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Today's AM fix was USD 1,594.75, EUR 1,293.60, and GBP
1,016.74 per ounce.
Yesterday’s AM fix was USD 1,614.50, EUR 1,305.60 and GBP 1,028.34 per
ounce.
Silver is trading at $27.70/oz,
€22.65/oz and £17.74/oz. Platinum is
trading at $1,401.25/oz, palladium at $571.75/oz and rhodium at $1,060/oz.
Gold dropped $8.70 or 0.54% in New York yesterday and
closed at $1,599.60/oz. Silver climbed higher before retreating to $27.64,
but it then rallied back higher to end with a gain of 0.14%.
Gold is under pressure today despite the likelihood of
more QE from the FED, ECB and other central banks and despite the very
uncertain and poor macroeconomic outlook.
Positive US data, retail sales grew for the first time
in 4 months, may have led to gold weakness and scaled back hopes that the US
Fed will take action soon.
On Tuesday, Gold ETF interest increased to its highest
level in nearly a month at 2,190.583 tonnes showing
how investment demand in the gold ETF is far more ‘sticky’ and
long term in nature.
This means that there is a fundamental pillar of
support below the gold market which did not exist in the 1970’s.
An important positive development for the gold market
is billionaire financiers George Soros and John Paulson have again increased
their allocations to gold as seen in the latest SEC filings.
George Soros more than doubled his shares in the SPDR
gold trust ETF.
He increased his position in SPDR Gold to $137.3
million in the second quarter from $52 million previously. SEC filing for the
second quarter showed Soros Fund Management more than doubled its investment
in the SPDR Gold Trust from 319,550 shares to 884,400 shares at the end of
June.
In September 2010 (see chart), Soros called gold
"the ultimate bubble" and largely dumped his stake in the ETF
before gold recorded annual gains in 2010 and 2011 and rose to a nominal high
of $1,920.30 per ounce in September.
There was speculation at the time that he may have sold
the SPDR trust in order to own far safer allocated gold bars.
Another billionaire investor respected for his
financial acumen is John Paulson and Paulson & Co increased its holdings
by 26% by purchasing an additional 4.53 million shares of the SPDR Gold Trust
to bring entire holding to 21.8 million shares.
It was the first time Paulson & Co had increased
its position in the SPDR Gold Trust since the first quarter of 2009, when the
investment firm initially acquired 31.5 million shares. It means that
Paulson's $21 billion hedge fund now has more than 44% of the company's
assets allocated to gold.
Paulson, who became a billionaire in 2007 by betting
against the US subprime mortgage market, lost 23% in his gold fund through
July as lower bullion prices and slumping mining stocks led to losses.
The increased allocation by Paulson shows that he has
much confidence that his allocation to gold will pay off in the long term.
Gold Prices/Rates/Fixes /Volumes – (Bloomberg)
According to Bloomberg, Vinik
Asset Management, the Boston-based hedge fund founded by Jeffrey Vinik, who formerly ran the Fidelity Magellan Fund
(FMAGX), cut its entire stake in the gold ETF. On March 30, the fund held 2.3
million shares, SEC data show. Eric Mindich’s
Eton Park Capital also sold all of its 739,117 shares last quarter, a filing
showed.
Moore Capital Management LP acquired 120,000 shares of
SPDR Gold Trust in the second quarter, a filing showed yesterday. The hedge
fund held no shares in the gold fund as of March 31. Moore was also
aggressive in selling financial and bank shares such as JP Morgan (JPM),
Wells Fargo and US Bancorp.
Gold fell 4% in Q2 but the increased allocations show
that some of the smartest money in the world continues to see gold as a
buying opportunity. With the Fed having bought $2.3 trillion of debt in two
rounds of 'quantitative easing' and all major central banks keeping borrowing
costs at a record low gold's fundamentals remain very sound.
Soros' recent renewed allocation to gold has been far
less trumpeted than his gold 'bubble' remark and much trumpeted liquidation
of gold holdings in May 2011. Some have suggested that Soros was misinterpreted
regarding his gold bubble remark and may have meant that gold will in time
become the "ultimate bubble".
Cross Currency Table – (Bloomberg)
Alternatively, Soros wishes to accumulate a large
position in gold prior to prices rising even further and was happy to help
dissuade the retail public from entering the gold market until he owns a
significant amount of gold.
Some hedge fund managers have been known to talk down
an investment while in the process of accumulating.
It could simply be that Soros has changed his opinion
regarding gold and does not now view it as a "not safe,"
"ultimate bubble". This seems likely as he has warned that there is
a real risk of a euro break up and is on record regarding having deep
concerns regarding the US fiscal situation - both of which are of course
bullish for gold.
Paulson told clients in February that gold is his best
long term bet, serving as protection against currency debasement, rising
inflation and a possible breakup of the euro.
Given Soros awareness of financial risk it is likely
that he also owns physical bullion and not just the more high risk shares in
the very public SPDR trust.
Other highly respected managers such as Kyle Bass, Greenlight Capital's David Einhorn
and Third Point LLC's Daniel Loeb are on record as favouring
more discrete ownership of actual physical gold bullion bars - in an
allocated format in a secure vault.
We advise our clients – retail, pension and
institutional – to do likewise and own physical gold bullion in the
safest way possible.
For breaking news and commentary on financial markets
and gold, follow us on Twitter.
NEWS
Gold edges up on Europe stimulus hopes; US data
weighs - Reuters
ECB - Gold Reserves Unchanged In Week to Aug 10
- Reuters
Royal Canadian Mint Unveils New Gold and Silver
Bullion Coins – Coin Update
Gold Fund's Collapse Rattles Poland
– Wall Street Journal
COMMENTARY
Aaaand It's Gone: This Is Why You Always Demand Physical
– Zero Hedge
Which Way Will the Pendulum Swing for Gold?
- GoldSeek
Silver Hoard Near Record High Has Transnational
Silver Abusers Concerned – Silver Vigilante
“They’re Going to Put the Old System In
a Coma”! - CNBC
Ron Paul – “U.S. Treasury Guilty of
Counterfeiting Dollars” – Gold and Silver Blog
Mark
O’Byrne
Goldcore
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