With gold withdrawals from the Shanghai Gold Exchange having reached 1,761 tonnes by November 14, and weekly withdrawals since the Golden Week holiday at the beginning of October averaging comfortably over 50 tonnes, China looks to be heading for an annual demand total (SGE gold withdrawals equate to overall demand) of comfortably over 2,000 tonnes again this year assuming these levels are maintained. Historically November and December are strong months for Chinese gold demand ahead of the Chinese New Year (February 19 2015), which suggests gold demand will remain strong through January and the first half of February too. Indeed should the current weekly demand levels hold up – the past six weeks have seen withdrawals from the SGE of 52 tonnes, 54 tonnes, 47 tonnes, 60 tonnes, 52 tonnes and 68 tonnes respectively – then we could be heading for an annual figure of around 2,100 tonnes. This is not far short of last year’s record of 2,199 tonnes as stated by the China Gold Association in its China Gold Yearbook released in September (of which 1,507 tonnes came from imports of gold bullion, 17 tonnes in dore imports from overseas mines, 428 tonnes of domestically mined gold thus leaving 247 tonnes to have come from recycled gold scrap. Figures are all from Koos Jansen, Nick Laird and the China Gold Association). Reading more China 2014 gold demand heading for 2,100 tonnes was first posted on November 25, 2014 at 4:59 pm.
Central Banks' Gold Buying in Spotlight as US GDP Beats Forecasts, Swiss Vote Looms, ECB Argues Over QE
GOLD PRICES fell and then swiftly regained $10 per ounce Tuesday lunchtime in London after better-than-forecast US GDP, trading back at $1200 data as central-bank gold buying policies again came under the spotlight. The world's largest economy grew 3.9% per year in the third quarter, while domestic US prices rose 1.4% – down sharply from Q2's inflation rate of 2.1%. World stock markets cut their earlier gains as the Dollar first jumped and then fell hard vs. the Euro. Ahead of next weekend's Swiss gold referendum – wanting all SNB gold held domestically, with a ban on ever selling again and new buying raising the metal to 20% of central-bank assets – French far-right party Front National has called for the same proposals to be applied at the Banque de France. Ukraine's central bank yesterday said last month's 35% drop in Kiev's reported gold holdings merely "optimized the composition of international reserves," raising the US Dollar and Euro shares to 70.3% and 15% respectively. Though much smaller, Ukraine had previously been buying gold alongside neighboring Russia for the last two years, adding some 15 tonnes as Moscow acquired 10 times as much to become the world's 5th largest national holder by the time this year's conflict over Crimea and now the Donbass regions broke out. Analysts at Deutsche Bank meantime, prompted by European Central Bank member Yves Mersch's comments on possibly buying gold as part of the ECB's new QE asset purchase scheme, say that "The idea has merit because of the possible sellers. "A program that targeted [private investment gold] holdings...especially in countries like Germany...would liberate dormant liquidity, some of which might even flow into consumption." "The [proposed Swiss] policy is barmy," agrees Financial Times columnist James Mackintosh, "but the idea of buying gold might usefully be deployed by the European Central Bank as the most politically acceptable, if least effective, form of large-scale quantitative easing" because it would appeal to "German conservatives". President of Germany's Bundesbank, and staunchly anti-QE to date, Jens Weidmann yesterday told a convention in Madrid that "While monetary policy can influence short-term demand, it cannot permanently boost growth prospects. "The same is true, unfortunately, for fiscal policy – even if additional fiscal space [ie, borrowing capacity] were available." Bond yields on the debt of several Eurozone members states today fell to new all-time lows on what analysts called "speculation" that the ECB will begin QE at next week's meeting. Reviewing central-bank bullion policies, "Gold's reputation as an inflation hedge, insurance against financial disaster and as a good diversifier...[meant that during the 2008-2012 crisis] the official sector rapidly switched from being a net seller of gold to a net buyer," says a special report from David Jollie at Japanese trading house and London market maker Mitsui Precious Metals. "We still expect central bank buying to be a net contributor to demand for gold in 2015," Jollie adds, but "we suspect that falling oil prices will lower gross purchases next year." Crude oil rose Tuesday, recovering 5% from this month's new 4-year lows as members of the Opec producer nations' cartel met in Vienna to discuss cutting output quotas in a bid to stem further losses.
Recent polls suggest the November 20th referendum does not have sufficient popular support â€“ and, therefore, the markets are not expecting any change in the Swiss central bankâ€™s gold policies or lasting impact on the metalâ€™s price.
