Buy Silver - May Replace Gold as Preferred Money of India Silver replacing gold as India's preferred investment option again after 100 years? by Fergal O'Connor, Senior Lecturer in Finance, University of York The Indian government has been trying to reduce its citizens’ demand for imported gold through a number of means over the last few years. This is part of a wider crackdown on currency used in the black market, that included the withdrawal and replacement of its two largest-denomination bank notes in early November. The strategy will likely have some unintended consequences if we take our cues from the events of 1910. Growth in Indian gold and silver jewellery demand. Thomson Reuters GFMS Gold 2016 and Silver Survey 2016 Indians’ famous love for gold has created serious and ongoing economic issues for the nation. In 2011, Australian investment bank Macquarie estimated that 78% of India’s household savings were held in gold. In effect, this means that India has a dual currency system where people choose to save mostly in gold rather than rupees. This is unlike any other major economy and begs the question: how do you wean a population off a precious metal? Bling and buy sale Building up savings in gold rather than deposits in a bank creates a permanent drag on India’s growth. This happens because the savings do not increase the available funds for lending within the banking system. One reason it is so difficult to put this gold to work as investment capital is that 79% of it is bought as jewellery, rather than bars or coins. Australian 2017 Silver Bullion Coin (1oz) now in stock India is the world’s largest consumer of gold jewellery at nearly 700 tonnes in 2015 according to the GFMS Gold Survey 2016. However, it mines less than two tonnes of gold a year. This means India must import gold worth US$25 billion each year, pushing up its current account deficit and pulling down the value of the rupee. In 2015, prime minister Narendra Modi’s government introduced a Sovereign Gold Bond scheme which allowed gold holders to swap their gold for an interest-bearing bond. At the end of the bond’s life investors would effectively be returned the same amount of gold. This move reduced the minimum amount of gold necessary to participate in such a scheme to two grams. As of November 2016, 14 tonnes of gold had been subscribed to the two gold bond issues, with another five tonnes collected through the older gold monetisation scheme (which has a larger minimum deposit of 30 grams). However, relative to India’s estimated privately held gold stock of 20,000 tonnes, these deposits represent tiny amounts and it still doesn’t seem like a solution. Unintended consequences An alternative would be to permanently reduce gold imports. To that end, in 2013, the government started to increase import taxes on gold imports to 6%; this now stands at 10%. However, falling gold prices during that period meant that there was still a 12% increase in gold imports in 2015 as consumers snapped up what they saw as bargain prices. And here is where we go back more than 100 years to see how this all worked out last time. You see, India has battled precious metals imports for quite some time. In 1910 the government of India increased the import tariffs on silver from 5% to 11%. A market report in 1912, by Pixley & Abell, a gold wholesaler, pointed to a 28% fall in silver demand in the Indian bazaars in the three years following the increase. They attributed this to not just a fall in demand for silver due to tax increases, but also a substitution of gold for silver in people’s savings as gold became more attractive on a relative basis. Between 1910 and 1930 net imports of silver in India fell from 98m ounces to 31m, according to British Geological Survey reports. After this time India gradually became the world’s largest gold consumer, a position it finally lost to China in 2015. And it seems a return to silver as a major investment for consumers in India may be on the cards. Following the recent import tax hikes for gold, 2015 saw Indian silver imports grow to almost 8,000 tonnes, 14% up on the previous 2014 record. At the same time, demand for gold jewellery, which accounts for 75% of all Indian gold demand, is down 30% for the 12 months to the end of September 2016, according to the World Gold Council. This points to a possible shift back to silver as a more prominent investment in India. Gold makes up the vast majority of Indian jewellery sales. But the graph below shows the rapid growth in silver jewellery demand in India, which is up over 600% in ten years, relative to marginal growth of only 25% in gold jewellery demand. Of course silver is not the only precious metal investment option available. If investors want a more compact form of wealth, then platinum, worth 56 times more per ounce, might suit. But a swap to silver in India, as was the norm pre-World War I, seems more likely and could have a major effect on prices. For a sense of scale, the Indian gold jewellery market in 2015 was worth US$25 billion, while the total world silver jewellery market was worth only US$3.5 billion. Conclusion Even a small substitution from gold to silver would result in a massive increase in the price of silver. A 10% reallocation from gold jewellery investment to silver in India would nearly double world silver jewellery demand. Mines and other sources would not be able to fill the gap immediately; prices would rise, further fuelling demand and creating a new, shiny headache for those trying to marshal India’s unusual economy. This article was originally published on The Conversation. Read the original article. Gold and Silver Bullion - News and Commentary Gold down on US rate hike expectations; ECB meeting in focus (MoneyControl.com) Gold prices gain slightly in Asia with demand forces in focus (Investing.com) US factory orders climb 2.7 percent in October, best gain in 16 months, but investment lags (WashingtonPost.com) Trade Deficit in U.S. Widened to a Four-Month High in October (Bloomberg.com) UK manufacturing slides, as Italian bank rescue hopes build – business live (TheGuardian.com) America’s relationship with China could get frosty under Trump (MoneyWeek.com) Fake News = Fake Markets... (GoldSeek.com) Market rigging strives to save disintegrating Europe (TheKingReport.com) From Hot to Not, Investors Exit Gold Funds in Switch to Equities (Bloomberg.com) Gold appetite hit a 5-year high in November as prices tumbled (MarketWatch.com) Gold Prices (LBMA AM) 07 Dec: USD 1,171.25, GBP 929.62 & EUR 1,092.19 per ounce06 Dec: USD 1,171.15, GBP 918.18 & EUR 1,086.94 per ounce05 Dec: USD 1,164.90, GBP 915.84 & EUR 1,095.36 per ounce02 Dec: USD 1,171.65, GBP 929.00 & EUR 1,100.88 per ounce01 Dec: USD 1,168.75, GBP 930.09 & EUR 1,099.68 per ounce30 Nov: USD 1,187.40, GBP 952.06 & EUR 1,115.44 per ounce29 Nov: USD 1,187.30, GBP 952.45 & EUR 1,119.98 per ounce Silver Prices (LBMA) 07 Dec: USD 16.77, GBP 13.32 & EUR 15.64 per ounce06 Dec: USD 16.79, GBP 13.17 & EUR 15.63 per ounce05 Dec: USD 16.62, GBP 13.05 & EUR 15.54 per ounce02 Dec: USD 16.35, GBP 12.95 & EUR 15.36 per ounce01 Dec: USD 16.30, GBP 12.91 & EUR 15.35 per ounce30 Nov: USD 16.67, GBP 13.39 & EUR 15.66 per ounce29 Nov: USD 16.54, GBP 13.26 & EUR 15.61 per ounce Recent Market Updates - Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market- Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns- Gold and Silver Will Protect From Coming Financial Crash – Rickards- RBS Fail Bank of England Stress Test- Peak Silver – Supply Deficits Mean Higher Prices- Bail In Risk – €4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms- Gold Down 13.5% In 13 Days – Trump Bearish For Gold?- War On Cash Just Got Real – India and Citibank In Australia- Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998- Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards- Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”- Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”- Islamic Gold – Vital New Dynamic In Physical Gold Market
Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market by Jan Skoyles, Editor Mark O'Byrne The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council have made an important decision which was announced yesterday at the World Islamic Banking Conference in Bahrain. This decision is about one of the most important markets in the world: the gold market, an invest-able market worth an estimated $2.4 trillion and is also of significance for the world of Islamic finance. The AAOIFI, in collaboration with the World Gold Council (WGC) and Amanie Advisors, has approved what will become known as the Shariah Gold Standard. This is a set of guidelines that will expand the variety and use of gold-based products in Islamic Finance. As many as 1.6 billion Muslims in the world, 25 per cent of the population, will have far greater access to the gold market than they have since the birth of modern finance, which has been primarily structured towards Western ideals. More details were announced at the World Islamic Banking Conference including details of the gold products that are likely to be permissible. The sharia gold standard announced yesterday allows the over 110 million investors in the Islamic world to invest in a) vaulted gold b) gold savings plans (such as GoldCore's GoldSaver) c) gold certificates d) physical gold ETFs including "probably" the SPDR Gold Trust, the biggest exchange-traded gold (GLD) e) gold mining shares (within certain Shari’ah parameters) We know three things that the new Shariah gold-standard will achieve: a) Increase diversity in the number of available Shariah gold compliant investment productsb) Greater emphasis on the role of physical gold in gold transactionsc) Islamic finance will have greater say in the setting of the gold price To some, this may appear to be an unnecessary formality taken by the body whose guidelines are followed by Islamic finance institutions across the world. After all, physical gold is Shariah-compliant and holds a unique status for Muslims. AAIOFI states, "From the perspective of Islamic Fiqh and the Islamic economic system, gold has its specific significance. This significance arises from the specific principles provided for gold and silver as Thaman in Shari'ah."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. However there has been a need for clarification for how gold bullion can be used for investment purposes by Muslims, for a long time. This uncertainty has kept Shariah-compliant offerings at a minimum and many investors restricted by the type of gold bullion transactions they are able to partake in, with most focused on jewellery and coin offerings. Daud Bakar, chairman of Amanie Advisors, agrees, ".the existing Islamic standards for gold are fragmented, hampering product development and market demand." Currently in the gold market, the majority of activity regarding gold financial instruments is based almost entirely on speculation. This is due to the overwhelming size of both the London and COMEX (Chicago Mercantile Exchange) gold markets, which together have the greatest influence on the spot price of gold. Whilst Islamic investors have always had access to the gold market through jewellery and coins, this guidance will vastly increase the number and diversity of investment products available. There are very few Shari'ah-compliant gold offerings today. Using its deep sector knowledge, GoldCore, and its Islamic partners, have been working on a comprehensive solution for two years and will provide the solution to qualifying Islamic financial institutions in early 2017. With gold investment platforms such as GoldCore able to offer segregated, allocated gold bullion accounts with the option of physical delivery, Muslims are now able to invest in gold bars and coins. The new 'gold standard' will affect the gold market globally as 1.6 billion people will be able for the first time to use gold bullion products and platforms that offer physical delivery, allocated and segregated gold ownership. "For a number of years we have been working on an institutional gold platform and indeed a Sharia compliant gold bullion solution for the institutional market. As a market leader in precious metal storage, we have been consulting with major institutions and our strong partners to deliver allocated and segregated gold storage services to investors throughout the world", said GoldCore CEO, Stephen Flood. If Islamic Finance institutions were to allocate just one per cent of assets into new gold products then we would expect to see demand climb by about 500-1000 tonnes, per annum. Given that recent demand and supply figures showed a surplus of just 172 tonnes of gold in the market, we could begin to see some tightening with the increase of Shariah-compliant gold instruments, which will have a positive impact on the price. It is not unreasonable to expect a minimum one per cent move of Islamic finance assets into gold, especially when you look at how it has performed. WGC data shows that in the last eight years the major Islamic asset classes (including REITs, the Takaful index, the Dow Jones Islamic Equities Index and the Dow Jones Sukuk Index) have all underperformed compared to gold, as have the major currencies used in the Islamic world. Few appreciate that the launch of a Shari'ah gold or Islamic gold standard signals a changing dynamic in the gold market. Gold bullion will be additionally appealing to Islamic banks due to Basel III rules that require banks own high liquidity and quality, low counter party risk assets such as physical gold in allocated and segregated storage. Until now, no group as influential as the AAOIFI has issued guidelines stating that gold must be the underlying asset in all gold transactions as we suspect they will do shortly. Whilst the likes of the COMEX gold market are able to grow to multiple times the size of the underlying physical market, with little impact on physical demand or price, this will no longer be case. Jan Skoyles is a research executive at GoldCore, a gold investment platform and this is a version of an article that first appeared in the Khaleej Times, the UAE's best selling English newspaper and highest circulated English language newspaper in the Gulf Gold and Silver Bullion - News and Commentary Gold nudges up after falling to 10-month lows (Business-Standard.com) Gold at 10-month low on higher shares (Reuters.com) Asian markets pick up speed, put Italy vote in rear-view mirror (MarketWatch.com) 3 more gold coins found in Salvation Army red kettles (ValleyNewsLive.com) New Islamic finance guidance on gold emphasises "physical gold" (Reuters.com) Gold Double-Slammed As 'Traders' Puke $3.5 Billion Notional Through Futures Markets (ZeroHedge.com) FT: Fears Rise over Future Supply of Gold (Gata.org) A pensions time bomb spells disaster for the US economy (BusinessInsider.com) Another battle between insiders and outsiders (DavidMCWilliams) What happens next, now that Italy has voted ‘no’ (MoneyWeek.com) Gold Prices (LBMA AM) 06 Dec: USD 1,171.15, GBP 918.18 & EUR 1,086.94 per ounce05 Dec: USD 1,164.90, GBP 915.84 & EUR 1,095.36 per ounce02 Dec: USD 1,171.65, GBP 929.00 & EUR 1,100.88 per ounce01 Dec: USD 1,168.75, GBP 930.09 & EUR 1,099.68 per ounce30 Nov: USD 1,187.40, GBP 952.06 & EUR 1,115.44 per ounce29 Nov: USD 1,187.30, GBP 952.45 & EUR 1,119.98 per ounce28 Nov: USD 1,189.10, GBP 956.51 & EUR 1,117.99 per ounce Silver Prices (LBMA) 06 Dec: USD 16.79, GBP 13.17 & EUR 15.63 per ounce05 Dec: USD 16.62, GBP 13.05 & EUR 15.54 per ounce02 Dec: USD 16.35, GBP 12.95 & EUR 15.36 per ounce01 Dec: USD 16.30, GBP 12.91 & EUR 15.35 per ounce30 Nov: USD 16.67, GBP 13.39 & EUR 15.66 per ounce29 Nov: USD 16.54, GBP 13.26 & EUR 15.61 per ounce28 Nov: USD 16.68, GBP 13.45 & EUR 15.73 per ounce Recent Market Updates - Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns- Gold and Silver Will Protect From Coming Financial Crash – Rickards- RBS Fail Bank of England Stress Test- Peak Silver – Supply Deficits Mean Higher Prices- Bail In Risk – €4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms- Gold Down 13.5% In 13 Days – Trump Bearish For Gold?- War On Cash Just Got Real – India and Citibank In Australia- Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998- Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards- Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”- Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”- Islamic Gold – Vital New Dynamic In Physical Gold Market- Peak Gold Globally – “Bullish For Gold”
Новость вышла что исламским инвесторам разрешили покупать золото. Это стало возможно после того, как группа, устанавливающая стандарты, адаптировала правила торговли этим металлом согласно законам Шариата. До этого момента исламские инвесторы избегали золота из религиозных соображений.Новые правила утверждены 19 ноября, и теперь золото стало одним из финансовых активов на исламском финансовом рынке, чей объем оценивается в 1,88 трлн долл, говорится в заявлении Организации по учету и аудиту для исламских финансовых институтов AAOIFI разработала стандарт при содействии Всемирного золотого совета, который полагает, что новые правила подогреют спрос на сотни тонн драгоценного металла. SPDR Gold Trust, один из крупнейших биржевых фондов, оперирующий золотом под тикером GLD, вероятно, включится в игру по новым правилам, кроме того, спрос на золото могут показать центральные банки исламских стран. При этом фьючерсы на золото не допускаются в качестве инвестиционного инструмента, так как, по законам ислама, для торговли нужна физическая основа товара. Новые правила требуют, чтобы продавец золота мог подтвердить сделку в день ее совершения, а также мог продемонстрировать то количество металла, которые он реализует, также в день заключения договора. По словам пресс-секретаря AAOIFI Хамида Хассана Мераха, аналогичные правила распространяются на торговлю серебром. По данным AAOIFI, расположенной в Бахрейне, золото пополнило список инструментов инвестирования, разрешенных в исламском мире, который включает недвижимые активы, облигации (сукук) и страховые бумаги (такофул). В 2015 году объем сукука сократился на 1,4% после того, как Банк Малайзии закрыл свою краткосрочную программу по выпуску облигаций. ну и график Золото 1 DAY и более подробно золото 5 MIN Вчера был классический перелоу и резкий выкуп, стопы сорвали. Впереди ФРС и на поднятие ставки обычно золото реагирует проливом но потом выкупается и встает в рост ( пример прошлое поднятие ставки и рост на 25%, лои графика, конец 2015 года) Так же вчера было интересно как не реагировали на падение и перелоу золотодобывающие компании… неким индикатором были. линией отметил начало торгов в США. Ну и какой комодитис без DXY индекс бакса день Удержит 100 или нырнет под? все что ниже RISK ON на рынках.. как там говорят блогеры? Ставим лайки, добавляемся в друзья .. твиттер twitter.com/GusevSSergey
