- 4 reasons why "gold has entered a new bull market" - Schroders- Market complacency is key to gold bull market say Schroders- Investors are currently pricing in the most benign risk environment in history as seen in the VIX- History shows gold has the potential to perform very well in periods of stock market weakness (see chart)- You should buy insurance when insurers don’t believe that the “risk event” will happen- Very high Chinese gold demand, negative global interest rates and a weak dollar should push gold higher This week gold broke through the key resistance of $1,300. For some time market commentators have been signalling this level as the point of entry for a new bull market. Often price can be distracting when it comes to trying to figure out what is going on. Two Schroders fund managers called the new bull market in gold about a week before the price broke through the key level. Gold has entered into a new bull market. As we have discussed previously, there are four main reasons for our stance: Global interest rates need to stay negative Broad equity valuations are extremely high and complacency stalks financial markets The dollar might be entering a bear market Chinese demand for gold has the potential to surge (indeed, investment demand in China for bar and coin already increased over 30% in the first quarter of 2017, according to the World Gold Council)
In a story that was seemingly tailor-made for the tabloids, Japanese news agency Nikkei is reporting that, in an unusual but tantalizing example of financial symbiosis, wealthy Chinese investors are teaming up with Yakuza gangsters to smuggle gold into Japan. The payoff for each side is simple: Chinese investors, who are increasingly fearful that a depreciating yuan will create turbulence in local stock and bond markets, can circumvent China’s stringent capital controls and move their money out of the country. And by cheating the Japanese government out of a consumption tax, the Yakuza stand to make a healthy profit. “The argument goes that the rich, having lost confidence in the Chinese yuan and with investment in other assets becoming difficult, are turning to gold smuggling to move their wealth out of the country. They supposedly hire mules to carry the gold from China, as well as places like South Korea and Taiwan, into Japan, where the consumption tax increase has made it easy for them to pay off the carriers and bribe staff at Asian airports.” While Nikkei admits that its story is mostly based on hearsay, data show that a spike in demand for gold on the mainland has coincided with an increase in busts for gold smuggling by Japanese customs officials. “On the data side, statistics from World Gold Council show that while global demand for gold used in jewelry and as an investment dropped 13.3% on the year in the three months through June, China's demand rose 7.8%. On the anecdote side, Chinese media outlet Shenyang Daily recently reported that 21 members of a gold smuggling gang had been discovered by customs officials in Shenyang, the largest city in Liaoning Province. Six were arrested on suspicion of trying to smuggle 45kg of gold out of China, while several other members were caught in the early morning of March 21 at Shenyang's Taoxian International Airport carrying 37kg of gold. One member was sent back to Shenyang from Japan after being caught trying to smuggle in 8kg of gold in January.” Meanwhile, Nikkei reports that Japan is quickly becoming a popular destination for gold smugglers, as the number of cases has ballooned since the increase in Japan's consumption tax in April 2014 to 8% from 5%. While the tax hike has been a burden for consumers, it has proven to be a boon for criminals. “Japan is fast becoming the go-to place for gold smugglers. According to data from the Finance Ministry, fines or other punishments were handed down for 177 gold smuggling cases in the year through June 2015. To put that into context, 2012 and 2013 each saw less than 10 cases punished. The surge continued the following year, with the number of cases reaching an all-time high of 294 -- and this may be only the tip of the iceberg, as authorities believe there are numerous cases that have yet to come to light.” The scam is relatively complex: With the cooperation of insider employees at budget airlines like Japan’s Vanilla Air, Japanese gangsters hide caches of gold aboard a given aircraft after it lands in China. Then they wait for the same plane to be used for a domestic flight, allowing them to carry the gold off the plane without risking being caught by customs officials. Once the gold has been safely off-boarded, the smugglers sell it through a seemingly legitimate merchant, pocketing the consumption tax. “In Japan, consumption tax must be paid on gold when it is brought into the country. This amount is later tacked onto the price of the gold when it is sold, passing the cost of the tax onto the buyer. By circumventing the initial taxation process, smugglers can make a "profit" equal to the amount of that tax. Jacking up the consumption tax rate means bigger gains for smugglers.” Japanese officials say they’ve been surprised by the level of sophistication exhibited by the smugglers, adding that they appear to be backed by “big organizations” with “big funds.” One recent case involved members of the Inagawa-kai, who were caught smuggling 112 kilos of gold into Japan from Macau using a private jet. “The method using budget carriers really surprised us," a member of the Customs and Tariff Bureau said. "There was also a case in Saga Prefecture that used a method often used by drug smugglers, delivering gold by sea. Whoever is behind these cases is really putting a lot of thought into the process." Japanese authorities suspect "big organizations" with "big funds" are carrying out the smuggling operations, hiring different people for different phases of the act. Much of the blame falls on yakuza organized crime groups. A case in 2016 involved members related to the Inagawa-kai group who were prosecuted for smuggling 112kg of gold on their private jet from Macau. Finance Ministry statistics show that in 51% of the 294 cases that year, the perpetrators were Japanese.” If conditions in mainland China are any indication, incidences of gold smuggling will probably continue to rise. Early this year, the Communist Party tightened its capital controls, making it more difficult for wealthy individuals to move money offshore. Chinese authorities have also forced bitcoin exchanges, long suspected of helping customers move money out of the country, to tighten their financial controls to ensure that their customers don't violate local financial regulations. If there’s anything to be learned from the Nikkei report, it’s that Chinese investors are becoming increasingly desperate to move their money offshore. Resorting to smuggling to move money offshore certainly doesn’t signal confidence in the country’s financial system.
- Gold has yet another purpose and may help fight cancer- Gold increases effectiveness of drugs used to treat cancer cells by acting as catalyst - research shows- Use of gold in technology and health growing each year- Tech use to increase- number of patent applications in 2017 grew- Industrial applications such as solar and bio-metrics reduce availability of above ground supply and gold for investment- Another string to the bow of gold and potential impact on sentiment towards gold and on the gold price- 'Could gold finally have a purpose?' bizarre headline ignores gold's 2,500 plus year history as a means of exchange, money and a store of value Source: Pinterest Editor: Mark O'Byrne Real, scientific evidence has been popping up for a while now which suggests the precious metal can make some major contributions to the world of science and medicine. As a fan of Goldschläger I have long been convinced of the health benefits of gold and just last week a research team at Edinburgh University announced results that showed gold nanoparticles could increase the effectiveness of drugs used to treat lung cancer cells. This latest announcement from the field of science is one of many which have been cropping up outside of the investment space, from medicine to solar panels to space technology, gold is making significant strides when it comes to its place outside of the financial world. In the last quarter, gold used in technology rose 2% y-o-y, according to the World Gold Council. This was mainly thanks to a growth in demand for bonding wire, Printed Circuit Boards (PCBs) and LEDs. It is not surprising that gold has a place beyond money. Due to it high conductivity, chemical stability and compatibility with other elements it is an ideal candidate in many applications. As technology and research improves the number of use cases for gold is growing each year. This is beneficial for those who are investing in physical gold bullion. Demand for gold’s physical properties in science takes it out of circulation and increases the demand for physical gold thereby reducing the availability for investment purposes. Below, we take a quick look at some of the use cases of gold and explain why this is good news for the gold market. Gold compounds Scientific research into the health benefits of gold has been going on for some time. But, as we have seen with other alternative treatments such as colloidal silver, there have been occasional negative results and this has slowed research in this area. Frequently uses for gold in medicine are pushed to the wayside due to a lack of technology that can maximise the benefits of the metal. This means side effects have been serious and enough to outweigh the benefits for many users. For example, in 1935 studies into the benefits of ‘gold salts’ were carried out. The term refers to gold compounds used in medicine, a practice known as aurotherapy. One of the main uses for gold compounds in health was as an anti-inflammatory. However it was rarely encouraged by the medical mainstream due to unwanted side effects such as skin discolouration, chrysiasas and kidney issues. But, as scientific methods improve research