Buying Gold | Gold Shines Most in September on Seasonal Buys | Zero Hedge | News2Gold

Gold Shines Most in September on Seasonal Buys | Zero Hedge
Gold Advances on Haven Buying, Silver Gains for Third Session ...
Gold Miners May Finally Be A Better Buy Than Gold | Seeking Alpha
John Hathaway Recommends Buying Gold Like It's 1999 Again ...

Gold Shines Most in September on Seasonal Buys | Zero Hedge

Posted: 28 Aug 2014 01:10 AM PDT

Gold Shines Most in September on Seasonal Buys

BLOOMBERG CHART OF THE DAY - September Sees 3% Gains Over 20 Years

Gold investors hurting from recent price falls and a long period of consolidation will be encouraged by the historical record and research and showing gold performs best in September.

The BLOOMBERG CHART OF THE DAY shows bullion averaged gains of 3% each September over the past 20 years, beating next best month November, when prices rose an average 1.8% according to Bloomberg based on a market update by GoldCore. We covered gold's seasonality and gold's best performing months here.

Buying increases with India's festival period, which runs from late August to October and is followed by the wedding season. At these times, bullion is bought for part of the bridal trousseau or in jewelry and bar form as gifts from relatives.

Chinese purchases may also increase toward year-end, before the country's Lunar New Year celebration in February. China replaced India as the largest gold buyer in 2013.

"Indian jewelers and dealers will be stocking up in the coming weeks, so it should affect prices," said Mark O'Byrne, a director at brokerage GoldCore Ltd. in Dublin.

"A lot of traders are aware of this trend towards seasonal strength, so that may contribute to higher prices. They tend to buy and that creates momentum."

See Gold's Sweet Spot - Strongest Months Are August, September, November And January here

Gold in U.S. Dollars - 2 Years (Thomson Reuters)

This morning gold in Singapore ticked higher to $1,285/oz and gold in London has been bid higher to $1,293/oz.

Gold is now trading above its 200 moving average of $1284, and the gold price remains relatively strong despite a stronger dollar, rallying equity market indexes, and a relative easing of geopolitical tensions. Geopolitical risk remains heightened and yet complacency remains extremely high.

The gold/silver ratio is currently 66.10, near its one year high showing silver remaining very good value versus gold.

Receive our award winning research here

Average:

Your rating: None

Gold Advances on Haven Buying, Silver Gains for Third Session ...

Posted: 28 Aug 2014 01:50 PM PDT

Gold and other precious metals settled higher Thursday

Gold gained Thursday in a round of safe-haven buying with higher trading volume contrasting against this week's earlier, and quieter sessions.

Gold for December delivery tacked on $7, or 0.6%, to close at $1,290.40 an ounce on the Comex division of the New York Mercantile Exchange. Reports that Russian tanks entered Ukraine sparked haven-buying, according to analysts.

"The market is getting nervous about the Ukraine situation, and people are moving to gold," Phil Streible, a senior commodity broker at R.J. O'Brien & Associates in Chicago, said in a telephone interview according to Bloomberg News. "Talks of further sanctions against Russia are increasing the safe-haven premium of gold."

Gold prices traded from $1,283 to $1,297.60. They slipped $1.80, or 0.1%, on Wednesday.

Silver scored a third straight session gain. Silver for December delivery — the new most active contract — advanced 13 cents, or 0.7%, to $19.61 an ounce. Silver prices ranged from $19.47 to $19.95.

In PGM future prices on Thursday:

October platinum added $5.30, or 0.4%, to $1,425.20 an ounce, ranging from $1,418.50 to $1,431.30.
Palladium for December delivery tacked on $3.40, or 0.4%, to $889.10 an ounce, trading between $893.55 and $901.50.

London Fix Precious Metals

Earlier fixed London precious metals also advanced. When contrasting London bullion Fix prices and the LBMA Silver Price from Wednesday PM to Thursday PM:

Gold added $9.25, or 0.7%, to $1,292 an ounce,
Silver gained 43 cents, or 2.2%, to $19.75,
Platinum rose $8, or 0.6%, to $1,428 an ounce, and
Palladium added $11, or 1.2%, to $898 an ounce

US Mint Bullion Sales in August

United States Mint bullion sales were unchanged Thursday. Below is a sales breakdown of U.S. Mint bullion products with columns listing the number of bullion coins sold last week, this week so far, last month, the month so far, and the year to date.

