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Gold slumping to four-year low for best forecasters

By Nicholas Larkin, Bloomberg

October 17, 2013 • Reprints

Central Banks

Consumer purchases will reach as much as 1,000 tons in India and China this year, the World Gold Council says. That would exceed China’s record of 778.6 tons in 2011 and approach India’s all-time high of 1,006.5 tons in 2010.

The flow of metal from west to east led Australia & New Zealand Banking Group Ltd., Deutsche Bank AG and UBS AG to open vaults in Asia this year. Central banks also are storing more metal, adding 535 tons to reserves last year, the most since 1964. They may buy another 350 tons in 2013, the World Gold Council predicts.

That’s being offset by the sale of bullion from exchange- traded products, with investors selling 731 tons valued at $30 billion this year, data compiled by Bloomberg show. ETP assets reached 1,900.8 tons yesterday, the lowest since May 2010. Paulson, the biggest investor in the SPDR Gold Trust, the largest gold ETP, cut his stake in the product by 53% in the second quarter, a government filing showed.

Mining Companies

Barrick Gold Corp., the biggest producer, said Aug. 1 it may sell, close or curb output at 12 mines from Peru to Papua New Guinea. The Toronto-based miner announced $8.7 billion of writedowns in the second quarter and cut its dividend by 75% after prices plunged. Its shares fell 50% in New York trading this year.

The rout in gold may spur mining companies to resume selling future output to lock in returns, reversing a decade- long trend that added demand as producers closed out positions. Hedging will rise to 35 tons in 2014 from 20 tons this year, Barclays Plc predicts.

The industry will “slowly return” to forward sales, Charles Carter, an executive vice president at AngloGold Ashanti Ltd., said at a conference in Rome on Sept. 30. The Johannesburg-based company is the third-biggest producer.

“A lot of gold has been held for speculative purposes, investment and a store of value, and that’s less of a reason going forward,” said Robin Bhar, an analyst at Societe Generale SA in London and the most accurate precious-metals forecaster over the past two years. “If you sell your gold and put your money into equities, other fixed-income assets or real estate, you’re going to show a return. The gold bull market is definitely over.”

www.bloomberg.com

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About the Author

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Related Terms
US Federal Reserve 8527Gold 7530bank 6455commodities 3439Metals 3359fed 3336metal 3075Standard & Poor 2008Congress 1894International Monetary Fund 1712Federal Reserve 1207U.S. government 1118Federal Government 965World Gold Council 930Goldman Sachs 868Goldman Sachs Group Inc. 864U.S. Treasury 854Citigroup Inc. 603Barclays Plc 573real estate 562Stimulus 475UBS AG 455SPDR Gold Trust 436Deutsche Bank AG 426policy makers 323taper 310Credit Suisse Group AG 308Barrick Gold Corp. 278Societe Generale SA 224John Paulson 199Outlook 103Bloomberg U.S. 100Jeffrey Currie 88Forecast 82AngloGold Ashanti Ltd. 62Australia & New Zealand Banking Group Ltd. 51Robin Bhar 49Tom Kendall 36Paulson 27David Wilson 16Charles Carter 9Monetary Fund 8Dagong Global Credit Rating Co. 4

Free Newsletter Modern Trader Follow

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