Physical Gold Demand Soared As Gold Price Tumbled In 2013 ...

Physical Gold Demand Soared As Gold Price Tumbled In 2013 ...
2014 gold price rally builds against record bearish bets | MINING.com
Gold price kicks off 2014 with a bang | MINING.com
TIMELINE: Gold price from QE1 to the taper to chair Yellen | MINING ...

Posted: 03 Jan 2014 09:45 AM PST

Sales of gold coins are booming even as the precious metal's price is falling (and it's not just central banks). Despite gold futures 28% drop in 2013 (its worst since 1981), the WSJ reports that demand for gold coins shot up 63% to 241.6 metric tons in the first three quarters of 2013.

Because these investors intend to hold onto their gold for years or decades, many see the recent drop as an opportunity to buy more at a cheaper price, notes on strategist, "they're not under any pressure to get a yield or a return in a year."

Still, the importance of gold coins has been eclipsed in recent years by the rapid growth of exchange-traded funds, some analysts say, "hedge funds tend to overpower the impact of physical gold purchases... relatively little money gets them an awful lot of market power." Unlike hedge funds, who may leave when prices fall, it is clear that coin buyers are in for the long haul.

Via WSJ,

Sales of gold coins are booming even as the metal's price is falling, a testament to gold's continued appeal for small investors and collectors despite its first bear market in more than a decade.

The heightened appetite for physical gold is a rare bright spot in a market that saw hedge funds and other large investors head for the exits last year. Gold futures prices tumbled 28% in 2013, their worst performance since 1981.

But at mints and coin shops around the world, gold continued flying off the shelves.

...

Sales of Gold Maple Leaf coins by the Royal Canadian Mint surged 82.5% to 876,000 ounces in the first three quarters of 2013 from the same period of 2012. The Perth Mint, Australia's national coin and bar producer, saw sales rise 41% to 754,635 ounces last year, while the U.S. Mint sold 14% more American Eagle gold coins than it did in 2012, along with a record amount of silver coins.

...

Because these investors intend to hold onto their gold for years or decades, many see the recent drop as an opportunity to buy more at a cheaper price, he added. "They're not under any pressure to get a yield or a return in a year," Mr. Melek said.

...

Some think the continued strength of physical gold buying will prevent prices from falling much further, as it becomes clear that a core group of investors is sticking with the market,

...

"It's obvious to me that at some point our dollar will see a downturn in its value," said Mr. McClintock, who runs a contract post office. "Gold is just a good comfort, it's a commodity that anybody in the world knows and you don't need to be an expert to understand."

...

Still, the importance of gold coins has been eclipsed in recent years by the rapid growth of exchange-traded funds, some analysts say.

...

"Folks like hedge funds tend to overpower the impact of physical gold purchases," Mr. Melek said. "Relatively little money gets them an awful lot of market power."

Unlike hedge funds, who may leave when prices fall, many coin buyers are in for the long haul.

...

"Most people who buy physical gold aren't doing it for the same reason you'd purchase a stock," said Mike Getlin, vice president with Merit Financial, a bullion and coin dealership in Santa Monica, Calif. "They tend to have a much longer investment horizon. They tend to hold onto them forever and pride of ownership is a huge factor in that."

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2014 gold price rally builds against record bearish bets | MINING.com

Posted: 03 Jan 2014 11:31 AM PST

The gold price enjoyed a second day of double digit gains, adding 1% on Friday to reach a near 3-week high and notching up its best performance since October.

On the Comex division of the New York Mercantile Exchange gold for February delivery added as much as $13 an ounce to a day high $1,238.30 in early afternoon trade.

Gold's fightback from last year's lows of $1,187 which was again tested on the last trading day of 2013 has put the record number of short sellers in the market on the back foot .

Short positions – bets that the price will go down – held by large investors or so-called managed money climbed to a record to 82,765 lots or 8,276,500 ounces in the week to December 24 according to the delayed Commodity Futures Trading Commission data released yesterday.

So many big players short of gold could translate into further upside for the metal as commercial traders and hedge funds are forced to cover their positions should gold go higher from here.

Gold has also been boosted by increased demand from Asia. The premium paid for taking immediate delivery of gold in Shanghai has risen to $23 an ounce, up from zero in November and a 4-month high.

Demand from world number two importer of the metal could also be boosted this year.