Gold Price Drop "Sparked Strong Asia Demand", Reducing London Stockpiles & Sending Borrowing Cost to 15-Year High
GOLD PRICES slipped half-a-per-cent below last week's finish in Asia and London trade Monday morning, holding below $1200 per ounce as world stock markets rose in quiet trade ahead of the US Thanksgiving holidays. Gold's recent drop to new 4.5-year lows beneath $1200 per ounce has seen "a strong physical demand response from Asia" says Jonathan Butler at Japanese conglomerate Mitsubishi in his weekly analysis, pointing to trade data from Switzerland – the world's major producer of smaller gold investment bars. "The west to east trade in [large, wholesale] Good Delivery bars, after conversion [to kilobars] at Swiss refineries, is alive and well," says Butler, "and is therefore reducing the available supply of good delivery metal" in London. That move, first noticeable during the 2013 gold price crash, is again "helping push gold forward rates into negative territory", meaning that would-be lenders of gold bullion are demanding better rates of return from borrowers needing metal at short notice. Monday morning saw the indicative GOFO rate, as reported to the London Bullion Market Association by its large market-making members, reach new 13-year extremes for 1-month loans and new 15-year extremes for 12-month deals. But so far, notes Butler at Mitsubishi, this 'tightness' in the gold lending market "has yet to spill over into the outright price." Chinese gold prices moved over 1% higher in Shanghai today, holding a premium to London quotes of $2.40 per ounce, and so inviting wholesalers to buy and ship Western metal to Asia. Retail investors in South Korea are growing their bullion investments, local press reports, with 3 major banks now offering gold bars in-branch. Surging gold imports to India – now the world's top consumer nation once more, according to data from market-development organization the World Gold Council – continue being blamed for a rise in the country's current account deficit with the rest of the world. To try and meet domestic demand without growing imports, the Titan jewelry group – part of the giant Tata Industries – is relaunching its Tanishq brand 'gold harvest' scheme, says the Hindu Business Line. Inviting existing gold owners to put their gold on deposit – freeing it for re-sale – has so far failed to mobilize India's huge private gold holdings. But "the return [offered to customers] now is around 12%," says Titan's chief executive for jewelry, C.K.Venkataraman.
There's no need to keep so much gold in New York, says the DNB. The cold war's over... SO the Netherlands' central bank has shuffled its global gold holdings, moving 122 tonnes from New York to Amsterdam, writes Adrian Ash at BullionVault. That's a big chunk of metal. Why pay the shipping costs? It makes sense for two reasons. First, as the DNB says in its news release, this move makes its holdings "more balanced" by location. Just less than one-third is now held at home, with another third still in New York...plus 20% still in Canada and roughly the same unchanged in London. You can do the same with your own personal gold reserves using BullionVault. Only better, and without the transport charges. Instead of four vaults on two continents, you can vault market-ready Good Delivery gold in 5 locations across three continents (London, New York, Singapore, Toronto, Zurich). You'll only pay 1 monthly storage fee ($4 minimum or 0.01% by value). Selling a little in one vault to re-buy in another will cost you a maximum 1.0% (half-a-per-cent dealing commission x 2). That's considerably less than air-freight and insurance...never mind insured shipping by sea (the chosen route according to this site claiming it was reported on this TV channel. Like the DNB or anyone involved will ever say). And using BullionVault, your full allocation is then proven each day...for your study and confirmed by independent, expert scrutiny...by our public Daily Audit. Second, Friday's DNB news heads off popular pressure to move gold in future. A growing call under the banner "Bring our gold home!", this has already forced Germany's Bundesbank to look stupid and weak in requesting very slow shipments to Frankfurt from the New York Federal Reserve. The same pressure has also helped seal the likely failure of next week's Swiss referendum on SNB holdings. Because voters sense that...while adding gold reserves might be wise...holding them all at home and vowing never to sell them isn't so smart. Fact is, only despots and pariahs hold all their gold reserves at home. (Oh, plus the UK and US Treasury departments. Ha!) Because keeping all your gold at home makes sense if a government fears global sanctions...or foreign invasion...or civil war. Gold, as even ex-Fed chairman Alan Greenspan knows, is money of the last resort. The ultimate payment, gold money was invented...and has since returned...in times of mistrust and violence. Because it can be used when soveriegn paper, social credit and other debt-based tokens are rejected. Think of Nazi Germany buying food supplies in WWII...or Great Britain and Russia buying materiel from the United States when a Nazi victory, and the worthlessness of Sterling and Roubles, looked all too possible in 1941. Hoarding all your central-bank gold inside your own borders...rather than having it ready to use as payment in a global gold-dealing centre...suggests you expect to need its value at home. Which isn't a happy outlook for your citizens. Think Venezuela under Hugo Chavez...or Libya in the dying days of "Mad Dog" Gaddafi. Private individuals can learn from their bad example, we believe. Because if you're right to buy gold against an economic or social meltdown at home, then you're certainly right to keep the bulk outside your own borders. Yes, the DNB must be seen to acknowledge and agree with popular demand for it to keep a bigger chunk of the Netherlands' gold reserves at home. But a spokesman quoted by De Telegraaf – which appears to have broken Friday's news at least an hour ahead of the DNB's announcement – is surely tempting fate by saying "It is no longer wise to keep half of our gold in one part of the world." Meaning on a different continent across 3,000 miles of cold ocean. "Maybe that was desirable during the Cold War, but not now." Well, maybe. For your own personal reserves, you might like to choose a secure jurisdiction which you can flee to...or from where you can receive the cash proceeds from selling a little...if exchange controls block you from buying gold at home, or moving money abroad, in future. The 5 locations which BullionVault offers all have a strong, if imperfect history of defending personal property rights. London, New York and increasingly Singapore are also world trading centres for gold...places where Good Delivery gold can be instantly sold for maximum value. But like the Dutch National Bank, it's also worth keeping some of your gold at home as well...just in case you do need "money of the last resort" to escape a collapse in domestic banking or law and order. Again, you can get that insurance in place at very low cost using BullionVault. Learn more about receiving a 100 gram Pamp Fortuna gold bar...delivered in time for the Christmas holidays.
