World Top 20 Gold 2018 – Countries, Companies and Mines

Top independent precious metals consultancy, Metals Focus, has published its latest analysis of the World’s gold supply and demand and the following 3 tables break down global production showing the Top 20 gold producing nations, companies and mining operations last year and their relative performances compared with a year earlier.  What will perhaps be disappointing for gold investors and some analysts is that the figures do not yet show that Peak Gold has been achieved, with new mine production growing by around 1.8% last year,

Table 1: Top 20 Gold Producing Nations 2017/2018 (Tonnes)

Rank Country 20 18 Output 2017 Output %  Change
1 China 404 429 -5.9%
2 Australia 315 293 +7.6%
3 Russia 297 281 +5.9%
4 USA 222 236 -6.3%
5 Canada 189 171 +10.4%
6 Peru 158 167 -4.9%
7 Indonesia 137 114 +20.0%
8 Ghana 131 130 +0.7%
9 South Africa 130 154 -15.7%
10 Mexico 115 119 -3.4%
11 Brazil 97 96 +1.3%
12 Uzbekistan 92 89 +3.9%
13 Sudan 77 88 -13.0%
14 Papua New Guinea 69 64 +7.4%
15 Kazakhstan 68 56 +22.1%
16 Mali 61 50 +21.3%
17 Argentina 60 63 -4.6%%
18 Burkina Faso 59 53 +12.8%
19 Tanzania 48 55 -12.7%
20 DR Congo 45 37 +22.8%
Others 728 697 +4.4%
  Total 3,503 3,442 +1.8%

Source: Metals Focus, lawrieongold

Table 2: Top 20 Gold Mining Companies 2017/2018 (Tonnes)

Rank Company 2018 Output 2017 Output %  Change
1 Newmont Mining 158.7 163.8 -3%
2 Barrick Gold 140.8 165.6 -15%
3 AngloGold Ashanti 105.8 116.8 -9%
4 Kinross Gold 76.5 78.6 -3%
5 Polyus Gold 75.9 67.2 +13%
6 Freeport McMoran 75.9 49.1 +55%
7 Newcrest Mining 76.7 71.1 +6%
8 Goldcorp 71.4 79.9 -11%
9 Navoi MMC (est) 64,7 62.3 +4%
10 Gold Fields 58.9 62.5 -6%
11 Agnico Eagle Mines 50.6 53.3 -5%
12 Shandong Gold 47.7 43.9 +4%
13 Harmony  Gold 44.1 34.0 +30%
14 China National Gold 40.4 42.4 -5%
15 Randgold Resources 39.9 40.9 -2%
16 Polymetal 37.8 33.4 +13%
17 Zijin Mining 37.0 37.5 -1%
18 Sibanye Gold 36.6 43.6 -16%
19 Yamana Gold 32.1 30.4 +6%
20 Glencore 31.2 32.1 -3%

Source: Metals Focus, lawrieongold

Table 3.  World’s 20 largest gold mines in 2018 (Production in tonnes)

 Rank Mine Country Owner(s) 2018 2017 Change
1 Grasberg Indonesia Govt ., Freeport 83.9 43.3 +74%
2 Muruntau Uzbekistan Govt. 61.5 61.0 +1%
3 Olimpiada Russia Polyus 41.1 36.6 +12%
4 Cortez USA Barrick 39.3 45.0 -13%
5 Lihir PNG Newcrest 30.3 28.6 +6%
6 Pueblo Viejo Dominican Rep Barrick/Goldcorp 30.1 33.7 -11%
7 Zarahshan Uzbekistan Govt. 30.0 30.0  –
8 Carlin USA Newmont 28.8 30.2 -5%
9 Goldstrike USA Barrick 26.0 26.9 -3%
10 Kibali DRC Randgold/AngloGold/Sokimo 25.1 18.5 +35%
11 Cadia Valley Australia Newcrest 23.4 17.0 +38%
12 Boddington Australia Newmont 22.1 24.5 -10%
13 Canadian Malartic Canada Agnico Eagle/Yamana 21.7 19.7 +10%
14 Kalgoorlie Super Pit Australia Newmont/Barrick 19.5 22.9 -15%
15 Detour Lake Canada Detour Gold 19.3 17.8 +9%
16 Geita Tanzania AngloGold 17.5 16.8 +5%
17 Veladero Argentina Barrick/Shandong 17.3 19.9 -13%
18 Kumtor Kyrgyzstan Centerra 16.6 17.5 -5%
19 Merian Suriname Newmont/ Govt. 16.6 16.0 +4%
20 Yanacocha Peru Newmont/Buenaventura/Sumitomo 16.5 16.6 -1%

Source: Metals Focus, lawrieongold

 

 

Advertisements

Very irreverent Brexit ditty

In the UK we are bombarded with pro and anti Brexit media coverage day in day out.  As someone who voted to Remain in the referendum 2 years ago, but has changed his view since, particularly in the light of intransigent EU negotiators, I hope others may find this ditty, posted on YouTube by Dominic Frisby, amusing if NSFW due to the language used.  Dominic will be known to many lawrieongold readers as an astute commentator on precious metals.  I wasn’t previously aware of his comedic singing abilities, nor of his Brexit viewpoint until this YouTube posting was brought to my attention by Canadian blogger ‘Otto Rock’ (a pseudonym) on his regular Inca Kola News blog (which I would recommend as must reading for anyone interested in the nefarious goings-on in the Canadian junior mining and exploration sector.

