cuts are pushing investors away from the Euro and into safe haven and lower risk investments like the USD$, or Gold. This has a twofold effect for the Gold in NZD$, with the NZD/USD potentially dropping further on a strengthening USD$ and the Gold price pushing to new highs.

Silver did not move particularly much overnight trading within a USD$0.40 range.

All of this leads to what can only be described as an exciting rollercoaster ride for Gold, Currencies and equities for the short term.

Update 6 April

2010-05-06T10:01:00.000+12:00

Gold traded in a broad range yesterday, topping out over USD$1190 and reaching a low of USD$1160 overnight before returning to the USD$1175+ range for the start of trading today.

Silver followed the trend, dropping from a high of around USD$18.80 to a low of USD$17.10 before climbing back to the mid $17 range.

Prices for gold in NZD improved overnight, primarily due to the NZD/USD dropping. Currently spot is trading around NZD$1620.

Most of the movement is due to continuing Euro zone issues, with the fear of contagion now becoming the prevalent driver in most markets. The EUR€ suffered against most currencies, with NZD/EUR being the only increase in the NZD exchange stable overnight. The NZX suffered its biggest drop this year, with most markets taking large drops – fear of continuing instability moving investors away from riskier investments.

Update 5 May

2010-05-05T16:44:00.004+12:00

Gold broke through USD$1190 on Tuesday night after confirmation that Greece would receive a bailout. High USD$ prices against the EUR€ saw gold pull back to USD$1170 on overnight trading, due to profit taking and to make up for losses on the stock markets.

Silver has followed gold – breaking up to USD$19 and dropping to below USD$18 overnight.

Risk aversion is expected to continue due to skepticism over the Greek bailout succeeding, coupled with rumors that Spain now require a bailout from the IMF which has been strenuously denied by Prime Minister Zapatero. Short term this may impact on the Gold futures price. Medium term, it should help bolster the spot price, as investment pulls out of the Euro and Sovereign and moves to safe haven investments such as gold.

In currencies – the NZD$ moved over 0.73 on Tuesday, pulling back by over a cent Wednesday as the USD$ strengthened due to the EUR issues. Over the ditch the AUD$ took a knock after the RBA raised their rate by .25 to 4.5 and announced it will hold at this rate for a while.

NZ currency fluctuations meant the USD$ spot price drop was covered with the exchange rate drop, again tempering any overall movement in NZD$ gold price, similar to the movements we’ve seen this year. Gold peaked just after midnight New Zealand time at around NZD$1620, with afternoon trading seeing the price down to around NZD$1600.

Looking forward we expect more volatility in currency and metal prices due to the Euro zone woes. Gold has broken through to new records in currencies in this zone (EUR, CHF and GBP ) as they drop against the USD$ and the gold spot price remains volatile.

Update 22 April

2010-04-22T15:13:00.000+12:00

GOLD:   Gold finished up on the close of US trading at $1148/oz trading as low as $1139. Concerns around the Greek debt crisis and its impact on the Euro, gold’s safe haven status providing some further support.
                Platinum Palladium and Silver all finished strongly – palladium at its highest since 2008 on a stronger Chinese auto market.
                Credit Suisse raised its 2nd Qtr forecasts for base and precious metals, with the expected range $1100 - $1200. The main concern is interest rates, with rising interest rates possibly having an effect on investor demand.

NZD:      The Kiwi dollar traded within the same range as further Greek concern slowed risk appetite in the currency markets.
                The IMF is still pushing for emerging Asian currencies ( including China ) to revalue/appreciate as they remain substantially undervalued ( especially in the case of the Renminbi)
                USD$ and CAD$ are again at parity 1:1

Update 21 April

2010-04-21T16:14:00.002+12:00

Gold prices recovering following Goldman Sachs and Greece disruptions

Gold prices spent the first half of the week trending down, from USD$1160/oz on Friday, to Monday’s low of USD$1132. The fall was primarily due to a stronger USD in light of Goldman Sachs’ pending court case and continuing issues around the Greek economy causing markets to become more risk adverse.

Tuesday trading (overnight Tuesday NZST) saw a reversal of the trend with the Gold price climbing back up to USD$1140 on Wednesday morning NZST.

In currency, the Kiwi dollar has sat between USD$0.7200 and USD$0.7050. A strengthening USD has been caused by the move away from risk due to Goldman Sachs and Greece.

Locally, the CPI announcement brought the rate back in overnight. However at the close of US trading it was back over the 0.71 mark. The range has been quite firm for the Kiwi recently so it’s not expected to break out in the short term.

Looking forward, Global G7 and G20 meetings this week will put the attention back on the Yuan vs the USD.

Freight and commodity prices may be in for a bumpy ride, due to eruptions from Mt Eyjafjallajokull which have caused widespread disruption to flights in Europe.

