Precious metals news

U.S. stocks surged on Thursday as a drop in weekly jobless claims alleviated concerns about the U.S. economy. The S&P 500 rose 1.8%, the Nasdaq jumped over 2%, and the Dow Jones increased by 1.8%. The jobless claims fell to 233,000, down from 250,000, surpassing economists' expectations. This positive labor market update followed a period of market volatility driven by weak non-farm payroll data. Despite recent market turbulence, investor sentiment was buoyed, with notable movements including Nvidia's fluctuating stock and Eli Lilly's 8% rise due to strong earnings.

BHP Group Ltd., the world's leading mining company, is seeking to sell its Brazilian copper and gold assets acquired through the Oz Minerals Ltd. takeover in May 2023. This decision follows a strategic review of these assets, and BHP has hired Banco Santander SA to advise on the potential sale. The acquisition of Oz Minerals was BHP's largest deal in over a decade, aimed at increasing its exposure to materials essential for clean energy and electric vehicles. Despite this, BHP is focusing on developing a copper hub in South Australia and has no plans to sell its stake in Samarco Mineracao SA, an iron ore producer jointly owned with Vale SA.

China's central bank, the People's Bank of China (PBOC), refrained from purchasing gold for the third consecutive month in July, maintaining its gold reserves at 72.8 million fine troy ounces. Despite the unchanged quantity, the value of these reserves increased to $176.64 billion due to rising gold prices, which have surged 16% this year. Analysts suggest that the PBOC's pause is due to elevated gold prices, and purchases may resume if prices decline. The PBOC remains a significant player in the gold market, having been the largest buyer in 2023, but its current strategy reflects caution amid high prices.

As of the end of July 2024, London vaults held 8,651 tonnes of gold, valued at $674.9 billion, marking a 0.6% increase from the previous month. This equates to approximately 692,103 gold bars. Additionally, 26,618 tonnes of silver were stored, valued at $24.4 billion, representing a 1.8% increase, or about 887,279 silver bars. These figures highlight London's crucial role in supporting the physical over-the-counter (OTC) market. The monthly publication of these data points reflects a commitment to greater transparency and timeliness in the precious metals market.

Despite gold's reputation as a safe haven and its significant price increase over the years, most discretionary fund managers maintain minimal exposure to it. Asset Risk Consultants (ARC) found that approximately 75% of managers have either no exposure to gold or allocate less than 2.5% of their portfolios to it, with none exceeding a 10% allocation. This low exposure persists even though gold prices have surged to record highs amid geopolitical uncertainties. The positive sentiment towards gold, driven by its recent performance, is not reflected in portfolio weightings, indicating a cautious approach by fund managers.

In July, exchange-traded funds (ETFs) experienced record-breaking inflows, with investors pouring $195 billion globally, surpassing the previous monthly record of $169 billion set in December 2023. This surge was driven by optimism that the U.S. Federal Reserve would soon cut interest rates, creating a favorable market environment. U.S.-listed ETFs received $124 billion, with fixed income ETFs attracting a record $60.5 billion and equity funds $127 billion. Despite a recent market sell-off, investor confidence in ETFs remained strong, with significant inflows continuing even on the worst day of the sell-off.

The United Arab Emirates has temporarily suspended operations at 32 gold refineries, representing about 5% of its gold sector, as part of a crackdown on money laundering. This action is part of intensified inspection campaigns by the Ministry of Economy to combat financial crimes. The suspended refineries were found to have committed 256 violations, including failing to assess risks and check customer databases against terrorism watchlists. This move is part of the UAE's broader effort to improve its financial reputation amid concerns about money laundering and gold smuggling, highlighted by a report indicating that a significant portion of gold imported from Africa was smuggled.

Gold prices rose on Thursday, supported by a weaker dollar and lower Treasury yields, amid increasing expectations of a U.S. interest rate cut in September. Spot gold climbed 1.2% to $2,410.69 per ounce, breaking a five-session losing streak, while U.S. gold futures increased by 0.7% to $2,450.40. The market is also focused on the upcoming weekly jobless claims data. Analysts suggest that gold could reach new highs as the market adjusts to potential Fed rate cuts, with economic uncertainties and geopolitical tensions further boosting its appeal as a safe-haven asset.

With the data finally out, I was able to update the Global Conventional vs. Unconventional Oil production for 2023.  Thanks to the folks at ASPO France.  I also share some interesting trends that have taken place since 2006, when conventional oil production peaked...

The Japanese yen's recent strengthening against the US dollar has been closely linked to movements in US tech stocks and the broader market. This connection is largely due to the unwinding of the "carry trade," where investors borrowed cheaply in Japan to invest in higher-yielding assets elsewhere. As Japan raises interest rates from near-zero levels, capital is flowing back into the yen, causing significant currency fluctuations and impacting global markets. This shift is reversing a long-term trend of yen weakness and dollar strength, leading to increased volatility in both currency and stock markets.

