This Month in Gold – November 2012

POSTED ON November 3, 2012 - POSTED IN Key Gold Headlines

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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This Month in Gold – October 2012

POSTED ON October 31, 2012 - POSTED IN Key Gold Headlines, Peter's Blog

Bridgewater’s Dalio Likes Gold, Breaks From Buffett
Forbes – Ray Dalio, manager of one of the world’s most profitable hedge funds – the $120 billion Bridgewater Associates – likes gold, sees it as a useful inflation hedge, and thinks it belongs in any well-diversified portfolio. For Dalio, gold is “the alternative money.” Concerning Warren Buffett’s stated aversion to gold, Dalio believes the Oracle of Omaha is “making a big mistake.” His pronouncements bring Dalio into line with peer hedge fund juggernauts George Soros, John Paulson, and David Einhorn.
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Bank of America Sees $2,400 – no – $3,000 Gold
CNBC and Financial Post – Bank of America Merrill Lynch is internally conflicted about gold at the moment. Fortunately, only in a good way. In mid-September, Francisco Blanch, a global investment strategist with the bank, claimed the Federal Reserve’s open-ended QE3 would propel the yellow metal to $2,400 an ounce by late 2014. A week later, Stephen Suttmeier, an analyst with the bank, wrote in a note to clients that the secular trend more likely suggests around $3,000 an ounce by early 2014.
Read Full Articles: CNBC>> FP>> (Both CNBC and FP link went to same CNBC article– seems like issue with original publishing)

Barclays Opens New Gold Vault in London 
Reuters – In September, the British banking giant Barclays opened the first bank-owned bullion vault that London has seen in over five years. Barclays expects demand to come primarily from institutional investors and sovereign funds. The launch reflects the ever-growing appeal of precious metals among investors. For security reasons, the vault’s location is top secret.
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Wealthy Investors Pile into Physical Bullion
Bloomberg – Deutsche Bank AG’s asset and wealth-management unit reports that more and more high-net-worth individuals are expressing interest in protecting their wealth from central bank-induced inflation by owning gold. Not all gold is equal, however. Physical trumps virtual. “For our ultra-high-net-worth clients, and a growing number of our high-net-worth clients who have significant liquidity, they are becoming increasingly concerned to have at least some of their exposure to this asset class in the form of allocated physical bullion itself, rather than the indirect exposure that an over-the-counter product offers,” says Mark Smallwood, head of Asia-Pacific wealth-management solutions.
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EM Central Banks Yet Again Buy More Gold
 MarketWatch – In what has become a monthly affair, emerging markets’ central banks continued to boost their gold reserves in July to mitigate the risk associated with holding too many dollars and euros. Turkey added 44.7 metric tons, Russia added 18.6 tons, South Korea added 15.5 tons, and Kazakhstan added 1.4 tons. Ukraine and Kyrgyzstan added 0.2 and 0.1 metric tons, respectively. Market participants say the purchases are an important support for the price of the yellow metal.
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This Month in Gold – July 2012

POSTED ON July 31, 2012 - POSTED IN Key Gold Headlines

Gold Investment Demand in China to Advance 10%
Bloomberg – China’s largest bullion bank expects domestic investment demand to increase by 10% this year. Zheng Zhiguang, general manager of the precious metals department at the Industrial and Commercial Bank of China Ltd. (ICBC), said currency debasement and the European debt crisis are driving safe-haven demand among local investors. “It’s necessary,” Zheng noted, “for individual, institutional, or even government investors to hold gold when the value of money is decreasing at a time of possible quantitative easing or excessive money-printing practices.”
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Central Banks Buying Gold Like It’s 1965
Barron’s – The last time the world witnessed the official sector buying bullion as consistently and substantially as it is now was… 1965. The 2008 financial crisis and the US Federal Reserve’s response to it, namely money printing, proved to be the turning point for sovereign bean counters. Central banks worldwide increased their gold holdings by 400 metric tons in the 12 months through March 31, up from 156 tons during the prior year. Emerging market central banks, in particular, have spearheaded the return to non-fiat reserves. This trend is driving speculators out of the gold market. Now, “the best way to play gold is as a long-term investor as a hedge against loss of purchasing power of paper money,” says George Gero, strategist at RBC Capital Markets in New York.
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Never Mind Europe, US Is the Bigger Threat
CNBC – Goldman Sachs economist Jim O’Neill thinks the weak employment picture in the US is a bigger threat to markets than the protracted European debt crisis. For O’Neill, stalled hiring reflects the underlying fragility of the American economy. With the May job creation report coming in at just 69,000 and the unemployment rate ticking up to 8.2%, “…some of the momentum in the US has been lost.” Were it not for a lack of confidence overall, O’Neill suggests that the European crisis would be having less of an impact on US markets.
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Endless QE? Yes.
Reuters – A Reuters analysis finds a robust majority of investment professionals see central bank pump priming coming by October. The expectation is that all of the Big Four global central banks – the US Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England – will continue to shift into inflation mode. “It is almost as if investors are saying QE will happen no matter what,” said Bank of America Merrill Lynch’s Gary Baker. The analysts note that political pressure is overwhelming to keep the spigots turned on. “The heyday of independent central banking could be drawing to a close,” notes HSBC economists Karen Ward and Simon Wells. Scary times indeed.
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Inflation Camp About to Win the Argument
MarketWatch – “The next decade will see a global consensus for inflation. If you want it, you’ll get it, central banks just have to print enough money,” argued Matthew Lynn, columnist for MarketWatch. Lynn notes that very soon Europe and Japan will resolutely join the US and the UK in the inflation camp to mitigate sky-high debt burdens, further increasing the global appeal of the inflation fix. How to survive this market environment? Invest in gold, property, and blue-chip equities, says Lynn – and stay away from bonds.
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This Month in Gold – June 2012

