Filed Pursuant To Rule Registration No. Despite pockets of strength, demand was down in all sectors. Key themes of Q2 more detail page Consumer demand falls in India and China. These markets accounted for almost half the fall in global demand. Eurozone issues bolster local investment. Investors in Europe focussed on issues close to home as the Greek crisis dominated the headlines. Facing forward: H2 outlook. Prospects for the remainder of the year are more encouraging, with consumers responding to the recent price drop.
Gold prices were largely directionless between March and June. This was both the cause and effect of weak demand. Such sideways price movement meant that consumers in a number of markets were discouraged from buying gold as they were uncertain as to whether there would be an opportunity to buy at lower levels.
The fall was chiefly due to the weakness in the key markets of India and China, both of which were dictated by market-specific issues. But the decline was more dramatic when we look at the second quarter.
Additionally, a relative dearth of auspicious days for marriages in June and July hit wedding-related demand in Q2. Wedding purchases are usually made months in advance of the event, which meant that this element of demand was unusually slow during the second quarter. See Jewellery for further detail. Continued economic slowdown and severe fluctuations in the domestic stock market knocked consumer sentiment.
The consumer environment in China has been overshadowed by the deceleration in domestic GDP growth and the jewellery market has been a notable casualty of this trend; the decline in network expansion into Tier 3 and 4 cities1 by jewellery retail chains bears witness to this.
Stock market turbulence also impeded demand. On the one hand, rallying equities drew attention away from discretionary purchases of items such as gold jewellery a phenomenon we discussed in Gold Demand Trends, First quarter as consumers poured disposable income into chasing stocks higher. On the other hand, the sharp reversal in stock markets in late June damaged sentiment, wiping out the capital gains made by late joiners to the rally and leaving consumers less inclined to spend their disposable income on jewellery, among other things.
Gold Demand Trends Second quarter European investors turn to gold at time of crisis The effect of localised issues driving demand was clearly apparent in European investment trends. Demand for bars, coins and ETFs was boosted by the Greek crisis and the possible threat to the stability of the euro area.
The positive impact on gold investment was confined to European markets, as they were the most likely to be directly affected by any contagion. Outside of Europe, investors did not seem to view the risks associated with Greece as systemic. Bar and coin demand for the region expanded by 7. Patterns of ETF demand in Europe were similarly telling. This outperformed the ETF universe as a whole, which saw modest outflows of just under 23t in Q2. While some may feel the increase was low-field, the number was in line with our expectation.
It explains the mechanics of the fall and provides broader context to the dynamics within, and key drivers of, the gold market. After a relatively subdued H1, there are reasons for cautious optimism for the remainder of the year. Importantly, from the perspective of consumers in price-sensitive markets, falls in the gold price can be a strong buy signal. Lower prices in markets across Asia and the Middle East often trigger purchases and interest has already been reported across a number of these.
The onset of the festival and wedding season in India in Q4 suggests healthy prospects for jewellery demand for the remainder of the year, with the caveat that this assumes normal monsoon rainfall. And there are tentative signs that the recent drop in gold prices has lifted appetite for gold in both China and India, with interest having picked up a little following the price fall.
Declines were widespread across Asian and Middle Eastern markets. Positive demand among Western consumers provided some respite. Demand for the year-to-end June reached 1, Extreme weather dented sentiment among rural Indian consumers The 81t decline in overall jewellery demand was chiefly due to a weak quarter in India. Extreme weather patterns overshadowed second quarter demand and had a direct impact on incomes among the all-important rural population who account for more than half of Indian gold demand.
Crops were damaged in Q1 by a combination of heatwaves in some areas and unseasonal rain and hailstorms in others. The impact on incomes was echoed in other consumer segments that are heavily dependent on rural demand, notably tractors and motorcycles, sales of which have slumped in recent months. Demand among urban consumers proved more resilient. Jewellery demand at some high-end, branded chain stores in larger cities saw modest year-on-year growth. This contrasted with sizable losses suffered by small, independent jewellers in Tier 2 cities3 and below.