What has to be surprising for anyone who follows the UK economy is that it hasn’t collapsed under Brexit uncertainty.  Indeed key indicators like the number of people in work is at its highest level since records began in huge contrast to a number of EU nations which are suffering record unemployment levels.  Global growth is set to expand far faster than EU growth and the UK is one of the world’s biggest economies in its own right, which is why the EU is desperate to keep us in the Common Market and is making it so difficult for us to leave.  Enough said.

The link to the YouTube video for Dominic’s song entitled 17 million f**ck-offs (I warned you so don’t view this if of a sensitive nature) is as follows: https://www.youtube.com/watch?v=jiUFPjulTW8

The latest updates on China’s gold

The Chinese central bank, The People’s Bank of China, has announced a 9.95 tonne increase in the country’s gold reserves and its subsidiary, The Shanghai Gold Exchange (SGE) has come up with its gold withdrawal figures for February (which we equate to China’s real gold demand).  My comments on both these have been published on the Sharpspixley.com website and links to the two, admittedly opinionated, articles are shown below:

CHINA ADDS 10 TONNES TO GOLD RESERVES, BUT IS THAT ALL?

The Chinese central bank has reported adding a fraction under 10 tonnes of gold to its forex reserves in February, but is the new total any more accurate than in the past?

CHINA’S GOLD DEMAND LOOKS TO BE SLOWING THIS YEAR SO FAR

The Shanghai Gold Exchange has now released gold withdrawal figures for the first two months of 2019 and if we equate SGE withdrawal figures to Chinese gold demand, as we do, these suggest the nation’s demand may be slowing this year/

LBMA Panel forecasts 2019

Every year the London Bullion Market Association (LBMA) invites a selection of precious metals experts to predict precious metals prices for the year ahead.  This year there was little consensus among the participants who generally predicted a very conservative price scenario.  The LBMA’s tabulation is shown below:

Our comments on the findings and our more bullish projections have been published on the Sharps Pixley website.  Click here to read them

Gold, Silver, Platinum Group Metals 2019 Metal Price Predictions And Stock Choices

Article published on Seekingalpha.com
Summary

Last year with precious metals, apart from palladium, falling short of projected values, our predictions and anticipated stock gains fell well short of expectations.

For 2019, we again anticipate relatively conservative gains in precious metals prices and continuing falls in general equities and bitcoin valuations.

If our predictions are correct, we could see a further recovery in precious metals prices and a sharp upturn in relevant stocks.

We are sticking in our stock recommendations to major precious metals miners and royalty/streaming companies as they are likely to remain comfortably in existence if metal prices move against them again.

To read full article on Seeking Alpha click on:

https://bit.ly/2Aw1ivY

Precious metals price predictions 2019

An article written by me for www.sharpspixley.com to estimate where I think precious metals prices may be in a year’s time:

Predicting precious metals prices for the year ahead can be an invidious task and I have to say that, although I considered my guesstimates for 2018 made a year ago as fairly conservative they were nearly all out by an order of magnitude.  My only consolation, perhaps, is that they were no more so than those of most other precious metals professional analysts and observers.

In the event, as the year played out to the full, gold at least outperformed equity markets by being almost flat over the full year despite underperforming general stocks for much of the period.  Equities, after performing well earlier on, came down with a bit of a bang over the final few weeks of the year and long term gold holders will have done better than those who held on to their general stocks.

My one prediction which turned out to be very accurate was that for bitcoin – not a precious metal at all – which I predicted would come down very sharply, as it did.  I was also looking for a sharp fall in general equities, but it took the final few weeks of the year for this to happen – prior to which they had performed fairly positively.

But herewith my best guesses for precious metals performance in the current year.  In general the projections for gold and silver are much the same as those I made a year ago – but perhaps a little more conservative.  OK, my timing was wrong a year ago but I see many of the factors likely to drive prices in the year ahead as actually being much the same. Let’s hope I am more accurate in my guesstimates this time around.

In general in 2018 precious metals had a fairly dismal year, with the exception of palladium and for much of the year, after a promising first quarter, were strongly outperformed by equities.  But in the final few weeks of 2018, equities came off very sharply and gold holders did rather better with the yellow metal coming off its lows.  As I pointed out in a previous article here, the strong dollar meant that gold actually performed even better – indeed positively – over the year in most countries other than the U.S.A. and with equities declining even more in most other countries than in the U.S. gold did indeed work rather well as a safe haven – as it is supposed to.  Some of the final figures and percentage changes over the full year are noted in the table below, but these figures are in U.S. dollars and with the U.S. dollar index (DXY) rising quite sharply (around 5%) over the full year gold actually increased in value in many other currencies which made it an even better performer in these nations.

