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Jan 14, 2010

GATA DISPATCHES: Market is Remonetizing Gold and . GFMS is SORE ABOUT IT..

Market is remonetizing gold, and GFMS is sore about it

Submitted by cpowell on 06:16PM ET Wednesday, January 13, 2010. Section: Daily Dispatches Investor Appetite Drives Gold to New Peak
By Chris Flood
Financial Times, London
Wednesday, January 13, 2010
LONDON -- Investors bought more gold than buyers of jewellery for the first time in three decades in 2009, highlighting the increasing impact of speculators on bullion prices.
GFMS, the consultancy that compiles benchmark supply and demand data on the metal, said investment demand doubled to 1,820 tonnes last year, while jewellery purchases fell 23 per cent to 1,687 tonnes, a 21-year low.
The data provide the clearest indication of the huge role investors played in driving gold to a record high of $1,226.10 a troy ounce in December.
Philip Klapwijk, GFMS executive chairman, said he sensed that a "large amount of money" was poised to enter the gold market this year. He predicted a "bumpy" return to record prices by the summer on the back of loose fiscal and monetary policies and US dollar weakness.
He warned that although investors could buy more gold this year, the market would become "increasingly vulnerable" to a severe correction when the circumstances favouring investment disappeared.
He said: "As the macroeconomic environment gradually normalises, the gold market's dependence on investment will become all too apparent with a substantial price retreat at that point on the cards."
The surge in gold prices, from $250 an ounce in 1999 to last year's record, has depressed jewellery sales, traditionally the backbone of consumption. Gold was trading on Wednesday at $1,128 a troy ounce.
The global economic crisis has also affected demand, particularly in India, the world's largest buyer.
GFMS said jewellery demand had fallen by almost half since reaching a peak of 3,294 tonnes in 1997. Traders said gold prices needed to drop below $1,000 an ounce to ensure a revival in jewellery demand, as the currencies of some key consuming countries, such as India and Turkey, depreciated against the dollar, increasing the local cost of bullion.
On the supply side, China cemented its position as the world's biggest gold producer. A further fall in South Africa's output, down 5 per cent on the year, saw it relegated to third position behind Australia. It had been the top producer for more than a century until 2007.
Global mine supply rose 6 per cent to 2,553 tones, a six-year high, helped by a large jump in output from Indonesia, up 55 per cent to 146 tonnes following a recovery in production at Grasberg in Indonesia, the world's largest gold mine, jointly owned by Freeport-McMoRan.
GFMS said it expected mine supply to continue to rise in the first half of 2010, helped by a number of new projects that have entered production.
However, the most significant supply side change last year was the rise in scrap gold supply, up more than 26 per cent to a record 1,541 tonnes, as consumers recycled unwanted jewellery in unprecedented quantities.
GFMS said that further growth in scrap supply might be possible but the consultancy noted that industry contacts had started talking about the possible depletion of near-market supplies.
Net sales from central banks dropped 90 per cent to 24 tonnes in 2009, the lowest level in more than two decades.

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MarketWatch: Personal Finance Daily , January 14, 2010


Personal Finance Daily
JANUARY 14, 2010

Thursday's Personal Finance stories

By MarketWatch

Don't miss these top stories:

One of the consequences of having an employer-based health-insurance system is that for a lot of workers those health benefits are really the ties that bind. When changing jobs means changing health plans, you can crimp a lot of labor-market movement.

That's especially true for folks who might want to consider striking out on their own but hold back because the insurance cost could well be unmanageable -- say, if you have a large family -- or coverage could be difficult, if not impossible, to get -- say, if you have pre-existing conditions like diabetes or heart disease, as millions do.

In that context, health-care reform may be the great liberator. If coverage were readily available in a public plan (gasp!) or even some sort of market exchange and if pre-existing conditions were no factor, how many more people would indulge their entrepreneurial spirits? And how much better would that be for the economy? The answer is pretty much speculative, but intuition tells you the impact would be positive.

All it takes is freeing just one person who turns out to be the next Gates or Jobs.

-- Steve Kerch, assistant managing editor/personal finance


How many jobs will health reform unlock?

If a health-care overhaul becomes law more people may feel emboldened to start businesses or change jobs because they'll no longer fear having to go without health insurance.
See Vital Signs.

Checklists, complexity and health reform

Author and cancer surgeon Atul Gawande talks about the role of the humble checklist in managing complexity and what incentives may work in health care now that it's being reformed. Kristen Gerencher reports.
 Watch Video Report.

Daschle: Final vote on health reform likely within six weeks

Comprehensive health-reform legislation is no less politically polarizing and difficult to achieve now than it was during the last major attempt in 1993-94, but a final vote is likely "within the next month or six weeks," former Senate Majority Leader Tom Daschle said Wednesday at the J.P. Morgan Healthcare Conference in San Francisco. As Democrats try to cobble together a compromise among different provisions in the House and Senate bills, Daschle weighed in with his predictions for what a final bill will and won't contain based on the how much agreement he perceives on the various measures.
See Health Matters Blog.

Organogenesis CEO on fast growth

Geoff McKay, CEO of Organogenesis, talks about the regenerative-medicine company's wound-healing products, its fast growth and the potential implications of a health-care overhaul. Kristen Gerencher reports.
 Watch Video Report.


Foreclosures top record, and no end in sight

The number of U.S. residential properties receiving at least one foreclosure filing jumped 21% in 2009 to a record 2.82 million, RealtyTrac, an online foreclosure marketplace, reported Thursday.
See Mortgages.

More foreclosure trouble ahead

The foreclosure crisis is far from over, according to RealtyTrac's Rick Sharga. The company will release its year-end report on Thursday showing foreclosures rose 20% over the previous year. He talks with Dawn Wotapka about some trouble spots and the outlook for 2010.
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Fixed-rate mortgages head a bit lower

Average rates on fixed-rate mortgages dropped this week, with the 30-year fixed-rate mortgage averaging 5.06%, according to Freddie Mac's weekly survey of conforming rates, released on Thursday.
See Mortgages.


Look who's peeking at your paycheck

You may think your income is private information. But the credit bureaus may have your number. And starting in February, your income -- as estimated by the bureaus -- may be used to help determine whether you get a new credit card.
See Consumer Watch.

Scoring secondhand Super Bowl tickets

Not so long ago, football fans looking to buy a Super Bowl ticket turned to scalpers, ahem, ticket brokers, who sometimes skirted the law or traded in counterfeits and fraud. Stories abounded of fans paying thousands of dollars only to find the seller couldn't deliver on that "guaranteed" seat. Talk about a quarterback sneak.
See Sports Watch.


Stock funds still below pre-crash levels

As a new year begins, many stock fund managers are celebrating 2009's outsized gains. But while the industry had its best results in 50 years, once 2008's performance is included more than 97% of all stock funds still show a loss.
See Fund Watch.

ETFs make inroads with 401(k) investors

Exchange-traded funds have been the hot thing in the investment world these days, but not among retirement plans. That may be changing, as ETFs finally are gaining a foothold in the 401(k) retirement-plan market.
See ETF Focus.

ETF assets top $1 trillion

Exchange-traded funds are now a trillion-dollar business, according to a report by BlackRock.
See ETF Focus.

Vanguard Windsor II gets a sixth manager

Yet another cook is stirring the broth at Vanguard, as one of its most popular funds adds another manager to the five it had.
See Fund Watch.

On California, don't believe the negative talk

As I've said before, I think fears about California's fiscal stability are greatly overdone. A lot of this commentary is really political rather than economic.
See Brett Arends.

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