Submitted by Koos Jansen from BullionStar.com What came to light as on odd discrepancy between GFMS’ Chinese gold demand and "apparent supply" has proven to be a tenacious cover-up by the oldest consultancy firm in the gold market. And not only does GFMS publish incomplete and misleading data on Chinese gold demand, all its supply and demand data is incomplete and misleading. As a result, the vast majority of investors across the globe has been brainwashed to believe total gold supply and demand mainly consists of global mine output and jewelry demand. In reality, the supply and demand data GFMS publishes is just the tip of the iceberg. But the firm is reluctant to admit this publicly, lest their business model would be severely damaged. GFMS has denied all allegations about their incomplete Chinese gold demand statistics by continuously making up false arguments. Therefore, BullionStar will debunk, once more, such arguments spread by GFMS – which are supposed to explain how from January 2007 until September 2016 the difference between GFMS’ Chinese gold demand and apparent supply reached over 4,500 tonnes – in order to expose true Chinese gold demand. Exhibit 1. Chinese gold supply and demand data. Apparent supply is reflected by the center columns (mine output + import + scrap supply). Withdrawals from the vaults of the Shanghai Gold Exchange serve as a proxy for Chinese wholesale gold demand. True Chinese gold demand is somewhere in between SGE withdrawals and apparent supply. Since 2013 I’ve witnessed GFMS shamelessly present nine arguments in their Gold Survey reports, but along the way abandoned the arguments that I had debunked on these pages. Indeed, few of all these arguments have ever proven to be valid, illustrated by the fact that GFMS perpetually keeps making up new ones. What’s left is to disparage are the final three arguments from GFMS’ most recent annual report: the Gold Survey 2016 (GS2016). Because GFMS chooses their arguments to be ever more complicated, I’ll have to be precise in my wordings not to allow any margin for interpretation errors. For detailed information regarding the mechanics of the Chinese gold market and supply & demand metrics readers can click the links provided. Debunking Final GFMS Arguments In the Chinese domestic gold market nearly all supply (import, mine output, scrap supply) is sold through the Shanghai Gold Exchange (SGE), and so Chinese wholesale gold demand can be measured by the amount of gold withdrawn from the SGE vaults; data published on a monthly basis. As I’ve been reporting on withdrawals from the Chinese core exchange since 2013, the debate between me and Western consultancy firms like GFMS with respect to true Chinese gold demand has centered around these infamous SGE withdrawals (exhibit 1). Per mentioned above, GFMS has put out nine arguments in recent years explaining their reader base why SGE withdrawals do not reflect gold demand. Firstly, let us have a look at the five arguments now abandoned by GFMS: Wholesale stock inventory growth (Augustus 2013) (Gold Survey 2014, page 88) Arbitrage refining (Gold Survey 2014, page 88) (Reuters Global Gold Forum 2015) Round tripping (Gold Survey 2014, page 88) (Gold Survey 2015, page 78, 82) Chinese commercial bank assets to back investment products. “The higher levels of imports, and withdrawals, are boosted by a number of factors, but notably by gold’s use as an asset class and the requirement for commercial banks to hold physical gold to support investment products.” (Gold Survey 2015, page 78). Defaulting gold enterprises send inventory directly to refiners and SGE (Gold Survey 2015 Q2, page 7) No need to discuss these anymore, as GFMS dedicated a full chapter in the GS2016 report titled, “A Review And Explanation Of How China’s SGE’s Withdraw Numbers Are Impacted By Other Trading Activities”, in which the arguments above are not listed, implying GFMS ceased to recognize them as relevant. However, there are three new arguments listed, and one old one, that will be discussed in this post: Tax avoidance (Gold Survey 2016, page 56). Financial statement window dressing (Gold Survey 2016, page 58). Retailers selling unsold inventories directly to refiners (Gold Survey 2016, page 58) Gold leasing activities and arbitrage opportunities (in China gold is money at lower cost) (Gold Survey 2016, page 57, Gold Survey 2015, page 78) Because gold leasing is an old argument it will only briefly be addressed here. 1. Tax Avoidance This argument entails an illegal Value-added tax (VAT) invoice scheme. Although this scheme exists, it can not have the impact on SGE withdrawals like GFMS wants you to think. GFMS introduces its special investigation chapter by stating: TAX AVOIDANCE The first and foremost factor behind why we believe the SGE’s withdrawal number differs from the country’s total gold demand is related to China’s current tax system, with some people exploiting this grey area. … the number of industry participants mushroomed in 2014 and 2015 as other traders became aware of the potential loophole. The GFMS team uses the terms “tax avoidance” and “loophole”. For the ones that don’t know, tax avoidance and tax evasion are two opposing practices. Tax avoidance is the legal usage of a tax regime to one's advantage in order to reduce the amount of tax payable by means that are within the law (Wikipedia). Tax evasion is the illegal evasion of tax payable (Wikipedia). In other words, tax avoidance is legal while tax evasion is illegal. In the introduction the GFMS team pretends the tax scheme is legal, while this is anything but true. In China one can risk life imprisonment or the death penalty when caught for tax evasion: Whoever forges or sells forged special invoices for value-added tax shall, if the number involved is especially huge, and the circumstances are especially serious so that economic order is seriously disrupted, be sentenced to life imprisonment or death and also to confiscation of property. Then, to add to the confusion, further down the GFMS team writes, “of course, all of the activities are considered illegal by the Chinese government.” Maybe GFMS doesn’t understand the difference between tax avoidance and tax evasion, two diametrically different practices, which makes their professionalism highly questionable. GFMS writes, “the first and foremost factor behind why we believe the SGE’s withdrawal number differs from the country’s total gold demand is related to China’s current tax system”. So we’re supposed to believe that after all these years - GFMS is operational for decades - and all that has been written on the Chinese gold market, now GFMS has finally found the “first and foremost reason” why SGE withdrawals do not reflect demand? Or did it recently stumble upon this scheme to use in its defence? I think the latter. The understand the details of this illegal VAT invoice scheme please read my post The Value-added Tax System In China’s Domestic Gold Market, written to substantiate this blog post. Regarding using VAT invoices for tax evasion, the GFMS team must have read this news article by the Shenzhen Municipal Office. In the news, a company called Longhaitong used SGE VAT invoices for tax evasion. How does it work? For example: the prevailing spot gold price on the SGE is 234 CNY/gramme. Company X tells a mom-and-pop jewelry fabricator that they can supply good quality cheap gold, say the SGE spot price minus 2 CNY/gramme, but without a VAT invoice. The mom-and-pop fabricator wants to buy 1 Kg so it gives 232,000 CNY to company X (the mom-and-pop shop will fabricate jewelry from the gold to be sold covertly without VAT to consumers). Company X buys 1 Kg of gold on the SGE at the spot price of 234 CNY/gramme, paying 234,000 CNY. Then company X gives the gold to the mom-and-pop fabricator but keeps the VAT invoice. Up till now, company X has incurred a loss of 2,000 CNY (bear in mind, because of China’s VAT system buyers pay the spot price at SGE which doesn’t include any VAT, but when companies withdraw the metal they receive a VAT invoice from the tax authority that describes 17 % of the all-in price is VAT, because the gold leaves a VAT exempt environment). However, company X can then sell the VAT invoice for 4,000 CNY to, in example, a brick trader. Company X effectively makes 2,000 CNY. If the brick trader alters the subject header on the invoice from “gold” into “bricks” he can tax deduct 34,000 CNY (234,000 / (1+17%) * 17%) from his VAT payable. In this scenario, the brick trader effectively makes 30,000 CNY (34,000 CNY minus the 4,000 it paid to company X). Naturally, all exemplar numbers can vary. For sure this illegal VAT scheme exists and has been used. But, only to a limited extent - in my conclusion I will tell you the upper bound. Mind you, in the scenario I just described the gold does meet demand, albeit through an illegal scheme! In addition, the discrepancy between the GFMS Chinese demand figures and SGE withdrawal numbers first appeared in 2008, and have exploded since 2013. Exhibit 2. Chinese gold supply and demand data. In the GS2016 GFMS writes: We initially became aware of the scheme in 2013 when it first emerged, but based on information gathered from our contacts, the number of industry participants mushroomed in 2014 and 2015 as other traders became aware of the potential loophole. The GFMS team wants readers to believe that it was the tax scheme that caused the discrepancy between GFMS Chinese demand and SGE withdrawals since 2013, but the VAT regulation regarding gold has remained unchanged since 2002. Is it believable that criminals found the possibility of these illegal practices 11 years later, exactly when Chinese demand exploded? No. If you click this link, you will see a similar incident that happened in 2010 and was reported at the end of 2011. The VAT scheme has existed for many years and crime incidents happen, but not like GFMS wants you to think. If the GFMS team was indeed aware of the illegal practices as late as 2013 and thought that was the year when these practices first emerged, then GFMS is not properly informed in the Chinese gold market. More from GS2016: One of our contacts with some understanding of this activity estimated that just from Shenzhen alone, such trading activities could have possibly impacted the SGE’s withdrawal volumes by a few tonnes per day. Approximately half of the gold being sold in the black market at discounts would eventually flow back to the SGE. In my opinion this is speculation. According to the news available, buyers in the black market are those who want the gold to fabricate jewelry that eventually is being met by true demand. In contrast, GFMS wants readers to believe half of the gold involved in the scheme flows back to the SGE. But bars withdrawn from the SGE vaults are not allowed to re-enter, only if they’re recast into new bars by SGE approved refineries (the gatekeepers of the Chinese chain of integrity). For gold involved in VAT invoice schemes to flow back to the SGE, technically SGE approved refineries would be complicit. Though the SGE conducts a campaign to crack down on such illegal tax activities. As stated above, the VAT scheme is real, though it can not involve as much gold as GFMS wants you to believe. Unfortunately we can’t compute the exact amount recycled through the SGE through this practice, we can only identify the upper bound, which we’ll do in the conclusion. As background information: when gold is withdrawn from SGE vaults and promptly flows back to the SGE, this overstates withdrawal numbers as it creates equal demand and supply that has no net effect on the price. Therefore, such recycle flows should not be counted in supply and demand statistics. Readers can click this post for more information. Financial Statement Window Dressing The GFMS team writes: Some companies attempted to build up their revenues by merely trading and withdrawing physical gold from the SGE vault so it would appear they have a high level of business activity, while in reality there is no real genuine demand behind this. Trading can build up revenues but why do these companies withdraw gold? That doesn’t make economic sense. If a company buys gold on the SGE and leaves the gold in the SGE vault, the gold will be recorded as “inventory” on the company’s balance sheet. If the company then withdraws the gold, the gold is still regarded as “inventory”, so what’s point of withdrawing gold? Changing the location of the gold doesn’t change the accounting nature of the gold. It is technically possible to buy gold on the SGE, withdraw, refine it into new bars, redeposit the bars into SGE vaults and sell the bars. However, this will incur expenses. When the point is “window dressing”, why incur unnecessary expenses? More logic would be to leave the gold in the SGE system. This argument is false. Retailers Selling Unsold Inventories Directly to Refiners In this section, the GFMS team writes: Retailers often prefer to sell a portion of their working stock at a discount directly to refiners in order to maintain inventories at a desirable level. Why waste the fabrication costs of jewelry when retailers can sell the products at a discount to customers? GFMS writes: By selling to refiners, even if such a transaction may result in a financial loss, it still counts as revenue; but doing the latter only increases the expense category and provides no benefits to the company’s revenues or asset value. Let’s assume an unsold jewelry stock is worth of 1,000 CNY. The retailer sells it to a refiner at 800 CNY, which results in a loss of 200 CNY. The inventory item on the retailer’s balance sheet is reduced by 1,000 CNY and the cash item increases by 800 CNY. The net result is that the total asset value of the retailer decreases by 200 CNY, then how can this practice provide benefits to the asset value? GFMS writes: As an example, during a field research trip earlier this year, a local refiner indicated that one jewellery retailer has sold approximately 40 tonnes of unsold jewellery pieces to them in a single two month period. But this quote doesn’t mention what the unsold jewelry pieces become in the end. Possibly, these pieces become gold wires, which might be used by jewelry fabricators instead of becoming gold bars that flow back to the SGE. GFMS pretend the majority of gold in China is continuously recycled through the SGE, which is not true. Many refineries are note even approved by the SGE to supply gold bars. Gold Leasing Activities And Arbitrage Opportunities This argument is one of the oldest and most persistent. But we can be short about this; in the Chinese gold lease market nearly all trades are conducted within the SGE system. Any speculator borrowing gold for cheap funding will not withdraw his metal loan, as his incentive is to sell spot for the proceeds. GFMS fools readers by mentioning high leasing activity, but it neglects to mention leases aren’t withdrawn from the vaults. Only a jewelry fabricator would withdraw borrowed gold because he wants to fabricate products to meet demand. For more information you can read this post on the Chinese gold lease market. Even the World Gold Council has recently stated little borrowed gold leaves the SGE system [brackets added by me]: Over recent years we have observed a rising number of commercial banks participating in the gold leasing market. … It’s estimated that around 10% of the leased gold leaves the SGE’s vaults. The majority is for financing purposes and is sold at the SGE [and stays within the SGE vaults] for cash settlement. This argument is false. Furthermore, it’s noteworthy that GFMS writes: From the perspective of the bank, lending physical gold is an off-balance sheet item,… But as I’ve demonstrated in this and this post the majority of the “precious metals” on the Chinese bank balance sheets reflects back-to-back leasing. Meaning banks borrow gold in the SGE system to subsequently lend out at a higher lease rate. So neither do the Chinese bank balance sheets influence SGE withdrawals. What withdrawals largely reflect are direct purchases by individual and institutional investors at the SGE. True demand. Conclusion There is a very limited extent to which the VAT scheme can explain the difference between GFMS' demand and SGE Withdrawals. I wrote previously that indeed there is certain amount of gold being withdrawn from SGE vaults, which, for various reasons, finds its way back to the SGE in newly cast bars – overstating SGE withdrawals as a proxy for wholesale demand. Unfortunately nobody knows exactly the volume flowing through the SGE that distorts withdraw data. But, we do know the upper and lower bound. The upper bound is the difference between SGE Withdrawals and apparent supply, the lower bound is zero. Exhibit 3. Chinese gold supply and demand data. As supply and demand are always equal, to estimate demand we can measure supply. GFMS only measures consumer demand (jewelry, retail bar and coin, and industrial demand) and not institutional demand (direct purchases at the SGE). This is not speculation this is a fact, and in China everyone can buy gold directly at the SGE so this explains the immense withdrawals. GFMS is fully aware of this but refuses to acknowledge it – because that would ruin their business model. Instead GFMS pretends that the difference between consumer demand and SGE withdrawals is all caused by gold being recycled through the central Chinese exchange. But how is this possible? If the Chinese gold market would simply be a merry-go-round fest, how come the Chinese import thousands of tonnes of gold that are not allowed to be exported? What GFMS suggests is not possible. The fact China keeps importing reveals demand. Another chart: Exhibit 4. Chinese gold supply and demand data. Apparent supply is reflected by the center columns (mine output + import + scrap supply). Theoretically the upper bound for the VAT scheme to have recycled gold through the SGE equals the difference between SGE withdrawals and apparent supply (the difference in exhibit 4 between the red and center columns). That’s the sole leeway we can debate about. As supply equals demand, demand cannot be lower than apparent supply. I should add, not unimportant, we know GFMS’ scrap supply data does not include disinvestment (institutional selling directly to refineries). So disinvestment must be included in the difference between SGE withdrawals and apparent supply as well. Have another look at exhibit 3. But, because we don’t know the amount of disinvestment, neither do we know the amount of distortion (VAT scheme and other recycling flows). That’s why in exhibit 1 I’ve disclosed the aggregated difference between apparent supply and GFMS demand. There can be no mistake about this volume, it reflects true demand and it has mushroomed into +4,500 tonnes since 2007. GFSM can present many more arguments in future reports, but it won’t change the fact that true demand is at least equal to apparent supply. To be exact, from January 2007 until September 2016 apparent supply accounted for 11,541 tonnes, and GFMS’ Chinese gold demand accounted for 6,903 tonnes. The difference, which GFMS has pursued to conceal, has aggregated to 4,638 tonnes. And according to my analysis this was not bought by the Chinese central bank. As over the aforementioned period SGE withdrawals accounted for 12,825 tonnes, we get... True Chinese gold demand ballpark = 11,541 - 12,825 tonnes GFMS' Chinese consumer gold demand = 6,903 tonnes Let’s see how much longer GFMS can deny reality. Exhibit 5. Chinese gold supply and demand data. Apparent supply is reflected by the center columns (mine output + import + scrap supply). For more detailed information with respect to GFMS’ incomplete global gold supply and demand metrics view this post.