Former Treasury Secretary Steven Mnuchin has called for the discontinuation of the 20-year Treasury bond, which he reintroduced in 2020, citing its higher yields and additional costs to taxpayers. The bond's reintroduction has resulted in approximately $2 billion in extra annual interest expenses, totaling around $40 billion over its lifespan. Despite the Biden administration's preference for maintaining the bond to ensure stability, Mnuchin argues that the bond has not met expectations and is financially burdensome. The debate over the bond highlights the complexities of managing the U.S. government's growing deficit.

Australia's gold industry is anticipating a surge in mergers and acquisitions (M&A) activity, driven by record-high gold prices and a slowdown in exploration. Larger mining companies are expected to target smaller producers and explorers as a means of expanding their reserves, given the challenges and costs associated with new exploration efforts. This trend has become a major topic of discussion at the Diggers & Dealers Mining Forum, with industry experts noting that favorable market conditions, strong commodity prices, and shareholder support are creating an ideal environment for deal-making. The sector has already witnessed its largest-ever takeover with Newmont Corp.'s acquisition of Newcrest Mining Ltd., and many believe this could be the beginning of a broader M&A wave in the Australian gold mining industry.

The Royal Mint, the UK's official coin maker, has launched a groundbreaking initiative to extract gold from electronic waste at its new facility in Llantrisant, Wales. Using an innovative, eco-friendly chemical process, the plant can process up to 4,000 tonnes of e-waste annually, potentially yielding 450kg of gold worth approximately £27 million. This venture not only addresses the growing global e-waste problem but also helps the Royal Mint diversify its operations in response to declining cash usage. The extracted gold will be used in jewelry production and eventually in commemorative coins, demonstrating a sustainable approach to precious metal sourcing while preserving jobs and reducing reliance on traditional mining methods.

Gold prices rose on Wednesday, driven by safe-haven demand and increasing expectations of a U.S. Federal Reserve interest rate cut as early as September. The precious metal gained support from geopolitical tensions and a looser monetary policy outlook, despite closing lower in the previous four sessions. Traders now see a 100% chance of a rate cut in September, with nearly 105 basis points of cuts anticipated by year-end. Gold's non-yield-bearing status makes it attractive in a low-interest-rate environment, while strong central bank buying has also contributed to its positive performance in 2024.

Japan conducted a record-breaking yen-buying intervention on April 29, selling 5.92 trillion yen ($40.83 billion) worth of dollars to combat the yen's decline. This intervention, along with an additional 3.87 trillion yen spent on May 1, aimed to stabilize the currency but ultimately failed to reverse its long-term weakening. The yen briefly strengthened by 5% but later hit a 38-year low in July, prompting further intervention. Japan's foreign reserves fell to $1.22 trillion by the end of July, reflecting the sale of U.S. Treasury holdings to fund these interventions.

In response to recent market turmoil, Bank of Japan Deputy Governor Shinichi Uchida indicated the central bank would refrain from raising interest rates during periods of financial instability. His dovish comments led to a weakening of the yen, a spike in bond futures, and a rebound in stocks. Uchida emphasized the need for monetary easing amidst volatile global markets and suggested that future rate decisions would depend on market conditions. Despite this, some economists still anticipate another rate hike by the end of the year.

Last week, US 30-year mortgage rates dropped significantly, hitting their lowest point since May 2023, which led to a surge in refinancing applications. The 30-year fixed mortgage rate fell by 27 basis points to 6.55%, while the rate on a five-year adjustable mortgage dropped by 31 basis points to 5.91%. This decline spurred a nearly 16% increase in the refinancing index, reaching a two-year high. Mortgage applications for home purchases also rose by 0.8%. Economists believe this drop in rates could signal a modest recovery in the housing market, assuming recession fears do not materialize.

The July jobs report revealed weaker-than-expected hiring and a rise in unemployment, sparking concerns about a potential recession and prompting expectations of more aggressive interest rate cuts by the Federal Reserve. However, some economists argue that the market's reaction may be overblown, citing continued consumer spending and a different composition in unemployment rise compared to typical pre-recession patterns. While the risks of an economic downturn have increased, experts caution against overreacting to a single data point and suggest that the labor market's weakness is more due to slower hiring rather than widespread layoffs.

This is basically gold building a launchpad, and this is just the beginning. No, You did not miss anything because you ain’t seen nothing yet

A wave of dip buying led to a significant rally in stocks following a massive $6.5 trillion selloff that had unsettled global markets. The S&P 500 saw its largest advance since February, with megacap stocks leading the gains. Hedge funds, as noted by Goldman Sachs, bought into the tech sector amid the volatility. The VIX, Wall Street's "fear gauge," recorded its steepest drop since 1990. This return to market stability came after a period marked by weak economic data and disappointing tech results. US Treasuries fell as demand for safe-haven assets decreased, and traders adjusted their expectations for Federal Reserve rate cuts. The S&P 500 rose 2%, driven by gains in companies like Nvidia and Walt Disney, while Treasury yields and corporate bond issuance also increased.