- Dugald Malcolm, Montreal
It seems that despite the record high prices of gold, buyers still purchased the precious metal in droves. According to the World Gold Council, gold demand rose 11% in the last quarter to 981.3 metric tons.
In what is becoming a familiar refrain, China was a major reason for the increase in demand. The country’s purchasing rose 47% in the quarter and the W.G.C. believes it may easily double by 2020. The demand for jewellery is one of the main reasons for the strong rise in demand for gold. Jewellery purchases in China increased by 21% in Q1.
The United States is actually deliberating on whether it might make sense to reschedule its mountain of debt obligations. The comment below was quoted from Paul Ryan, a fiscal conservative trying to slice government spending:
Holders of US government debt would be willing to miss payments “for a day or two or three or four” if it put the US in a stronger position to pay them later on, Rep. Paul Ryan told CNBC Tuesday.
Another trader has turned cautious on commodities. Dennis Gartman of the Gartman Letter and money-manager to several hedge funds, cautioned investors this morning that commodities might have reached a short-term peak.
Gartman pointed to the upcoming massive Glencore IPO this week in Hong Kong and London as evidence that the “smartest people” are cashing-out while the getting is still good.
San Diego, California
Flying alone provides me with the time to reflect on events, the markets and issues that command my inner most thoughts. There’s something special about being alone at 38,000 feet, something peaceful.
On this trip home back from Currency Expo in San Diego, I’m thinking about the scores of people who attended this great event. More than 400 investors listened to me speak on Saturday morning.
In the span of just eight trading days this month, commodities have gone from red-hot to stone-cold as investors leave the space like a bad dream. I always find a selloff fascinating because investor behavior is so irrational; for the value based bargain hunter, corrections provide a great entry point to buy quality investment ideas or themes at a discount.
Funny, but judging by the price action in agriculture, mining and energy you’d think China has stopped buying raw materials on May 2. This is hardcore selling!
Jim Rogers, probably the individual investor’s best friend and a deep contrarian value investor, continues to like agriculture and dislikes Treasury bonds. He also favors gold and oil.
Rogers has made his views widely known in the popular press lately, including on Bloomberg news and CNBC.com
This morning’s crop progress report from Bill Gary’s Grain Insight (www.cis-okc.com) isn’t pretty. With the exception of winter wheat, every crop is behind last year’s planting schedule and in some cases, several crops are projected to yield the smallest harvests in more than two decades.
I’m sure some investors are relieved to see most commodities opening higher on Monday after the worst weekly performance for the sector since Lehman’s failure in September 2008. Silver and oil were especially trashed last week. The benchmark CRB Index fell more than 10% from Monday through Friday.
Some commodities, however, might have already topped out. Sugar prices have crashed more than 20% recently and cotton has also tanked. Also, copper looks weak and has been consolidating for weeks, suggesting the global economy might be entering a soft patch.
The Mexican Central Bank reported buying 93.3 tons of gold bullion in February and March, extending a trend among major and emerging economy central banks as gold accumulation gains momentum.
U.S. dollar reserves as a percentage of total central bank assets has declined over the past decade as more countries reduce their dollar-based holdings and swap those assets for gold, EUR and other currencies.
Silver prices are now in the midst of a crash after hitting a 31-year high on Friday. This price action should come as no surprise for seasoned investors following a more than 170% gain since mid-2010. In April, silver logged its best month in more than 25 years.
And now silver is losing some important friends…
George Soros is selling silver and possibly, gold. Other hedge fund managers are reported to have dumped silver over the past several days as the metal flirted with $50 an ounce.