Update March 19

2010-03-19T14:10:00.002+13:00

An interesting Bloomberg article regarding Central bank holdings of Gold

March 18 (Bloomberg) -- Central banks added the most gold to their reserves since 1964 last year amid the longest rally in bullion prices in at least nine decades, data compiled by the World Gold Council show.
Combined holdings rose 425.4 metric tons to 30,116.9 tons, an increase worth $13.3 billion at last year’s average price, according to the data. India, Russia and China said last year they added to reserves. The expansion was the first since 1988, the data from the London-based council show.
Central banks, holding about 18 percent of all gold ever mined, are expanding their holdings for the first time in a generation as investors in exchange-traded funds amass bullion as an alternative to currencies. Holdings in the SPDR Gold Trust, the biggest ETF backed by the metal, are at 1,115.5 tons, more than the holdings of Switzerland.
“There’s clearly been a renaissance of gold in central bankers’ minds,” said Nick Moore, an analyst at Royal Bank of Scotland Group Plc in London. “It’s not just been central banks taking on gold, but a general shift for physical gold in the investment sector.”
Official reserves of central banks and governments may expand by another 187 to 218 tons this year, CPM Group forecast last month. The council’s data also includes the holdings of the International Monetary Fund, European Central Bank and other international and regional bodies.
Gold climbed 24 percent last year, reaching a record $1,226.56 an ounce in December. World holdings rose 527 tons in 1964 and climbed 832.7 tons the year before that, according to the London-based industry group.
‘At the Edge’
“Gold is quietly, at the edge, becoming the world’s second reservable currency, supplanting the euro and rivaling the dollar,” Dennis Gartman, a Suffolk, Virginia-based economist and hedge-fund manager, said in his Gartman Letter today. “The trend shall continue months, if not years, into the future.”
Gold is up 2.7 percent this year and traded at $1,126 an ounce at 11:29 a.m. in London. The U.S. Dollar Index, a six- currency gauge of the greenback’s value, is up 2.7 percent this year after slipping 4.2 percent in 2009. Bullion typically moves inversely to the U.S. currency.
Higher prices for gold, especially in euros and sterling, may deter countries from adding further to reserves, RBS’s Moore said. Bullion climbed to a record 838.43 euros on March 5, Bloomberg data show.
“Central banks might feel somewhat embarrassed to be buying gold at records” in some currencies, Moore said. “When you have an asset trading at an all-time high, the temptation is not to purchase more.”
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.

Gold price daily average in NZD$

Gold price daily average in EUR

Gold price daily average in GBP

Gold update March 2010

2010-03-16T17:05:00.002+13:00

Welcome to 2010,and the resumption of service for the NZ Mint bullion blog.

Today's blog is all about comparisons over the last 10 years. We've seen significant growth in the stock markets and real estate markets, and I thought it was a good time to compare this growth against the Gold markets locally.

Gold price vs NZX50

This chart shows the movement over the last decade of the gold price( right hand axis) vs the NZX50 index ( left Axis). The left hand axis shows the NZD$ price the NZX50 index reached from Q1 2001 through to Q1 2010, the right the Gold price in NZD valued gold.
The growth of the NZX50 index has been strong, reaching a high in 2007 of ~NZD$4400 (increase of 258%) dropping down to 3225 ( growth of 189%). In the same period NZD$ valued gold climbed to a high of ~NZD$1950 (growth of 325%)and has pulled back to around NZD$1570 ( growth of 261%) since 2001.

Median house price vs Gold Price

This chart shows the median house price (LHS axis - greeen bars) in NZ from 2000 to 2010. ( stats from the REINZ ) compared to the USD$ gold price (RHS axis -blue line) over the same period.
Growth in housing prices increased from NZD$170,000 in 2001 topping out in Q1 2010 at NZD$360,000 - a growth of 211%. The gold price climbed from USD$295 topping out in 2009 at USD$1195 ( growth of 405% ) before pulling back to USD$1100 (370%) or NZD$ terms starting at NZD$600 topping over NZD$1900 ( 316% ) and back down to NZD$1550 (258%)

From Mineweb:

$1,000 gold now more floor than ceiling

The price that was once an invisible ceiling, is now more likely to be the level at which a fall in the gold price bottoms out

