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Gold’s London AM fix this morning
was USD 1,656.00, EUR 1,248.21, and GBP 1,042.95 per ounce.
Yesterday's AM fix was USD 1,648.50, EUR
1,248.86 and GBP 1,039.01 per ounce.
Cross Currency Table – (Bloomberg)
Gold fell 0.89% in New York yesterday and
closed at $1,650.80/oz. Gold edged higher in Asia and ticked slightly higher
before falling in Europe this morning where gold is now trading at
$1,649.30/oz.
The weak dollar helped the buying
strength in Asia but a drop in physical demand and hopes for the US economic
recovery limited gains.
The US housing data figures reaffirmed
hopes that the US economy is improving. Some investors have closed out
positions in order to buy more risky high yielding assets.
Still stubbornly high oil prices are
bullish for gold but have not led to higher gold prices so far.
Gold Market Sentiment Very Poor Despite
Strong Fundamentals
Risk appetite remains high as seen in
equity indices near record highs and gold more than 15% below its recent
record high (nominal).
The fragile US economic recovery remains
close to lapsing into a recession which would see a reversion to QE and
currency debasement.
Similarly, the Eurozone debt crisis is
nowhere near being solved and the risk of contagion remains - whether that be from Greece or from Portugal, Spain or Italy or a
combination thereof.
The risk of the global debt crisis
leading to an international monetary crisis or currency crisis remains and is
underestimated - in the same way that the debt bubble was underestimated.
Geopolitical risk remains high with
instability throughout much of North Africa and the Middle East and the risk
of a military confrontation between Israel and Iran.
Currency Ranked Returns - (Bloomberg)
Competitive currency devaluations
continue and the Japanese remain ahead of the curve in the currency wars as the
stealth devaluation of the yen continues.
The yen has fallen by more than 7%
against the euro, 9% against the dollar and 13% against gold year to date -
in less than 11 weeks.
Despite the favourable
macroeconomic, monetary, systemic and geopolitical fundamentals - sentiment
in the gold market remains lukewarm - especially among the retail public and
media in western markets.
There remains scant media coverage of the
gold market in the non specialist financial press
and media and what coverage there is tends to be quite negative.
Gold’s long term diversification
value and benefits continue to be almost completely ignored in favour of simplistic assertions from gurus and a superficial
focus on gold’s recent nominal price action.
Short term speculators and weak hands
have again been washed out of the paper market on the recent sell off and
some are even short now due to the poor technicals.
However, some banks are viewing this
correction as an opportunity to buy the dip (see Other News yesterday and
today).
Coin and bar demand has been lacklustre in recent days and weeks and indeed there has
been a degree of nervous selling by some bullion owners. This is something we
have hitherto not seen in this gold bull market.
Asian demand has also been quite slow and
despite the sell off with Indian and Chinese demand slower recently, while
demand from Thailand and Indonesia continues.
Asian consumer and "social
security" gold demand does not appear to be the primary driver of the
market place today.
Rather, central bank demand is likely
providing the fundamental support to the market as emerging market central
banks continue to quietly accumulate gold tonnage on price weakness either
directly or through the Bank of International Settlements (BIS) as reported
by the FT last week.
Those seeking to protect and grow their
wealth in the coming months and years would be wise to emulate central banks
and reduce counter party risk and diversify their wealth with an allocation
to gold.
Bernanke’s Lack of Nuance on Gold
Standard
Federal Reserve Chairman Ben Bernanke spoke at George Washington University
yesterday in his first of four public lectures about the financial crisis.
The former Princeton economics professor
speaks again on Thursday and twice next week in an effort to create some
positive spin on his handling of the US financial crisis.
In his first lecture he dismissed
proponents of the gold standard, saying that such a system limits the government's
ability to address economic conditions.
"Since the gold standard determines
the money supply, there is not much scope for the central bank to use
monetary policy to stabilize the economy," Bernanke said.
"Under a gold standard, typically
the money supply goes up and interest rates go down in a period of strong
economic activity - so that's the reverse of what a central bank would
normally do today."
