Heads up! We can finally buy retail gold at the neighboring ATMÑ
http://www.sun-sentinel.com/business/fl-gold-vending-machine-20101217,0,4105899.story
Tagged: gold RSS
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Diana
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WSJ – Gold Mania? Not Quite
A different perspective – gold and the average joe
How much have ordinary Americans actually invested in gold this year?
According to Financial Research Corp., a Boston firm which tracks the data, investors poured $7.4 billion into gold bullion through exchange-traded funds from the start of the year through the end of July. Nearly all of that went into State Street’s SPDR Gold Trust.
But a lot of that money came from big institutions like pension funds, hedge funds and mutual funds. According to State Street, these account for at least 45% of the investment in GLD these days.
So individual members of the public probably accounted for only about half the new investment, or $3.7 billion.
The public has also been buying gold coins and bars. According to GFMS, Ltd., the London-based consultancy that produces the most authoritative figures, U.S. investors bought about 45 metric tons of gold bars and coins in the first half of this year. This is less than they bought last year.
Based on prices in the first half, that maybe accounted for another $1.7 billion or so of investment.
Grand total: The public bought about $5.4 billion worth of gold.
But the story doesn’t end there. At the same time, others were selling gold. Lots of it. I was walking through the mall on Saturday when a young woman came up to me, thrust a plastic bag and leaflet under my nose, and asked me if I had any old gold jewelry to sell. The company she worked for would do a deal on the spot….
….How much has been sold? Nobody knows for certain. But GFMS says the figures so far are about 10% to 20% higher than last year. Some very rough numbers suggest sales through the first half may have come to about 70 metric tons or so–worth maybe $2.7 billion.
So if individuals bought $5.4 billion worth of gold, and sold about $2.7 billion, their total net investment comes to $2.7 billion. These are the figures through early summer: July for the bullion funds, end of June for the physical gold.
Are these bubble levels? Is the mania near its peak?
Try this. Through the end of July, according to FRC, investors poured $22 billion into emerging markets mutual funds. And a remarkable $155 billion into bond funds. Compared to these figures, the amount invested into gold is chickenfeed.
But it’s a tiny share of retail investment this year. It’s hard to call it a public mania.
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Teresa Lo
897 ETFs, 43 Categories and a Partridge in a Pear Tree
State Street has published their quarterly ETF industry guide [DOWNLOAD PDF].
More interesting was a tidbit in their email blast:
SPDR® Gold Shares [GLD] saw assets under management rise to over $50BN in June, fueled by inflows of more than $1.6BN during the month and $7.6BN year-to-date. Assets under management stand at $52.8BN with an average daily volume of more than $1.9BN1. For more information, including gold research and statistics, please visit http://www.spdrgoldshares.com.
So, nearly 15 percent of the money in GLD came in this year.
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Dale
Teresa, I think I just saw the Gold “finger” you warned us about on the live trading session last week. Thanks. I hope no one was caught short.
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Teresa Lo
Gold to $10,000? $36,000? $GLD
When analysts and pundits begin to make large-percentage upward price projections after a long uptrend, we must take note of this obvious sentiment indicator.
Gluskin Scheff Chief Economist & Strategist David Rosenberg wrote today, “Interestingly, gold is hanging in (and up in dollar terms now for seven straight sessions — since mid-January, every interim low has been higher than its predecessor and ditto for every intermittent high. The chart looks great and hardly parabolic.) and added:
GOLD HEADING TO $10,000 AN OUNCE?
Peter Schiff thinks that is a real possibility — see page 45 of the current BusinessWeek. There is no doubt that when benchmarked against the CPI, money supply and GDP, gold can easily double from here. Demand is always difficult to forecast, especially for jewellery, but we do know that central banks have very deep pockets and bought more gold last year (425 tons) than at any other time since 1964.The supply backdrop is also highly conducive to a sustained bull market. Mined production is no higher now than it was a decade ago and has fallen outright in 5 of the past 8 years. And, we know what the marginal cost curve is doing because there is so little cheap supply left in the ground that gold companies now have to drill as much as 2.3 miles to get to the yellow metal in South Africa (and all Bernanke has to do is press a button).
Not to be outdone, some dude on CNBC bandied about the figure of $36,000:
Gold at $36,000 Not as Ridiculous as It Sounds?
Gold should be viewed not as a commodity, but as a cash supplement, Davies said.“There’s been such proliferation of currency,” he said. “As a consequence, gold is very undervalued.”
“I could be really obtuse and say $36, 000,” he said. “But actually it’s not as ridiculous as it might sound.”
If all the reported Fort Knox gold was re-valued at $36,000 per ounce, it would pay off all the debt in the US, he said.
OK, then. To infinity and beyond!
