- 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.
Submitted by Koos Jansen, BullionStar.com. My best estimate as of June 2017 with respect to total above ground gold reserves within the Chinese domestic market is 20,193 tonnes. The majority of these reserves are held by the citizenry, an estimated 16,193 tonnes; the residual 4,000 tonnes, which is a speculative yet conservative estimate, is held by the Chinese central bank the People’s Bank of China. I’m aware I’ve been absent from writing about the Chinese gold market for a long time, so for some of you it can be burdensome to pick up where we left a few months ago. It is not feasible for me to explain the entire structure of the Chinese gold market again; my suggestion would be to follow the links provided in the text for more background info. Most knowledge is covered in previous BullionStar posts, Mechanics Of The Chinese Domestic Gold Market, Chinese Cross-Border Gold Trade Rules and Workings Of The Shanghai International Gold Exchange. To substantiate my estimates on above ground gold reserves in China mainland, we’ll first discuss private gold accumulation in China through the Shanghai Gold Exchange (SGE), after which we’ll address official purchases by the People’s Bank of China (PBOC) and its proxies that operate in the international over-the-counter market. Chinese Private Gold Accumulation A few days ago, you could read on the BullionStar Gold Market Charts page that withdrawals from the vaults of SGE in June accounted for 156 tonnes. Year to date SGE withdrawals have reached 984 tonnes, which is 16 % shy of the record year 2015 when 1178 tonnes were withdrawn by this time. Since 2013 gold demand in China has remained extremely elevated - don’t let the World Gold Council tell you anything different - which exposes spectacular years of physical gold accumulation by the Chinese. Exhibit 1. The amount of SGE withdrawals provides a fairly good proxy for Chinese wholesale gold demand, although not all gold passing through the SGE adds to above ground reserves. In China, most scrap supply and disinvestment flows through the Shanghai bourse as well, next to mine output and imports. Needless to say, recycling gold within China doesn’t change the volume of above ground reserves. So, simply using SGE withdrawals won’t fly for calculating above ground reserves. What we’re interested in are net imports and mine production in the Chinese domestic gold market. Although gold exports from the Chinese domestic market are prohibited, exports from the Shanghai Free Trade Zone (SFTZ) where the Shanghai International Gold Exchange (SGEI) is located, are permitted. Before calculating Chinese net imports, let’s have a brief look at exports from the SFTZ - which reflects to what extent the SGEI is developing as a physical gold hub in Asia. As far as I can see, China’s gold bullion export from the SFTZ is still negligible. From the United Nations’ international merchandise trade statistics service COMTRADE, it shows the only countries that have imported tiny amounts from China in 2017 are the UK and India. But the amounts are so small, they carry little importance for our analysis. There is one region that is importing significant amounts of gold from China, which is Hong Kong, though, this likely isn’t exported from the SFTZ but from the Shenzhen Free Trade Zone. The vast majority of China’s jewellery manufacturers are in Shenzhen, and for quite some years gold jewellery, ornaments, industrial and semi-manufactured parts are being exported from this Chinese fabrication base to Hong Kong. These events haven’t got anything to do with the SGEI in my opinion. Thereby, Hong Kong exports far more gold to China than vice versa. For computing net gold export from Hong Kong to China we’ll subtract “imports into Hong Kong from China” from “exports and re-exports from Hong Kong to China” (as you know China doesn't disclose gold trade statistics itself). Imports into Hong Kong accounted for 23 tonnes, while exports and re-exports to China accounted for 333 tonnes. Accordingly, China net imported 311 tonnes from Hong Kong in the first five months of 2017. Exhibit 2. In 2016 rumours circulated Hong Kong’s elevated gold exports relative to gold re-exports possibly hinted at fallacious trade data. This year the numbers show no sign of such activities. If we apply the same math to Switzerland’s customs data, it shows China net imported 172 tonnes from the Swiss in the first six months of this year. Most definitely Australia has exported gold bullion directly to China in 2017 as well, but the Australian Bureau of Statistics (ABS) has changed its methodology regarding this data somewhere in 2016 and is reluctant to share the details with me. Using my old way to compute Australia’s export directly to China results in 23 tonnes (this number is provisional and will be amended). The UK, a large gold exporter directly to China in 2014 and 2015, hasn’t shipped any gold directly to China year to date, according to Eurostat. Exhibit 3. Annualised Chinese gold import for 2017 stands at 1,159 tonnes. What’s remarkable is that Chinese true gold demand is far greater than what the World Gold Council (WGC) and GFMS are reporting as “Chinese consumer gold demand”. This is due to incomplete metrics applied by the WGC and GFMS. The immense tonnages imported by China have been waived in previous years, by the aforementioned Western consultancy firms, with dishonest arguments. (If you like to study the details regarding gold demand metrics read this.) In reality, thousands of tonnes are being imported into China and this metal is not coming back in the foreseeable future; causing a bull run on steroids if institutional interest for gold rebounds in the West. Ascending above ground reserves within China imply declining above ground