*from www.bloomberg.com, Mar. 12, 2013 (To view original article click here.)
Take Away #1: Gold’s poor start to the year and the biggest sales by investors on record are increasing concern that the bullion’s long rally is ending.
Key Facts and Figures:
- Investors sold 106.2 metric tons valued at $5.4 billion from exchange-traded products in February and another 26.1 tons was cut since then.
- The 12-year rally will peak in 2013 says Credit Suisse Group AG and Barclays Plc.
- George Soros reduced his stake in the biggest ETP by 55% in the last quarter.
- Prices are within 5% of a bear market after the longest run of monthly losses since 1997.
Take Away #2: Hedge funds are now their least bullish since 2007 as economies accelerate and the Fed policy makers review stimulus.
Key Facts and Figures:
- Bullion as much as doubled after central banks started buying more than $3.5 trillion of debt from December 2008 to restore growth.
- Now, global equities are at a four-year high.
- The dollar is near its strongest in seven months.
- Eight of 13 analysts surveyed by Bloomberg said they expect lower average gold prices in 2014 than this year.
Take Away #3: Gold has had the worst start to the year in a quarter century.
Key Facts and Figures:
- Gold slid 5.6% to $1,581.55 an ounce in London this year by yesterday’s close, the worst start since 1988.
- Gold traded today at $1,595.71 and averaged a record $1,669 last year.
- The S&P’s GSCI gauge of 24 commodities rose 1.1% since the start of January and the MSCI All-Country World Index (MXWD) of equities gained 6.4%.
- Treasuries lost 1.1%.
- Goldman Sachs Group Inc. reduced its three-month forecast by 12% to $1,615 on Feb. 25 and expects $1,550 in a year.
- Gold is “significantly overvalued” and unlikely to return to its September 2011 record of $1,921.15, says Credit Suisse.
- Numerous other banks including Barclays Plc, BNP Paribas SA, and many others are predicting lower average prices next year than in 2013.
Take Away #4: Global equities advanced as economies see growth.
Key Facts and Figures:
- About $6.8 trillion was added to the value of global equities since November as China accelerated for the first time in two years.
- Economists surveyed by Bloomberg expect U.S. growth to gain every quarter this year.
- The IMF predicts global expansion will climb to 3.5% in 2013 from 3.2% in 2012.
- U.S. unemployment fell to a four-year low of 7.7% last month as job growth surged.
Take Away #5: Large stakeholders cut their positions in gold.
Key Facts and Figures:
- Soros Fund Management owned $97 million of metal through the SPDR Gold Trust as of Dec. 31.
- Moore Capital Management LP sold its stake in the SPDR fund, valued then at $16 million, and cut holdings in the Sprott Physical Gold Trust by 53% to $12.1 million in the fourth-quarter.
- John Paulson, the largest SPDR investor, kept his holdings unchanged last quarter. The stake is now valued at $3.4 billion.
- Paulson told Paulson & Co. clients March 6 that his Gold Fund fell 26% this year.
Take Away #6: Some still bullish on gold on the back of continued stimulus policies.
Key Facts and Figures:
- Central asset buying won’t end anytime soon and concern about currency debasement combined with rising expectations for inflation will spur demand for gold, said Morgan Stanley.
- The median estimate of 13 analysts surveyed by Bloomberg is for a record annual average of $1,700 in 2013, falling to $1,638 in 2014.
- Bank of japan Governor-designate Haruhkiko Kuroda said last week the central bank should bring forward open-ended asset purchases scheduled to start next year.
- European Central Bank President Mario Draghi said, officials discussed cutting borrowing costs further.
- Gold usually earns returns through price gains, increasing its allure at a time of record low interest rates.
Take Away #7: Bullion not declining for all investors, amid mounting rhetoric over currency wars.
Key Facts and Figures:
- Gold priced in yen rose 5.7% this year.
- Gold priced in British pounds advanced 4.1%.
- Central banks added 534.6 tons to reserves last year, the most since 1964.
- Barclays forecasts 300 tons of buying in 2013 and the same in 2014.
- Lower prices and improving economies may boost jewelry purchases, the biggest source of demand.
- Barclays predicts a 3.2% gain this year, from an 8.2% drop in 2012.
Take Away #8: Slump in gold is curbing profit for miners.
Key Facts and Figures:
- As bullion quadrupled since 2003, mining costs jumped more than five-fold.
- For as many as 11 of the world’s biggest miners, production costs averaged $991 an ounce for the first nine months of 2012.
Take Away #9: Future production of gold is in question.
Key Facts and Figures:
- The 30-member Philadelphia Stock Exchange Gold and Silver index, including Freeport-McMoRan Copper & Gold (FCX) fell 17% this year.
- Mining companies have so far held off locking in prices by selling future production.
- Barclays anticipates net hedging of 20 tons this year and 35 tons in 2014. Annual production is about 2,700 tons.
Take Away #10: Investors seem to be betting on further declines.
Key Facts and Figures:
- For options traders, puts that profit should the SPDR Gold Trust (GLD) fall 10% cost 2.1 points mare than calls betting on a 10% rally.
- The price relationship known as skew reached a record 3.3 points Feb. 21.
- Combined ETP holdings stand at 2,479.9 tons, from a peak of 2,632.5 tons in December.
- Hedge funds are 84% less bullish on gold than they were the month before prices reached a record in September 2011.
- Speculators held a net-long position of 39,631 futures and options in the week ended March 5, the fewest since July 2007.
- The U.S. Mint sold 753,000 ounces of American Eagle coins last year, 25% less than in 2011.
- Coin and bar sales from Australia’s Perth Mint fell 17% last year.
*To view original article from www.bloomberg.com click here.