Author: Ross Louthean
Posted: Monday , 15 Mar 2010

PERTH -
The once magical US$1,000 an ounce price for gold - once considered unachievable - will be increasingly regarded more as the future "bottom out" floor price in the immediate years ahead, according to a senior economist with the major Australian bank Westpac.
Senior economist Huw McKay told the Paydirt Australian Gold Conference in Perth today that the gold price had stepped up year on year by about US$100 an ounce above predictions, for at least the past five years.
"What we did not know was going to happen was that we were going to have such an enormous collapse in risk appetite that pushed gold beyond the US$1,000 magical barrier," McKay said.
"That has changed gold trends forever and what was once an invisible ceiling, is now more a level where we talk about the US$1,000/oz price as more of a floor price going forward.
"It is now being seen as the level at which any plunge in the gold price will start to pull out of such a dive."
McKay attributed the gold price pressures as due to the change in demand for jewellery - from two thirds of world gold consumption in 2007 to around 40% currently.
"In parallel with this, there has been an expansion in exchange traded products which have grown from accounting for 7% of total gold consumption in 2007 to 19% now.
"This is a dramatic trend movement move and it is here to stay," McKay said.
"World equity markets and financing has so much uncertainty to it that the allure of gold has never been stronger.
"Demands for gold has shifted to the investor, with very strong fundamental trends coming together to fuel investor appetite for things they can see, touch, hold and put in a warehouse. Gold certainty meets those criteria."
McKay said the turn towards gold had come out of all other asset classes as "investors try to get into something that holds value".
The Westpac executive predicted gold holding at around US$1,006/oz by the end of this year, moving only slightly higher to around US$1,030 by 2011.
and Goldcore:

Gold Supported by Geopolitical and Sovereign Risk as S&P and Moodys Warn US

Published by Maria Sutt under Market Updates | Precious Metals Update |

Gold
Gold fell in US trading on Friday from $1,119/oz to $1,098/oz to close with a loss of 0.54% and a loss of nearly 3% for the week. Silver was again more resilient and fell less than 2% last week. Gold has range traded from $1,102/oz to $1,106/oz so far in Asian and European trading this morning. Gold is currently trading at $1,103.00/oz and in euro and GBP terms, gold is trading at €804/oz and £732/oz respectively.
World equity markets are under pressure after mixed US economic reports and Chinese monetary policy tightening concerns. Asian stocks were mostly down, as are European shares so far this morning. Increasing geopolitical tensions between the US and China is likely making markets somewhat jittery (see below).
Sovereign debt issues and currency risk remain prevalent and look set to keep gold buoyant for the foreseeable future. Indeed, gold is increasingly being seen as a safe haven currency as seen in the recent record (nominal) highs in euro and sterling due to the challenges facing the UK and European economies.
These sovereign debt issues also face the US and thus the world’s reserve currency the dollar. Late last week, S&P warned that the US’ AAA credit rating is not guaranteed and today Moody’s is warning that unless the US gets public finances into better shape, there would be “downward pressure” on its triple A credit rating.

Concerns about gold being a bubble are overdone with gold today only 19% above the price it was 12 months ago (and up 11% in sterling terms and 9% in Euro terms). While many equity markets are up by some 40% to 70% in the same period.
Silver
Silver reached as high as $17.08/oz this morning in Asia. Silver is currently trading at $16.96/oz, €12.38/oz and £11.27/oz. Silver outperformed gold again last week and continues to exhibit signs that it might soon begin to play catch up with gold and target recent record (nominal) highs.
Platinum Group Metals
Platinum is trading at $1,610/oz and palladium is currently trading at $464/oz. Rhodium is at $2,550/oz.
News
Geopolitical tensions between China and the US appear to be escalating which is another bullish factor for gold. China PM, Premier Wen Jiabao, has defended China’s increasingly assertive trade and foreign policies and vowed to fight any new signs of economic crisis and currency “protectionism”. Tensions over Taiwan and Tibet continue and he chided the US for a 'disturbance' in relations. Wen turned the tables on the U.S., renewing appeals for assurances from Washington about the safety of China's $800 billion in foreign exchange reserves invested in U.S. Treasury securities. Wen said the value of the U.S. dollar was a "big concern" and asked Washington to take unspecified steps to reassure investors.
The UK housing market has stalled again, fueling fears of a double-dip recession. There are growing concerns that the housing market could be facing a double-dip recession, as data released today shows house prices in March have risen by the smallest margin on record.
Finance ministers from the 16 countries using the euro meet today in Brussels to discuss the Greek debt crisis and Greece’s progress in introducing the austerity measures needed to regain the confidence of the markets.

From AP:

China trims holdings of Treasury securities

China trims holdings of US Treasury securities for third month as US federal deficit soars

