Gold falls further, down 21% from high

Gold tumbles almost 5% overnight, now below US$1,500/oz, hurt by Cyprus plan, weak US data

13th Apr 13, 8:20am by David Chaston

Gold closed in New York on Friday at US$1,477/oz after earlier closing in London at US$1,535.50/oz.

Silver closed at US$25.85/oz in New York after the London fix was set at US$27.40/oz

Both metals and energy sank overnight, and led a gauge of commodities to an eight-month low and extending a slump that one analyst said may mark the “death bell” for the four-year rally in raw materials, Bloomberg reported.

"The scale of the decline has been absolutely breathtaking," a Societe Generale analyst said. "We tried to rally and that just didn't get anywhere. There hasn't been any downside support, it's like a knife through butter."

US retail sales fell in March by the most in nine months, US Commerce Department figures showed, and the Thomson Reuters/University of Michigan index of consumer sentiment sank to its lowest level since July 2011. Other US Commerce Department figures showed that wholesale prices also fell sharply in March.

European stocks and the euro fell earlier as the currency bloc’s finance ministers prepared to meet, firming speculation that Cyprus will have to sell gold reserves to raise cash.

Citigroup analysts said there will be “many more losers than winners” for commodities this quarter and most industrial and precious metals will decline.

“It’s partly driven by a number of investors who have come to the conclusion that it’s not attractive to be in commodities, especially with what’s going on in the stock market,” another Societe Generale analyst said .

“When people see gold going down, that might have reinforced selling in other commodities. We think it’s overdone in base metals, in oil, because the global economy is recovering. In gold, this is the beginning of the bear market.”

Brent crude fell $2.01 to US$102.26 a barrel, while U.S. crude oil futures declined $2.53 to US$90.98.

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Source: Kitco

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12 Comments

by Roger Witherspoon | 13th Apr 13, 9:31am 1365802296

http://www.zerohedge.com/news/2013-04-12/japanese-bonds-vs-gold-why-com…

by Grant A | 13th Apr 13, 11:10am 1365808241

Amazing what they can do selling paper gold. Can't wait until they have to find some of my physical, there just ain't enough....accumulate

by Vera Fayed | 14th Apr 13, 10:07am 1365890848

Who, exactly are they GrantA. Tell us the names of the specific ETF's who are short of physical gold to back their paper. Gold is a device used to extract money from under the mattresses of conspiracy theorists. The stuff costs about $600 on average to extract and make into shiny bars. It doesn't get used up. It doesn't degrade. 90% of the gold used in electronics will eventually be recycled.

2,500 tonnes of gold are mined annually up from less than half that amount 33 years ago. Peak production is now running into peak gold-bugs. What are you going to do with your gold when you run out of cash GrantA? Y'know, that handy stuff you give to a barman and he gives you as beer. If you are going to wait for the price to recover I suggest asking a 1979 gold-bug how that worked out. 32 years until the next price peak and still didn't reach it's inflation adjusted 1979 price. 32 years of waiting in vain for the miracle.

Gold is not an investment. Pretty to look at, convenient as a way of parting dumbheads with their money, but not an investment.

by Gibber | 13th Apr 13, 3:01pm 1365822079

Mish points to a Marc Faber interview re Gold, shares and the policy of the cookoo people who inhabit Central Banks.

http://globaleconomicanalysis.blogspot.co.nz/2013/04/marc-faber-i-love-…

by splineman | 14th Apr 13, 8:36am 1365885400

Gibber.......Thanks for the link. Interesting read. Also Gold is a great NZD hedge....although that may be a long time comming. As Mish says, forget about timing.

Cheers

by Grant A | 14th Apr 13, 10:31am 1365892269

I'll put it really really simple for you Vera

Gold isn't an investment for me and I suspect most others, it's insurance. It's sometime that has held its value for hundreds of years and has a intrinsic value because the production of it is very limited each year. Lets compare that to paper fiat currency, which they now ALL are for the first time in history, the stuff that all the majors, including the reserve currency of the world are producing at great multiples by the day. I got mine at $700 an ounce in about 2006 - what am I going to do with it ? When I need some I'll convert it to fiat and immedaitely buy a hard asset, even if its only a temporary one before I drink it

A better question for you is, what fiat currency in the history of mankind has survived any length of time I.e. the stuff youre seemingly placing you faith in ?