POSTED ON June 30, 2012 - POSTED IN Key Gold Headlines

Emerging Market Central Banks Add More Gold to Reserves
MarketWatch – The latest data from April shows emerging market central banks continued to add to their gold reserves. Among the top buyers, Mexico added 94,000 ounces, bringing its total gold reserves to 4.04 million ounces; Kazakhstan added 65,000 ounces, bringing its total to 3.16 million ounces; Ukraine added 45,000 ounces, bringing its total to 984,000 ounces; and Turkey took the cake, adding just shy of 1 million ounces. Notably, the Philippines lifted its gold stockpile by over a million ounces in the month prior, a move that UBS analyst Edel Tully said should “gather much attention from the market.”
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China May Overtake India as Biggest Gold User
Bloomberg – The economic juggernaut of the future just can’t seem to satisfy its appetite for gold. Mainland China imported six times as muchbullion during the first quarter of 2012 as it did during the same period in 2011. Specifically, China imported 135 metric tonnes from January to March through intermediaries in Hong Kong. The surging imports suggest the billion-plus population could soon overtake India to become the biggest gold user by weight in the world. It remains unclear, however, who exactly is taking delivery of all that gold; some analysts see the purchases through Hong Kong as primarily destined for the central bank in Beijing.
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Silver Analysts Are Bullish for Q4 2012
Bloomberg – Silver is sought after for its adaptability. First, silver actually has been money throughout the ages, so it does well in high-risk periods. Second, silver has myriad industrial applications, so it does just as well in high-growth environments. Given central bank pump-priming and continued growth in emerging markets, it is no surprise then that the median of 11 analysts tracked by Bloomberg see the grey metal climbing back to US$35/oz by the end of the year.
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Gross, Goldman See More Fed Easing Soon
Bloomberg – Once central banks start down the money-printing road, they typically don’t stop until the proverbial dung hits the fan. Pimco’s Bill Gross, manager of the world’s largest fixed-income fund, and Jan Hatzius, chief economist at Goldman Sachs, see the fan approaching rather quickly. Both see another round of large-scale asset purchases by the Fed, aka QE3, being announced this summer, possibly as early as the next Fed meeting on June 19th. Some Fed governors are skeptical that additional money-printing will help at this point, but Gross and Hatzius think the inflation doves will prevail.
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Italians Recycle L’Oro di Famiglia
Financial Times – Who would have thought that behind mega-markets China and the US, Italy is the world’s third largest recycler of gold? With global mining supply flat, and demand and price soaring, ‘green’ gold is going some of the way to fill the supply gap. Southern European countries have a time-honored tradition of gifting gold at major life milestones, and nowhere is the tradition more prominent than in Italy. “Since I was a child, I remember that gold was given as a gift on various occasions and people used to say: ‘Put it aside,'” recalls Ivana Ciabatti, head of Italian precious metals giant Italpreziosi. Well, with a sovereign debt crisis about to send that beautiful country into economic collapse, many Italians are deciding that rainy day has come.
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The Swiss Want Their Gold Back
Zero Hedge – Direct democracy and plutocracy make for awkward bedfellows. In an emerging challenge to the politicians in Bern, the people of Switzerland have jump-started the process of repatriating their national bullion reserve. The initiative, called Save Our Swiss Gold, needs 100K signatures to be put to a vote in the next federal election. If adopted, it will force the Swiss National Bank to do three things: (1) physically store gold reserves in Switzerland, (2) cease selling any more of the gold reserves, and (3) maintain at least 20 percent of total reserves in gold.
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This Month in Gold – May 2012

