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09/28/2023 10:30 PM     Current Market Spot Prices:     Gold:  $1,863.21/ozt   Silver:  $22.81/ozt   Platinum:  $931.62/ozt   Palladium:  $1,311.48/ozt  

Friday, May 17, 2013

Bearish Analysts' Sentiments and Realized Gold Outflows Weigh Down Prices The U.S. Comex gold futures fell 3.46 percent week-to-Thursday to $1,386.90, just $64 above the worst level reached in mid-April this year. Year-to-date, the gold futures dropped 17.24 percent, compared to a rise of 15.73 percent in the S&P 500 Index, 6.48 percent in the Euro Stoxx 50 index and 12.66 percent in the MSCI Developed World Index. The Dollar Index is also up 4.79 percent this year.

Softer Economic News but Higher Stock Prices
While Japan's Q1 real GDP, driven by higher private consumption, jumped a higher-than-expected 3.5 percent, the Euro-area's April inflation rate dropped to a three-year low to 1.2 percent while the Q1 real GDP declined 0.2 percent, its sixth quarter of contraction. The weekly jobless claims in the U.S. increased by 32,000 to 360,000. The Philadelphia Fed index and the New York's manufacturing survey also unexpectedly contracted as the fiscal cuts have taken effect.

Nevertheless, about 39 percent of the stocks in the S&P 500 Index reached their 52-week high according to Bloomberg. The Japanese Nikkei Index is also approaching a five-year high. The strength of the stock markets has surprised many investors who are still under-allocated to equities and are skeptical of the economic future.

Gold-Backed ETP Holdings Continued to Drop
As inflation is low and equity markets are rising, gold-backed ETP investors have been rotating out of gold. The SPDR Gold Trust holdings dropped to a four-year low to 1,041 metric tons yesterday after reports show that investors such as Soros, Northern Trust and BlackRock have cut their holdings between 12 to more than 50 percent in Q1. Credit Suisse predicted that gold will trade at $1,100 next year, citing that gold is relatively expensive compared to other hard commodities.

The World Gold Council reported that while gold-backed ETPs dropped 176.9 tonnes in Q1, total bar and coin demand surged 10 percent from a year ago to 377.7 tonnes while jewellery demand climbed 12 percent to 551 tonnes. Central Banks continued to add gold by over 100 tonnes for the seventh consecutive quarter. The tug of war between the physical buyers and the paper gold investors will likely continue.

What to Watch Next Week
Next week, various U.S. regional Fed Presidents will speak about the economy on 20, 21 and 23 of May. On 22 May, Japan will announce its Target rate, Ben Bernanke will make his testimony and the latest US FOMC minutes will be released. The U.S., Euro-17 and China will release the flash manufacturing PMI index for May on 23 May. Germany will report its IFO business climate index on 24 May.
Posted by Mike Gupton at 8:43 AM 0 Comments

Tuesday, May 14, 2013

CASTING CALL AT KMG GOLD WINNIPEG CASTING CALL: Wednesday May 15, and Thursday May 16, 2013

Ever wanted to get an appraisal for all of the weird stuff you've been saving for years? KMG Gold Recycling is having a reality show filmed at 620 Academy Rd in Winnipeg, Wednesday May 15, and Thursday May 16, 2013. The film crew and production compnay will be here as well as all of our experts for Coins, Militaria, Antiques, Paper Money, Watches, and of course GOLD, SILVER, PLATINUM, and PALLADIUM.
If you have an item that has a story behind it, we would like to talk to you. Did your Grandfather have an old railroad pocket watch? Do you have a sterling silver set that was owned by Queen Victoria? Do you have a collection of gold or silver coins that is very old? We will evaluate it for free and maybe your story will be on TV.

Why Are You Selling Your Gold?