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ekuutan
Thought I should post Marc Faber’s comments to see the alternate view. Intermediate term gold will probably decline, but Long term I still think its good.
“I am aware that some pundits think gold to be “a bubble.” But let me point out the following. Gold prices have not increased much compared to other assets, which reached bubble phases, such as the Nikkei Index between 1970 and 1989, US high tech stocks in the 1990s, and home prices after 1995 (see Figure 18). Gold has also risen far less since 1999 than in the 1970s when the gold price increased by more than 20-times.
People who think gold to be a “bubble” also will also argue that it is an “over-owned” asset.
Let me shed some light on this point. Every year I attend numerous investment seminars, corporate meetings, and conferences. I frequently ask who among the audience owns some gold. Usually a maximum of between 3% and 5% of the participants own some gold or other precious metals (one exception was the Mises Institute Conference: there about 50% of the participants owned gold but bear in mind that these are the true hard core “sound money” protagonists). In fact, given all the money printing that is going on around the world I was rather shocked that when I attended recently five different conferences and group meetings with investors I consider to be “sophisticated,” prudent, and “intelligent,” hardly anyone among them owned any physical gold or silver (usually among 200 people maybe 3 people).I can assure my readers that I have lived through a huge gold mania when gold really became over-owned. That was in the late 1970s, when I was running the Drexel Burnham Lambert’s Hong Kong office, which had more in common with a sleazy casino than with a brokerage office. Day and night clients would come by (I kept the office open 24 hours a day) and gambled through our dealers in “London gold” or in futures. Also, when you traveled in the late seventies, people everywhere in the world knew the price at which they could buy or sell gold and silver. Nobody then was interested in equities or bonds! That was the time when precious metals were over-owned and when they were in the midst of a huge mania. But now! If anything gold is significantly under-owned (see Figure 19).
I am not implying that gold and silver prices cannot decline, but any decline would occur for other reasons than gold and silver being “over- owned.” So, I should like to categorically state that anyone who says that gold is over-owned and in the midst of a mania is completely clueless about the nature of asset markets and about what happens in the late phases of an investment mania when speculation gets completely out of hand (as was the case for gold and silver in the late 1970, Japan in the late 1980s, and the NASDAQ in 2000).”
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while listening to your early morning commentary about gold, I saw this, T, thought you would find interesting…
GLD ETF AUM May Grow by 239 Million Shares According to Shelf Registration
Submitted by numis-exchange on Thu, 05/27/2010 – 19:29
Hot on the heels of Sprott Physical Gold Trust ETV (PHYS) offering 18 Million new shares, The SPDR Gold Shares ETF (GLD) announces a shelf registration of 239 Million shares. Currently, GLD has 390 Million shares outstanding for a total market cap of over $40 Billion. At todays close of $118.47, it represents a potential increase of $28 Billion or 61% increase in AUM.The commencement date of the proposed sale to the public is listed as “from time to time after the effective date of the registration”.
Brad 10:27 PM on October 6, 2010 Permalink | Log in to Reply
Great article JB (may I call you JB?). This has been my personal observation as a Financial Advisor: the general public is not invested heavily in gold, and it is not a bubble, at least not yet. Though it’s price will one day correct, all respect to T, who surely calls these short term moves better than I do.
Maaaayyybe EMs are a bubble:
http://blogs.wsj.com/marketbeat/2010/10/06/conventional-wisdom-watch-we-all-love-em-so-watch-out/
(and I guess everyone forgot that their “pristine balance sheets” consists mainly of USTs…).
In a further examination of gold prices, here is something interesting from Eddy Elfenbein, who believe is familiar to InVivo subscribers… a new model for pricing gold- I found this one fascinating:
http://www.crossingwallstreet.com/archives/2010/10/a-model-to-explain-the-price-of-gold.html
Peace to the T-ciples
Brad 11:42 AM on October 7, 2010 Permalink | Log in to Reply
I love it- this is already catching on-
Here is a longer-term chart of Eddy Elfenbein’s pricing model for gold from EconomPicdata:
http://econompicdata.blogspot.com/2010/10/on-value-of-gold.html
Brad 8:34 PM on October 10, 2010 Permalink | Log in to Reply
Let’s keep beating this poor, defenseless dead horse just for fun. Here is a Crossign Wall Street reader’s comment on Elfenbein’s new gold pricing model (which btw I think is one of the most simple and brilliant observations I have ever seen):
http://www.crossingwallstreet.com/archives/2010/10/gold-model-reader-response.html
I will be amazed if this model doesn’t have some broad influence in the future. Amazing how this has just been sitting there as a factual reality, and no one picked up on it (or at least spoke about it) until now. This is why I love the blogosphere!
ArlingtonJB 3:09 PM on October 10, 2010 Permalink | Log in to Reply
You may absolutely call me JB and I love the term ‘T-ciples’!