Metal Price or Index Level

Price/Level 1/1/2018

Price/Level 1/1/2019

% Change

Gold (US$)

$1,306

$1,282

-1.8%

Silver (US$)

$17.06

$15.47

-9.3%

Platinum (US$)

$947

$794

-16.2%

Palladium (US$)

$1,087

$1,252

+15.2%

Dow Jones Industrial

24,824

23,327

-6.0%

S&P 500

2,696

2,507

-7.0%

NASDAQ

7,007

6,635

-5.3%

Nikkei

23,506

20,015

-14.9%

DAX

12,871

10,559

-18.0%

FTSE 100

7,648

6,728

-12.0%

Bitcoin

$13,445

$3,717

-72.4%

Gold:  The most significant of the precious metals being covered given that where gold goes the others tend to follow – more or less – despite the fact that industrial demand becomes more and more significant as one moves through the precious metals list.  My prediction for the gold price at this time next year is a conservative US$1,400 – up a little over 10%.   ……..

To read the full article which includes my price estimates for silver, platinum and palladium too on sharpspixley.com’s metalsdaily website click on:

LAWRIE WILLIAMS: PRECIOUS METALS PRICE PREDICTIONS 2019

Gold a better 2018 investment than equities – almost everywhere!

Lightly edited version of article first published on www.sharpspixley.com

The better gold price, coupled with the big downturn in general equities, has meant that over the year to date gold has outperformed stocks quite significantly even in the USA – and even more so in most other countries.

As the year draws to a close we see that gold has outperformed equities, virtually everywhere in the world.  Year to date U.S. equities, as measured by the Dow, S&P and NASDAQ, are down over 10%, while European and Asian equities have fallen by even greater percentages.  Gold, in U.S. Dollars is also down year to date, but only by a little under 4%.  Indeed the gap may even be widening as the year end approaches with gold gaining and equities still falling.

So even in the U.S. gold has comfortably outperformed equities over the year, while in other key currencies it has even done rather better having seen gains in most, with many currencies declining in value against the mighty dollar.  Globally, thus gold has more than performed its role as a safe haven investment extremely well.  In countries where the domestic currency has collapsed, like Venezuela and, to an extent, Argentina, gold has proved to be an exceptionally good asset to hold.

As an example of gold in major currencies, the gold price in Euros is up by 1% so far this year and in the British pound sterling it is up around 2.5%. while in both the EU and the UK equities have fallen sharply (around 11%) over the year to date.  In the Australian dollar gold is up almost 6%, and in Canada it is up around 3.5% in the domestic currency’ while again equities are down sharply in both countries.

There are exceptions of course – in Japanese yen gold is down by 5.7%, but Japan’s prime stock index – the Nikkei – is off by 11.4% so gold has still easily outperformed the market there too.  In Swiss Francs, another currency which is usually considered among the stronger palyers, gold is also down – by around 2.9% – but again it has comfortably outperformed the Swiss Stock market which is also down a little over 11%!  (All figures as at close Friday December 21st).

If one looks also at another key investment asset – the heavily promoted bitcoin – the biggest bitcoin player, BTC, has lost around a massive 70% since January 1st this year.  I think that more than quashes any argument that bitcoin provides a better haven than gold which was prevalent when BTC was riding high in the second half of 2017.  It has proved to be a far more volatile asset than gold which somewhat defeats the safe haven principle! It is altogether a much more speculative asset class and we would not be surprised to see the price dive further in the weeks and months ahead.  Other cryptocurrencies have declined even further than BTC in percentage terms.

As we have noted before we have not been a believer in bitcoin as an investment.  We warned people to get out when BTC was at around $10,000 on the way up to almost double that level so we were a little early with our advice, but were obviously correct in principle.  In our view it’s better be out too soon in what was looking increasingly like a developing bubble situation than too late!

So what happens from here?  Equities are still looking vulnerable while portents for gold and the other precious metals are looking positive although data may yet change the position of either or both.  Geopolitics are ever increasingly uncertain – in part due to President Trump’s domestic difficulties and his insistence on a continuing trade dispute with China which seems to be disadvantageous to both nations. There are also continuing issues in the Middle East, Ukraine, Afghanistan, North Korea and the South China Sea to name but five potential flashpoints – but there could well be others which crop up in the year, or years, ahead.  The Democratic party majority in the U.S. House of Representatives which will be in place in 2019 and the subsequent possibility of moves to impeach the U.S. President add further degrees of uncertainty to the mix, which could weigh on equities and the dollar and boost precious metals.

Some observers feel that silver, which has underperformed in the past year, might be the precious metal to plump for given that it tends to outperform gold when the latter is in a rising pattern.  Palladium fundamentals look strong too, but the price could suffer if there is an economic recession, as could that of silver,  and a global recession may, or may not, be on the cards.  A U.S. recession has looked unlikely in the near term, but further falls in equities could lead to negative overall sentiment which could push the recession button and adversely affect all industrial metals – sooner rather than later.

The U.S. Federal Reserve is currently looking as if it will reduce the projected number of interest rate rises next year.  If this is indeed confirmed – or if the Fed looks as if it will reduce the number of rate rises further, which looks possible if equities continue on their downwards path – then this could depress the U.S. dollar and gold could move up strongly.

