Ghanian Gold Projected To Disappear In 2061

Here's one for the supporters of peak gold. Some participants in an Institute of Economic Affairs (IEA) forum on trade for sustainable development are claiming that Ghana will run out of gold in fifty years' time unless new reserves are found.

Currently, Ghana, the second largest gold producer in Africa and the 10th in the world, produces some 2.9 million ounces of gold per year, approximately four percent of global production.

Despite being one of the largest commodity exchange earners for the nation, gold yielded a return of only $2 for every $1 spent from1990 to 2009.

Dr. Tutu, a Senior Research Fellow of the IEA, urged government to invest and develop mining communities since they would have nothing after the mines are closed.

According to him, Ghana should take a cue from South Africa, where mining communities, including Johannesburg, have been turned into big cities.

From 1990 to 2009, $9.02 billion investments in minerals earned the nation 19.6 billion from gold.

However, total foreign exchange earnings for cocoa over the same period was $13.9 billion, with an investment of about $818 million.

This prediction echoes earlier predictions of the world (or a region) running out of oil. So far, those predictons have been confounded - no wonder why this one's been hedged. Still, it's a tantalizing one that fits the peak-gold scenario...provided that it's remembered that the gold being referred to is economically-available gold.

WOW Gold Farmer Gets Robbed Of Bullion

It's unfortunate that her name and game got noticed in the media due to her being robbed, but Kristina Fincham has an unusual career. She's a World of Warcraft gold farmer, who plays the game to accumulate gold and sell it for real money to hungry players. There are lots of gold farmers about, but she's one who took the proceeds and invested them in real gold. Sadly, her hoard has been stolen.

An Australian woman is suing her insurer over the theft of 74 bars of real gold bullion worth $74,549, which she bought using profits made from gold farming in World of Warcraft.

Adelaide Now reports that Kristina Fincham was a (clearly successful) gold farmer in WoW who sold in-game gold to players in return for substantial profits. For reasons unknown, she then decided to convert the profits from the WoW gold into real-world gold bullion.

Reason unknown? Gold to gold has a neatness to it, and the reason can be easily discerned by looking at a ten-year gold chart.

Sales Of First Spouse Gold Coins Jump

The U.S. Mint is finding it easy to sell any mint product with gold in it, even the 1/2 oz First Spouse coins. According to a report from Coin Update News, weekly sales of First Spouse coins jumped to the highest level in two months.

In the middle of the reporting period, the United States Mint raised the prices for most numismatic gold coins, in line with the increased market value of gold. Collectors may have placed heavier orders ahead of the price change in order to take advantage of the lower prices. Across all available options, the US Mint sold 759 of the one-half ounce gold coins, compared to 380 in the previous period.

Another factor at play might be the unexpected sell out of the proof version of the James Buchanan’s Liberty First Spouse Gold Coin. The US Mint struck fewer coins than the maximum authorized mintage based on demand forecasts, and this proved to be short of meeting demand for the entire sales cycle. If the US Mint underestimated the number of coins to produce for this issue, it may also be possible for other issues....

That underestimation of demand does not apply to the Mrs. Lincoln coin. I know I'm speculating here, but President Lincoln does not have a good reputation in revisionist libertarian circles. That revisionism likely had something to do with the low sales of that particular coin.

Needless to say, the newfound popularity of the entire series is also caused by increasing demand for physical gold.

Existing Home Sales Rise 2.7% In January

The National Association of Realtors' estimate of existing home sales rose 2.7% in January to 5.36 million from a downwardly-adjusted 5.22 million in December. This number was above expectations for 5.22 million in January. There's some indication that the NAR may have overestimated home sales by as much as 20% due to a flawed model [so this number should be taken with a grain of salt.] The median price, though, dropped to $158,000 - the lowest since April of 2002.


After sinking to as low as $1,402 by 9:30, gold began rallying before the number was released. Reaching almost $1,409 just after the release, the metal pulled back a bit and continued climbing. Perhaps the question marks surrounding the data helped, but a fall of the U.S. Dollar Index to new lows makes for a better candidate.

Indian Physical Gold Buying Slow But Back

According to a Reuters report webbed by the Economic Times, Indian traders have stepped back into the buying ring due to a slight fall in gold and rise in the rupee.