Martin Crutsinger, AP Economics Writer, On Monday March 15, 2010, 5:02 pm EDT

WASHINGTON (AP) -- China retained its spot as the biggest foreign holder of U.S. Treasury debt in January even as it trimmed its holdings for a third straight month. The string of declines underscored worries that the U.S. government could face much higher interest rates to finance soaring budget deficits.
The Treasury Department said Monday that China's holdings dipped by $5.8 billion to $889 billion in January compared with December. Japan, the second-largest foreign holder of U.S. government debt, also trimmed its holdings but by a much smaller $300 million, to $765.4 billion.
Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $19.1 billion in January, as net purchases of private corporate bonds fell by $24.8 billion, the biggest drop on record.
A month ago, Treasury initially reported that China had cut its holdings so sharply that it had lost its top spot as America's largest foreign creditor, a position it had held since its holdings overtook Japan in September 2008.
However, 10 days later, Treasury released its annual update of the figures. The revised data showed that China, while reducing its holdings, still retained the top spot. Treasury revises the data based on more detailed readings of the statistics, which do a better job of sorting out actual ownership of the bonds. This review determined, for example, that some bonds credited to Britain because they were purchased there were actually purchased on behalf of Chinese investors.
The decline in Chinese holdings is coming at a time of increased tensions between the two nations. Chinese Premier Wen Jiabao on Sunday rejected American pressure on China to allow its currency to rise in value against the dollar, saying such efforts amounted to a kind of trade protectionism.
A group of 130 House members sent a letter to the administration on Monday urging the Treasury Department to cite China as a currency manipulator in a report that is scheduled to be released next month. The group also called on the Commerce Department to impose trade sanctions on China on the basis that its currency system was an unfair trade practice.
"If the administration fails to act on this issue it will hold back our economic recovery and hurt the ability of American small businesses and manufacturers to increase their production, keep their doors open and create jobs," said Rep. Mike Michaud, one of the signers of the letter.
Treasury spokeswoman Natalie Wyeth said Treasury was still reviewing the congressional letter. She said there would be no direct response to Wen's comments beyond President Barack Obama's comments in a trade speech last week. Obama said that China would make an "essential contribution" to rebalancing the global economy by moving to a more market-oriented currency regime.
The Obama administration is hoping China will resume allowing its currency to rise in value against the dollar as a way of trimming the huge trade gap between the two nations. The United States ran a deficit of $226.8 billion with China last year, the largest deficit recorded with any country. A cheaper dollar would make American products less expensive in China while making Chinese goods more expensive for American consumers.
Treasury's latest report on international capital flows showed that foreign holdings of Treasury securities increased by $17 billion in January to $3.71 trillion.
While China and Japan decreased their holdings, oil exporting countries boosted their holdings to $218.4 billion, up from $207.4 billion in December, and holdings of Treasury securities in Great Britain rose to $206 billion, up from $178.1 billion.
Rick McDonald, an economist at Action Economics, said the January report reflected a normalization of purchasing activities following a two-year credit crisis in which investors had flocked to the safety of U.S. securities in the wake of severe turmoil in global financial markets.
Julian Jessop, chief international economist at Capital Economics, said the Treasury report just affirmed market information in January that showed the dollar rising in value against most currencies with Treasury interest rates falling. Jessop said this pattern did not support concerns that foreigners were losing their appetite for U.S. bonds.
Strong foreign demand for U.S. Treasury debt helps to keep the interest rates that the government pays for that debt from rising. However, there are other factors that influence U.S. interest rates beyond foreign demand, including decisions by the Federal Reserve.
Fed policymakers have kept a key short-term interest rate at a record low of zero to 0.25 percent for more than a year and many economists believe that the Fed will continue to pledge to keep rates exceptionally low as a way to boost the economy when they conclude their regular meeting on Tuesday.
The federal budget deficit hit an all-time high of $1.4 trillion in 2009, and the Obama administration is projecting that this year's deficit will climb even higher to $1.56 trillion. But the administration is also pledging to get the deficits under control once the economy has resumed sustained growth.

Update October 2009

2009-11-03T10:17:00.010+13:00

Gold price in NZD$ vs USD$ for 2009This chart is a graphic representation of the obvious effect the higher NZD$ has on the gold price.
along with the Australian dollar ( below )
Gold price in AUD$ vs USD$ for 2009

NZD$ vs USD$ for 2009

Moving forward: The US Mint is seeing rapid increases in demand for the Silver Eagle and Gold Buffalo bullion coins. This correlates to demand shown throughout the world for Gold and Silver bullion coins picking up in the latter half of the year.
The annual LBMA conference in Edinburgh this week is viewing gold pricing in USD$ and demand to be still strong in the near to medium term

Is gold likely to break USD$1100 shortly?

Optimism over Dubai gold sales

Worlds oldest Gold mine found in Georgia

Gold making a come back for the latter part of the wedding season

Barrack continuing to de-hedge 1 million ounces now,the remaining 1.9 million by September 2010

Update 21 September

2009-09-17T09:29:00.011+12:00

Gold price in USD$ vs NZDUSD exchange - this is a very good demonstration of how the moving USD$ value is keeping the NZD price of gold very stable at the moment, almost every move in the gold price is shadowed by an equal movement in the exchange rate, highlighting the capability of Gold to also act as an exchange rate

Russian Central bank buying increases by 300,000oz *(9.3tonnes)

IMF approves sale of 403 tonnes of gold *(12,956,750.9oz)

The Vix rate drops to its lowest rate in a year

The US Dollar drops to its lowest level in a year

Strong data takes a toll on Bonds, continues the expectation of inflation

Gold expected to rise above USD$1100 in 2010 on central bank buying

Gold industry faces reserve crisis - given the rapid escalation of Gold prices, demand and a reduction of supply, is there going to be a tipping point for immediate supply on a global scale?

