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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