huntergatherer

Volatility in Au; never fails to disappoint: http://www.kitco.com/charts/popup/au24hr3day.html

Indian monsoon late - more bad news for the local gold market SLUGGISH DEMAND Indian monsoon late - more bad news for the local gold market While Indian demand for gold jewellery and investment products has been painfully slow this year and looks like staying that way, a number of local incentives are underway to boost the industry Author: Rhona O'Connell Posted: Friday , 03 Jul 2009 LONDON - The Indian gold market has been very sluggish so far this year as high prices and straitened economic times have taken their toll. Figures from the World Gold Council (compiled by GFMS Ltd) showed that in the first quarter of the year scrap supplies were so strong that demand for investment bars and coins net of scrap was negative, with a return to the market of 17 tonnes, while jewellery demand for the quarter stood at just 34 tonnes against a quarterly average over the previous five years of 133.5 tonnes - an effective fall of 75%. While scrap return eased during the second quarter, anecdotal evidence suggests that the past three months have not painted a pretty picture either. The Bombay Bullion Association has reported that Indian gold imports were down 50% year-on-year in the first half of this year compared with the first six months of 2008. To put this into perspective, Indian gold jewellery and investment product demand is recorded by the WGC at 713 tonnes, compared with 769 tonnes in 2007 and 710 tonnes in 2006. If these import figures can be taken as a benchmark indicator pure and simple then this suggests a shortfall of some 350-400 tonnes in demand this year, but the early figures for demand suggest that the drop may well be larger. Jewellery fabricators have been reporting intermittent business, but appear to have come to the end of the wedding season with inventory in hand. Local prices, however, have not been especially kind to the market - generally speaking Indian prices have oscillated around international price levels and although the local market has been weak, prices have not dipped to enough of a discount to stimulate exports. As result, when (if) the jewellery markets pick up in September at the end of the monsoon season and before the important festivals such as Diwali, there may well be metal already in the country and available for sale. Trouble is, we don't yet know how strong the pick-up is likely to be and the latest bad news is meteorological. The monsoon is late and is expected to be below average for the first time in four years. This is potentially significant as the strength of the monsoon is obviously vital to the quality of the harvest and this in turn dictates the amount of funds that the farming community (which constitutes more than half the Indian population) has to hand when the harvest is in. Gold has traditionally been one of the primary purchases for the Indian agrarian population (although it is now having to compete to some extent with white goods, electronics and holidays), who typically account for between 60% and 70% of Indian gold purchases. A poor harvest will undermine gold buying and crop failures have already been reported. So a poor Indian market in the year to date does not look as if it is going to show much upside later in the year either. For the longer term, a number of incentives are underway for streamlining the industry that should make it more efficient and by association may be have a knock-on positive effect on demand. The Indian Bullion Market Association has been formed that should allow for a uniform gold price across the country as opposed to the prevailing system, which can result in sizeable variations. The domestic price will be determined on the basis of the trade flowing across the electronic platform set up by the National Spot Exchange Ltd (NSEL) and set as a benchmark twice a day - although the Managing Director of NSEL has said that a wholly uniform price will not be logistically feasible until the implementation of the Goods and Services Tax, due by March 2011. At an international level, the Bombay Bullion Association has recommended that local gold traders should be allowed to import gold directly rather than having to got through agencies or banks and is also lobbying for the removal of central sales tax on gold. The NSEL is also lobbying for the government to abolish the 2% customs duty currently level of imports of doré gold that is destined for local refineries in order to boost their flow of feedstock. The local industry is fragmented and working well below capacity - although its capacity itself is also small in the context of the market overall, at between three and four tonnes per annum. Plenty of moves afoot in the country, then, including innovations from NSEL in the form of mini-contracts from eight grammes up to one kilo as of the start of July (previously the contracts were denominated in 100 grammes and one kilo) as part of the NSEL ‘s push to raise its position among the world's gold price setters. Meanwhile, the depressed level of local demand means that India may continue to face a fight with China for the position as the world's largest gold consumer. China won the first quarter this year; will it have won the second quarter? http://www.mineweb.com/mineweb/view/minewe...1&sn=Detail

El Nino weather phenomenon could affect the price of crude oil over the winter in US due to warming effect and Indian demand for gold over the summer through poor monsoon. http://www.ft.com/cms/s/0/3c09dfa6-64cc-11...?nclick_check=1

Points to add to debate: 1. Currently no CGT on Au. Hold physical where practical then use GM or BV for larger amounts. 2. One of the advantages of holding Au is to avoid counterparty risk. (much endorsed by James Turk) 3. ETFs are derivatives and thus exposure to broad financial markets, mechanisms and their problems. 4. ETFs are best suited to short term trading only in the way they behave. They have annual fees. 5. Problems with ISAs are the set up costs. Are they worth it? You can bag around 10k CGT free. 6. GM outside UK jurisdiction. BV could be more exposed to government policy. 7. With GM you pay a higher commission when buying but remember when selling (which will be a larger total sum) you sell at equivalent market value spot. (based on Au fix price) 8. With GM you can earn interest on funds and switch between currencies.