Launch of the AAOIFI Shari’ah Standard on Gold, developed in collaboration with the World Gold Council
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council are delighted to announce the issuance of ‘Shari’ah Standard No. 57 on Gold and its Trading Controls (“the Standard”). The Standard deals with the Shari’ah rulings for gold in its various forms and categories, the Shari’ah parameters for gold...
Submitted by Ronan Manly, BullionStar.com Introduction Exchange traded investment vehicles backed by physical gold refer to a group of trusts, funds, or other legal entities which hold gold bars with a custodian in a vault and which issue securities, units or other fractional ownership claims against that gold. These securities are pitched and marketed as an alternative to direct ownership of gold bullion and these products have seen significant expansion and evolution over the last 10-12 years. There are a number of such products including Exchange Traded Funds (ETFs) and Exchange Traded Certificates (ETCs). These product classes now represent a relatively large footprint within the gold investing space. In addition to the very large and well-known SPDR Gold Trust (GLD) and iShares Gold Trust (IAU), there are several other similar products from providers such as ETF Securities, Source ETFs, and Xetra-Gold. At the time of writing, GLD held nearly 900 tonnes of gold, ETF Securities products held over 300 tonnes, iShares gold ETFs held approximately 275 tonnes of gold, and Xetra-Gold held 110 tonnes. Therefore, their combined gold holdings are now larger than all but the world’s largest central bank gold reserve holdings. As popular as these securities are, it’s important to look at what exactly these products provide, and what they don’t provide when compared to ownership of segregated physical gold bars or gold coins. Exposure to the Gold Price, not to Gold A common investment objective of all of these gold-backed vehicles is to provide the security holder with exposure to the price of gold, not to actual physical gold. For example, the investment objective of SPDR Gold Trust shares is to “reflect the price of gold bullion”. The iShares Gold Trust “seeks to reflect generally the performance of the price of gold” The Source Gold P-ETC “aims to provide the performance of the spot gold price”. Xetra-Gold is an “opportunity to participate in the performance of the gold market”, in a product that has “no beneficial ownership to gold”. These products therefore do not provide their holders with direct ownership of gold. ETFs: Paper at the end of the day No Right to Underlying gold – Cannot take Delivery Although these products do hold physical gold that backs the respective securities, a primary concern is that they do not, and never will, allow the unit holders to obtain access to the underlying gold. The gold bars held in these vehicles are almost always large ‘variable weight’ gold bars, commonly called London Good Delivery bars, which weigh anywhere between 350 ounces and 430 ounces. For example, in ETFS Physical Gold (Ticker PHAU), “each individual security has an effective entitlement to gold”. For Source Physical Gold P-ETC, “each Gold P-ETC is a certificate which is secured by gold bullion”. For the SPDR Gold Trust, the “gold shares represent fractional, undivided interests in the Trust” which owns the underlying gold. But in none of these vehicles can the unit holder take delivery of the underlying physical gold that backs the shares or units. Xetra-Gold does offer a roundabout option to its holders to convert their securities into physical gold if they so choose. This route, however, does not even involve access to the specific underlying gold bars of the product. Instead, Xetra-Gold holds an additional pool of unallocated gold for conversion purposes. In the words of Xetra, “in order to facilitate the delivery of physical gold, the issuer holds a further limited amount of gold on an unallocated weight account with Umicore AG”. Umicore is a Belgian headquartered metals refiner and recycler. Counterparty Risk Another common trait of gold-backed ETFs and similar vehicles is that they all have quite complex structures, long prospectuses filled with numerous risk warnings, and lots of moving parts. Lots of moving parts also means lots of participating entities such as trustees, custodians, marketing agents, Authorised Participants (APs), issuers, and market-makers, which potentially also means significant counterparties risks. A retail investor would also generally need a brokerage account to hold and trade these ETFs and securities, which is another layer of counterparty risk. For example, the SPDR Gold Trust (GLD), marketed as a gold-backed ETF, is technically a grantor trust, established under the laws of New York State, and registered as a non-managed investment pool. It has a Trustee, a Sponsor, a Marketing Agent, and a Custodian, among other involved entities. Similarly, the iShares Gold Trust (IAU) is set up as a grantor trust. The Source Physical Gold P-ETC is an exchange traded certificate collateralised by gold bullion. ETF Securities Physical Gold securities are secured, undated, limited recourse debt securities that are listed on exchanges such as the London Stock Exchange. In the event of extreme financial market crisis, the complex structures of these products and the potentially complex counterparty risk scenarios that could arise should not be overlooked. Vault Visits and Personal Audits Prohibited The gold bar holdings underlying these collective investment pools are mostly stored in the London precious metals vaults of HSBC and JP Morgan, and in some cases, similar vaults in New York, Zürich and Frankfurt. Without exception, retail holders of gold-backed ETF units / shares / certificates can never visit these custodian vaults. In the case of the London vaults of HSBC and JP Morgan, the vault locations aren’t even publicly disclosed, so even if you wanted to turn up at the vault, you wouldn’t know where to go. Some large institutional holders of the SPDR Gold Trust and the iShares Gold Trust have on occasion been allowed into these HSBC and JP Morgan vaults, but this simply demonstrates that institutional clients get preferential treatment from these Trusts relative to smaller investors. It goes without saying that since retail investors can’t ever visit the vaults in which ETF gold is stored, and since even institutional holders only get a quick vault ‘tour’, these ETF holders can never perform their own independent audits of the stored gold. This would not be practical anyway given that the ETF gold is a pool of undivided interests in the form of large Good Delivery bars, so there are no ear-marked gold bars individually identifiable per holder. BullionStar allocated and segregated vault storage Contrast this with segregated and allocated private vault storage offered by a company such as BullionStar, where the storage customer is always welcome to go to the premises and view their own gold holdings in person. High Cost for Non-Physical Ownership The costs of investing into gold-backed ETFs are not cheap. For example, the SPDR Gold Trust has an expense ratio of 0.40% per annum which covers fees incurred by the Trust to pay the multitude of entities involved in running the Trust, such as sponsor fees, marketing agent fees, trustee fees, custodian fees, listing fees, and legal fees. And these ETF’s do not even provide investors with ownership of physical segregated and allocated gold ownership. Contrast this to BullionStar’s storage costs. BullionStar operates a secure storage vault in Singapore which is integrated into its shop and showroom premises. BullionStar secure vault storage BullionStar’s Bullion Savings Program (BSP) for gold is a fully backed physical precious metal allocation program that only costs 0.09% per annum. For example, when a customer buys 1 BSP Gram of gold, 1 gram of gold is allocated to the program from BullionStar’s stock inventory. The BSP is available in gold, silver and platinum metals. For silver and platinum, the cost of the BSP is only 0.19% per annum. BSP Grams can be converted to physical bars when sufficient grams have been accumulated and conversion is free, i.e. there is no conversion cost. BullionStar BSP gold grams can be converted to 100 gram PAMP gold bars anytime there is a sufficient balance in the holder’s account. This conversion level is attainable and realistic and is far more practical than converting ETF units to 400 ounce gold bars which, although it may be theoretically possible, would be beyond the reach of all but the largest institutional ETF holders. Similar to BSP gold grams, BSP silver grams can be converted to 15 kilogram silver bars once a sufficient balance is reached, and platinum grams can be converted to 1 kilogram platinum bars. Vault storage in BullionStar’s secure storage vault is only 0.39% per annum for gold bullion products (gold bars and gold coins). This storage cost is for fully allocated, fully audited and fully insured vaulted gold. No Sub-Custodian Agreements in the London Vaulting System A custodian is an institution that holds securities or physical assets in safekeeping on behalf of the owner. Similarly, a sub-custodian is an institution that provides custody / safekeeping services on behalf of a custodian. A custody contract is formed between asset owner and the custodian. From the perspective of the asset owner, the sub-custodian can be viewed as an unrelated third-party. In addition to the secrecy surrounding the locations of the London precious metals vaults, an outdated and informal system of conventions is still used between custodians and sub-custodians in the London Gold Market. For example, the SPDR Gold Trust prospectus states that “the sub-custodians selected and available for use by the Custodian include: Bank of England, The Bank of Nova Scotia-ScotiaMocatta,…JPMorgan Chase Bank, and UBS AG”. However, the same prospectus also states that there are no written sub-custodian agreements or contracts in the London gold market: “There are expected to be no written contractual arrangements between sub-custodians that hold the Trust’s gold bars and the Trustee or the Custodian, because traditionally such arrangements are based on the LBMA’s rules and on the customs and practices of the London bullion market.” The LBMA here refers to the London Bullion Market Association. Therefore, in the London Gold Market, which is the world’s center for the storage of the gold that backs the large gold ETFs, there are no subcustodian agreements. This lack of sub-custodian agreements in the London Gold Market goes against how all other financial markets are run. In comparison, the world’s equity and bond markets employ very sophisticated and highly detailed custody and sub-custody agreements covering the roles and legal responsibilities of both parties, and their liabilities under various scenarios. The use of sub-custodians in the London vaulting system by gold-backed ETFs is not just a theoretical issue. It happens in practice and has happened quite recently. In the SPDR Gold Trust 10-Q filing with the SEC for the quarter ended March 31, 2016, the filing revealed that the Bank of England had acted as a custodian for GLD as recently as February 2016.: “During the quarter ended March 31, 2016, the greatest amount of gold held by sub-custodians was approximately 29 tonnes or approximately 3.8% of the Trust’s gold at such date. The Bank of England held that gold as sub-custodian.” Therefore, this lack of sub-custodian agreements in the London Gold Market is a real and somewhat underappreciated concern. HSBC gold vault London Inadequacy of Insurance Given the sheer scale of some of the gold-backed ETFs such as the SPDR Gold Trust and iShares Gold Trust, and the value of the gold held in these Trusts, one would assume that the insurance coverage of the gold held must be vast and in excess of the value of the gold held. For example, the SPDR Gold Trust, at the time of writing, held nearly US$ 34 billion worth of gold bars. However, insurance cover of the gold held in these Trusts is not sufficient. In fact, these Trusts don’t even insure their gold, as they leave the responsibility of insurance to the custodian. However, the custodians of the Trusts only insure the contents of the vaults (specie insurance) for limited general insurance cover that vastly falls short of the value of the gold bars held in those vaults. For example, the GLD prospectus states: “The Trust does not insure its gold. The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody” The GLD FAQ reiterates this situation: “The Trust is not a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the Trust. If the gold held by the custodian on behalf of the Trust becomes lost, or gets stolen or confiscated, the Trusts shareholders would have to bear the loss. Insolvency Risks Physical gold has been held as a form of savings and as a store of value for thousands of years. Gold-backed ETFs and associated products have only existed for the last 15 years or so. It’s not clear how gold-backed ETFs and their custodians and trustees would perform in a fully fledged systemic financial crisis. In contrast, physical gold has a long and proven history of acting as a reliable safe-haven status during financial crises. What, for example, would happen if an ETF’s custodian such as HSBC became in danger of failure? This is not merely a theoretical issue as this scenario is covered in the GLD prospectus: “If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant. In addition, in the event of the Custodian’s insolvency, there may be a delay and costs incurred in identifying the gold bars held in the Trust’s allocated gold account.” Arguably, the default of a custodian entity is a real risk when holding a gold-backed ETF, and the ETF price should be discounted by quantifying the cost of this risk using a proxy such as the price of purchasing Credit Default Swap (CDS) insurance on the debt securities of a custodian bank. A Shareholder, not a Gold Holder In gold-backed ETFs, such as GLD, that are structured as publicly traded Trusts, the unit holders are actually shareholders of the Trust. These trusts are governed by Trust Indentures which are legal documents laying out the roles and responsibilities of the Trustee, Sponsor, Custodian, and Marketing Agent. In some scenarios, such as fee arrangement changes, the wording of the indentures cannot be amended without the approval of more than 50% of shareholders. Since the unit holders of the ETFs are actually the shareholders of the Trust, the unit holders have voting rights on the indenture wording change, and can be contacted by proxy voting agents operating on behalf of the Trust. This was starkly illustrated over 2014 / 2015 when the SPDR Gold Trust chose to launch a proxy solicitation campaign in an attempt to change the fee structure of the Trust to make it more advantageous to the Sponsor, which is a subsidiary of the World Gold Council. During the proxy campaign, GLD shareholders were bombarded for months on end by disruptive phone calls from the proxy voting services Broadridge and D.F. King who were attempting to gather the required number of shareholder votes. Many small GLD shareholders who thought they were buying physical gold when they bought SPDR Gold Trust units, were not impressed when they realised that they were actually shareholders on the receiving end of constant phone calls soliciting their vote and even phone calls trying to convince them to update their already cast vote. This type of disruptive fiasco would obviously not happen when owning segregated physical gold bars or gold coins. ETFs Valued using LBMA Gold Price ETFs and similar investment vehicles are usually valued based on their Net Asset Value (NAV). The NAV is the value of assets, less the value of liabilities, divided by the number of shares outstanding. ETFs usually trade at prices in and around the NAV but they can trade at either a discount or a premium to the NAV. In the case of the large gold-backed ETFs, the NAV is calculated based on the LBMA Gold Price benchmark which is a price derived from a daily auction of unallocated gold in London where the only direct participants are a small group of LBMA bullion banks. In fact, the rules of access to the auction prevent any entity except LBMA bullion bank members from being direct participants in this auction. Since March 2015, this auction is the successor to the scandal ridden London Gold Fix auction, and is essentially the same process, run by some of the same banks. The new LBMA auction will not even reveal who the auction chairman is, so the entire process is still not transparent. As such, the NAVs of these ETFs are formed by a gold price which is central to the London Gold Market’s system of unallocated gold transfers, where there is zero trade reporting, zero position reporting, an opaque system of clearing and vaulting, and where vastly more gold is traded than there is physical gold backing. In a scenario under which the paper price of gold diverged from the physical price, the fact that these ETFs are valued based on the LBMA gold price and not on physically settled gold transactions has potential implications for the trading price of these ETFs, and the discounts / premiums to their NAVs. ETF Ownership Perpetuates the Opaque LBMA run London Gold Market Investment flows into gold-backed ETFs tend to channel gold demand that might otherwise have gone into physical gold into products whose supply is met by tapping the pool of LBMA bank controlled gold inventories and even the pool of central bank gold lending. The actual mechanism for adding gold bars to the large London-based gold ETFs requires the custodians to allocate gold from the unallocated metal credit balances of the Authorised Participants (APs). These APs are mostly bullion banks. The unallocated metal balances of the bullion banks are essentially a general pool of bullion bank unallocated gold credits that have been created via the fractional-reserve gold banking system. There is very little transparency around where the additions to the large London vaulted gold ETFs come from. The physical gold which the custodians HSBC and JP Morgan source is not provided by the APs and bullion banks, by definition because the APs and bullion banks only transfer unallocated gold to the custodians. More importantly, the APs and bullion banks don’t normally maintain large physical gold inventories. The custodians may even be directly borrowing from central banks which store their gold at the Bank of England, as a recent case of SPDR Gold Trust gold held in the sub-custody of the Bank of England during Q1 2016 implied. The investment flows into ETFs therefore support and prop up a) the LBMA unallocated gold accounting system, b) the opaque London gold clearing and vaulting system, and c) the bullion banks that are at the heart of the fractional reserve unallocated gold system. ETF Ownership Directly Funds World Gold Council The World Gold Council is a member-owned non-for-profit organisation that was established to promote the demand for physical gold. The Council’s members currently comprise 19 gold mining companies from around the world. Another concern specifically regarding the SPDR Gold Trust is that the majority of the fees earned by the Trust flow to the World Gold Council (WGC) due to the sponsor of the Trust being a fully owned subsidiary of the World Gold Council. In fact, a large majority of WGC’s revenue are derived from fees from the SPDR Gold Trust. The WGC also receives recurring income each year from ETF Securities in connection with a historic transaction it previously entered into with this ETF provider. Therefore, the World Gold Council has a strong and vested interested in marketing and promoting investments into gold-backed ETFs, and less incentive in promoting direct ownership of segregated and allocated gold. GLD fees fund the World Gold Council Additionally, since the SPDR Gold Trust leaves it to the custodian HSBC to allocate physical gold to the Trust, the SPDR Gold Trust is also reinforcing the LBMA fractionally reserved and unallocated gold accounting system, as well as the opaque London gold clearing and vaulting system. Therefore, there is a potential conflict of interest in that retail demand for the GLD does not necessarily increase the demand for the physical gold mined by WGC’s members. For those who are not impressed with the World Gold Council’s track record in promoting the physical gold industry, these are important philosophical considerations. The Quantity of Gold Represented by each ETF Share Declines over Time Since gold backed ETFs accrue their expenses and pay those expenses by selling some of the gold held in the Trust / Fund, the quantity of gold represented by each share / unit declines over time. As the SPDR Gold Trust prospectus states: “The Trust does not generate any income and regularly sells gold to pay for its ongoing expenses. Therefore, the amount of gold represented by each Share has gradually declined over time.” When the SPDR Gold Trust was launched in 2004 (originally called StreetTRACKS Gold Shares when it launched in November 2004), it was structured so that each GLD unit was worth 1/10th of an ounce of gold. This is also called the Trust’s ‘Initial Pricing’. At the time of writing, December 2016 (12 years after launch), the NAV per GLD share expressed in gold ounces had declined to 0.095338 ounces per share. Therefore, since launch in November 2004, the value of each GLD share has declined by 0.004662 ounces of gold due to the fact that the Trust’s expenses are paid by continually selling a portion of the Trust’s gold. Therefore for a holder of GLD since launch date, that holder has lost 4.662% of the gold that was initially backing each share. There is another metric displayed on the GLD website which also illustrates this point, and its referred to as “Monthly Gold Sales per Share”. As an example, as of late November 2016, this figure was stated as being US$0.04133. Annualizing this cost into “Annual Gold Sales per Share” brings it to US$ 0.49596. Expressing the annual gold sales per share in terms of the GLD NAV (which was US$115.454 at the time), means that the annual gold sales equate to 0.4296% of the Trust’s NAV, which is about the same as the Trust’s estimated expenses of 0.40% per year. This artlcle first appeared on BullionStar's website in the Gold University research pages under a title of "Gold ETF Mechanics".
