Gold demand was down

The World Gold Council released a new report about global demand / supply trends. The main hints from the report were that gold demand was down 13% on yearly basis compared with Q1 2012. Due to the fact of lower prices of yellow metal the value measure of gold demand was US$51bn, down 16% on the year before. The net outflow from ETFs was 177t in this quarter. We have witnessed a strong demand in the jewelry sector which was up 12% to 551t. The Q1 2013 total mine production was up 4% on last year at 688t. Recycling fell 4% resulting in a total supply that is 1% higher than a year ago and net central bank purchases was still huge but was 5% lower on Y/Y basis. But central banks have been net purchasers of gold the ninth consecutive quarters.

The Perth Mint of Australia achieved record sales in April, due to the fact of lower prices of precious metals. For the month of April 2013, sales of gold as coins and minted products reached 111,505.06 troy ounces. This amount was more than double the previous month and up by an astounding 534.43% from the year ago period when 17,575.64 troy ounces were sold.

gold_maniaTo have a perspective about the supply of yellow metal you have to realize that the production itself is only from 2560 metric tons to 2700 metric tons of new gold per year. According to CEO of Barric GoldThere are very few mega-sized gold mines currently in production in the world … In terms of a cross-section of total gold mines by size, there are about 400 gold mines producing. Only 156 of these, or about 40%, produce over 100,000 ounces per year. . .Twenty-one mines produce over 500,000 ounces per year. . .Only six mines produce over 1 million ounces.”

Gold Premiums in India doubled because of some speculation that government reconsiders restrictions on bullion imports by banks to reduce supplies. The fees jewelers pay dealers for bars jumped as high as $40 an ounce this week from $17. The Reserve Bank of India on May 13 limited imports of gold by banks. The main problem for the country is its account deficit due to the huge imports of precious metals. Gold imports soared by 138 % y/y in April. Gold imports in April were $7.5 billion, compared to $3.1 billion in March. This was mostly driven by the sharp fall in gold prices during the month and buying mania in India.

Portugal will never replicate a deal that Cyprus considered a.k.a to sell its gold reserves under its bailout. Last month Cyprus announced that some members of government considered adding to the rescue package a sale of gold reserves worth 400 million euros. „If we can say today that the Bank of Portugal is among a small group of central banks with adequate risk provisioning … is mostly because we have significant gold reserves,“ said Bank of Portugal´s Governor Carlos Costa. Portugal´s gold reserves are unchanged at 382.5 tons.

Matúš Pošvanc

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