One report estimates that the tech giant will require a staggering amount of gold to produce the coming iWatch.
Your News to Know is back with this week’s top news stories and critical reads regarding gold and precious metals. Stories this week include: The value of gold could spike to $1,700 an ounce next year, Apple may buy as much as a third of the world’s gold to produce the coming iWatch, and with a change in local taxes, Indian gold imports might soon surge.
Analyst: The price of gold could spike to $1,700 an ounce in 2016
A recent article from MarketWatch reports that we are likely to see a significant increase in the price of gold as early as the middle of 2016.
This recent prediction runs counter to others, which have called for gold to increase in value further into the future. When talking to CNBC in a recent interview, Bank of America Merrill Lynch commodities analyst Francisco Blanch estimated that we would need to wait around two more years to see gold go past $1,500 an ounce.
But Chintan Karnani, chief market analyst at Insignia Consultants, now believes that gold will “see another parabolic bull run from July 2016”, and urges investors to “have the patience and not get scared by more price falls” as he predicts that gold could go upwards of $1,700 an ounce in the second half of 2016. He feels that this spike price will be facilitated by the expected weakening of the dollar before the U.S. presidential elections.
Several economic factors are seen as the cause for the upcoming gold price surge. Aside from bonds losing their safe-haven status due to debt levels, Brien Lundin, editor of the Gold Newsletter, pointed out several other reasons for the positive outlook on the price of gold, saying that “eventually, uncertainty in currencies, negative interest rates overseas and, above all, the mountainous levels of debt amassed by Western economies and Japan will make a much higher gold price inevitable.”
Is Apple about to buy a third of the world’s gold?
Early reports indicate that Apple might soon purchase a staggering amount of gold to meet production demands for its iWatch, potentially buying one third of the precious metal currently available in the world, according to MINING.com’s Cecilia Jamasmie.
The technology giant will need such an amount of gold as they look to mass-produce their newest technological marvel called the Apple Watch, or iWatch, a so-called ‘smartwatch’ with various futuristic features usually reserved for devices like smartphones and tablets.
Some reports speculate that every iWatch model will have an 18-karat gold case that should be “twice as hard as standard gold”, with TidBits’ Josh Centers estimating that two troy ounces of gold will be used in each of the watches. If this is indeed the case, Apple will need 746 tons of gold a year – thirty percent of the world’s annual production – in order to achieve their goal of producing over a million units every month.
Jamasmie concludes that, if the estimates are true, Apple “may soon become a major player in the world’s luxury watch market, grabbing about half of it.”
Gold imports in India expected to increase following absence of tax reduction
Bloomberg reports that Indian imports of gold are expected to see an increase in the wake of Indian Finance Minister Arun Jaitley surprising financiers worldwide by refuting expectations of a tax cut. A survey conducted by Bloomberg in February found that seven out of ten jewelers and analysts predicted a tax cut, as did the majority of the Indian population.
Bloomberg spoke to Indian trader Rajesh Mehta, who told them that “overseas purchases may jump to 100 metric tons in March from about 25 tons in February as jewelers and traders, who delayed purchases in anticipation of the tax cut, replenish stockpiles,” noting that there wasn’t a lot of importing in the last month as “everyone was waiting for the duty changes.”
The tax was originally introduced in 2013 in order to combat a massive account deficit that was directly tied with excessive importing, as well as to strengthen the Indian currency, the rupee. The measures were successful as India saw its deficit reduced to $32.4 billion from $87.8 billion, allowing the government to cease forcing importers to sell twenty percent of their purchases for re-export.
An upcoming religious festival in India, the Akshaya Tritiya, is also expected to significantly increase imports as gold demand in the country rises; Indians make heavy use of jewelry and gold in particular during many such important events. “With Akshaya Tritiya festival around the corner, imports will only rise next month,” Gitanjali Gems Ltd. chairman Mehul Choksi confirmed over the phone with Bloomberg.
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