This Month in Gold – May 2015

Austria Repatriating Some Gold from Britain
Reuters – Austrian central bank officials say they plan to repatriate some of its gold reserves from Great Britain in response to criticism that it stores too much of its precious metal abroad. The Austrian National Bank administers the country’s 280 metric tons of gold reserves. Currently, about 80% is stored in Britain. Bank officials say they plan to decrease that to around 30%, with 50% of the reserves kept in Austria. The country also stores gold in Switzerland. This repatriation is part of a larger European trend beginning with Germany, which brought home 120 tons of gold from New York and Paris in 2014.
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Gold Smuggling in India at All-Time High
Times of India – Gold smuggling hit an all-time high in India this year, with police and revenue agencies seizing more than 3,500 kg of gold in 2014-15. In 2012-13, agents only seized 350 kg gold. It’s generally thought that seizures represent less than 10% of actual smuggling. Officials say in the two years since the duty on gold was upped to 10%, smuggling has increased by 900%. Seizures in Nepal also doubled with the Indian duty increase, as smugglers pushed gold from Dubai, Thailand and China into Nepal to be brought to India as authorities monitored more traditional routes.
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Germans Buying Up Gold at Frantic Pace
CNN Money – Germans are bullish for gold, buying up the metal at a dizzying rate. A report released in May revealed a 20% spike in gold bar and coin purchases in the first quarter of 2015, as compared to the previous year. Analysts cite inflation fears due to central bank money printing and jitters over the Greek economy as two factors in the buying spree. Demand also increased by at least double-digits in France, Switzerland and Austria during the first quarter.
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Chinese Planning $16 Billion Gold Investment Fund
Telegraph – The Chinese plan to establish a $16 billion fund to stockpile gold as part of the “Silk Road” initiative to boost trade. Chinese state media reports the new entity may include an exchange-traded fund for the precious metal and investment in gold mining. The fund plans to raise the $16 billion in three tranches, according to the report. Analysts say this major new investment vehicle could generate significant impetus in the gold market. The “Silk Road” initiative is a plan to create an economic block across Asia and Europe that the Chinese hope will double their economy over the next 10 years.
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Russia Keeps Boosting Gold Holdings
Reuters – A senior Russian central banker announced that the country plans to stockpile more gold. Dmitry Tulin said gold is a reserve asset free from legal and political risks, reflecting fears that Western countries could freeze Russian assets overseas as part of their sanctions over the situation in Ukraine. Russia’s gold reserves rose from 39.8 million troy ounces to 40.1 million troy ounces in April, according to central bank data. That reflects a trend of increasing gold reserves in Russia over the last several months.
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Chicago Mercantile Exchange Developing Gold Futures Contract
Reuters – Three sources indicate Chicago Mercantile Exchange is developing a European gold futures contract to serve its customers in London. The new contract would challenge London’s direct cash market. The contract would reportedly mirror existing futures traded on CME’s New York COMEX platform, which features a 100 ounce contract size and trades between 15 million and 20 million ounces daily. Analysts say access to London gold would likely increase the number of futures delivered.
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