This Month in Gold – July 2013

Deutsche Bank Opens Asian Gold Vault
The Wall Street Journal – Deutsche Bank has opened a gold vault in Singapore with a 200 metric ton capacity in order to capitalize on rising Asian demand for the metal. The opening goes hand-in-hand with Singapore’s goal of becomeing a new center for bullion trading. Last year, Singapore dropped its goods-and-services tax on gold and now hopes to increase its share of world gold demand to 10-15% in the next decade. “Gold has traditionally been stored in London, Zurich, and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve,” said Mark Smallwood, head of Asian-Pacific wealth planning for Deutsche Asset & Wealth Management.
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Platinum Demand Likely to Increase in 2013
Forbes – CPM Group predicts that platinum demand will increase in 2013, outstripping supply once again and supporting an increase in the price. The rising demand is attributed to positive investor sentiment and increased industrial demand. Demand grew only 0.1% in 2012, but should increase about 0.9% this year. Platinum supply dropped 10.6% from 2011 to 2012, largely due to a 12% drop in South African production. In 2013, CPM Group expects South African production to rise again so long as no prolonged labor strikes occur.
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Moscow Exchange to Trade Physical Gold & Silver
Russia Today – The Moscow Exchange will begin trading physical gold and silver by the end of 2013 and plans to add platinum and palladium in 2014. Right now, the market only trades futures. The hope is that adding physical metals will increase liquidity and the number of participants in the exchange. “We are a gold-exporting country. We produce a large number of precious metals. However, the trade volume is still significantly lagging behind our peers. Our commodity market is not transparent,” said Mikhail Orlenko, director of the Moscow Exchange commodity market.
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IMF: Fed Has “No Clue” How to End QE
Reuters – The International Monetary Fund said that global markets overreacted to Ben Bernanke’s statement that the Federal Reserve will end its quantitative easing by mid-2014 if the US economy continues to improve. “The Fed has no clue what will happen when it starts selling assets,” said Olivier Blanchard, IMF’s Chief Economist. Contrary to Bernanke’s statements, other Fed officials backpedaled on the idea of ending QE any time soon. Nevertheless, equity, bond, and commodities markets around the world plunged on Bernanke’s comments. Blanchard noted that the dramatic reaction is largely due to the speed of the supposed halt to QE, which would inevitably provoke volatility if the Fed were to make good on its claims. The IMF has recommended the Fed maintain QE until at least the end of 2013.
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