The general lack of interest is shown in the charts below, where open interest on Comex is now at very low levels.
It
is noticeable how open interest has fallen from the time of the August
lows, and in the case of silver it is down nearly 30%. The short
positions have reduced from extremes to only abnormal, and the longs in
most trader categories are on the low side. However, it is a sign of
relative strength that against this lacklustre interest those August
lows are holding, a performance that should worry those with short
positions, given the strong demand for physical gold, summarised below.
Russia’s
official gold reserves have increased to 1,015.5 tonnes and have nearly
caught up with China’s 1,054 tonnes. With her massive oil and gas
surpluses Russia is likely to continue to accumulate gold and overtake
China soon. Kazakhstan now holds 134.5 tonnes, and Turkey continues to
add to her position with 487.4 tonnes.
In the private sector net
liquidation of the GLD ETF slowed to about 10 tonnes in September so
far, after 17 tonnes in August, and is not a significant factor. And we
learn this week, according to the Bank of Thailand that Thai gold
imports in the first seven months were worth $10.9bn, which translates
into approximately 240 tonnes, compared with a similar amount for the
whole of 2012.
Thailand is proposing a new official gold market
in Bangkok, based on that country’s escalating demand. Elsewhere in the
region China through the Shanghai Gold Exchange (SGE) has delivered
enough gold to absorb all non-Asian mine output on its own, to which has
to be added Hong Kong’s trade statistics for non-monetary gold adjusted
for regional double-counting. The available figures for just these
three centres are shown in the table below.
Officially-recorded
Indian gold imports have slumped due to new import procedures imposed
by the central bank, and as a result gold has been left stuck at
airports. But with the wedding season and Diwali looming, it is a fair
bet that all available supplies are now being smuggled, and this year’s
total imports is on course to exceed 1,000 tonnes.
It is against
this extraordinary background, where only some of total Asian demand
dwarfs global mine supply by an extraordinary margin, that Western
capital markets nervously worry about the short-term outlook for gold
prices. Where this gold is coming from is a longer story, but there is
little doubt that at current prices physical demand easily exceeds
available supply.
Next Week
Next week is a quiet one for announcements, the highlight perhaps being on Wednesday with an expected no change in ECB interest rates, but a press conference to follow in the early afternoon may reveal some policy statements.
Monday: Eurozone: M3 money supply. UK: Current Account Deficit. US: Initial Claims. Japan: Core CPI.
Tuesday: Japan: Vehicle Sales. UK: Halifax House price Index. Eurozone: Manufacturing PMI; Unemployment. US: Manufacturing PMI; Construction Spending; ISM Manufacturing; Vehicle Sales.
Wednesday: Eurozone: PPI; ECB Interest Rate. US: ADP Employment Survey.
Thursday: China: CPI; PPI. Eurozone: Composite PPI; Services PPI; Retail Trade. US: Initial Claims; Factory Orders; ISM Non-manufacturing Index.
Friday: US: Non-farm Payrolls; Unemployment. Japan: BOJ Monetary Policy Announcement.
