This Month in Gold – January 2014

World Gold Mints Slammed with Demand
Bloomberg – Increased global demand for gold coins has world mints struggling to produce enough and maintain supplies. Austria’s mint, which saw a 36% increase in Philharmonic coin sales in 2013, is operating 24 hours a day. Purchases from Australia’s Perth Mint rose 20% YoY from the beginning of 2014 to January 20th. The US Mint is expecting its best month of sales since April 2013, when the gold price plunge triggered a surge in demand. The UK Royal Mint ran out of 2014 Sovereign gold coins by January 8th and took nearly a week to replenish supplies. In spite of gold’s overall price slump, mint managers expect physical demand to remain strong in the coming months. Read Full Article>>

US Silver Coin Premiums Expected to Rise
Bloomberg – Due to lack of supply and record demand, wholesale premiums on silver American Eagle coins may rise as high as 17%. Sales were halted on December 9th due to lack of supply, which in turn required the US Mint to significantly limit the quantity of its weekly allocations when sales resumed in early January. In 2013, silver American Eagle sales hit an all-time high of 42.675 million ounces. Silver premiums are still lower than in April 2013, when they hit 25%, the highest since 2008. Demand for gold American Eagles has also been high. By mid-January, monthly sales of gold Eagles had reached 63,000, far more than the 56,000 ounces sold in all of December. Read Full Article>>

First Foreign Banks Granted Chinese Gold Import Licenses
Reuters – In late 2013, ANZ and HSBC became the first foreign banks to be granted Chinese gold import licenses. This is the latest in China’s ongoing reforms to loosen restrictions on bullion trading and increase gold market accessibility. Huge Chinese consumer demand in early 2013 triggered a supply crunch and high premiums. While demand will likely remain strong, traders warn that the new licenses will not guarantee a dramatic increase in imports in 2014. China has also allowed an additional local bank to import gold. In addition, China saw the launch of its first gold ETF last year, and the Shanghai Gold Exchange plans to introduce gold futures contracts available to foreigners in 2014. Read Full Article>>

Chinese Auto Market Boosts Palladium
Bloomberg – 2013 Chinese palladium imports grew 8.9% YoY due to higher demand for catalytic converters from automakers. Chinese car deliveries hit a record of 21.98 million units last year, and the China Association of Automobile Manufacturers expects 2014 deliveries to increase even further to ~24 million. The auto industry is one of the most important drivers for the price of palladium, and increased demand in China may erode existing stockpiles. This led Goldman Sachs to choose it as one of the best metal picks in 2014. Read Full Article>>

Argentina Inflation to Hit Decade High in 2014
Reuters – Analysts expect consumer prices in Argentina to rise 30% in 2014. Official statistics claim a 10.5% inflation rate in the 12 months through November 2013, but other analysts place it at closer to 26%. The inflation is a product of dramatic currency devaluation, exacerbated by a lack of investor confidence due to plummeting central bank reserves and government-instituted price, currency, and trade controls. The Argentinian peso hit record lows in January when supermarkets made a deal with the government to freeze prices on 200 food products for one year. President Cristina Fernandez refuses to tighten fiscal policies to address these systemic problems. Venezuela is the only country in the region with worse inflation, currently at 56% last year. Read Full Article>>

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