POSTED ON May 30, 2012 - POSTED IN Key Gold Headlines

Bernanke: Fed Stands Ready to Do More
The Wall Street Journal – Federal Reserve Chairman Ben Bernanke reaffirmed the ‘Bernanke put’ this month, otherwise known as music to the ears of precious metals investors. Appearing after the Fed’s latest rate-setting meeting, Bernanke said that another round of bond purchases remains “very much on the table and we will not hesitate to use them should the economy require that additional support.” Bernanke cited a weak employment picture and general uncertainty about the US and world economies as support for his activist posture.
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IMF: Mexico, Russia & Turkey Add Gold to Reserves in March
Bloomberg – Emerging market central banks added more gold to their reserve holdings in March, the International Monetary Fund reports. Mexico led the pack, adding 16.8 tons of bullion, valued at US$906.4 million (just shy of a bullion billion). Russia similarly added 16.5 tons of bullion, Turkey added 11.5 tons, Kazakhstan added 4.3 tons, and Ukraine added 1.2 tons. The purchases continue the trend among emerging market central banks to diversify their reserve holdings away from the paper currencies of developed markets. Emerging market central banks also tend to only hold a small fraction of their reserves in gold as compared to their developed world counterparts, so analysts expect that diversification trend has plenty of room to grow.
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Fed Vice Chair: Printing Press May Continue after 2014
The New York Times – Math says the Federal Reserve cannot raise interest rates from near-zero before late 2014 without crippling the US economy. Janet Yellen, the agency’s No. 2 and a close ally of Chairman Ben Bernanke, admitted as much in a speech in Manhattan in early April. Citing a lackluster recovery and an underperforming labor market, Yellen laid the groundwork for a yet another extension of zero-rate policy, and argued that if anything, “there has been a significant shortfall in the overall amount of monetary policy stimulus since early 2009.” Yellen suggested that late 2015 might instead be a more appropriate time to start raising interest rates.
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Time to Mine Precious Metals in Space?
CBS News – Precious metals at today’s elevated prices create mining opportunities in unconventional places. Space tourism pioneers Eric Anderson and Peter Diamandis, owners of Planetary Resources, with the backing of deep-pocket investors Larry Page of Google and filmmaker James Cameron, hope to mine near-earth asteroids soon. “This company is not about thinking and dreaming about asteroid mining,” Anderson claims. “This company is about creating a space economy beyond the earth.” Prospecting is scheduled to begin in 2020.
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This Month in Gold – April 2012

POSTED ON April 30, 2012 - POSTED IN Key Gold Headlines

Central Banks Vigorously Buying the Dip
Financial Times – At least one central bank, and likely more, took advantage of this month’s correction in gold to further diversify their reserve holdings away from the US dollar. According to several estimates from traders familiar with the purchases, the Bank for International Settlements – which buys gold on the open market for central banks, thereby preserving their anonymity – purchased four to six tons of the yellow metal, which at current prices is estimated to be worth between $250-300 million. “Central banks have definitely been looking at gold as an asset class much more closely ever since European central banks stopped selling,” remarked a senior gold banker.
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Barclays Expects Gold Rally in Q2
Reuters – “Worry Not!” proclaims banking giant Barclays Capital about this month’s correction in gold. By the second quarter, gold will have charged back up to $1,850 an ounce. Why? The same reason that has been driving up fiat-priced gold over the past decade: atrocious public policy. Specifically, analysts at Barclays Capital foresee “the resumption of the kind of currency debasement/inflation concerns that have been the big driver of gold and silver prices over the past 12 months.”
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Research Firm: Furious Rally for Gold Ahead
Financial Post – Julian Jessop, Chief Global Economist at Capital Economics, a leading economic research outfit, says the next leg up for gold will be nothing short of “furious.” Gold will bypass the psychologically significant $2,000 milestone and end the year at $2,200 an ounce, according to Jessop’s latest market analysis. Trouble in Europe is the most likely catalyst to cause gold to surge. “We continue to expect further defaults not only in Greece, but also elsewhere in the region, with at least one country abandoning the euro completely over the next two years.”
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Morgan Stanley: $2,175 Gold in 2013
Financial Post – Morgan Stanley is putting the pedal to the metal when it comes to buying gold in 2012. In particular, the bank expects the US Federal Reserve to launch QE3 in the coming months, a move that will be very bullish for the yellow metal. Morgan Stanley foresees gold prices rising to $1,845 in 2012 and $2,175 in 2013. Long-term, Morgan Stanley bases its sanguine forecast for gold on four pillars: the decline in price hedging by gold miners, fewer central bank sales among developed nations and the rise of developing nation central bank purchases, the lack of significant new supplies from gold miners in the coming years, and continued growth in investment demand.
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This Month in Gold – March 2012

