The World Gold Council has announced plans to form a committee that will help set up India’s first physical gold exchange. Officials say they hope to have the exchange up and running in 12 to 18 months.
The committee will not actually set up the exchange, but will provide guidance. WGC Indian operations managing director PR Somasundaram told Bloomberg the council is in the process of creating an industry committee of jewelry trade associations, dealers, miners, regulators, foreign and Indian banks, and eventually some consumers.
After surging in August, gold continued to flow into ETFs last month, signaling continued strong demand for the yellow metal – specifically in North America.
According to the World Gold Council, gold-backed ETF holdings increased by 22.4 tons in September. This follows on the heels of a 31.4 ton increase in August.
Recently, Jamie Diamond of Citibank made headlines by labeling Bitcoin a fraud. Whether those comments played any part in Bitcoin’s recent sell off is hard to say, but the true believers reacted with predictable outrage given that the comments came from the ultimate Wall Street insider whose financial supremacy is supposedly threatened by crypto currencies like Bitcoin.
Although my critical comments on Bitcoin over the years have not received nearly as much attention, they have been just as summarily dismissed by the crypto currency crowd. But I am a well know libertarian and follower of the Austrian School of economics. I am not a member of the banking establishment, nor am I a fan of fiat money. I should be one of the good guys. But since I happen to own a company that sells gold, a metal that supposedly Bitcoin will soon make obsolete, the crypto crowd looks at me like a stubborn old buggy whip salesmen who refuses to acknowledge that the future resides in horseless transportation.
Well Bitcoin is not the automobile and gold is not a buggy whip. While Diamond’s comments were not 100% on the money, he is right about Bitcoin’s ultimate demise, just wrong about how it will meet its fate and why. While most fear that government will simply look to make Bitcoin illegal (which could be a possibility if Bitcoin could actually deliver on its promises), it is much more likely to die of natural causes.
What happens when government officials spend with virtually no restraint and they don’t have a printing press that can crank out more money?
Last week, both S&P Global Ratings and Moody’s Investors Service downgraded Hartford’s credit rating deeper into junk status. According to a Reuters report, the downgrade puts Hartford near the bottom of the credit scale. This means the agencies view the city as essentially in default with little prospect for a full bondholder recovery.
Conventional wisdom holds that gold is a good store of value, and provides a hedge of protection against inflation and economic upheaval. But a close look at the data reveals gold offers a long-term growth trajectory comparable to other financial asset classes.
Sales of gold coins and minted bars jumped to 46,415 ounces in September, up from 23,130 ounces a month ago. Silver sales during the month came in at 697,849 ounces, compared with 392,091 ounces in August.
Earlier this month, US Treasury Secretary Steven Mnuchin threatened China, saying the US would “put additional sanctions on them and prevent them from accessing the US and international dollar system” if they don’t go along with the most recent round of sanctions slapped on North Korea. We argued that the threat may be meaningful, but it also might be empty.
In a recent article published on the Mises Wire, Ryan McMaken added another layer of analysis, arguing that if the US were to follow through on the threat, it would imperil the US dollar. McMaken’s reasoning dovetails with a point we’ve made more generally about Trump’s penchant for tariffs – that they will undermine the dollar. Of course, that’s good for gold.
Indians love gold. Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold imports into the country nearly tripled year-on-year in August. India ranks as the second largest gold consuming country in the world, trailing only China. But gold isn’t the only precious metal Indians covet. They also buy a lot of silver.
According to a new report by the Silver Institute, India consumed 160.6 million ounces of silver in 2016, accounting for 16% of global silver demand.
A few Fridays back, I shared some of the innovative ways people have come up with to smuggle gold. Like I said in that article, gold smuggling is a very lucrative business. People want gold, and they’ll go to great lengths to have it. But smuggling isn’t as easy as you might think, and people have put gold in some places … Well, let’s just say it couldn’t have been a comfortable experience.
OK – I’ll just come out and say it. More than a few smugglers have resorted to sticking gold up their butts.