American Eagle and Buffalo Bullion Sales (# of coins)
	Thursday Sales	Sales Last Week	Current Sales Week	July Sales	August Sales	YTD Sales
$100 American Platinum Eagle Bullion Coins	0	300	0	0	700	13,600
$50 American Eagle Bullion Gold Coins	0	3,000	5,000	26,000	21,000	245,500
$25 American Eagle Bullion Gold Coins	0	0	0	0	0	27,000
$10 American Eagle Bullion Gold Coins	0	0	4,000	6,000	6,000	84,000
$5 American Eagle Bullion Gold Coins	0	5,000	0	25,000	25,000	410,000
$50 American Buffalo Bullion Gold Coins	0	2,000	1,500	5,500	8,000	125,000
$1 American Eagle Silver Bullion Coins	0	430,000	397,500	1,975,000	2,007,500	28,111,000
Great Smoky Mountains National Park 5 Oz Silver Bullion Coins	0	0	3,000	500	3,000	32,500
Shenandoah National Park 5 Oz Silver Bullion Coins	0	0	500	0	500	20,500
Arches National Park 5 Oz Silver Bullion Coins	0	0	1,200	1,500	1,200	21,200
Great Sand Dunes 5 Oz Silver Bullion Coins	0	N/A	7,500	N/A	7,500	7,500

Gold Miners May Finally Be A Better Buy Than Gold | Seeking Alpha

Posted: 27 Aug 2014 10:45 AM PDT

Summary

Gold miners were originally thought to be the better way to play gold's rise, as they were more levered to the upside than gold itself.
The bullish gold miner thesis did not work, however, as gold miners have actually underperformed gold over the past 5 years.
This time could be different as CEOs focus on containing costs. Gold miners may still outperform gold going forward.

In 2006, a select few thought that the housing market was going to "revert back to the mean". Many of those pessimists shorted levered banks and home builders, while a hedge fund manager by the name of John Paulson bought CDS insurance on subprime mortgages.

When the housing bubble finally burst, the short investors made money, while John Paulson made history by making perhaps the greatest trade ever.

In playing the end of the housing bubble, buying mortgage CDS insurance was arguably much better than shorting banks or homebuilders, as the upside of CDS insurance was orders of magnitude the upside of shorting homebuilders.

A Golden Parallel

In late 2008 and early 2009, the Federal Reserve began expanding its balance sheet by leaps and bounds, and many thought that gold would rally as a consequence. Instead of buying gold the commodity, many investors bought shares of gold miners instead.

It made a lot of sense at the time: for most miners, the cost of production was significantly lower than the spot price. In addition, many miners had large reserves that should have made them highly levered to the upside.

In the opinion of the smart money, buying shares of gold miners was similar to buying CDS insurance in 2006. It was a smarter way to play the bubble.

A Golden Disappointment

5 years later, shares of gold miners have disappointed their investors. Although shares of gold miners did initially rally further than gold the commodity, shares of gold miners also crashed harder beginning in 2012.

In terms of absolute return, the Market Vectors Gold Miners ETF (NYSEARCA:GDX) has vastly underperformed the SPDR Gold Trust ETF (NYSEARCA:GLD) over the past 5 years.

(click to enlarge)

Screenshot from: Google Finance

One reason for the underperformance is that costs were higher than anticipated, as projects constantly ran into delays and cost overruns. Also, rather than create shareholder value, many CEOs decided to use rising prices to build empires. Their empire-building inevitably destroyed shareholder value when gold prices fell.

An Improving Picture

Beginning this year, the picture has improved for gold miners.

GDX, for one, has vastly outperformed GLD: year-to-date, GDX is up 24% versus GLD's 6% advance.

One can argue that this time is different and gold miners will outperform gold going forward because the CEOs have learned their lesson.

Many of the empire-building CEOs have been fired or pressured to step down because of the weakness in their companies' share prices. The surviving CEOs and their successors will no doubt think twice before approving any non-core spending.

Many miners are also dedicated to containing all-in sustaining costs. Barrick Gold Corp. (NYSE:ABX), for example, has a goal of containing all-in sustaining cost to $920-$980 per ounce for 2014 from $915 per ounce in 2013. Newmont Mining Corp. (NYSE:NEM), meanwhile, has a goal of reducing all-in sustaining cost to $950-$1,050 by 2015 from $1,104 per ounce in 2013. Both companies may still be contemplating a merger so that they can save an additional $1 billion a year in costs.

Given the prolonged downtrend in gold miners, many gold miners are trading at fairly cheap valuations. Barrick Gold, for example, trades at a forward PE of only 15. If gold rises and Barrick Gold's production costs remain stable, Barrick Gold's valuation will become even cheaper.

Even though gold miners have had a rough past 5 years, because of the renewed focus on containing costs, they may have a much better next 5 years. Given their vast reserves, the gold miners may still outperform gold like what the smart money originally predicted.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article. (More...)

Seeking Alpha PRO helps fund managers:

Research new investment ideas
Reduce risk

For an overview of our products and pricing:

Thank you for your interest in Seeking Alpha PRO
We look forward to contacting you shortly for a conversation.

Thank you for your interest in Seeking Alpha PRO

  Our PRO subscription service was created for fund managers, and the cost of the product is  prohibitive for most individual investors.    At this time, we do not yet have a subscription product for individual investors.  If you'd like us to contact you when it's ready, please click here.    If you are an investment professional with over $1M AUM and received this message  in error, click here and you will be contacted shortly.

