This Month in Gold – April 2013

Argentinians Rushing to Gold
Bloomberg – An escalating demand for gold in Argentina has exhausted the scrap stores of Banco de la Ciudad de Buenos Aires. Banco Ciudad became Argentina’s only gold trader after President Cristina Fernandez de Kirchner banned purchases of 99.99% pure gold for savings last July. To avoid this restriction, the bank sells sells gold products of 99.96% purity. Investors are rushing to buy them to protect the value of their savings against an estimated inflation rate of 26%. Thanks to ongoing peso printing, analysts expect the currency to depreciate 12.9% by year-end. Record amounts of gold futures contracts are also being sold as investors flee the falling value of both peso-denominated bonds and the Argentinian government’s dollar-denominated bonds. Even though Banco Ciudad gold is not recognized internationally, and the spread between buying and selling the gold is 35%, Argentinian gold buyers have already seeing good returns compared to peso-holders.
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Russia, South Africa to Create “OPEC-Style” Platinum Bloc
Bloomberg – With about 80% of platinum group metals (PGM) reserves, Russia and South Africa are planning to create an OPEC-style trading bloc. Russian Natural Resources Minister Sergey Donskoy said, “Our goal is to coordinate our actions accordingly to expand the markets. The price depends on the structure of the market, and we will form the structure of the market.” South African Mines Minister Susan Shabangu hopes the deal will push up prices by limiting the supply of platinum with taxes and incentives. Albert Minassian, an analyst at Investec Ltd., is skeptical of their ability to influence the price of PGM, though he did say, “we view this announcement as supportive for PGM prices.” South Africa mines 70% of global platinum and Russia mines 40% of global palladium, though other producing countries would be invited to join the group. Read Full Article>>

China & Brazil Currency Swap Bypasses US Dollar
The Globe and Mail – China and Brazil signed a currency swap agreement to trade up to $30 billion per year in their own currencies. The deal is designed to protect their economies should an international banking crisis limit US dollar financing. The deal comes in advance of a BRICS summit, where members are expected to create a plan for a joint foreign-exchange-reserves pool and infrastructure bank for emerging economies. Both the currency-swap deal and infrastructure bank are designed to limit the power of the IMF and World Bank, which the BRICS see as serving the trade interests of rich Western nations. The BRICS account for about 20% of global GDP. China is Brazil’s largest trading partner, and the two are the largest economies of the BRICS.
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Central Banks Continue to Diversify Out of Dollars
Bloomberg – Central banks continued to buy gold and diversify their reserves away from the US dollar after a record year of gold purchases in 2012. The Bank of Korea raised its gold reserves 24% in February, while Mongolia increased its gold reserves to the highest in four years. Russia, Kazakhstan, Azerbaijan, and Ukraine also increased gold reserves in February. According to the World Gold Council, the amount of total global reserves allocated to gold and currencies other than the US dollar has tripled since 2008. Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said, “Given the depreciation rates of the major currencies in the world and the debt crisis, especially in the eurozone, there’s definitely a lot of room to buy gold.”
Read Full Article On Korea>> On Yen & Renminbi>> On Mongolia>>

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This Month in Gold – March 2013

