Today's AM fix was USD 1,589.25, EUR 1,271.40, and GBP 1,025.65 per ounce.
Yesterday’s AM fix was USD 1,593.00, EUR 1,264.79, and GBP 1,023.45 per ounce.

Silver is trading at $28.67/oz, €22.92/oz and £18.52/oz. Platinum is trading at $1,448.00/oz, palladium at $618.00/oz and rhodium at $1,200/oz.

Gold 1 Month Chart – (Bloomberg)

Gold climbed $5.60 or 0.35% yesterday in New York and closed at $1,600.20/oz despite stock markets giving up early gains on misguided optimism regarding the Spanish “bailout”.

Gold fell initially in Asia before trading sideways and this range trading has continued in European trading.

Gold edged higher Tuesday after hopes were dashed that Spain's bank bailout would be the panacea that would lead to alleviating the eurozone debt crisis.

XAU/EUR 1 Month Chart – (Bloomberg)

Gold is consolidating near $1,600/oz as investors are concerned that the sovereign debt of Spain will still be stretched to the breaking point and Greece’s possible departure from the euro will unleash more instability in the region.

The risk of contagion remains real and European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls as a worst-case scenario should Athens decide to leave the euro.

While the technicals are poor, the fundamentals remain sound with the euro zone debt crisis far from resolved. Indeed, the euro zone debt crisis will likely morph into the global debt crisis in the coming months when markets turn their attention to the Chinese property bubble and the poor fiscal position of Japan, the UK and the US.

Market watchers are waiting for the Greek elections on June 17, and also the Group of 20 financial summit plus the US Fed’s policy meeting next week.

Turkiye Is Bankası AS, Turkey’s biggest bank by assets, plans to collect $1 billion of gold in its deposit accounts by the end of the year, citing deputy chief executive officer Erdal Aral.

As much as 5,000 metric tons of gold is stored “under the mattress” in Turkey, Aral said, according to the Istanbul-based newspaper. Gold deposit accounts have surged to 13.6 billion liras ($7.4 billion) from 3.1 billion liras within the past year, according to data released by the banking regulator, Aral was quoted as saying.

Gold has always been seen as money and as a store of wealth in Turkey and now the country is leading the way with regards to the remonetisation of gold in the 21st Century.

XAU/GBP 1 Month Chart – (Bloomberg)

Turkey remained the world's number one minter of gold coins in 2011. There is an increasing tendency for gold bars to be retail investors' vehicle of choice – although gold coins still retain a majority market share.

Turkish people can pay in gold in certain foreign exchange houses and most jewellers will accept gold as payment. Turkish banks are is now offering digital gold saving accounts.

Turkey expanded its gold reserves by 29.7 metric tons in April. Turkey’s bullion reserves climbed to 239.3 tons last month meaning that Turkey increased their gold reserves by 14% in April.

The central bank on March 27 doubled the share of lira reserves banks can hold in gold to 20%, saying it would provide 6.1 billion liras ($3.3 billion) of extra liquidity.

"This addition," the WGC says, "was the result of a policy change under which the central bank will now accept gold in reserve requirements from commercial banks to help the banks utilize their gold in managing their liquidity."

Some analysts have suggested that the increase in Turkish gold reserves, as reported by the IMF, may actually be a form of “double accounting”. Whereby the gold held in Turkish banks client’s gold account is transferred from the local bank as a reserve to the central bank, from where it then figures as gold reserves.

Besides massive domestic holdings and robust demand in Turkey, the country is also importing and then exporting huge quantities of gold into Iran and ‘Arab spring’ countries with some $1.2 billion of precious metals exported into Iran in April alone.

OTHER NEWS
(Bloomberg) -- Gold Hinges on Emerging Markets, Not Inflation: Chart of the Day
Gold’s prospects are less dependent on inflation than on demand from emerging markets, according to a study released last week.

The CHART OF THE DAY shows the relationship between gold and the U.S. consumer price index since 1975, when futures on the metal began trading. The inflation gauge was set equal to the gold price as the period began.

Assuming that gold moved in lockstep with the CPI, the implied price would be about $780 an ounce, according to Duke University Professor Campbell R. Harvey and his collaborator, Claude B. Erb. Yesterday’s price on the Comex in New York, $1,596.80 an ounce, was more than twice that number.

