Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
On Monday gold futures were hammered again dropping the price of the metal to a 3-month low, hurt by a strong dollar and geopolitical troubles in Iraq and Ukraine fading from headline.
In afternoon trade on the Comex division of the New York Mercantile Exchange gold for December delivery was changing hands for $1,255.60 an ounce, down nearly 1% or $12 an ounce compared to Friday’s closing price.
Precious metals investors poured money into the sector during July, but renewed selling in August only accelerated into September.
Global exchange traded funds backed by physical gold saw outflows last week of 13.4 tonnes, dropping total holdings to 1,713 tonnes, perilously close to four-year lows of 1,708 reached in June.
Some 17 tonnes left during August and that compares to inflows in July which was the best since November 2012. Year to date roughly 50 tonnes have left the dozens of funds traded around the globe and investment bank Barclays believes 100 tonnes could exit the market in 2014.
Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012, but last year saw net redemptions of 800 tonnes.
Silver is performing much better than the yellow metal with last week’s addition of 56.7 tonnes in the holdings of silver-backed ETFs, bringing the total to 19,866 tonnes.
Despite the lacklustre price of silver, ETF investment in the metal is now within shouting distance of October last year’s record of 20,121 tonnes.
Like ETF investors, speculators in gold and silver futures and options turned more bearish last week, slashing long positions – bets that prices will go up – dramatically.
Bullish bets on gold – net long positions held by large investors like hedge funds – were cut by 20%, while silver longs more than halved in the week to September 2 according to Commodity Futures Trading Commission data released after the close of business on Friday.
On a net basis hedge funds hold 74,031 gold lots or 7.4 million ounces, nearly half the year high of 144,272, while silver longs have dwindled to 6,264 lots from 46,795 in June.
Open interest – a measure of market involvement – held by large investors or so-called managed money picked up slightly during the week, but remains close to a five year low.
7 Comments
38Years
The manipulative governments can only maintain the façade for so long. Its not an if but rather a when, all the Fiat Funny money crumbles and takes gold to $5,000/ou. and silver to $1,000/ou. The real trick will be how to hold on to and use your gold and silver when the broke governments try to seize it all.
EdwardUlyssesCate
It’s unfortunate that paper gold is used to establish the price of the real stuff, but it’s the only way the banksters can lie and steal the real deal from ordinary folks. Kinda like drive-by shooting holes in your lifeboat when a hurricane is coming, and using the sheriff’s car to do it.
Dale Holmgren
I think people are too lazy to buy physical gold. That’s alright, the longer they let me buy physical gold cheaply the better off I’ll be.
RUSS
Hi!, Patrons Of Mining.COM Et Al:
My deceased mentor from Holland once explained it to me this way: “People generally have a low sense of values these days regards economics and spend little time learning it, because the subject for too many is too dry and not exciting enough like reading a novel!” In my estimation he was right and below are two ideas regarding the true value of silver regardless of its’ present price:
(A): Years ago researchers performed conductivity of electricity tests rating copper 100%. Later another researcher discovered that the previous tests did not include silver and so he performed the tests again rating silver 120%. So, today all technological productions sending electrical currents current from point A to point B etc. utilize silver worldwide. To do this scientists can now use Industrial 999.99 purel Silver to produce a wire from one troy oz. of silver that is believe it or not 50 miles long. The purity of Industrial Silver is achieved by electrolysis. Regardless of the price of one’s silver when purchased these features are constants and the strong hands speculator should take advantage of this information in my opinion, by holding onto their silver until a true market shortage develops at the Comex when the various Industrial buyers are bidding between them against each other for future short supplies to surface throughout Industry usage of silver worldwide.
(B): My mentor purchased silver in 5000 troy oz. bars he told me, because that is what Eastman Kodak considered in those days to be a contract they would not discount when they purchased silver for their use in silver haloids used in the production of colored film. For example they could create enough silver haloid from one troy oz. of Industrial Silver to produce more than 5,000 colored camera film we can place into our photo albums at home. These two outlines provided me by my deceased mentor from Holland provided me the confidence to purchase silver and hold on until the market comes to my price which in those days was regulated by physical demands in the marketplace without the added features we have today regards currency depreciation worldwide. He could for see these developments occurring in the future which he termed an eventual flight from paper money beginning not by ordinary people but instead beginning within the Foreign Exchange Markets. The average Joe Six Pack he mentioned would be reacting not to the safety of physical precious metals but instead to the rising prices at the super market, the gas pump, general merchandise stores etc., etc. etc.
(C): Finally, in Article 1; Section 10 of OUR US Constitution we learn that OUR founding Fathers asked that we use only gold and silver (called specie) coins as our everyday money without any paper money. Had this pact with the Constitution been implemented, Politicians today would not be able to go to the Federal Reserve System with interest bearing bonds, in order to procure their funding for their deficit spending, because with the use of specie only the Federal Reserve could have never existed in the first place, because instead of paper money called Federal Reserve notes we the people would be using specie gold and silver coins only and the Federal Reserve System does not deal in those. Had Article 1; Section 10 been unalterably utilized over all these wasted years, the gold in Fort Knox, Kentucky or elsewhere would be in the pockets of we the people Nationwide which means there would never be a need for an audit of Fort Knox etc. Neither would we have the deficits we now have, because the politicians can’t ever come up with trillions of silver dollars can they upon which to spend US into deficits. These disciplines have been buried in the collusion that exists between OUR Congress and the Federal Reserve System making both illicit entities through their collusion. Is this the form they want OUR US patriotism to take and defend with OUR lives, our fortunes and OUR children/grandchildren?
RUSS SMITH, CA. (One Of Our Broke, Fiat Money States)
[email protected]
SageOwexford
Very telling observation on the Silver ETF net purchases by enlightened investors. While silver is considered a Poor Man’s Gold, the appreciation potential from here for Silver is about 50% greater than that for Gold, the latter being the prime target for Central Bank funded manipulation. Doesn’t it warm the cockles of your heart to know government entities are either funding or are complicit in the price suppression of both Gold and Silver?!! Remember that the Speculative COT positions are usually wrong in their positions in the futures markets, so an exit by managed funds, as in “Hedge”, is not an indication that the bottom is going to drop out of the Gold and Silver market. Quite the contrary. It could more correctly imply that the bottom is near and a turnaround will crush the Hedge Funds to add more pain to their dismal 2014 returns that don’t compensate clients for the risk of the positions taken on their behalfs. Buy when the herd is exiting I always say. $1250 Gold and $19 Silver is going to be very cheap by the year 2018. A prediction by the Sage.
Kurt
The dollar is strong compared to WHAT? Have prices at the pump dropped dramatically? How about restaurant food prices? Groceries? I care nothing for the comparison to other paper currencies. The things I need and use have not suddenly become cheaper in “dollars”. So why have metals if not for paper manipulation? Stand and deliver or go home already!
Rubadubdub
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