Update 4 September

2009-09-04T10:05:00.007+12:00

Daily Gold price (NZD and USD) and the Kitco.com 24 hour Gold price charts.

The Gold price in US$ has increased strongly over the last 2 days - gaining from around USD$950 through to its current USD$992 ( ~NZD$1380 at the end of August to currently ~$1460)

Is this an indication that gold has broken out of its range from the previous few months?
Bloomberg.com
China to push gold and silver investments to its citizens?
Indian demand to increase before Diwali

Missing Russian gold found at the bottom of Lake Baikal?

Update 20 August

2009-08-20T10:51:00.005+12:00

US Gold demand up 10% for Q2

Indian sales increase and the central banks become buyers

Indian demand looks to increase

5000 Swiss bank accounts given to the US IRS

IMF indicates a Nascent recovery underway

More bad news - Germany bracing for another possible credit crunch

Good news - unlocking the secrets of Gold chemistry

Quick update for 13 August

2009-08-13T11:57:00.005+12:00

German Gold Reserves in New York

An interesting piece about the possibility of Germany's Gold reserves being held in the US. It also mentions the new CBGA which has reduced from 500 tons per annum to 400 tons (including any sales by the IMF).

Update 11 August

2009-08-11T13:05:00.003+12:00

Inflation could force gold to be new global currency

Comex gold to consolidate, rise

Investing in gold: What's right for you, physical or paper?

Credit Suisse analysts say they continue to like the long-term story for metal demand, suggesting demand will remain at strong levels in the next 10-15 years.

Why Gold investing is crucial

Update 5 August

2009-08-05T12:33:00.010+12:00

As you can see from the chart above ( gold priced in USD$ and NZD$ ) due to a weakening USD$ - it is becoming cheaper to buy gold here in NZ dollars despite the gradual increase in the USD$ price of Gold.

Another forward looking month for Gold bullion, with more accounts of buying in quarters not regularly associated with physical gold -US hedge fund managers 'turn to gold'

Expectations of continued growth in demand in the next 4- 6 months - U.K. Royal Mint Doubles Gold Output as Demand Swells

Central banks holding onto their gold rather than selling- Central bank gold sales may be lowest since 1994

Gold prices must go up - WGC official

Quest to retrieve shipwreck gold completed

Law changes mean South Africans can now own gold bars

arrrrr -Gold treasure found in pirate shipwreck

Update 29 July - NZ Mint now in the Central City

2009-07-29T14:41:00.009+12:00

We have shifted to our new premises at 48 Greys Ave, Auckland Central.

High Speed trading now big news in the US stock market - the ability for the large market players to transact between exchanges before the 1 second confirmation of a trade is completed.

Oil market speculation to be restricted - this will have an impact on the uptake in the Energies markets, most likely to have an impact on the commodities markets.

Drop in consumer confidence weighs on commodities the commodities market dropped overnight, as consumer confidence in the US markets dropped in July.

All eyes on the OCR the high dollar is making it cheaper to buy NZD$ valued gold at the moment.

update 15 June

2009-06-15T11:12:00.002+12:00

Gold price Daily average NZD(blue) vs USD(green)

South Africa's gold output drops 13%

Strong gold price augurs well for some juniors

Update 12 June

2009-06-12T09:23:00.007+12:00

Gold price Daily USD(green) vs NZD(Blue)

NZDUSD weekly average

Bloomberg: Bondholders Face Losses From Commercial Mortgages

Long-term US unemployment woes increasing the rate of prime mortgage foreclosures

Interesting news - and a reminder to always declare everything at Customs.....
Two Japanese citizens caught carrying US$134 Billion of undeclared US bonds trying to enter Switzerland

Some interesting reading - Rozanna Wozniak ( NZ economist )has written a paper for the World Gold council - http://www.research.gold.org/research/ regarding investing in Gold for retirement ( with a UK bent)
This site is very informative, with lots of information updated regularly. Highly recommended (requires registration (free))

update 11 June

2009-06-11T09:29:00.004+12:00

Gold price USD(green) vs NZD(Blue)

NZD after the OCR was announced this morning

Russia, Brazil Will Buy $20 Billion IMF Bonds, Diversify Currency Reserves

Gold May Be ‘Best Investment' - Bloomberg

Update 9 June

2009-06-09T08:50:00.004+12:00

Local investment News:
Investors risk losing $20m on Albany project

ING fund investors must make their own call

Blue Chip rides again after action fails

Overseas:
US Mint Sells $948 Million in Bullion Coins

Bloomberg on the current volatility in the market

Reuters overnight review

Update 05 June

2009-06-05T09:46:00.006+12:00

Quarterly gold price (average) in USD(green) and NZD(blue)

Gold price Daily in USD (Green) and NZD (Blue)

Bill English thinks the rising share prices may be another "bubble"

Gold price in USD up USD$20 again overnight

Reuters overnight update
Did U.S. Export Over 175 Million Ounces of Gold?

