News

Gold prices tend to reach $1,400 by early 2018 Gold prices tend to reach $1,400 by early 2018

According to Bank of America Merrill Lynch analysts, the precious metal price is set to jump to a four-year high at the beginning of 2018. The yellow metal’s climb began in the last days of August, when a weaker dollar pushed it above the $1,300-per-ounce mark. Then gold hit a 10-month high, jumping 1,4 percent to reach $1,326, and it was the highest level since the US election. As Mihir Kap...

According to Bank of America Merrill Lynch analysts, the precious metal price is set to jump to a four-year high at the beginning of 2018.

The yellow metal’s climb began in the last days of August, when a weaker dollar pushed it above the $1,300-per-ounce mark. Then gold hit a 10-month high, jumping 1,4 percent to reach $1,326, and it was the highest level since the US election.

As Mihir Kapadia, CEO of Sun Global Investments, said in a note, “there is increasing expectations for President Trump to counter react to the North Korean aggression, which may further propel the prices upwards”.

The gold price is on its track to jump to a four-year high of $1,400 by early next year, according to Francisco Blanch, head of commodities research at Bank of America Merrill Lynch. Lower long-term US interest rates and a lack of progress by US President Donald Trump in delivering reforms will provide support.

“The Fed may be a little bit more cautious in their stance on raising interest rates for the remainder of the year. There are a lot of uncertainties out there,” Phil Streible, senior market strategist at RJO Futures in Chicago, told Bloomberg.

It could be good for gold if the Fed decides to increase interest rates at a slower pace. That’s because higher interest rates increase the opportunity cost of holding non-yielding bullion.

Earlier this month, hedge fund billionaire Ray Dalio recommended investors to allocate 5-10 percent of their portfolios to gold. He mentioned risks including the North Korea situation, as well as the possibility that Congress may fail to increase the US debt ceiling, leading to a technical default.

By the way, the US dollar fell in the last days of August to its lowest level in more than two years, providing additional support for the gold price.

The post appeared first here
RPT-COLUMN-Zinc on a bullish tear but just how high can it go?: Andy Home RPT-COLUMN-Zinc on a bullish tear but just how high can it go?: Andy Home

(Repeats with no changes. The opinions expressed here are those of the author, a columnist for Reuters) * LME zinc call options: tmsnrt.rs/2fYeZft By Andy Home LONDON, Aug 21 (Reuters) - Zinc on Monday morning hit a fresh decade high of $3,180.50 per tonne on the London Metal Exchange (LME). Zinc bulls have been waiting a long, long time for this moment. A slow-fuse narrative of a loom...

(Repeats with no changes. The opinions expressed here are those of the author, a columnist for Reuters)

* LME zinc call options: tmsnrt.rs/2fYeZft

By Andy Home

LONDON, Aug 21 (Reuters) - Zinc on Monday morning hit a fresh decade high of $3,180.50 per tonne on the London Metal Exchange (LME).

Zinc bulls have been waiting a long, long time for this moment. A slow-fuse narrative of a looming supply crunch has been simmering for years but has finally burst into explosive price action.

True, London zinc has been given a helping hand from Shanghai, where speculative froth seems to have spilled over from the iron ore and steel markets to the base metals complex.

And also true, a supply-side response to high zinc prices is already starting to build with old mines such as Thalanga in Australia being brought back out of mothballs and speculation mounting as to how long Swiss producer and trader Glencore will wait before reversing the production cuts it announced in 2015.

But right now the LME zinc market is bubbling away with stocks falling and spreads tightening. Volatility seems assured but can zinc return to the heady days of late 2006/early 2007, when the price peaked out at $4,580?

There are a few believers, judging by some of the higher strikes trading in the zinc options market but the overall options landscape suggests collective bull positioning is much less ambitious.

LME STOCKS DOWN, SPREADS TIGHTEN

The zinc raw materials market has been tightening for many months thanks to the closure of exhausted mines such as Century in Australia and Glencore's 500,000 tonnes of annualised cutbacks.

But until very recently any flow-through impact on the refined metal part of the zinc supply chain has been elusive.

That's changed, at least as far as LME-registered stocks are concerned.

At 247,850 tonnes, headline LME zinc inventory has fallen by 180,000 tonnes, or just over 40 percent, so far this year. It is back at levels last seen in 2008.

On-warrant stocks are significantly lower still at 125,525 tonnes after someone last week cancelled a 23,050 tonne tranche at New Orleans in preparation for physical load-out.

