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Gold & Precious Metals

Gold Market Update

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Posted by Clive Maund

on Monday, 23 October 2017 06:37

The dollar is getting ready for a sizable rally, and that means that gold and silver are going to be knocked back again. Longer-term however, the outlook for the Precious Metals could scarcely be better, as we will see. In last weekend’s update it was pointed out that gold’s gap breakout from its steep downtrend shown on its latest 6-month chart below was probably false and that it was expected to drop back as the dollar advanced, which it duly did last week. Bearing in mind that the dollar has about completed its Head-and-Shoulders bottom, it is now clear that a parallel Head-and-Shoulders top is completing in gold as shown on the chart. This chart projects a breakdown beneath the nearby support level to be followed by a drop targeting the quite strong support in the $1200 - $1215 area.

gold6month221017

....continue HERE for 7 more charts & analysis 

 



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Gold & Precious Metals

THE FRAGILE GOLD INDUSTRY: Gigantic Equipment, Massive Capital Expenditures And Rising Costs

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Posted by Steve St. Angelo - SRSrocco Report

on Thursday, 19 October 2017 06:37

Mercedes-Mining-TruckThe gold industry has been built on the leveraging of debt and energy.  The days of using human and animal labor to produce the precious yellow metal are long gone.  While some gold is still mined the old fashion way, the overwhelming majority is produced by using colossal-sized mining equipment, massive amounts of capital, energy, and materials.  Thus, the global gold supply comes via a very complex industry with a lot of moving parts.  When one of these critical parts are in short supply or removed, then the entire gold supply system disintegrates.

An example of one of the newest complex gold mines in the world is the Pueblo Viejo Mine in the Dominican Republic, owned by Barrick (60%) and Goldcorp (40%), which cost a staggering $3.7 billion to build.  The Pueblo Viejo Mine started production in 2013 and is now running a full capacity.  Gold production at the Pueblo Viejo Mine is over one million ounces per year.  According to Barrick, it’s cost of sales at Pueblo Viejo was $564 an ounce in 2016.  However, cost of sales does not include “all costs.”  We must also factor General and Administrative, Exploration-Evaluation, Mine Closure and Income Tax expenses.



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Gold & Precious Metals

Gold Is In A Dangerous Spot

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Posted by Avi Gilburt - Elliottwavetrader.net

on Wednesday, 18 October 2017 06:32

Of late, I have seen many articles postulating what moves gold up or down. We have heard all the old reasons being put forth from GDP, to a hedge against market volatility to interest rates, to the US Dollar, and many more. Unfortunately, market history simply does not support these reasons as a consistent driver of gold, as I have detailed in many past articles:

Sentiment Speaks: Time To Buy Gold To Prepare For A Stock Market Crash?

In fact, a recent article on gold suggested that “[w]e all know that gold is negatively correlated to GDP growth.” Well, since gold rose between 2000-2008, and as you can see from this attached chart that REAL GDP did as well, are we really sure that we “all know that gold is negatively correlated to GDP growth?”

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In fact, take note that the stock market also rose strongly during this same period of time. Moreover, I have seen many other charts presented which offer no evidence that there is any real relationship between gold and GDP. 



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Gold & Precious Metals

Gold: Textbook Pullback In Play

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Posted by Stewart Thomson - Graceland Updates

on Tuesday, 17 October 2017 06:38

Oct 17, 2017

  1. Gold’s recent rally from the $1268 area lows has stalled, and the reasons for that are both fundamental and technical.
  2. Please  click here now. Double-click to enlarge this daily gold chart. Gold fell about $100 from the $1362 area highs as seasonally soft Chinese buying was accompanied by a collapse in Indian demand.
  3. That collapse was caused by the “Know Your Client” rule imposed by the government on gold jewellery purchases.
  4. The price decline was exacerbated by the “Golden Week”  holiday in China. Also, the Chinese government chopped commercial bank reserve requirements. That created a huge “risk-on” mentality in global stock markets during what is normally a weak period.
  5. As the Golden Week holiday ended, the US jobs report was released, and the Indian government killed the “Know Your Client” rule. 
  6. Gold surged about $40 higher from the $1268 area Fibonacci line to the neckline of the head and shoulders top pattern.


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Gold & Precious Metals

SWOT Analysis: Gold In Focus After Climbing Above Key Threshold Level

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Posted by Frank Holmes - US Global Investors

on Monday, 16 October 2017 06:31

Strengths

 

  • The best performing precious metal for the week was palladium, up 7.28 percent as money managers raised their net-long positions on continued expectations that the shift from diesel to gasoline powered cars will continue.  
  • Gold traders and analysts surveyed by Bloomberg are bullish for the first time in five weeks, reports Bloomberg. Following the release of the Fed minutes which showed rising concern about low inflation, the yellow metal climbed to a two-week high.  A fresh flare-up in tensions with North Korea pushed gold higher this week, writes Bloomberg, along with a U.S.-Turkey diplomatic spat regarding visitor visas was supportive.
  • The Indian government withdrew an order that brought the gold industry under anti money-laundering legislation, reports Bloomberg. Jewelers were included in the Prevention of Money-Laundering Act in August that increased compliance requirements. In response to the rule reversal, shares of jewelers climbed in the country. This move comes just as gold buying improves before the Hindu festival of Diwali, the peak season for demand, the article continues.

 

Weaknesses

 

  • The worst performing precious metal for the week surprisingly was gold, up more than 2 percent, despite grabbing most of the precious metals headlines.
  • According to the People’s Bank of China website, gold reserves in China came in at 59.24m fine troy ounces in September, unchanged again from the previous month, which unfortunately is beginning to become a trend.  Chinese markets had been closed the prior week to mark National Day.
  • Oddly, the B2Gold share price underperformed for the week as it reported a production beat for the third quarter as well as its first gold pour at Fekola.  SSR Mining also reported a minor shortfall in quarterly production which did hit the share price as well.

 

Opportunities

 

  • The odds of an interest rate increase by year-end fell to 73 percent on Friday, from 77 percent on Thursday, weakening the dollar, according to fed funds futures data compiled by Bloomberg. Gold climbed above $1,300 on the dovish news and this has heads turning somewhat back to gold versus the bulk miners as the following report illustrates. S&P Global Market Intelligence released a note this week showing that miners planned to spend nearly $8 billion looking for new deposits in 2017, about 14 percent more than last year, reports Bloomberg. Gold exploration budgets in particular rose 22 percent to $4.1 billion in 2017, the article continues. That’s the biggest increase among nonferrous metals.

 

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