16 July 2013
Berita Semasa 16 Julai 2013 ...
Repeating history and gold bear market
The weighted average historical duration of previous gold bear markets was 3.2 years with a weighted average price decline of 43%.
History has a knack of repeating itself and that factor alone could guide the metal towartds the green light at the end of the tunnel.
According to latest mining industry comment by Jennings Capital Inc, gold could be close to the end of the rout though continued price weakness is possible with an implied target gold price of about $1,080 an ounce.
The report said : We have examined this gold bear market compared to the previous ones during the past 40 years to have an understanding of how both the commodity and the equities could respond.
The weighted average historical duration of previous gold bear markets was 3.2 years with a weighted average price decline of 43%.
This suggests to us that we could be close to the end of the rout though continued price weakness is possible with an implied target gold price of about $1,080/oz (a further 11% decline).
We have also examined the widening gap between the commodity and equity valuations which have blown out from its historic trading range due in part to the popularity of ETFs. The Gold/XAU ratio has hit an all-time high and could be due for a correction, in our view, at which point, the trade would be to short gold and long the gold equities.
History Has a Knack of Repeating Itself
We have examined this gold bear market compared to the previous ones during the past 40 years to have an understanding of how both the commodity and the equities could respond. We look at the relative price movements and not the fundamentals as the market has been notorious for remaining disconnected from the fundamentals for extended periods of time though we still believe in gold as a store of value as a number of central banks around the world continue a race to devalue their respective currencies from significant amounts of quantitative easing.
Considering the price movements of gold in insolation has the benefit of capturing investor sentiment, momentum, and the market’s perception of an appropriate supply-demand balanced price without the distraction of seemingly supportive fundamental factors. For example, this recent gold bear market has included the Bank of Japan’s announced intention to double the monetary base within two years, and Germany’s intention to repatriate a significant portion of its gold reserves, events that would usually be received as fundamentally bullish.
How Bad Could It Get? Further Weakness Possible
This most recent gold bear market began after the peak gold price of $1,900/oz set on September 5, 2011. About 1.8 years have passed and gold has declined 37% which compares to the weighted average historical duration of 3.2 years and a weighted average price decline of 43%. This suggests to us that we could be close to the end of the rout with an implied target gold price of about $1,080/oz (figure 3). We derived our weighted average performance using the Rsquared correlation between this current gold price decline and the respective historical gold bear market.
We do caution one obvious limitation of comparing this gold bear market to previous declines with the recent use of ETFs which were not widely used in previous gold bear markets. These products have the effect of increasing price volatility as they themselves buy and sell gold in significant quantities.
A Major Decoupling Between the Commodity and the Equities
ETFs have also changed the way we invest in the gold sector as another avenue of exposure to gold. Using the XAU (Philadelphia Gold and Silver Index) as a proxy for gold equities, we note the Gold/XAU ratio has shifted from its usual trading range, corresponding to the popularity of ETFs, in our opinion, and continues to push to all-time highs.
That said, the widening margin between the commodity and equity valuations could be due for a correction, at which point, the trade would be to short gold and long the gold equities.
Sumber : Google
15 July 2013
Berita Semasa 15 Julai 2013 ...
Gold plunge to hit Venezuela hard
Venezuela is one such country as the strategy carried out by the authorities at the Central Bank of Venezuelan has turned it into a country highly vulnerable to the dramatic fall of gold prices.
Since 2013, fluctuating gold prices have puzzled gold traders as the yellow metal tumbled by over 25 percent .
Some country's having enough gold reserves but without enough other liquid reserves to satisfy the needs of their economies for imports also suffered.
Venezuela is one such country as the strategy carried out by the authorities at the Central Bank of Venezuelan has turned it into a country highly vulnerable to the dramatic fall of gold prices.
Analysts said Venezuelan reserves are not in at an adequate level. They can hardly be enough to cover imports for one month. In June, 70% of the country's international reserves were comprised by 365.8 tons of gold.
In this scenario, Venezuela has the largest gold reserves among Latin American countries and ranks fifth worldwide.
This does not mean the country will not be able to import any longer; small portions of money continue coming in. However, there is no flexibility to meet the requirements of the private sector, which needs US dollars to import and curb shortage.
The reduction in the portion of petrodollars allocated to the Central Bank has resulted in fewer reserves. Paradoxically, the nation stopped accumulating reserves and became more fragile due to the jump of its debts in foreign currency, higher dependence on imports, heavy capital outflow, and country risk levels that hit credits in international markets.
Sumber: Google
14 July 2013
Berita Semasa 14 Julai 2013 ...
Gold,Silver sale by Perth Mint drops again in June
Analysts said the drop in sales shows that lower prices have failed to woo buyers in Australia this time around just like elsewhere as consumers expect a further drop.
Australia's largest mint, Perth Mint announced yet another slowdown in gold and silver sales in June.
The mint sold 49,460 ounces of gold in bars and coins during June compared with 92,781 ounces in May,116,755 ounces in April and 52,704 ounces in March.
Silver sales also dropped to 636,047 ounces in June from 674,480 in May.
Analysts said the drop in sales shows that lower prices have failed to woo buyers in Australia this time around just like elsewhere as consumers expect a further drop.
During the mid-April plunge, sales of coins and jewelry surged around the world,spurring a 13 percent rebound in prices in less than three weeks.
However, sales remained weak last month despite the bullion losing 23 percent in the three-month period after the mid-April plunge amid speculation that the Federal Reserve will curb its asset-buying program as the U.S. economy recovers.
The US Mint also reported lower sales figures in June. The U.S. Mint sold 57,000 ounces of American Eagle gold coins in June from 70,000 ounces in May and 209,500 ounces in April
Sumber : Google
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