is able to find ways to harness the benefits of the precious metal without such dramatic side effects, as we have seen with this latest news. This is mainly thanks to the growing role of tech in health, as scientists work to see how we can use technology to improve diagnoses and treatment, rather than just look to chemicals and how they might cure us. A (perhaps) more impressive use for gold in health was revealed last year, in Israel when researchers from the Israel Institute of Technology developed sensors made from gold nanoparticles which can be used in a breath test in order to identify different diseases. Whilst the test is not yet accurate enough for mainstream use, the Institute’s sensors could identify the specific disease 86% of the time after allowing for factors such as age and gender. Health remains a small field for gold as scientists work to perfect developments, but it can look to the area of technology for inspiration in terms of its potential. Gold’s in vogue - energy and security One of the major criticisms of gold, by the environmental lobby is the energy intensive process involved in mining for gold. Whilst mining companies work to reduce their impact on the environment, the yellow metal is being used in energy harnessing methods through solar panels and so is almost working on the flip side of this issue. In 2011 a team of French and Dutch scientists found that a discontinuous film of gold nanodots just 0.5nm thick, across a solar panel could improve the efficiency of organic photovoltaic cells (already a low cost option in alternative energy). This layer needed to just cover 15% of the cells in order to see an improvement in performance. Of course, solar panels and alternative energy sources are increasingly important, especially as governments fight to work out a solution to the energy crisis. Another area growing rapidly (much to many readers’ chagrins) is the area of biometric security. That trendy smartphone you have that lets you access your information using your fingerprint, is most likely using gold bonding wire. The wire is a key component in this area which has recently hit the mainstream. In 2016 Samsung and Huawe began to use biometric security in their products. As a result, sensor makers in mainland China, Taiwan and South Korea were operating at full capacity leading them to increase both prices and lead time to meet demand. ‘Could gold have yet another purpose?…’ One of the headlines about this news that grabbed our attention was courtesy of CNBC, it read ‘Could gold finally have a purpose? New research says it could help in the fight against cancer.’ Might we suggest that the headline needs rewriting? Perhaps to read, ‘Could gold have yet another purpose?…’ As we said at the beginning, this latest announcement from the field of science is one of many which have been cropping up from medicine to solar panels to space technology, gold is making huge strides when it comes to its place outside of the financial world. Gold save all ills? Financial disaster and now cancer Gold retains an important place and a role in the financial and monetary world. It has been money for over 2,500 years and it continues to be. Not only for those in India and China, but also central banks and investors who see the purpose of gold as one of financial protection and long-term benefits. The growing use of gold in industrial applications suggests that these new uses for gold have the potential to increase demand, reduce supply and increase the attractiveness of this ever-useful metal. In turn, this extra demand leads to more broad based demand and could lead to higher prices. It is also worth asking if the industrial gold element of the market will be enough to cause physical gold demand to have more influence on the price of gold. Currently it is primarily driven by the paper and electronic market. There is another way to look at this as well, investing in anything to do with tech is very fashionable right now, but it can also be as risky - see the FANG (Facebook, Apple, Netflix, Google) stocks as an example. So, when investing in physical, allocated gold you are not only investing in sound money but also a technological asset, which has a lot more real world uses backing it than a trendy online platform. In short, gold is coming back in fashion and more importantly is becoming more useful by the day. News and Commentary Gold Seen Jumping To $1400 On World Tension - Russian Investment Bank (Bloomberg) PRECIOUS-Gold slips from over 2-month high as dollar inches up vs yen (Reuters.com) Stocks Bounce and Havens Drop as Korea Fears Abate: Markets Wrap (Bloomberg) Trump threatens 'military option' in Venezuela as crisis escalates (The Guardian) Police shut down scam 'cryptocurrency boiler room' in the City (Telegraph) Source: Bloomberg.com Fed Has 6,200 Tons of Gold in a Manhattan Basement—Or Does It? (WSJ) China Will Continue to be Very Supportive of Commodities (Bloomberg) India’s gold imports to rebound in 2017 on restocking, good monsoon (Reuters) What’s your nuclear meltdown plan? (Stansberry Churchouse) This Chart Might Make You Rethink the Adage “Stocks Always Come Back” (24H Gold) Gold Prices (LBMA AM) 14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce09 Aug: USD 1,267.95, GBP 974.80 & EUR 1,079.79 per ounce08 Aug: USD 1,261.45, GBP 967.78 & EUR 1,068.20 per ounce07 Aug: USD 1,257.55, GBP 963.41 & EUR 1,065.90 per ounce04 Aug: USD 1,269.30, GBP 964.92 & EUR 1,068.37 per ounce Silver Prices (LBMA) 14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce09 Aug: USD 16.59, GBP 12.76 & EUR 14.14 per ounce08 Aug: USD 16.39, GBP 12.57 & EUR 13.87 per ounce07 Aug: USD 16.13, GBP 12.35 & EUR 13.67 per ounce04 Aug: USD 16.70, GBP 12.71 & EUR 14.07 per ounce Recent Market Updates - Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold- Great Disaster Looms as Technology Disrupts White Collar Workers- Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat- Silver Mining Production Plummets 27% At Top Four Silver Miners- Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline- Gold Coins and Bars See Demand Rise of 11% in H2, 2017- Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”- What Investors Can Learn From the Japanese Art of Kintsukuroi- Bitcoin, ICO Risk Versus Immutable Gold and Silver- This Is Why Shrinkflation Is Making You Poor- Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble- Why Surging UK Household Debt Will Cause The Next Crisis- Gold Seasonal Sweet Spot – August and September – Coming Important Guides For your perusal, below are our most popular guides in 2017: Essential Guide To Storing Gold In Switzerland Essential Guide To Storing Gold In Singapore Essential Guide to Tax Free Gold Sovereigns (UK) Please share our research with family, friends and colleagues who you think would benefit from being informed by it.
This week for the first time - in the name of "transparency" - the London Bullion Market Association unveiled that as at 31 March, 2017 there were 7,449 tonnes of gold, or 596,000 gold bars, valued at $298 billion sotred in the vaults around London as well as $19 billion in silver. Only the gold hoard at Fort Knox and among Indian households said to account for more than the LBMA's inventory, which clears just over $18 billion in gold daily. Most London gold is stored in the Bank of England, with the rest in private vaults, including those operated by HSBC and JPMorgan, both profiled previously (here and here). The Bank of England holds most of the gold and silver in London, or over 60% of the total gold, and already publishes some details of its holdings. The new LBMA data supposedly also reveals how much private custodians, HSBC, JP Morgan, and ICBC Standard Bank among them, keep in their vaults. The publication of vaulting statistics marks the first step toward the LBMA's promise of greater transparency, which will eventually be enhanced further by trade reporting that is set to also be published later on. respectively. As UBS strategist Joni Teves writes, this addition to the available pool of information helps various market participants, as well as regulators, have a better assessment of market activity in precious metals. For instance, comparing the newly released vaulting statistics with trade flows allows for a better understanding of the movement of metal and the dynamics between investment and physical demand. Combined with other indicators of market length, such as Comex net longs and ETF holdings, it also enables market watchers to have a better gauge of market positioning. The data released so far confirms relatively limited investor participation this year – perhaps as a result of a broad shift toward cryptocurrencies as the new "safe" currency, at least among some age groups. Bank of England (BoE) data, which extends further back to 2011, confirms that investor positions have declined considerably from the peak during the height of the bull-run and that there's room for gold exposures to grow from here. As LBMA data series extends up ahead, we should get an even better picture. All in all, changes in gold holdings as illustrated by LBMA and BoE reinforce a positive stance on gold. Courtesy of UBS, below we present extended observations on what the LBMA data reveal, and the implications for the broader gold market in general, as well as investing in the precious metal in particular. Never 'too much of a good thing' with market data The London Bullion Market Association (LBMA) and the London Precious Metals Clearing Limited (LPMCL) have released data on gold and silver inventories sitting in London vaults (loco London gold and silver), a move that is consistent with wider developments in the industry towards greater transparency. This addition to the available pool of information helps various market participants, as well as regulators, have a better assessment of market activity. Comparing the newly released vaulting statistics with trade flows allows for a better understanding of the movement of metal and the dynamics between investment and physical demand. Combined with other indicators of market length, such