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Kitco Market Nuggets

Market Nuggets: GFMS: Gold Producers Net Hedging Stood At 5.11 Million Oz In Third Quarter

20 January 2011, 03:36 p.m.
By Kitco News
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(Kitco News) -- Producers' lifted 2.16 million ounces of gold from the global hedge book in the third quarter, a drop of one-third, leaving 5.11 million ounces still hedged, option-delta adjusted, consultancy GFMS said Thursday. The nominal number of ounces – not adjusted for option delta – is 8.83 million ounces. AngloGold was the largest de-hedger, removing 1.73 million ounces and Sumitomo Metal Mining increased its collar positions by 0.13 million ounces, delta-adjusted.

By Debbie Carlson of Kitco News dcarlson@kitco.com

Market Nuggets: Net De-Hedging By Fourth Quarter Seen At 4.65 Million Oz - GFMS

20 January 2011, 03:35 p.m.
By Kitco News
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(Kitco News) -- With AngloGold closing its hedge book by the fourth quarter, GFMS estimates that net de-hedging will be near 4.65 million ounces for the year. "It could be argued that AngloGold's book was the last of the 'great' hedge books, which at end-2009 amounted to 46% of the global total, when adjusted for option delta," the consultancy said Thursday

By Debbie Carlson of Kitco News dcarlson@kitco.com

Market Nuggets: Jewelry Demand In Third Quarter Reached 548 Metric Tons – GFMS

20 January 2011, 03:34 p.m.
By Kitco News
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(Kitco News) -- The mid-summer dip in gold prices came at a "fortuitous" time for metal fabricators anticipating the higher fourth-quarter retail demand for the yellow metal, GFMS said. The jewelry fabrication demand in the third quarter totaled 548 metric tons, the highest corresponding quarter since 2008. In July prices fell to as low at $1,157 an ounce (London p.m. fix) before rebounding.

By Debbie Carlson of Kitco News dcarlson@kitco.com

Market Nuggets: SEB Short-Term ‘Tactical’ View On Gold Neutral-Bearish; Strategic View Bullish

20 January 2011, 11:18 a.m.
By Kitco News
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(Kitco News) -- SEB Commodity Research says its short-term “tactical” view on gold is “neutral to bearish” but that it remains favorable toward the metal in its longer-term strategic view. “At the moment, investors in the OECD region are selling gold on falling safe-haven demand while Asian investors are buying to hedge against inflation,” says a report from analyst Filip Petersson. “Thus the market remains relatively balanced.” Reduced demand after the Chinese New Year could hurt gold, but returning growth or sovereign debt worries in the OECD could tilt prices back higher, he says. “The strategic bull case remains relatively intact even though the European sovereign-debt outlook has improved somewhat,” SEB says. “In addition to the European situation, strong Asian demand, central-bank buying and potential OECD inflation supports the strategic picture.”

By Allen Sykora of Kitco News asykora@kitco.com

Market Nuggets: Barclays Analysts Cite Divergence In Investor Interest For Silver

20 January 2011, 9:04 a.m.
By Kitco News
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(Kitco News) -- Investor interest in silver has been diverging lately, with strong sales of silver coins but outflows from exchange-traded products, point out analysts with Barclays Capital. The bank notes that rising silver production has been outpacing fabrication demand, but any excess has been absorbed by investment. However, this year so far, “prices have been pulled between a divergence in ETP interest and coin sales,” Barclays says. “Silver ETP flows have started the year on a weak note, with outflows yesterday of 17 (metric tons) taking total net redemptions for January to 317 tons, completely offsetting the inflows recorded in the full month of December. However, coin sales have been very strong, with the U.S. Mint reporting a fresh record monthly high for sales in January before the month is complete.” Sales have hit 4.588 million ounces, surpassing the previous record of 4.26 million set in November, Barclays says.

By Allen Sykora of Kitco News asykora@kitco.com

Market Nuggets: Gartman Exiting Silver But Maintaining ‘Insurance’ Position In Gold

20 January 2011, 08:42 a.m.
By Kitco News
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(Kitco News) --Newsletter writer Dennis Gartman says he is moving out of silver but keeping an “insurance” position in gold. He points to a recent uptick in the gold/silver ratio, which he follows as a sign of either inherent strength or weakness in precious metals. The ratio measures the number of ounces of silver needed to buy an ounce of gold. The ratio normally falls when prices are stronger but rise when prices weaken, since silver is usually the more volatile metal. “The fact that the ratio has risen smartly is, to us, a very real bearish signal,” he says in The Gartman Letter. Gold could slip some more, but if so, silver could fall even more, he suggests. “We were rather aggressively bullish of metals until two and three weeks ago when we surprised everyone by reducing that exposure by 2/3rds, retaining what we now call our ‘insurance’ position in gold and silver,” he says. “The only change we wish to make is to reduce our exposure to silver entirely, ‘swapping’ silver for gold.”

By Allen Sykora of Kitco News asykora@kitco.com

Market Nuggets: Chinese Data Prompts Worries Of Further Monetary Tightening—R.J. O’Brien

20 January 2011, 08:24 a.m.
By Kitco News
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(Kitco News) --Metals—as well as stock-index futures and a number of other commodities—are softer after Chinese economic data were strong enough to prompt worries about further monetary tightening in the country. “China data dominates the headlines this morning with ‘inflation’ concerns being foremost,” says a research note from Janet Mirasola, managing director of R.J. O’Brien & Associates. “ Instead of celebrating the growth and recovery that China’s lead has given the global marketplace with stellar results and a ‘to die for ‘ GDP of 9.8% in the fourth quarter, the fear of tightening policies and a forced slowdown of the inflationary growth is putting the brakes on most asset and commodity markets this morning.” Other readings included Chinese CPI of 4.6%, year-on-year industrial-production growth of 15.7%, an annual rise in retail sales of 18.4% and fixed-asset investment of 24.5%.  “All of these results were on the strong side of expectation, which in reverse reaction has added caution to investor trades so far,” Mirasola says. “The expectation of another raise in interest rates is now looming large over global markets.”

By Allen Sykora of Kitco News asykora@kitco.com

Market Nuggets: Commerzbank: Copper To Be Deficit Even As Producers Seek To Increase Output

20 January 2011, 08:20 a.m.
By Kitco News
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(Kitco News) -- High base-metal prices have given mining companies further incentive to expand production, yet prices may continue to rise anyway, says Commerzbank. “According to the National Bureau of Statistics, copper production in China reached record levels both in December and in the whole of last year,” the bank says. “Production of other metals was also boosted considerably last year. Even so, this has not been able to offset the strong demand on global metal markets.” The bank cites data from the World Bureau of Mineral Statistics showing the copper, nickel and zinc markets showed significant supply deficits last year from January to November. Also, the bank notes that Pan Pacific Copper, Japan’s largest copper producer, expects an expansion of the copper-market deficit this year to 635,000 tons. “We therefore see more upside price potential for metals in general and copper especially,” Commerzbank concludes.

By Allen Sykora of Kitco News asykora@kitco.com