Buying Gold | Why patience will be rewarded for anybody <b>buying gold</b> in June <b>...</b> | News2Gold |
| Why patience will be rewarded for anybody <b>buying gold</b> in June <b>...</b> Posted: 02 Jun 2014 10:06 PM PDT Posted on 03 June 2014 with no comments from readers Patient investors who buy when prices are at the low-point of the cycle always win in the long run. Historically gold prices are cheapest in June. Gold prices are at a low-point in their cycle. Buy while prices are low this month and your reward may come sooner than expected. Why's that? Did gold prices not fall $50 in the past week? Yes, gold prices are exceptionally cheap. Bullion billionaire Eric Sprott offers the following bullish thoughts in his latest missive: 1. The Gold Forward Offered Rate remains very low, with extended periods of time in negative territory. 2. Why is Germany's repatriation of their 674 tonnes of gold taking so long? As of March 2014, only 69 tonnes had made their way back, a pace of less than five tonnes a month. If there is no shortage of gold, why are the US and UK exporting so much gold to Switzerland? (which itself exports most of it to China). 3. According to some estimates, China consumed over 4,800 tonnes of gold in 2013, implying that about 3,600 tonnes were drawn from global stocks (i.e. western vaults) to satisfy demand. 4. All this Chinese buying is reflected in the monstrous amounts of gold deliveries on the Shanghai Gold Exchange. 5. Dubai is building a new gold refinery capable of handling 1,400 tonnes, and current global gold refining capacity is about 6,000 tonnes (world mine production is less than 3,000 tonnes a year). Why would they need so much refining capacity if physical demand was not buoyant? 6. As the major gold miners cut back on exploration, future mine supply will remain constrained. 7. Another 'temporary source of supply' (900 tonnes) has been ETFs, which have been raided for most of 2013. However, they have now stabilized. Other things being equal in demand, where will that 900 tonnes of supply come from in 2014? 8. Interestingly, the Silver Institute, in its 2014 World Silver Survey, noted that there was a 96 million ounces shortfall in 2013 due to strong physical demand. ArabianMoney investment newsletter readers have the benefit of more insights this month in a special item on gold's historic performance in June (subscribe here). Posted on 03 June 2014 Categories: Gold & Silver  |
| Citigroup: 'Don't be tempted' to <b>buy gold</b> mining stocks | MINING.com Posted: 29 May 2014 04:00 PM PDT The gold price extended the week's losses on Thursday sliding to a near 4-month low as negative sentiment sweeps the market. On the Comex division of the New York Mercantile Exchange, gold futures for August delivery touched $1,251 an ounce during regular trading, the lowest since end January. Gold is still modestly up in 2014 but has retraced 68% of its year to date rally, down $123 from highs reached mid-March as the rally on the back of safe haven demand loses steam and lower prices fail to entice bargain hunters. Investment blog Barron's quotes on Thursday from Citigroup's so-called Global Gold Book which paints a grim picture of prospects for the industry and that the "poor fundamentals [is] difficult to ignore: Understandably, many shareholders are toiling with the idea of buying into gold equities given the past 12-month's decline in share prices. We continue our theme of "don't be tempted". Clearly there will be rallies in market valuations as sentiment about gold or operating currencies change, but we believe these will be short term in nature and are difficult to time. Long-term shareholder value is driven by a company / industry's ability to deliver EVA. The odds remain strongly against gold companies on this front. "Cuts to capex and exploration costs, and high grading, are helping margins near term. However, it is a double edged sword. The reason is that gold companies have to spend an increasing amount of capex just to fight a falling production trend and prevent a blow-out in unit costs. "It is because of this that we caution that a slow-down in capex will invariably result in a fall in production (over time), which in turn will lead to a faster rise in unit costs. Whether or not they cut capex, we see both scenarios as bad for cash flow delivery and shareholder returns, longer term. Increasing head grades in order to boost near-term results (a practice that has become common over the past year) should also have detrimental effects longer term. There seems to be no easy way out." While Citigroup makes no bones about its bearishness on the sector, the bank nevertheless rates Vancouver's Goldcorp (TSE:G) and top producer Barrick Gold (TSE:ABX) as buys and is neutral on Newmont Mining (NYSE:NEM). Citigroup cautions investors to stay away from Gold Fields (NYSE:GFI), Harmony Gold (NYSE:HMY) and Sibanye Gold (NYSE:SBGL). |
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