Including Singapore's challenge to Hong Kong and China in Asia's gold bullion market...
FOUR YEARS AGO, back when gold prices rallied within spitting distance of their all-time 2011 highs, the professional market's premier event – the annual London Bullion Market Association conference – took it to Hong Kong,
writes Adrian Ash at BullionVault.
Heart of East Asia's gold trade, Hong Kong remains today the key import point for gold into world No.1 consumer China, bigger than direct shipping to Shanghai or Beijing.
Yet at LBMA 2012, any delegate picking up their complementary copy of the
Financial Times at the Grand Hyatt in Hong Kong found a different Asian city advertising across the front page...
...with its bold-as-brass advert appearing again in this week's LBMA 2016 delegate pack...
"I remember first discussing the idea of a Singapore Conference at the 2012 event in Hong Kong," said LBMA chief exec' Ruth Crowell in her introduction Monday morning.
"Hong Kong was the highest ever attended Asian LBMA Conference. That is, until today. As of this morning, we have 706 delegates from 39 countries...a record for Asia and only narrowly beaten by Rome [2013] as the best attended conference ever."
So in the Olympic spirit of record-breaking numbers, and with an eye on the Association's 30th birthday coming in 2017, here's a quick take in 30 facts, figures and rumors from the LBMA's jam-packed 2016 conference at the Shangri-La Hotel in Singapore...
5-fold – the growth in Singapore's physical gold trade since it made gold tax-exempt in 2012. Employment has doubled.
200 tonnes – the volume of gold bullion shipments through Singapore in 2015, up 65% from the year before, added Lim Hng Kiang, Minister of Trade & Industry,
welcoming the LBMA conference on Monday. Metal is of course free to come and go, unlike in China, where...
10 tonnes – the weight of silver bars HSBC asked for as a sample when Beijing said it wanted to start selling in the mid-1990s according to Paul Voller, now global head for precious metals at the bank. The Chinese officials were surprised at that quantity...and sent the 300 tonnes they'd already got ready anyway.
9 million – the number of private individuals trading on the Shanghai Gold Exchange, alongside 10,000 institutional traders
according to Jiao Jinpu, chairman of the SGE. "China is a very open gold market...We invite everyone to join."
1,693 tonnes – last year's net imports to China using pretty much each of the 3
methodologies proposed by Macquarie analyst Matt Turner. Not that he or we need bother, according to Jiao. "If only you all learnt Chinese," he half-joked, "we wouldn't have these communication problems" – meaning questions over quite what China's reported gold data mean.
ANZ – the largest gold importer to China according to John Levin, head of precious metals at ANZ...
2pm – the time in Singapore of the new "pre-AM" London benchmark gold price,
announced Monday by the Singapore Bullion Market Association and adding a third auction to the daily LBMA Gold Prices. The process and participants will be the same (and with
more players to come as an exchange-traded contract is added to the world's benchmark Fixing) and again, the auction will identify a price for metal settled in London. But for anyone using this new Asian Fix to buy or sell, they can of course get metal out of Singapore just as easily as in. Unlike the giant consumer nations of
gold-hoarding China or India...
One-to-many – the model of brokerage INTL FC Stone's new trading platform for precious metals clients, pricing all its available gold, silver and other commodities in whatever location you might need them, plus quotes from other clients wanting to sell. Called
PMXecute+ it contrasts with the 'many-to-many' model tried by various platforms hoping to put hundreds or thousands of buyers and sellers directly in touch with each other. Because INTL's product actually exists.
26% – the proportion of ALL tradable bonds globally now yielding less than nothing, according to Eric Robertsen, head of macro strategy and FX research at Standard Chartered Bank – meaning that investors are guarantee to lose money if they hold to redemption. That insanity turns gold's famous
zero yield into high yield.
Half-full – what the conference room got, at best, during the featured presentations at LBMA 2016 in Singapore. Pity, but business called no doubt.
18% – the likely rate of general sales tax on gold jewelry in India once the GST Committee has decided, according to 4 industry players debating the future of the world's largest historic consumer market. That would recategorize gold in India from
'savings' to a 'luxury', but might not dent demand said Kotak Mahindra Bank's Shekhar Bhandari, if other factors (the Rupee, or world prices) counteract it.
70% – the proportion of total gold imports to India now being smuggled on one estimate given to another industry conference recently. Demand hasn't collapsed, in other words. Only legal inflows, and air transport revenues with them.
$12 billion – the sum apparently collected by India's
income disclosure scheme, an amnesty on 'undeclared' wealth with an end-September 2016 deadline and carrying a 45% tax rate. To find the money to pay, says a new friend inside India's bullion market, many families have sold bullion and jewelry, badly worsening India's glut of gold and so widening this year's discounts to global prices.
