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Friday, September 27, 2013

The U.S. Budget Drama and the Longer-term Fundamentals for Gold

www.kmggold.com After a rebound of 1.51 percent in the U.S. Comex gold futures on Wednesday, the prices fell 0.92 percent on the next day to $1,323.60. The Dollar Index has hardly changed after two days.

The S&P 500 Index climbed 0.35 percent on Thursday after falling 0.27 percent while the Euro Stoxx 50 Index was at the same level as Tuesday. The 10-year Treasury bond yield is steady at around 2.65 percent on Thursday, declining for three consecutive weeks.

The U.S. Monetary and Fiscal Policies in Focus
Recent positive factors for gold include the delay in the Fed's tapering and the possibility of a government shut-down on 1 October, when the new fiscal year begins.

U.S. will also reach its borrowing limit of $16.7 trillion by 17 October. The U.S. Republicans want to use the budget negotiation to curtail funding for the ObamaCare which Obama and the Democrats have rejected.

Gold investors were swayed on Thursday as the U.S. jobless claims declined unexpectedly by 5,000 to 305,000 last week while a measure of the consumer confidence by Bloomberg has risen for three weeks, raising again the expectations of the Fed's tapering. However, the pending home sales dropped more than expected by 1.6 percent for the month of August.

Reviewing the Longer-term Factors in Gold
Despite the somewhat confusing messages from the Fed and its governors and the ebb and flow of economic data, it is useful to re-focus on the longer-term fundamentals of gold. Gold discoveries have fallen off the cliff from 160 million ounces in 1995 to fewer than 5 million ounces in 2011.

The average gold production is about 200 tonnes per month while China alone imported about 115 tonnes in July. The Indian import demand has been suppressed by the government's duties hikes, but the Indian consumption (in value terms) has not budged as the culture of saving through gold jewellery is deeply entrenched. Global central banks will likely add another 350 tonnes of gold to their reserves in 2013.

What to Watch
Apart from following the ongoing U.S. budget debate, we will also monitor the September China final PMI on 30 September, Yellen's speech, Germany's September unemployment change, and the final September PMI for the U.S. and E17 on 1 October, Bernanke's speech and the ECB interest rate decision and press conference on 2 October as well as the Bank of Japan target rate and the September U.S. unemployment rate and non-farm payrolls on 4 October. www.kmggold.com
Posted by Mike Gupton at 9:39 AM 0 Comments

Wednesday, September 25, 2013

What's New This Fall at KMG Gold

With the start of fall and people going back to school and work, September often feels like a fresh start. At KMG Gold we're welcoming the changing seasons and with it, embracing some exciting new marketing strategies and promotions that we want to share with you.

First and foremost, you might have noticed that we've expanded our presence on several digital media platforms. You can now join thousands of others and find us on Facebook, Twitter, Pinterest and Google+. You'll find daily updates with all things related to our business, the precious metal industry, the coin industry and other interesting topics. By subscribing to any (or all!) of our social networks, you'll be able to join the conversation and receive insider special offers, discounts and promotions throughout the year.

Another thing that we're excited about is our recent partnership with several businesses from the Academy Road Biz. Each month, we'll be featuring an in-store contest at our Academy Road location in Winnipeg with one of our new partners. If you drop by, you'll be able to enter a ballot to win a unique prize each month from one of the many businesses on Academy Road.

This month KMG Gold has partnered up with Blossoms Winnipeg, a locally-operated business that specializes in making custom fresh fruit arrangements. Perfect for big occasions, small occasions or even just treating yourself, these arrangements are as beautiful as they are delicious. We tried a box of chocolate-covered strawberries and they were heavenly so it's fitting that our first prize is a box of these delicious treats.

Posted by Mike Gupton at 12:15 PM 0 Comments

Wednesday, September 25, 2013

The Gold-ETP Investors and the Asian Consumers View Gold Differently

www.kmggold.com The U.S. Comex gold futures have dropped 1.25 percent to $1,316 on Tuesday after rising 1.85 percent last week. After a jump of 4.73 percent last Thursday, the gold futures retreated almost 2.70 percent on Friday.

After closing at an all-time high last Wednesday at 1,725.52, the S&P 500 Index has dropped 1.63 percent by Tuesday this week. The Euro Stoxx 50 Index rose 2.10 percent last week and dropped 0.15 percent this week. Since the FOMC meeting last Wednesday, the Dollar Index has risen for four consecutive days by a total of 0.41 percent.

The clear beneficiary of the Fed's delayed tapering has been the U.S. 10-year Treasury bond yield, which has declined 20bp to 2.6552 percent since the start of the FOMC meeting.

Improving External Environments
The September China "flash" PMI jumped to a six-month high at 51.2 compared to an expectation of 50.9. The growth rebound has been helped by better exports. The improving external environment is confirmed by the E17 September PMI, which rose faster than expected to 52.1. The index has been above 50 (expansion) three months in a row.