Только в течение октября Россия пополнила свои золотые резервы на 1,4 миллиона унций или около 48 тонн золота. По данным Всемирного совета по золоту, в мире добывают около 3 тысяч 200 тонн золота в год, и эти 48 тонн составляют около 1,5 процента от общего объёма добытого золота. Это огромное количество золота для одной страны, приобретённое всего за один месяц.
Gold down 13% in 13 trading days since Trump election Factors that have led to lower gold prices Trump bearish for gold in coming four years? 'Trumpflation' cometh Sharia gold - vaulted gold accessible to 110 million new investors What to do? Diversify and geometric price cost average Donald Trump was elected President and the gold price surged 5%, over $60, from $1,271/oz to $1,336/oz. As many of us had suggested it would. And then something strange happened, something not expected by the majority of market participants - it started to fall, the dollar strengthened. We now have a gold price that is down 13% since the US election result - from a high of $1,336/oz to a low of $1,177/oz this morning. This is a drop of 13% in just 13 trading days since the election. Does this mean that Trump and his Presidency isn’t going to be very bullish for gold prices as so many of us predicted? Does this mean that gold is going to underperform or worse, enter a bear market in the next four years? We don’t think so. Indeed, we see this as extremely unlikely. We outline below just some of the factors that have lead to the recent declines in the gold price, and outline why we don’t think this is a sign of things to come. US dollar strengthens as Federal rate hike looms For many in the gold space the miserable gold price is thanks to the expectations that Janet Yellen and co. will decide to hike rates thanks to some mixed data that suggestes a strengthening US jobs market. These were the noises emanating from the recent Federal Reserve Open Markets Committee meeting press release. The US Dollar has rallied to its highest level since 2005 this week, largely on the back of these Fed expectations. Higher borrowing costs can hurt gold bullion as strategic buyers look at gold in the context of yields and interest payments. Although this is less the case now given ultra loose zero percent and negative interest rate monetary policies. ETF support gone ... for now In 2016 gold demand has been supported by stellar ETF demand as, according to the World Gold Council, the high gold price in Q3 had a negative impact on gold demand, elsewhere. For the SPDR Gold Trust and the iShares Gold Trust combined inflows are worth around $13.6 billion for this year (a record). Both jewellery and gold bars and coin sales have reached levels this year not seen since 2009. But physical demand has not reflected such levels in Q3. After very significant demand and the price surge in Q1 and Q2, Q3 saw a reduction in demand for jewellery and coins and bars. Whilst central banks, which have been huge buyers (and therefore supporters) in the physical gold market, have reduced gold reserve diversification to 33% of that in 2015. “ETPs were the only bright spot during the quarter, with 146t of inflows helping to counterbalance weak demand elsewhere, notably in jewellery (-21%), bars and coins (-36%) and purchases by central banks (-51%).” But that bright spot has started to dim since the Trump’s victory: According to ETF.com “in the week since the election, outflows from the SPDR Gold Trust and the iShares Gold Trust totalled $1.7 billion…the aftermath of the elections has clearly dampened enthusiasm for gold among ETF investors.” Therefore it is unsurprising that a market that has been significantly supported by one investment product is now struggling as the outflows add up. But the ETF argument raises an interesting point As the World Gold Council stated in their recent report, much of the activity surrounding gold purchases this year (especially in the area of ETFs) shows strategic buying rather than investment buying. This was no more clear than on the early hours of the election night on November 9th, as Jim Rickards recently outlined, “Gold prices surged late on Nov. 8 and into the early morning hours of Nov. 9 as a Trump victory became clear. This was exactly in line with my expectations. Based on sentiment and momentum, gold should have held those gains. Instead, one of the largest and most visible individual gold investors, Stan Druckenmiller, decided to liquidate his entire gold position in the middle of the night. Druckenmiller told CNBC: “I sold all my gold on the night of the election… All the reasons I have owned it for the last couple of years, it seems to me they may be ending. And by the way, they’re ending globally.” The move by Druckenmiller saw gold continue to decline in the following days thanks to a change in sentiment. Many sheep like traders adopted a ‘me too’ attitude. Momentum is a powerful thing in markets. Do the reasons to own gold no longer exist? In short, no. In lengthier words, still no. One of the main reasons for the dollar strength and uptick in industrial metals is because Trump is expected to spend, spend, spend his way back to making ‘America Great Again.’ The Donald in the White House means reduced regulation, a fall in corporate taxes and trillions of dollars of fiscal stimulus. 'Trumpflation' cometh. All of this without any thought to the inflationary effects. Jim Rickards, explains: “If the Fed accommodates the deficit with “helicopter money,” inflation will surge. If the Fed leans against the big deficits with rate hikes, this will cause a stronger dollar and lead to a global liquidity crisis in emerging markets. If bank regulation is eased, banks can be relied upon to leverage up with risky derivatives, which will make the next financial crisis more, not less, likely. Druckenmiller’s stated reasons for selling gold are equivalent to saying, 'I cancelled my fire insurance because now that Trump is president, we won’t have any more fires.' Don’t count on it.” Druckenmiller is a great investor but like the majority of investors simply does not understand gold's role as a hedging instrument and financial insurance - either through choosing not to or through lack of knowledge. Both Brexit and the Trump victory have wrong footed the financial markets and we are heading into unchartered territory both politically and economically. Unchartered territory means complex decisions are needed to be made by both governments and investors in order to navigate their way through over the coming years. Uncertainty will lead to bargain hunting A lot of uncertainty remains in both the geopolitical and economic arenas. Conventional wisdom told us that gold would benefit from a Trump win, and in truth we haven’t seen the results of Trump win. This will play out over the next four years, and this is where we expect the precious metal to benefit. Aside from Trump’s disastrous spending policies and strategic gold buyers dumping the metal for equities, there are some highlights to consider in the next few months. With each Republican nomination contest we see at least one candidate mention the role of gold in the monetary system. In this recent one, we had a couple and one of them was Donald Trump. It’s highly unlikely Trump is going to be forcing Janet Yellen to announce a return to the gold standard, but we may well see more discussion about gold’s monetary role. In addition to Trump taking a shine to gold, the gold market is soon to see a significant increase in investors when vaulted gold coins and bars become accessible to over 110 million Muslim investors in Turkey, Pakistan, Malaysia, Indonesia, Bahrain, Qatar, Saudi Arabia and the United Arab Emirates As we outlined last week, the Sharia Gold Standard or Islamic Gold Standard is set to be announced, this will allow Muslims around the world to invest in physical gold. The reasons to own gold have not disappeared in the dawn-of Trump. As Rickards says: “The reasons to own gold are insurance against extreme risk, as a hedge against inflation, and as a sound form of money in a world where central banks are losing control. All of those reasons still apply” There are also the not inconsiderable risks posed by the Italian referendum on Sunday week, December 4th, and the French general election on April 23, 2017. Both of which have the potential to plunge the Eurozone into a new crisis - a potentially existential one. Medium and Long Term (2017-2025) 'MSGM' Fundamentals The long term case for having an allocation to precious metals is due to the still positive fundamentals: Macroeconomic risk is high as there is a serious risk of recessions in major industrial nations with negative data emanating from the debt laden Eurozone, Japan and China. Even the recoveries in the UK and the U.S. are tentative at best. Issues with banks, a la Lehman or Deutsche, or a major terrorist incident or another war could badly impact fragile consumer and investor sentiment. Systemic risk remains high as little of the problems in the banking system have been addressed. There remains the risk of another ‘Lehman Brothers’ moment or a new ‘Grexit’ moment and seizing up of the global financial system. The massive risk from the unregulated “shadow banking system” continues to be significantly underappreciated. There are many potential Lehman Brothers out there both in the Eurozone with Deutsche Bank looking very vulnerable. Geopolitical risk remains elevated – and Trump's election seems likely to exacerbate these risks. This is seen in the continuing significant tensions in Lebanon, Syria etc and between Iran and Israel. There is the real risk of conflict and the consequent effect on oil prices and the global economy. While tensions with Russia may subside with the Trump election, tensions with Iran and other Muslim nations look set to worsen.Indeed Trump's trade and economic policies have the potential to create significant tensions even with major trading partners in the EU and with China. Monetary risk is high as the policy response of the Federal Reserve, the ECB, the Bank of England, the BOJ and the majority of central banks to the risks mentioned above continues to be ultra-loose monetary policies, zero interest rate policies (ZIRP), negative interest rate policies (NIRP), the printing and electronic creation of a tsunami of currency and the debasement of paper and electronic currencies.Should the macroeconomic, systemic and geopolitical risks increase even further in the coming months, then the central banks’ response will likely again be more cheap money policies. This will lead to further currency debasement and there is a risk of currency wars deepening. Given these real risks, investors should use this latest correction to diversify into physical gold. There is a strong case for having higher allocations to physical gold today, of as much as 25% of a portfolio, given the risks above. We advise owning physical gold as gold ETFs have significant levels of legal indemnifications and various forms of force majeures that exposes investors to unnecessary risks with little recourse. Hence the importance of physical, allocated and segregated gold “outside the banking system.” Those seeking to allocate funds to precious metals should geometrically price cost average into position by front loading their initial allocation and allocating as much of 50% of their allocation to gold on the first transaction. This latest bout of weakness will allow value buyers to accumulate physical on the dip. Gold and Silver Bullion - News and Commentary Gold hits 9-1/2-month low on firm dollar; set for third weekly loss (Reuters.com) Gold futures fall further below $1,200 mark (MarketWatch.com) Gold edges lower on dollar and U.S. rate prospects (Reuters.com) Potential gold-import ban by India could be biggest bombshell since Nixon (MarketWatch.com) Mastercard, Visa Set to Reap Spoils of India’s War on Cash (Bloomberg.com) $6 billion 'puke' sends gold plunging below $1200. Source Zero Hedge Trump's Victory: What Does it Mean for Gold? (TocqueVille.com) ECB Warns There Is "Significant Risk Of Abrupt Market Reversal" (ZeroHedge.com) $6 Billion Puke Sends Gold Plunging Below $1200 As Dollar Index, Bond Yields Spike (ZeroHedge.com) Chart of the week: “shrinkflation” hits the chocolate market (MoneyWeek.com) Gold: valuable reserve amid unprecedented policy environment (Gold.org) Gold Prices (LBMA AM) 25 Nov: USD 1,187.50, GBP 995.33 & EUR 1,121.83 per ounce24 Nov: USD 1,187.25, GBP 995.36 & EUR 1,125.04 per ounce23 Nov: USD 1,213.25, GBP 998.00 & EUR 1,143.00 per ounce22 Nov: USD 1,217.55, GBP 997.89 & EUR 1,144.98 per ounce21 Nov: USD 1,214.95, GBP 984.72 & EUR 1,143.39 per ounce18 Nov: USD 1,206.10, GBP 971.15 & EUR 1,135.54 per ounce17 Nov: USD 1,232.00, GBP 988.19 & EUR 1,148.10 per ounce Silver Prices (LBMA) 25 Nov: USD 16.47, GBP 13.21 & EUR 15.55 per ounce24 Nov: USD 16.31, GBP 13.09 & EUR 15.43 per ounce23 Nov: USD 16.56, GBP 13.36 & EUR 15.59 per ounce22 Nov: USD 16.76, GBP 13.46 & EUR 15.77 per ounce21 Nov: USD 16.68, GBP 13.47 & EUR 15.69 per ounce18 Nov: USD 16.51, GBP 13.30 & EUR 15.54 per ounce17 Nov: USD 17.04, GBP 13.65 & EUR 15.87 per ounce Recent Market Updates - War On Cash Just Got Real – India and Citibank In Australia- Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998- Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards- Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”- Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”- Islamic Gold – Vital New Dynamic In Physical Gold Market- Peak Gold Globally – “Bullish For Gold”- Gold Price Should Go Higher On Global Risks and Trump – Capital Economics- President Trump – Why Market Loves Him and Experts Wrong- ‘Helicopter Money President’ Trump To Create Inflation and Gold Will Rise- Central Bank Gold Demand continues in Q3- Trump Victory Sends Gold Surging 5%- An uncertain election outcome looks good for gold
За последние 4 года денежно-кредитная политика России претерпела серьезные изменения. Также изменились структура и объемы золотовалютных резервов страны. Если в ноябре 2012 г. общая сумма ЗВР составляла 527 млрд. долларов, то сейчас 391 млрд. долларов.Однако куда более интересно посмотреть на саму структуру резервов. За этот период Центральный банк предпочитал увеличивать долю золота, одновременно сокращая вложения в иностранную валюту. В последние 4 года российский регулятор активно распродавал долговые бумаги США. За этот период вложения в гособлигации Соединенных Штатов упали более чем в 2 раза, с 166 млрд. долларов до 76,5 млрд. долларов. Освобождавшиеся средства регулятор предпочитал размещать в золоте. В ноябре 2012 г. в драгоценном металле хранилось всего 9,8% средств ЗВР, в ноябре текущего года они выросли до 16,5%. Согласно данным Всемирного золотого совета по состоянию на октябрь текущего года в резервах России находилось 1,5 тыс. тонн желтого металла, увеличившись за 4 года на 568 тонн. РезюмеНа наш взгляд, изменение структуры золотовалютных резервов страны вызваны в первую очередь напряженными отношениями между Россией и США. Не стоит забывать, что в последние годы доходность по гособлигациям Соединенных Штатов упорно приближалась к нулю, делая инвестиции в них менее привлекательными. Подробнее Другая статистика:Объемы золота в резервах центральных банков мираБюджетные средства, размещенные в банкахПогашение внешнего долгаОбъемы операций РЕПО
Synthetic Gold Leasing: More Details Regarding The “Precious Metals” On Chinese Commercial Bank Balance Sheets.