reserves in the rest of the world. And the more scarce the metal in the West, the higher price when demand revives. I’ve described this phenomenon in my previous post How The West Has Been Selling Gold Into A Black Hole. In a forthcoming posts I will add more texture to my analysis. Domestic mine production in China is not allowed to be exported, effectively all output can be added to above ground reserves. The China Gold Association (CGA) wrote on April 28, 2017, that Chinese domestic mine output in the first quarter accounted for 101 tonnes. Lacking the data for the second quarter, makes me estimate mine production from January until June by doubling 101, which is 202 tonnes. By the way, the CGA added: Gold is a special product with the dual attribute of general commodity and currency. It is the cornerstone of important global strategic assets and the national financial reserve system. It plays an irreplaceable role in safeguarding national financial stability and economic security. Based on data publicly available, in the first six months of 2017 China net imported at least 506 tonnes into the domestic market and mined 202 tonnes. An addition of 707 tonnes to Chinese private gold reserves. Chinese Official Gold Purchases I can be short on PBOC gold purchases: the Chinese central bank does not buy any gold through the SGE - its increments must be treated in addition to all visible flows - and it buys in secret not to disturb the global market. I’ve shared my analysis regarding the PBOC buying gold through proxies in the international over-the-counter (OTC) market for several years on these pages. Although, my reasoning has been confirmed countless times, it’s worth noting it was affirmed once more not long ago. Early 2017 world renowned gold analyst Jim Rickards was in a meeting with the three heads of the precious metals trading desks of largest Chinese bullion banks. These gold dealers told Rickards that indeed the PBOC does not buy any gold through the SGE. Rickards stated in the Gold Chronicles podcast published January 17, 2017 (at 25:00) [brackets added by Koos Jansen]: What I [J. Rickards] don’t know is about the Shanghai Gold Exchange sales, they’re pretty transparent, how much of that is private and how much of that is the government [PBOC]. And I was sort of guessing 50/50, 70/30, whatever. What they told me, and these guys are the dealers [the three heads of the precious metals trading desks], it’s 100 % private. Meaning, the government operates through completely separate channels. The government does not operate through the Shanghai Gold Exchange. … None of what’s going on on the Shanghai Gold Exchange is going to the People’s Bank Of China. In fact, the PBOC uses Chinese banks as proxies to buy gold in countries like the UK, Switzerland and South-Africa after which the metal is transhipped to Beijing. Note, monetary gold shipments do not show up in customs reports of any country. I haven’t come across any clues in the past months that have changed my estimate on the PBOC’s true official gold reserves. My best substantiated guess still is 4,000 tonnes (in contrast, the PBOC publicly discloses it holds about 1,840 tonnes). For more information on how and when the PBOC stacked up to 4,000 tonnes, continue reading at the BullionStar Gold University by clicking here. Estimated Total Gold Reserves China 20,000 Tonnes Let us put the pieces of the puzzle together. We know the PBOC doesn’t buy gold though the SGE, but prior to 2007 the Chinese gold market wasn’t fully liberalized and back then the PBOC was primary dealer in the domestic market. Any PBOC purchases prior to 2007 could have been from Chinese gold mines. What else do we know? China is said to be a gold importer since the 1990s, suggesting domestically mined gold was not exported after, say, 1994. In the next screen shot from the China Gold Market Report 2010 we can read “China has been a gold importer since the 1990s”. Exhibit 4. Courtesy China Gold Market Report 2010. For the sake of simplicity, we’ll calculate from 1994 onwards. Precious Metals Insights (PMI) has estimated that 2,500 tonnes of gold jewellery were held by the Chinese population in 1994. Furthermore, I have data on Chinese non-monetary gold import starting in 2001 - which started slowly but ramped up in 2010 (exhibit 2). In 1994 PBOC official reserves accounted for 394 tonnes and Chinese domestic mine output accounted for 90 tonnes. So, our starting point in 1994 is: 2,500 (jewellery base) + 394 (official reserves) + 90 (mining) = 2,984 tonnes From here, we can aggregate domestic mine output and net imports for every succeeding year. As stated above, my assumption is that the PBOC sourced its official gold from domestic mines prior to 2007, but shifted these acquisitions to the international market after 2007. The official gold increments in 2001 (105 tonnes) and 2003 (100 tonnes) I’ve subtracted from “aggregate domestic mine output”, the increments in 2009 (454 tonnes) and onwards I did not subtract from “aggregate domestic mine output”. The previous calculation has resulted in the following chart: Exhibit 5. Aggregate net import reflects non-monetary gold. In the chart the green, blue and grey bars represent private gold reserves, and summed up account for an estimated 16,193 tonnes at the time of writing. The red bars reflect the PBOC's official gold reserves - I would like to stress this number is speculative - and currently account for 4,000 tonnes. My best estimate as of June 2017 for total above ground gold reserves within the Chinese domestic market is 20,193 tonnes.
Министерство торговли Индии видит возможности для снижения пошлины на импорт золота, в то время как дефицит счета текущих операций страны сокращается, сообщает Bloomberg. Индия является вторым по величине потребителем металла в мире.
