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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Two Critical Gold Events Around The World

Two potentially big stories for gold are unfolding right now. In disparate parts of the globe.

First in terms of gold supply. In the world's fifth-largest bullion producer: Peru.

Reports late last week from the Peruvian government show another notable decline in monthly gold output. With production for May falling 24.6% compared to the year-ago period. Equating to a loss of over 111,000 ounces for the month.

The drop in output continues a trend we saw the previous month. With April production figures down by over 116,000 ounces--or 26%--compared to April 2013.

This appears to confirm a trend toward declining output from this critical supplier. With the recent numbers pointing to a potential shortfall from Peru of around a million ounces for 2014 as a whole, as compared to last year.

That's not a massive amount in a global sense. Representing about 1% of worldwide gold production. But it would tighten supply--helping put upward pressure on prices.

On the other side of the world, bullion demand could also get a shot in the arm. Within the next 24 hours.

That's because of new budget measures set to be announced in India tomorrow. Where speculation is running high that the recently-elected federal government will finally ease gold import restrictions.

The local press quoted an unnamed source this week as saying that the budget will likely involve a reduction of import duties on gold. With the source saying, "We are looking at 6% [import duties] for sure."

That 6% would be a big improvement for gold buyers. With current import taxes running a hefty 10% on gold bars and 15% on gold jewellery. The source further told the press that the new budget will either announce an immediate cut, or outline a path toward such.

Either case would be positive for demand in India, the world's second-largest gold buyer. The budget will be officially announced at 11 am on July 10 (it's 7 pm, July 9 in New Delhi as I write)--keep an eye out for a gain in gold prices on any positive announcements here in the next 24 hours.

Here's to bullish news,

By Dave Forest


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