7.6% – India's GDP expansion this year, overtaking China as the world's fastest-growing major economy.
142nd – India's rank on the world league table for ease of doing business. "It should be growing faster and adding more jobs," says Andrew Staples, Director of Economist Corporate Network, South-east Asia.
Hard cash – one bright spot for secure shippers and vaults. A lot of physical Dollars are apparently finding their way to Australasia, tucked away in safe-deposit boxes by overseas savers anxious about the
abolition of money. Word is that far more are also finding their way to Europe, and for the same reason. But the real currency boom is coming in emerging markets, where transaction volumes in cash continue to rise.
"More dangers now than 2007" – the verdict on global financial markets from William White, Chairman of the OECD Economic Development & Review Committee. "Controversial perhaps and needs to be debated," said White in his keynote speech. But "a problem anywhere now
means problems everywhere..."
2016 – the worst year for global trade growth since 2009 according to the Economist Group's EIU.
10th place – the importance of Britain's membership of the European Union, according to 1,000 Japanese companies, when asked to list their reasons for having a significant UK base. Major banks and manufacturers won't leave reckons Bob Takai of Sumitomo.
£1000 per ounce – the price of gold reached immediately after June's Brexit referendum, and holding ever since. That has spurred a surge in scrap jewelry flows, out of consumer holdings and surprising the industry. Because after the cash-for-gold boom and bust of 2009-2014, it seemed safe to assume that household stockpiles of broken or unwanted pieces had been emptied. But apparently not.
"Bumbling along" – the third, rarely prophesied but more common market outlook, according to Ray Eyles of Millennium Capital, contrasting the binary choice of asset prices rising or falling rapidly.
300% – the jump in cost for bullion banks lending metal when new 'stable funding' rules come into effect, sometime in 2017. That basically
pushes them out of that business, including lending metal to the refining industry so it can keep running, and forcing a potential crisis for the wider gold bullion market pretty much worldwide.
First, do no harm – the principal now entirely lost by politicians, central bankers and regulators as ICBC Standard Bank's Tom Kendall put it.
"Shadow bankers" – what large refiners could become for the mining industry, in the musings of Paulson's John Reade and Amplats David Jollie in their conference round-up, if regulated bullion banks do quit the business. Perth Mint CEO Richard Hayes demured when asked pretty much the same question in the producer & refining session...
Twice as much as now – the annual amount of platinum demand for auto-catalysts in Asia's vehicle fleet by 2035 on the rough estimate from Paulson Europe's John Reade, based on the loadings and driver growth forecast in Tuesday's PGM session.
But 20% – the proportion of VW's car output it plans to build with electric engines in 2020
Couple of hundred tonnes – the additional annual gold demand which India and China's long-term economic growth "must" mean according to Tuesday's Asian outlook panel...
"A great disappointment" – China, most probably, according to Chris Watling of Longview Economics. "It's got both South Korea's
'chaebol' problem" of bloated and sclerotic corporations, he said, as well as the crippling debt-to-GDP horror of Japan.
1 – the number of LBMA 2016 delegates declaring themselves to be
"investors" when polled in the opening session. Last year that number was 7. Make of that what you will for the outlook. The majority of delegates, as ever, were in banking. Which explains why, at the debate on producing and refining, some 70% of attendees voted to say that gold miners really should
start hedging some of their output again, to the disdain and dismay of the panel.
75 centimetres – thickness of the reinforced concrete walls inside
Le Freeport, the stunning tax-free storage facility opened back in 2012 for wealthy investors to
secure their fine art (and view or even auction it). Effectively a series of high-security boxes within high-security boxes, it is also used to hold property belonging to BullionVault users wanting
Singapore gold and silver trading and storage, all at the same low charges as they enjoy for London, New York, Toronto or Zurich.
BONUS FIGURES – but as yet just numbers, neither fact nor rumor, were the 12-month price forecasts made by delegates attending the first and last sessions of the conference.
By October 2017, when the LBMA conference will arrive in Barcelona (and beat Rome 2013 no doubt), gold will trade at $1347 per ounce according to the average guess of this year's attendees.
Bullish maybe at 7%...but palladium is seen 17% higher from this week, up at $752, with platinum up 13% at $1055.
Silver made the really hot tip though, with an average forecast for 20% gains to $20.90 per ounce.
Wealth warning! LBMA delegates notoriously
predict what they've just seen on average. But then again, during the bull market topping in 2011, their forecast of roughly 10% annual gold gains consistently lagged the market.
¡compra oro!
