This Month in Gold – October 2013

Gold Posts Biggest Quarterly Gain in a Year
Reuters – Gold ended the third quarter up 8%, the largest quarterly gain since Q3 2012. It’s expected to recover further if Fed stimulus continues, which analysts consider a possibility given a US government shutdown and weak dollar. “It seems to us that the central bank will likely stand pat again, perhaps not wanting to take two completely different directional views on rate policy in the span of just 30 days,” said INTL FCStone analyst Edward Meir. 
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Central Banks Keep Buying Gold
Reuters – Eight central banks added to their gold holdings in August. Turkey made the biggest addition to its reserves in five months, while Russia made its biggest gold purchase since December. For 11 consecutive months Russia has increased its reserves, while Turkey has grown its gold holdings 13 of the past 14 months. Ukraine, Azerbaijan, and Kazakhstan also added significant amounts of gold to their reserves. Central bank gold purchases are seen as a good support of the gold price going forward. “Central banks continue to view gold as good value on a long-term basis,” said Victor Thianpiriya of the Australia and New Zealand Banking Group.
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US Mint Silver Coin Sales Beat 2012
Bloomberg – By the end of August, the US Mint had sold 33.75 million ounces of silver coins YTD, compared with 33.74 million ounces in all of 2012. Record high demand for silver has been driven by its safe-haven appeal and expanding industrial demand in countries like China, the second biggest silver importer in the world. Chinese imports increased every month from May to June. Demand has been so strong that the US Mint suspended sales temporarily in January due to lack of stock, and dealer premiums were as high as 25% in April.
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China to Increase Gold Trade
Reuters – China’s central bank has proposed new rules allowing more banking firms and gold producers to apply for gold import and export licenses. Currently only 9 out of 25 Shanghai Gold Exchange member banks are allowed to trade gold. The change would also reduce restrictions on individual gold buyers, allowing them to import up to 7 ounces of overseas gold without reporting or taxes. The new policy may increase China’s gold imports and ease local premiums, which surged last spring on supply shortages. China will likely surpass India as the biggest global gold consumer this year.
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Enhancing Energy and Water Technology with Gold
Bloomberg – Growing global demand for energy and clean water has industries turning to gold as a way to improve efficiency and lower costs. Gold’s high electrical conductivity and corrosion resistance make it useful in the catalytic converters of cars, and nanoparticles of gold can remove pesticides and heavy metals from water. Gold could also be used to improve the efficiency of solar-cell technology and the performance of fuel cells.
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