We can see evidence of this in company reports. Indian wedding-related demand was weaker in the second quarter. Given that wedding purchases are usually made in advance of the event, this hit second quarter demand. The wedding season resumes in November, which suggests that the market will see a pick-up in such purchases towards the end of the current quarter.
It is important to note that while wedding-related demand may be affected by such quarterly fluctuations, total annual purchases should not be affected; the overall number of marriages will not decline, but will simply be condensed into a smaller number of auspicious days.
The local gold price was a clear indicator of the weakness in Indian gold demand in Q2. Imports in April and May overshot demand considerably: jewellery manufacturers and wholesalers had anticipated healthier levels of demand. Much of the surplus gold is currently languishing in bloated inventories, waiting to be absorbed as demand picks up in H2. In any case, the groundswell of these imports have contributed to the inventory overhang in the market.
Looking at Indian jewellery demand on a half-yearly basis, the net impact is a modest decline of just over 7t. A risk to this scenario is the monsoon rainfall, which is projected by the meteorological department to be below normal for the second consecutive year. Although research by India Ratings and Research4 suggests that the government has a strategy to minimise agricultural losses in the case of a deficient monsoon, the central bank has identified a shortfall in monsoon rains as a key risk to its inflation outlook.
As discussed in Key Themes, the domestic economic backdrop and stock market volatility both contributed to reduced demand. However, when equities took a turn for the worse and fell sharply in June, the reverse was not the case. In fact, the negative effect on jewellery demand was compounded by the detrimental impact on sentiment among consumers Chart 3. The Chinese jewellery industry faced a challenging time as manufacturers and retailers chased a smaller pool of consumers, leading to excess capacity.
Such increased competition has forced a number of small workshops to close and many wholesalers are facing debt problems, with banks tightening up their lines of credit to the jewellery industry. This partly helps to explain the increased market share of 18 carat jewellery as manufacturers reallocated resources towards promoting this higher-margin product.
In contrast, demand in Japan edged higher, aided at the margin by higher numbers of Chinese tourists. Demand grew 0. Lower prices triggered buying interest. Turkish consumers priced out by near-record lira gold In Turkey, currency depreciation pushed local prices out of reach of many consumers. The local price reached its highest levels for almost four years as the surprise election result sent the lira plummeting.
Recycling volumes normalised, however, following the spike seen in the previous quarter. Negative forces dominate Middle Eastern demand Turning the spotlight to the Middle East, the second quarter was a period of widespread weakness. Consumers in Iran battled a raft of negative forces, including: an increase in VAT, lower oil prices, currency weakness and international economic sanctions. US jewellery demand remains on gentle upward course The atmosphere in Western gold jewellery markets was more positive.
The slightly erratic nature of US economic recovery has proved a headwind to more convincing growth, but we expect the recovery in demand to gain momentum as yet lower prices feed through to consumers. UK jewellery demand continued to build on the solid base established in Total first half demand of 8. Investment Bar and coin demand sinks in lacklustre investment environment; ETF outflows slow to a trickle. Looking at first half data, ETFs net flows were zero compared with outflows of The opening weeks of the third quarter have seen dramatic moves in the gold price, all the more so for the fact that the price was range bound during Q2.
We have published notes which comment in detail on this fall see Market commentary and Investment commentary and explain why the above factors do not necessarily reflect the overall investment case for gold, or threaten the prospects for long-term gold investment. ETF outflows have increased since the end of June, but the pace of these flows remains below the levels seen in the previous two years.
Investors focused primarily on coins, as well as on bars of small denominations 1oz, and 50gg , indicating that demand in this segment was driven by small retail investors, rather than those in the High Net Worth category. France was an outlier within the region; investment demand turned marginally negative in Q2.
The decline was partially a response to tighter legislation after the government lowered the threshold for anonymous cash payments. US investment stages late rally Bar and coin demand among US investors had a weak start to the quarter. Demand was decidedly muted as subdued prices failed to ignite interest in gold. This was followed by a huge burst of activity in June, when bullion coin sales by the US Mint hit a month high. July has seen a further extension of this trend, with demand for gold Eagle coins reaching a 2-year high of ,oz as the price dropped.