A word of caution for precious metals investors though – should equities truly crash, which has to be a possibility, liquidity issues could also lead to a precious metals sell-off too as happened in 2008 as big investors struggled to stay afloat and needed to sell good assets to do so.  However, if history repeats itself in this respect the twin consolations are that firstly some of the big institutions are much lighter on gold holdings this time around, given that gold investment fell out of favour given the seeming ever-upwards path of equities up until the past few weeks.  And secondly comfort could be gained in that back in 2008/9 gold was the quickest major asset class to recover – indeed was rising strongly while equities were still on the way down!

China’s SGE Gold Withdrawals still slipping but up year to date

The latest figures for Shanghai gold withdrawals in November have now been released and they are down a little on 2017 and a bit more on 2016, but the cumulative year to date figures are still up:

Table: SGE Monthly Gold Withdrawals (Tonnes)

Month   2018 2017 2016 % change 2017-2018 % change     2016-2018
January   223.58 184.41 225.08 +21.2%  -0.7%
February*   118.42 148.24 107.60 -20.1% +10.7%
March  192.61  192.25 183.24  +0.2%  +5.1%
April  212.64  165.78 171.40  +28.3% +24.1%
May  150.58  138.08 147.28  +9.1%  +2.2%
June  140.59  155.51 138.51  -9.6%  +1.5%
July 137.41  144.71 117.58  -5.0%  +16.9%
August  190.59  161.41 144.44 +18.1%  +32.0%
September  188.12  214.24 170.90  -12.2%  +10.1%
October*  142.94  151.54  153.25  -5.7%  -6.7%
November  179.08  189.10  214.72   -5.3%  -16.6%
December  185.21  196.37
Year to date 1,876.58 1,845.34 1,774.00 +  1.7% +5.8%
Full Year  2,030.48  1,970.37

Source: Shanghai Gold Exchange.  Lawrieongold.com

* Months include week long New Year and Golden Week holiday periods

For additional comment on the above click on the below link to my article on the sharps Pixley website:

Chinese gold demand slipping – but still up y-o-y

A Tale of Two Conferences – 121 and Mines & Money head to head

The past couple of weeks in London have seen two major mining-oriented conferences/exhibitions which in many respects went head to head in attracting participants.  What is perhaps ironic is that the individuals who run the conference organisation for the first of these to take place – the 121 Mining Investment conference- used to be the organisers for the other – Mines & Money – until they deserted virtually en masse a few years back to set up their own conference business.  This they have built up very successfully with events in London, Hong Kong, Cape Town, New York and Singapore and have expanded conference focuses from mining to oil and gas, technology and property.

Mines & Money on the other hand has retained its mining focus and has also expanded geographically from London to Hong Kong, New York, Brisbane, Melbourne and Toronto, but is now run by Beacon Events which does have other conference streams too.

The revenue generating patterns for the two events are somewhat different.  The 121 conference generates all its income from the organisations (mostly junior mining and exploration companies) which give 10 minute presentations to mostly sparsely attended delegate sessions, but generate most interest from meetings set up at their individual display areas in a 2-day event, but with free admission to qualified delegates.  It would seem that Mines & Money might have the edge here as it provides something similar, plus has more general ‘expert’ presentation slots over 4-days, and attracts a number of service companies and national exhibits, but makes its money from attendee fees as well as exhibitor and presentation charges.  However, talking to paying participants, it appears that the 121 event had more of a buzz, perhaps better networking and, in general, the paying participants seemed happier with the overall benefits which may have accrued.

In general the 121 conference’s event facilities, were perhaps better, being held at the old County Hall on the Thames South Bank; the catering was definitely better and the printed conference programme was streets ahead of that given out at Mines & Money.  The latter held its event at the Business Design Centre in Islington as it has almost from the start (its first event some 16 years ago was at the Excel Centre much further from London’s City Centre) but at this year’s event the organisers do, on the face of things, appear to have been cutting some of the costs involved – notably on the catering front and in the printing of conference materials.

Mines & Money also has a very successful associated Awards Dinner, organised by Mining Journal, the original founder of the whole series of Mines & Money events.

So which is the better event?  Both have their strengths, but for paying participating companies we think 121 may have the edge.  The venue, close to Waterloo Station is arguably more convenient and it definitely comes out ahead on facilities and ambience as it does for the catering and printed material pertaining to the speakers and participating companies.. Mines & Money has a much broader conference programme and more ‘expert’ speakers plus the Awards dinner so there’s probably room for both although Mine & Money may have to make more of an effort in future years to retain any dominance it may still have.

May be a great time to buy back into the gold majors

Summary and link to an article published on Seeking Alpha.com

Now May Be The Time To Buy Into The Gold Majors

Summary

The proposed Barrick/Randgold merger, assuming it is implemented, will likely lead to a positive re-rating of the whole sector.

Randgold’s management has been brought in by Barrick in an attempt to change the latter’s management philosophy for the better.

Barrick shareholders may not be happy with a greater involvement in Africa, but Randgold has seen over a decade of virtually uninterrupted growth, wholly in the ‘Dark Continent’.

A more liberal dividend policy is likely to be implemented by Barrick, in itself helping to stimulate investment interest.

The saying goes that the best time to buy into a market is when ‘blood is running in the streets’. After a series of mostly disappointing Q3 results, media and commentators have been climbing into the gold majors, and many of these have seen their stock prices sink to new interim lows. Now may thus well be the time to climb back into investing in these stocks as they are likely to be at, or near, their low points as long as the gold price remains where it is at the moment, or moves higher over the remainder of the year as we think it will…..