Since this is the ultimate physical liquidity base of the London contract, it's no big surprise to see time-spreads start to tighten up.

The benchmark cash-to-three-months period CMZN0-3 ended last week valued at $7.00 per tonne contango, compared with $15.50 contango on Monday.

There is a pocket of more acute tightness on the LME's prime September prompt date (Sept. 20) with the spread between then and October trading in small backwardation.

Although there are no warning lights yet flashing on the very front part of the curve, stocks have reached a level where more spread volatility seems assured.

Graphic on LME zinc call options: tmsnrt.rs/2fYeZft

OPTIONS LANDSCAPE

But what of the outright price? LME three-month zinc is already up by almost 25 percent so far this year. Can it go higher, even back to those super-charged levels seen 10 or so years ago?

The LME options landscape suggests there are a few super bulls looking for more stellar upside price action but the bulk of positioning betrays much more modest expectations.

Market open interest is broadly bullish, skewed towards calls, which confer the right to buy, over puts, which confer the right to sell. As of Friday's figures from the LME, call open interest across all active months totalled 64,055 lots, compared with 38,845 lots of puts.

And some of it is sitting on strike prices as high as $4,500 (September) and $4,400 (December). But the tonnages are relatively modest at 2,500 tonnes and 8,575 tonnes respectively.

Rather, most of the call open interest across the front four months (September-December 2017) is distributed across a strike price spectrum running from $3,000 to $3,500 per tonne.

A significant part of that, clustered on the $3,000 and $3,100 strikes, has already moved into the money after zinc's burst higher last week. It may, indeed, have acted as an accelerator to the move as those who sold those options would have had to cover their exposure.

The balance of the rest of the call open interest is sitting on the $3,200 strike price (9,946 lots through December), the $3,400 strike (4,620 lots) and the $3,500 strike (7,585 lots).

Open interest then tails off sharply in the more rarefied atmosphere above that strike price level.

And beyond the end of December, things look even more subdued. The highest call strike in June 2018, the month with the largest options interest next year, is just $3,650.

BULL RESTRAINTS

Upside positioning in the zinc options market suggests that the current consensus is for only a bit more upside and earlier rather than later.

There are two major restraints on bullish expectations.

The first is that building supply response, which could be significantly accelerated if Glencore pulls the trigger on reactivating some of its shuttered capacity.

The second appears to be continued scepticism about the signalling power of LME stocks.

LME stocks are already low and with almost half sitting in the cancelled category awaiting load-out, they look set to fall further.

But how much zinc is sitting in the statistical off-exchange shadows?

There is still little hard evidence of a metal squeeze outside of the LME.

"The availability of zinc metal for rapid delivery continued to be good in Europe and spot market metal premiums remain largely unchanged," was Swedish producer Boliden's take on the physical market in its Q2 2017 financial report.

The possibility of metal finding its way into, or even back into, LME sheds, particularly in the event of a cash-date squeeze, seems to playing on bulls' minds.

Because for now, the zinc options market is signalling there is a bit more bullish excitement to come, but only a bit and only in a relatively short timeframe.

You'll know that's changed, if someone starts buying call options that target those 2006-2007 all-time highs.

The post appeared first here
Byron King: All Things Favor Gold in the Medium to Long Term Byron King: All Things Favor Gold in the Medium to Long Term

Gold and mining expert Byron King sees the gold price passing $1,300 per ounce by the end of 2017. He says that gold may see some ups and downs in the second half of 2017, but in general it’s heading higher. That’s according to Byron King of Agora Financial – speaking from the sidelines of the Sprott Natural Resource Symposium, King said he sees the yellow metal breaching $1,300 per ounce befor...

Gold and mining expert Byron King sees the gold price passing $1,300 per ounce by the end of 2017. He says that gold may see some ups and downs in the second half of 2017, but in general it’s heading higher.

That’s according to Byron King of Agora Financial – speaking from the sidelines of the Sprott Natural Resource Symposium, King said he sees the yellow metal breaching $1,300 per ounce before the year is over. “All things favor gold over certainly the medium to long term,” he commented.

King writes and edits Jim Rickards’ Gold Speculator, and in the distant future he believes gold could rise as high as $10,000. “All we have to do is take global money supply … and back it with 40 percent gold,” he explained. “To do that you will need $10,000-an-ounce gold.”