Министерство торговли Индии видит возможности для снижения пошлины на импорт золота, в то время как дефицит счета текущих операций страны сокращается, сообщает Bloomberg. Индия является вторым по величине потребителем металла в мире.
In the first half of 2017, gold prices have gained around 8%
Millennials Can Punt On Bitcoin, Own Gold and Silver For Long Term - Bitcoin volatility shows not currency or safe haven but speculation- Volatility still very high in bitcoin and crypto currencies (see charts)- Bitcoin fell 25% over weekend; Recent high of $3,000 fell to below $1,900- Bitcoin least volatile of cryptos, around 75% annualised volatility- Gold much more stable at just 10% annualised volatility- Bitcoin volatility against USD about 5-7 times vol of traditional forex trading- Cryptos remain subject to huge speculation with little fundamental analysis- Despite major differences many crypto currencies correlated, mimic one another- Extreme hype - bitcoin expert bets will eat own body part on national television- Millennials can punt on bitcoin, should also own gold and silver for long term- Cryptos mere 'babies' when compared to time tested gold and silver BTC in US Dollars - 1 Year (Source: Coindesk) Editor: Mark O'Byrne Crypto volatility and hype shows immaturity remains The joy about working in precious metals is that for part of the weekend you can switch off. There is a precious time when markets are closed and you don’t have to worry about market movements and what might be happening. You check back in on Sunday afternoon/evening and can delight in the markets starting to wake up for the week ahead. This isn’t the case in cryptocurrencies. This weekend crypto-currency market participants got a wake-up call as to what 24/7/365 market trading really means. They watched the price of bitcoin plummet around 10% on Sunday morning (EST) alone. This contributed to bitcoin's overall fall of 25% since last Thursday and into the weekend. Other crypto currencies fell by more. BTC Versus Gold Volatility (Source: Buybitcoinworldwide.com) The volatility is so bad that if you are one of the few with a bitcoin app that allows you to actually spend your bitcoin then you might have found yourself paying for a brunch that was a hell of a lot more expensive than when you originally sat down to order it. You then might have noticed as you left the cafe that the currency was in full recovery mode and that brunch needn’t have been so expensive after all. Just over one month ago bitcoin was flirting with $3,000, appearing on the front pages of financial magazines and Google saw record searches for ‘Bitcoin.’ On Sunday’s crash the price reached $1,863 but as I write this early Thursday morning (BST) it’s at $2,351. What is this volatility all about and how can cryptocurrency proponents claim that this new money will change the world when its price behaviour can barely manage to guarantee we’ll be able to afford breakfast? It seems the market cannot decide if this is a store of value or just of little value? Volatility - what does it mean and does it matter? Bitcoin remains the least volatile of the cryptocurrencies mainly thanks to its time-served, adoption rates and that it has the highest liquidity. But, we are still talking about a currency which was $600 around a year ago and is now close to $2,400. Even diehard bitcoin fans have to admit that we are in a speculative boom phase. This applies to all cryptocurrencies, not just bitcoin. If the last two decades have taught us anything about investments it is that speculative boom phases in technology are ones which should be approached with caution. No one knows what the speculation phase says about future valuations or how the product (and its market) will mature. Currently we are in a speculative phase which will soon have to either sit down and shut-up or stand-up and show how this hyped market is going to move from proof-of-concept, significant investments and use-case scenarios through to in-use case scenarios and people actually using cryptocurrencies. At the moment, the majority of traders are either disinclined to learn more about what the future of these cryptos could be or they are just profit-seeking. This created spikes and huge volatility. All cryptocurrencies are volatile but the speculation which creates the volatility is not only profit-seeking but also quite uninformed. You can tell this in the way that the three major/most popular currencies track one another. BTC in US Dollars - 3 Months (Source: Coindesk) Bitcoin, Ripple and Ethereum are significantly different cryptocurrencies, yet they have closely tracked each other recently. Ripple (unlike Ethereum and bitcoin) is largely a privately held currency focused on the interbank transfer market. Ethereum is basically a ‘smart’ system which is robust and already widely adopted for complex data-sharing systems. It has been embraced by the banks. Indeed, thirty big banks, tech giants, and other corporations—including J.P. Morgan Chase, Microsoft, and Intel—are uniting to build business-ready versions of the software behind Ethereum and it's decentralised computing network based on digital currency. And finally, bitcoin which whilst it might be the first one and therefore has high adoption rates and greater stability, it is also the one with the least features. More