as Comex net longs and ETF holdings, it also enables market watchers to have a better gauge of market positioning. The publication of vaulting statistics marks the first step towards more transparency in the industry; trade reporting that is set to also be published later on should further enhance this. Having data on loco London gold and silver trading volumes would allow for better comparisons of trading activity and interest across various regions. As far as market analysis is concerned, there's no such thing as 'too much of a good thing' when it comes to information that provides additional insights. The LBMA and the LPMCL first announced the plan to publish gold and silver vault holdings in May. The data published today represents aggregated data collected from the Bank of England (BoE) and seven other custodians that offer vaulting services, and covers end-period holdings of gold and silver from July 2016 to March 2017. Going forward, this data will be published each month, with a three-month lag. The data includes gold and silver in the form of large bars, kilo bars or coins, but excludes jewellery and other private holdings held in vaults that are not part of the London clearing system. These statistics only include gold and silver that is held physically in London, defined by the LBMA as “held within the environs of the M25”. This metal underpins the daily trading and clearing activities in the London bullion market. London continues to be a key gold trading centre globally, with an average of $18.1bn worth of gold cleared each day in March 2017, according to LBMA net daily clearing statistics. Clearing data is different from turnover data, so until we get LBMA trade reporting statistics, comparing London market activity against that of other regions remains challenging. But to somehow put things into context for now, it probably still helps to note that the average daily turnover of physical gold spot contracts on the Shanghai Gold Exchange is over $1bn, while an average of about $32bn worth of gold futures trade on Comex each day. Estimating investor gold holdings in London One of the recurring questions that gets asked by clients and various market participants is on the level of gold or silver holdings or the level of investor positioning. This has always been very difficult to answer. The market has had to rely on third-party estimates of above-ground holdings, such as those provided by Thomson Reuters GFMS, the World Gold Council or Metals Focus. Other ways that we've tried to address this type of question is to look at Comex net long positions and ETF holdings. Now, with the availability of vaulting statistics, we can add another dimension to the analysis. We can start by saying that 7,449 tonnes or 239.49 moz of gold and 32,078 tonnes or 1,031.32 moz of silver were sitting in London vaults as of end-March. For gold, we can take the analysis further: as the BoE also publishes gold vault holdings data separately, we are able to split out – at least in aggregate – what is held in other vaults. This is not possible for silver as the BoE does not provide silver custodial services. The BoE provides gold custody services primarily to central bank customers to help them get access to London gold market liquidity, although it also holds some gold custody accounts on behalf of certain commercial banks that support central bank access to the liquidity of the London gold market. On the assumption that the BoE custody service primarily caters to central bank customers, it’s probably fair to say that 1) the bulk of BoE gold represents official sector holdings and 2) gold held in other vaults is likely to be more investment-related. To be sure, this is somewhat simplistic in that, as mentioned earlier, the BoE also offers custody accounts to certain commercial banks, while at the same time it is also possible for central banks to hold their gold in non-BoE vaults. To put some context around this, let us consider for illustration's sake that about 80% to 90% of BoE gold holdings are accounted for by the official sector. Let us also consider for simplicity that the vast majority of gold held in commercial vaults represents investor holdings and only a negligible amount comprises official sector gold accounts. These simplistic assumptions would therefore imply that over the past year, an average of about 96.68 to 110.92 moz ($119-139 bn) of investment-related gold was held in London. These inventories would include metal held on behalf of ETFs. Based on our database of gold ETFs, we estimate an average of around 48.78 moz or about $60bn worth of gold was held in London vaults to back ETF shares during the same period. Taking these ETF-related holdings into account would then leave roughly around 47.90 to 62.14 moz or about $60bn to $78bn worth of gold in unallocated and allocated accounts as available pool of liquidity for OTC trading activities. While we now have a starting point with the vaulting statistics, a breakdown of the type of gold holdings remains unavailable. As such, the discussion above and the charts and tables below are presented here to provide some context. Nevertheless, despite these limitations, the data still somehow supports the broad assumption on how loco London gold stocks may be split between official sector and investor holdings. For instance, the data shows that gold held at the BoE appears to be more stable relative to gold held in other London vaults, such that changes in total loco London gold over the past nine months have been driven more by changes in non-BoE gold. Intuitively, it would make sense for investment-related gold holdings to be more volatile relative to official sector holdings. Central banks hold gold as part of their official reserves and also serve monetary purposes, typically having much longer. While we now have a starting point with the vaulting statistics, a breakdown of the type of gold holdings remains unavailable. As such, the discussion above and the charts and tables below are obviously only presented here to provide some context. Nevertheless, despite these limitations, the data still somehow supports the broad assumption on how loco London gold stocks may be split between official sector and investor holdings. For instance, the data shows that gold held at the BoE appears to be more stable relative to gold held in other London vaults, such that changes in total loco London gold over the past nine months have been driven more by changes in non-BoE gold. Intuitively, it would make sense for investment-related gold holdings to be more volatile relative to official sector holdings. Central banks hold gold as part of their official reserves and also serve monetary purposes, typically having much longer time horizons. Matching ETF data against total loco London inventories Gold and silver held in London vaults that back shares in exchange-traded funds (ETFs) are also included in the statistics, regardless of where the ETF is listed. In general, this means that although gold or silver ETF shares may trade on exchanges elsewhere, as long as the metal is held physically in London, these would be considered loco London and form part of the LBMA’s monthly statistics. For instance, the largest gold ETF is listed and trades on the New York Stock Exchange (NYSE), but its designated custodian ultimately holds the underlying metal in its London vaulting facilities. Similarly for silver, the ETF with the largest holdings trades on the NYSE, but some of the metal underpinning the shares is allocated in London. We estimate that as of last week there are around 68.65 moz of gold and about 687.57 moz of silver held in ETFs globally. Our database of gold and silver ETFs suggests that, using average gold and silver prices over the past year, about 48.78 moz of gold worth about $60bn and about 427.67 moz of silver worth about $8bn are likely to be held in London to back ETF shares. This is obviously a rough estimate that’s provided here only for indicative purposes. Looking at changes in ETF holdings vs changes in total vault holdings between July 2016 and the end of the first quarter this year shows that the trend is broadly similar for gold, yet divergent for silver. Considering the period as a whole, the divergence continues for silver with total holdings up by 8% or 79.89moz, but ETFs down 3% or 12.06 moz. For gold, the change in total stocks vs the change in ETFs also diverges when the entire period from July 2016 to March 2017 is taken into account – total loco London gold inventories increased by a modest 2% or 5.34 moz but ETF holdings were down 8% or 3.87 moz. Given the data series is quite short, it is challenging to form any strong conclusions at this juncture. We expect that as the series extends in time we will be able to gather more insights from these flows. Intuitively, divergences in total London gold stocks and ETF holdings could reinforce other indicators that suggest declines in ETF shares do not always reflect net exit from gold or silver exposures. Instead, outflows from ETFs could represent a switch to different forms of exposure such as allocated or unallocated accounts. Tracking gold trade flows vs changes in London stocks Comparing total gold holdings data with UK gold import and export flows confirms a strong link between the two, regardless of whether one is using UK trade data or what may be implied by Swiss Customs statistics. This is intuitive in that net inflows of gold into the UK should understandably translate into a build in holdings, while net outflows would suggest a reduction in overall levels. In addition to UK trade statistics, Swiss data on gold flows from and to the UK is also a useful indicator of how much gold is leaving or entering London vaults. Given Switzerland’s key role in global gold refining, it is an important hub for the movement of metal and essentially acts as an interface between investment demand in Western markets and consumer demand in Asia. Combining Swiss and UK trade data with London vault holdings allows for a more complete picture. Periods of strong physical demand out of key markets