Gold

Gold prices are usually guaranteed to generate considerable disagreement about future direction – it’s a metal with perennial bulls supporting an ever-higher price and equally committed bears who see no justification in a price much higher than the cost of production.

The current position is no different, with arguments for further price rises matched by those calling for falls. News that one of the biggest bulls, Paulson & Co. Inc., had sold some 1.1 million ounces held in the SPDR Gold Shares (GLD) ETF during the second quarter was matched by news that the wider ETF gold holdings saw losses of 402 metric tons of gold between April and June.

Not surprisingly, the gold price crashed to a near-three-year low of $1,180 a troy ounce at the end of June, according to the FT, but not as widely reported was the counterbalance to that news that as Paulson sold ETF holdings, he bought OTC gold swaps. Far from abandoning gold, Paulson was migrating to a more cost-effective strategy to access what he sees as an inevitable rise in the gold price given time.

FREE Download: The Monthly MMI® Report – covering the Precious markets.

News from the wider gold market, though, isn’t encouraging.

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Hedge funds and private investors have been burned in gold price falls this year, down 23% for the second quarter – its biggest decline since at least 1968, according to Reuters data – while since the beginning of the year it is down 29.5%.

In April, a dedicated gold fund managed by John Paulson was down about 27%, bringing the year-to-date decline to 47%. Since then it has slipped further.

But the hedge funds’ pain is the small buyers’ gain, it would seem, as falls in the gold price have encouraged buyers in the world’s largest jewelery market (India) to see falls as buying opportunities.

According to an FT article, gold imports in April and May surged to about 300 tons, about a third of the quantity imported in the whole of 2012. Rising gold prices had been eating into jewelry consumption; demand was down 30% from 2005 as the price rose inexorably in the intervening years, but the fall has made the metal more accessible and perceived by many as a bargain to be snapped up.

But the surge in imports has come at a most unfortunate time for India, and as a result, for the prospects of a recovery in the gold price.

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It’s curious, isn’t it?

Miners saw the fall in metals prices and most of them reacted promptly by cutting capex, in some cases production, and wherever possible, cash flow.

Cutting back on capital expenditure is not a short-term option. It can take years to reverse even a project slowdown, and to resurrect a mine project that has been closed can take five to 10 years. So if miners are battening down the hatches, they must be confident prices are not going to come back anytime soon, if you like that the super cycle is, at least for now, over.

If that is the case, it begs the question: why have producers not hedged their production at what could prove to have been historically high prices?

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The gold market really appears to be in a mess.

As widely reported in the media, the gold price plummeted during April, sparked by fears of an early exit or the tapering of the Fed’s quantitative easing program and then multiplied many-fold by the herd instinct, as speculative holders saw a price crash in the making and all rushed for the exit.

Conflict Minerals conference

You know the gold price if your company buys it – but how do you know if the metal’s conflict-free?

Prices have since recovered about half of the mid-month fall to around $1,468/oz, but are still way down on the start-of-the-year level of $1,700/oz. Comex speculative positions underline the lack of enthusiasm among investors – Standard Bank reports in a note to investors that net speculative length fell 72.0 tons.

Underlying moves were particularly bearish, with 32.5 tons unwound from long positions last week (slightly lower than the 35.8 tons shed the preceding week), and a disconcerting 39.5 tons added to speculative shorts.

The bank observed that the futures market was not convinced that gold could sustain its upward momentum.

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Ok, we’d hoped that would catch your attention.

Before you accuse us of being male chauvinists (we are no such thing!), it doesn’t matter whether you’re a man or a woman – if you’re working for companies that source different metal products, all that matters is that you know how best to comply with the conflict minerals rule, inside and out.

Conflict Minerals conferenceSo with just ONE WEEK LEFT to register for our unprecedented one-day conference on the topic, here are a few questions you may have that we can answer:

Q:  Won’t this SEC Conflict Minerals Rule be overturned anyway? I thought the National Association for Manufacturers brought a winnable lawsuit against the SEC…

A: Don’t count on it, bub. While NAM has challenged the rule, chances are not good that the rule will be overturned. MetalMiner recommends that companies continue on the path of planning and developing implementation solutions, as many of the experts we have spoken to do not feel the legal case will actually change the reporting obligation on behalf of publicly traded companies.

Q: All right, my company doesn’t really have a Conflict Minerals compliance process yet…where the heck do I start?

A: Don’t worry, you’re not alone. However, do you have accurate records covering whom to contact (not only name and location, but also personal email and direct phone number information) for every supplier you have used over the past 18 months? Gathering that info may be a good place to start. Alternatively, if you only source a handful of parts, and you know they contain at least traces of tin, tungsten, tantalum or gold, you can undertake a part-centric approach.

Q: How can my company efficiently track this process and streamline my whole supply chain?

A: Thomas Kase, the lead analyst for our sister site Spend Matters, is all over it. One word: technology. More words – here’s what you have to look at, according to Thomas:

  • 3rd Party Enrichment – parent-child linkages, insights & validations
  • Contracts – what you have committed to on the sell-side
  • Customers – what you are about to commit to on the sell-side
  • Inform, Train, Document – across all areas, internal and external
  • Products – and components, sub-components and ingredients to gradually audit your way to the source (certify your entire supply chain, not just your suppliers)
  • Sourcing – early and full visibility to the sourcing process and team to enable early upstream correction
  • Suppliers (i.e, your vendors) – their locations, parents, and subsidiaries, which individuals to engage with at each level, etc.