India gold eased a tad from its highest level in seven weeks on Wednesday weighed by a stronger rupee, leaving traders unenthused as they waited for bigger falls to stock up for the wedding season demand, dealers said.

"There are a few orders. I have priced in for 25 kgs below $1,400 (an ounce)," said a dealer with a state-run, bullion importing bank in Mumbai....

Traders and dealers said buying appetite could resurface if prices decline below the keenly-watched $1,400 an ounce level.

So, to a modest extent, upwards price acclimatization has set in. The bargain point is now $1,400.

Gold Climbs Back Above $1,400

Gold didn't start off that well when the overnight session got moving. Fluctuating between $1,395 and $1,400 last night, it crept up above $1,400 at 2 AM ET and eased itself into a higher range of $1,400-$1,405. A decaying U.S. dollar had its influence, although its drop phase coincided with gold's. The news that more Bank of England Monetary Committee members wanted to raise the BoE rate - this time, three out of nine - didn't deter gold. Evidently, the gold market is either assuming the rate will stay at 0.5% next month or is getting used to the idea that a rate hike is a sign of inflation getting out of hand.

Although gold stayed in the higher range, it overall trend was a slow move upwards. As of 8:07, the spot price was $1,404.00 for a gain of $5.00 on the day. The Kitco Gold Index attributed -$0.70 to predominant selling and +$5.70 to a weakening greenback.

The U.S. Dollar Index spent last night and some of this morning declining, with a respite to break up the two stages of droppage. By 2:35 AM ET, it had touched 77.40. Then rising, it failed to get above 77.6 and lost its upward momentum as it reintroduced itself to its earlier low. As of 8:13, it had rebounded a little to reach 77.48.

A Bloomberg article said gold was buoyed by worries of increasing inflation and continued Mideast turmoil.

Libyan leader Muammar Qaddafi in a television address yesterday vowed to fight a growing rebellion until his “last drop of blood.” The dollar declined against the euro on speculation rising fuel costs will put further pressure on European Central Bank policy makers to combat inflation. Gold typically moves inversely to the greenback and traded within 2 percent of the record.

Gold “will continue to be boosted by geopolitical factors, inflation threats, and from a return of investment,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report. Still, prices “have progressed to overbought levels,” which may pressure the metal, he said.

The article also mentions Euro Monetary Council member Yves Mersch musing publicly about the need to do something about Eurozone inflation. The drop in ETF holdings is continuing, with 10 gold ETFs tracked by Bloomberg seeing their holdings drop 4.86 tonnes yesterday to 2,014.8 tonnes. All of that drop was from the SPDR Gold Shares Trust.

An earlier Reuters report, covering the night stretch of the overnight session, said gold declined last night because bargain hunting has drained away and ETF holdings have declined.

"For the rally to continue, I think we need to cross $1,410. If that level is breached, then gold may hit a new high," said a dealer in Singapore.

"But my concern is the ETF ... the volume is not picking up. Technically, the market seems overbought. These are some of the factors which could somewhat cap the upside for gold going forward. What really matters is whether the tension in the Middle East will escalate further."

Also noted was the holdings of the SPDR Gold Shares Trust dropping 4.855 tonnes to 1,218.243 tonnes yesterday. Another quoted gold dealer said there was bargain hunting at the low end of gold's range last night. A meeting of the mainland Chinese Congress is scheduled, with high inflation high on the agenda.

The morning Wall Street Journal report said gold has firmed up on Mideast turmoil.

One precious metals trader said he expects the gold market to continue to gain as the unrest in the Middle East and North Africa as well as inflation fears and re-emerging worries about the financial health of some European governments create a price floor.

But Commerzbank warned gold "seems to be caught" around $1,400 an ounce and struggling to rally.

Also quoted is ETF Securities, which linked last week's Portugese debt troubles to gold's rise.

No news on the U.S. economy was released at 8:30, so gold had to find its own way. The range held, with the metal bouncing off $1,405 at the start of the pit session and then declining a little as pit trading got rolling. As of 8:41, gold was again $1,404.00 for a gain of $5.00 on the day. The Kitco Gold Index assigned -$0.45's worth fo change to predominant selling and +$5.45's worth to greenback weakening. The U.S. Dollar Index, after inching up to 77.50, dropped a little as its recovery lost momentum. As of 8:44, it was at 77.47.

