GOLD stocks gathering momentum

[Ageo]

Guys im not sure on the production levels and how everything else is going but i am in the Gold market (jewellery wholesaler) and can tell you how its affected the world in Jewellery.

We import gold (9ct & 18ct) from Italy and ive been to many jewellery fares around the world such as Hong Kong, Switzerland, Italy and many other places. Basically the jewellery industry especially gold has taken a bit of a hit simply because gold prices have risen alot in the last 10 yrs and the problem is manufacturers, wholesalers and retailers realise this but the customers dont and think prices are still the same as 10 years ago. So alot of people have held off buying gold in many ways (only for special occasions mainly) and the reason we know this is because retail shops tell us all the time (worst year in business for mostly all of them) and people want 18ct gold for 9ct prices. Manufacturers in Italy have large stockpiles of gold jewellery simply because that cant move it as fast as they did in the past. So basically if the demand for gold is decreasing then dont expect the price of gold too shoot up anytime soon (i could be wrong of course) but demand isnt high prices tend to stagnate and thats what the current prices are doing atm. Could you imagine if gold hit $800+ per ounce? People wouldnt buy because cost of living is rising and people cant afford to buy luxury goods.

Gold is a long term investment where inevitably like most precious metals will go up in value since its a commodity that will only last so long.

Just thought id give you a perspective from supply and demand area.

 

[Gundini]

Excellent post Ageo, and thanks for the heads up!

Makes a lot of sence from your angle, and let's face it, jewellery is the bread and butter of the Gold price. Well done!

 

[explod]

Guys im not sure on the production levels and how everything else is going but i am in the Gold market (jewellery wholesaler) and can tell you how its affected the world in Jewellery.

We import gold (9ct & 18ct) from Italy and ive been to many jewellery fares around the world such as Hong Kong, Switzerland, Italy and many other places. Basically the jewellery industry especially gold has taken a bit of a hit simply because gold prices have risen alot in the last 10 yrs and the problem is manufacturers, wholesalers and retailers realise this but the customers dont and think prices are still the same as 10 years ago. So alot of people have held off buying gold in many ways (only for special occasions mainly) and the reason we know this is because retail shops tell us all the time (worst year in business for mostly all of them) and people want 18ct gold for 9ct prices. Manufacturers in Italy have large stockpiles of gold jewellery simply because that cant move it as fast as they did in the past. So basically if the demand for gold is decreasing then dont expect the price of gold too shoot up anytime soon (i could be wrong of course) but demand isnt high prices tend to stagnate and thats what the current prices are doing atm. Could you imagine if gold hit $800+ per ounce? People wouldnt buy because cost of living is rising and people cant afford to buy luxury goods.

Gold is a long term investment where inevitably like most precious metals will go up in value since its a commodity that will only last so long.

Just thought id give you a perspective from supply and demand area.

I am sceptical of this post. Being from within the industry Ageo you have a vested interest in trying to keep the price of your raw material as low as possible. Nothing personal, just as I see it.

Throughout history, gold has been a primarily a store of wealth. President Nixon with the Brettin Woods agreement stalled it for 30 years but the game appears to be up now.

I myself and many I know have physical bullion stored,... as a hedge against inflation, or if you like against the devaluation of money (fiat currency). Central banks have been selling heavily for the last three years in an endeavour to cap the gold price to protect the principal of paper money but in that time it has risen more than 50%. Because mines are depleting, production in most countries, particularly South Africa is falling.

With the US dollar breaking to an all time low, I am afraid you will have to pay more for your gold and when more people realise that it is one of the few remaining things with intrinsic value, I feel confident your wholesale business will pick up smartly

 

[Ageo]

I am sceptical of this post. Being from within the industry Ageo you have a vested interest in trying to keep the price of your raw material as low as possible. Nothing personal, just as I see it.

Throughout history, gold has been a primarily a store of wealth. President Nixon with the Brettin Woods agreement stalled it for 30 years but the game appears to be up now.

I myself and many I know have physical bullion stored,... as a hedge against inflation, or if you like against the devaluation of money (fiat currency). Central banks have been selling heavily for the last three years in an endeavour to cap the gold price to protect the principal of paper money but in that time it has risen more than 50%. Because mines are depleting, production in most countries, particularly South Africa is falling.

With the US dollar breaking to an all time low, I am afraid you will have to pay more for your gold and when more people realise that it is one of the few remaining things with intrinsic value, I feel confident your wholesale business will pick up smartly

Well put it this way, i buy gold for $650 p/o and say gold goes up to $700, why would i want to not make a profit on my gold????

To me it makes no difference, we buy at a higher price, everyone along the way adjusts there prices to make their cut and in the end the customer pays for it all. All im saying is if gold is lower then more people buy and in turn demand is on the increase. The higher it goes the more people will think twice about buying it.

And as for your last comment about the few remaining things with intrinsic value just stop for a second and think like a normal everyday person that wants to buy gold. Forget the mathematical mumbo jumbo and find out the real reason "Fashion and Culture". 99% of people dont go and buy gold jewellery and expect it to go up in value, they buy it cause they "like it". But when push comes to shove and that mortgage repayment is due most likely they will choose that before jewellery.