Looking the historical trends in US bar and coin demand, the rolling four-quarter total of demand reached 49t in the latest quarter. This is a long way from the Yet it is more than double the pre-crisis average of And well in excess of the While demand is unlikely to return to the levels, certainly in the absence of any systemic risk event, it is likely to remain at historically elevated levels.
This closely gels with the change in European bar and coin demand, reinforcing our view that investment in Western markets has established a support level well above historical norms. Demand for gold bars and coins picked up towards the end of the quarter, in response to the sharp drop in Chinese equities in the latter half of June.
This was also mirrored by a rise in demand for gold accounts. Uncertain price expectations were a factor, as was the stock market, which has continued to capture the attention of investors with its continued strong performance. The weak rural economy played a further role. Those rural investors most affected by the Q1 rains were more inclined to sell gold to supplement declining incomes than make fresh purchases. The lack of demand was such that, unusually, India exported a small amount of bullion during the quarter.
East-Asian investment weakness broadly reflects price expectations The smaller East Asian markets cumulatively accounted for a 6. Mitchell I. He was a Partner of One Equity Partners, a private investment firm, from through From to , Mr. From to , he was Chairman of the Board of Directors of Register. Com, Inc. Previously Mr. James E. Hyman, age 56, has served as President and Chief Executive Officer of Community Education Centers, a provider of offender reentry and in-prison treatment services, since January Morgan, and has previously served as a director of Mac-Gray Corporation.
About Jason Industries.
July has seen a further extension of this trend, with demand for gold Eagle coins reaching a 2-year high of ,oz as the price dropped. Looking the historical trends in US bar and coin demand, the rolling four-quarter total of demand reached 49t in the latest quarter. This is a long way from the Yet it is more than double the pre-crisis average of And well in excess of the While demand is unlikely to return to the levels, certainly in the absence of any systemic risk event, it is likely to remain at historically elevated levels.
This closely gels with the change in European bar and coin demand, reinforcing our view that investment in Western markets has established a support level well above historical norms. Demand for gold bars and coins picked up towards the end of the quarter, in response to the sharp drop in Chinese equities in the latter half of June. This was also mirrored by a rise in demand for gold accounts. Uncertain price expectations were a factor, as was the stock market, which has continued to capture the attention of investors with its continued strong performance.
The weak rural economy played a further role. Those rural investors most affected by the Q1 rains were more inclined to sell gold to supplement declining incomes than make fresh purchases. The lack of demand was such that, unusually, India exported a small amount of bullion during the quarter. East-Asian investment weakness broadly reflects price expectations The smaller East Asian markets cumulatively accounted for a 6. Uncertainty over the future direction of gold prices was a general theme across the region.
In Japan, activity picked up in terms of both buying and selling, but the net impact was broadly neutral with just 0. Some investment buying has re-emerged since the end of the quarter, in response to the fall in the gold price. Central banks and other institutions Central banks and other institutions still steadfastly committed to gold. Since , central banks and other institutions have been unwavering in their accumulation for gold.
Demand amounted to Gold remains sought-after by those looking to diversify their reserves away from troublesome currencies Chart 5. Does not include countries with net purchases or sales of less than 0. Aside from Russia, significant fresh demand came from Kazakhstan, whose central bank purchased a further 7. The country has now increased its gold reserves for 33 consecutive months. Iran repatriates 13t of historically-purchased gold The Central Bank of Iran declared that it had taken delivery of 13t of gold from South Africa, having stored it there for the past two years.
The announcement was concrete evidence that Iran has bought gold to bolster its reserves in recent years, albeit that the seller remains unidentified. As part of talks towards a nuclear agreement, Iran was permitted to move the gold from South Africa to its own domestic vault. Little is published about the level of Iranian gold reserves, but it is clear that Iran sees gold as a prominent part of its total reserves.
China reports a jump in gold holdings Without doubt the most significant announcement came shortly after the end of the quarter. Reaction to the announcement was cool among investors in the West, who voiced disappointment that the figure was not in line with their higher, and in some cases unrealistic, expectations. Despite this, the increase in gold reserves was overwhelmingly supportive for the gold market; reaffirming that China remains committed to gold as a reserve asset.