To read full article click on: Now May Be The Time To Buy Into The Gold Majors 

 

Big anomalies in September’s Swiss gold exports

Here follows a lightly edited and updated version of an article first published yesterday on the Sharps Pixley website looking at some unusual export data for gold from Switzerland in September.  Switzerland is a key conduit for the transfer of gold bullion from West to East as being the location for a number of refineries which specialise in taking Western gold bars and dore bullion from mines and re-refining this to the smaller sized ultra high quality gold bars and wafers in demand in Asia and the Middle East:

Switzerland has announced its gold imports and exports for September and while imports are from the usual suspects there are some important anomalies from the normal pattern in the country’s September gold export figures.

Imports totalling around 177.8 tonnes largely came from the UK (91.8 tonnes – or a little over half the total) and the USA (33.1 tonnes) neither being abnormal numbers, with the UK being the centre of the global gold trade and the USA being the world’s fourth largest gold producer. The balance came from relatively small amounts mostly from other gold producing nations.

The real surprises came in the gold export recipients. Mainland China topped the list comfortably with 37.5 tonnes out of total gold exports for the month of 119.4 tonnes but the HUGE surprise in the figures was that during September Switzerland, apparently, according to the figures we were presented with initially, exported zero gold to both India and Hong Kong,  We were however fed incorrect data and now we have updated figures which corrects the anomalies.  The initial figures were indeed  erroneous.  In fact exports to India were down very substantially to 16.6 tonnes but Hong Kong still took a respectable 28.9 tonnes.  A graphic of the real figures is shown below:

However, some other Swiss gold recipients in September are indeed really anomalous as they also usually fall outside the country’s normal gold export listings; notably Hungary which imported 28.9 tonnes as it increased its central bank holdings tenfold (see: Central Bank gold buying – New kids on the block), although Hungary reported this as occurring in the first two weeks of October, but it apparently entered the Swiss export figures in the earlier month. Other big unusual importers were Indonesia (with 16.6 tonnes), the African nations of Ghana (5.2 tonnes), Gabon (4.8 tonnes) and Senegal (2.6 tonnes), while among the normal Swiss gold recipients Thailand (7.7 tonnes), Saudi Arabia (2.6 tonnes) and Taiwan (2.5 tonnes) absorbed larger amounts than normal.

It remains to be seen whether some, or all, of these were adding, like Hungary, to their official gold reserves. If they are this should become apparent when the IMF publishes its next table of changes in world gold reserves which is always available in the data section of the World Gold Council’s website (http://www.gold.org).

Interestingly the gold price soared yesterday reaching $1,240.80 at one time up from $1,221.70 when the U.S. market closed a day earlier. This may also have been prompted by a big plunge in general equity markets with Asian, European and North American markets all losing substantial ground.  They do seem to be picking up a little today, albeit nervously (the Hang Seng continued to fall and Germany’s DAX is down a little as I write)  but it remains to be seen if the apparent rise is just a temporary bounce and if there is further carnage to come.

The dollar index has also picked up a little today which could mitigate further rises in the gold price – at least temporarily

Is the oft-predicted plunge in equity prices beginning – and if so are we seeing a move into gold as a safe haven? The dollar index also appears to be slipping a little and we again saw inflows into the big gold and silver ETFs. Perhaps precious metals are coming back into favour again?

Gold may be waiting on U.S. midterms

An article published by me a few days ago on the info.sharpspixley.com website – and followed by on on the same subject from a U.S. commentator:

The gold price, after its recent uptick, seems to be consolidating in a US$1,220-$1,230 range, perhaps held in check by a stronger U.S. dollar index – although maybe even more likely by machinations on the COMEX paper gold futures market.  Every time upwards pressure moves the price to the $1,230 mark it appears to be smartly brought back down a few pegs!  Movements in and out of the big SPDR Gold Shares (GLD) gold ETF have been non-existent the past few days, suggesting  too that the institutional market may be biding its time, waiting for a break-out one way or the other before committing more funds, or withdrawing gold, out of the world’s biggest gold ETF.

With the U.S. midterm elections coming up in a few weeks’ time and with some uncertainty showing up in the polls, gold may well find itself in a hiatus period until after election date (November 6th).  There’s an interesting article published by the BBC in the UK which looks in some graphical detail at the various factors which have tended to move the electorate under past Presidencies and the latest corresponding figures (See:  US mid-terms: Can we tell if Democrats will win?)  Looking at the figures and charts, currently they would on average suggest good Democratic party gains, although whether enough to gain a majority in the House of Representatives, which the Republicans currently control by 241 seats to 194, let alone in the Senate, is not so certain.  President Donald Trump (who is a hugely contentious figure in U.S. politics) has confounded the polls before and could well do so again.  His supporters are fanatical in their partisanship – but then so are his opponents .

We think that perhaps the best pointer to the eventual result may lie in the numbers of political retirements ahead of the midterms from each party – and far more Republicans are retiring than Democrats.  The Democrats have also been far more successful in raising funds for advertising campaigns supporting their candidates than the Republicans.