Submitted by Koos Jansen from BullionStar.com. More proof the "precious metals assets" on Chinese commercial bank balance sheets have little to do with the “surplus” gold in China's domestic market. The "surplus" in the Chinese gold market is the difference between withdrawals from the Shanghai Gold Exchange vaults and gold demand as measured by consultancy firms like the World Gold Council and Thomson Reuters GFMS. The "surplus" accounts for more than 4,000 tonnes. In reality the "surplus" is true gold demand by Chinese individuals and institutional investors directly at the SGE. Some analysts think the huge tonnages in "precious metals assets" on the balance sheets of Chinese commercial banks have anything to do with the "surplus", but this is not true. And I prefer to explain in detail. One of the topics about the Chinese gold market that has not been fully illuminated is the "gold" on the 16 Chinese commercial banks' balance sheets. At the end of 2015 the aggregated "precious metals assets" on the bank balance sheets accounted for 598 billion yuan (RMB), which translates into approximately 2,682 tonnes of gold – if all the precious metals were gold related, which is very likely. In my previous post on this subject we learned from examining the banks' annual reports from 2015, that there are at least five gold assets that can appear in the “precious metals” line item on the balance sheets. Namely: Gold savings that belong to the banks’ customers (Gold Accumulation Plans, GAP) Gold inventory for the banks’ retail gold bar business Gold leasing business Gold held for hedging purposes Gold held outside China In this post we’ll examine more thoroughly the (Chinese and English) annual reports from 2007 until 2014 of the 16 banks, to learn more on what these huge tonnages represent. The most significant new finding is that Chinese banks conduct synthetic leases - in other words: swaps. By performing synthetic leases, Chinese banks can show "precious metals assets" but no "precious metals liabilities" on their balance sheets. Then, at the very surface it seems these banks own gold, in reality they own zero gold. Exhibit 0. Precious Metals Assets Chinese Banks. Also note, swaps can be executed with foreign banks, through which gold is subsequently imported into the domestic market. And because the Chinese banks have been importing thousands of tonnes in recent years, it should come as no surprise these trades have influenced the “precious metals” line item on their balance sheets. More findings that will be addressed in this post are: Chinese reported lease volume reflects yearly turnover. Gold stored in Shanghai Gold Exchange (SGE) designated vaults owned by commercial banks does not to appear on the custodial bank’s balance sheet. More confirmation some gold on the balance sheets is stored outside China. My conclusion is that the “precious metals” on the Chinese commercial bank balance sheets do not account for the “surplus” gold in the Chinese domestic market Western consultancy firms pretend to be ignorant about. The Chinese banks do not own much gold of themselves, as some analysts have speculated, nor are these banks preparing for a new gold standard designed by the PBOC, according to my sources and analysis. This post is divided in three segments. The first segment is about accounting, which supports the second segment about swaps and other gold related line items on the Chinese bank balance sheets. The first segment can be skipped if you already posses thorough knowledge on accounting. The third segment displays all the "precious metals" related data of the 16 bank balance sheets from 2007 until 2015. I Accounting Background Before we can discuss the details of the “precious metals” mentioned in the financial statements of the annual reports of the 16 banks, we need to do some studying on accounting structures (study the definitions of a financial statement, balance sheet, an income statement, assets/liabilities, financial assets/liabilities and derivative financial assets/liabilities). This study will prove valuable for future posts as well. The bank balance sheets are an important topic in the Chinese gold market; understanding accounting helps us to illuminate the Chinese gold market. Financial Statement Financial statements of banks are divided in three main segments: a balance sheet, an income statement and a cash flow statement. Balance Sheet On Investopedia we can read the definition of a balance sheet: Balance Sheet A balance sheet is a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders. The balance sheet adheres to the following formula: Assets = Liabilities + Shareholders' Equity A number of ratios can be derived from the balance sheet, helping investors get a sense of how healthy a company is. These include the debt-to-equity ratio and the acid-test ratio, along with many others. The income statement and statement of cash flows also provide valuable context for assessing a company's finances, as do any notes or addenda in an earnings report that might refer back to the balance sheet. An example would be, ICBC holding 1 tonne of gold in small ICBC brand bars as inventory for retail sales. This gold is an asset of ICBC. Income Statement Next to a balance sheet, banks disclose an income statement in their annual reports. From Investopedia we read: Income Statement An income statement is a financial statement that reports a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses …. It also shows the net profit or loss incurred over a specific accounting period. Unlike the balance sheet, which covers one moment in time, the income statement provides performance information about a time period. In example, ICBC buys gold at the SGE worth 1,000,000 RMB and has the metal recast in small 200 gram ICBC brand bars. If ICBC subsequently sells the newly casted bars for in total 1,100,000 RMB, then 100,000 RMB is profit and will be included in the income statement. Cash Flow Statement Next are the cash flows, from Investopedia: Cash flow is the net amount of cash … moving into and out of a business. Total aggregated cash flows are measured over the course of a period, for example one year, as with the income statement. But unlike the income statement, it records all things related to cash flows. For example, if ICBC buys a new building worth 10,000,000 RMB, this will affect the balance sheet (cash decrease, asset increase) and the cash flow statement, but not the income statement. An Asset From China’s Accounting Standard for Business Enterprises: Basic Standard we can read how an asset is defined: Article 20 An asset is a resource that is owned or controlled by an enterprise as a result of past transactions or events and is expected to generate economic benefits to the enterprise. “Past transactions or events” mentioned in preceding paragraph include acquisition, production, construction or other transactions or events. Transactions or events expected to occur in the future do not give rise to assets. “Owned or controlled by an enterprise” is the right to enjoy the ownership of a particular resource or, although the enterprise may not have the ownership of a particular resource, it can control the resource. “Expected to generate economic benefits to the enterprise” is the potential to bring inflows of cash and cash equivalents, directly or indirectly, to the enterprise. Article 21 A resource that satisfies the definition of an asset set out in Article 20 in this standard shall be recognized as an asset when both of the following conditions are met: (a) it is probable that the economic benefits associated with that resource will flow to the enterprise; and (b) the cost or value of that resource can be measured reliably. Article 22 An item that satisfies the definition and recognition criteria of an asset shall be included in the balance sheet. An item that satisfies the definition of an asset but fails to meet the recognition criteria shall not be included in the balance sheet. Financial assets/liabilities Financial assets/liabilities can be subdivided in several categories, such as financial assets/liabilities designated at fair value through profit and loss, financial assets/liabilities held for trading and derivative financial assets/liabilities. Financial assets/liabilities are included on the balance sheet and the change in fair value of most financial asset/liabilities will appear in the income statement. Not all banks subdivide financial assets/liabilities in the same manner. For example, ICBC lists “financial assets/liabilities held for trading” parallel to “financial assets/liabilities designated at fair value through profit and loss”. Other banks only disclose “financial assets/liabilities designated at fair value through profit and loss” as a total. The details on accounting are beyond the scope of this post. Let’s have a look at an example of a financial liability. We’ll use plain gold leasing. Suppose ICBC borrows 1 Kg of gold for 1 year and instantly sells the gold at 280 RMB/gram. ICBC will then record a cash asset of 280,000 RMB and a financial liability held for trading of 280,000 RMB on its balance sheet. Say, after one month the gold price surges to 380 RMB/gram. For ICBC the cash asset remains at 280,000 RMB, but the bank will increase the carrying amount of the financial liability held for trading to 380,000 RMB. The 100,000 RMB, which is a loss, will go into the income statement. In the income statement there is a separate line for this called net profit or loss on financial assets or liabilities designated at fair value through profit and loss. Below is part of the income statement from ICBC’s 2015 annual report. Exhibit 1. Courtesy ICBC. “Consolidated Statement of Profit or Loss” is the income statement. In accounting amounts in between brackets are negative. Derivative financial assets/liabilities Derivative financial assets/liabilities on balance sheets must not be commingled with derivative instruments such as futures or forwards, of which the notional values are recorded off-balance sheet. Let me show how derivative financial assets/liabilities are acquired. We’ll use futures as an example. Suppose ICBC buys long a SHFE gold futures (1,000 grams) contract at 280 RMB/gram on 1 November 2016 that is to expire in June 2017. The futures contract itself (derivative instrument) is recorded off-balance sheet, but the profit or loss arising from it creates a “derivative financial asset/liability” recorded on the balance sheet and the income statement. At 1 November 2016 the fair value of the futures contract is 0 because the future price has not moved yet so there is no profit or loss. The notional value of the futures contract is 280,000 RMB (1,000*280). On 1 November 2016 ICBC’s financial statement would be: ICBC’s derivative financial asset/liability held for trading on the balance sheet = 0 Fair value ICBC’s derivative financial asset/liability held for trading recorded in the income statement’s “net profit or loss on financial assets or liabilities designated at fair value through profit and loss” = 0 RMB Notional value of ICBC’s derivative financial instrument recorded off-balance sheet = 280,000 RMB Suppose one month later, on 1 December 2016, the gold price has surged to 380 RMB/gram. ICBC is long gold so it will have a mark-to-market profit of 100,000 RMB. This profit will go into the income statement in “net profit or loss on financial assets or liabilities designated at fair value through profit and loss”. At the same time ICBC has created a derivative financial asset held for trading worth 100,000 RMB. (If gold would sink below 280 RMB/gram, ICBC would record a derivative financial liability held for trading.) On 1 December 2016 ICBC’s financial statement would be: Derivative financial asset held for trading on the balance sheet = 100,000 RMB Fair value ICBC’s derivative financial assets held for trading recorded in the income statement’s “net profit or loss on financial assets or liabilities designated at fair value through profit and loss” = 100,000 RMB Notional value of ICBC’s derivative financial instrument recorded off-balance sheet = 380,000 RMB Below you can view a balance sheet and an off-balance sheet account from ICBC’s 2015 annual report. Exhibit 2. Courtesy ICBC. Balance sheet from ICBC’s 2015 annual report. Exhibit 3. Courtesy ICBC. Off-balance sheet account from ICBC’s 2015 annual report. Having said this, the practice of categorizing precious metals assets and liabilities varies from bank to bank in China. Nevertheless, there are excellent observations to make from the financial statements of the banks. This will be quite complex, if I didn’t explain it properly, please refer to the introduction of this post that serves as a simplified summary. II Findings Banks Do Synthetic Back-To-Back Gold Leasing Through Swaps From the previous post, we know that gold leasing – mainly back-to-back borrowing and lending – overstates the precious metals assets and liabilities of Chinese banks. However, what was not mentioned in the previous post was that banks do synthetic back-to-back leasing through swaps. This way, it’s possible that banks that are active in the gold lending market, will show precious metals assets on their balance sheet – without precious metals liabilities, while not owning a single gram of metal themselves. The bank will synthetically borrow gold through a swap, and lend it out for a few extra basis points. The result is synthetic back-to-back leasing. From a Chinese bank’s perspective a synthetic gold lease is conducted by borrowing RMB to buy spot gold, lend that metal to a customer, and at the same time sell short a forward contract. When the gold loan to the customer comes due the metal is returned to the bank, which then will be sold through the forward contract to repay the bank’s RMB loan. That’s the definition of a swap: buy spot and sell forward (sell spot and buy forward for the counterparty). If gold is in contango, and the forward price is higher than spot, the Chinese bank will make a profit on the swap. However, in contango, the costs for the RMB loan transcend the swap profit. The difference between both is the cost equal to the gold lease rate (GLR). In my previous post Understanding GOFO And The Gold Wholesale Market we could read about these relationships (and the exact workings of swaps). Fiat interest rate - swap rate = GLR Effectively, by borrowing RMB for a swap the bank pays GLR to synthetically borrow gold. As the international gold lease rate is likely lower than the gold lease rate in China, Chinese banks can make a profit by (synthetically) borrowing gold abroad, import the metal and lend it through the SGE system at a higher GLR. (Whenever a gold loan is to be repaid from the Chinese domestic gold market to an international lender, not the physical metal is exported, but funds cross the Chinese border, as physical gold export is prohibited from the Chinese domestic gold market.) For example, Minsheng Bank can synthetically borrow gold for 3 months from HSBC at GLR in the interbank market. When Minsheng lends the gold for 3 months to a jeweler at GLR + 30 BPs, then Minsheng earns 30 BPs in this trade. Exhibit 4. All precious metals related data from Minsheng Bank’s financial statements 2007 - 2015. We can observe a significant surge in precious metals assets, lease volume and precious metals derivatives in 2014. In the real world, this is exactly what banks have been doing. Let’s still use Minsheng Bank as an example. Please view the table above. We can see Minsheng’s gold lease volume jumped from 13 tonnes in 2013 to 101 tonnes in 2014, and the precious metals assets surged from 2,913 million RMB in 2013 (~12 tonnes) to 25,639 million RMB in 2014 (~107 tonnes). The surge in precious metals assets was fully caused by the increment in the gold lease business, as can be seen in the excerpt below from Minsheng Bank’s 2014 annual report. All the numbers are in millions of RMB. Exhibit 5. Courtesy Minsheng Bank. It’s disclosed the precious metals assets jumped from 2,913 million RMB in 2013 to 25,639 million RMB in 2014, due to a 22,726 million “increase in precious metals lease business”. But note we can only see an increase in “precious metals assets” on Minsheng’s balance sheet (exhibit 4), there are no “precious metals liabilities”. This is because the gold lend by Minsheng was sourced through swaps. Minsheng didn’t literally borrow gold (precious metals liability), it swapped gold for RMB collateral. This is how it works in Minsheng’s case. When it enters a swap transaction these are the spot and the forward legs to be recorded in the financial statement. Minsheng borrows RMB and buys spot gold to lend out to a customer at GLR plus a few basis points. At that moment a precious metals asset (the gold loan) is recorded on the balance sheet, but not a precious metals liability (the related RMB liability is not disclosed in exhibit 4). Simultaneously, Minsheng sells short a forward contract that is recorded off-balance sheet. In due time the gold loan is repaid, the forward settled, etc. The off-balance activities are shown in exhibit 4, additionally they’re disclosed in Minsheng’s financial statement to be viewed below. Again all numbers are in millions of RMB. Exhibit 6. Courtesy Minsheng Bank. We can see that the large increase in precious metals derivatives trading from 2013 to 2014 was mainly caused by “3 months to 1 year” “forwards and swaps”, of which most have been swaps used for synthetic back-to-back leasing. Also note: Exhibit 5 shows there was a 22,726 million RMB (~ 94 tonnes) increase in leases from 2013 to 2014. Exhibit 6 shows ~ 24 billion RMB (~ 100 tonnes) in “3 months to 1 year” swaps have been executed in 2014, over zero in 2013. Likely, the majority of the swaps have been in tenors close to 1 year, as by 31 December 2014 roughly 107 tonnes in precious metals assets were on the balance sheet. In 2014 the “3 months to 1 year” “cash inflow” (Minsheng’s sell forward leg) transcended the “cash outflow” (buy spot leg) because gold was in contango that year in China. (Exhibit 6) Perhaps you have noticed that Minsheng Bank counts only 1 leg of the gold swap off-balance sheet. Yes, if we compare the total “precious metals forwards and swaps” “cash outflow” 32,865 million RMB with the total notional amount in precious metals derivatives off-balance sheet, 32,844 million RMB, the two numbers are roughly equal. All in all, at the surface it seems Minsheng Bank holds approximately 100 tonnes in precious metals assets, in reality this is merely reflecting synthetic back-to-back leasing through swaps. More proof there can be little “surplus” gold on the commercial banks