At Conflict Minerals EDGE, Thomas will present how various players in the technology solutions sphere, “from ERPs to point solutions and modules from suite providers, can get the job done.” The MetalMiner and Spend Matters team will also address what you should consider doing at the same time as you roll out a Conflict Minerals compliance initiative.

Q: Can I still register??!?!?!

A: You bet. Click here.

Q: But what if I can’t make it to Chicago on May 6?

A: MetalMiner has the most comprehensive conflict minerals resource section for manufacturers. Look for the “Conflict Minerals” tab on the top right side of our site!

“Do you know you source conflict minerals (tin, tungsten, tantalum, gold)?”

“Yes.”

“Do you know what you must do almost exactly one year from now?”

“Ummm…”

Yeah, these people aren’t ready either:

Source: IHS

That sample of electronics industry managers surveyed by IHS isn’t alone – in fact, if those in the electronics industry are behind, what does that say for the rest of us? Scary.

Here’s a follow-up poll, from EBN Network (a site covering the electronics industry supply chain):

Source: EBN Network

FULL DISCLOSURE: The one respondent who is “done and cracking the Champagne” – that’s me. I had to vote to see the results. (And I do always fancy myself cracking Champagne.) But in essence, not only is no one done; very few have even begun.

We at MetalMiner have known this for a while, and that’s exactly why we’re in the business of helping manufacturers become compliant.

How do we do that already? Check out our killer white-papers:

Need tangible tools, templates or solutions? Get them at our upcoming one-day conference:

Details and Registration

Conflict Minerals conference

* Also: SPREAD THE WORD! USE THOSE BUTTONS BELOW!!!

The spot gold price hit an intraday low of $1,493.35 (£972.40) per troy ounce on Friday, putting it 22.3 percent below September 2011’s intraday peak of $1,921.41, according to a Telegraph article.

As a bear market is said to be a 20-percent fall from its high, gold can be said to be a bear market, even when prices subsequently recovered to $1,505.20 later in the day they are still 21.7 percent below the peak.

Over the weekend, the slump has continued, with the Sydney Morning Herald reporting this morning that spot gold dropped as much as 3.9 percent to $1,425.75 an ounce today and was at $1,433.15 in Singapore.

gold price

Source: telegraph.co.uk

Gold appears to have been hit by three factors. Firstly, the US dollar is stronger on speculation that the Federal Reserve could end quantitative easing by 2014, and secondly, adverse comments by analysts, particularly Goldman Sachs, advised clients last week to short gold, lowering its 12-month forecast to $1,390 from $1,550, according the Telegraph.

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MetalMiner interviewed Jay Celorie, Global Program Manager at Hewlett-Packard and active participant in the EICC® (Electronic Industry Citizen Coalition) and GeSI® (Global e-Sustainability Initiative), regarding MetalMiner’s white paper, “The Definitive Guide to Conflict Minerals Compliance for Manufacturers.” Jay shared some of his thoughts on some of the key issues around conflict minerals, our paper and various approaches.

This portion of the interview continues from Part One, available here.

On Tin, Tungsten and Gold Supply Chains

“The electronics industry has been successful in recruiting many of the tantalum smelters to join the CFS Program. This was accomplished in part for many reasons.

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Neon-Alphabet_Study-O-Portable3TG, OECD, EICC, SEC, CFS, DRC…

Is this alphabet soup washing over you, scalding your skin, blinding your eyes?

We know how it feels. That’s why we’ve put together the definitive one-day conference for manufacturing professionals who source tin, tungsten, tantalum or gold-containing metals and materials – to answer all your conflict minerals compliance questions:

REGISTRATION DETAILS HERE!

Taking place at the Hotel Sax in downtown Chicago, from 8:00 AM to 5:00 PM (CDT), this conference focuses on in-depth solutions, not just idle chatter and boring PowerPoint presentations.

WHAT YOU’LL GET OUT OF IT:

Specific implementation tools, including

  • Checklists
  • Project plans
  • Templates
  • Technology maps and decision guides

Not to mention intimate discussions with the industry’s leading voices in conflict minerals compliance.

WANT TO BE PREPARED?

Download our recent free whitepapers:

Register NOW: Conflict Minerals EDGE

We recently caught up with Jay Celorie, Global Program Manager at Hewlett-Packard and active participant in the EICC® (Electronic Industry Citizen Coalition) and GeSI® (Global e-Sustainability Initiative), regarding MetalMiner’s white paper, “The Definitive Guide to Conflict Minerals Compliance for Manufacturers.” 

Intro: Sending an Economic Signal Toward Responsible Sourcing

A simple way to think about conflict minerals – and complying with SEC rules – is making sure that your economic signal is directed toward responsible sourcing. The EICC and GeSI organizations have provided a tool (the reporting Template) and a program (the CFS Program) to enable any company to accomplish this task.

From an industry perspective, we are focused on these efforts – the CFS Program, which validates conflict-free smelters, and the common reporting Template – a common data format to identify smelters in a company’s supply chain. Companies need to ask their suppliers to use these to identify their smelters and then ask those smelters to get on the CFS list.

If they are not on the CFS list, they must understand their customers may switch to smelters who are on the CFS list. Within the next few years, we expect to have a critical mass of CFS smelters and refiners for all four metals (tin, tungsten, tantalum and gold) that will enable electronics companies (at a minimum) to confirm they are sourcing conflict-free.

Below, Jay Celorie shared some of his thoughts on some of the key issues around conflict minerals, our paper and various approaches.

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