The EU is China's largest trading partner. With Germany's Chancellor Merkel winning a third term, a strengthening Euro, and Greece clawing back from defaults, the E17 growth outlook is getting better. However, the U.S. September flash PMI was at 52.8, lower than the 54 expected. The U.S. September Consumer Confidence Index has also declined for four consecutive months.

The gold price pendulum swings as a couple of the Fed governors said that a tapering by October or the end of the year could not be ruled out while the U.S. budget headline risks have been increasing and the Dollar Index has stalled.

Investors' Demand
According to the CFTC, the combined short contracts of the gold speculators jumped almost 17 percent while the combined long contracts declined five percent right before the FOMC meeting. The gold-backed ETP holdings rose about three metric tons on Tuesday, the first increase after 11 days of decline.

Year-to-date, the ETP holdings have dropped about 26 percent to 1,935 metric tons. However, research has shown that in the first seven months of this year, the Chinese consumers have taken up more than twice the amount of the outflow from the SPDR gold ETF. According to the World Gold Council, the Q2 jewellery demand has climbed to 576 tonnes, with both China and India demand jumping by over 50 percent year-on-year.

The Q2 bars and coins demand jumped 78 percent from a year ago, with the Chinese demand surging 157% and that of India jumping 116 percent. Thailand, the third largest Asian consumers after China and India, has seen gold demand jumping 58 percent in Q2 as well. The "battle" between the gold ETP sellers and the Asian consumers continues to be an important one to watch. www.kmggold.com
Posted by Mike Gupton at 10:06 AM 0 Comments

Wednesday, September 18, 2013

KMG Gold Sponsors KBI Bass Tournament - Again!

KMG Gold Sponsors KBIFor the second year in a row, KMG Gold was proud to sponsor the Kenora Bass International (KBI) Tournament that occurs annually in Kenora, Ontario. 2013 marked the 26th anniversary of the KBI, a day that is lots of fun for everyone involved. Held at the Lake of the Woods, the inaugural KBI Tournament began in 1988 with 48 boats in participation. Now, up to 150 boat teams compete in this exciting competition. KMG Gold 2012 Certificate

The rules are simple: each two-person team has three days to catch the largest bass they can. After the bass is weighed and the winning team is declared, the bass is released back into the water, alive and healthy! The friendly spirit of competition is certainly noticeable at the tournament and KMG Gold was excited to be a part of such an exciting atmosphere.

KMG Gold strives to partner up with local organizations and charities in an effort to give back to the community in which we operate. This is just one of the many ways that we set ourselves apart from other gold buyers in the community. If you are an organization or charity in our local community, please reach out to us and see how we can help you!

Posted by Mike Gupton at 2:00 PM 0 Comments

Wednesday, September 11, 2013

KMG Gold Sponsors Local Soccer Team Who Are Off to the Finals!

KMG Gold Sponsors Winnipeg Soccer Team Continuing one of our favourite traditions of giving back to the community, KMG Gold has sponsored a local Winnipeg soccer team for the second year in a row. KMG Gold has generously donated soccer jerseys to this team of exceptional young men who are heading into the finals this week.

Coached by Raffaele Richichi, the season has been full of exciting memories and victories for the dynamic team. At their August 25th game, KMG Gold Sponsors Local Soccer Team onto the Finalsthe last game in their regular season, they really needed a win to be promoted for the next season. The team was only able to field ten players for the game since many of their key players were missing and their defensive captain suffered an injury during the game. The eight field players and goalie still managed to kick their way to a 4-2 victory by playing an unconventional 4-4 system. Each and every player on the team did their part pull out this important victory against the strong opposing team on a scorching hot summer day! Richichi was proud of his team, saying that, "The result we got was quite the longshot and a prime example of overcoming adversity in our inaugural season."

Congratulations on your victories so far, gentlemen! Everyone at KMG Gold is wishing you the best of luck in the finals!

Posted by Mike Gupton at 7:00 PM 0 Comments

Wednesday, September 11, 2013

Gold Continues to Price in a Fed's Tapering in September

www.kmggold.com The U.S. Comex gold futures were unchanged on Monday but fell 1.64 percent on Tuesday. The gold futures have fallen 2.30 percent this month and 18.62 percent this year. The CRB Commodities Index fell 1.11 percent and the crude oil futures plunged 2.84 percent during the past two days as the prospects of a diplomatic solution to the Syrian problem have risen.

The S&P 500 Index rose 1.74 percent this week after rising 1.36 percent last week while the Euro Stoxx 50 Index jumped 1.71 percent after surging 3.02 percent last week. The Dollar Index fell 0.40 percent this week to end at 81.821 on Tuesday while the U.S. 10-year government bond yield settled at 2.9681 percent after breaching 3 percent during Asian trading on 6 September.

Looking to Fed's Tapering and Chinese Growth Rebound
The gold futures rebounded about one percent last Friday when the U.S. reported that 169,000 non-farm payrolls were added, which was lower than expected, and the unemployment rate fell to 7.3 percent in August.