Tell us your story why you're selling your gold. Need to pay bills? Need to pay for home renovations? Need to pay for a vacation? Need to buy a new stove, fridge, washing machine and a dryer? Maybe you are just cleaning up your old stuff and it's time to get rid of it. Whatever your story is, we need to hear from you!
Bring Your Gold and Your Stories to KMG Gold Recycling
620 Academy Rd. Winnipeg Manitoba
Wednesday and Thursday, May 15-16, 2013, 9:00-5:00

KMG Gold Recycling | | 620-C Academy Rd, Winnipeg MB R3N 0E6 Canada
Toll Free: 877-468-2220 | Office: 204-452-4653 | Fax: 204-261-8752 | Email:
Posted by Mike Gupton at 4:33 PM 0 Comments

Thursday, May 09, 2013

Gold is Struggling against Rising Interest in Rising Equities After rising for two consecutive weeks, the U.S. Comex gold futures fell 1 percent week-to-Tuesday to $1,448.80 although prices touched $1,458 on Wednesday Asian morning. The story of the week is still rising equities, with the S&P 500 index climbing 0.71 percent after rising 2.03 percent last week and the Euro Stoxx 50 index rising 0.2 percent after surging 2.99 percent last week.

So far in May, the S&P 500 index, the Euro Stoxx 50 index and the MSCI World index have jumped 1.78 percent, 2.10 percent and 1.08 percent respectively. The gold futures have slipped 1.58 percent this month while the Dollar Index has risen 0.62 percent.

Better Data from the U.S., Europe and China
Last Friday, the U.S. reported a higher-than-expected rise in nonfarm payrolls of 165,000 in April. The unemployment rate also inched down 0.1 percent to 7.5 percent in April. In Europe, the ECB governor stands ready to cut interest rates again, paying close attention to all the economic data in the next few weeks. The ECB predicts the EU-17 economies will shrink 0.4 percent in 2013.

However, Germany's March factory orders surprisingly jumped 2.2 percent against a predicted drop of 0.5 percent, indicating a recovery is taking place. China reported a larger than expected jump in exports of 14.7 percent in April although several economists already pointed out that some capital flows may have been disguised as trade flows leading to the inflated exports numbers.

Nevertheless, imports rose 16.8% year-on-year, reflecting a pretty robust domestic demand picture. In fact, Hong Kong has just reported that China's gold imports from Hong Kong reached a record high of 223.52 metric tons in March before the large sell-off in gold in April. The China Gold Association stated that China is currently short of gold jewellery inventory after gold purchases surged in April.

Fund Holdings
Bloomberg reported that for the week ending 30 April, speculators in gold increased their net-long positions in options and futures by 19 percent while they decreased their net-short positions by 9.2 percent. However, the net-short positions are still more than three times the average since the data started in 2006. The gold-backed ETP holdings dropped further on Monday to 2,254.68 metric tons, after a record fall in April and a peak in December 2012.

Given the reduction of tail-risk in Europe, the rising labour market in the U.S. and the low inflation rate, investors prefer equities to gold in the near-term. Nevertheless, as the World Gold Council pointed out, gold still has a place in investors' portfolios as a hedge against the consequences of the on-going global quantitative easing.
Posted by Mike Gupton at 1:18 PM 0 Comments

Friday, May 03, 2013

Gold Prices Buffered by Retail Buyers Despite Traders' Bearishness The U.S. Comex gold futures fell 1.76 percent on Wednesday and rebounded 1.48 percent on Thursday to end at $1,467.60, a decline of 12.4 percent year-to-date. The Dollar Index surged 0.91 percent on Thursday to 82.224 after falling 1.23 percent in the beginning of the week. The Euro/Dollar dropped 0.87 percent on Thursday after the ECB cut rates. The S&P 500 index ended up unchanged in the past two days while the Euro Stoxx 50 index rose 0.25 percent.

Chinese Housewives Taking On Wall Street Short-Sellers?
According to a local Hong Kong newspaper, the largest fall in gold prices in 30 years prompted the Mainland Chinese tourists to buy about 60 tonnes of gold in Hong Kong during the three-day Labour Day holiday. After this surge of buying, physical demand will inevitably slow down although it is clear that gold is highly regarded as precious gifts for the younger generations and a store of value in Asia, providing support to gold prices and prompting the short-sellers to cover.