Update 04 June

2009-06-04T08:56:00.006+12:00

The Gold price in USD$ dropped over night, however this has been mitigated by the NZD$ drop against the USD$ - showing how the the movements are currently aiding in exchange rate hedging for Kiwis.

Capital Gains tax on property in NZ?

Keynote speeches from the World Mining Investment Congress

Glen Beck from Fox news with a chart showing the increase of USD$ in the market over the last 100 years.

Update 02 June

2009-06-02T09:38:00.005+12:00

The Kiwi dollar is climbing higher again, on the weaker US$, helping push the gold price higher, and making it cheaper to buy in NZD$ ( offsetting the exchange risk)

The gold price price cam back last night due to a renewed interest in stocks (despite the announcement of GM going into bankruptcy.)

The Expectation of Gold breaking the USD$1000 barrier again this summer is high -

thestreet.com video

Reuters update

Gold can still be found in the wild

Update 28 May

2009-05-28T12:11:00.003+12:00

Budget this afternoon, should be interesting to see results reflected with the S&P and the NZDUSD exchange rate

German company introduces a Gold bullion dispensing ATM

Ever wanted to stop smoking? a great blog from Mike (In Tokyo) Rogers

update 27 May

2009-05-27T08:13:00.004+12:00

Gold price still stable however the NZD is still climbing ( more like the USD is still dropping )

Mike is world famous in New Zealand - TV3's ASB business show today

Time life pictorial on why printing money can be dangerous

An interesting article on the state of mind in the US currently - a man is bieng prosecuted for paying in Gold and Silver coins

Update 22 May

2009-05-22T09:08:00.008+12:00

Sorry for the gap in updates, it's been a busy few weeks.

We're currently experiencing a resurgence in the USD$ gold price - again a move to safehaven investments due to instability in the US dollar and the equities markets.

Global investment in gold has increased by up to 38% in the first quarter year on year.

Bad news on the property investment front in NZ.

update Thursday 07 May

2009-05-07T11:26:00.005+12:00

Gold price in NZD And USD daily average

A busy night - with the gold price bouncing back over USD$900, but offset by a similar increase in the NZDUSD cross rate. The big story at the moment is the bank stress tests, with the news being positive or negative depending upon your location.

Gold closes higher on thoughts of inflation ahead

Dollar Falls Further Versus Resurgent Resource-Linked Currencies

What investors need to know about the stress tests

Update 06 May 2009

2009-05-06T09:38:00.004+12:00

Gold price in NZD (blue) and USD (Green) daily average

A busy night, the US Fed reserve believe we are at the bottom and climbing back out of the recession. Gold broke through USD$910 before dropping back down to just below USD$900 at close.

NY gold ends up on fund buying amid inflation worry

Gold rises on worries over banks; copper falls first day in five

Gold Climbs to One-Week High as Dollar Declines; Platinum Gains

Update Tuesday 05 May 09

2009-05-05T09:42:00.006+12:00

Gold price in USD(Green) and NZD(Blue) daily.

NY gold ends higher on inflation fear, weak dollar

China's Gold Buy Raises Eyebrows For Right Reasons

Australian, New Zealand Dollars Rise as Slump May Be Easing

Update Monday 04 May

2009-05-04T11:51:00.005+12:00

GOLD NZD$ price 04 May 2009

May day through most of the world, so markets were fairly quiet on Friday.
Gold falls as investors rediscover their appetite for risk

Warren Buffett: Inflation on the horizon

Friday, 01 May 2009

2009-05-01T13:12:00.005+12:00

NZD$ Gold price daily

EUR Gold price daily

USD Gold price Daily

A quiet night, Chrysler has filed for bankruptcy and and US Treasuries are down.

The good news, Swine flu is no longer (hello 2009 H1N1)

On the global bullion front - gold sales are up in India and still running strong in Dubai

2009-04-30T11:59:00.005+12:00

Gold price daily in NZD$

A small rally overnight due to a weakening in the USD$. WHO have updated their level to 5 of 6 for the Swine flu pandemic. This may start to affect markets shortly.

OCR announcement this morning: the predicted 0.5% drop - having an immediate effect, dropping the NZD$ by nearly a cent.

Update 29 april 2009

2009-04-29T09:20:00.003+12:00

Gold price NZD$ daily average.

A quiet 2 days - US Consumer confidence on Monday moved the gold price back, and trading last night was quiet.
Many analysts and investors are waiting to see what comes of the Swine flu outbreaks, if things get worse we would expect to see a move to safehaven investing globally. Watch this space......

