Posts Tagged ‘gold bullion’
First-Quarter Demand for Gold Jumps 19% in China, 27% in India
By Michael Lombardi, MBA for Profit Confidential
This doesn’t make it easy to understand for investors who bought gold stocks and have now seen them go down in price…
But while the prices of gold stocks have pulled back significantly this year, demand for physical gold bullion has gone through the proverbial roof.
The U.S. Mint had to halt the sales of its most-sold 1/10-ounce gold bullion coin. In Australia, the Perth Mint is working in overdrive to fill rising orders. The British Mint reports British consumers’ buying of gold has accelerated as well.
In the first quarter of 2013, total demand for gold bullion from China amounted to 294 tonnes, as jewelry demand in the country increased by 19% from the same period last year. Bar and coin investment demand rose by 22% from the first quarter of 2012. (Source: World Gold Council, May 16, 2013.)
In India, demand for gold bullion came in at 257 tonnes in the first quarter, up 27% from the first quarter of 2012. Retail investments in gold bullion edged up by 52%, and demand for jewelry was up 15% in the first quarter.
Likewise, demand for gold bars and coins in the U.S. were up by 43% in the first quarter of 2013 compared to the first quarter of 2012.
And that’s not all! The biggest driver of gold bullion prices in my opinion, central banks, bought more gold.
The first quarter of 2013 marked the seventh straight quarter when central banks accumulatively added more than 100 tonnes of gold bullion to their reserves. But we still have central banks, such as the Bank of China and the Russian central … Read More
Too Many Buyers as Central Bank of India Restricts Gold Imports
By Michael Lombardi, MBA for Profit Confidential
Data from the U.S. Commodity Futures Trading Commission showed that on May 7, there were 67,374 short contracts on gold bullion—speculators betting the yellow metal will go down in price. This was 6.4% higher than it was a week earlier. (Source: Bloomberg, May 13, 2013.)
According to EPFR Global, a firm that tracks money flows, for the week ending May 8, money managers fled from gold bullion and precious metal funds, withdrawing $1.27 billion. So far this year, they have withdrawn $20.8 billion—the largest amount since the firm started to track the data in 2000.
As bears continue to look for reasons to sell and investors pour out of gold, I see a brighter future for gold bullion ahead.
For the price of any investment to decline, there has to be some fundamental changes. Consider the decline in the key stock indices in 2008–2009. The reasons for the broad market sell-off were dismal earnings, a financial system on the verge of collapse, and anemic consumer demand.
But the fundamental reason for the rise in gold bullion prices hasn’t changed. There is still strong demand, and it’s increasing not just in U.S., but in the global economy.
In April, the trade deficit of India, the biggest consumer of precious metals, increased by more than 70% from March due to high imports of gold bullion and silver. The country imported $7.5 billion worth of precious metals in April, compared to $3.1 billion in the same year-ago period. (Source: MarketWatch, May 13, 2013.)
As a result of this pressure on the account deficit, the central bank of India put restrictions on … Read More
Demand for Gold Bullion Coins Jumps Nine-Fold at U.S. Mint
By Michael Lombardi, MBA for Profit Confidential
In April, as gold bullion prices dropped in the futures market, or the “paper market” for gold, the United States Mint reported it sold 209,500 ounces of gold bullion coins, up 950% from the 20,000 ounces of gold bullion coins it sold in April 2012. (Source: United States Mint web site, last accessed May 1, 2013.)
While this shows that demand for gold bullion in the U.S. is strong; elsewhere in the world, investors are also rushing to buy more gold bullion.
In April, Britain’s Royal Mint sold more than three-times the number of gold bullion coins it did in April of last year. The director of bullion and commemorative coin at the Royal Mint, Shane Bisset, said, “…since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin market, and this presently shows no sign of abating.” Bisset added, “…the Royal Mint continues to supply to its customers and is increasing production to accommodate the higher demand.” (Source: Kolesnikova, M., “U.K. Royal Mint Gold Coin Sales More Than Tripled in April,” Bloomberg, April 24, 2103.)
Major markets for gold bullion are showing robust demand. According to Standard Chartered PLC, on April 23, its gold bullion shipments to India doubled compared to the week before, and they were 20% higher from previous records.
On the other side of the world, in Australia, the situation is the same; gold bullion buying is increasing. In an interview, Ron Currie, Sales and Marketing Director at Perth Mint, said, “…we haven’t seen levels like this since the 2008 global financial crisis.” Without providing … Read More
American Real Disposable Income Collapses in First Quarter of 2013
By Michael Lombardi, MBA for Profit Confidential
In the first quarter of 2013, real personal disposable income (the amount of money the average American has left after paying taxes) in the U.S. economy decreased 5.3% compared to the same period of 2012.
As consumers in the U.S. economy experienced a contraction in their income, their expenses increased. Personal outlays increased 4.1% in the first quarter of 2013 compared to the first quarter of 2012. As a result of contracting income and rising expenses, the personal savings rate compared to disposable income in the U.S. economy was only 2.6% for the first quarter of 2013.
Similarly, private businesses in the U.S. economy are seeing their inventories rise. Businesses increased their stockpiles by $50.3 billion in the first quarter of 2013, $13.3 billion in the fourth quarter of 2012, and $60.3 billion in the third quarter of 2012.
What all of these numbers show is that consumers in the U.S. economy are struggling and businesses are not selling. This phenomenon is further proven by the corporate earnings of companies in the key stock indices; while many are beating their profit targets, only a handful are meeting their revenue expectations.
The U.S. economy is consumer-focused—consumer spending makes up a huge chunk of our gross domestic product (GDP). Consumers in the U.S. economy are in pain. We have wages that are declining, expenses that are rising (thanks to the weakening value of the U.S. dollar and rising inflation due to too many new printed dollars in the system), savings that are falling, and an unemployment rate that remains high.
As I have been saying, real economic growth takes place in a … Read More
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