such as India and China could attract the movement of large investment bars sitting in London vaults to Switzerland for conversion into kilo bars. These gold kilo bars would subsequently be shipped to physical buyers in Asia and ultimately be converted into jewellery or other investment products to meet consumer demand. Net outflows of gold from the UK should coincide with declines in vault holdings in this case. In fact, this scenario occurred back in 2013: as the Fed's taper tantrum led to a sharp rise in US real rates, gold collapsed by 29% as investors exited gold exposures. In turn, the sharp drop in the gold price made it very attractive for physical buyers, especially in the context of a decade-long bull market. Investor gold positions held in London vaults – whether OTC or ETF-related – were being heavily liquidated. This metal then made its way to Switzerland, was converted into kilo bars, and shipped to Asia to satisfy the surge in demand in China, India as well as other parts of the region. Interestingly, LBMA data shows that in Q3 last year, the opposite occurred – the UK was a net importer of gold and vault holdings increased. This coincided with weak physical demand for most of last year, which was more than offset by a pickup in investment interest. Given strong demand from the investor community, gold still managed to rally 8% in 2016 (and as much as 30% from trough to peak) despite the weak fundamental backdrop. Towards the end of the year, market forces became conducive for gold to once again leave London vaults and be shipped out of the UK. Investors unwound positions in anticipation of the first Fed rate hike, while at the same time, seasonal and regulatory factors in key markets boosted physical demand, allowing buyers in Asia to absorb the liquidation from Western investors. Demand out of China kicked in heading into year-end, in anticipation of the Lunar New Year holidays, while the demonetisation of highvalue banknotes in India led to a knee-jerk spike in demand. So far this year, physical markets have been more stable, while investment demand has been positive yet broadly more subdued. As mentioned earlier, the data tends to reflect this, with changes in loco London gold holdings relatively limited during the first quarter of 2017. A marginal benefit of this link between vault holdings and trade flows is that there is a shorter lag in trade data reporting. This means that trade statistics should help market watchers anticipate changes in loco-London inventories before getting confirmation a couple months later from the LBMA report. Insights on investment activity Looking at the entire data series from July last year to March this year, an observation that's worth noting is the modest 2% increase in total gold holdings equivalent to around 166 tonnes. This change is likely a function of investor liquidations in Q4 2016, as markets anticipated a Fed rate hike, which has since reversed but at a subdued pace. This also coincides with ETF flows – heavy liquidations towards the end of last year have been succeeded by net inflows this year, but volumes lag considerably compared to the same period in 2016. More importantly, according to LBMA data loco London gold holdings during Q1 this year were relatively flat. This coincides well with the broadly limited investor participation in the gold market that we have been highlighting. Many investors are keeping an eye on the gold market and continue to appreciate gold's value as a diversifier in a portfolio, yet few have been actively involved in putting on meaningful, strategic positions. Subdued investor participation has been an important factor holding gold back, in our view, in spite of supportive macro factors. Subdued investor activity has been apparent in speculative positioning data indicated by the CFTC Commitment of Traders Report as well as gold ETF flows. In June, sentiment towards gold understandably came under pressure given the rise in real rates – not just in the US but also in Europe – and the seemingly hawkish shift in tone among central banks (see Gold falls as real rates rise). As of early July, CFTC data showed that gold net longs on Comex had fallen to the lowest levels since January last year. Despite the rebound in gold prices in recent weeks, net speculative positions on Comex have remained very lean. Meanwhile, gold ETFs marked the first month of net outflows in July. Although gold ETF holdings are up on a net basis year-to-date, the increase is much more subdued at only 107 tonnes compared to over 598 tonnes during the same period in 2016. Changes in gold positioning on Comex and ETF holdings coincide with the subdued changes in loco London gold inventories. As mentioned earlier, the data shows a larger increase in silver vault holdings vs gold. Relative speculative positioning between gold and silver on Comex similarly shows a stronger build in investor positions in silver than gold, at least during the first half of the year. Given silver's large industrial demand component, it initially attracted some attention on the back of growth and risk optimism amid the reflation theme. This translated into persistent gains in Comex investor positioning, which reached a fresh all-time high in May. Yet as fiscal stimulus hopes faded and reflation trades were unwound, so did the interest in silver. Comex positioning has since given back about 81% from the highs, mainly driven by a strong increase in gross short positions, which have been reaching record highs in recent weeks. It would be interesting to see Q2 and Q3 data on loco London silver holdings to find out whether OTC positions followed a similar trend. Loco London silver holdings could potentially be relatively more robust than what Comex speculative positions imply. Silver ETF holdings have generally been resilient over the past few years, despite heavy liquidations in gold ETFs, which could mean that silver OTC positions could also show a similar sense of stability. Finding clues on positioning from BoE gold data, for now Given that only limited historical data is available, it is difficult to put total London gold inventories fully into perspective. For instance, we cannot compare current levels versus the amount of gold and silver held during the peak of the bull run nor during the trough reached at the end 2015. However, for gold we can look to BoE vault holdings, which go back to 2011, for some hints. Based on LBMA data, the BoE accounts for the bulk of loco London gold inventories, representing about 68% of the total on average over the period covered. As the LBMA data series extends up ahead, we should be able to have a better idea of how closely linked trends in BoE and non-BoE gold are, and in turn get a better perspective on investor positions. The amount of gold held at the BoE was at a high of 6,250 tonnes or 200.50 moz in February 2013 and fell to a low of 4,693 tonnes or 150.87 moz in March last year. As of end-Q1, levels are about 8% or 12.49 moz higher at 163.36 moz, but still considerably below the highs. As we argued earlier, the BoE's gold holdings likely mainly reflect official sector positions. Some central banks manage their gold reserves more actively than others while there have been a few such as the Bundesbank which have repatriated gold held in various foreign locations over the past few years. These flows are likely also reflected in the BoE's data. Nevertheless, the BoE does hold some gold custody accounts for certain commercial banks. To the extent that non-official sector gold holdings influences these flows, the trends should be broadly similar to changes in loco London gold held in other vaults. The trend in gold holdings would in this case be consistent with our view that exposure to gold has been reduced considerably from the highs during the peak of the bull run. And although investment interest has been revived over the past year and a half, levels of exposure likely remain limited by historical standards. Much leaner positioning is one of the key factors supporting gold this year and suggests that there is ample room for positions to be rebuilt against a backdrop of benign rates, soft dollar and lingering uncertainties.
Эксперты из Индии подсчитали спрос на золото в этой стране с 2008 г. Как выяснилось, с 2008 г. по сегодняшний день в страну было импортировано жёлтого драгметалла на общую сумму 300 млрд. долларов...
Первое место в мире по золотовалютным резервам заняла Швейцария. Золотовалютные резервы страны составляют около 1040 тонн, она занимает первое место по количеству золота на душу населения — 123,5 грамма, согласно данным Всемирного совета по золоту. За Швейцарией следуют Ливан (49 граммов золота на душу населения), Германия (41,1 грамма), Италия (40,4 грамма) и Португалия (37,1 грамма).