Ironically, it is monetary policies of
recent years that have contributed to this financial crisis and a quasi gold standard may have led to more prudent monetary
and fiscal policies.
Proponents for a gold standard such as
Republican presidential candidate Ron Paul, advocate
the closure of the central bank and a return to a gold standard where every
dollar issued must be backed with equivalent reserves of precious metal.
Fed critics rightly point out how
Greenspan and then Bernanke let the housing bubble and debt bubble (including
subprime) balloon out of proportion. The other criticism and warning is that
continually ultra loose monetary policies and QE
(overnight interest rates near zero since 2008 & $2.3 trillion in bond
purchases) will lead to dollar debasement and the pain of inflation for
consumers in the coming months.
Bernanke did not touch on the economy or
monetary policy but did note that he will not rush to undo the Fed’s
QE.
For breaking news and commentary on
financial markets and gold, follow us on Twitter.
OTHER NEWS
(Bloomberg) -- Gold Trading Fell 12% in February as Silver Increased, LBMA
Says
Gold trading declined 12 percent to an average of 19.5 million ounces a day
in February compared with a month earlier, the London Bullion Market
Association said today in an e-mailed report.
Silver trading rose 7.2 percent to a
daily average of 160 million ounces, the LBMA said.
(Bloomberg) -- Gold Seen Recapturing
Precious Metal Crown
Gold may regain its crown from platinum as the more-expensive metal within
six months as Europe’s debt crisis and slower Chinese growth crimp
demand for catalysts and boost gold as an alternative, Mitsui & Co. said.
The chart of the day shows spot platinum
became costlier than gold on March 12 for the first time in six months. The
metal had been cheaper than gold for the longest continuous period since at
least 1987, Bloomberg data show. The lower panel tracks assets in
exchange-traded products, with gold holdings little changed this month while
platinum holdings declined.
“The risks to the global economy
for slower growth still exist,” said Mitsui’s precious-metals
analyst David Jollie, formerly the author of the
platinum-group metals publication by Johnson Matthey Plc,
which produces a third of global auto catalysts. “There is potential
for gold to outperform.”
Gold may rally as U.S. economic growth in
the first half disappoints, prompting further stimulus, Societe
Generale SA said March 19. International Monetary
Fund Managing Director Christine Lagarde warned the
day before that global economic stability was still at risk from debt levels
and slower growth in emerging markets. China is targeting a 7.5 percent
expansion this year, down from the 8 percent goal in place since 2005.
Platinum has rallied 19 percent this year
to $1,673 an ounce at 4:35 p.m. in Singapore yesterday as expectations for
growth lifted the outlook for pollution-control devices and supplies from
mines in South Africa were disrupted. Gold gained 5.6 percent to $1,651.89 an
ounce. The yellow metal may average $1,859 in the third quarter, versus a platinum
average of $1,745, according to analysts’ forecasts tracked by
Bloomberg.
Gold-backed ETPs, which reached a record
on March 13, are little changed this month to March 19, compared with a 0.3
percent drop in platinum holdings. This year, platinum assets have increased
8.1 percent compared with gold’s 2 percent rise.
(Bloomberg) -- U.S. Jewelry Retailers
Report ’11 Silver-Sales Gain, Group Says
The Silver Institute said that 77 percent of U.S. jewelry retailers boosted
sales of silver jewelry in 2011, according to a Nielsen/National Jeweler
survey.
Twenty-seven percent had a sales increase
of more than 25 percent, the Washington-based Silver Institute said today in
a statement on its website.
(Bloomberg) -- Indian Jewelers to Reopen
Stores After Five-Day Shutdown
Gold jewelers in India, the world’s biggest bullion buyer, will reopen
shops tomorrow after a five- day nationwide shutdown to protest increases in
taxes, according to a trade group.
About 10,000 artisans, goldsmiths and
jewelers will hold a rally in Kolkata before ending the strike, the first in
seven years, said Bachhraj Bamalwa,
chairman of the All India Gems & Jewellery
Trade Federation.