On the other hand, the CFTC reported that speculators have reduced their net-long gold positions by 25 percent in the latest reporting week while they maintained the second-largest short positions in gold since the beginning of the data in 2006.

Central Bank Actions - Different Gold Reactions
The U.S. Fed recently maintained the pace of bond purchases at $85 billion per month. However, the Fed would be ready to increase or decrease the pace of bond purchases depending on the economic data, changing the market expectation that the Fed can only reduce its pace of bond purchases going forward. The slowdown in the March payroll data, a weaker inflation, the tightening of fiscal policy as well as a lower U.S. ISM manufacturing data have prompted the policy maker to remain flexible in its monetary policy.

The gold futures nevertheless fell 1.76 percent on Wednesday as the market still expects the U.S. to grow faster in the next four quarters, leading investors to buy more equities than gold. The gold-backed ETP holdings fell again by 0.9 percent this week as of Wednesday and dropped 369.3 tons this year. On Thursday, gold demand and prices increased after the ECB cut the refinancing rate by 25bp and raised the possibilities of a negative deposit rate for the banks and further stimulus down the road.

What to Watch
The market will zero in on this Friday's April non-farm payroll data and the unemployment rate in the U.S. Next week, we will watch for the Chinese April trade numbers and Germany's March industrial production data on 7 May, the Bank of England's monetary policy announcement and the Chinese April inflation number on 9 May as well as the Fed's speech on 10 May.
Posted by Mike Gupton at 10:48 AM 0 Comments

Wednesday, May 01, 2013

Could the Central Bank Actions Change the Gold-Backed ETP Outflows? The U.S. Comex gold futures fell $122.70 and 7.69 percent in April, representing the largest sell-off in gold since December 2011 when the gold futures fell over $200 intra-month. The gold futures dropped 12.16 percent year-to-date after a bull-run for twelve consecutive years as the prices surged from $279 at the end of 2001 to $1,675.80 at the end of 2012.

Year-to-date, the Dollar Index rose 2.48 percent, the S&P 500 index surged 12.02 percent, the Euro Stoxx 50 index rose 2.89 percent while the CRB Commodity index dropped 2.33 percent.

Mixed Global Economic Data
Global economic news has been mixed at best. In the U.S., the April consumer confidence index jumped unexpectedly to 68.1 while the S&P/Case-Shiller housing index rose 9.3 percent year-on-year in February.

Despite the housing improvement, the manufacturing remains an area of concern as seen in the recent lower-than-expected April Chicago purchasing manager index. In April, China's manufacturing PMI expanded at 50.6 compared to 50.9 in March, indicating that the expansion is slowing down.

While the April jobless rate in Germany was unchanged at 5.4 percent, the Euro-area unemployment rate inched up to 12.1 percent and the youth unemployment rate reached 24 percent. The 11 percent rebound in the gold futures from the 15 April's trough probably reflects the expectations that the U.S. Fed will maintain its bond purchase program while the ECB will cut rates further given the worsening economic data.

Continued ETP Outflows
Gold investors are keenly watching the direction of the gold-backed ETP holdings, which fell 174 metric tons or 7.1 percent in April to 2,275.84 metric tons according to Bloomberg. The SPDR gold holdings fell to a 43-month low to 1,078.54 tons at the end of April. Deutsche Bank estimated that institutions, which hold close to 50 percent of SPDR, may further sell down 5 million ounces of gold in Q2.

The commodity funds also saw a large net outflow of $7 billion in Q1 according to Barclays. While such outflow may seem to reflect global economic weakness, gold was the single asset dragging down the aggregate with $9.2 billion of net gold funds outflow in Q1. This Wednesday's FOMC meeting and this Thursday's ECB announcements will give further clues to gold investors which way they should go.
Posted by Mike Gupton at 8:31 AM 0 Comments