When you work in the industry you see how everyday people are (and its the masses that moves the market).

 

[Nicks]

Im with Explod on this.

Secondly, if you import your gold from Italy, you are probably importing retail.

Also regarding the comments about the masses. When it comes to retail jewellery Australia is certainly not the masses. The Indian and Chinese rapidly increasing middle class have a demand for Gold jewellery like never before.

As for raw gold. There are now at least two (Fat Prophets and Managing Director of Newmont Mining) that say Gold will hit US $1000 ounce by the end of the year.

I think Fat Prophets are a joke myself, ramping it up when they pick winners but mention nothing of their many losers BUT I give a lot of credit to the words of the MD of Newmont.

Any one else got any comments from experts on the direction of gold?

In my opinion Gold will hit this mark. Sharemarket volatility is a factor in higher gold prices and as we have seen over the last 2 weeks it doesnt get more volatile than this. With the ramping up of production for Avoca things are only just going to get better in this market climate. Im obviously not the only one who thinks so as the share price has remained rock solid (increasing in fact) with the recent falls. Positive news on their ever increasing success and growth has helped also.

 

[Ageo]

Im with Explod on this.

Secondly, if you import your gold from Italy, you are probably importing retail.

Hi Nick, we goto straight to the manufacturer and buy our gold or we buy gold bars from the Australian Bullion Company, send it over to them so they can make the jewellery for us. (how is that retail)?

Also regarding the comments about the masses. When it comes to retail jewellery Australia is certainly not the masses. The Indian and Chinese rapidly increasing middle class have a demand for Gold jewellery like never before.

Hehe i wasnt talking about the Australian market, as i said before i have been to jewellery fairs across the world and spoken to large Manufacturing /Wholesale/Retail companies and a majority of people are saying that gold jewellery is not as it used to be and they are mostly having an average year.

As for raw gold. There are now at least two (Fat Prophets and Managing Director of Newmont Mining) that say Gold will hit US $1000 ounce by the end of the year.

Yes i heard this, how convenient the manager of a gold mining company to say gold will hit $1000 p/o hehe

In the end i hope gold goes up as i have alot of stock here that can benefit in an increase in value

 

[Uncle Festivus]

Excellent post Ageo, and thanks for the heads up!

Makes a lot of sense from your angle, and let's face it, jewelery is the bread and butter of the Gold price. Well done!

I'm not too sure about that G. Jewelery is but a sideline to what is essentially a currency play, so in the big picture it will most likely take it's direction in proportion to the inflation of the fiat money supplies and exchange rates. Jewelery demand helps but it's hardly the main driver.

As for reducing demand the higher the price goes, it usually does the opposite due to the human trait of not missing out on something that is appreciating eg mania. Gold is also just a very small part of the global asset classes so any mass migration to gold or gold shares will result in a mania.

 

[Ageo]

I'm not too sure about that G. Jewelery is but a sideline to what is essentially a currency play

According to this site
http://www.gold.org/value/stats/statistics/gold_demand/index.html

Out of Golds total demand for 1st quarter 2007 which is $17.4 billion dollars, Jewellery consumption is almost $12 billion dollars.

I find it hard to believe that its just a sideline with information like that. Unless im missing something?

 

[explod]

According to this site
http://www.gold.org/value/stats/statistics/gold_demand/index.html

Out of Golds total demand for 1st quarter 2007 which is $17.4 billion dollars, Jewellery consumption is almost $12 billion dollars.

I find it hard to believe that its just a sideline with information like that. Unless im missing something?

As stated above gold jewellery is big in India, particularly during wedding season over there. To wear as jewellery is very much a side issue as against a store of wealth and exchange. The tradition of carrying gold, in any form as currency goes back thousands of years and as times are becoming uncertain this accumulation is growing in earnest of late, particularly throughout Asia and the Middle East.

Keep making that jewellery Ageo, your good days are coming In My Humble Opinion

 

[BIG BWACULL]

As stated above gold jewellery is big in India, particularly during wedding season over there. To wear as jewellery is very much a side issue as against a store of wealth and exchange. The tradition of carrying gold, in any form as currency goes back thousands of years and as times are becoming uncertain this accumulation is growing in earnest of late, particularly throughout Asia and the Middle East.

Keep making that jewellery Ageo, your good days are coming In My Humble Opinion

Sorry in advance had to throw this in,
"what you talkin bout fool"
Any way as you were I'll be here :couch

 

[Nicks]

"Hi Nick, we goto straight to the manufacturer and buy our gold or we buy gold bars from the Australian Bullion Company, send it over to them so they can make the jewellery for us. (how is that retail)?"

... I guess what I was meaning by retail is jewellery, ie that you dont buy the Raw Gold from Italy, that would just be plain stupid, you buy the jewellery from Italy. Your earlier post implied you buy the Gold from Italy.

Gold is a hedge against uncertainty and Gold is finite. These are uncertain times.

 

[Ageo]

... I guess what I was meaning by retail is jewellery, ie that you dont buy the Raw Gold from Italy, that would just be plain stupid, you buy the jewellery from Italy. Your earlier post implied you buy the Gold from Italy.