Submitted by Ronan Manly, BullionStar.com Infographic website Visual Capitalist recently published an eye-catching infographic on behalf of Sprott Physical Bullion Trusts which featured 4 well-known billionaire investors and their supposed investments in gold. The infographic is titled “Why the World’s Billionaire Investors Buy Precious Metals” and can be seen here. The 4 investors profiled in the infographic are: Jacob Rothschild (Lord), chairman of London-based investment trust RIT Capital Partners Plc David Einhorn, president of Manhattan-based hedge fund firm Greenlight Capital Ray Dalio, chairman and CIO of hedge fund firm Bridgewater Associates, Westport (Connecticut) Stanley Druckenmiller, chairman and CEO of Manthattan-based Duquesne Family Office (and formerly of Duquesne Capital Management) Overall, four very famous investors, and four names that should at least be vaguely familiar to almost anyone who has a passing interest in financial markets and investing. For each of the 4 billionaires, the Sprott infographic provides a few quotes about their views on gold and then moves on to record their recent ‘Moves’ into ‘gold’, or in some cases their recent readjustments of existing ‘gold’ exposures. However, the trouble with this infographic is that although it’s visually appealing, nowhere does it mention how these famous investors achieve their exposures to ‘gold’, i.e. what form their gold investments take. This is something which is also regularly bypassed in financial media articles, especially those published by Bloomberg, articles which refer to hedge fund managers such as Druckenmiller, or John Paulson, or Ray Dalio buying ‘gold’, but which all too often are too lazy to do basic research into the actual trades that these hedge fund managers execute to acquire their positions in ‘gold’ and whether these positions are actually in real physical gold or in some form of synthetic or derivative or paper gold. In fact, the first comment posted on the Visual Capitalist website under said Sprott infographic when it was published asks exactly this question: “I’d like to know if they are holding physical bullion, presumably in guarded safe vaults, or just paper.” Given that the infographic is ‘Presented by’ Sprott Physical Bullion Trusts, one might assume that Rothschild, Einhorn, Dalio and Drukenmiller are all investing in physical bullion. But are they? This is the question I set out to answer and which is documented below. Some of my findings may surprise you. The Rothschilds: Jacob & RIT Capital Partners First port of call, the Rothschilds of St James’s Place in London. Given that the Rothschilds are probably the richest family in the world and have been involved in the gold market for hundreds of years, you might assume that the family of the Five Arrows knows a thing or two about the difference between real gold bars and paper gold. And presumably they do. However, no one seems to have told this to the day-to-day managers of RIT Capital Partners Plc, the Rothschild controlled investment vehicle quoted in Sprott’s infographic. Investment trusts are actually public limited companies (Plcs) which are structured as closed-ended investment vehicles. These vehicles issue a certain number of shares that can then be publicly traded. RIT Capital Partners plc, formally called the Rothschild Investment Trust (hence the name RIT), trades on the London Stock Exchange. Jacob Rothschild (The Lord Rothschild) is chairman of RIT Capital Partners Plc. As a publicly traded vehicle, RIT Capital Partners Plc publishes annual and half-yearly reports, and is therefore more transparent than its hedge fund brethren. RIT’s latest report, an annual report for year-end 2016, was published on 28 February 2017. Strangely, although the Sprott infographic was only published on 7 June 2017, it quotes not from the annual report for year-end 2016 but from RIT’s half-yearly report to 30 June 2016, which was published on 15 August 2016. The Sprott infographic states: “In a 2016 shareholder update [Jacob] Rothschild outlined bold changes to the RIT Capital Partners’ portfolio, including…increased exposure to gold and precious metals to 8%” Similarly, in the RIT Chairman’s Statement (page 2) of the 30 June 2016 report, Jacob Rothschild said “We increased gold and precious metals to 8% by the end of June.” Glancing at either the Chairman’s statement or the Sprott infographic, you might think ‘ok, so RIT holds (or held) 8% of its portfolio in gold and precious metals’. However, this is not the case, a fact which becomes clear when we look at the Investment Portfolio (holdings) of RIT that are detailed in the same report. Jacob Rothschild, RIT Capital Partners RIT is a global investment fund whose holdings span equities, hedge fund investments, private investments, real assets, credit, and bonds. It’s ‘gold’ and ‘precious metals’ holdings are listed under ‘Real Assets’. The entire RIT portfolio is worth £2.73 billion. The Real Assets section of the RIT report to 30 June 2016 (on page 6 of the report, page 8 of the pdf) lists relevant gold-related line items as: “BlackRock Gold & General Fund”, described as “Gold and precious metal equities”, valued at £22.9 million, and representing 0.9% of the NAV, with a fund weight of 0.83% “Gold Futures” with a description “Long, 6.0% notional“, valued at £7.6 million, represents 0.3% of the NAV “Silver Futures with a description “Long, 1.2% notional” valued at £7.6 million, representing 0.0% (rounded) of the NAV These are the only gold-related investments in the entire RIT portfolio. Therefore, could this 8% that Jacob Rothschild refers to as “we increased gold and precious metals to 8% by the end of June” be a combination of a 6% notional long on gold futures, a 1.2% notional on long silver futures, and a 0.8% fund weight in gold mining equities through the BlackRock Gold & General Fund holding? In short, the answer is Yes. Firstly, looking at the BlackRock Gold & General Fund, this is a UCITS equity fund which exclusively invests in the shares of gold and silver mining companies such as Newcrest, Newmont, and GoldCorp and which is benchmarked against the FTSE Gold Mining Index (an equity index). However, the BlackRock website reminds us that “The Fund does not hold physical gold or metal.” Like all equity investments, this fund exposes its holders to equity risk, currency risk, sectoral risks (in this case the mining sector), possible gold hedging risks, and the general corporate risks that come with stock specific investing in any publicly quoted company, some of which cannot be diversified through portfolio investing. Next up are the precious metals futures line items. In investment portfolios, notional is literally the gross exposure of a position. In this case, the RIT portfolio being long 6.0% notional in gold futures just means that the portfolio’s notional exposure to gold (via the gold futures position) represented (on 30 June 2016) an amount which was 6.0% of the total (gross) exposure of the portfolio. This is also a leveraged position since it was acquired via the purchase of exchange traded futures and the maintenance of these futures via margin. The amount reflected in the NAV for this position just refers to the margin. I also checked with RIT investors relations as to whether Jacob Rothschild, when he stated that RIT holds gold, was actually referring to these gold futures positions. RIT investor relations responded: “Yes, we do refer to long gold futures exposure as “holding gold”. We take this view since we are confident that gold futures are acting as a suitable proxy for gold both from a regulatory perspective and in terms of where we are in the cycle. However, it should be clear to all that holding gold futures is not the same thing as holding vaulted physical gold. Gold futures may provide exposure to the US Dollar price of gold, but that’s about it, and even if they can be theoretically exercised into physical gold on the COMEX or ICE platforms, no one uses them for this purpose. For example, only 0.04% of COMEX gold futures contracts result in physical delivery each year. Gold futures also entail exchange risk, risk of not being able to exercise for delivery, margin risk, forced cash settlement risk, etc etc. Gold futures are also derivatives that can come into existence in massive quantities as long as there are counterparties to take the other side of the futures trades. Allocated physical gold on the other hand is an asset which exists in limited quantities, has no counterparty risk, has intrinsic value and has been used as money and as a store of value for thousands of years. The “regulatory perspective” that RIT refers to just seems to mean that the fund’s exposure ticks various compliance boxes and is an acceptable security from a compliance and regulatory perspective. The “where we are in the cycle” phrase probably refers to the interest rate cycle in terms of interest rate movements, inflation, real interest rates etc, but surely this is irrelevant because if you really believe that gold futures prices are a perfect proxy for gold prices, then the existence of a “cycle” and the phases of such a cycle become irrelevant to the investment decision? In summary, it should be clear that RIT Capital Partners Plc does not hold any gold or other precious metals, because it merely holds gold futures and units in a BlackRock fund which itself only holds gold and silver equities (common shares) and which does not hold physical gold. Just for completeness, let’s turn to the latest annual report from RIT for year-end 2016 that Sprott did not refer to. Has anything changed compared to 30 June 2016? At year-end 2016, according to Jacob Rothschild: “We continue to hold gold and gold mining shares amounting to 6% of the portfolio.“ Therefore, by the end of 2016, by RIT’s logic, it now had a 6% exposure to gold (and the exposure to silver futures had disappeared). However, as per the 6 month earlier period, this was really a) exposure to the US dollar price of gold via gold futures and b) an exposure to the common equity of publicly-traded gold mining companies through the BlackRock fund investment. In the Real Assets section of the RIT annual report (page 13 of the report, page 15 of the pdf), it lists: “BlackRock Gold & General Fund”, with a description “Gold and precious metal equities” valued at £20.3 million, representing 0.9% of the NAV, and with a fund weight of 0.7% “Gold Futures” with a Description “Long, 5.7% notional” representing (0.2%) of the NAV Again, the 6% Rothschild reference includes the 5.7% long notional on gold via the gold futures, the BlackRock fund with a weight of 0.7%, and possibly the (0.2%) NAV (margin), which altogether net to approximately 6% when rounded down. Since 8% sounds better than 6%, Sprott may have chosen to reference the 30 June 2016 RIT report and not the more recent 30 December 2016 RIT report as this would make Rothschild appear more bullish on gold. David Einhorn and Greenlight Capital Hedge funds by their nature are very secretive, and because they are private pools of capital, they have no obligation to report detailed holdings even to their clients, let alone to the general public. Some of the justifications for hedge fund secrecy include preventing other trading parties adversely trading against them and preventing competitors replicating their positions. Note, hedge funds still have to report equity holdings to the US SEC and