Page 11 - Bullion World Volume 4 Issue 5 May 2024
P. 11

Bullion World | Volume 4 | Issue 5 | May 2024


           …but there is more to it than that.  While the physical   The period of stabilisation in the second half of the month
           market for coins and bars, and price-elastic investment-  was also triggered to some extent by US numbers; this
           grade jewellery, has evaporated (and some coins are   time the US CPI and PPI were, for the second successive
           trading at a discount to spot and returning to refineries   month, higher than expected and poured some cold
           accordingly), the professional market has been firmly   water on the bond markets’ over-benign view of the
           on the bandwagon and the rise in price has become   Fed’s likely future course of action.  Some profit taking
           self-fulfilling as not only are momentum traders and CTAs   appeared but gold had grabbed the markets’ attention
           involved, but as well as technical stop-driven trading,   and the bull run resumed towards month-end.
           there has been evidence of fresh investors.
                                                              The move was accelerated by the action in the options
           In other words, the initial rise in price deterred some   markets.  Anecdotal evidence had already suggested
           buyers and generated some profit taking, but as it   that there was some high volume option trading going
           gathered speed, every-one appeared to want to join the   through and after a period of relatively narrow horizontal
           party.                                             ranges in January and February, premia would have
                                                              been low.  The gearing on the delta of these options also
                                                              contributes to the self-fulfilling nature of the move.





           Gold in key local currencies, January 2023 to date






























           Source: Bloomberg, StoneX


           Meanwhile the  Exchange Traded Products remained   the quarter was -113.23t, with 68.,2t (4.1%) and 54.2t
           continued to see net redemption despite the febrile   (3.9%) from Europe, while Asia took in 9.6t (7.1%) and a
           atmosphere elsewhere.  For the whole of 2023, the   minor loss of 0.4t (0.7%) from elsewhere.
           World Gold Council (the most reliable source) shows a
           fall of 244t (funds exodus of $14.7Bn), leaving holdings   The Money Managers’ activity on COMEX largely
           at yearend of 3,226t, AUM $214.4 Bn.  In 2024 to end-  reflected the OTC activity, with outright longs gaining
           March there were fresh redemptions, although the pace   215t or 67% and shorts contracting by 46%, taking
           was also slowing, with just 13.6t leaving the funds; and   the net position up by factor of 1.6. At the close of
           over the month overall, all of this came out of Europe,   business on 2nd April, therefore, the outright long was
           with a drop of 1.6% or 22t.  North America bought 4.8t   538t compared with a twelve month average of 405,
           (+0.3%) and Asia, 3.1t or 2.2% with 0.5t going into   pointing up the possibility of sizeable lqiudiation should
           other areas.  This left holdings at month-end of 3,112.4t   the surrounding financial and geopolitical environment
           with $222.2Bn in Assets Under Management.  World   change, substantially – which looks unlikely.
           mine production is roughly 3,650t.  The net change over

                                                                                                          11
   6   7   8   9   10   11   12   13   14   15   16