Archive

Tag Archives: gold

 
 

 
 

Advertisements
  • Global investment in ETFs over the quarter was up significantly by 56% on the previous year.
  • The Indian market is showing signs of recovery, up 9% to 223.1t from 204.8t in Q3 2011 following increases in both jewellery and investment demand. In comparison with Q3 2011 jewellery demand was up 7% to 136.1t and investment demand rose by 12% to 87.0t. Investors moved into the imitation coin market*, up 59%, whilst jewellery increased due to re-stocking ahead of the Indian wedding and festival season. Indians appear to have acclimatised to recent price trends and have been buying into a rising market.
  • In China demand fell 8% to 176.8t in Q3 2012 from 191.2t in Q3 2011 due to falls in jewellery of 6% and investment of 12% mainly as a result of negative sentiment surrounding China’s slowing economy.  Jewellery demand was 123.8t in Q3 2012, due to a decline in purchases of 18k pieces and a notable slowdown in the expansion of the retail network, as stock-building reduced. Investment demand was down to 53.0t Demand this quarter remains 19% above the longer term average.
  • Central banks bought 97.6t in the quarter. In six out of the last seven quarters, central bank demand has been around 100t, which is a sharp increase from as recently as 2010. The year to date figure for central bank buying is up 9%.

source: wgc

Claudius – Aureus, gold (41-54 C.E., finest known)

Claudius, 41-54 AD. Gold Aureus (7.79 g), Rome mint, struck 41-42 AD. Head of Claudius right, wearing oak wreath. Reverse: Legend in three lines, within oak wreath; EX SC / OB CIVES / SERVATOS. RIC 15; C. 34; BMCRE 16; Von Kaenel 149 (this coin). With a remarkably fine and elegant early portrait. A splendid coin — one of the finest aurei of Claudius in existence! Rare. NGC graded Uncirculated. Millennia, 86

Gold investors clearly saw last week’s price drop as a buying opportunity, as holdings of gold-backed ETFs hit a record highthis week (p.103). Although QE3 would support precious metals prices, it is only ‘icing on the cake’, as more important factors will likely send gold higher this year.

Investment Thesis

The recent sell-off notwithstanding, we remain bullish into 2012. While the current strength in the USD is a headwind to USD gold prices, we expect aggressive Fed action, including and the likely adoption of QE3 in 1H12, to be positive for gold, even if the USD continues to strengthen. We forecast prices will rise on a quarterly average basis through 4Q13.

Investor Demand

In our view, the timing of the sell-off in late December suggests strong selling pressure linked to year-end book squaring, portfolio adjustments and commodity index reweighting. Furthermore, the sell-off also coincided with an especially sharp rally in the TWI of the USD, strong headwind for gold given its USD pricing and quasi-currency function.

While we expect European funding stress to continue in early 2012, recent coordinated actions by six central banks and separate actions by the ECB suggest that non-gold related measures to ease access to USD swaps will be successful, reducing downside pressure on the gold price.

Consequently, gold prices will again depend on whether the four pillars of the original bull market persist: (i) decline in producer hedging (and potentially de-hedging as a positive demand factor); (ii) the decline of DM central bank sales and rise of EM central bank purchases; (iii) the inability of gold mining companies to increase gold supplies materially; and (iv) long-term growth in physical investment demand.

Supply

Constrained new gold supply is placing greater emphasis on the increased delivery of above-ground stocks to meet demand. However, in theabsence of central bank sales, and limitations on the size of the available scrap pool, the continuation of physical demand growth from ETFs and coin sales is putting upside tension on the market, ensuring the bull market is sustained into 2012-13.

from:  Morgan Stanley Global Reasearch – March 12, 2012 The Commodity Manual