Jewelers are protesting against higher
taxes announced by Finance Minister Pranab
Mukherjee last week, which may raise retail gold prices by 6.3 percent and
potentially halve Indian imports. The government boosted levies as it seeks
to rein in a widening current-account deficit, partly fuelled by record
bullion imports last year.
“Demand will definitely
fall,” Bamalwa said. India will be “out
of the market,” he said.
India raised the import duty on gold bars
and coins and platinum to 4 percent from 2 percent, after doubling the tax in
January. A levy on gold ore, concentrate and so-called dore
bars for refining will be doubled to 2 percent and an excise tax on refined
gold will climb to 3 percent from 1.5 percent, Mukherjee said in his budget
speech for the year beginning April 1.
Imports may fall as much as 35 percent
this year from a record 969 metric tons in 2011, according to Prithviraj Kothari, president of the Bombay Bullion
Association.
‘Social Security’
The plunge in purchases may be greater, Bamalwa said, predicting a decline of between 40 percent
and 50 percent as higher prices crimp demand.
“In India, jewelry is not a rich
person’s commodity,” he said. “Poor people also buy jewelry
for social security.”
Futures in India gained 32 percent last
year, exceeding the 10 percent advance in global prices, as the currency
slumped to a record low. Gold for immediate delivery was little changed at
$1,652.05 an ounce at 11:06 a.m. in Mumbai. Futures for April delivery on the
Multi Commodity Exchange of India Ltd. were also little changed at 27,840
rupees per 10 grams ($551).
The jewelers’ group will continue
to lobby the government to withdraw the levy on non-branded gold jewelry, Bamalwa said. The tax won’t apply to small
goldsmiths and artisans, the Central Board of Excise and Customs said
yesterday.
India’s gold imports may reach $100
billion by 2015-2016 and the government should “strictly monitor the
inflows with higher customs duty,” the Associated Chambers of Commerce
and Industry of India said yesterday.
(Bloomberg) -- Gold Exports From
Australia Set to Increase 9% in 2012-2013
Gold exports from Australia, both of
domestically produced and overseas-sourced metal,
will increase 9 percent to 361 metric tons in 2012-2013 from 331 tons a year
earlier, said the Bureau of Resources and Energy Economics.
Gold production will expand 7 percent to
287 tons in 2012-2013 with the ramp-up of production at Newcrest Mining
Ltd.’s Cadia East operation expected to
provide most of the increase, the bureau said.
(Bloomberg) -- Standard Chartered Starts
Long Comex Gold October Futures
Standard Chartered Plc
started a bet on higher Comex gold October futures,
saying the metal has declined more than is justified because of investor
demand.
Gold will average $1,925 an ounce in the
third quarter, buoyed by central bank buying and investor demand as a hedge
against inflation, Koun-Ken Lee, an analyst at the
bank, said in a report dated today. The bank has a recommended portfolio of
commodities and is selling the soybeans, keeping corn and letting a bear
trade spread on London Metal Exchange nickel March futures expire “in
the money,” according to the report. The trade involved a short on
nickel at $20,100 a ton and a long on nickel at $21,150 a ton and March 2012
futures ended at $18,717 a ton, it said.
SILVER
Silver is trading at $32.09/oz,
€24.26/oz and £20.26/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,635.75/oz, palladium at
$685/oz and rhodium at $1,425/oz.
NEWS
(Reuters)
Gold edges up on dollar; physical demand sluggish
(Bloomberg)
Gold Seen Averaging 16% More in 2012 on Financial Market
Concern
(Reuters)
Bernanke says gold standard wouldn't solve problems
(CNN)
Professor Bernanke rails against gold standard
COMMENTARY
(King World News)
Embry: $50 Downside on Gold but $1,000’s to the
Upside
(Zero Hedge)
Bernanke's Speech Decrypted
(The Economic Collapse Blog)
Ben Bernanke Lectures America About Why The Federal
Reserve Is Good And The Gold Standard Is Bad
(24HGold)
Elliott Wave Predicts $32,659 Gold on 16 Jan 2015
(Casey Research)
What's Really Happening with Gold and Silver in India
(Financial Sense)
Central Bank Balance Sheets Put Gold at $1900
Mark
O’Byrne
Goldcore
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