Thank you for your interest in Seeking Alpha PRO
We look forward to contacting you when we have an individual investor product ready!

Already subscribed to PRO? Sign in here

John Hathaway Recommends Buying Gold Like It's 1999 Again ...

Posted: 04 Aug 2014 02:57 PM PDT

In this interview by The Gold Report, portfolio managers Johny Hathaway and his partner Doug Groh share their view on the precious metals market. They also explain how they are investing in the metals right now.

John Hathaway explains how the gold futures chart is showing that we are in the process of a reverse head-and-shoulders pattern, a sign of a bottom and exhaustion of downward momentum. This bottom will be confirmed when gold trades above $1,400/ounce. It's shaping up to be a bottom, although it could be tested over the summer. Chart courtesy: International Strategy & Investment Group LLC.
gold price 2011 July 2014 investing

Are statistics on money flows telling you that investors are starting to get interested again?

Hathaway: Yes. If we look at the SPDR Gold Shares Exchange-Traded Fund (GLD:NYSE), which is one proxy for money flows into the gold space, the outflows that have been predominant over the last couple of years have pretty much run their course. Now, we're starting to see assets build in the SPDR Gold Shares ETF. At Tocqueville, our fund has seen steady inflows all year, in some cases, very substantial inflows. I don't know if what we're seeing is comparable to other managers in the precious metals space, but our experience this year has been positive . Chart courtesy: MeridianMacro

gld gold holding July 2014 investing

Conflicts in the Ukraine, Iraq and Gaza have bumped gold prices lately. Can these events act as long-term fundamental supports or do they represent short-term volatility that will fade fast?

Hathaway: Anything geopolitical always has a knee-jerk impact. I would never recommend gold based on today's headlines, yesterday's headlines or speculation about future headlines. Having said that, geopolitical issues away from the headlines influence the demand for gold. Europeans are probably more conscious of gold today than they might have been six months ago. People want to get their wealth in a safe place. That will reinforce demand for gold as time goes by.

What were gold's fundamentals in 1999?

Hathaway: Fifteen years ago, we were at the end of a 20-year bear market, so the psychology was very negative. Gold was never mentioned in polite discussions. We're not that different today from where we were then. Considering the drop from a high of $1,900/oz to slightly less than $1,200/oz, that's a pretty big decline in the space of two and a half years. That makes the setup similar to what we experienced in 1999. Back then, the markets were flush with optimism, and I would say that's the case today. I think there are many parallels.

One unique thing that is happening right now is that the mining share valuations seem to be leading commodity prices. How comes?

Hathaway: It's not an ironclad relationship, but when the shares outperform the metal, which they've done this year and by a fairly substantial amount, that's generally a favorable setup for a better phase in the gold market. In 2011, the opposite occurred. Gold reached a new high and was in the headlines in every newspaper on the planet, yet the shares were conspicuous by their underperformance. That was a sign that the shares were not confirming the new highs in gold, and we've seen the result. A lack of confirmation between the shares and the metal prices can sometimes indicate the future direction of the gold price, or vice versa, of the share prices.

QE never did seem to weigh down the dollar. Are investors on the sidelines waiting for the impact of liquidity to buy gold?

Hathaway: I think the rationale for owning gold is as strong as ever. Radical monetary policy probably won't end well and any thinking person should be concerned about it. That's why we believe you need to have some exposure to gold. Markets today are over-exuberant: pumped up equity valuations, nonexistent spreads between quality and junk, record issuance of low-grade paper, all of these things are typically indicative of an endgame in financial assets. Gold is not at that party. It's conspicuous by its absence. In our view, it's pretty hard to say that anything represents value these days except precious metals. Gold is wealth insurance.

When we started the Tocqueville Gold Fund (TGLDX) in 1998, we all said, "If this works, we'll be glad we did and if it doesn't work, everything else we're doing will be successful, rewarding and profitable." As it turned out, gold was a terrific thing to be in from 1998 through 2011. And we believe it will be again.

What words of wisdom do you have for investors who may have been in the gold space over the last three years or are just thinking about getting back into it?

Groh: We believe that investors should consider gold and gold exposure as an alternative asset class and as part of an overall portfolio. While there are attractive values in the gold space, investors should think about having broad exposure to the gold sector, whether it's through bullion, mining companies in different stages of development, or producers. Each avenue carries different opportunities and risks. That is why a group of precious metals stocks mixed with an exchange-traded fund or a gold mutual fund like the Tocqueville Gold Fund can serve an investor better than having just one name.

Additionally, I would recommend that investors average their investment over time instead of buying all at once. The gold price is volatile and it's very difficult to get the low points. Averaging over time when the price dips can help financially and mentally even out the ups and downs.

Finally, consider gold as a very long-term investment, not just a two- or three-year investment. We believe it should be a permanent part of an overall portfolio as a non-correlated asset. It doesn't really have counterparty risk and it trades to a different type of profile than other financial instruments. That's why we recommend having a portion of a portfolio allocated to gold and gold mining equities.