Technology Substitution and thrifting remain the key challenges for gold demand within the technology sector. The recurring theme of substitution away from gold is still prominent; despite its superior qualities, gold remains relatively expensive to cost-conscious manufacturers. Demand of Owing to the growing trend of consumers changing electronic devices such as smartphones more regularly, manufacturers are beginning to place less emphasis on materials which provide greater longevity.
Gold bonding wire witnessed further losses in Q2 And while gold bonding wire is still used in memory packages, key manufacturers are working on gold reduction projects. There were indications that some manufacturers might be moving away from palladium-nickel PdNi alloys back to gold. This was mostly seen in higher-end goods, where concerns over performance and reliability are highest. A reduction in demand from Chinese slowing economic growth and Russian sanctions and rouble weakness consumers did little to derail growth in costume jewellery and gold-plated accessories.
Further, pressure on manufacturers to thrift has lifted owing to a lower current gold price. The long-term trend of ceramics replacing gold continues unabated, as consumers still place a greater emphasis on cosmetic as well as financial considerations. Year-to-date, mine production, hedging and recycling have generated a combined 2, Lower levels of recycling account for a good portion of this decline. Growth was again scattered across the globe as mines in a number of countries were able to generate minor increases in output.
Indonesia made the largest contribution to the growth in mine production. Increased output at both the Goldstrike and Twin Creeks mines in Nevada helped towards year-on-year growth for the US as a whole, although this was largely due to comparisons with a poor There are differing forces at play in the mining industry, which have implications for future production levels.
Mining companies have certainly made great strides in reducing their costs over the last year or two. However, there is only so much more scope for producers to implement cost-cutting measures, and many remain at the mercy of foreign exchange fluctuations. Coupled with the sharp drop in the gold price in July, producer margins have deteriorated further and we continue to expect that mine production will taper off, levelling out over the next year.
This view is supported by a three-year decline in levels of exploration and development activity in the gold mining industry. Recycling ebbs to 8-year low Recycling activity subsided following the burst of activity seen in Q1, which had flushed out much of the readily available supplies. Despite the surge in local prices, they fell just short of the level many consumers were targeting as a sell signal and hence recycling was relatively well contained.
The fall in the price since the end of the quarter has further dampened the propensity for Turkish consumers to sell their existing holdings. Amid a broad contraction in recycling, India was an outlier. Hedging continues to impact supply only at the margin Year-on-year comparisons of producer hedging show a marked swing. The relatively sizable hedge position initiated by Polyus Gold in Q2 contrasts with 5t of net de-hedging in the most recent quarter.
The trivial de-hedging of Q2 was due to continued deliveries into existing positions, although we expect that minor hedging activity mostly for the purposes of aiding cashflow in debt repayment may outweigh such deliveries for the year as a whole.
Hedging continues to have only a marginal bearing on the total supply of gold. Since Q1 , the net total impact of hedging on overall gold supply is This compares with total cumulative gold supply over the same period of over 24,t. Given that shareholders continue to express a preference for mining companies not to engage in hedging, supply from this category is unlikely to increase in the coming quarters. Consequently, the total supply figure in the table will not add to jewellery plus investment demand for India.
Notes and definitions All statistics except where specified are in weights of fine gold Notes Revisions to data All data is subject to revision in the light of new information. Historical data series Demand and supply data from Q1 are provided by Metals Focus. For more information on this process, please see Creating a consistent data series by Dr James Abdey www.
Swaps and the effects of delta hedging are excluded. Consumer demand The sum of jewellery consumption and total bar and coin investment occurring within a country i. Dentistry The first transformation of raw gold into intermediate or final products destined for dental applications such as dental alloys. Over time, new products may be included when appropriate. Fabrication Fabrication is the first transformation of gold bullion into a semi-finished or finished product.