recently bitcoin has been traced by Dash and XMR, also different in offering to bitcoin. The fact that these vastly different cryptocurrencies are mirroring each other suggests that we are still in the phase of the market where the majority of traders lump as ‘cryptocurrencies’ and are failing to see the difference. And, even if they are seeing the difference they are perhaps hedging their bets as to which one will ‘make it’. They could all ‘make it’ given their different capabilities and applications. At the same time, there is likely to be massive "creative destruction" in this space and there is the risk of failure - especially in the altcoin space. Of course, it is likely that bitcoin’s volatility will slow over time. Currently its annualized volatility is 75 percent (gold’s is 10%) but that could improve when one considers gold’s was as high as 90% in the 1970s as the US abandoned the gold standard and stagflation badly impacted western economies an investors. Therefore, we should not dismiss cryptos but we should approach them with caution and be careful not to declare it as the new ‘gold standard’ of investments. Are digital currencies replacing gold? One of the longest surviving myths about bitcoin is that it is competing with gold. Since bitcoin once again caught the attention of the mainstream its competition with gold has proven to be quite the clickbait for those looking to offer comment on the cryptocurrency. This week Fundstrat's Tom Lee dubbed bitcoin the ‘new gold’ (yawn) and claimed that ‘Cryptocurrencies are cannibalizing demand for gold.’ This may not appear to be the case when we look at recent gold demand figures in countries such as India, but will it impact long term? Aswath Damodaran, professor of finance at the New York University Stern School of Business, told CNBC, that it may well do. He believes gold is going out of fashion thanks to the likes of bitcoin:"Cryptocurrencies have taken the role of gold at least for younger investors because they don't trust paper currencies.” But how can they trust bitcoins? Or any cryptocurrency for that matter? Damodaran believes they will trust them because they no longer trust paper currencies. The issue with paper fiat currencies (now digital fiat currencies) is that they have a history of failing and the fiat system we currently operate on is relatively new. So, why are bitcoins (or another digital cryptocurrency) suddenly going to save the day? The World Gold Council’s John Reade, chief market strategist and head of research (and former managing partner at Paulson & Co.) recently spoke about how millennials need to look beyond the current performance of gold and instead to the long-term: “Millennials are an interesting case study; they are going to be working and investing a long time so you need to think about more than just the short term ... Gold is a great diversifier for a portfolio but it is more than that. It is a source of returns that is commiserate with equities over the last 10, 20 years.” It is vital millennials consider the performance of an asset over a long-period of time, as they are just starting to build their portfolios and need to prepare for the next 20, 30, 40 years or more. Whilst bitcoin (and Ripple, Ethereum etc) may have some years behind them, they are mere 'babies' when compared to time tested gold and silver. Not to mention that the time they have accrued has only shown volatility, with investors taking one of the biggest punts of their lives. Conclusion - we’re not down on bitcoin, just on hype This isn’t to say that bitcoin etc have no future and are not worth allocating a very small amount of a portfolio to. Instead we return to the point of view we have long maintained - gold and bitcoin are complementary assets, not competing ones. Cryptocurrencies are for real and some will evolve and survive and thrive. Which one, or which handful, are for keeps who knows. Only time will tell. Where the price will go from here, we’re unsure and that’s no bad sign given the volatility. We’re certainly not as confident as John McAfee who is so sure the price will hit $550,000 within three years that he has bet his own manhood on it. No matter what you think of bitcoin you have to agree that it will take a rally of monumental proportions to protect the the virility of Mr McAfee. Like any new tech investment, investors should approach with caution. It’s no bad thing to take a punt on something you believe will bring long-term value and gains whilst insuring you have some financial insurance in the form of gold and silver as well. This is how many investors should look at gold and bitcoin. Bitcoin is the child with great potential and it might help fund your retirement if you’re lucky, but you can’t guarantee it won’t go off the rails. So best make sure you’re still saving on your own and stocking up on some time-proven physical gold and silver. News and Commentary Gold extends its streak of gains to four sessions by a hair (MarketWatch.com) Stocks Rise to Record; BOJ Holds Policy Before ECB (Bloomberg.com) Asian markets post gains as BOJ stays pat (MarketWatch.com) Dow, S&P 500 and Nasdaq close at records with push from better-than-expected earnings (CNBC.com) Gold steady ahead of central bank meetings (Reuters.com) Australian gold exports to Hong Kong and China. Source SRSRocco Report