Gold Scrapping May Have Reached 500 Tons, GFMS Says

The significance of Chinese gold holding clarification - CPM

Monday 27 April

2009-04-27T10:42:00.005+12:00

Daily average Gold price in NZD$

A busy weekend, thanks to an announcement by China, which has the biggest gold and foreign-currency reserves. China has increased its gold holdings by 76 percent since 2003, said Hu Xiaolian, the head of the State Administration of Foreign Exchange. China added 454 metric tons to its reserves, which rose to 1,054 tons, through domestic buying and scrap refining, Hu told the Xinhua News Agency today.
This is expected to see a positive influence on the gold price in the short to medium term (example in case the Gold price is Pushing USD$920 this morning already)

Bloomberg: China Increases Gold Reserves 76% to Fifth-Largest (Update4)

NZD$ News this morning: N.Z. Dollar Drops on Rate-Cut Concerns, Australia’s Declines

Gold coins are a great way to go.....

Friday update

2009-04-24T09:52:00.005+12:00

Gold price NZD$ hourly chart

A busy night for gold - back over USD$900 due to the bad news coming out from the IMF and a weakening US Dollar.

Have a look at the NBR Wealth guide (Out today) - some interesting articles for local investors (including an indepth look at Gold)

Gold rises above $900 after U.S. jobs data; copper falls

Another General Grant of the coast of Gisbourne? Nail ignites shipwreck mystery

An interesting chart from New Scientist, showing how long different commodity resources will last

2nd Update for 22 April

2009-04-23T12:02:00.003+12:00

I had to add this, as it is a brilliant article, explaining the thinking behind gold from well known and respected Gold analyst James Turk

Kitco Commentators Corner

Update 22 April

2009-04-23T10:33:00.010+12:00

Gold price Weekly in NZD$ (red line shows the simple average)

Another quiet day in the markets -lots of news but no real movments in relation to NZD$ priced Gold.

Gold: Price to be boosted by increased imports to India

IMF predicts further woe for European banks

CNN overnight on the markets

And Bloombergs wrap up

Gold update 21 April

2009-04-22T10:03:00.006+12:00

Welcome to the 21st Century - we are now on Twitter - mike_okane if you'd like to follow us. I'm not trying to compete with the Hollywood stars (1 million followers) but we thought it would be a good way to get quick simple concise information pertaining to Bullion and New Zealand out.

ECB invested 2008 gold sale proceeds in U.S. dollars

Bloomberg News:
Gold Gains for Second Day in Asia as Stocks Slide Boosts Demand

April 21 (Bloomberg) -- Gold advanced for a second day in Asia as a slump in global equities increased demand for the precious metal as a haven investment.

The regional benchmark MSCI Asia Pacific Index dropped for the first time in three days as the prospect of rising bank losses curbed optimism that the global economy is recovering. U.S. stocks tumbled yesterday following six straight weeks of gains as investor concerns grew that credit losses are worsening.

“The gold price was bolstered by the diversion of funds from the equities market,” David Moore, chief commodity strategist at Commonwealth Bank of Australia, said in an e-mail today.

Bullion for immediate delivery rose as much as 0.4 percent to $888.28 an ounce before trading at $887.50 at 1:52 p.m. in Singapore. The precious metal gained as much as 2.3 percent yesterday, the most since March 18.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, stood unchanged at 1,105.98 metric tons yesterday.

“Long-term fundamentals remain tight, with little sign of any oncoming supply glut,” BlackRock Inc., the largest publicly traded U.S. asset manager, noted in a weekly report.

“On the demand side, the rising wealth of emerging economies is likely to support jewelry demand whilst the ongoing financial turmoil and inflationary pressures are likely to continue to stimulate investment demand,” it said.

Among other precious metals for immediate delivery, silver was up 0.7 percent at $12.175 an ounce, platinum lost 0.5 percent to $1,158.50 an ounce, and palladium dropped 0.3 percent to $223.75 an ounce.

Gold update 20 April

2009-04-20T14:25:00.008+12:00

Indicative NZD$ Gold price movement.

The Gold price strengthened overnight due to concerns in the finance sector of further credit writeoffs in the near future. The NZD$ and AUD$ also dropped due to ECB disagreements possibly extending the global crisis, and drops in the commodities market affecting the export markets in both countries.

Euro Drops to One-Month Low on Concern ECB Discord Will Worsen

Govt Guarantee withdrawn from Viaduct Capital

Australia, N.Z. Dollars Fall as ECB Debate Fuels Growth Concern

US gold ends up 2.3 pct on stocks woe, credit fear

Gold price could hit $1,500

Gold update 17 April 2009

2009-04-17T12:25:00.006+12:00

Well its been a while since I've updated this blog, and I do apologize. The primary cause of the slow update is the financial crisis which lead to a very large surge in trading (There's a few quotes out there of me saying we were averaging a normal months trades per day for quite a while.*)

Gold price Daily in NZ Dollars

At New Zealand Mint we are now starting to see physical supplies open up, but there are still bottlenecks in some areas.

The big influence on the gold price in the near future is likely to be made up of stimulus packages and the inflation/deflation issues arising of the back of these.
Another issue is the length of the recession with the IMF announcing that they can see it lasting 5 years or longer

The other factor we Kiwis need to take account is our "strengthening" dollar. This has dropped down to a healthy 0.50 against the US Dollar (down from around the mid eighties late last year), but at the moment we are sitting in the high 50c range due to a weaker US dollar. So much like the proverbial cork on an ocean, the near term movements of our dollar are dependent upon other factors, especially the US Dollar.