Gold demand The total of jewellery fabrication, technology, total bar and coin demand and demand for ETFs and similar products. Jewellery End-user demand for all newly-made carat jewellery and gold watches, whether plain gold or combined with other materials. Excluded are: second-hand jewellery; other metals plated with gold; coins and bars used as jewellery; and purchases funded by the trading-in of existing carat gold jewellery. Mine production The volume in fine weight of gold mined globally.
This includes an estimate for gold produced as a result of artisanal and small scale mining ASM , which is largely informal. Hedging accelerates the sale of gold, a transaction which releases gold from existing stocks to the market. Over time, hedging activity does not generate a net increase in the supply of gold. Official coin demand Investment by individuals in gold bullion coins. It equates to the fabrication by national mints of coins which are, or have been, legal tender in the country of issue.
It is measured at the country of consumption rather than at the country of origin for example, the Perth Mint in Australia, sells the majority of the coins it produces through its global distribution network and is measured on a net basis.
In practice it includes the initial sale of many coins destined ultimately to be considered as numismatic rather than bullion. Other industrial Gold used in the production of compounds, such as Gold Potassium Cyanide, for electro-plating in industrial applications as well as in the production of gold-plated jewellery and other decorative items such as gold thread.
India accounts for the bulk of demand in this category. Physical bar demand Investment by individuals in small 1kg and below gold bars in a form widely accepted in the countries represented within Gold Demand Trends. This also includes, where identifiable, gold bought and stored via online vendors.
It is measured as net purchases. Recycled gold Gold sourced from fabricated products that have been sold or made ready for sale, which is refined back into bullion. This specifically refers to gold sold for cash. It does not include gold traded-in for other gold products for example, by consumers at jewellery stores or process scrap working gold that never becomes part of a fabricated product but instead returns as scrap to a refiner.
Partly a statistical residual, this number also captures demand in the OTC market and changes to inventories on commodity exchanges, with an additional contribution from changes to fabrication inventories. Technology This captures all gold used in the fabrication of electronics, dental, medical, decorative and other technological applications, with electronics representing the largest component of this category. It includes gold destined for plating jewellery.
Tonne Metric 1, kg or 32, troy oz of fine gold. Total supply The total of mine production, net producer hedging and recycling. All rights reserved. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced.
Other third party data and content is the intellectual property of the respective third party and all rights are reserved to them. Any copying, republication or redistribution of content, to reproduce, distribute or otherwise use the statistics and information in this report including by framing or similar means, is expressly prohibited without the prior written consent of the World Gold Council or the appropriate copyright owners except as provided below.
Brief extracts from the analysis, commentary and other World Gold Council material are permitted provided World Gold Council is cited as the source. It is not permitted to reproduce, distribute or otherwise use the whole or a substantial part of this report or the statistics contained within it.
Com, Inc. Previously Mr. James E. Hyman, age 56, has served as President and Chief Executive Officer of Community Education Centers, a provider of offender reentry and in-prison treatment services, since January Morgan, and has previously served as a director of Mac-Gray Corporation.
About Jason Industries. The Company is the parent company to a global family of manufacturing leaders within the seating, finishing, components and automotive acoustics markets, including Assembled Products Buffalo Grove, Ill. All Jason companies utilize the Jason Business System, a collaborative manufacturing strategy applicable to a diverse group of companies that includes business principles and processes to ensure best-in-class results and collective strength.
Headquartered in Milwaukee, Wisconsin, Jason employs more than 4, individuals in 14 countries. Contact Information.
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|4fx investment mmgps||Hedging continues to impact supply only at the margin Year-on-year comparisons of producer hedging show 4fx investment mmgps marked swing. The impact on incomes was echoed in other consumer segments that are heavily dependent on rural demand, notably tractors and motorcycles, sales australi investments llc which have slumped in recent months. Bar and coin demand for the region expanded by 7. Negative forces dominate Middle Eastern demand Turning the spotlight to the Middle East, the second quarter was a period of widespread weakness. All Jason companies utilize the Jason Business System, a collaborative manufacturing strategy applicable to a diverse group of companies that includes business principles and processes to ensure best-in-class results and collective strength. Consequently, the total supply figure in the table will not add to jewellery plus investment demand for India.|
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