Trump's Russia troubles could mean it's time to buy gold (BusinessInsider.com) Brodsky: This Is A Red Flag Warning (ZeroHedge.com) McWilliams: Central bankers behind curve and risk doing "untold damage" (DavidMCWilliams.ie) Australia Exports Record Amount Of Gold To China (SRSRoccoReport.com) European stocks higher as investors focus on ECB and Draghi (CNBC.com) Gold Prices (LBMA AM) 20 Jul: USD 1,236.55, GBP 953.63 & EUR 1,075.06 per ounce19 Jul: USD 1,239.85, GBP 950.84 & EUR 1,074.83 per ounce18 Jul: USD 1,237.10, GBP 949.47 & EUR 1,071.82 per ounce17 Jul: USD 1,229.85, GBP 940.71 & EUR 1,074.03 per ounce14 Jul: USD 1,218.95, GBP 940.54 & EUR 1,067.92 per ounce13 Jul: USD 1,221.40, GBP 944.51 & EUR 1,071.05 per ounce12 Jul: USD 1,219.40, GBP 947.60 & EUR 1,064.29 per ounce Silver Prices (LBMA) 20 Jul: USD 16.18, GBP 12.50 & EUR 14.07 per ounce19 Jul: USD 16.23, GBP 12.44 & EUR 14.08 per ounce18 Jul: USD 16.17, GBP 12.41 & EUR 13.99 per ounce17 Jul: USD 16.07, GBP 12.30 & EUR 14.02 per ounce14 Jul: USD 15.71, GBP 12.11 & EUR 13.76 per ounce13 Jul: USD 15.95, GBP 12.34 & EUR 14.00 per ounce12 Jul: USD 15.83, GBP 12.31 & EUR 13.82 per ounce Recent Market Updates - “Time To Position In Gold Is Right Now” says Jim Rickards- Bloomberg Silver Price Survey – Median 12 Month Forecast Of $20- “Bigger Systemic Risk” Now Than 2008 – Bank of England- “Financial Crisis” Coming By End Of 2018 – Prepare Urgently- Video – “Gold Should Probably Be $5000” – CME Chairman- India Gold Imports Surge To 5 Year High – 220 Tons In May Alone- “Silver’s Plunge Is Nearing Completion”- China, Russia Alliance Deepens Against American Overstretch- Silver Prices Bounce Higher After Futures Manipulated 7% Lower In Minute- Precious Metals Are “Best Defence” Against Bail-ins In Economic Crisis- Buy Gold Near $1,200 “As Insurance” – UBS Wealth- UK House Prices ‘On Brink’ Of Massive 40% Collapse- Gold Up 8% In First Half 2017; Builds On 8.5% Gain In 2016 "It is important to note that all portfolios under all conditions actually perform better with exposure to gold and silver" - David Morgan In the short video above, David Morgan, the Silver Guru, speaks briefly about the importance of owning silver bullion coins and bars as financial insurance in an uncertain world. He speaks about GoldCore Secure Storage and how he recommends GoldCore's ultra secure allocated and segregated gold, silver, platinum and palladium bullion storage (Zurich, London, Singapore and Hong Kong) to his retail and high net worth clients.
• Tournament officials say new media model is wanted • Mikko Ilonen leads Scottish Open after first-round 65Sky Sports has lost the rights to the US PGA Championship, which takes place at Quail Hollow next month, in what marks an embarrassment to the broadcaster just days after it announced the launch of a dedicated golf channel.The PGA of America, which runs the tournament, confirmed that Sky’s deal – which had run for a decade – has not been renewed because a completely different media model is being pursued. While the details of that are unknown, there could still be an element of live broadcast, via another outlet. Continue reading...
- India gold imports in H1, 2017 greater than all of 2016- India imported 521 tonnes of gold in first half of 2017- H1 figure for gold imports $22.2 Bln versus $23 Bln in all '16- Gold demand was up 15% year- on-year in the first quarter- June gold imports climbed to an estimated 75 tonnes from 22.7 tonnes a year ago- Annual total set to surpass 900 tons, strongest year since '12- “I trust gold more than the currencies of countries” - 63% of Indians in Survey Editor: Mark O'Byrne Gold imports into India have surged in the last six months thanks to festivals, economic recovery and concerns over a new tax regime and the push for the cashless society in India. Imports totalled 521 tonnes in the first half of this year, compared to just 510 tonnes in all of 2016. Should buying levels continue then India could end 2017 having imported over 900 tonnes, a level not seen since 2012. These figures are impressive given where the country’s gold demand was at the end of the 2016. The low figure of just 510 tonnes imported in the entire year was mainly thanks to a range of political and economic issues which had a more negative role than anyone foresaw. Many of those issues are now resolved, but some had lingering effects. Some good, some bad. So it is with tentative celebration that we look at this boost in gold demand from the world’s second-largest lover of gold and ask how the country has begun to favour gold once again and if it will continue at pace. 2016: A tough year for gold buyers Last year physical gold demand - for gold coins, gold bars and jewelery - in India hit a seven year low not because of a loss in interest in the precious metal but thanks to a range of political and economic factors. The biggest of these events was of course the sudden announcement by the government to immediately remove all Rs500 and Rs1,000 notes by 30 December. A total of Rs15.44 trillion ($220 billion) – or 86% of the currency in circulation – was abandoned almost overnight. Whilst many internationally and in India itself, especially their many small and medium enterprises, looked on in horror at the impact this had on savers and on the economy, the Governor of the Reserve Bank of India, Urjit Patel’s prediction that the economic recovery would be ‘V’ shaped has come to fruition. The World Gold Council’s June newsletter draws attention to two significant indicators, the Composite PMI and the sale of motorcycles, which have demonstrated this V-recovery. The sale of motorcycles are a good indicator of the health of India’s cash economy. Last year sales halved in one month, to their lowest in six years. The PMI dropped to its lowest level on record. Both have since rebounded. Whilst there are still some controls on cash, new money has been printed and is making its way into circulation. Cash in circulation has increased by 58% in the first half 2017, this will no doubt help the economy past the liquidity squeeze. 