Gold Price Weakness
Update 18th June 2015
Gold up 1.45% AT $1201
“Investors have cut total holdings in Exchange-Traded Products backed by physical gold to a new six-year low following five consecutive weeks of selling.”
Charts Courtesy Ole Hansen Saxo Bank
Gold Mining Costs & The Price Buyers Are Willing To Pay
Mining costs are not uniform. But, in relation to substantial volume producers, indicated all in costs are between $950 and $1150 per oz. This price range corresponds with the prices buyers are currently willing to pay. If gold buyers are not prepared to pay a price that rewards production supply will fall, demand will exceed supply and the price will stabilise at a level that rewards producers.
The gold price spiked to over $1900 between 2007 and 2011 when gold was being over hyped as a safe haven. In spite of the severe correction that followed the prophets of doom continue to hype gold relentlessly. Claims that China is on course to imposing a new gold standard to strengthen its credentials with the IMF is the latest absurd pitch.
Moderation, Motivation, Strategy & Timing
The Goldwatcher pitch has been that gold is well described as The Stateless Money Franchise. Moderation has been our Golden Rule and still is. Sensible motivation, strategy and timing are of course golden rules for all investing.
Gold is out of favour now with the investors who can access a range of alternative financial hedges and diversification opportunities. However gold remains on the agenda for anyone interested in owning an asset with a different risk reward profile to other financial assets. In this context the case outlined in The Goldwatcher for owning gold as insurance against the unexpected and unthinkable remains compelling .
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Surging Stock Exchange speculation in China
The Chinese are not speculating in Gold and not buying cars. China’s auto sales are slowing because people would rather plow money into stocks. Dealers are cutting prices to move inventory.