The US Mint adopted its numismatic gold coin pricing policy on January 12, 2009. The policy categorically states that the Mint can align the prices of gold and platinum pieces with the prevailing market prices of these metals, adjustable on a weekly basis. Earlier, the price adjustment used to be a long drawn process with the requirement for issuing a public notice before any such move. This procedure effectively took weeks, during which the trading in coins would remain suspended. Since the adoption of the policy, the Mint has adhered to it. Taking the procedure charted out in a notification published in the Federal Register, the average of London Fix prices over a week is used to determine the price adjustment for the collector’s pieces. However, on May 27, 2010, the authorities did not reduce the price of the gold coins in response to the decline in the London Fix gold prices.
Four days later, the Mint explained its action in a statement released on May 31, 2010. The official communication revealed that the price fixation of the coins is determined ‘primarily’ based on the Fed Register method, but not solely on it. Reiterating the mission of the pricing policy, the statement mentioned, “The new policy was adopted to ensure that the United States Mint is able to recover all costs associated with gold and platinum products, while keeping changes in prices to a minimum.” Apparently, the internal policy that comes into play only in some exceptional circumstances was invoked this week.
As per this rule, the Wednesday PM Fix is used as a reference point for assessing the trend with the view to keep the change in valuations to the least. If the average falls above the existing range, while the Wednesday Fix falls within the range, the prices will remain untouched. On the other hand, if the average is lower than the range, while the Wednesday Fix remains within the range, the prices do not fall. Such was the point in the case for the week ending with the AM Fix on Wednesday, May 26. The Mint also clarified that there exists yet another parameter for consideration. “Additional criteria based on the Wednesday PM fix address changes of more than one range, as well as spikes in the market, which could cause the average to be above the existing range, while the Wednesday PM fix is below the existing range, or vice-versa,” the statement mentioned.
Wednesday, June 30, 2010
Sunday, June 6, 2010
Analysts Predict Gold Prices Reach New Records in Third Quarter
Speakers at a precious metals conference put together by ETF Securities believe that gold prices are set for even more record highs do to the current monetary policy and issues over the current status of the euro.
HSBC analyst James Steel expects gold prices to exceed the present high of $1,248.95 with in the third quarter of 2010.
"If the issues that are affecting euro zone debt shift across the Atlantic ... that is when we would look for the dollar to weaken and for gold to (break higher)," Steel said.
Steel will on to say the the current US monetary policy is good for gold with supporting global commodities demand. The US monetary policy has reduced the opportunity cost of holding non interest bearing gold.
The euro has lost 15 percentage points to the US dollar in 2010 which has also increased the demand for gold, says Nicholas Brooks, head of research at ETF Securities.
"It seems across the board to be Europeans who are buying gold, whether it is coins or bars or ETFs," Brooks said. "The clear logic is that European investors are worried about the euro.
"The concern is what happens to the euro in the next three to five to 10 years," he added. "A lot of investors (are) looking at gold and commodities generally as an alternative."
"I don't think they are selling all their euros and buying gold, but a lot of conservative investors, very large investors, who before had never held any gold are now looking at gold."
Steele continued to add that, as long as, there are concerns about the euro than the strength of the dollar which usually impacts gold prices will not have any effect.
HSBC analyst James Steel expects gold prices to exceed the present high of $1,248.95 with in the third quarter of 2010.
"If the issues that are affecting euro zone debt shift across the Atlantic ... that is when we would look for the dollar to weaken and for gold to (break higher)," Steel said.
Steel will on to say the the current US monetary policy is good for gold with supporting global commodities demand. The US monetary policy has reduced the opportunity cost of holding non interest bearing gold.
The euro has lost 15 percentage points to the US dollar in 2010 which has also increased the demand for gold, says Nicholas Brooks, head of research at ETF Securities.
"It seems across the board to be Europeans who are buying gold, whether it is coins or bars or ETFs," Brooks said. "The clear logic is that European investors are worried about the euro.
"The concern is what happens to the euro in the next three to five to 10 years," he added. "A lot of investors (are) looking at gold and commodities generally as an alternative."
"I don't think they are selling all their euros and buying gold, but a lot of conservative investors, very large investors, who before had never held any gold are now looking at gold."
Steele continued to add that, as long as, there are concerns about the euro than the strength of the dollar which usually impacts gold prices will not have any effect.
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