2016 wasn’t just about the war-on-cash in India. The gold market was also negatively affected by a prolonged jewellers strike. Sales of gold were crippled across the country as a result. The strike is now over and supply of jewellery to the market has reportedly returned to normal levels. Cashless push, good for gold In the short-term the removal of 86% of the country’s cash was clearly damaging to physical gold demand and there are some lingering effects that will continue to impact the market. The first of these is that as of April 1 2017, all cash transactions over RS200,000 (US$3,000) are banned. This is likely to prove problematic for those in rural areas where access to banking, cheques and electronic payments is not common. We obviously don’t know what the impact of this will be. It may curb gold purchases all together, or we may see a change in gold buying behaviour namely pushing demand onto the black market or buyers spreading their purchases over a period of time. The above is a negative, but something which is only likely to impact in the short-term. If at all, it may not given the ruling came into play in April and purchases have remained strong since then. Ultimately over time buying behaviours will change rather than the desire to hold gold. How do we know this? Aside from India’s gold demand holding strong over hundreds of years a fantastic World Gold Council survey carried out last year found the following results: “I trust gold more than the currencies of countries.”63% of respondents in India agreed with the statement. “Gold makes me feel secure for the long-term.”And 73% of respondents in India agreed with the statement. Whilst the survey was carried out before November 2016, we have little doubt that the sentiments echoed in the WGC’s survey are even stronger given the somewhat underhanded way in which the government went about removing cash from circulation - and the severe impacts on many ordinary Indian savers and business people. Will strong demand keep going? Whilst the country appears to have recovered from the demonetisation of November-December 2016, there are new factors which will both negatively and positively impact the demand for physical gold. One of these is the new change and simplification of the GST. Last month the government announced an increase of GST on gold products from 1.2% to 3%. It is likely that much of the rush to buy gold in the first half of the year was partly due to concerns over the forthcoming rate hike. Gold dealers were likely looking to stock up on gold, ahead of any planned increases in the price. Therefore we may see a drop in demand now the GST rate has been announced and recently implemented. Or we may not. The change in GST could add some much needed efficiencies to the Indian gold market. Despite the increase in GST, the move was ultimately welcomed by the gold market who had expected a higher hike, to perhaps 5%. As the WGC wrote in last month’s report: GST should eliminate double taxation and improve supply chain efficiencies. It can make the gold industry more transparent which, coupled with recent hallmarking legislation, should ensure gold buyers have confidence in the gold products they buy, rather than continuing to suffer from the gross level of under-carating they have previously endured. This is particularly good news when you consider the inflation-busting wage hike that government employees and pensioners are due this year. This will no doubt support demand for physical gold as will the additional income farmers are currently enjoying following the bumper agricultural crop in 2016, following the best monsoon in three years. Gold demand cannot be calmed in IndiaBoth rural and city incomes are set to climb in the coming months thanks to these factors, so it is unlikely a small increase in tax will put off anyone intending to buy gold. Of course, in the short term it is likely GST will pose challenges for the industry, particularly for small artisan jewellers. But overall the move is likely to put more confidence in the marketplace. Like everything in markets, pictures tell a very different story when you look at the long and short-term factors. Last year, gold demand in India was very weak. Stories circulated about the growing middle-class and their lack of interest in the gold that the older generations have so desired. Long-term, there have always been changing fortunes, changing government policies and factors which will both positively and negatively impact the demand for gold. However, gold demand has always remained strong and India, alongside China, remains