“If gold is an inflation hedge, then on average its real return should be zero,” Erb and Harvey wrote. Instead, returns from 2000 through March of this year averaged 13 percent a year on an inflation-adjusted basis.

Cross Currency Table – (Bloomberg)

Emerging markets are in a position to sustain the surge, they wrote, because gold accounts for a smaller portion of central-bank reserves in those nations than it does in the U.S. and other developed countries.

Brazil, Russia, India and China would have to increase their total holdings of the metal by 153 percent to match the Federal Reserve’s investment as a percentage of gross domestic product, the report said.

Erb is based in Los Angeles, and Harvey is based in Durham, North Carolina. Their study was first published June 6 on the Social Science Research Network, an online repository for academic research.

(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,669 Metric Tons
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,669.08 metric tons as of June 11, according to figures on the company’s website.

June 11 June 8 June 7 June 6 June 5 June 4

2012 2012 2012 2012 2012 2012

Million Ounces 310.868 310.868 310.868 311.838 310.868 309.898

Daily change 0 0 -970,176 970,184 970,196 -137,357

Metric tons 9,669.08 9,669.08 9,669.08 9,699.25 9,669.08 9,638.90

Daily change 0.00 0.00 -30.17 30.17 30.18 -4.27

NOTE: Ounces are troy ounces.

(Bloomberg) -- Philippines Says Gold Smuggling Hurting Value of Metal Output
The value of Philippine metal production in the first quarter fell 38 percent to 19.6 billion pesos, largely due to gold smuggling, Environment Secretary Ramon Paje said in a statement.

Gold purchases of Bangko Sentral ng Pilipinas from small miners declined 92 percent in the three months ended March to 618 kilos worth 1.35 billion pesos from 7,493 kilos a year earlier worth 14.1 billion pesos, Paje said. The official asked the Presidential Anti-Organized Crime Task Force to help stop gold smuggling, saying that the drop in central bank’s gold purchases “clearly means that gold outputs are going to the blackmarket and smuggling activities.”

Output of silver and chromite also dropped in the first quarter while copper, zinc, nickel and iron rose, Paje said. Gold output is expected to rise this quarter with the entry of a new producer while production of nickel, chromite and iron are seen to increase this year, Mines & Geosciences Bureau Director Leo Jasareno said in the statement.

(Bloomberg) -- Ghana Gold Output Fell 1.7% to 2.92 Million Ounces Last Year
Gold production in Ghana, Africa’s second-biggest producer of the metal, fell 1.7 percent to 2.92 million ounces last year as output at Gold Fields Ltd., the biggest gold miner in the West African nation, declined.

Revenue from sales of the metal increased to $4.63 billion from $3.62 billion a year earlier, as the average price climbed to $1,583 per ounce from $1,219 in 2010, the Accra-based Ghana Chamber of Mines said in an e-mailed statement. Total earnings from minerals rose to $4.78 billion from $3.72 billion, it said.

Operational difficulties, including power-supply problems, at Gold Fields’ Tarkwa mine led to a decline in production to 717,342 ounces from 735,034 ounces a year earlier, the chamber said. AngloGold Ashanti Ltd. and Newmont Mining Corp. also operate mines in Ghana.

Diamond production fell 8.2 percent to 283,369 carats in the year, according to the chamber, which didn’t give a reason for the drop.

Bauxite shipments declined 22 percent to 400,069 metric tons and revenue from exports of the metal slowed to $13.4 million from $15.1 million, the chamber’s data showed.

Shipments of manganese rose to 1.8 million dry tons from 1.2 million tons.

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NEWS
Gold inches down as Spain bailout boost fades‎ - Reuters

European financial crisis tempers gold price gain - BusinessWeek

Gold Futures Shoot Up to Nearly 5-Year High – AdvisorOne

Exclusive: Euro zone discussed limiting the size of withdrawals from ATM machines & capital controls - Reuters

COMMENTARY
Stay The Course As Gold Continues Its Progressive March – Jim Sinclair’s Mineset

Visualizing China's Voracious Appetite For Gold – Zero Hedge

Greyerz - Worldwide Package Coming From Fed, ECB & IMF – King World News

Ned Naylor-Leyland Reveals Actual Owner of Bob Pisani’s GLD Gold Bar – Silver Doctors

Is Gold in a Bubble? – Paper Money Collapse

Mark O’Byrne

Goldcore