they do this via their quarterly 13F form submissions, which can be viewed on the SEC EDGAR website about 6 weeks after quarter end. Sometimes hedge fund stars will drop hints about some of their positions or engage with the financial media, but this is mainly to talk their positions and trading books up. Often however, the “partner letters” (similar to shareholder letters) that hedge fund partnerships send to their clients / investors will give some indication as to their positions and asset allocations, and for whatever reason, some of these letters seem to make it into the public domain pretty quickly. Note that most hedge funds are established as Limited Liability Companies (LLCs), a structure which supports the partnership model. Following Jacob Rothschild, next up on the Sprott infographic is hedge fund manager David Einhorn and his Greenlight Capital hedge fund firm. Greenlight, as a hedge fund firm, runs a series of funds that invest in equity, debt etc but also include global macro and that are known as the “Greenlight Capital funds” a.k.a. “The Partnerships”. There are at least 6 funds in this group, maybe more. David Einhorn, Greenlight Capital The Sprott infographic refers to a recent gold-related ‘Move’ that Einhorn that made as follows: “In early 2017, Einhorn mentioned on an earnings call that he was:…Keeping gold as a top position” More recently, Greenlight again refers to its gold positions in a partners letter dated 25 April 2017, in which it wrote that “gold gave us a small profit in macro”, and that: “Gold remains a long-term position with a thesis that global fiscal and monetary policies remain very risky” So we can assume that Einhorn maintains a gold exposure of some sort. Since there was no information in the above partner letter as to what exactly Greenlight refers to as a gold position, and nothing that I could find on the web, I did what any junior Bloomberg reporter should but doesn’t do, and shot off an email to Greenlight asking how Greenlight Capital attains its long gold exposure? Surprisingly, or maybe not, within about 20 minutes Greenlight answered with a short and sweet one-liner: “We hold physical allocated gold in all our funds.” This response came from the top of the Greenlight tree, close to Einhorn. Hint David Einhorn only follows three accounts on Twitter, one of which is Donald Trump another of which is the Einhorn Trust. So now we know that at least one major hedge fund firm holds physical allocated gold. On a side note, Greenlight also offers two funds called Greenlight Capital (Gold), LP and Greenlight Capital Offshore (Gold), Ltd. These two funds actually offers investors a gold class which denominates investments in that class in gold rather than USD. This is similar to a USD denominated fund offering shareholders a EUR or CHF class, the only difference being that this class is in gold. Ray Dalio and Bridgewater Bridgewater Associates, based in Westport in Connecticut, runs some of the largest and most well-known individual hedge funds such as the global macro Pure Alpha as well as other well-known funds called ‘The All Weather’ and ‘Pure Alpha Major Markets’. Ray Dalio is founder, chairman and chief investment officer (CIO) of Bridgewater. In the Sprott infographic, the gold ‘Move’ which they chose to highlight Dalio for was that: “In 2016, Dalio said it is prudent to have a ‘well-diversified portfolio’ that is 5-10% gold” However, unlike the other investors profiled, i.e. Rothschild, Einhorn, and Druckenmiller, who had investment decisions attributed to them that involved taking or extending long positions, there is nothing, at least in the infographic, that refers to Dalio taking on or amending a gold position. When Dalio refers to gold, which he has done publicly on a number of occasions, he tends to do so in generalistic terms such as the following comments which were taken from Dalio’s appearance at the CEO Speaker Series conversations organised by the Council on Foreign Relations (CFR): “And so gold is one of the currencies. So we have dollars, we have euros, we have yen and we have gold.” “Now, it [gold] doesn’t have a capacity — the capacity of moving money into gold in a large number is extremely limited.” “I think … there’s no sensible reason not to have some — if you’re going to own a currency, … it’s not sensible not to own gold” “I don’t want to draw an inordinate amount of attention to gold” “a certain limited amount, at least passably, should be in gold, just like you would hold a certain amount in cash” “Now, it depends on the amount of gold, but if you don’t own, I don’t know, 10 percent in — if you don’t have that and then it depends on the world, then you — then there’s no sensible reason other than you don’t know history and you don’t know the economics of it.” Ray Dalio, Bridgewater Associates Dalio frequently, in various forums, demonstrates his understanding of the historical importance of gold in the monetary system. Based on the language that Dalio uses about capacity of the gold market and his appreciation of the history of gold, my hunch is that Bridgewater does hold physical gold in a similar manner to how Greenlight Capital holds gold. Dalio has also gone on record with Tony Robbins hinting at a gold allocation that he would use for an “all weather fund”. This is not the Bridgewater All Weather Fund, but it could be something similar. Dalio’s recommended asset allocation that he gave Robbins was: 30% Stocks 40% Long-Term Bonds 15% Intermediate-Term Bonds 7.5% Gold 7.5% Commodities Although it is quite tricky to contact Bridgewater, I did manage to find Dalio’s email (somehow or other) and like an aspiring Bloomberg reporter (or not), I shot off an email to Dalio asking: “Does Bridgewater hold physical gold in its funds (e.g. Pure Alpha, All Weather, and Pure Alpha Major Markets) or some other type of long gold exposure?” The same day, I received back an automated response: ______________________________________________________________________ Message from "Ray Dalio" ______________________________________________________________________ I recognize from your email address that this is the first message I have received from you since Bridgewater Associates began using Sender Address Verification (SAV). Your message is very important to me. Like you, we are very concerned with stopping the proliferation of spam. We have implemented Sender Address Verification (SAV) to ensure that we do not receive unwanted email and to give you the assurance that your messages to me have no chance of being filtered into a bulk mail folder. By pressing REPLY and SEND to this message your original message will be delivered to the top of my inbox. You need only do this once and all future emails will be recognized and delivered directly to me. ... Thank you! Ray DalioHowever, after replying as per the instructions above using the verification address, there was no further response from Bridgewater. Maybe he is on vacation! So the jury is still out on how Bridgewater acquires its exposure to gold, assuming that its funds actually have exposure to gold. But my guess is that at least some of Bridgewater’s funds do hold gold, and probably hold real physical allocated gold. Stanley Druckenmiller and Duquesne Finally, the Sprott infographic features Stanley Druckenmiller, founder and former chairman and president of Pittsburgh-based Duquesne Capital Management, and also former portfolio manager of Soros’ Quantum Fund. In 2010, ‘Stan’ Druckenmiller wound down Duquesne Capital since he claimed it was becoming harder to deliver consistently high returns, but he continued to manage his own wealth through Duquesne Family Office LLC, which is based out of Manhattan. According to the infographic, in early 2017 Druckenmiller said: “Gold was down a lot, so I bought it.” Stan Druckenmiller, Duquesne This quote was reported in a 8 February 2017 Bloomberg article which itself was based on a CNBC interview from 7 February: “I wanted to own some currency and no country wants its currency to strengthen,” Druckenmiller said Tuesday in an interview. “Gold was down a lot, so I bought it.” As per usual, Bloomberg doesn’t bother to find out or mention what form of gold exposure Druckenmiller was referring to in that interview. Strangely, Bloomberg says that Druckenmiller bought gold in late December and January having previously sold his ‘gold’ on election night in November when Trump was elected. I say strangely because Druckenmiller is known for getting his US dollar ‘gold exposure’ via the gold-backed ETF the SPDR Gold Trust (GLD) however, the Duquesne Family Office 13F filings with the SEC don’t show GLD activity in Q4 2016 or Q1 2016. Looking at recent Duquesne Family Office 13F filings which show reportable equity holdings (including GLD since GLD is a listed security and is basically like a share), the last time Duquesne Family Office had a long exposure to the SPDR Gold Trust was in Q1 2016 when it held 2,016,000 call options on the SPDR Gold Trust (Cusip 78463V907) which at the time had a notional exposure of $237.16 million. Druckenmiller had purchased 2,880,000 call options on GLD during Q2 2015 but reduced this to 2,016,000 calls during Q1 2016. Duquesne has not held any SPDR Gold Trust shares or options since Q1 2016. However, looking at the Duquesne 13F filings for Q3 2016, Q4 2016 and Q1 2017, there are some interesting changes in reported holdings of some gold mining equities over this period. As of the end of September 2016, Duquesne reported holding 1.8326 million Barrick Gold shares and 530,800 Agnico Eagle Mines shares. Then, as of the end of December 2016, neither of these stocks appeared on the Duquesne 13F list. However, as of the end of March 2017, both Barrick and Agnico reappeared on Duquesne’s filing, with Druckenmiller’s family investments holding 2.85 million Barrick Gold shares, and 882,900 Agnico Eagle Mines shares. Barrick Gold, headquartered in Canada, is the world’s largest gold mining company. Agnico Eagle, also headquartered in Canada, is another large gold mining company. The timing of Druckenmiller saying that he