The Reserve Bank of India lifted some import restrictions on December 31 which was responsible for a plunge in imports on the subcontinent of between 250–300 tonnes in 2013 from a peak above 1,000 tonnes in 2011.

A negative in the market remains continued outflows from gold-backed exchange traded funds.

Holdings of the world's largest gold ETF – SPDR Gold Shares (NYSEARCA:GLD) – dropped 3.5 tonnes yesterday after a 45 tonne decline in December. At 794.6 tonnes GLD holdings are at the lowest level since January 2009.

Overall, the more than a hundred gold-ETFs traded around the world saw net selling last year of 869 tonnes with the bulk of the selling – 586 tonnes – occurring in the first half of 2013.

The price of of gold ended 2013 down 28% at a shade over $1,200 an ounce, bringing a 12-year bull run that took it from around $270 an ounce at the end of 2000 to a record high above $1,900 in September 2011 to a decisive end.

Image by cobalt123

Gold price kicks off 2014 with a bang | MINING.com

Posted: 02 Jan 2014 11:31 AM PST

The gold price surged more than 2% to a two-week high on Thursday, attempting a comeback on the first day of trading in 2014 after last year's dismal performance.

On the Comex division of the New York Mercantile Exchange gold for February delivery added $28 an ounce to $1,230.80 in early afternoon trade.

Gold was boosted by a weaker dollar, bargain hunting, investor rotation out of US stocks which after a record setting 2013 suffered a triple digit loss on Thursday.

Investors exited the market in droves last year and selling accelerated again in December, with holdings in exchange traded products backed by gold falling the most since June.

Net selling for the year amounted to 869 tonnes with the bulk of the selling – 586 tonnes – occurring in the first half of 2013.

Ole Hansen, head of commodity strategy at Denmark's Saxo Bank, in a research note Thursday points out that only six out of 52 weeks saw net buying during 2013:

"The behaviour of investors will be watched very close as 2014 begins for any signs of whether the relatively calm price action may attract some fresh investment into yellow metal, either through futures or exchange traded products."

Hansen believes most of the outflows from gold ETFs has happened by now and consequently the metal is in a much better position to react to gold-friendly news. During the first half of 2014 gold would remain under pressure, but he is cautiously optimistic looking further into the year.

The performance of precious metals is a stark contrast to US stock which enjoyed a bumper 2013. The S&P 500 rose 29.6%, the biggest annual gain since 1997, while the Dow blue chip index climbed 26.5% in 2013, the best performance since 1995.

Compared to gold and silver, equities now look overbought. The Financial Post quotes Julian Jessop, chief global economist at Capital Economics, as saying gold could revisit $1,400 this year and could probably go higher:

"Overall, then, we see plenty of scope for gold to bounce back in 2014. Indeed, the poor performance in 2013 has left the precious metal looking attractive again compared to other assets, including equities."

Image by Al_HikesAZ

TIMELINE: Gold price from QE1 to the taper to chair Yellen | MINING ...

Posted: 01 Jan 2014 02:34 PM PST

When US Federal Reserve Chairman Ben Bernanke testified in front of the US Congress in July last year he famously said said he "doesn't pretend to understand gold prices" and "nobody does".

During incoming chair Janet Yellen's confirmation hearings in November she echoed Bernanke's befuddlement about the gold price adding that she doesn't "think anybody has a very good model of what makes gold prices go up or down."

Yellen, a noted monetary policy dove and considered an architect of the Fed's QE program, did have some insight into gold safe haven status: "It is an asset that people want to hold when they're very fearful about potential financial market catastrophe or economic troubles and tail risks. And when there is financial market turbulence, often we see gold prices rise as people flee into them."

While Yellen pleaded ignorance about where the gold price is headed, she is more confident about the state of the stock market saying traditional valuation methods do not suggest equities are behaving "bubble like".

Yellen supported the modest start to tapering off asset purchases despite her beliefs that the US economy is falling "far short". But 2014 could bring a few surprises, not least of which a stock market correction as this 50-year chart shows.

CLICK BELOW FOR A SLIDESHOW OF THE ROCKY RELATIONSHIP BETWEEN THE US FEDERAL RESERVE AND THE PRICE OF GOLD:

Physical Gold Demand Soared As Gold Price Tumbled In 2013 ...

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