Barclays believes this still warrants the Fed to start reducing asset purchases in the September FOMC meeting from $85 billion a month currently to $70 billion, with a halt to asset purchases in early 2014.

In China, macro data continue to point towards stabilization and improvement. The August industrial production rose 10.4 percent year-on-year compared to the expected 9.9 percent. Exports and imports rose 7.2 percent and 7.0 percent year-on-year in August compared to 5.1 percent and 10.9 percent in July. The Chinese leaders state that a slower growth is a deliberate policy as the economy goes through structural changes and a 7.5 percent growth target appears likely.

The Chinese growth rebound is bullish for gold prices as well as commodities in general.

Shorter-term Factors at Play
The imminent threat of a Syrian war has receded as the U.S. senators are evaluating the Russian proposal to Syria to remove its chemical weapons. Investors have resumed selling their gold-backed ETFs in September after the stabilization in late August.

Gold speculators have increased their combined net positions four weeks in a row to 101,396 contracts according to the CFTC. The Comex gold inventories have plunged 36 percent this year when physical demand for gold and physical delivery have increased in response to the plummeting prices in April and June. Nevertheless, the upcoming FOMC meeting and the U.S. economic data remain the larger factors on the direction of gold prices. www.kmggold.com
Posted by Mike Gupton at 8:30 AM 0 Comments

Thursday, September 05, 2013

Gold traders watching macro data, FOMC, geopolitical tension and gold's seasonal pattern in September

www.kmggold.com After rising 6.35 percent in August, the U.S. Comex gold futures jumped 1.14 percent on 3 September to $1,411.70 after the Labour Day weekend. The Dollar Index also rose 0.33 percent after rising 0.78 percent last month.

The S&P 500 Index increased 0.42 percent on the first day of trading in September after dropping 3.13 percent in August while the Euro Stoxx 50 Index surged 1.18 percent this month after falling 1.69 percent last month. The U.S. 10-year Treasury bond yield surged from 2.7839 percent at the end of August to as high as 2.9105 percent but settled at 2.8576 percent on Tuesday.

Stronger Manufacturing Growth Globally
The U.S. ISM Manufacturing Index jumped to 55.7 in August, the highest level in 26 months. The U.S. manufacturing growth is led by a jump in construction spending, new orders and exports demand.

The ISM increase and the expectation of the Fed's tapering this month have strengthened the U.S. Dollar. The China official PMI Index in August jumped to 51, a three-year high, compared to an expectation of 50.6. The Eurozone August PMI also rose faster than expected due to the growth in Spain and Italy.

Gold Market Zeros in the Middle East Tension and Rising Uncertainties
Despite the strength in the U.S. Dollar, the gold has reasserted its role as the safe haven as the uncertainty in the Middle East influences sentiments this month.

The gold futures reacted positively to the news that the U.S. house speaker John Boehner supported President Obama's call for the Congress to approve a war on Syria.

The rising market uncertainties are likely to lead to a rise in the "fear index" in September. At the same time, a chart from the seasonal trader.com shows that September is a "golden month" for gold, with the gold price falling in only five Septembers over the last 25 years.

This week's U.S. payroll numbers and the unemployment rate will give more hints to the Fed's likely actions in the FOMC meeting this month. Policy meetings, macro data, geopolitical news, and seasonal gold pattern will dominate gold trading in September. www.kmggold.com
Posted by Mike Gupton at 9:04 AM 0 Comments

Wednesday, September 04, 2013

A Warm Welcome to KMG Gold Recycling's Newest Team Member, Gold-N-Memories of Steinbach, MB

KMG Gold New PartnershipIn an industry rife with unethical businesses, KMG Gold recognizes the importance of only working with businesses and individuals who have a commitment to the same high standards of ethics and integrity as we do. That's why we've implemented the Trusted Gold Buyer program, a designation that recognizes the same high standards as us.

The latest addition to the KMG Gold team is Gold-N-Memories from Steinbach, Manitoba. Gold-N-Memories joins a select group of business authorized to represent the KMG Gold Refinery in the purchase and recycling of unwanted gold and silver jewelry and other precious metals. Gold-N-Memories has made a commitment to the same high standards of ethics and integrity in their business dealings as have, which is why we've chosen to bring them into our network. They will now be able to display the KMG Gold Trusted Gold Buyer banner and decals in their place of business and will be able to incorporate the designation in their business cards, stationery and other marketing materials.

As a winner of multiple BBB Torch Awards that recognize the importance of integrity and ethics in the business place, KMG Gold has long been recognized as the trusted authority in North America for the recycling of precious metals. We strive to educate our customers to ensure they receive the highest payout possible and ensure that they aren't taken advantage of by some less than scrupulous individuals in the gold buying industry.

Posted by Mike Gupton at 3:25 PM 0 Comments