balance sheets. As long as Chinese annual lease volume grows, the commercial bank balance sheets can mushroom as a consequence. Exhibit 7. Chinese Lease Volume Reflects Yearly Turnover. In the past there has been some doubt whether the reported Chinese gold lease volume reflected the total turnover over a certain period, or the gold that has been leased out at a certain point in time. Already in May 2015 I wrote China's reported gold lease volume reflects turnover – because traders at Chinese banks told me - and now there is more confirmation to be presented. From Minsheng Bank’s financial statements we can understand that the gold lease volume means the lease turnover per annum. Have another look at exhibit 4. Minsheng bank leased out 116 tonnes of gold in 2015, which was an increase from 2014. But at the end of 2015, the “precious metals assets” wherein gold leasing is recorded, decreased to 83 tonnes. This can only be possible if the lease volume is annual turnover. Apparently, in 2015 Minsheng’s leasing business grew, but it conducted more deals in tenors shorter than 1 year, causing the annual turnover to increase (to 116 tonnes) but the outstanding leases at year-end on the balance sheet to decline from the previous year. The World Gold Council (WGC) seems the have come to the same conclusion recently. In the Gold Demand Trends Q2 2016 report, it stated (page 15) the gold lease volume “captures the total amount of gold leased in the reporting period, for example, if Commercial Bank A lends 1t to Jeweller B for three months and Jeweller B returns it back for the Commercial Bank A to lend again to Bank C, a total of 2t of leasing volume will be recorded for the period”. This confession by the WGC is remarkable, because from April 2014 until early 2016 the WGC was spreading a myth about the gold involved in the Chinese lease market. From the WGC’s China’s Gold Market Progress And Prospects, April 2014: No statistics are available on the outstanding amount of gold tied up in financial operations [leases] linked to shadow banking but Precious Metals Insights believes it is feasible that by the end of 2013 this could have reached a cumulative 1,000t. For several years the WGC pretended any lend/borrowed gold was “tied up in illegal leasing schemes”, and if the leases would be unwound this event would flush the physical market dragging down the price. Although this was nonsense, copy-paste media outlets like Reuters and the Financial Times simply reproduced what the WGC was writing, adding to the confusion in the gold community. (By the way, the consfusion simply appeared to be a pack of lies invented by Western consultancy firms that were trying to uphold the illusion the supply and demand data they had been selling for decades was complete.) While at it, the WGC admitted most of the leased gold doesn’t leave the SGE vaults: It’s estimated that around 10 % of the leased gold leaves the SGE’s vaults. The majority is for financing purposes and is sold at the SGE for cash settlement. This is what I’ve written since February 2015: gold leasing has little impact on SGE withdrawals, as the vast majority of leases are for financing purposes and are thus settled within the SGE system. Gold In SGE Vaults Is Not On The Custodian’s Balance Sheets In China, most of the SGE vaults are actually owned by commercial banks but approved by the SGE as “designated vaults”. In addition there are other types of enterprises that own “SGE designated vaults” - probably jewelry companies in Shenzhen, the heart of China’s jewelry manufacturing industry. In my previous post I shared the possibility that SGE vaulted gold appears on the balance sheets of custodian commercial banks. But further research has pointed out that is not the case. SGE vaulted gold does not appear on the balance sheet of the custodians, only on the balance sheet of the owner. As has been written at the beginning of this post, in order for a custodian, in this example ICBC, to recognise the gold owned by another entity, in this example BOC, in its SGE-designated vault as an asset, the gold has to be “owned or controlled” by ICBC. In reality ICBC wouldn’t have any ownership of this gold. ICBC would have, to a certain extent, some control over BOC’s gold, but in order for ICBC to recognise the gold as an asset on its balance sheet, it should be “probable that the economic benefits associated with that resource will flow to the enterprise”. In other words, ICBC should be able to sell or lease out BOC’s gold in its vaults to record the metal as asset. Though, an SGE custodian would never go there or its business would collapse promptly. Exhibit 8. Balance sheet of Ping’ An Bank. There is more confirmation. On the balance sheet of Ping’ An Bank, the volume of precious metals holdings for 2011 and 2010 were both nil. At the same time, according to Ping’ An’s annual report of 2010, its total gold withdrawals ranked No. 8 among all SGE designated vaults. ???????????????????????????8?? Gold vaulting service keeps increasing and the withdrawal number is listed the eighth among SGE designated vaults. And in 2011 Ping’ An’s gold deposit and withdrawal total accounted for 10% of all SGE warehouse activity. It is hard to believe that Ping’ An had no gold in its SGE-designated vaults at the end of 2010 and 2011, while Ping’ An’s vaults were such an important part of the SGE system. Concluding, Ping’ An didn’t recognize other SGE clients’ or members’ gold in its vaults as its assets. Hence we have for 0 for Ping’ An’s precious assets in 2010 and 2011. Some readers may point out the following paragraph in ICBC’s 2015 annual report: The Group records the precious metals received as an asset. A liability to return the amount of precious metals deposited is also recognised. However, if readers check ICBC’s 2015 annual report in Chinese, they will find the original paragraph was written like this: ??????????????????????????????? The group recognises an asset when the group receives the precious metals deposited by the customer for accumulation, and at the same time recognises the related liability. Therefore, ICBC was actually referring to the gold in its Gold Accumulation Plan (GAP) and the key information was lost in translation. Gold in Chinese ETFs is neither recognized by its custodian as an asset. Some Of Chinese Banks’ Gold Is Indeed Outside China I mentioned in the previous post that some of Chinese banks’ precious metals holdings could be outside China. ICBC acquired Standard Bank in 2015 and Standard Bank’s precious metals are outside China. However, even some medium-sized Chinese banks hold precious metals outside China. The following table is from Ping’ An’s 2014 annual report (page 196, numbers are in millions of RMB). Exhibit 8. Screen shot of Ping’ An Bank’s annual report 2014. What we see is that Ping’ An held gold assets in US dollars worth 2,420 million RMB. The disclosed “foreign exchange equivalent” for Ping’ An’s precious metals would only be mentioned like this if the precious metals are held outside China. If the precious metals would have been located inside China, Ping’ An never would have listed the value of the assets as “USD (in CNY equivalent)”. III Data We will not extensively analyze every Chinese bank’s financial statement like we’ve done with Minsheng Bank and Ping’ An Bank above, though I do like to share all the data I’ve collected. The practice of categorizing precious metals assets and liabilities varies from bank to bank so readers should pay attention to the notes below the tables and are recommended to read the original annual reports for more information. The derivative instruments are listed according to the notional amount (off balance sheet) instead of the fair value. The notional amount is not comparable between banks because for swaps, some banks only consider one leg while others add both the spot and forward legs, for example Bank of Ningbo, together. Assuming all precious metals mentioned are gold related. 1. Industrial and Commercial Bank of China (ICBC) We can observe ICBC precious metals assets started to transcend its financial liabilities related to gold in 2014. The possible causes are increases in ICBC brand gold bar sales (more inventory), customers purchased more options (ICBC would need to buy more gold to hedge), and more synthetic gold leasing. 2. Bank of China (BOC) “Commodity derivatives and others” were called “precious metals derivatives and other derivatives” before 2010. BOC doesn’t have any significant numbers related to precious metals in financial liabilities designated at fair value through profit and loss. Noteworthy, at the end of 2007 BOC had 7,982 million RMB (~ 41 tonnes of gold) in precious metals pledged as collateral, and late 2009 this figure had grown into 27,271 million RMB (~ 114 tonnes of gold). The precious metals were used as collateral in swap transactions for financing, according BOC’s accounting practice. From BOC’s 2009 Annual Report: ?????????????????????????????????????????????????????“????” ???? Precious metals swap transactions, based on the transaction nature, are treated as precious metals sales under collateral agreement. The precious metals pledged as collateral are not ceased to be recognized and the related liability is reflected in “borrowings through interbank lending” 3. Bank of Communications Bank of Communications lists precious metals assets in two separate categories. I'm not sure what is identified with "precious metals contracts". Bank of Communications reported in its 2013 annual report that it conducted overseas gold swap business: ?????????????? [Bank of Communications] successfully conducted overseas gold swap transactions. In 2013, Bank of Communications conducted gold interbank lending with HSBC and HSBC became the most important source of physical gold for the Bank of Communications: ???2013?????????????????????????????????????????????????????? The two parties [Bank of Communications and HSBC] not only conducted “first deal” cooperation in gold consignment and gold borrowing, but also realized surging cooperation volume. HSBC has become an important import source of physical gold for the bank. 4. China Construction Bank Not everything in the “other derivatives” category are precious metals. China Construction Bank (CCB) wrote in its annual reports that the market share of physical sales to the public was No. 1 in 2010, and in the same year the market share of gold leasing was 40 %. From CCB’s 2010 annual report: ????????????????????????????40.30%????????37.41%? The Bank [China Construction Bank] has maintained the rank of No 1 in branded physical gold to individuals. The market share of gold leasing was 40.30 %. The market share of account gold was 37.41 %. CCB offered physical withdrawal on precious metals accounts since 2013 and its own gold accumulation plan since 2015. 5. Agricultural Bank of China Before 2014 “precious metals contracts” were called “precious metals lease contracts”. Not sure what “precious metals contracts” can be next to “precious metals lease contracts” - perhaps SGE physical contracts like Au99.99. Before 2011, precious metals derivatives were reported separately as forwards and swaps. The precious metals lease business was reported to be launched in 2010. 6. Shanghai Pudong Development Bank The change in “Financial liabilities at fair value through profit and loss” was caused by precious metals shorts (?) according to Shanghai Pudong Development Bank’s annual reports. 7. China Merchants Bank The increase in “precious metals assets” was caused by the increase in proprietary trading and gold lease according to the annual reports. From China Merchants Bank’s 2014 annual report: In 2013, China Merchants Bank reported to have conducted precious metals leasing of 60 tonnes, a 203 % increase from 2012. 8. China Minsheng Bank The fine data was discussed in the previous chapter. 9. Industrial Bank The 644 million RMB precious metals related liabilities were caused by “gold pledge business” according to Industrial Bank’s 2008 annual report. “Precious metals shorts and leased precious metals” are a subcategory under “financial liabilities held for trading”. 10. China CITIC Bank According to the annual reports, the surge in the precious metals and precious metals contracts in 2014 was caused by the increase of precious metals lease and proprietary business. According to CITIC bank’s 2014 annual report: ??????????????????????????? In the reporting period, the gold lease business and precious metals proprietary trading business all achieved rapid growth. 11. Ping’ An Bank (former Shenzhen Development Bank) Before 2014 precious metals derivatives were called gold derivatives. Before 2009, Ping’ An only gave a lump sum of all the derivatives. Just in case there were any gold derivatives in this category, I’ve included the lump-sum numbers. The increase in the “financial liabilities designated at fair value through profit and loss” in 2013 was caused by the increase in “financial liabilities held for trading” related to “gold business”, according to the annual report. Therefore all the numbers in “Financial liabilities designated at fair value through profit and loss” are listed here, although this category may include some liabilities not related to precious metals. From Ping’ An’s 2013 annual report: 12. Huaxia Bank The precious metals assets in 2007 and 2008 were a result from physical gold sales according to the annual reports. 13. Everbright Bank According to the annual reports, Everbright Bank started to conduct gold consignment sales and gold leasing in 2013. Therefore, the increase in precious metals holding in 2013 was probably caused by these activities. From to Everbright Bank’s 2013 annual report: ?????????????????????? [Everbright Bank] acquired the gold import qualification, started to conduct gold consignment and gold lease business. 14. Bank of Beijing Clearly the Bank of Beijing participates in back-to-back leasing, as precious metals leased out are exactly equal to precious metals leased in. 15. Bank of Nanjing The Bank of Nanjing only disclosed 6 million RMB in precious metals assets in 2014 and 7 million RMB in 2015. 16. Bank of Ningbo
Только в течение октября Россия пополнила свои золотые резервы на 1,4 миллиона унций или около 48 тонн золота. По данным Всемирного совета по золоту, в мире добывают около 3 тысяч 200 тонн золота в год, и эти 48 тонн составляют около 1,5 процента от общего объёма добытого золота. Это огромное количество золота для одной страны, приобретённое всего за один месяц. Другим важным моментом, выделяющим эту сделку, являются её относительные масштабы в сравнении с ранее проведенными центробанком страны закупками золота. Эти 1,4 миллиона унций явились самой большой закупочной партией с… 1998 года! Иными словами, это очень много, учитывая, что Россия является крупным покупателем золота с 2008 года — и можно было ожидать масштабных сделок в течение всех последних восьми лет. Хотелось бы напомнить инвесторам, что закупка таких больших объёмов золота была сделана в прошлом месяце, а крупнейшим геополитическим событием этого месяца стали итоги избирательной кампании в США. Важно, что по мере приближения выборов Россия стала занимать центральное место в предвыборной риторике обоих кандидатов, бросавших упрёки друг другу, подвергнувшись при этом демонизации со стороны Клинтон.
Submitted by Mark O'Byrne via GoldCore.com, Russia gold buying accelerated in October with the Russian central bank buying a very large 48 metric tonnes or 1.3 million ounces of gold bullion. This is the largest addition of gold to the Russian monetary reserves since 1998 and could be seen as a parting 'gift' by Putin to his rival ex-President Obama. The Russian central bank gold purchase is the biggest monthly gold purchase of this millennium. Concerns about systemic risk, currency wars and the devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion purchases by large creditor nation central banks such as Russia and China. Commerzbank went with the simple explanation: “Clearly the central bank was taking advantage of the stronger ruble – which has made gold cheaper in local currency – to buy more gold.” “By contrast, the Chinese central bank bought only around four tons of gold last month – the second-lowest gold purchases since China began publishing monthly figures back in June 2015. The currency is likely to have played a role here, too – the yuan has been depreciating noticeably since the end of September.” However, the Russian Central Bank has quietly been buying huge volumes of gold over the last 10 years. This diversification into gold accelerated since the financial crisis and since relations with the U.S. deteriorated in recent years. Russia bought gold systematically both when the ruble was strong and when it was weak. In 2015, Russia added a record 208 tons of gold to her reserves compared with 172 tons for 2014. According to the World Gold Council, only the central banks of the U.S., Germany, Italy, France and China currently hold larger gold reserves than Russia. The Central Bank of Russia has outpaced the People's Bank of China (PBOC) by nearly 150 tonnes in the last seven years, and has been the world’s largest central bank buyer of gold reserves for some time. This trend is expected to continue. Total gold mining production globally is around 3,200 metric tonnes per year. Thus, Russia's purchase of 48 metric tonnes is around 1.5% of total annual global gold production. This is a very large amount for one country to buy in just one month. Some of the gold bought will have come from Russian gold production which is currently at about 26 metric tonnes per month. In 2014, Russia was the third largest gold miner in the world at 266.2 tonnes, just six tonnes short of Australia in second place and China in first place. The Russian central bank is buying all of Russian gold production and sometimes buying gold on the international market. This demand is solely from the Russian central bank. There is little data regarding investor, high net worth (HNW) and ultra high net worth (UHNW) individuals including family offices who are diversifying into gold in Russia. Russia is an increasingly wealthy nation with thousands of millionaires and hundreds of billionaires including mega rich oligarchs. It seems likely that some of these Russian investors are also diversifying into gold. Clearly, Russia puts great strategic importance on its gold reserves. Both Prime Minister Medvedev and President Putin have been photographed on numerous occasions holding gold bars and coins. The Russian central bank declared in May 2015 that Russia views gold bullion as “100% guarantee from legal and political risks.”
