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Today's AM fix was USD 1,628.50, EUR 1,291.74, and GBP
1,040.31 per ounce. Yesterday’s AM fix was USD 1,623.50, EUR 1,284.52,
and GBP 1,035.20 per ounce.
Silver is trading at $28.87/oz,
€22.96/oz and £18.49/oz. Platinum is
trading at $1,492.00/oz, palladium at $628.70/oz and rhodium at $1,215/oz.
Gold edged up $1.20 or 0.07% yesterday in New York and
closed at $1,627.40/oz. Gold remained steady in Asia seeing gradual gains
which continued in European trading.
 
Cross Currency Table – (Bloomberg)
Gold rose for an eighth
consecutive session today, its longest winning streak in almost a year. The
gains may be due to concerns that the U.S. Federal Reserve may launch further
non conventional monetary measures, such as QE, in
increasingly desperate attempts to prevent the world's largest economy
falling into recession or Depression.
Gold has gradually rose 3% in the last eight sessions
and is also supported by the debt crisis in Europe with initial euphoria over
a victory for pro-bailout parties in Greece giving way to persistent concerns
over Spain and Italy and their banking sectors.
Today's Spanish debt sale saw Madrid's borrowing costs
rise even more. The average yield on the 12-month bill was 5.074%, against
2.985% previously.
The Federal Open Market Committee (FOMC) releases a
policy statement at the end of its two-day meeting on Wednesday. The Fed's
current "Operation Twist" programme,
which involves buying long-term debt and funding the purchase by selling
short-term notes, is scheduled to expire at the end of June.
The Fed appears increasingly likely to offer even more
monetary stimulus despite political opposition, concerns about whether it
will be effective and the still underestimated risk of inflation.
The Group of 20 summit said that leading and emerging
economies will "take the necessary actions" to strengthen the
global economy and if growth weakens substantially, countries without heavy
debt loads stand ready to “stimulate their economies.”
Physical buying was reported as "lacklustre" in bullion markets in Asia however it is
worth noting that similar reports of limited demand have been seen in much of
the last 12 months and yet demand from China in particular has increased
significantly and remained very robust.
Western institutional demand for gold and silver
remains robust as seen in the ETF holding figures.
Holdings of the largest gold-backed
exchange-traded-fund (ETF), New York's SPDR Gold Trust climbed by 0.33
percent on Monday from Friday, while that of the largest silver-backed ETF, New
York's iShares Silver Trust rose by 0.62 percent
for the same period.
Gold is less than 18% below the record nominal high of
$1,915/oz seen in late August 2011, nearly 10
months ago.
In January 1980, gold traded at $2,600/oz in real terms - adjusted for the significant inflation
of the last 32 years. See chart above courtesy of Nick Laird in Sharelynx.
Importantly, today gold at $1,630/oz
is still 50% below the real high from more than 32 years ago.
There are very few assets in the world that are trading
at well below their real price in 1980.
An example of this is the Dow Jones Industrial Average
which was trading at 1,000 in 1980 and is today trading at 12,700. Therefore
it is nearly 13 times higher than its nominal high in 1980.
Gold's nominal high in 1980 was $850/oz. Today gold at
$1,630/oz is less than 2 times its nominal high in
1980.
There are very few goods, services or assets that are
only twice their cost in 1980.
This shows how gold is far from overvalued from a
historical perspective. While this may seem hard for some to believe due to
gold's gains since 1999 which has seen gold rise 6 fold in 13 years.
However, these gains came about after a massive 20 year
bear market that saw gold go from being overvalued to being massively
undervalued.
The anti gold and ‘gold
bubble’ brigade will say that the 1980 high price was a massive bubble
as seen in the parabolic price move and subsequent collapse.
They are correct in this. However, they fail to realise that nearly all assets move in cycles from
undervalued to fairly valued to overvalued and then to the mania phase of
significant over valuation.
The gold market has yet to see that mania phase with
gains being gradual in recent years, last year and so far in 2012.
Mania is nowhere near the gold market with the majority
of the public having no allocation to gold whatsoever and the non specialist financial media covering gold very
occasionally and covering it very sceptically when
it does.
There continues to be a complete failure to understand
gold’s importance as a store of value, an important diversification and
as a crucial safe haven asset.
Another important consideration today is that gold may
not have a parabolic price move up and then price collapse a la 1980 as today
there is the real possibility that there is a return to some form of gold
standard.
Gold may be revalued to a much higher price and that
price may be fixed at this higher level.