sold his ‘gold’ on election night in November 2016 and the bought gold in late December 2016 and January 2017 fits very well with the Duquesne trades of selling Barrick Gold and Agnico Eagle so that they appeared in the Q3 13F, but not in the Q4 13F and then reappeared in the Q1 2017 13F. If this is the case, then Druckenmiller’s Duquesne does not hold gold but holds gold mining equities, and Druckenmiller’s recent references to buying gold are really references to holding common shares in publicly-traded gold mining companies. Duquesne, however, could hold other ‘gold exposures’ such as gold futures or even real physical allocated gold. But due to the non-obligation of these investment pools to report holdings, this is unclear. I also sent an email to Stan Druckenmiller at his Duquesne address, asking him: “Does Duquesne Family Office hold physical gold as part of its exposure to gold within its investments, or is the exposure some other type of long gold exposure such as the gold-backed ETF GLD?” However, as of the time of writing, Druckenmiller has not responded. Druckenmiller’s gold exposure via GLD calls between Q2 2015 and Q1 2016 also deserves some commentary. Readers of this website will know that holding a gold-backed ETF such as GLD is not the same as owning real physical gold. Although the Trust behind GLD holds gold bars, GLD units just provide exposure to the US dollar price of gold and there is no conversion option into real gold. With GLD, the holder is a shareholder and not a gold holder. There are many other concerns with GLD, all of which are documented on a BullionStar infographic. However, Duquesne’s ‘exposure’ is even one more step removed from gold since it was in the more of a derivative (call option) on an underlying (GLD) which itself does not provide ownership of any gold to the holder. So in some ways this could be called a second order derivative. Paulson & Co Although Sprott’s infographic doesn’t feature John Paulson of hedge fund firm Paulson & Co, maybe it should have. However, on second thoughts maybe not, because Paulson & Co is currently the 6th largest institutional holder of SPDR Gold Trust (GLD) shares, which as explained above, is not the same as owning real physical gold. According to its latest 13F filing, Paulson & Co holds 4,359,722 GLD shares worth a sizeable $500 million. John Paulson (far right), along with Jim Simons of Renaissance (middle) and George Soros (left) Paulson also launched a specific gold fund in 2010 which is now called the PFR Gold Fund, named after Paulson, and the two managers who used to run the fund, namely, Victor Flores and John Reade, hence the PFR. Reade has now left Paulson & Co, and moved to the World Gold Council (WGC), which derives the majority of its revenue from…wait for it….the SPDR Gold Trust, since WGC’s 100% owned subsidiary World Gold Trust Services is the sponsor of the GLD. According to HedgeTracker, the PFR Gold Fund has a “long-term strategy focus investing in mining companies and bullion-based derivatives“, so again you can see that this is nothing to do with owning and holdings real physical allocated gold. Conclusion After this whirlwind tour, we know the following: RIT Capital Partners Plc claims to hold gold but really holds a) gold futures which provide notional long gold exposure and b) a BlackRock fund which invests in gold mining shares. Greenlight Capital holds allocated gold in all of its hedge funds (and they are good about replying to emails). Bridgewater Associates probably holds gold exposure across at least some of its funds. Given Ray Dalio’s grasp of the importance of real physical gold, I would be surprised if Dalio’s funds do not hold real physical gold. But Dalio is a hard man to track down, so the jury is still out on this one. Stan Druckenmiller’s Duquesne Family Office had a large exposure to the SPDR Gold Trust via call options in 2015 and early 2016 but then closed this exposure. Duquesne also invests in gold mining equities Barrick Gold and Agnico Eagle Mines, and this could be what Druckenmiller is referring to when he said he sold and then bought back gold. Paulson is a big fan of the SPDR Gold Trust, a vehicle which is in no way the same as owning physical gold, because it merely provides exposure to the US dollar price of gold. If and when the paper gold market implodes and the price of real physical gold diverges from the paper price of gold, the world’s billionaire investors will need to line up their ducks and explain to their partners and shareholders if they actually hold tangible physical gold bars, and if not why not. This article originally appeared on the BullionStar website under the title "Are the World’s Billionaire Investors Actually Buying Gold?"
Золото и шелк. Опубликованные недавно данные Всемирного золотого совета показали сенсационный рост спроса со стороны Пекина на золото. Не финансовые инструменты, так или иначе привязанные к золоту, не ценные бумаги, номинированные в этом металле, не права на золото, хранящееся в...
Pension Funds, Sovereign Wealth Funds and Central Banks "Stock Up" on Gold "Amid Uncertainty" By Attracta MooneyFinancial Times, LondonSunday, June 11, 2017 The gold reserves of the world's biggest public sector investors reached an 18-year high as they hoarded the precious metal after Donald Trump's election and the Brexit vote added to geopolitical uncertainty. State investors increased their net gold holdings by 377 tonnes to an estimated 31,000 tonnes last year -- the highest level since 1999, according to a study of 750 central banks, public pension plans and sovereign wealth funds with $33.5 trillion in assets. Danae Kyriakopoulou, chief economist at the Official Monetary and Financial Forum, the central bankers' forum that compiled the research, said state investors had flocked to the precious metal because of its status as a "haven asset" and to take advantage of rising prices. "There was a lot of political uncertainty in the past year. There were big political shocks with Brexit and Trump, which have driven investors back to gold," she said. The price of gold surged after the unexpected Brexit vote in June and immediately after the election of Mr. Trump in November, although it fell in the final weeks of the year. Alistair Hewitt, head of market intelligence at the World Gold Council, said state-backed investors had also increased their gold stores as a hedge against the stronger dollar. The dollar is up 15 percent against the pound over the past year. "Central banks and public institutions have been adding to their strategic gold holdings for a number of years," Mr. Hewitt said. "A lot of emerging market central banks hold significant amounts of US dollars, and they have bought gold as a hedge against this concentrated currency exposure." ... Remainder of report via FT: State investors stock up on record gold reserves amid uncertainty In 2013, the global monetary think-tank, the Official Monetary and Financial Institutions Forum (OMFIF), warned in a wide-ranging analysis of the world monetary system of “twin shocks” to the dollar and the euro and of a “coming dollar shock” and pointed out how gold would be a safe haven in a dollar crisis. Demand for physical gold is likely to rise as the world heads towards a multi-currency reserve system under the impact of uncertainty impacting the stability of the dollar and the euro, the main currencies held by central banks and sovereign wealth funds.See here: “Gold Will Prove A Haven From Currency Storms” – OMFIF Study News and Commentary Gold Rally Limited to U.K. as Impact of Political Turmoil Muted (Bloomberg.com) State investors stock up on record 31k tonnes of gold reserves – highest since 1999 (Gata.org) Law Will Oblige Travelers Entering US to Declare Digital Currency Holdings (AltCointToday.com) Sibanye Gold say South Africa wildcat strike continues, 138 arrested (Reuters.com) Nevada Becomes First US State to Block Blockchain Taxes (CoinTelegraph.com) The Strange Secret History of Operation Goldfinger (NewYorker.com) Bringing 1/2 of Germany’s Gold Back (Handelsblatt.com) Barack Obama – The $600 Billion Man (BonnerAndPartners.com) Santander acquistion of Banco Popular shows "financial system insane" (ValueWalk.com) Another Day of Salami Slicing in Silver and Gold (GoldSeek.com) Avoid Digital & ETF Gold – Key Gold Storage Must Haves Gold Prices (LBMA AM) 12 Jun: USD 1,269.25, GBP 998.14 & EUR 1,131.28 per ounce09 Jun: USD 1,274.25, GBP 1,001.31 & EUR 1,139.18 per ounce08 Jun: USD 1,284.80, GBP 992.12 & EUR 1,142.70 per ounce07 Jun: USD 1,292.70, GBP 1,001.07 & EUR 1,146.62 per ounce06 Jun: USD 1,287.85, GBP 997.31 & EUR 1,144.77 per ounce05 Jun: USD 1,280.70, GBP 992.41 & EUR 1,136.88 per ounce02 Jun: USD 1,260.95, GBP 980.39 & EUR 1,123.88 per ounce Silver Prices (LBMA) 12 Jun: USD 17.13, GBP 13.50 & EUR 15.27 per ounce09 Jun: USD 17.35, GBP 13.60 & EUR 15.52 per ounce08 Jun: USD 17.60, GBP 13.60 & EUR 15.67 per ounce07 Jun: USD 17.60, GBP 13.64 & EUR 15.71 per ounce06 Jun: USD 17.56, GBP 13.61 & EUR 15.62 per ounce05 Jun: USD 17.52, GBP 13.58 & EUR 15.59 per ounce02 Jun: USD 17.19, GBP 13.37 & EUR 15.33 per ounce Recent Market Updates - 4 Charts Show Gold May Be Heading Much Higher- Gold in Pounds Surges 1.5% To £1,001/oz – UK Political Turmoil Likely- Gold Prices Steady On UK Election Risk; ECB Meeting and Geopolitical Risk- Gold Breaks 6-Year Downtrend On Safe Haven and 50% Surge In Chinese Demand- Deposit Bail In Risk as Spanish Bank’s Stocks Crash- Terrorist attacks see Gold Stay Firm- Trust in the Bigger Picture, Trust in Gold- Trump, UK and the Middle East drive uncertainty- Is China manipulating the gold market?- Why Sharia Gold and Bitcoin Point to a Change in Views- Bitcoin volatility and why it’s good for gold- Silver Bullion In Secret Bull Market- Should I Invest My Fortune in Gold? Inaugural Lecture by Dr Brian LuceyAccess Award Winning Daily and Weekly Updates Here
На рынке драгоценных металлов царят оптимистические настроения. Вчера котировки золота прибавили 1,2%. Таких цен на золото не было с 4 ноября прошлого 2016 года. Золото получает хорошую поддержу из Азии...
