Has Gold’s ‘Bubble’ Burst Or Is This A Golden Opportunity?

Today’s AM fix was USD 1,232.75, EUR 957.40 and GBP 822.55 per ounce.
Yesterday’s AM fix was USD 1,249.50, EUR 961.15 and GBP 819.67 per ounce.

Gold is lower today in all currencies. It is now flat on the week in dollar terms but has eked out gains in pound and euro terms after the BOE and ECB elected to keep interest rates at 0.5%. Unprecedentedly low interest rates continue in the western world which is gold supportive.

The U.S. nonfarm payrolls data will be published at 1230 GMT. A poor jobs number will likely see safe haven buying and a better than expected number should lead to weakness. 

Prices had advanced this week after Middle East tension saw oil rise to over $103 a barrel and political turmoil in Portugal led to a surge in the nation’s borrowing costs. 

Gold analysts are the most bullish in a month after the political instability in Portugal raised concern that Europe’s debt crisis will worsen and as a record quarterly drop in prices drove demand for jewelry and coins according to Bloomberg.


Gold in USD, 5 Day – (GoldCore)

Fourteen analysts surveyed by Bloomberg expect prices to rise next week, with ten bearish and three neutral, the largest proportion of bulls since June 7th. While hedge funds are the least bullish in six years and holdings in ETF products dropped to a three-year low, demand for physical metal has been strong.

“A recovery will be tentative initially but a return of the euro zone debt crisis could spark a more sustainable rally,” Bloomberg quoted Mark O’Byrne of GoldCore as saying. “Many jewelers internationally are likely to use the recent price falls as an opportunity to stock up.”

The huge two day fall on the COMEX in April spurred demand for jewelry, coins and bars around the world, and imports into Turkey, the fourth-biggest consumer, expanded to a 4 ½ year high. 

China’s net gold imports from Hong Kong increased 40% in May from a month earlier according to calculations by Bloomberg based on data from the Hong Kong government today.

Cheap gold continues to attract bargain hunters to bullion shops in China.

Mainland buyers purchased 106 metric tons during the month, after deducting flows from China into Hong Kong, compared with 76 tons a month earlier. Inbound shipments including scrap were 127 tons, from 75.6 tons a year earlier and 126.1 tons in April.


Gold in British Pounds, 5 Day – (GoldCore)

Exports of gold to Hong Kong from China were 21 tons in May, according to a separate Statistics Department statement, down from 50.2 tons in April, and compared with 32.7 tons in May 2012.

Trading of spot bullion of 99.99 percent purity on the Shanghai Gold Exchange, China’s biggest market for gold bullion for immediate delivery, exceeded 20 tons every day from April 16 until May 3, when gold had its biggest drop ever in the two days through April 15.

 
Gold in Euros, 5 Day – (GoldCore)

However, it was not all positive on the demand side as the Perth Mint report that bullion sales have fallen for a second month in June as falling prices deterred Australian and western buyers. 

Gold slid 23% last quarter after speculators and weak hand investors liquidated positions after the vicious price falls in April.  The Federal Reserve said it may ‘taper’ stimulus from $85 billion to $65 billion but many analysts question if this justifies the scale of the falls. Especially given the fact that physical demand remains robust globally.

Has Gold’s ‘Bubble’ Burst Or Is This A Golden Opportunity?   
Our recent well attended webinar has been uploaded to YouTube.

 

Topics covered in the webinar included:

* Outlook For Gold And Silver This Year and Coming Years

* Learning From 1970s Bull Market & 1975/76 Price Collapse

* Safest Way To Own Gold And Silver

* Paper and Digital Gold

* Knowing When To Reduce Allocations Or Sell

* Safest Way To Own Gold And Silver

* Extremely Negative Sentiment Towards Gold

In the webinar we caution all to “ignore the considerable noise, alarmist articles and headlines and always focus on the fundamentals, on the importance of diversification and on the long term.”

Despite the favourable macroeconomic, monetary, systemic and geopolitical fundamentals – sentiment in the gold market remains lukewarm – especially among the retail public and media in western markets.

There remains scant media coverage of the gold market in the non specialist financial press and media and what coverage there is tends to be quite negative or very simplistic. 

Gold’s long term diversification value and benefits continue to be almost completely ignored in favour of simplistic analysis and assertions from gurus or a superficial focus on gold’s recent nominal price action in dollar terms.

Short term speculators and weak hands have again been washed out of the paper market on the recent sell off and many speculators are short now due to the poor technicals.

Given the variety of macroeconomic, systemic, geopolitical and monetary risks in the world today, owning an internationally diversified portfolio with healthy allocations to gold and silver bullion has never been more prudent.

NEWS
Gold Bulls Dominant as Portugal Stokes Debt Concern – Bloomberg

Gold eases for 2nd day; US jobs data eyed – Reuters

Gold Drops to Trim First Weekly Gain in Three Before U.S. Data – Bloomberg

Singapore launches world’s first physical precious metals exchange – Channel News Asia

COMMENTARY
Bass Hunkers Down: "We Dramatically Reduce Portfolio Risk" – Zero Hedge

Billionaire Sprott Warns – Derivatives Will Crash Financial System – King World News

Why U.S. Economy Is Facing An Inflationary Time Bomb – ETF Daily News

Audio: Chinese Housewives’  "Gold Rush" – CRI English

For breaking news and commentary on financial markets and gold, follow us on Twitter.

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