Submitted by Mark O'Byrne via GoldCore.com, Russia gold buying accelerated in October with the Russian central bank buying a very large 48 metric tonnes or 1.3 million ounces of gold bullion. This is the largest addition of gold to the Russian monetary reserves since 1998 and could be seen as a parting 'gift' by Prime Minister Putin to his rival ex-President Obama. The Russian central bank gold purchase is the biggest monthly gold purchase of this millennium. Concerns about systemic risk, currency wars and the devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion purchases by large creditor nation central banks such as Russia and China. Commerzbank went with the simple explanation: “Clearly the central bank was taking advantage of the stronger ruble – which has made gold cheaper in local currency – to buy more gold.” “By contrast, the Chinese central bank bought only around four tons of gold last month – the second-lowest gold purchases since China began publishing monthly figures back in June 2015. The currency is likely to have played a role here, too – the yuan has been depreciating noticeably since the end of September.” However, the Russian Central Bank has quietly been buying huge volumes of gold over the last 10 years. This diversification into gold accelerated since the financial crisis and since relations with the U.S. deteriorated in recent years. Russia bought gold systematically both when the ruble was strong and when it was weak. In 2015, Russia added a record 208 tons of gold to her reserves compared with 172 tons for 2014. According to the World Gold Council, only the central banks of the U.S., Germany, Italy, France and China currently hold larger gold reserves than Russia. The Central Bank of Russia has outpaced the People's Bank of China (PBOC) by nearly 150 tonnes in the last seven years, and has been the world’s largest central bank buyer of gold reserves for some time. This trend is expected to continue. Total gold mining production globally is around 3,200 metric tonnes per year. Thus, Russia's purchase of 48 metric tonnes is around 1.5% of total annual global gold production. This is a very large amount for one country to buy in just one month. Some of the gold bought will have come from Russian gold production which is currently at about 26 metric tonnes per month. In 2014, Russia was the third largest gold miner in the world at 266.2 tonnes, just six tonnes short of Australia in second place and China in first place. The Russian central bank is buying all of Russian gold production and sometimes buying gold on the international market. This demand is solely from the Russian central bank. There is little data regarding investor, high net worth (HNW) and ultra high net worth (UHNW) individuals including family offices who are diversifying into gold in Russia. Russia is an increasingly wealthy nation with thousands of millionaires and hundreds of billionaires including mega rich oligarchs. It seems likely that some of these Russian investors are also diversifying into gold. Clearly, Russia puts great strategic importance on its gold reserves. Both Prime Minister Medvedev and President Putin have been photographed on numerous occasions holding gold bars and coins. The Russian central bank declared in May 2015 that Russia views gold bullion as “100% guarantee from legal and political risks.” Prudent investors are following Russia’s lead by diversifying and having an allocation to physical gold coins and bars.
Только в течение октября Россия пополнила свои золотые резервы на 1,4 миллиона унций или около 48 тонн золота. Это огромное количество золота для одной страны, приобретённое за один месяцThe post Центральный банк России сделал на рынке золота то, чего не было последние 20 лет appeared first on MixedNews.
Только в течение октября Россия пополнила свои золотые резервы на 1,4 миллиона унций или около 48 тонн золота. Это огромное количество золота для одной страны, приобретённое за один месяцThe post Центральный банк России сделал на рынке золота то, чего не было последние 20 лет appeared first on MixedNews.
Только в течение октября Россия пополнила свои золотые резервы на 1,4 миллиона унций или около 48 тонн золота. Это огромное количество золота для одной страны, приобретённое за один месяцThe post Центральный банк России сделал на рынке золота то, чего не было последние 20 лет appeared first on MixedNews.
Избрание Трампа в президенты США сильно встряхнуло американские и мировые рынки. С 8 ноября фондовые рынки США пошли вверх устанавливать новые исторические максимумы, акции банков заметно выросли, а американская валюта серьезно окрепла по отношению к другим валютам. Всё вроде бы выглядит для экономики вполне позитивно, если бы не несколько «но». Каждое по отдельности оно не очень хорошо, но когда их сразу несколько, это вызывает серьезную озабоченность. Итак, начнем.Рост биржевых индексов – это хорошо. Но когда этот рост происходит одновременно со снижением объемов торгов, это обычно свидетельствует о том, что рынок находится на пороге смены тенденции с роста на падение.Американская валюта растет относительно своих конкурентов, в том числе и евро. Проблема заключается в том, что евро снижается относительно американской валюты уже девять дней подряд. Это всего лишь второй раз за всю семнадцатилетнюю историю общеевропейской валюты. В прошлый раз аналогичное событие, когда евро столь же стабильно снижалось относительно американской валюты на протяжении 11 дней и достигло своего минимума, имело место 11 сентября 2008 года за четыре дня до краха банка Lehman Brothers.Гораздо более неприятными, чем первые два момента может оказаться то, как после победы Трампа ведут себя американские казначейские облигации. Их доходность резко пошла вверх, и некоторые наблюдатели оценивают ситуацию последних дней на этом рынке как бойню. Владельцы бумаг активно стали их сбрасывать. Доходность по десятилетним бумагам пробила вверх нисходящий тренд, имевший место по крайней мере с 2008 года, что может говорить о начале смены тенденции. Доходность по десятилетним облигациям перед выборами составляла 1,77%, а к настоящему времени выросла до 2,3% годовых. Скачок доходности этих бумаг всего за неделю был чрезвычайно мощным, и подобное происходило всего лишь трижды за прошедшее десятилетие.Еще более неприятно обстоят дела с тридцатилетними бумагами. Доходность по ним также резко подпрыгнула вверх, и в отличие от десятилетних облигаций может свидетельствовать о гораздо более неприятном развитии событий. Дело в том, что за последние тридцать пять лет такая обстановка имела место перед всеми без исключения крупными экономическими кризисами. Так происходило в 1987, 1994, 1996, 1999, 2008 годах, а также накануне сравнительно недавнего кризиса, имевшего место в ЕС в 2010 году, и нефтяного кризиса 2013 года. Конечно, можно предположить, что на этот раз все будет иначе, но, как свидетельствует исторический опыт, это вряд ли.Долговой рынок примерно на порядок превышает по своим объемам рынок акций, и происходящие на нем события оказывают гораздо более серьезное влияние на состояние экономики и финансов. А действия участников рынка наглядно демонстрируют то, что в условиях ухудшающейся экономической ситуации во всем мире они активно сбрасывают имевшиеся у них на руках чужие долги. Центральные банки различных стран за прошедший год избавились от американских казначейских обязательств на 374 миллиарда американских дензнаков. Всего же с начала августа 2014 года, когда совокупные бумажные резервы центральных банков достигли исторического максимума в 12,032 триллионов ам. дензнаков, к началу ноября 2016 года они сократились почти на один триллион до 11,006 триллионов ам. дензнаков.В подобной обстановке вряд ли является случайностью то, что с 6 декабря 2016 года планируется ввести «шариатский золотой стандарт», который позволит мусульманам приобретать золото и связанные с ним финансовые продукты в соответствии с законами шариата. По оценкам, это затронет примерно 1,6 миллиарда человек, исповедующих ислам. Если по золотым слиткам и монетам шариат дает определенные рекомендации, то в отношении остальных связанных с драгоценным металлом продуктов этого раньше не было. Всемирный золотой совет ожидает, что в результате принятия такого стандарта дополнительный спрос на золото вырастет на «сотни тонн». Если же всего лишь 2% активов, находящихся под управлением исламских финансовых институтов, поступит на рынок золота, то это может привести к дополнительному спросу на желтый металл, превышающему 1000 тонн. Каким будет спрос на самом еле, покажет время, что же касается розничного спроса, то он не утихает, и объемы продаж золотых «орлов» Монетным двором США с начала месяца достигли отметки в 82 тысячи унций.Пока рынок акций находится в состоянии эйфории, а долговой рынок настойчиво указывает на резкое ухудшение финансово-экономической обстановки, население усиленно готовится к возможному финансовому краху и запасается твердыми обеспеченными деньгами - физическими драгоценными металлами.Мои книжки «Крах «денег» или как защитить сбережения в условиях кризиса», «Золото. Гражданин или государство, свобода или демократия», «Занимательная экономика»,«Деньги смутных времен. Древняя история», «Деньги смутных времен. Московия, Россия и ее соседи в XV – XVIII веках» можно прочитать или скачать по адресу http://www.proza.ru/avtor/mitra396
Islamic Gold - Important New Dynamic In Gold Market Next month, 1.6 billion people will likely have a new 'gold investment standard' Islamic finance market expected to grow to US$5 trillion by 2020 Islamic asset classes have all under performed compared to gold Gold has risen over 367% in US dollar terms and by more in currencies used in Islamic countries Gold bullion products may be additionally appealing to Islamic banks due to Basel III rules New Sharia Gold Standard will impact gold price By the end of 2016, 1.6 billion people will likely have a new gold investment standard for the first time in modern history. These 1.6 billion people are the Muslims of the world who constitute nearly 25% of the 6.9 billion people on the planet. This new 'gold standard' is the Sharia gold standard developed as part of a three-party collaboration between AAOIFI, the World Gold Council (WGC) and Amanie Advisors. The new Sharia or Islamic gold standard, ‘will provide guidance from a Sharia perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants,’ the WGC states on its website as we reported back in May . ‘The Standard also aims to increase transparency and harmonisation regarding the use of gold in various market practices.’ The new standard is expected to act as an internationally recognised consensus on regular gold savings plans (gold accumulation plans), allocated and segregated gold bullion storage, gold certificates, physically-backed gold ETFs, certain gold futures and gold mining equities. Gold investment is currently allowed under Sharia law, given certain conditions are met. In the physical gold market today, there are a very few gold investment products or services, such as those offered by Goldcore, which are Sharia-compliant. We will explore what sharia-compliancy means in more detail but suffice to say that the lack of guidelines means there are few eligible gold investment products out their to meet Islamic investors’ requirements. Islamic Finance and gold investment Many non-Muslims will be familiar with the phrase ‘Sharia Law’. It has come under some attention in recent years throughout the world as people seek to understand Islam, how it is practised and what it means in the modern world. Whilst Sharia Law is based on the Quran and other sacred texts, it has been adapted in order to keep up with changing times, through the guidance of Islamic scholars. Many non-Muslims understand Sharia Law to be a set of laws that guide or govern how a Muslim lives their personal life. Few realise that it also guides the financial decisions of Muslims. Islamic Finance, the financial services industry that operates under Shariah Law, is rapidly growing in size and therefore importance. At present the Islamic Finance market is a small part of the global financial market, at just $2 trillion. But this is expected to grow. Standard and Poor’s believe it could reach US$5 trillion by 2020 as reported by Truewealth Publishing, Business Insider and MSN. Currently money managers within Islamic financial markets find themselves limited to Sharia-compliant assets such as equities, real estate an Islamic bonds (sukuk). There are virtually no official sharia-compliant gold products on the market. “As the Islamic financial services market grows in size and importance, so does the need for a greater understanding of the application of Shariah guidance on the use of gold,” stated Aram Shishmanian, CEO of the WGC. “While there is some guidance for gold coins and bars, there is virtually no guidance on gold elsewhere in the financial sector.” Whilst there are some gold-products available within Islamic finance the market is fragmented and there is no guidance for Islamic investors. “…there is a lack of Islamic gold-based products globally,” explained Maya Marissa Malek, the managing director of Amanie Advisors, “We conducted comprehensive research of the available gold-based products conventionally, with [the] WGC instrumental in providing this information. Based on that, we tried to envisage a Shariah equivalent so that the standard will be robust enough to cover both existing and future possible gold-based products.” Muslims and the gold market There has been awareness that change is afoot in the gold market, by gold commentators for the last eighteen months or so. For many the passing of Sharia-compliant guidelines means a huge surge in gold demand and therefore the gold price. But can we really expect this from a diverse group of people who happen to share a religion? Yusuf DeLorenzo, an AAOIFI member, stated “…gold has historically been the choice of individual Muslims desirous of preserving wealth and value.” The AAIOFI expands on this further, “Historically, gold has always been a fascinating and charming choice of investment for humans in all societies and cultures. From the perspective of Islamic Fiqh and the Islamic economic system, gold has its specific significance. This significance arises from the specific principles provided for gold and silver as Thaman in Shari’ah.” There is certainly a desire for Muslims to invest in gold according to Dr. Mohammad Daud Bakar, Chairman of Amanie Advisors, a critical partner in the new Sharia gold standard who said: “Gold has a unique status in Islam, but the existing Islamic standards for gold are fragmented, hampering product development and market demand. The Sharia Standard on Gold … will provide clear guidance on gold to individuals and institutions.” For the AAIOFI the opportunity to create guidelines for Sharia-compliant gold investment products is giving Islamic investors the opportunity for further diversification, “Shari’ah compliant investment options in gold market (including physical as well as exchange based transactions) can provide Islamic Financial Institutions (IFIs) and their customers a great opportunity to diversify their investments.” However, the AAOIFI reminds us that there is also a call in the Quran and other holy texts that call for the reader to exercise caution when investing in precious metals “The original sources of Shari’ah i.e. the Holy Quran and Sunnah have numerous cautions on the use and hoarding of gold on the moral and ethical side. These include a few prohibitive uses, as well as, general guiding principles against hoarding of gold and silver.” Gold and Sharia When people talk about Sharia or Islamic gold, they are referring to gold or gold investment products that are Sharia compliant. However in Islam gold is a special case. “Gold is very much Shariah compliant in terms of using it as a commodity. But there are certain conditions from a Shariah point of view which are enforced on gold and not on other commodities,” Dr Mohamad Akram Laldin, the executive director of International Shariah Research Academy for Islamic Finance, explained to IFN. In Islamic texts gold is a Ribawi item and investors need to practice caution when investing in it to ensure that it meets certain conditions. A Ribawi item in Sharia law is an item that must be sold on weight and measure. There are six Ribawi items: gold, silver, dates, wheat, salt and barely. As a Ribawi item gold cannot be traded for future value or for speculation. In most cases trading gold futures contracts is haram and forbidden or proscribed by Islamic law. It is speculation and not backed by physical gold, the price can be volatile and you can end up paying or receiving interest on your trading account. This means that gold investment has been limited to its use as a currency and jewellery, as the earning of interest is forbidden. The immediate transfer requirement means that speculating on future values is not allowed. This makes it tricky in the area of gold futures and other paper gold products. Dr Mohamad Akram Laldin, explained to IFN, “In other commodities the counter value can be deferred. But when it comes to gold, both counter values have to be spot. That is one of the biggest issues when it comes to the trading of gold. Under modern transactions we will have sophisticated platforms, and different ways and means to transact, but as long as these conditions are satisfied we can always trade.” This might sound as though gold investment is near impossible in the Islamic world today. In reality it is not, although there is some confusion. Yusuf DeLorenzo, an AAOIFI member, stated “The hesitation about investing in gold when credible Shariah standards are unavailable is nearly universal in the Islamic world ... There might be certain other issues, particularly when it comes to delivery,” stated Dr Mohamad Akram. “If I am buying gold from a vendor on a platform, can I take physical delivery of this gold? But as long as these conditions can be satisfied, there shouldn’t be any issue. As an underlying asset, gold is Shariah compliant and can be used.” With gold investment platforms such as Goldcore able to offer segregated, allocated gold bullion accounts with the option of physical delivery Muslims are able to invest in gold bars and coins. However, there has been no consensus on the trading of gold as a commodity, owning companies that hold gold assets (e.g. an ETF), gold futures allowing delivery etc. Why the need for a new gold standard? WGC data shows that in the last eight years (when reliable data first became available) the major Islamic asset classes (including REITs, the Takaful index, the Dow Jones Islamic Equities Index and the Dow Jones Sukuk Index) have all underperformed compared to gold, as have the major currencies used in the Islamic world. Since 2000, gold has risen 367% in US dollar terms (Gulf Cooperation Council currencies are pegged to the US dollar), 393% in Malaysian Ringgit terms, and 762% in Indonesian rupiah terms. Whilst Muslims are able to invest in gold there is clearly a lack of understanding and consensus for how Sharia law can be applied to today’s vast number of gold product offerings. Hence why the WGC and their partners, believe a gold standard will be beneficial to both Muslims and the gold market. The World Gold Council stated in its October newsletter that they hoped the new standard will ‘bring all the strategic benefits of investing in gold to Islamic investors.’ The choice of assets that Muslims are currently able to invest in is considered to be ‘so limited’ by the WGC that they are expecting the benefits of a gold investment standard to be ‘even more pronounced.’ The new Sharia gold standard will set a future path in place for gold products and those who invest in Sharia-investible assets. Once the Standard is announced on December 6th, we are likely to see increased development of new products due to the increased customer base and some diversification amongst Shariah-compliant offerings which will likely offer options for savings, hedging and diversification. So far, none of these things have been available on a standard Sharia compliant basis. Natalie Dempster has been quoted by Reuters stating that the new guidelines for holding gold-backed products may be additionally appealing to Islamic banks who are/will be required under Basel III rules to increase the amount of High Quality Liquid Assets (HQLAs): “Gold for its nature could fit into HQLA buffers that Islamic banks could hold…Since the financial crisis, banks have been required to set aside pockets of so-called high-quality liquid assets to protect them against another systemic liquidity crisis…Basel gave national supervisors in Islamic jurisdictions the right to define high-quality liquid assets themselves. And I think gold will fit very well there. It is an extremely liquid market." New gold standard The new Sharia Gold Standard is set to be announced on the 6th December at the World Islamic Banking Conference. “Shariah Standard on Gold” will provide “guidance from the Shariah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants,” according to Natalie Dempster of the World Gold Council. It is believed that it will state that gold investments must be backed by physical gold. In truth, whilst there have been some draft rounds of the Standard and quite a bit of publicity, no one knows what is set to be revealed in the ‘guidance’. It may still exclude gold futures contracts, a draft by the WGC states that whilst gold as a currency can be traded on a spot basis, however if it is seen as a commodity then it could be the subject of a future sale under the principle of salam, or deferred delivery sale. The gold standard draft will likely approve holding gold in ETFs, derivative contracts, investment accounts and Islamic bonds. What the standard will not include is guidance on the sourcing of gold, which is unsurprising in some respects as their is nothing directly about this in the Quran. However, it does require its followers to be ethical - something that is an important issue in the gold market these days. “It will provide clarity on gold’s use in financial services and harmonise the relevant rules across markets, thereby creating greater access to gold,” said Natalie Dempster, Managing Director, Central Banks and Public Policy, WGC. Overall the Standard is expected to achieve the following: Increase the amount of available liquid Shariah-compliant instruments Increase the diversity of available liquid Shariah-compliant instruments including gold bullion and some other gold related investments Facilitate greater consumer choice by expanding the range of Shariah-compliant financial solutions Greater role for the Islamic finance industry in global gold price discovery New dynamics in gold price discovery The final point above, to achieve a ‘Greater role for the Islamic finance industry in global gold price discovery’ is one that is playing on current gold market participants’ minds. There are estimated to be around 1.6 billion Muslims around the world. Given the extent to which the gold market looks to Chinese and Indian demand in terms of demand, supply and price changes this move will likely come to have a very significant impact on the dynamics of the gold market. The role of price discovery has been, up until recently, shared between the London Gold Market and the LBMA and the COMEX. However there has been a new dawn and the new policies from China regarding all aspects of the gold market have put the wheels in motion. Earlier this year the Shanghai Gold Benchmark was launched by the Shanghai Gold Exchange, seen as China’s step to “increase its weight in the global pricing of gold,” according to the People’s Daily. When the benchmark was announced Marwan Shakarchi, chairman of Swiss-based refining group MKS (a Shanghai gold Exchange member) was quoted as saying that China is “a market of 1.2 billion people and simply cannot be neglected.” This step was seen as the first of many toward internationalisation of the Chinese Gold market. The Islamic world is obviously different to the Chinese and Indian gold markets - dispersed geographical location, different exchanges, different nationalities, regulations and customs. However, it is worth remembering that the majority of Muslims reside in countries where there is still a strong view that gold is money and a strong store of value. In countries such as Pakistan with tricky geopolitical status, or Malaysia and Indonesia with a fluctuating currencies, one can expect to see an increase in demand for Sharia compliant gold products. And, therefore, a change in dynamic in the gold market. The places to watch are Bahrain, Qatar, Indonesia, Saudi Arabia, Malaysia, United Arab Emirates, Turkey, Kuwait, Oman and Pakistan which currently represent 93% of Islamic financial assets within their financial institutions. Gold coins of Kushnan Empire centering on Afghanistan, northern India and western China. British Museum. Wikimedia Whilst one of the bodies involved in setting the standard, the AAIOFI, is based in Bahrain, we expect to see Dubai gain some serious influence with these changes. The Emirate plays a significant role in both the physical and paper gold markets. Over $75 billion worth of gold, or about 40 per cent of the world's physical bullion exchange, was traded through Dubai in 2013, according to the Dubai Multi Commodities Centre (DMCC). This is a city with very strong vision over what it can achieve in the gold market. “In 2003, Dubai traded US$ 6 billion in gold; in 2012, it was US$ 70 billion. Even taking into consideration gold’s phenomenal price rise over this period, Dubai has doubled the tonnage traded through the Emirate,” according to the Dubai Multi Commodities Centre (DMCC). Currently the Dubai Gold and Commodities Exchange (majority owned by the DMCC) already has active gold futures trading and earlier this month it announced that it would become the first foreign exchange to list Shanghai gold futures. It is clear that it has set itself up to compete with the likes of Singapore as a gateway between the East and the West, and in the meantime will play an increasing role in this increasingly globalised financial and increasingly important physical gold market. The launch of a Sharia Gold Standard, is also an opportunity for those in the West, who are determined to maintain some control over price discovery. In London, the London Metal Exchange (LME) is the central clearing hub for Shariah compliant commodity trades. Given their recent work on updating their role in the gold market it will come as no surprise that they are reportedly looking at a gold futures contract that could be settled based on the physical delivery of gold bars. This is what the Chinese have done with gold bars in a kilo format on the Shanghai Gold Exchange (SGE). Should this happen, the LME exchange likely already has the right relationships in place to leverage a new Sharia gold standard. Is the physical gold market big enough It is important to retain the important point that the new gold standard will stress the need for underlying physical gold, in whatever gold products are bought. Whilst the likes of the COMEX gold market are able to grow to multiple times the size of the underlying physical market, with little impact on physical demand, this will no longer be case. Especially with the likes of China enforcing similar rules. The World Gold Council have stated that we can expect to see an additional demand of ‘hundreds of tonnes’ once the sharia gold standard has been approved. If just 2% of the assets currently managed by Islamic finance institutions are invested into sharia-compliant gold products then we can expect to see over 1,000 tonnes of additional gold demand. Should these numbers come to fruition this will have a major impact on supply, as well as demand. Without the existence of a formal Sharia Gold Standard, total global gold demand was just under 1,000 metric tonnes in Q3, whilst total global gold supply was just over 1,000 metric tonnes leaving a surplus of 172 metric tonnes. Should Islamic Finance begin to create significant additional demand in the gold market, then we should see these demand and supply issues in the gold market leading to higher prices. It is always important to remember the very small size and rarity of physical gold in the world. Physical gold is both finite and extremely rare and all the gold ever mined would fit into a giant gold bar the size of a four bedroom house. It is roughly 22 metres cubed and would fit on the center court of Wimbledon - see GoldNomics video. Conclusion While we do not know the details of what will be announced on the 6th December, we do know the most important aspects. Indeed, GoldCore have for a number of years been working on a Sharia compliant gold bullion solution for the institutional market and have strong partners who we are working with today. The changes will affect the physical gold market globally, 1.6 billion people will be able for the first time to use gold bullion products and platforms that offer physical delivery, allocated and segregated gold ownership. Silk Road - Wikimedia As we reported on last month, the impact of religious festivals on the gold market is monitored all over the world. We can expect to see similar changes and dynamics come the arrival of the Sharia Gold Standard. However, this is an entire financial market that will coming into the physical gold market. Unlike with religious festivals etc, we will see an increase in the number of structured, well-marketed and regulated financial products that have been designed to offer physical gold to sophisticated investors including high net worth (HNW), ultra high net worth (UHNW) and indeed family offices. This will not only impact the physical gold market, but it will impact the current roles in price discovery and how 1.6 billion people choose to invest in and hold gold coins and bars. To us, this could not have come at a more pertinent time. The West is coming under increasing economic and political pressure as the 'Silk Road' nations of the Middle East and Far East, including Russia and China, continue their rise and become more powerful. It is without surprise that the Silk Road nations continue to assert their independence from western dominance and monopoly - including in financial markets. And it is with even less surprise that they are doing this through gold. Gold and Silver Bullion - News and Commentary Uncertain state of world—economically & geo-politically—bodes well for gold in 2017 said GoldCore (MarketWatch.com) Gold prices firm as dollar retreats from 14-year high (Reuters.com) Asian markets slip as oil prices fall (MarketWatch.com) Gold price 'will be just fine', says fund manager (TheWeek.co.uk) Much-feared pensions time bomb is now exploding for 600,000 workers (Independent.ie) What's Next for Gold? (GoldSeek.com) Gold Price Skyrockets in India after Currency Ban – Part II (Acting-Man.com) Gold Not Driven by Inflation But Real Rates - Audio (Bloomberg.com) Trump & The Financial Markets The Next Four Years (MarketOracle.co.uk) Why Italy is the next country to fall to Trumpism - McWilliams (DavidMCWilliamns.ie) Gold Prices (LBMA AM) 17 Nov: USD 1,232.00, GBP 9,988.19 & EUR 1,148.10 per ounce16 Nov: USD 1,225.70, GBP 9,984.36 & EUR 1,144.68 per ounce15 Nov: USD 1,228.90, GBP 998.86 & EUR 1,138.70 per ounce14 Nov: USD 1,222.60, GBP 997.80 & EUR 1,136.53 per ounce11 Nov: USD 1,255.65, GBP 999.19 & EUR 1,154.45 per ounce10 Nov: USD 1,280.90, GBP 1,034.07 & EUR 1,175.48 per ounce09 Nov: USD 1,304.55, GBP 1,050.42 & EUR 1,176.84 per ounce Silver Prices (LBMA) 17 Nov: USD 17.04, GBP 13.65 & EUR 15.87 per ounce16 Nov: USD 16.95, GBP 13.64 & EUR 15.85 per ounce15 Nov: USD 17.00, GBP 13.68 & EUR 15.80 per ounce14 Nov: USD 17.20, GBP 13.73 & EUR 15.95 per ounce11 Nov: USD 18.59, GBP 14.73 & EUR 17.09 per ounce10 Nov: USD 18.75, GBP 15.11 & EUR 17.20 per ounce09 Nov: USD 18.81, GBP 15.12 & EUR 16.96 per ounce Recent Market Updates - Peak Gold Globally – “Bullish For Gold”- Gold Price Should Go Higher On Global Risks and Trump – Capital Economics- President Trump – Why Market Loves Him and Experts Wrong- ‘Helicopter Money President’ Trump To Create Inflation and Gold Will Rise- Central Bank Gold Demand continues in Q3- Trump Victory Sends Gold Surging 5%- An uncertain election outcome looks good for gold- Ignore past elections, this one’s too uncertain- Gold may be the only winner in US elections- The London Gold Market – ripe for take-over by China?- Diwali, Gold and India – Is Love Affair Over?- Silver Krugerrands By South African Mint Coming Soon – Massive Clearance Sale on Gold Krugerrands- Trump “Will Probably Win” and Gold “May Rise $100” Overnight – Rickards
По мере удаления даты прошедших выборов в США все большее влияние на поведение глобальных рынков будут играть те же самые факторы, которые влияли на них и до этого. Прежде всего это накопленные за всю предыдущую историю и продолжающие и дальше накапливаться долги, по которым невозможно расплатиться, и построенная на их основе вся современная финансовая система с ее необеспеченными бумажными валютами и тотальным искажением всей системы ценообразования. Разрешить накопившиеся проблемы путем каких-то реформ вряд ли удастся, поскольку на проведение реформ требуется время, а это означает лишь одно: новая острая фаза кризиса неизбежна вне зависимости от того, кто оказался у власти в США. Основные вопросы заключаются лишь в том, что в итоге послужит спусковым крючком для этого события, и кто в результате этого пострадает сильнее.Надеяться на то, что этого удастся избежать, особенно не приходится, и отскок акций того же Deutsche Bank-а от отметки в 10 евро до 15 евро не должен вводить в заблуждение и вселять надежды в то, что все нормализовалось. Рынок акций давно уже перестал отражать реальное состояние дел в экономике. Гораздо более важным событием представляется то, что итальянский банк Monte Paschi начал процесс конверсии части своих долгов в свои же акции, то есть, акционерный капитал. Процесс «добровольного» спасения кредитного учреждения за счет клиентов банка начинается. Что-то подсказывает, что это лишь начало как для старейшего европейского банка, так и для других, не исключая тот же самый Deutsche Bank. Все будет определяться лишь тем, насколько масштабным окажется в каждом конкретном случае процесс спасения за счет вовлечения в него вкладчиков и клиентов тех или иных кредитных учреждений.Естественной реакцией на подобное развитие событий, общее ухудшение глобальной экономической обстановки и маячащую на горизонте стагфляцию во все большей степени становится приобретение драгоценных металлов. Инвестиционный спрос на золото, по данным Всемирного золотого совета, за первые три квартала 2016 года вырос до 1390 тонн по сравнению с 923 тоннами в 2015 и 855 тоннами в 2014 годах. Всего за три квартала текущего года спрос на драгоценный металл уже в полтора раза превысил прошлогодние значения. Основная доля прироста спроса на золото в этом году пришлась на покупки разнообразных биржевых фондов, обеспеченных золотом, и составила 725 тонн.Розничный спрос на золото также остается на высоком уровне и заметно опережает показатели прошлого 2015 года. Если за весь 2015 год крупнейший производитель монет из драгоценных металлов Монетный двор США поставил на рынок 801,5 тысячу унций золотых инвестиционных «орлов», то на момент написания данной заметки с начала 2016 года эти показатели уже оказались превышены более чем на 5%.Все это говорит об одном: все большее число участников рынка, как физических лиц, так и корпоративных инвесторов, теряет веру в возможность позитивного исхода сложившейся ситуации и стремится защитить свои сбережения, перекладывая их в физические драгоценные металлы и фактически выводя их за пределы современной финансовой системы. Разница заключается лишь в том, что в отличие от владения физическим драгоценным металлом в случае приобретения паев биржевых фондов, обеспеченных золотом, их владельцы не становятся реальными хозяевами желтого металла, а лишь получают в свои руки очередное бумажное обязательство, не устраняющее полностью всех рисков современной финансово-банковской системы. Покупки золота (и серебра) свидетельствуют о том, что далеко не все имеют желание за счет своих сбережений спасать разоряющиеся банки и предпочитают самостоятельно защищать их всеми имеющимися у них способами.Мои книжки «Крах «денег» или как защитить сбережения в условиях кризиса», «Золото. Гражданин или государство, свобода или демократия», «Занимательная экономика»,«Деньги смутных времен. Древняя история», «Деньги смутных времен. Московия, Россия и ее соседи в XV – XVIII веках» можно прочитать или скачать по адресу http://www.proza.ru/avtor/mitra396