UBS Predicts Major Gold Rally
MarketWatch – UBS, the biggest bank in Switzerland, says US monetary policy will favorably influence the price of gold in the latter part of 2013. Gold’s sell-off in mid-February is attributed to the belief that the Fed will end quantitative easing sooner than expected. However, as UBS analyst Julien Garren remarks, “given the Fed voters’ highly dovish bias, we expect them to continue printing into 3Q13.” UBS anticipates an increase in US demand for industrial metals (which include silver and copper) as well.
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Central Banks’ Gold Purchases Highest in Nearly 50 Years
CNBC – In 2012, global central banks bought the most gold since 1964, according to the World Gold Council’s latest Gold Demand Trends Report. The governments of Russia, Brazil, and Iraq bought the lion’s share of the total 534.6 tonnes. This accounts for 12% of global gold demand in 2012, up 2% from 2011. Developing countries in particular have a greater need for diversification as their official reserves of dollar- and euro-denominated assets grow. “Assets like gold are a hedge against debasement [of] foreign exchange reserves,” said Ric Spooner, chief market analyst at CMC Markets. India remained the largest overall consumer of gold in 2012, though Chinese demand is growing fast.
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US Gold Heading to Asia
Reuters – In December 2012, US exports of private gold rose by 43% from the previous month, to $4 billion, according to the Commerce Department. $2 billion of these gold sales went to Hong Kong, due to a surge in demand for the yellow metal from emerging Asian markets. Gold exports to Hong Kong have been increasing for several years as more and more affluent Asians buy precious metals to protect themselves from financial uncertainty in the US and EU. The spike in Asian gold demand has even led to a shortage of storage space in local vaults.
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Platinum Supply at 13-Year Low
Bloomberg – Closing mines in South Africa and growing automobile sales contributed to a new low in worldwide platinum supplies. According to Barclays Plc, supply will drop to 5.68 million ounces this year, the lowest since 2000. This has already driven the platinum price up 10% this year, passing the price of gold for the first time since April 2012. While demand for platinum for jewelry and investment are expected to decline this year, global car sales reached record highs in 2012 and are projected to continue apace. Growth in other industrial applications is also expected to boost demand. Experts expect total platinum demand to keep rising in 2013, in spite of contractions in Europe and a volatile global economy. Read Full Article>>

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This Month in Gold – January 2013

American Eagle Gold Coin Sales Skyrocket
Financial Times / CNBC – November saw a 131% increase of US American Eagle gold coins sales, the highest rate in two years. The rush started right after the re-election of President Barack Obama, indicating that many investors have lost faith in a near-term solution to the United States’ ailing finances. The increase in physical bullion sales did not translate into higher gold spot prices due to institutional capital leaving gold ETFs and other derivative investments.
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China Frees Up Gold Market
The Wall Street Journal – In December, the Chinese government began to allow interbank gold trading for the first time. This is just the beginning of the CCP’s plan to compete with London’s liquid gold market and attract more foreign investors to the Chinese economy. Jeremy East, global head of metals trading at Standard Chartered PLC, remarked “From [China’s] perspective, gold is seen as currency, and the government is slowly releasing controls on currency.” China is the world’s largest gold producer and one of the top gold consumers.
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Gold Execs: Yellow Metal Rising in 2013
The Vancouver Sun – PricewaterhouseCoopers’ Gold Price Report found that 80% of gold mining executives expect the price of gold to rise in 2013. New demand from central banks is key to this forecast, as many have shifted from net-sellers to net-buyers of the yellow metal. Mining executives have to be more accurate than most in their forecasts in order to properly anticipate demand for future projects. Thus, this bullish endorsement carries significant weight in the investment community.
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Japanese Pensions Invest in Gold
The Wall Street Journal – Several Japanese pension funds have begun to invest in gold for the first time. With Prime Minister Shinzo Abe calling for unlimited quantitative easing from the Bank of Japan, funds are seeking safety from inflation in gold. Traditional Japanese pension funds rely heavily on foreign and domestic bonds, which were traditionally considered foolproof, but are now seen as vulnerable to credit downgrades and other shocks. “By diversifying currencies, we aim to reduce risks associated with them,” said Yoshi Kiguchi, the chief investment officer of Okayama Metal & Machinery Pension Fund, which began buying gold as an alternate currency in March.
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This Month in Gold – December 2012