P.S your obviously out of touch with mining costs that have been rising at a compounding 10% rate in recent years - most are above $1,000 now.

by Vera Fayed | 14th Apr 13, 11:02am 1365894159

@GrantA. The average industry production cost for $212 was US$662oz. (Source: 2012 Global Metals, Mining and Steel Conference.) The stuff is still selling for more than twice it's cost of production.

Gold bugs crack me up. More fun than Jehovah's Witnesses bacause their religion is so much stronger. Silver bugs are kinda funny to, but too sad to make fun of. Also gold bugs always bought their gold way back in the day. No one apparently bought when it was $1,700, $1,800 or $1,900. Yet on the boards back then, there they all were saying (over and over again), "Got Gold". Gotta buy some "cause it's gonna go to $3,000, no wait $5,000 no wait....

by Roelof | 14th Apr 13, 11:50am 1365897058

Vera... I'm note sure if the cost of production is the best way to figure out the value of gold..... though , of course , it is important.

It is golds' relative value to currencies that accounts for most of its' price rise ie.. not so much gold increasing in value but currencies diminishing in value.

To put it another way.... Maybe the "market" percieves it as a currency hedge.... and I'm not talking about the die hard "goldbugs"...

Much of the compounded growth in Real Estate, over the last 40 yrs can aslo be looked on as a function the the deminishing value of Fiat Money.. ie we price Realestate in terms of dollars...' ( money supply growth rates over the last 40 yrs mirror House price growth rates )

Japan doubling its' money supply over the next 2 yrs ..is uncharted territory.... likewise with all this QE..ing...and ECB..ing...

Having said all that.... it is easy to get burned in any market..,.. including real estate.

by Grant A | 14th Apr 13, 11:59am 1365897541

Vera - thats not what I've read but I'll run with your figures because I dont think the cost in itself is all that important at all

And I'll show you why... lets adquate that to your fiat currencies - what do you think it costs to produc e a one dollar note ? a few cents ? heck actually you can produce billions of them with a press of a button. You fiat currency lovers who post disparaging remarks atrributed to gold bugs (which I'm certainly not one of) but never answer the questions about the value and history of fiat currencies, really crack me up...they are so trapped by what they've always known, they can't see the wood for the trees. Fiat currencies (e.g. the USD being the main one) have gone from $1 to 5cents in less than 100 years yet they dride those that consider gold might over the long term retain it value - what are you comparing it against, fiat ? Its not gold going up, its fiat sinking

by Vera Fayed | 14th Apr 13, 12:46pm 1365900364

GrantA do, what you mean by "your fiat currencies". My capital is represented by desirable property that has produced rents which have easily risen with inflation for decades. The average hold time on shares I own is over 13 years and overall dividend growth is only slightly below inflation because of a couple of brain-farts in the eighties. You seem to assume that the only alternative to owning physical gold (I do have some, the grandkids love it ) is to stash paper money under the mattress. Get real. No informed investor keeps any more capital in cash than is required. Serious capitalists prefer debt, ie they are constantly shorting fiat currency.

Who is NZ's richest man. G Hart, right?

Which NZer holds the most debt? G Hart, right?

As for buying physical gold for insurance , your words. The actual situation is that unless you are particularly reckless, you will be buying insurance for gold, from an insurance company. Paid for in $$. (In advance) .You will also be paying for added security for your home, lest some balaclava wearing, gun toting sob's arrive wanting to rid you of it. Or do you pay to have it in a safety deposit box? Not that cheap, is it?

by Grant A | 14th Apr 13, 12:38pm 1365899937

Gold mining production all up costs ballooning

http://goldnews.bullionvault.com/gold-mining-all-in-costs-031220132

by Hevi Groswaite | 15th Apr 13, 12:14pm 1365984865

Well, gold seems to be bouncing back. We can certainly expect volatility...

Hold on to your...

HGW