Gold Price Jumps Above $1200 on China Rate Cut, Hits 4-Week Euro High as Draghi Vows "More Inflation", Japan Risks "Losing Control" of Yen Decline
GOLD PRICES popped to the highest level this month Friday lunchtime in London, trading back above the $1200 level after the People's Bank of China cut its key interest rate for the first time in two years. The unscheduled change in PBoC rates – down to 5.6% for 1-year loans – saw world stock markets and government bond prices rise, pushing longer-term market rates and yields lower. Commodity prices also rose, rallying 0.7% on the Bloomberg Composite index to stand unchanged on the week as Brent crude oil shot back to $80 per barrel – a four-year low when first hit last month – and iron ore bounced from new 5-year lows. "There is a decent amount of open interest around the $1200 level for Monday's Comex option expiration," says Germany's Commerzbank in a note, pointing to speculative betting on the direction of gold prices. "An initial pullback is likely before the next leg of an up-move," says new technical analysis of gold price charts from French investment bank and London market maker Societe Generale. The Euro currency today sank more than 1 cent to near this month's new two-year lows versus the Dollar after European Central Bank president Mario Draghi vowed to increase QE money creation "if necessary" to beat deflation in the 18-nation single currency union. "We will do what we must to raise inflation and inflation expectations as fast as possible," said Draghi in a Frankfurt speech given in a personal capacity, rather than as ECB chief. "If current policy is not effective enough...we would broaden even more the channels through which we intervene, altering the size, pace and composition of our [QE] purchases." Draghi's comments help the gold price in Euros touch 4-week highs above €970 per ounce. The Euro also sank 1.5% against the Yen, sliding from new 6-year highs, after Japan's finance minister Taro Aso said the decline in the Yen – aimed at boosted export sales and spurring domestic inflation – has been "too rapid". Raising QE money creation to new record sums, the Bank of Japan risks losing control of the Yen's decline, warns FX strategist Steven Barrow at Standard Bank. Because "we can't believe that the BoJ can continue to buy ever-increasing proportions of the nation's debt without there being some sort of consequence." Draghi's comments will "unequivocally increase the market's focus on EUR and EUR shorts [ie, bearish bets on the currency]," says a note from Citigroup analysts, "ahead of the December 4 policy meeting." China's rate-cut news came after the close of Shanghai gold dealing for the week. But trading was solid in the main Au(T+D) contract, with premiums above global quotes reaching $3 per ounce. With Ukraine's central bank meantime reporting a 35% drop in its gold bullion reserves – most likely to subsidize imports of natural gas, according to commodity analysts – the Dutch National Bank said today it has "adjusted [its] gold stock location policy", moving 122 tonnes from New York to Amsterdam the better to "balance" its holdings and boost "public confidence".
