On that tone set by labor conditions in the US, we go (at least those of you in the USA) into Labor Day mode and promise to see you on the other side of the long weekend. Most traders will be once again manning their battle stations as next week unfolds; look for added pop and sizzle in either direction –with a preview to come during today’s book-squaring rituals. But, before we let you go, one more quick glance at the divergent sentiments and projections present in the gold market, as relayed by Sharps Pixley, a London-based bullion house, to the media. East and West part ways? Consider the fact that:
"Western based news reporters seem broadly skeptical of the [gold] bull run (with questions centered on whether or not we are in a bubble) while reporters from the East are evidently not so. Nowhere is that divergence of thought quite so apparent than in the statistics that the markets are currently reporting. Bullion exchanges in both Hong Kong and Dubai have in the last couple of days both reported a doubling of average daily trade volumes in against the corresponding period a year ago.
Moreover, "gold sales in Shanghai have been red hot, while in Japan there has been a more Western style skepticism and some good selling reported. Here in London we have seen some good buying (typically from Asian clients) while significant volumes of ‘old gold’ (typically Krugerrands bought in the 1980′s) are coming back to the market, creating an interesting two way trade."
Not that the above is much different in how the market’s conflicted mood is shaping within the US itself. Just as there was a notable slowdown in gold ETF accumulations in the earlier part of the year despite soaring gold prices, there is also a divergence to be found in the US Mint’s statistics on gold Eagle coin sales; one that is not at all apparent if current headlines are the only ones taken into account.
While we are told that the Mint’s August sales were at their highest since January –a true statistic and one not in dispute- there has been little coverage of the fact that the year-to-date sales of one-ounce Eagle coins are off by some 16% vis a vis the 2010 numbers. Odd, but true.
Also true is the fact that total Eagle coin sales (all sizes) are also down for the eight months that have elapsed this year, and they are down by a not insignificant 3.55 tonnes (114,000 ounces) versus last year. As well, the 2011 year-to-date figures are off by over 20% compared to the panicky days of 2009. Could it be that –just as everywhere else apparently- the skeptics and the panicked ones are present on the scene at the same time? That finding would be the least surprising one of all time.
Have a pleasant weekend.
Jon Nadler is a Senior Metals Analyst at Kitco Metals Inc. North America