Monday, 26 August 2013

43pc bought more gold after price plunge | Tana goldfields mining fraud investment tips

The vast majority of investors either retained or added to their holdings of silver and gold after prices fell sharply in the spring, a survey suggests. |

When asked whether they had made any changes to their precious metal investments over the past year, 37pc of investors said they hadn’t changed their allocations to silver and gold, while 43pc had increased their holdings.

Just 14pc of investors said they had reduced their holdings, while 4pc had switched from gold to silver. Only one in 100 said they had sold all of their holdings of the precious metals while 0.7pc had moved from silver to gold.

The survey was conducted by BullionVault, which allows individual investors to own gold and silver without taking possession.

The strong support for the metals came despite the survey being conducted in June, just after a major sell-off that saw the price of gold tumble.

Having peaked in autumn 2011 at almost $1,900 an ounce, the price fluctuated between $1,600 and $1,800 for much of the next year, before beginning a sharp decline from October 2012. In June it fell below $1,200 but staged a recovery in July, rising by 7.6pc.

Separate research has found that the top seven best performing funds in July were all related to gold. Gold funds tend to own shares in gold mining companies, whose shares rose more sharply than the gold price, gaining 9.7pc over the month.

The best performing fund was the Way Charteris Gold Portfolio, which climbed by 24.9pc in July, according to Hargreaves Lansdown, the fund supermarket. Next was Smith & Williamson Global Gold & Resources, which gained 19.5pc over the month, and Old Mutual's BlackRock Gold & General fund with a 19.3pc rise.
Adrian Lowcock of Hargreaves Lansdown said the rally was due to indications from America's Federal Reserve that the withdrawal from quantitative easing – so-called "tapering" – would be slower than previously thought.

“Investor confidence returned in July as the Fed confirmed that it would continue purchasing $85bn a month of bonds," he said. "The Fed gave a broad outline of how QE tapering will proceed, reassuring investors that tapering was dependent on continued economic growth.

"Investors responded positively to the comments and gold rallied strongly in July. Continued QE is considered good news for gold as it increases the likelihood of higher inflation at some time in the future."
He added: "Gold shares have fallen a lot further than the actual price of gold this year and in July they also rebounded quicker. Traditionally gold mining companies have been more volatile than the underlying asset as they are a 'geared' investment to the precious metal. They lagged behind as the gold price rose in previous years but have tracked the price more closely this year."

Top performing funds in July 2013

Fund                                                                                                                      Rise
Way Charteris Gold Portfolio                                                                     24.9pc
Smith & Williamson Global Gold & Resources                                    19.5pc
Old Mutual BlackRock Gold & General                                                   19.4pc
Investec Global Gold                                                                                      18.7pc
BlackRock Gold & General                                                                           18.5pc
Junior Gold                                                                                                         17.4pc
Ruffer Baker Steel Gold                                                                                                16.4pc
Axa Framlington Biotech                                                                              14.6pc
MFM Techinvest Technology                                                                      12.3pc
FF&P US Small Cap Equity                                                                            10.9pc

Miguel Perez-Santalla of BullionVault said: "For many private investors gold and silver is a long-term investment choice, and many precious metals investors are still feeling the sting of the last global economic downturn. They are clearly still very cautious about announcements and forecasts heralding signs of life in the economy that could tempt them away from precious metals.

"With this continued uncertainty and combined with the drop in price of precious metals, there is an opportunity to not just hold on to current investments but to also increase exposure further to protect savings and investments against any future shocks."

1 comment:

  1. Gold mines output set to reach record

    Output from the world's gold mines is set to hit record highs this year, disappointing bulls who are impatiently waiting for production cuts following this year's 24 percent plunge in prices. Some gold miners have felt the squeeze of lower prices this year, and a number, including Canada's Kinross and Russia's Polymetal, suspended marginal mines and projects after a dramatic first-half price drop.

    But as prices fall, others are actually increasing output to maintain revenue and profit levels. In some cases, they are targeting higher grade ore to keep marginal mines operating and generating cash, at the expense of future production. Furthermore, several large projects put into motion during gold's 12-year rally, which took it as high as $1,920 an ounce in 2011, are coming to fruition.

    "Our expectation is that we're going to see a fresh record high in gold mining output this year," GFMS analyst William Tankard said. "What we're seeing is an ongoing response not to the slide in prices, but the decade-long stretch of fairly heavy capital investment into the mining industry that preceded it." The world's top three gold miners - Barrick Gold, Newmont Mining and AngloGold Ashanti - all reported higher production in the most recent quarter.

    For some marginal mines, firms are planning to tap better grades up front, a practice known as high-grading, which often comes at the expense of shortening the life of a project and giving up lower grade ore that could have been economic later. African Barrick Gold, for example, re-engineered its lowest grade and highest cost mine, Buzwagi, to tap higher grades and move less material, hoping to ensure the operation generates cash.

    "In the short term, when they have got flexibility, you can see companies changing the ore mix to keep themselves operating," Nomura analyst Tyler Broda said. During the boom years, the cost of gold mining soared. But this year the average cost of producing an ounce of gold is already showing signs of retreating, according to metals consultancy Thomson Reuters GFMS.