Gold - The Weekly Global Perspective
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That was the week that was!
And what a week this week was! Post the holidays showed the irrepressible solidness of gold. It rose Euros 1.465 on the week, when we compare this mornings fix with the fix quoted in our last issue, but this gain was pared to Euros 0.1 at the p.m. fix in London.
The funds continued to drive the market, pushing so hard when the gold price spiked to $430, the all the bearish players in this region were scared right out of their shorts. These large scale speculators are so clearly certain of what they are doing, giving the impression of a simple dealing formula guiding their actions. The next "G-AM" explains what is meant by this. Once you understand why they are doing this, the uncertainty and maybe even the concept of the market 'overhang', will be dispelled from your mind.
Oh yes, the price of the $ was fixed at $418.1 for one ounce of gold, on the 8th January a.m., 85 US cents lower than last week. The $'s price moved down to a low of 1.28 against the Euro, before recovering to $1.25 to the Euro, after a dive into the trenches by the market players, in the expectation of some negative comment from the E.C.B. on the performance of the Euro. But they didn't get it, they got quite the opposite, from Monsieur Trichet, the new E.C.B. President, brushing off political pressure. After this it was up, up, and away as the Euro turned around to roar up to $1.2728, at the time of writing, or, to be consistent, 'as his statement was heard, the $ took a dive again, falling to $1.2728 at the time of writing, taking the precious metals up with it.
Large Speculators positions
The positions of the titled, "Large scale Speculators" rose to 513 tonnes last week still down on the September last high of 526 tonnes. The behaviour of these funds continues to be stable and consistent with the pattern established in the second half of 2003. We see their positions as, not an overhang at all, but tied into some sound reasoning on their parts. - see "G-AM".
The Euro Perspective
The true perspective on this market has to be through the "eyes" of the Euro. The precious metal markets will be constantly coloured by the currency conflicts, primarily because the forex market is not a battle zone, yet. Nor is there a "Trade War" yet! The postures adopted by the U.S. administration and that of the E.C.B. have now made it clear they have their own agendas and no problems with the currency slide of the $. Confused? - To understand these positions you will need to understand the thinking behind this. An article detailing and clarifying these 'postures' is being produced for our next issue of "Gold-Authentic Money".- so subscribe to stay on top!
This is so important that we at "G-AM" say that, if you believe that gold is a $ denominated commodity and nothing else, you will not understand the precious metal, or currency markets. In that case, we advise you to stand away from these markets, or else pay the price. How can we be so emphatic? Example, the gold price has surged in $, so surely the commodity speculators will want to dump gold soon? Not so! It has barely risen in Euros, in fact it has risen in Euros only 16% over the last entire year, hardly a move warranting its disposal? And to sell it for $ - are you serious?
De-Hedgers - Spare a thought
We are aware of the De-hedgers, who it is assumed, averaged their hedging sales of gold at around $355. If they are waiting for the commodity $ price to fall, they are sitting on a potential loss of just under 20% to date.
As such losses have different impacts on different companies each company's panic buttons will be positioned at different places, somewhere between a rock and a hard place. We wait with interest to see who breaks cover first? This will be important because the stated objectives of nearly all mining companies is to reduce their hedges. With up to 2,000 tonnes worth of hedges waiting to be unwound, this remains a huge, pent-up demand waiting to do for gold in 2004 onwards, what it did for the gold market in 2002 and 2003.
Vietnam & China
At first glance a small item, but on closer examination, a sign for the future. Vietnam is to import ten tonnes of gold, in the first quarter of 2004, to cool an overheated gold market in the country. Individual, and jewellery demand is very strong, in Vietnam, as wealth steadily increases. Hence in a country such as Vietnam, just like China, where gold is wealth and used in transactions, such as property sales and purchases, gold demand is growing.
In China you find a country so very many times larger than Vietnam and where wealth is burgeoning rapidly. With the various freedoms extended recently, to the internal gold market, the same process is occurring steadily, surely and in proportions that will dwarf several countries like Vietnam. The publication of these figures read far better than the regular small Central Bank sales we read of from time to time [Switzerland is a steady seller of around 8 tonnes a week].
When weighed in the balance, we suspect [we cannot state for sure until figures are published] that everything that the Central Banks take and more, will be swallowed up, without even a gulp, by China and the other countries [Vietnam and others, where economic recovery is happening fast] in Asia, nparticular.
What should be clearly noted about the precious metal markets, is that of very late the dealers in the market have adjusted their prices far more than they have dealt the metal, except in the case of gold and silver, where trading has been seen in some volume, indicating a real role in this currency picture.
Silver was the star of the week currently standing at $6.22 in the middle, almost a 10% rise in Euros. Its latent strength is turning patent. Brace yourselves!
p.l. is still volatile, having risen in price to Euros 669, up from Euros 646.47 last week. Again, mainly a currency play. In $ it is now at $843.
The London Gold Fix
Gold Fix 8th January a.m. $418.10 E 332.353 p.m. $421.00 E331.027
Steady as she goes in Euros! We do expect gold's performance in Euros, to pick up in the not too distant future, when pending fundamentals kick in. This may not lead to a fall in the $ price of gold - more later!
Direct from G-AM's - Tony Henfrey. A Sample. Want more - Subscribe
The attached monthly chart shows that the GOLD-EUR has been trading below Euros 350 since 1990. If it should beat this resistance, it would open the way for it to move substantially higher. The 34-month indicator is declining at 13.4, but the monthly Mesa has a rising trend, until December 2004.
Track Record of Gold-Authentic Money - Changing Tack - Gold & Precious Metal Shares
We Received this from one of our Subscribers and wanted to meet his request as follows:
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In 2003 we managed to make overall, over $160 net from the gold market this year, which started with gold at $350 and is finishing at $414. And we always keep our eyes on minimising losses and getting the best runs available from these markets. Tony Henfrey and well known Technical Analyst going back over 35 years in experience, keeps his fingers on the pulse in our other services which cover the broad spectrum of markets from Bonds to Currencies, etc. His "One-on-One" daily service is there to help each of you to make the moves in specific trades, while our original "Comparative Performance Model" puts you into the shares which will outperform the rest of the best of gold and precious shares, in our top-of-the-range, technical service called "Changing Tack - Gold and Precious Metal Shares"
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