POSTED ON March 31, 2012 - POSTED IN Key Gold Headlines

Emerging Market Central Banks Driving Gold Higher
CNBC – Mark Bristow, CEO of Randgold Resources, a miner with operations in western Africa, says that emerging market central banks are underpinning today’s elevated and rising gold price. In a financially volatile world, Bristow maintains, emerging market central banks are using gold to mitigate their foreign exchange risks and as a general hedge. Bristow also thinks this will drive the yellow metal for years to come.
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This Month in Gold – February 2012

POSTED ON February 28, 2012 - POSTED IN Key Gold Headlines

Gold Again Above $1,700 on Fed’s Extended Zero-Rate Pledge
Reuters – Gold rallied hard on January 25, climbing 2.5% intraday to above $1,700 an ounce, on news that the Fed is extending its promise to maintain near-zero interest rates until late 2014. The Fed’s previous low-rate pledge was set to expire in mid-2013. The rally was gold’s biggest intraday gain in four months, and eclipsed the day’s modest gains in equities and other commodities. “Ben Bernanke is saying if you keep your money under your mattress, you lose out as the purchasing power of the US currency is being eroded,” remarks Axel Merk, the currency expert from Merk Funds.
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Gold Proves Safest as Goldman Forecasts Record
Bloomberg – US Treasuries step aside; the world’s oldest safe-haven asset is making a comeback. According to the Bloomberg Riskless Return Ranking, gold has outperformed all other commodities over the past five years when adjusted for volatility. The next-best performer has been gold’s junior sibling: silver. No surprise, then, that Goldman Sachs likes what it sees in the yellow metal market. The bank forecasts gold futures to climb to $1,940 an ounce in the next twelve months.
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China Gold Hoarding Turns More Traders Bullish
Bloomberg – Mainland China imported a record-breaking 85.7 tons of gold bullion via Hong Kong last October. It shattered that record and set a new one in November, importing a whopping 102.8 tons. China recently overtook India to become the world’s largest gold-jewelry market. The exploding imports via Hong Kong may also be a sign that the People’s Bank of China is looking to further diversify its reserve holdings. “The thing that’s caught people’s minds is the massive increase in Chinese buying,” says Ross Norman , CEO of Sharps Pixley Ltd., a bullion brokerage in London. “Gold has demonstrated time and time again its ability to hold purchasing power.”
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Sprott Positive on Gold
Reuters – Eric Sprott, the renowned Canadian fund manager, remains positive on precious metals for the coming year. Sprott anticipates gold will rally to $2,000 an ounce and beyond in 2012. Sprott is even more sanguine on silver, which he anticipates will rally to $50 an ounce and beyond. Sprott points to strong physical demand from mainland China and Turkey, where consumers are purchasing specie at record rates, as an important driver of the secular bull market in gold – in addition to the more fundamental litany of concerns about the global economy. Sprott prefers physical bullion as an asset choice, especially in light of the MF Global swindle.
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Miners See Gold Hitting $2,000 This Year
TheTelegraph(UK) – The folks digging the yellow metal up out of the ground see rosy times ahead. A survey by accounting giant PricewaterhouseCoopers (PwC) found that a preponderance of gold-mining company executives believe the price of gold will keep increasing in 2012 for a 12th consecutive year. The average prediction from the survey came in around $2,000 an ounce. Accordingly, gold mining companies have increased their price targets for this year by 20%. Miners underestimated their price targets in 2011, predicting the yellow metal would end the year at only $1,500 an ounce.
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This Month in Gold – January 2012