Russia Continues to Buy Gold as Price Recovers $20 Swiss "No" Drop, Most Gold Miners Now "Under Water"
BUY GOLD bids rose Thursday morning in London, recovering most of yesterday's $20 swing as the Dollar slipped on the currency market after mixed US inflation data. Consumer prices slipped from September faster than forecast last month on the Bureau of Labor Statistics' index. But on the seasonally adjusted index, and excluding "volatile" food and fuel costs, annual inflation rose to 1.8% near the upper-end of the last two years' pace. Wednesday's minutes from the latest US Federal Reserve meeting "left no-one in any doubt," reckons one bullion-market analyst, "about their will to continue normalizing monetary policy." "The precious metals will continue," says another, "to be guided by Dollar moves on the whole. "Gold seems to have found a ceiling for the time being around $1200 and a floor around $1175." Wednesday's $20 drop and bounce came on opinion polls showing that Swiss citizens are set to vote against all 3 questions in next week's referendum, turning down plans to cap immigration, raise taxes on wealthy foreign residents, and forced the Swiss National Bank to buy gold and never sell it again. Russia's central bank continued to buy gold in October, new data showed today, adding 1.6% to reach 1,170 tonnes of bullion reserves. Central-bank governor Elvira Nabiullina announced to the lower house of Russia's Duma on Tuesday that the state has added 150 tonnes of gold so far this year. India's surge in demand to buy gold, meantime, has not yet led the government to decide on fresh anti-import rules, a Finance Ministry spokesman is quoted today by the Financial Times – contradicting Wall Street Journal and Reuters quotes from a "source" earlier this week that new curbs were due "as soon as [last] Tuesday." Gold industry trade body the All India Gems & Jewellery Trade Federation (GJF) asked its members to cease selling investment coin and bar on Wednesday. The government "have not taken the final decision so far," the FT quotes the Finance Ministry's D.S.Malik. Prices to buy wholesale gold through the Shanghai Gold Exchange today edged lower in Yuan terms, but Chinese premiums – over and above comparable London quotes – rose to a 1-week high of $2.60 per ounce by the close of trade. South African-based Gold Fields (JSE:GFI) – the world's 7th largest gold mining business – meantime posted third-quarter profits down 22% from the spring, but said it could "ride through" this month's price drop to new 4.5-year lows because its all-in break-even cost is $1090 per ounce, including repaying debt. Market prices to buy gold bottomed on 7 November at $1132 per ounce. "The industry [however] by and large is under water," CEO Nick Holland went on, forecasting "further writedowns" and "curtailed production...but it will take some time to filter through." Major refiner Johnson Matthey (LON:JMAT) today said its underlying profits grew 10% year-on-year in Q3, but revenues for its precious metals business fell by one third.
Changes in gold are sometimes driven upward not by relative weakness in the U.S. dollar to other fiat currencies, but, instead, by flight from all paper currencies.
Gold Prices Lose "Psychologically Important" $1200 Level Ahead of US Fed Minutes, Swiss Gold Poll Also Eyed
GOLD PRICES recovered but then slipped again below what analysts called the "psychologically important" level of $1200 per ounce Wednesday morning in London, ahead of US Federal Reserve minutes from the central bank's latest policy meeting. "Participants most likely are also awaiting news on the latest Swiss gold referendum poll" – due at 5pm European time, with the vote itself on Sunday 30 November – says another trading desk. After new factory-gate data showed US producer prices rising 1.7% annually in October, tomorrow brings the latest consumer price index. "I see symmetry [in the 2.0% inflation target] as important," Minneapolis Fed president Narayana Kocherlakota said yesterday, repeating a speech made last week after publishing his "dissent" from the October vote, which kept interest rates at zero, tapered the last of the central bank's new monthly QE asset purchases, and again pointed to rate rises sometime in 2015. "Without [stressing] symmetry, inflation might spend considerably more time below 2 percent than above 2 percent...creat[ing] doubts in households and businesses...unmooring inflation expectations...and reduc[ing] the effectiveness of monetary policy as a mitigant against adverse macroeconomic shocks." World stock markets meantime rose ahead of the Fed minutes on Wednesday, while US Treasury bonds fell – edging yields higher – and industrial commodities bounced 0.5% but grains slipped amid the ongoing record US harvest. Gold's price rally through $1200 on Tuesday was "probably due to the covering of short positions" by bearish traders, reckons Germany's Commerzbank. "We didn't see much," says Swiss refinery group MKS, "in the way of Chinese physical demand to support the market today." Lower Shanghai volumes, however, contrasted with a rise in Chinese gold prices relative to London quotes, recovering to $1.50 per ounce from Tuesday's two-week low. "The recent recovery in gold prices stalled on Tuesday," says a technical chart analysis from Swiss bank and London market maker UBS, pointing to "resistance at $1207.95" – the 62% retracement of the last 6 weeks' drop. "Now, we expect the bearish trend to resume." Further out, however, analysts at Standard Chartered today raised their gold price forecasts, targeting a rally to average $1245 in 2015 and then $1330 the year after. "The current backdrop for gold prices," says the note, "is one the weakest ever because of the multiplicity of factors supporting a bearish view. "However, we see the tide turning...most particularly [because] Dollar bullishness will likely fade." With the Fed's meeting notes due later on Wednesday, the US Dollar today hit fresh 7-year highs against the Japanese Yen, but retreated from an earlier rise vs. the Euro to touch this month's low at $1.2570 for a third time.