As the BBC article notes on the political retirements: “Several key committee chairs and Speaker of the House Paul Ryan have already joined what’s become a modern record for retirements from a majority party – a telling sign that they think Republicans may not be a majority much longer.  Several incumbents – on the left and right – also were forcibly retired, as they lost primary races to grass-roots challengers. That could be another indication of an anti-incumbent mood in the electorate that, because there are more Republicans running for re-election than Democrats, could help fuel a Washington power shift.”

As noted above, President Trump is a contentious figure, even within his own party, and we suspect that the record number of Republican legislators standing down could be as much a sign of their dissatisfaction with the incumbent President and his policies as a normal retirement pattern.  Out of the political mainstream they no longer have to support his proposals – or comment positively on his numerous off-the-cuff tweets.  If this sense of dissatisfaction filters down to the grassroots there could well be a very big Democratic Party resurgence.

So all in all we would not be at all surprised if the Democratic Party overturns what is a pretty decent Republican majority in the House, but perhaps the GOP will retain its slender majority in the Senate.  If the Democrats overturn the Republican majority in both houses then the currently hugely partisan state of U.S. politics could lead to any, or all, of President Trump’s policy proposals being mitigated or ended altogether.  But what a wounded President Trump might do in such circumstances, while retaining executive and Commander-in-Chief powers, could be very worrying for both the U.S., and the world as a whole.

While President Trump, and his utterances, are not to everyone’s taste he has been presiding over a growing U.S. economy and falling unemployment – at least as far as perhaps tweaked official statistics tell us.  However the country’s trade deficit has been growing, while some are increasingly worried about the prospective economic implications of the trade wars the President has unleashed.

Should the Democrats prevail in the midterms then that would likely throw the U.S. into a political impasse and could severely knock confidence in the U.S. dollar which has been riding high of late.  A falling dollar would likely mean a rising gold price so political change and uncertainty in the U.S. could well be positive for gold despite the Republicans being, in theory, perhaps more precious metals-friendly than the Democrats.

President Trump and his policies seem to have been good for Wall Street and even many of those who were on the political right, but seemingly opposed to the idea of The Donald becoming President, now, perhaps grudgingly, are prepared to accept that what he has been doing has been positive for the economy.  But the worry for the Republican Party is not necessarily that those of this opinion will vote Democrat – they probably won’t – but they may abstain from voting altogether thus allowing Democrat victories by default.

So the big money, which can swing the gold price either way, may well be holding off for the time being until they are sure which way the political wind is blowing.  But the nearer to the polling date we get, if the polls are looking decisive one way or the other, the more likely we are to see gold breaking out up or down.  At the moment virtually all the polls are predicting Democrat gains, although Republicans still look to be comfortably ahead in the Senate.  The House is a different picture altogether and we look likely to see significant Democrat gains, although whether enough to achieve a majority is still in the balance.  The recent Kavanaugh hearings could have a negative impact on the Democrat vote as there is a general feeling that opposition to the judge’s appointment was purely politically motivated.  That has consolidated Republican support and perhaps weakened likely Democrat turnout.

 

GLD Rising. Is this the move we’ve been waiting for?

Updated version of an article published on sharpspixley.com on Monday.  To read original article click here

In a post a few weeks ago we suggested monitoring inflows or outflows of gold into or out of the big SPDR Gold Shares gold ETF (GLD) as a way of judging big money sentiment on gold (See: Watch GLD for gold price guidance) and for a corresponding gold price direction. And, after a series of consistent gold withdrawals from the ETF, this does seem as if it may have turned around sharply last week at almost exactly the same time as the big fall in the equities markets commenced. Last Tuesday, for example, 8.82 tonnes of gold were added into GLD – the first increase since July – and after a couple of days of zero movement in the ETF, another 5.65 tonnes of gold were added into it on Thursday. the additions continued over the weekend with a further 4.12 tonnes added.  These are not insignificant amounts. 18.59  tonnes of gold is equivalent to around the annual production of the world’s 32nd largest gold producer last year – and this amount was added only over a 6-day period. This week’s continuing GLD figures will thus be particularly worth watching to see if the build-up continues – and if it does watch out!

Many observers have suggested that for a sustained increase in the gold price this would be accompanied by a significant downwards correction in the general equities markets which are seen by many as overbought, with such a correction perhaps overdue and inevitable. But beware of a really big downward move in equities should this happen, as some commentators suggest. Such an occurrence could bring precious metals down in price too as happened in 2008. The prospect of this may have lightened somewhat in comparison with the last big downturn as many institutions are out of any substantial precious metal holdings given they have been somewhat out of favour as an investable asset in the past several months. And even if they do drop in price alongside equities they will likely recover far faster – as in 2008/2009.

Today has seen a bit of a pick-up in equities in most markets, although gold has pretty well held on to its gains.  What is too early to tell though is whether today’s equity recovery is a shortlived bounce, or a start of the continuation of the bull market in general equities.  It’s perhaps worth reading the transcript of the Stephen Leeb interview published on this site a day or so ago.  Despite a slightly rambling interview, Leeb is one of the smartest guys around and he reckons that if this recent move in equities is not the start of the long-awaited crash, the latter is not far ahead.  We shall see in  the next few days.