Zacks Industry Outlook Highlights: Goldcorp, Barrick Gold, Golden Star Resources, New Gold and Seabridge Gold
Zacks Industry Outlook Highlights: Goldcorp, Barrick Gold, Golden Star Resources, New Gold and Seabridge Gold
Zacks Industry Outlook Highlights: Barrick Gold, AngloGold Ashanti, Alamos Gold, Eldorado Gold and Pershing Gold
Zacks Industry Outlook Highlights: Barrick Gold, AngloGold Ashanti, Alamos Gold, Eldorado Gold and Pershing Gold
Gold-backed Currency Launches in Dubai New gold-backed currency OneGram launched Backed by one-gram of gold, uses blockchain technology OneGram is first in wave of new Shariah, tech-savvy gold products 2017 sees big changes for gold thanks to Shariah gold and blockchain Gold investors should prepare for tightening in supply Bitcoin and shariah gold demand suggest change in retail investor thinking Technology, shariah gold and bitcoin point to changing views Ramadan Kareem rang out across Dubai and the rest of the Muslim World this weekend as the holiest month in the Islamic calendar began. For 29-30 days over a billion Muslims around the world practice sawm (fasting), charity (zakat) and salat (prayer). This period is a time of spiritual reflection, increased devotion and worship as well as a time to come together with loved ones for both the break fast meal (Iftar) and pre-fast meal (Suhur). Ramadan is obviously observed in different ways around the Muslim world. Here in Dubai a non-Muslim will experience a place full of both celebration and reflection, with events happening every evening that are there to welcome everybody. The month also sees a number of companies launching Ramadan promotions ranging from bank accounts (free banking for six months, anyone?) to spa treatments (2-for-1 massage?) to huge packs of dates (the first food to break the fast). As part of the celebrations, a new gold-backed currency has been launched, here in Dubai. It is a new currency known as OneGram (OGC) backed by one gram of gold and can be used for digital payments. There is a fixed number of OGCs and digital transaction fees (minus admin costs) will be reinvested to buy more gold. According to the managers, “the amount of gold backing each OGC will increase with time.” OneGram has been launched by a private company of the same name. The company claims to offer a proof-of-stake blockchain that is ‘’further anonymized’ than Bitcoin. Reports state that ‘developers employ zero-knowledge dual-key stealth addresses and ring signature protocols toward ‘instant, untraceable, unlinkable, trustless transactions.’ Shariah Gold Standard In December we witnessed the launch of the Shariah Gold Standard. Announced in Bahrain by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council, the Standard is the first ever set of guidelines for the 2 billion Muslims looking to invest in gold-based financial products. As we explained in December: According to Islamic texts, gold is a ribawi item, which means that it must be sold on weight and measure, and cannot be traded for future value or for speculation. In order for a gold instrument to be Shariah-compliant, the precious metal must be the underlying asset in related transactions. When the Shariah Gold Standard was launched, one of the world’s leading investors Mark Mobius labelled it as a “godsend” that was both “innovative and revolutionary”. Currently the Islamic Finance market accounts for 1% of the global GDP, and is growing at nearly 20% per year. The new AAOIFI issued guidelines are expected to propel demand for gold as more companies (such as GoldCore) launch Shariah-compliant gold investment products. The combined use of both innovative Shariah gold investment standards and new technology could boost demand by around 500-1000 tonnes per annum. The launch of OneGram is part of the new wave of gold financial products that we are beginning to see as a result of the Shariah Gold Standard. Muslims have long looked for more gold products to be made available to them in the $2 trillion Islamic financial markets. A gold-backed cryptocurrency is not just a positive sign for Muslim investors, it is also a positive sign for those who are looking to invest outside of the financial system. Of course, investing in physical gold has long been available for both Muslims and non-Muslims for many years, but this recent announcement says a lot more about the demands for safe-haven investing than previous changes in financial markets have. A new safe-money standard? Right now it seems the world is paying attention to a financial and geopolitical situation that is proving to have one too many cracks to fix and fill. But, in the background, there is a growing awareness of how we can protect ourselves when those cracks turn into canyons. There is something in the air that suggests we might be seeing a turn in the way savers and investors are beginning to view their money. The launch of technologically advanced, shariah compliant gold-products is an early indication of this. But when one also considers the recent performance of bitcoin, then we see that the desire to hold money outside of the financial system with reduced counterparties is growing. The size of the bitcoin market might be minuscule compared to gold, and gold’s market size minuscule compared to that of the dollar, but times are changing. The increased accessibility to these sound-money, safe-haven assets is a sign that the most powerful financial group in the world - the people on the street - are harnessing ways to gain control of their investment portfolios. Ultimately we believe bitcoin is a complementary asset to gold, but time will tell. Whilst watching and waiting on bitcoin, gold investors should feel assured that launches of gold-backed products such as OneGram are not only validation of the modern approach to investing in gold, but also validation of their decision to invest in gold. This is good news for gold investors who have chosen to invest in not only the ultimate form of financial insurance but also one that is finite and physical. As awareness and demand grow, it is not unreasonable to expect to see some tightening in the availability of physical gold, which will have a positive impact on the price. News and Commentary North Korea warns of ‘bigger gift package’ for U.S. after latest test (Reuters) Gold firm near one-month highs as geopolitical concerns support (Reuters) Gold little changed near 4-week highs in holiday-thinned trade (Investing.com) How Much Gold Would Buy You a Home in Toronto? (Bloomberg) Stocks Meander, Pound Rises in Holiday-Hit Trading (Bloomberg) Will The Crazy Global Debt Bubble Ever End? (ZeroHedge) Op-Ed: Bitcoin is more akin to the Nasdaq than gold and is not a safe haven asset (CNBC) Gold Demand Could Plunge As India Considers New Tax Policy (OilPrice.com) The Story Behind Continuing Strong Gold Bullion Coin Demand (Market Oracle) ECB’s Draghi: Extraordinary Monetary Support Still Needed (Economic Calendar) Avoid Digital & ETF Gold – Key Gold Storage Must Haves Gold Prices (LBMA AM) 29 May: USD 1,265.00, GBP 983.41 & EUR 1,127.87 per ounce26 May: USD 1,265.00, GBP 983.41 & EUR 1,127.87 per ounce25 May: USD 1,257.10, GBP 969.48 & EUR 1,119.57 per ounce24 May: USD 1,251.35, GBP 963.29 & EUR 1,119.58 per ounce23 May: USD 1,259.90, GBP 969.62 & EUR 1,119.17 per ounce22 May: USD 1,255.25, GBP 967.17 & EUR 1,123.07 per ounce19 May: USD 1,251.85, GBP 962.17 & EUR 1,122.03 per ounce Silver Prices (LBMA) 29 May: USD 17.29, GBP 13.45 & EUR 15.41 per ounce26 May: USD 17.29, GBP 13.45 & EUR 15.41 per ounce25 May: USD 17.15, GBP 13.23 & EUR 15.29 per ounce24 May: USD 17.03, GBP 13.14 & EUR 15.22 per ounce23 May: USD 17.14, GBP 13.22 & EUR 15.25 per ounce22 May: USD 16.95, GBP 13.04 & EUR 15.10 per ounce19 May: USD 16.77, GBP 12.90 & EUR 15.02 per ounce Recent Market Updates - Bitcoin volatility and why it’s good for gold- Should I Invest My Fortune in Gold? Inaugural Lecture by Dr Brian Lucey- Gold and Silver Bullion Now Treated As Money In Arizona- Manchester Attack Sees Asian Stocks Fall, Gold Firm- James Rickards: Gold’s “Decisive Turn Around” – “Next Stop Is $1,300 Or Higher”- Gold and Silver Bullion Coins See Sales “Explosion” In UK On “Wave Of Political Turmoil”- Gold Investment Is the Ultimate Guide for Tech Investors In 500 Words- Gold Spikes On Heavy Volume On Trump, U.S. Political “Mess”- Cyber Wars Could Crash Markets and Threat To Humanity – Rickards and Buffett- Cyber Attacks Show Vulnerability of Digital Systems and Digital Currencies- History of Gold – Interesting Facts and Changes Over 50 Years- U.S. Gold Exports To China and India Surge In 2017- The Dream of the Central Banker Access Award Winning Daily and Weekly Updates Here