Oh sorry i meant Gold Jewellery, if we ever buy raw gold its from the australian bullion company which is based on the spot price for that day. But i was talking about trading gold jewellery not so much raw gold as gold jewelllery is a fairly large mover of the gold price according to statistics.

 

[skegsi]

AAM are one to watch with 1moz (highish grade) in WA Greenstone belt and about to produce feasability study. Low cost anticipated (open pit) and more gold likely to be found. Right next door to a 2.2moz resource (Regis) and right next door to CRE (1.5moz, operating) who just had deutsche bank buy over 50% with 125m. Maybe good takeover target.
Market cap ~20m at the moment. ~$800m in ground

 

[Boyou]

Here's an interesting New site for Gold watchers.Just launched today!

(The DR referred to is The Daily Reckoning..a free subscription E letter that I get daily)

http://www.goldnerds.com.au/

GoldNerds is open for business. DR readers can get an exclusive head
start on understanding the Australian Gold sector and be among the
first to sieve through the ASX gold sector in a way that has not been
possible before. This is it, the first public announcement!

We're looking for cheap gold. With central banks pumping money supply
up by around 12% pa, we were looking for investments that would survive
an inflationary volcano, and naturally drawn to the gold sector. But
when we tried to research the Australian offerings we were struck by
the lack of a comprehensive comparison. Nowhere could we get a list of
who has a resource, and what it costs. Indeed - there wasn't even an up
to date list of which companies on the ASX were IN gold.

So we've done the legwork and research ourselves. It's taken 10 months,
and we've collected a team of 12 to do it, but it's finally here. A
spreadsheet with shares, options, market cap, EV, resources, reserves,
locations, status, production, cash costs, cash, debt, hedges and all
the cost ratios you could want to compare. There's over 7000 data
points in our full spreadsheet. Heaven for number-crunchers and bargain
hunters!

BTW, the list of current Australian gold investment links is here:

http://draustralia.c.topica.com/maahmCoabAqT7bJhMUpbafpTkF/

We found over 200 companies with more than a $10m market cap who are
serious about gold or silver. The good news for investors is that
there are plenty of opportunities for bargain hunting. The Australian
market is under-analysed, there are plenty of companies the market has
missed. Look at the random noise in the graph (on our site
http://draustralia.c.topica.com/maahmCoabAqT8bJhMUpbafpTkF/ There is little rhyme or
reason to the cost of the resources.

The Australian market hasn't woken up to the value of having rights to
underground gold. Gold companies are valued on other factors like
production or cash costs. But if the gold price spikes to $2,000 an
ounce, the value of these underground resources will be leveraged like
a catapult. Currently you can buy a stake in underground gold for as
little as $10 an ounce (EV/oz - EV is a better measure of the value the
stock market is putting on a company's resources than market
capitalisation; in the GoldNerds spreadsheet we do both). There are
even three producers with gold resources valued at less than $30 an
ounce. On the other hand, the median price of gold resources on the ASX
is about $130/oz. And well known take-over target, Newcrest, is around
$225/oz.

 

[numbercruncher]

"There are even three producers with gold resources valued at less than $30 an ounce."

Interesting! Who are these three companys?

 

[Boyou]

You'll have to pay for the priveledge of that knowledge!

I haven't decided whether to take the plunge and subscribe yet,but I am heartned by their comments about Re rating Aus Gold explorers...on the basis of their EV

"'EV' is a recognised standard measure, it means Enterprise Value,
and is calculated like this, EV = market cap - cash + debt. It's what
you'd end up spending (in theory) to own the company and settle its
books."

Any comments?

 

[Nicks]

AAM are one to watch with 1moz (highish grade) in WA Greenstone belt and about to produce feasability study. Low cost anticipated (open pit) and more gold likely to be found. Right next door to a 2.2moz resource (Regis) and right next door to CRE (1.5moz, operating) who just had deutsche bank buy over 50% with 125m. Maybe good takeover target.
Market cap ~20m at the moment. ~$800m in ground

I agree with you on this one Skegsi. The figures all tell the story. The statistics (Market cap, gold reserves, production viability, outlook) are remarkably similar to another 20c Gold miner I bought into a couple of years back, AVO Avoca (now ~$1.60). The balance sheet is good too, they have plenty of operating cash.
So, I bought some!

 

[Ken]

Spot price of gold when I first posted was $645 an ounce now it is 730 odd.

I had a feeling this would happen. Gold is what investors buy when they are unsure.

Gold stocks such as IGR doubled. RSG, AVO, all put on well over 50%.

The signs were there. Gold had been out of favour.

For those who bought gold well done.


Its the safest investment with no inflation worries you can not make more of it like you can money.... well as easily as you can print.

 

[gfresh]

Gold is used in a lot of electronics these days...and has been used for 1000+ years of commerce. It's also the one thing that can remain stable, or even appreciate in times of uncertainty. I don't believe gold is going away anytime soon

 

[Sean K]

They certainly are, but must be due for a rest. These two have run a bit hard IMO. As much as I would love them to keep running away, they must consolidate at some point. Great breakouts!!