Even though top gold miners were expecting declines in their gold production this year, analysts said this would have only a minimal impact on prices. You should expect some changes,but not anything drastic. Keep an eye out, the top precious metals IRA companies should let you know if anything goes to far in either direction (price of gold goes up or down).
That’s because prospects of lower output have already been built into the price of gold, which was fetching $1.234 an ounce in the bullion market in New York Thursday afternoon, according to the analysts.
Barrick expects to produce 8.1 million to 8.4 million ounces of gold in 2015, down from 8.64 million in 2014. Newmont forecast 2017 sales of 5.2 million to 5.6 million ounces, down from 5.87 million a year earlier.
Mike Guido, director of hedge fund marketing at Societe Generale, said a decline in mining production would just be another added incentive for investors to buy gold. The same goes for the trends of people putting their retirement savings into precious metals IRA.
“If gold production does drop for the year, that could be one of the moving parts that add to that fuel,” said Guido, adding, however, “I don’t think it’s going to be a main driver.”
Market price of spot gold and precious metals IRA accounts
Guido said the market had a “very strong consensus to see higher prices,” largely boosted by geopolitical tensions, expectations that the U.S. dollar would weaken further, and strong investment demand such as the continued inflow to gold exchange-traded funds.
Stephen Platt, an analyst at Archer Financials, said gold production had really not kept up with booming demand, and that the expectations for lower supply are already reflected in the price of gold.
“It has already to some extent helped keep the market tighter than you would have expected. Given the strength to prices. I think to some extent it has already discounted,” Platt said.
Global gold demand in fourth-quarter 2016 climbed nearly 6 percent year-on-year, bolstered by growing investment interest and improved jewelry consumption, according to trade group the World Gold Council. Now everyone that did an 401k to Gold IRA rollover is on their toes to see where the price of spot gold is going to go.
GOLD DE-HEDGING and IRA accounts
Gold miners, on the other hand, accelerated their de-hedging of gold production to take advantage of the higher prices.
Spot gold has jumped nearly 12 percent since it hit a low of $1,112.90 an ounce in early January.
Barrick on Thursday said it had completely eliminated its fixed-price gold hedge contracts, more than two years ahead of its target date. A Newmont spokesman said that the company had a non-hedging policy on gold.
Bruce Dunn at Auramet Trading noted that gold miners’ lower production forecast could be bullish to prices.
If Newmont and Barrick continued to collapse their hedge books, or ran into any problems with production, it would definitely support the price of gold, Dunn said.