Gold ends August ahead, but profit taking evident

In the Lead: “Turkish Delights“

Meanwhile, AWD Chase de Vere’s Patrick Connolly suggests that "if you are invested in gold you have to be aware that something that has risen so sharply could fall just as sharply. We’ve been limiting the amount we advise our clients to hold and where we think exposure is too high we’ve been advising that now is a good time to take profits." No one recommends giving up the core insurance position that is so essential to maintain in the precious metal, but it does make sense to note that “profit” is not a four-letter word, whereas “loss”…well, you know…

It would appear that (at least) Turkish investors have been…delighted with gold’s recent gains and have begun heeding just such timely, level-headed advice. Recent patterns from that country would indicate that locals “with savings in foreign currencies and gold are cashing in their profits with car purchases. Customers who feel they have earned enough thanks to those currencies' [the dollar and euro] rise against the lira and the recent hike in gold prices are deciding to realize their profits by buying new cars.” While the “wisdom” of buying a Beemer or a Jag with gold-derived profits may be questionable, the strategy of buying them before their prices vault higher along with certain foreign currencies against the Turkish lira is certainly not. Consider it another type of ‘hedging’ and recognition of the aforementioned letter-count of the word “profit.”

Meanwhile, the buying and selling of bullion by assorted central banks continued last month, as the process of reserve management rolled on. Colombia bought 2.3 tonnes of yellow metal and Russia added 4.4 tonnes to its stash, while Kazakhstan cut it holdings by 3.11 tonnes. Also seen selling were Mexico and Tajikistan. Large-scale additions or disposals among official sector players still have not been noted for this most turbulent year.

Silver opened with a loss of two pennies and a quote at $41.33 per ounce in New York. Not much to report in that niche, other than the maintenance of the same, roughly $40-42 range that has been in place for some time now. The white metal largely refused to (once again) join the rally in gold on Tuesday. Platinum dropped and palladium gained as the New York trading day commenced.

The former declined $4 to the $1,847 level and the latter climbed to $780 with a $7 pop. No changes were noted in rhodium. Swedish Carmaker Volvo (Chinese-owned at the moment) joined forces with Germany’s industrial giant Siemens to develop plug-in hybrid and electric vehicle technology further. In other automotive-world news, it has been projected that US car sales probably stalled in August not only as buyers slow down ahead of new model-year arrivals into showrooms, but on account of dimming levels of consumer confidence.

If automotive industry analysts prove to be correct, the annualized sales pace of cars in the USA will show a run-rate of 12.1 million units. That’s 600K units better than August 2010’s pace but is 400K units short of the sales trend noted in the first half of 2011. With any luck, the final tally for this year may come in at just under 13 million units moved off dealers’ lots and it may climb to nearly 14 million next year; a trend that platinum-group metals investors would certainly cheer and welcome. At least on the [Japanese] production side of the equation, things are apparently returning to normal after the supply chain disruptions precipitated by the Sendai quake took their toll this spring and summer.

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