One little-noticed feature of this rally was the slowness of gold's reaction to previously galvanizing events until the Egypt protests exploded. Its hesitation in the face of earlier troubles showed its distance from the spotlight back then: the continued drops in ETF holdings while it goes up evinces skepticism. The metal is still climbing a wall of worry, and shows the ability to put on gains when attention is focused elsewhere. It might suffer a pullback, but any such decline won't be that strong. As for today, $1,400 is the level to watch for: the recently habitual afternoon decline might not show up.

Gold, After Sagging, Closes Below $1,400; Winning Streak Broken

It was close for a time, but gold trended downwards just before noon ET and traded listlessly just below $1,400 for most of the afternoon. A mid-afternoon rally feebly tried to get and stay above the round number but didn't do the trick. At regular trading's end, the metal posted a sizable single-digit loss. The six-day winning streak is broken.

The day started out fairly well after the metal shook off an overnight decline which took it briefly below $1,395. Jumping up to $1,403 when the pit session got rolling, the metal stayed above $1,400 until mid-morning when it declined in anticipation of a good consumer-confidence number - one well above expectations. Once the news was released, it stalled and then turned upwards as demand picked up due to more trouble in Libya. Vaulting as high as $1,407.50, the metal lost ground along with oil as technical selling entered the market. Just after noon, gold lost more than ten dollars an ounce to bottom around $1,396.

Then climbing to $1,399, it rallied listlessly and was interrupted by a pullback in the middle. Bobbing around $1,400 in mid-afternoon, the metal sunk again but bottomed at a higher level than was reached by the before-noon slide. There was little last-minute rallying, and what little there was got almost erased by the time the electronic-trading hitch ended. At the end of regular trading, the spot price was $1,399.00 for a drop of $7.60 on the day. The Kitco Gold Index split the loss into -$5.50 due to predominant selling and -$2.10 due to greenback strengthening.

Gold's six-month chart, from Stockcharts.com, shows an upwards common gap due to yeaterday's hiatus:



Standard gap analysis says this gap is likely to be filled by a decline, but it should be remembered that there would be no gap had yesterday's action been included in the chart. That noted, there is a chance that gold will come down simply because it's gone up so much. Its Relative Strength Index number, found at the top of its chart, is close to overbought. That's a fairly good performance this soon after a new record high. The length of time spent in a bullish configuation by the Moving Average Convergence-Divergence lines at the bottom of its chart is more characteristic of a bull market than a bear market or even a consolidation.

That said, gold is presumptively in a range-bound consolidation phase until a new record high is made. Anyone who thinks that the metal's shaken off its doldrums and is prepared to take out $1431 is free to act on such an assumption, but the typical action of gold after a nice run like last fall's is to consolidate. Should gold follow suit once again, its current price is at the higher-risk zone with respect to an intermediate-term entry point.

After a strong two-stage run in overnight trading, the U.S. Dollar Index sunk back down and spent a fairly quiet day in today's regular session. Initially slumping, it didn't reverse itself until mid-morning. Then, its lesser rally couldn't get it up above 77.9. Slumping back down again, it ended up zeroing in on 77.8. As of 5:30, it was at 77.805.

Its own six-month chart, also from Stockcharts.com, shows its action on Monday as well as today. Today's candlestick's large upper wick shows its overnight strength:



The small body of the candle, though, does shows the muted trading of today. It seems to be poised for more climbing, but any further rallies should be treated skeptically unless it gets well above 79.5. Its recent turnaround still looks like a countertrend rally, a break between last month's droppage and - possibly - next month's. Of note is the fact that the greenback has not been rallying that strongly due to the Mideast and North African crisis. Gold, of course, has.

Given that gold's six-day winning streak is now history, the question remains about where it goes next. This month's rally has been treated skeptically, including by me, in part because the Mideast crisis was a fortuitous boooster of the metal. In its absence, gold would likely have been more hesitant and more obviously range-bound. The crisis can't last, and gold's fate will be influenced by the level it's at when the turmoil's ebbed. The pre-noon slide may be a harbinger or it may be an aberration, like declines earlier on in this rally. Asian buyers stopped co-operating last night: if they return to buying, then gold will be cushioned against any serious decline from this level. It's their call.