$8.81 was my buy last time (near the the low) and I would gladly buy near that level again or its equivalent.

Happy days.

I got in at £315 (about $605) in 2006. Thanks to posters on this type of thread. I undertook careful research and fully understood the wealth preservation and insurance reasons for holding. At the time holding dollar denominated assets, not sterling, was identified as a yielding strategy. I put in what would have been the equivalent of a typical FTB property deposit. (but this is only a small share of my total funds) I am not too worried about fluctuations in gains because I hold a core position of insurance against my other currency deposits. My Au hedged my Yen, Swiss Franc, Euro deposits for some time which have since been converted to sterling and Canadian dollars. I doubled up my PM holding by buying Ag in 2008 and then added 50% more metal on the low of $8.81. I sold off my Ag at the end of February (when Ag overshot from its low channel excursion) because this represented a possible high and Ag is very susceptible to deflationary forces. I 'preserved' the dollar gains against sterling by doing this. I bought some more Au after the February correction but am keeping an open mind to possible scenarios. The main one being PMs may not necessarily be a one way ticket to wholesale wealth preservation. (longer term-yes, shorter term-maybe no) This is only because the additional Au is on top of my core position. I hope to be in a position to respond to price rises as well as buy in at lower values should they arise. By being not over committed I can afford to take a longer term view if necessary.

Paying spot price for physical without paying a premium is the same as scrap value.

'Watch Silver' or rather 'Watch Out for Silver!' particularly during periods of de-leveraging/forced liquidation.

Au sky-diving from $931 to $918 in quick time today. Parachute opening to pull up to around $922 level.

I bought my Au core position at $605 (£315) in 2006 and so far has not dipped below this (touch wood) as a long term hold. My large position of Ag was traded out in early March at the recent high - below $14 for 11% profit - bought in inflationary uptrend in spring/summer '08 and by stronger sterling. Other Ag bought at $8.81 was sold for 14% profit. My attempt at buying some Au at a recognised entry point recently has turned out to be a dud. RSI down to near 30 but turned out to be a false signal. I hope to average this position out during the sales.

Holding in London might be considered a plus side if you wanted to collect from their vault. (obviously easier if live in UK) That option might appeal if concerned over collapse of internet service or you could fly to Zurich. You would have to hold 1000oz to get a LBMA bar which makes Ag a more likely candidate than Au.(unless you are very wealthy) You would, of course, have to pay VAT on Ag by taking delivery in UK. You can, I believe, switch between vaults at a cost. I have held Ag and Au in both London and Zurich on basis of above to spread risk and peace of mind.

Imagine that; trying to out shine Au.

Beware of imitations.

'Offshore Account' - The PM will no doubt be trying to look there as well.

In response to current stategies: I have held a main core position of Au since end of 2006 when near $600 (£315). I diversified out of sterling into foreign currencies in 2007. I bought Ag Spring to Summer 2008 during inflationary expectations and this was hedged by my Au. With the deflation Ag value dropped but bought around $2 per £ and sold out for healthy profit just after the recent Au spike of $1000 (Ag spike $14.50) at <$14.00 because believe we are in a deflationary trend for now. etc. (I should have taken a smaller position in Ag equally hedged with Au during this time as it turned out. I think it is not a good idea to take too large a position in case of another bout of deflation - inflation will come later.) I was also able to buy Ag at a dip for $8.81. Since sold but will later hope to add to Ag to position prior to inflation. I have held off buying Au until recently and bought some in case there is a surge back over $1000. If there is a push I would expect the price to fall back over the summer where I would add to my position. If there is no push I will hold Au as currency to expected inflationary trends. If there is a fall back I will be hedged by core position.

Au now up to $939.

Au now below $920 hit $917.

Did the train just leave the station leaving the bears on the platform?

Back to $920.

Gold in free fall without chute at present. <$925

Edit: Should read; 'RBS release their official loss figures on Thursday. (estimated to be £28 billion)' But most people on here knew that. RBS has the largest corporate company debt in Britain's history. Lloyds TSB HBOS losses estimated to be £10 billion.

HBOS release their official loss figures on Thursday. (estimated to be £28 billion) Lloyds TSB anounce their losses on Friday. Depends what the actual figures are and how the market reacts and effect on sterling etc.

Timing for setting up an Au long in 2006 was important. Spring/early summer was best avoided.

Kitco today - 'Failure to Launch'(!) by Jon Nadler Sold off large portion of Ag yesterday for 14% profit before costs. (buy low sell high) Ag going down.