Schiff: Gold Will Pass $2,000/oz
ABC News – Gold will go much higher than $2,000 an ounce, says Peter Schiff, CEO of Euro Pacific Precious Metals. The reason it hasn’t gotten there yet, argues Schiff, is because most people have yet to fully grasp the true scale of the economic predicament the US faces. However, Schiff warns that there are many scammers in the gold market today. He has published tips to help buyers avoid the most common swindles.
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Supply-Side Squeeze Ahead for Gold, Says Barrick CEO
Bloomberg – The CEO of Barrick Gold Corp., the world’s largest producer, said in November that gold discovery rates are declining even as exploration spending is hitting all-time highs. Jamie Sokalsky pointed out that none of the finds currently being made are “supergiant,” or in excess of 20 million ounces. “I don’t see a surge in gold production [even] if we saw a gold price of $3,000,” Sokalsky said. He noted that today it takes twice as long to develop production as it did a decade ago. In short, the supply-side sees little room for growth, while the demand-side is exploding. Expect prices to adjust accordingly. 
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Brazil Ups Gold Holdings, Again
Reuters – After stepping back into the bullion market in September for the first time since 2008, Brazil’s central bank upped its gold holdings yet again in October, according to IMF data released this month. The data shows that Brazil increased its gold holdings by slightly more than 17 tonnes, bringing its total holdings to 52.5 tonnes. The increase is a ten-fold expansion of September’s increase of 1.7 tonnes, suggesting an acquisition trend that is decidedly upwards sloping. Meanwhile, emerging markets Kazakhstan and Turkey also increased their gold holdings, while Germany – now responsible for bailing out its fellow EU member-states – shed some 4.2 tonnes.
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China Keeps Gold Bugs Smiling
Financial Times – The big take-away from this year’s London Bullion Market Association annual convention, held for the first time in Hong Kong, is: China’s love affair with gold is only beginning. In 2007, China made up 10% of global demand for gold. By 2011, that figure had more than doubled to 21%. Many people in China and the region view gold as a second currency. Gold also is useful to circumvent strict capital controls on the yuan. In addition, the central bank in Beijing is widely expected to grow its bullion holdings, which currently stand at less than 2% of total reserves.
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Indian Gold Demand Likely to Jump 23%
MarketWatch – Strong festive season purchases and an uptick in economic growth suggest demand for the yellow metal in the South Asian behemoth is likely to register 23% higher than previously estimated. Total demand for 2012 is likely to approach 800 tons, up from a previous estimate of 650-750 tons. The pickup in demand in India is bullish for international prices.
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Lawmaker Asks to Be Paid in Gold
Politico – Jerry O’Neil, a Montana state lawmaker and a member of the Republican Party, has asked the state legislature to pay his salary in gold rather than US dollars. Recently reelected to his northern Montana district, O’Neil says his constituents have asked him to uphold the text of US Constitution, which states that only gold and silver can be allowed as legal tender. “I think we’ve gotten a tremendously long way from [the Constitution],” O’Neil argues. “If we don’t start paying that debt down, we’re going to lose the country.”
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This Month in Gold – November 2012

China’s Currency Rises in US Backyard
Financial Times – Two scholars from the Peterson Institute of International Economics write: “Would-be US leaders would do well to note that for probably the first time since the Second World War the dollar bloc in East Asia has been displaced. In its wake a currency bloc based on China’s renminbi is emerging.” Seven out of ten currencies in the region now track the renminbi more closely than they do the US dollar. This shift is occurring despire Beijing’s reluctance to liberalize its financial and currency markets.
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Chinese Gold Imports YTD Top Total ECB Holdings
ZeroHedge – Through the end of August 2012, China imported more gold year-to-date than the entire European Central Bank stockpile. Specifically, from January 1 to August 31, China purchased and imported a whopping 512 tons of the yellow metal. The ECB has a mere 502 tons of bullion in total. By New Year’s Eve, it is safe to assume that China will have imported more gold in one year alone than the eleventh-largest official cache on earth: India’s 558 tons. China’s rapid shift to hard currency dovetails with its marked unwillingness since the end of 2011 to bring additional US government securities onto its books.
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German Auditors Want Gold Reserves Verified
Reuters – The German Federal Court of Auditors, the government’s accounting arm, has called on the Bundestag (parliament) to order a physical inventory check of the nation’s bullion holdings. Germany owns 3,400 tonnes of gold, in large part held abroad at the Federal Reserve Bank in New York, the Banque de France, and the Bank of England. The Bundesbank (central bank) insists that written assurances from its foreign counterparts are sufficient. The auditors, unsurprisingly, disagree.
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Chinese Bullion Purchases from Australia Jump 900%
The Australian – Australian sales of the yellow metal to China have soared an eye-popping 900% during the first eight months of 2012. At $4.1 billion so far this year, gold is now Australia’s second largest physical export to China after iron ore. Perth Mint is the chief supplier of bullion to China. Chinese citizens are buying gold to preserve wealth in times of escalating economic uncertainty, and China’s central bank is buying aggressively to diversify away from weak-kneed western fiat currencies.
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