Investors hoping to profit from gold’s coming price increase should allocate about 10 percent of their portfolio to hard metals, said King, and another 10 percent to junior miners. “There’s a downside to everything, but the downside is relatively limited … on the juniors.”

The post appeared first here
5 Top Gold-producing Countries 5 Top Gold-producing Countries

The last year was an eventful one for the gold price. According to the most recent data from the US Geological Survey (USGS), the gold price rose about 9 percent year-on-year, while the Engelhard daily gold price fluctuated through several cycles. Read on to learn more about the top gold-producing countries of the last year, based on the most recent numbers reported by the USGS. 1. China Mine ...

The last year was an eventful one for the gold price. According to the most recent data from the US Geological Survey (USGS), the gold price rose about 9 percent year-on-year, while the Engelhard daily gold price fluctuated through several cycles. Read on to learn more about the top gold-producing countries of the last year, based on the most recent numbers reported by the USGS.

1. China
Mine production: 455 MT

Once again, China was the world’s top gold-producing country with output of 455 MT. The country has now held that position for 10 years in a row.
In addition to being the top producer of gold, China is the world’s largest gold consumer, and has been for four straight years, according to the World Gold Council. That said, gold consumption in China dropped 7 percent in 2016. The drop was the result of higher gold prices and strained supply in the fourth quarter.

2. Australia
Mine production: 270 MT

Gold production in Australia took a bit of a tumble in 2016, dropping from 278 MT in 2015 to 278 MT.
That decline may have come because the country’s biggest gold producer, Newcrest Mining, reported a drop off in production in 2016. Specifically, the company noted that production from its Cadia operation was lower and said that it sold a mine in Papua New Guinea.

3. Russia
Mine production: 250 MT

Russia’s gold production held steady in 2016, but the country plans to increase output over the next decade or so; in 2016, it was reported that the country is planning to raise its annual gold production to 400 tonnes by 2030. Most of its additional gold will come from the development of local gold ore fields.
According to the USGS, Russia holds 8,000 MT of gold reserves, second only to Australia at 9,500 MT.

4. United States
Mine production: 209 MT

US gold production dipped last year, dropping from 214 MT in 2015 to 209 MT in 2016. Most of the gold in the country was produced at more than 40 lode mines, several large placer mines in Alaska and a number of smaller placer mines in the western Us.
The USGS further notes that the 26 top operations in the country were responsible for 99 percent of its gold output.

5. Canada
Mine production: 170 MT

Gold production in Canada rose noticeably in 2016. Last year, the country reported output 170 MT of gold, compared to 153 MT in 2015.
It appears as though gold production in Canada is only going to grow from hereon out. In February 2017, Agnico Eagle Mines announced plans to expand an existing gold mine and develop another one in Nunavut; they are expected to become operational in 2019.

The post appeared first here
"This is a great step toward increasing the investment attractiveness of Ukraine" - CEO Avellana Gold on ratification of the Agreement on Trade in Canada and Ukraine

Senate of Canada ratified an agreement on free trade with Ukraine.The Senate Committee on Foreign Affairs and International Trade is confident the trade deal will benefit both countries’ economies and signal Canada’s strong, ongoing support for an emerging democracy and a longstanding partner. Free Trade Agreement Implementation Act was adopted with one accord. This is more than just a free ...

Senate of Canada ratified an agreement on free trade with Ukraine.The Senate Committee on Foreign Affairs and International Trade is confident the trade deal will benefit both countries’ economies and signal Canada’s strong, ongoing support for an emerging democracy and a longstanding partner.

Free Trade Agreement Implementation Act was adopted with one accord.

This is more than just a free trade agreement. In addition to the reduction of tariffs (Ukrainian goods entering Canada would be duty-free), it includes a clause on anti-corruption mirroring the Criminal Code of Canada, as well as environmental protection requirements. For Canadian companies, the deal will give unfettered access to a market of 45 million potential customers.

Acknowledging that the Ukrainian government is making great strides towards democracy, committee members look forward to the day when Ukrainians can enjoy the freedoms and benefits that come with living in a vibrant, thriving democracy.

The committee believes this agreement is an important signal of Canada’s commitment to openness in trade and investment and will further deepen Canadian-Ukrainian relations.

"We welcome this long-awaited decision. We also consider it a great step in increasing the investment attractiveness of Ukraine. A free trade agreement with Ukraine opens a lot of opportunities", - says Brian Savage, CEO Avellana Gold.