Is this the turning point for gold and silver?

Here follows a lightly edited and updated version of an article I published on the info.sharpspixley.com website earlier today.  (To read original article click here)

We wrote here recently about the short term headwinds facing gold and the longer term positives, but some of the short term negatives seemed as if they fell away at a single swoop yesterday!  Could the 800 point fall in the Dow be the start of the much predicted equities collapse?  Indeed the Dow and the S&P 500 were both down around 3% on the day and the NASDAQ down a massive 4%.  These falls have been mirrored by big falls in general equities in Asia and Australia, and this morning in Europe. The equities sell-off has continued today, but not, so far, as severely as yesterday.

As perhaps another indicator,  yesterday a massive 273,851 ounces of gold were added to the SPDR Gold Shares ETF (GLD) – that’s over 8.5 tonnes and is the first positive movement of gold into GLD for nearly 3 months, and a very sizeable amount to boot.  We have stated here before that one should watch GLD additions or withdrawals as a guide to institutional sentiment towards gold and since April we have mostly seen withdrawals – an enormous 141 tonnes of gold had been taken out from GLD from end-April until yesterday.  Again could this be a turning point for gold?  One day’s figures are perhaps not a sufficient indicator of what’s to come, but are a  and it is essential to monitor this indicator as a guide to precious metals sentiment.

Today we have seen a big rally in the gold price which has hit its highest level since the beginning of August, up over 2% at its intra day peak so far today.  Silver has seen a slightly stronger increase too, but not enough yet to see it break out from its correlation with the gold price.  But investor interest has been strong as witness the high level of silver Eagle sales out of the U.S. Mint.  It has the potential to outperform gold should the rallies in both metals continue.

As always commentators’ views are mixed on the likely effect of yesterday’s falls in equities valuations.  Some see them as a buying opportunity in an ongoing bull market pointing to a similar fall in February from which the major indexes made a fairly rapid recovery.  All eyes will be on the Dow and the S&P over the next few days to see if the falls will continue, or if there will be a bounce back.

We are entering a time where Fed tightening by raising interest rates may well be making markets nervous.  President Trump has been quick to lay the blame for yesterday’s fall on the Fed’s policy of raising interest rates thus leading to a stronger dollar (which has adversely affected the gold price in dollars if not in some other currencies).  This fall in other currencies against the dollar has had a counter-effect on some of the Administration’s tariff impositions.  Yet even so some U.S. manufacturers are already warning that the tariffs on Chinese goods in particular will have a negative impact on input and consumer prices.

So, we are likely going to see a steady increase in U.S. inflation, and unless there is a slew of positive data on job creation, wages and in PMI forecasts, we could see sentiment turning down which could further impact U.S. equities markets.  If equities are seen as likely to fall further this could see an increased move towards safe haven assets like gold and silver.

Although be warned, if equities markets really do tank as some are predicting, then precious metals prices could suffer too as individuals and funds/institutions struggle to maintain liquidity and are forced to sell off good assets with the bad.  We saw this happen in the 2008 market crash, although it should be noted that gold, in particular, was far quicker to recover than equities and climbed back to pre-crash levels while equities were still falling.

And what of silver?  This has had a pretty torrid time of late as represented by a gold:silver ratio (GSR) at around its highest level for around 20 or more years.  When the GSR has been this high in the past it has tended to precede either an economic crisis or a big stock market turndown, or both.  Is that what we are now experiencing?  We have often said we don’t anticipate a return to the supposed old average GSR of around 15 as the out and out silver bulls will suggest, but a return to the 70 level, or even 60, could be on the cards with a huge positive impact on the price of silver. vis-a-vis that of gold

This morning, gold has already regained the $1,200 level which had previously seen major resistance to an increase coming in.  And once U.S. markets opened the price shot up another $20.  If this level is sustained through the end of the week and equities continue to fall, then we could see a big surge in precious metals prices in the days and weeks ahead.  Chart followers had been pointing to a gold close above $1,215 as being the significant level from which gold might continue to appreciate and, as I update this article gold is sitting comfortably higher than this level.  it obviously remains to be seen whether it will stay there, but we think there is a good chance of it so doing and then move on to get some of its lustre back.

Bitcoin too has been stuttering with BTC down around 5% and the smaller cryptos, like ETH, mostly down more than 10%.  We have long warned that we have no confidence in the stability of a bitcoin investment and this kind of volatility perhaps makes the point for us.  Some observers reckon that BTC will fall to around $2,000 by the year end, or even lower, and some of the lesser cryptos to close to zero.  We wouldn’t be surprised if this were to come about!