*From the Financial times of London:

Gold coin shortage as demand soars
Submitted by cpowell on 12:22PM ET Wednesday, February 25, 2009. Section: Daily Dispatches
By Javier Blas
Financial Times, London
Wednesday, February 25, 2009
Link
NEW YORK -- The rush by retail investors into bullion coins is creating shortages as mints across the world struggle to meet the surge in demand, dealers and mint officials say.

The scarcity is lifting coin premiums to as much as 5 per cent above the spot gold price, a level reached briefly after the collapse of Lehman Brothers last September, when coin shortages also surfaced.

Spot gold in London on Wednesday traded at $972 an ounce, below last week's peak of $1,004.5.

"There is demand for double or triple what the US mint is able to produce," said Michael Kramer, president of MTB in New York, one of the four US gold dealers authorised to purchase bullion coins directly from the government's mint.

The US Mint has sold 193,500 ounces of its popular American Eagle gold coin in the first seven weeks of this year, the same amount it shipped during the whole of 2007 and about the same as in the first six months of last year.

"The demand is extraordinary. All the coins we got on Monday are gone today [Tuesday] and we will not be able to take any order until the following week," Mr Kramer said. "It is the same with other mints."

Bullion coins used to be bought mainly by collectors and gold bugs, but the financial crisis is leading regular retail investors to embrace them, dealers say.

Although the surge in coin demand is a bullish signal for gold prices, the fact that mints cannot match demand means that the potential extra consumption does not push spot prices higher, but just drives premiums above normal levels.

The Rand Refinery in Johannesburg, which mints the world's most popular gold coin, South Africa's Krugerrand, said demand was above its maximum capacity, even after doubling last month to 20,000 ounces from 10,000 ounces a week.

Johan Botha, head of precious metals sales at the Rand Refinery, said there was demand for more from international investors, pointing to strong sales to Switzerland, the UK and Germany. "If we were able to produce 30,000 ounces,the market would absorb it," he said.

Mr Kramer said MTB had Krugerrand orders equal to three months of refinery supplies to the company.

The New Zealand Mint said it was doing as much business in a day as in a month a year ago, mostly servicing global investors.

Michael O'Kane, head of gold sales at the New Zealand Mint, said: "Most mints and bullion manufacturers are struggling to meet current demand levels."

At New Zealand Mint we are now in a position where supply lines are allowing for normal delivery time frames

The big influence on the gold price in the near future is likely to be made up of stimulus packages and the inflation/deflation issues arising of the back of these.
Another issue is the length of the recession with the IMF announcing that they can see it lasting 5 years or longer

From the World Gold council - Inflation worries driving gold

Gold update September 2

2008-09-02T10:53:00.008+12:00

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

2008-08-06T13:57:00.004+12:00

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

2008-07-22T18:12:00.003+12:00

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

2008-07-07T11:10:00.005+12:00

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

2008-06-30T11:44:00.006+12:00

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

2008-06-23T12:03:00.004+12:00

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

2008-06-05T08:45:00.003+12:00

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

2008-05-22T09:45:00.005+12:00

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

2008-05-05T16:20:00.004+12:00

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

2008-04-17T15:01:00.009+12:00

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

2008-03-27T10:41:00.008+13:00

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

2008-03-19T16:25:00.005+13:00

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

2008-03-14T09:58:00.002+13:00

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

2008-03-13T15:11:00.004+13:00

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

2008-03-06T08:19:00.006+13:00

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

2008-02-25T09:36:00.004+13:00

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

2008-02-13T09:30:00.000+13:00

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

2008-02-08T11:45:00.000+13:00

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

2008-02-04T15:01:00.000+13:00

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

2008-01-09T08:51:00.000+13:00

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

2008-01-08T11:13:00.000+13:00

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

Gold update 3 December

2007-12-03T15:28:00.000+13:00

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

2007-11-26T22:13:00.000+13:00

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

2007-11-19T15:49:00.000+13:00

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

2007-11-10T10:03:00.000+13:00

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

2007-10-29T12:22:00.000+13:00

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

2007-10-15T13:45:00.000+13:00

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

2007-10-05T16:19:00.000+13:00

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

2007-10-01T10:59:00.000+13:00

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

2007-09-24T16:23:00.000+12:00

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

2007-09-14T16:27:00.000+12:00

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

2007-09-09T20:37:00.001+12:00

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

2007-09-03T20:46:00.000+12:00

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

2007-08-24T16:02:00.000+12:00

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

2007-08-21T10:02:00.000+12:00

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

2007-08-17T17:11:00.000+12:00

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

2007-08-10T16:09:00.000+12:00

“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

2007-08-03T17:27:00.000+12:00

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!