POSTED ON January 28, 2012 - POSTED IN Key Gold Headlines

Will European Sovereigns Have to Sell Their Gold?
MarketWatch – To make ends meet, European sovereigns may soon have to dig deep into their pocketbooks and jettison some of their gold reserves. At 2,452 tons, Italy enjoys the world’s fourth-largest gold reserves. Current value: $123 billion. Rome’s budget deficit for 2011: $80 billion. France, meanwhile, has bullion worth $122 billion and a budget deficit of $150 billion. China, on the other hand, owns very little gold. It is eagerly looking to diversify its reserves comprised largely of paper IOUs. When the bullion changes hands, so will the power, says MarketWatch.
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Bullion Could “Easily” Crack $2,000
The Telegraph – Richard Davis, manager of the BlackRock Commodities Income Investment Trust, told the UK paper The Telegraph in a video interview this month that gold could “easily” top $2,000 in the next twelve months. This is especially the case if investment demand remains strong. Davis notes that the macro concerns underlying investment demand are all still with us. Moreover, investment demand is the only factor that has ever driven a long-run bull market in gold. In inflation-adjusted terms, gold has yet to reach its 1980 peak of approximately $2,300, Davis points out.
Watch Full Video>>

BoA Targets $2,000 – $2,500 Gold in 2012
CS Monitor – Sabine Schels, a commodities strategist at Bank of America Merrill Lynch, bucks the latest short-term hysteria following a correction in the price of gold and says it will continue its relentless climb in 2012. Schels believes gold will rally and reach $2,000 to $2,500 this year, noting there is no let up in investor interest anywhere on the horizon. The main drivers of investor interest, according to Schels, include the negative outlook for sovereign debt, loose monetary policy in the developed world, and the need for emerging market central banks to diversify their reserve holdings.
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The Ron Paul Portfolio
Total Return Blog, Wall Street Journal – US Representative and Republican Presidential candidate Ron Paul has placed the majority of his eggs in one basket: gold. Surprising? No, not really. Rep. Paul’s Congressional colleagues, mainstream money managers, and crony capitalists scoff at his portfolio’s extreme concentration in one asset class. The problem with their argument, however, is that few of them have made money as of late, notwithstanding flipping Treasuries. Representative Paul, on the other hand, has held true to his investment philosophy for the past 30 years. And events just keep proving him more and more right. Perhaps there is some logic to his use of fundamental values to guide his decisions – in politics as well as economics.
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This Month in Gold – December 2011

POSTED ON December 31, 2011 - POSTED IN Key Gold Headlines

Central Bank Gold Purchases Surge in Q3
Wall Street Journal – Central banks have purchased 7X as much gold in the 3rd quarter of this year than the same period last year, the latest World Gold Council quarterly report reveals. The combined purchases amount to a whopping 148.8 metric tons of gold. By comparison, in the third quarter of 2010, central banks purchased only 22.6 metric tons. Although a significant number of the buyers from 2011 remain anonymous, Marcus Grubb, managing director of investment at the Council, hints the answer may lie in central banks from surplus countries in East Asia, Central Asia, and Latin America.
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US Federal Debt Now Exceeds $15 Trillion
Washington Times – In case you were looking for one more reason to stockpile precious metals to hedge against coming inflation, history’s greatest debtor nation passed a new milestone this month: Washington’s debt load now tops $15 trillion! The achievement comes as a result of a one-day, $56 billion (no, not million) increase to the nation’s bar tab. Bottoms up as the politicians dither and squabble, and extend the after-, after-party for just a few hours longer. Will we reach the $16 billion mark before the tab comes due?
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Swiss National Bank Returns to Profit
Financial Times – It has been a challenging year for chairman Phillip Hildebrand and the Swiss National Bank; the man and the institution paradoxically charged with stemming the stratospheric rise of a fiat currency managed too well. The first and second quarters of 2011 saw the central bank report combined loses of SFr10.8 billion. The third quarter, however, was starkly different. Thanks to the bank’s gold holdings and foreign exchange reserve positions, investments that both saw gains, Mr. Hildebrand posted a redeeming SFr16.6 billion, or US$19 billion, profit. It remains unknown precisely how much the bank has spent to cap the swissie to the euro at the 1.20:1 level.
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Salvation Army Receives Golden Donation
Press Citizen, Iowa City – Some Iowan out there really knows how to do a good deed. A Salvation Army red kettle outside the Coralville Walmart this year received a gold coin worth almost $200 from an anonymous donor, continuing what has become a now four-year-old tradition in Johnson County. Given the donation was made in the form of an appreciating gold coin, it is really a gift that’ll keep on giving. And to round it off, Salvation Army red kettles do not dispense receipts; so we can be pretty sure this donor will not be writing off the act of kindness on his or her taxes.
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