the world’s top gold buyers. ConclusionObservers are right to be positive about Indian gold demand in the long-term. Economic growth will likely continue to push demand higher thanks to the groundswell of young Indians set to enter the workplace, growing middle class incomes and the poor performance of the rupee as a store of value. There will inevitably be peaks and troughs and ebbs and flows along the way, but gold will remain a key part of the Indian 'saving DNA'. Therefore India will continue to be a vital and significant source of demand in the global gold market. News and Commentary Gold books gain for second straight session (MarketWatch.com) Emails show Russian prosecutor offered Trump Jr. information on Clinton (Reuters.com) Gold turns higher as US stocks stage brief drop (FXStreet.com) Gold positive but upside limited as Yellen testimony looms (Investing.com) U.S. Stocks Rebound From Early Shock, Oil Rises (Bloomberg.com) Want to Know What's Really Out of Favor? Gold (TheStreet.com) Gold Stocks' Summer Bottom (MarketOracle.co.uk) Gold - Pet Rock Revisited (TFMetalsReport.com) The Breaking Point & Death Of Keynes (ZeroHedge.com) India Removes 220 Tons of Physical Gold (GoldSeek.com) Gold Prices (LBMA AM) 12 Jul: USD 1,219.40, GBP 947.60 & EUR 1,064.29 per ounce11 Jul: USD 1,211.90, GBP 938.98 & EUR 1,063.68 per ounce10 Jul: USD 1,207.55, GBP 938.63 & EUR 1,060.11 per ounce07 Jul: USD 1,220.40, GBP 944.47 & EUR 1,068.95 per ounce06 Jul: USD 1,224.30, GBP 946.14 & EUR 1,077.51 per ounce05 Jul: USD 1,221.90, GBP 945.87 & EUR 1,078.45 per ounce04 Jul: USD 1,224.25, GBP 947.32 & EUR 1,078.81 per ounce Silver Prices (LBMA) 12 Jul: USD 15.83, GBP 12.31 & EUR 13.82 per ounce11 Jul: USD 15.51, GBP 12.02 & EUR 13.61 per ounce10 Jul: USD 15.22, GBP 11.82 & EUR 13.36 per ounce07 Jul: USD 15.84, GBP 12.29 & EUR 13.88 per ounce06 Jul: USD 16.01, GBP 12.36 & EUR 14.09 per ounce05 Jul: USD 15.95, GBP 12.36 & EUR 14.09 per ounce04 Jul: USD 16.15, GBP 12.48 & EUR 14.23 per ounce Recent Market Updates - “Silver’s Plunge Is Nearing Completion”- China, Russia Alliance Deepens Against American Overstretch- Silver Prices Bounce Higher After Futures Manipulated 7% Lower In Minute- Precious Metals Are “Best Defence” Against Bail-ins In Economic Crisis- Buy Gold Near $1,200 “As Insurance” – UBS Wealth- UK House Prices ‘On Brink’ Of Massive 40% Collapse- Gold Up 8% In First Half 2017; Builds On 8.5% Gain In 2016- Pensions Timebomb In America – “National Crisis” Cometh- London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess- Shrinkflation – Real Inflation Much Higher Than Reported- Goldman, Citi Turn Positive On Gold – Despite “Mysterious” Flash Crash- Worst Crash In Our Lifetime Coming – Jim Rogers- Go for Gold – Win a beautiful Gold Sovereign coin 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.
Доброе утро! В США стартует очередной сезон корпоративных отчетов — в пятницу свои финрезультаты опубликуют такие крупные банки, как JPMorgan, Citigroup и Wells Fargo. На этом фоне внимание рынка будет сосредоточено на прибылях компаний, отодвинув на второй план законопроекты о налоговой реформе и здравоохранении. Между тем рейтинговое агентство S&P Global Ratings может скорее понизить, чем повысить рейтинги финансовых компаний США, говорится в релизе агентства. «Поскольку волатильность рынка находится вблизи исторических минимумов, условия кредитного рынка остаются достаточно стабильными и экономика продолжает расти, финансовые компании США получают выгоду. Тем не менее, число негативных прогнозов по рейтингам превышает количество позитивных прогнозов в секторе примерно в соотношении 3 к 1, и поэтому мы ожидаем, что число понижений рейтингов превысит число повышений в течение следующих 12 месяцев», — пишет агентство. По прогнозу S&P, в годовом исчислении заработная плата в США вырастет к концу 2017 года примерно на 2,75%. Это, по мнению агентства, положительно должно сказаться на компаниях, работающих с потребительскими кредитами. По состоянию на 30 июня 2017 года стабильный прогноз по рейтингам имели 34 финансовые компании США, или 56% среди всех рейтингуемых агентством. Негативный прогноз имели 20 компаний, или 33%, а позитивный — 7, или 11% всех компаний. Объем золота в ETF (exchange traded funds — биржевые инвестиционные фонды) и схожих продуктах по состоянию на конец июня составил 2 тыс. 313,1 тонны золота (74,4 млн унций), подсчитал World Gold Council . Это на 22,2 тонны (1%) больше уровня предыдущего месяца. При этом в денежном выражении оценка золота в ETF снизилась на 1%, до $92,4 млрд. Основной приток золота в ETF пришелся на североамериканские и европейские фонды, объем золота там вырос на 12,8 тонны (до 1 тыс. 227,1 тонны) и на 10,5 тонны (до 977,7 тонны) соответственно. В Азии наблюдался отток золота из ETF в объеме 1,3 тонны, до 61,9 тонны. При этом в Китае отток золота из ETF замедлился: в течение месяца объем золота в Hua'an Yifu Gold ETF опустился ниже отметки в 20 тонн, но к концу июня вернулся к этому уровню. Нефть. Государственная нефтяная компания Саудовской Аравии Saudi Arabian Oil Co. (Saudi Aramco) планирует инвестировать в ближайшие 10 лет порядка 300 миллиардов долларов в нефтяную добычу, заявил в ходе 22-го Всемирного нефтяного конгресса в Стамбуле гендиректор компании Амин Нассер. Он также подчеркнул, что нефтяная отрасль еще долгие годы