OTHER NEWS
(Bloomberg) -- Gold ETP Holdings Climb 6.1 Metric Tons, Most Since March
29
Gold holdings in exchange-traded products backed by the metal rose 6.1
metric tons to 2,399.72 tons, the biggest gain since March 29, data tracked
by Bloomberg showed.
(Bloomberg) -- IShares Silver
Trust Holdings Gained 60.34 Tons as of Yesterday
Silver
holdings in the iShares Silver Trust, the biggest
exchange-traded fund backed by silver, gained 60.34 metric tons to 9,804.85
tons as of yesterday, according to figures on the company’s website.
(Bloomberg) -- South Africa will study ways to
“address current challenges” facing platinum producers, the government
said after meeting companies and labor unions, as falling prices threaten
profitability.
The parties will set up a group to consider options,
the Department of Mineral Resources said today in a statement.
South Africa makes up than three-quarters of world
platinum supply.
Anglo American Platinum Ltd. and Aquarius Platinum
Ltd., the largest and fourth-largest producers, this month said they would
idle their Marikana operation because of a
“difficult” market. Eastern Platinum Ltd. also halted development
of a mine. Prices fell about 13 percent in the past three months in London.
About 334,000 ounces of platinum and 170,000 ounces of
palladium output “is unprofitable on a cash-cost
basis,” SBG Securities (Pty) Ltd. estimated in a note. That’s
about 7 percent and 6 percent of national output, respectively, it said.
The country is concerned about job losses, Mines
Minister Susan Shabangu said June 12. About one in
four people are unemployed in Africa’s largest economy.
(Bloomberg) -- Gold Futures in India Rise to a Record
30,388 Rupees/10 Grams
Gold
futures in India, the world’s biggest importer of bullion, rose as much
as 0.3 percent to a record 30,388 rupees per 10 grams.
The August-delivery contract traded at 30,379 rupees
per 10 grams at 10:03 a.m. in Mumbai on the Multi Commodity Exchange of India
Ltd.
(Bloomberg) -- India’s Gold Imports Seen Lower as
Record Price Cuts Demand
Gold
imports by India, the world’s biggest buyer, may slump this month as
record local prices fueled by a decline in the currency cut jewelry and
investment demand, an industry group said.
Purchases may drop to 20 metric tons to 25 tons in
June, from 55 tons to 60 tons a year ago, Prithviraj
Kothari, president of the Bombay Bullion Association, said in a phone
interview today.
Bullion futures in India reached an all-time high
today, while global spot prices for gold were down 15 percent from a peak.
Demand in India plunged this year after the government twice raised taxes on
imports, jewelers held their longest ever strike and as record prices spur
scrap selling.
“Gold demand every day is dull. Prices are too
high,” Kothari said. “Everyone is selling.”
August-delivery bullion rose as much as 0.3 percent to
30,415 rupees ($543) per 10 grams on the Multi Commodity Exchange of India
Ltd., the highest since the exchange began trading the precious metal in
November 2003. The contract was last at 30,388 rupees at 12:43 p.m. in
Mumbai.
Prices rallied in India after the rupee depreciated
against the dollar and the government increased the import duty on the metal,
Kothari said. Gold in India may reach 32,000 rupees per 10 grams this month
or next, he said. The rupee, Asia’s worst performing major currency
this quarter, fell to a record 56.515 per dollar on May 31.
Scrap sales in India may more than double to about 300
metric tons in 2012 from 130 tons a year ago, Kothari said May 29. Gold
demand is traditionally “slack” this month and in July because of
the lack of weddings and festivals and as farmers wait to harvest their next
crops, he said today.
Gold demand in India fell to 207.6 tons in the quarter
ended March 31 from 290.6 tons a year earlier, the World Gold Council said
May 17.
Indian usage may shrink to 800 tons to 900 tons in 2012
from 933.4 tons a year earlier, according to Albert Cheng, Far East managing
director at the council.
For breaking
news and commentary on financial markets and gold, follow us on Twitter.
NEWS
Gold stretches gains to 8th day; Fed eyed
- Reuters
Gold, silver edge higher in Asian trading
– Market Watch
Gold recovers as post-Greek election optimism
fizzles – Financial Post
CME to allow physical settlement for weekly gold
options - Reuters
COMMENTARY
How to Save Your Money And Your Life
- GoldSeek
The Experiment Has Failed. Are You Ready?
– Zero Hedge
“The US has set a dangerous course”
– Money Week
Auguries — Endgame –
Financial Post
Perth Mint Gold and Silver Bullion Sales Rose in May
- Coin Update
Gold Will Shock Investors By Soaring This Summer
– King World News
Mark
O’Byrne
Goldcore
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