Gold Bullion Prices

Gold Price Sinks Below $1500

GOLD PRICE NEWS – The gold price traded lower Monday morning, falling $3.00 to $1,499 per ounce.  The price of gold broke through a number of support levels last week as it plunged over $60.  A stronger U.S. dollar has weighed on gold, silver, and the broader commodity complex in recent weeks.  Sovereign debt worries, which have depressed risk appetites among investors, continue to dominate the headlines with key votes by the Greek and Italian parliament over austerity packages set to take place later this week. The Global Precious Metals Team at TD Securities highlighted support levels for the gold price roughly 2.5% below current levels: “Short term support remains at $1,470 where gold has held a few times on recent sell-offs and we keep hearing rumors of central bank buyers below. We would look to buy gold at $1,470 should we see it and job the range up to $1,510.” In a report to clients on Friday, Macquarie Capital Markets Canada wrote that “This underperformance has been particularly concentrated in the last three months, where we have seen the S&P/TSX Gold Index in US$ (-10.0%) underperform the spot price of gold (+5.8%).  The underperformance of gold stocks relative to bullion has been much more dramatic than for other commodity stocks.” In its research, Macquarie looked at the historical performance of the S&P/TSX Global Gold Index versus the gold price over the past decade.  Aside from the unprecedented 2008 financial crisis, the firm noted that divergence between gold shares and the metal is currently the largest since 2003.  “Following these instances,” Macquarie wrote, “on average, the TSX Gold Index has returned 49% over the next 12 months, outperforming gold by close to 25%. What’s more, about half of the outperformance tends to occur in the first month following a peak outperformance of gold.” Based on the relative strength in gold shares this past week, the firm contended that “It is possible we are seeing the beginnings of a trend reversal right now.”  While it acknowledged that “a sustained recovery in the performance of gold equities relative to bullion is likely to require sustained strength in equity markets,” Macquarie argued that such a development could begin early in the second half of this year. West Kirkland Mining (WKM.TSXV) announced that it entered into an agreement with Rubicon Minerals (RBY) in which West Kirkland can earn a majority stake in mineral rights held by Rubicon covering approximately 351 square miles (909 sq. kilometers) in the Long Canyon Trend of north eastern Nevada, while allowing Rubicon to retain an interest in any future discovery. Full West Kirkland Mining Press Release.

Gold And Silver Ownership And Prices Will Not Be Affected By Dodd ...

Gold is higher again today as the Greek debt crisis and continuing strong demand from Asia continues to support prices. 

The euro is surprisingly firm with the U.S. dollar, Japanese yen and Swiss franc under pressure. Risk appetite remains high with commodities, Asian and European equities higher and peripheral bond markets have received a bid and seen yields fall due to optimism on the Greek vote.

Cross Currency Rates

The governor of the Bank of Greece said overnight that Greece would be committing ‘suicide’ if the parliament does not vote for the harsh austerity and privatizations measures today (1300 GMT).

The vote is expected to be close with many Greek parliamentarians and the Greek people feeling that it is unfair to Greece and will only serve to postpone the day of reckoning.

Gold in Swiss Francs – 2 Years (Daily)

Gold and Silver Ownership and Prices Will Not be Affected by Dodd-Frank Legislation on July 15

The 2010 Dodd-Frank Act, and the regulatory legislation associated with it, is due to come into law in just over two weeks on July 15.

A number of clients, particularly U.S. clients, have contacted us regarding the possibility that the new legislation could lead to price falls in the gold and silver markets. Some were even concerned that it had implications for their ownership of physical coins and bars and for bullion stored in Western Australia, Switzerland and vaults internationally.

Concerns arose due to reports that retail foreign exchange, spread betting and CFD providers are set to discontinue offering their gold and silver over the counter products. These allow speculators to take leveraged positions, short and long, in over the counter derivative products.

After July 15, U.S. residents are prohibited from trading these OTC gold and silver derivative products. All precious metal transactions that are leveraged and not delivered in 28 days, must be conducted in a “designated contract market,” a board of trade or exchange designated by the CFTC.

Those who own bullion should be reassured that their bullion ownership will not be affected as the legislation does not apply to the physical coin and bar market. 

The legislation will also not apply to contracts fully paid for or delivered within 28 days, and commodity futures contracts trading on an exchange such as the CME Group CME and the many other international exchanges.