Diamond News Archives
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TOKYO/LONDON (Reuters) - A worrying sign of inversion in the U.S. Treasury bond curve is dulling the appeal of the developed world’s highest-yielding bond market for foreign investors.
Overseas investors are reviewing their investments or shunning Treasuries as rates at the short end rise above those at the longer end and make it unprofitable for holders of these bonds to hedge their currency risks.
The difference between short- and long-term bond rates, or the yield curve, has contracted in recent weeks as rising U.S. interest rates meet growing doubts the world’s biggest economy may be slowing down, weighing on longer-dated yields.
And as short-term yields move higher than longer-term yields, the cost of hedging exposure to the U.S. dollar has gone up.
“There is the whole issue of hedging costs. That is the one thing that was inconsequential at the start of the year but now it is sizeable,” said Paul O’Connor, head of multi-asset at Janus Henderson in London, whose firm manages $378.1 billion in assets.
“You are knocking off a substantial part of U.S. yields when you buy from the UK perspective and hedge back that exposure. When we buy government debt, we always hedge it. You don’t want to take the FX risk,” he said.
The U.S. Federal Reserve has raised rates eight times since late 2015 and looks set to hike them again next week even as other global central banks stay shy of normalizing policy, causing a significant gap to open up in short-dated interest rates.
The European Central Bank and the Bank of Japan have both kept interest rates below zero percent, while the Bank of England has raised rates only twice from its record low near...
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(IDEX Online) – ALROSA sold $266.6 million of rough diamonds in November, and $4.1 billion worth in the first 11 months of 2018.<?xml:namespace prefix = "o" ns = "urn:schemas-microsoft-com:office:office" /?>
ALROSA's total sales in November of rough and polished diamonds were down 18% on the year to $274 million, with polished diamond sales of $7.4 million.
Meanwhile, total diamond sales in the January-November period increased by 3.7% on the year to $4.2 billion, polished diamond sales of $90.4 million.
"Diamond sales in November were 13% higher by value and 25% higher by volume against October this year," said ALROSA's Deputy CEO Yury Okoemov. "This may be indicative of strengthening demand for low-cost small-sized rough diamonds, which has been declining over the past few months. However, it is too early to make final conclusions. We still see a lot of potential for an increase in demand for rough diamonds from the Indian diamond-cutting sector, which is still having trouble with access to credit."...
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It’s time for our roundup of the big investment banks and where they predict the gold price will go in 2019. Their forecasts, while as fallible as any others, are worth paying attention to for one reason.
These banks control enormous amounts of capital, so keeping an eye on where they stand vis a vis the gold price is worth monitoring.
So, presented here without further commentary, is a sampling of current institutional views on gold:
Goldman Sachs
Goldman Sachs calls late-2018 gold prices ‘extremely attractive.’ "If U.S. growth slows down next year, as expected, gold would benefit from higher demand for defensive assets," Goldman said. Their most recent 2019 price target was $1,325/oz.[1][2]
JPMorgan Chase
“We see gold likely repricing lower through the middle of next year, at which point the Fed’s policy will move into restrictive territory. The curve will invert, the expansion will slow and expectations of Fed easing will build. At this juncture, we would expect real rates to move lower and gold’s fortunes to reverse, as gold tends to benefit from consistent drop in real yields during the lead up to recessions and thereafter.” 2019 gold price forecast: $1,294/oz[3].
Credit Suisse
“The USD has on average depreciated in the latter third of past expansions but there is a lot of variation across cycles, so this is far from certain. In contrast, commodities and especially gold have tended to appreciate consistently.” 2019 gold price forecast: $1,250[4]
BOFA Merrill Lynch
“Gold is set to surge over the next year as concerns deepen about the widening U.S. budget deficit and a tariff-driven trade...
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Gold is looking interesting.
Fundamentally, it shouldn’t as the Fed is tightening the screws on liquidity, the ECB is ready to stop the printing press, and international reserves continue to decline.
Check out the chart.
Higher lows since August, a breakout of a crude cup-and-handle formation, and what looks like the coming test of the 200-day at 1257, which has rejected the gold price over the last year almost as many times I was in high school asking girls out on dates.
Could be gold is sniffing out an escalation of the U.S.-China conflict or it could be something altogether different.
Chinese media reports that the situation in the South China Sea is expected grow more intense over the coming year, with one senior military official also declaring that China should be prepared to attack United States naval vessels, should the U.S. violate Chinese “territorial waters.”
Dai Xu (戴旭), who is President of the Institute of Marine Safety and Cooperation, as well as a PLAAF Air Force Colonel Commandant, was quoted by the tabloid Global Times saying the following.
“If the U.S. warships break into Chinese waters again, I suggest that two warships should be sent: one to stop it, and another one to ram it… In our territorial waters, we won’t allow US warships to create disturbance.” – Taiwan News, December 9th[1]
Double yikes.
Hope Mike Pence and John Bolton, who appear to be driving a Two-China Policy in the administration, at least to us, are reading the above.
Don’t say we didn’t warn you about a hotter Taiwan Straight, way back before it came on the radar. See here[2] and here[3].
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(IDEX Online) – Lucapa Diamond Company says that diamonds from the Lulo mine in Angola will feature in an historic inaugural international tender under Angola’s new diamond marketing laws recently approved by the President of Angola, Joao Lourenco, and the country's Council of Ministers.<?xml:namespace prefix = "o" ns = "urn:schemas-microsoft-com:office:office" /?>
Sociedade Mineira Do Lulo, of which Lucapa is a partner, will showcase and sell seven large and exceptional Lulo diamonds that it has in inventory through an exceptional stone tender to be held by Angola's state diamond marketing company Sodiam in Luanda next month.
The tender will mark a significant milestone for the Angolan diamond mining industry, being the first Lulo diamonds offered for sale at international tender under Angola’s new diamond marketing policy.
The Lulo partners, in conjunction with Sodiam, will invite major international diamantaires and large stone manufacturers to participate in the inaugural tender of Lulo’s exceptional diamonds.
The new diamond marketing policy is among the measures being introduced by Lourenco with the aim of increasing foreign direct investment in Angola’s diamond sector.
The seven Lulo diamonds to be offered at tender include Type IIa D-color white gems of up to 114 carats and a 46-carat pink (pictured above). These diamonds were held in inventory by SML in anticipation of the new marketing policy.
The Lulo partners had originally expected the diamonds would be sold in the December quarter. However, while meeting the timetable was achievable, it has been agreed that significant additional buying interest would be generated by holding the inaugural international tender in January 2019, when diamond pricing is traditionally stronger.
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