 

Latest SGE figures could point to a Chinese gold demand turndown

Perhaps a week later than usual – due to the Golden Week holiday, China’s Shanghai Gold Exchange has just published its gold withdrawal figures for September, and they’ve come in around 12% down on the same month a year ago.  The question is does this represent a downturn in Chinese gold demand, despite the relatively low gold price with lower metal prices usually sparking an upturn in retail gold demand in mainland China and Hong Kong?  – See table below for monthly SGE gold withdrawals for the past couple of years:

Table: SGE Monthly Gold Withdrawals (Tonnes)

Month   2018 2017 2016 % change 2017-2018 % change     2016-2018
January   223.58 184.41 225.08 +21.2%  -0.7%
February*   118.42 148.24 107.60 -20.1% +10.7%
March  192.61  192.25 183.24  +0.2%  +5.1%
April  212.64  165.78 171.40  +28.3% +24.1%
May  150.58  138.08 147.28  +9.1%  +2.2%
June  140.59  155.51 138.51  -9.6%  +1.5%
July 137.41  144.71 117.58  -5.0%  +16.9%
August  190.59  161.41 144.44 +18.1%  +32.0%
September  188.12  214.24 170.90  -12.2%  +10.1%
October*  151.54  153.25
November  189.10  214.72
December  185.21  196.37
Year to date 1,554.55 1504.70 1406.03 +  3.3% +10.6% 
Full Year  2,030.48  1,970.37

Source: Shanghai Gold Exchange.  Lawrieongold.com

* Months include week long New Year and Golden Week holiday periods

A double digit percentage downturn for one month may in reality not be indicative of a downturn – yet – but taken into account with other factors  (not least the initial impact of the trade and tariff ‘war’ with the U.S.) we think it may be time to take note given the huge impact of Chinese gold consumption on global gold trade.

It is actually a somewhat contentious point as to whether SGE gold withdrawals are a real representation of Chinese demand.  The major gold consultancies dispute this and come up with far lower figures for Chinese  consumption, but, in terms of actual gold flows they do seem to be far closer to reality than the consultants’ estimates.  Known gold imports from those countries which break down their gold export figures by national destination, plus China’s own gold production, plus an allowance for scrap come far closer to the SGE withdrawal total than the consultants’ consumption estimates.  If we add in a small allowance for gold imports not detailed in national statistics we do end up with a sum total which equates to SGE withdrawals.  Regardless, though, the SGE figures given they are released monthly, are an easily accessed measure of trends in gold activity in the world’s largest gold consumer.

 

So we await future months’ SGE figures with particular interest given they will include demand leading up to the next Chinese New Year which falls on February 5th (a year of the pig), around 10 days earlier than the 2018 New Year.

Those with sharper eyes may note that this year’s February SGE gold withdrawal figures were some 20% lower than the previous year without prompting the kind of comment we are seeing here, but this is explainable by the comparative dates of the Chinese New Year, which fell mid-February this year and end-January in 2017 with much more of the corresponding holiday period, when the SGE is closed, falling within February this year.

I have added additional comment on the state of the Chinese economy and the impact of the SGE gold withdrawals in a post on sharpspixley.com which may be accessed directly by clicking here.

Suffice it to say that if the latest SGE gold withdrawal figures do presage a turndown in Chinese gold demand, this could have an important impact on global demand fundamentals given that China is the world’s largest gold consumer.

Two connected gold posts from me on Sharps Pixley

This past week I have published a couple of gold-relevant posts on the info.sharpspixley.com website which look at the current price pattern for gold and whether it has bottomed yet.

The first was:

Gold battles to hold $1,200

The first couple of paras  follow – to read the full article click on the linked title  above:

The past few trading days have seen the gold price hovering above and below the $1,200 mark in the light of a stronger dollar and a lack of Chinese data due to the nation’s Golden Week holiday this week.  Every time the gold price has nosed above $1,200 it has been taken down a few dollars again.

The hard right wing gold fraternity generally put this down to manipulation by the powers that be on the futures markets where at key times remarkable amounts of paper gold are offered for sale – although spoofing, where massive sales or purchase orders are placed on the futures markets, but with an intent to cancel orders before they can be implemented, may well be a prevalent cause. For example, the U.S. CFTC regulator has just fined Canada’s Scotiabank a paltry $800,000 for doing this on the COMEX futures markets for gold and silver from at least June 2013 to June 2016.  It makes one wonder how common this kind of market manipulation is among the other major bullion banks.  The profits that can be gained from playing the markets to their advantage in this manner far exceed any fines that may be imposed by the regulators and the banks may view the prospect of being caught out and fined just as a cost of doing business.  After all an $800,000 dollar fine is just peanuts to a major banking entity.  Who knows what huge profits were made by playing the markets in this manner ?

The Chinese Golden Week holiday suggests………….  To read full article click on the title above.

The second article looked at the weekend close above the $1,200 level, looks at the short term headwinds facing gold, and then the long term positives.  To read the full article click on the link below:

Gold ends week above $1,200. Is the bottom in yet?

The gold price managed to end the past week above the $1,200 level, but still a little below its 50 day moving average, although it did manage to breach that line intra-day, so it is close. But the big question is is it there to stay, or will it turn down again and test its recent low of around $1,183 again?

We have read a number of gold commentaries suggesting the bottom is in on numerous occasions during gold’s decline from above $1,350 earlier in the year, with most such forecasts being overtaken by further declines within a very short space of time. But this time around it does look like there may have been a firm bottom in the low $1,180s. But as we noted in an earlier article this past week, gold has been struggling to remain consistently above the $1,200 level, despite continuing buying pressure.

Gold has been range bound for most of the past few days between around $1,190 and $1,210 being unable to break out in either direction so far. There are certainly short term headwinds………

To read full article click on the title above