будет занимать центральное место в энергетике, поскольку переход к альтернативным источникам топлива будет «долгим и сложным». В то же время глава Минэнерго РФ Александр Новак в понедельник говорил в кулуарах конгресса, что плавный выход из венского соглашения ОПЕК+ разумен и многие об этом говорят. Такой выход, по словам министра, может занять несколько месяцев. В целом как я отмечал ранее информационное давление на котировки барреля продолжаются. Так вслед за ведущими американскими инвестдомами BNP Paribas сообщил о снижении прогнозов по средней цене нефти марки брент на 2017 — с $60 до $51 и нефти марки WTI с $57 до $49, а так же на 2018 — с $63 до $48 и с $61 до $45 соответственно. Сегодня рынки будут традиционно ждать статистику по запасам от API (23.30мск), эксперты опрошенные агенством Bloomberg ждут снижения запасов сырой нефти: -2.8 млн до 500.1 млн, бензина: -1.88 млн до 235.4 млн, дистиллятов: +0.692 млн до 151.1 млн и собственный прогноз экспертов Bloomberg запасов сырой нефти в Кушинге: -1.4 млн. Российский рынок. Международный валютный фонд (МВФ) вновь сохранил прогноз роста экономики России на текущий год на уровне 1,4%. Стабилизация стоимости нефти и улучшение финансовых условий, сообщается в заявлении МВФ, будут способствовать возвращению роста в 2017 году, ожидаемое увеличение ВВП составит 1,4%. Согласно прогнозу, рост в 2018 году также составит 1,4%. «Экономика России стабилизировалась в 2016 году с сокращением ВВП всего на 0,2% после двойного потрясения из-за низких цен на нефть и санкций. Относительно низкая реакция на крупные внешние воздействия отражает эффективную политику властей — плавающий валютный курс, поддержку ликвидности банковской системы и вложение капитала, а также ограниченный фискальный стимул в сочетании со сдерживающей политикой регулирования доходов», — говорится в заключительном заявлении МВФ. Негативная динамика в производстве, слабый потребительский спрос, укрепление рубля и более низкие цены на продовольствие за счет высокого урожая способствуют приближению реального уровня инфляции к целевой, установленной ЦБ на уровне 4% к концу 2017 года. МВФ рекомендовал в своем заявлении продолжить постепенное смягчение монетарной политики. Индекс ММВБ. Здесь на пути роста стоит отметка 1930п, озвученная и отмеченная на графике еще на прошлой неделе. При закреплении индикатора над ней основная цель роста 1960п. Поддержкой все так же служит уровень 1900п. фРТС. Фьючерс по прежнему находится в диапазоне 98000п — 100000п, с потенциалом выхода за его рамки в пределах 1500п — 2000п. Для регулярного выхода утреннего обзора ставьте пожалуйста плюсы.
Для развития рынка золота России необходимо последовать примерам других стран и снизить ставку НДС на золото до 0%, с таким предложением выступили представители Всемирного совета по золоту в ходе совещания при комитете Госдумы по финансовому рынку.
Factors that may give the struggling gold ETFs some respite in the second half of 2017.
России необходимо отменить НДС на золото, считают во Всемирном совете по золоту. Несмотря на то, что страна является третьим мировым производителем этого металла, а ЦБ — его крупнейшим покупателем, внутренний рынок характеризуется слабым спросом со стороны частных инвесторов, отмечают эксперты.
7 июля Комитет Государственной Думы по финансовому рынку провел расширенное совещание на тему: «Развитие рынка инвестиционного золота в России». В дискуссии приняли участие депутаты, заместитель Министра финансов Алексей Моисеев, представители Центрального Банка, Гохрана России, Всемирного совета по золоту, золотодобывающих компаний, российских и иностранных инвесторов. Открывая заседание, председатель Комитета Анатолий Аксаков предложил обсудить перспективы и проблемы развития рынка золота. Он отметил, что в России, которая играет важную роль на мировом рынке золота, являясь одним из крупнейших его производителей, внутренний рынок характеризуется низким интересом к золоту у частных инвесторов. По оценкам экспертов, основным фактором, препятствующим развитию рынка золота, является высокая ставка НДС – 18%. А.Аксаков указал на то, что России предстоит синхронизировать налоговое законодательство в области финансовых операций с золотом с другими участниками Евразийского экономического союза в связи с тем, что Белоруссия и Казахстан обнулили ставки НДС. В ходе заседания были представлены результаты исследования компании Ernst & Young о том, как возможная отмена НДС повлияет на доходы российского бюджета. Было отмечено, что совокупный положительный эффект для бюджета страны оценивается в 10 млрд рублей за 10 лет. Сейчас сумма, зачисляемая в бюджет по продаваемому российскому золоту, составляет около 100 млн рублей в год. А.Аксаков назвал идею о снижении НДС «продуктивной», но требующей согласования с Правительством, а также не исключил возможность внесения в Государственную Думу соответствующего законопроекта в период осенней сессии.
The LME (London Metal Exchange) and the World Gold Council have today confirmed that LMEprecious will launch on 10 July 2017, as planned. All preparations are now complete with regulatory go-ahead also received. LMEprecious introduces exchange-traded and centrally cleared precious metals products to the London market. It will comprise spot, daily and monthly futures for gold and silver. The...
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...