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The
Swiss franc and the euro are weaker today and marginally lower against gold.
Asian equity markets were higher (except for a 0.25% fall in the Nikkei) but
European indices are more hesitant this morning. Greek, Italian and Spanish
debt markets have seen yields creep slightly higher this morning.
Cross-Currency
Markets
Gold and silver have fallen marginally this morning. It is too early to tell
whether the paper-driven sell off is over and some western buyers will wait
for a higher weekly close. This is not the case in much of Asia where
physical demand remains very robust and jewelers and investors are buying the
dip. In India, this was seen in the strong Indian ex-duty premiums (AM
$.5.36, PM $2.77) for gold yesterday.
The
scale of Chinese demand continues to surprise some analysts and dealers.
Growing Chinese demand over a period of years and China supplanting India as
the largest importer of gold in the world, is what we have said was likely to
happen for some time. Data shows China importing 209 tonnes of gold the first
10 months of last year, versus 333 tonnes for India for the whole year.
Many
market participants tend to focus on the daily fluctuations and
“noise” of the market and not see the ‘big picture’
major change in the fundamental supply and demand situation in the gold and
silver markets – particularly due to investment and central bank demand
from China and Asia.
The
Financial Times reports that precious metals traders in London and Hong Kong
were stunned by the strength of Chinese buying in the past month. “The
demand is unbelievable. The size of the orders is enormous,” said one
senior banker, who estimated that China had imported about 200 tonnes in three
months.
The
important fact that the Chinese people were banned from owning gold from 1950
to 2003, means that the per capita consumption of over 1.3 billion people is
rising from a tiny base, is not realised by most. While the increase in
Chinese demand has been very significant, it is likely to continue and the
demand is sustainable due to Chairman’s Mao’s half-century gold
ownership ban.
Should
the Chinese economy crash, as some predict, demand could fall. However, sharp
declines in Chinese equity and property markets and problems with the yuan
would likely lead to significant safe haven demand.
UBS
reports that “many refiners report a backlog of Chinese orders to fill,
which suggests that the January buying was not solely for the festive
season...the prospect of renewed impressive demand once China returns, should
continue to support gold." UBS also reports that while speculative
shorts on the COMEX are at a 5 and half year high, there remains
"elevated physical demand” and this “usually signals an
impending bottom in price."
Also
of note is that “gold forward rates have tightened across the curve,
with one-year borrowing rates 12bp lower since last Thursday. This is due to
a steep increase in physical demand, and to less lending in the
market.”
The
physical gold bullion market is becoming less liquid, strongly suggesting
that we could be close to the bottom in this sell off.
Gold
Gold
is trading at $1,336.15/oz, €966.50/oz and £820.78/oz.
Silver
Silver
is trading at $28.25/oz, €20.53/oz and £17.43/oz.
Platinum
Group Metals
Platinum
is trading at $1,825.50/oz, palladium at $804.50/oz and rhodium at $2,450/oz.
News
(Bloomberg)
-- New Year gifts help put China on track to become top gold consumer
China imported
about 200 metric tons of gold in three months leading to the Chinese New
Year, helped by consumers giving bullion gifts instead of cash for the
holiday, the Financial Times reported, citing an unidentified banker.
The
premium for physical gold over London prices has dropped to about $4 an ounce
today, from as much as $20, the newspaper said.
(Bloomberg)
-- Gold Drops for Second Day as Recovery Curbs Investment Demand
Gold declined
for a second day on expectation that an economic recovery will erode the
allure of the precious metal as an alternative investment amid concerns of
rising inflation and escalating protests in Egypt.
Spot
gold fell as much as 0.3 percent to $1,331.50 an ounce before trading at
$1,332.68 by 3:04 p.m. in Tokyo. Bullion has lost 6.2 percent this year.
Holdings in gold-backed exchange- traded products fell to the lowest level
since June.
(Bloomberg)
Tokyo's gold vending machines vie for attention with drinks and
lingerie
Makishi
Rokugawa says he's installing the first gold vending machines in central
Tokyo so Japanese consumers can invest in "something real".
Space
International Ltd, a company started by Rokugawa with funds from selling
novelty USB flash drives, is offering gold or silver to the world's biggest
vending machine market, where consumers can buy anything from drinks and
candy to lingerie and fortune-telling printouts.
In a
nation where deflation has cut consumer prices for 21 straight months through
November, salaries are the smallest since 1990, bond yields are the world's
lowest, and the stock market is 40pc below its December 1989 peak,
"ordinary Japanese need a way to invest in something they can
touch", Rokugawa (35) said yesterday at a media conference.
"What
if you wake up one day and your money is just a piece of paper?"
Rokugawa asked reporters at the $410-a-night Imperial Hotel, where he plans
to place a second gold vending machine after putting one in his Tokyo office
building. Rokugawa plans to take his business "nationwide" next
year and is considering entering the Hong Kong market, he said.
The
machine offered 1 gram of gold for 6,800 yen ($82.30) yesterday. Gold traded
at $1,362.45 per troy ounce at 10:52 a.m in Tokyo, or about $44 a gram.
The
vending machine sells the precious metal in the form of coins and ingots,
with weights ranging from a gram to a quarter of an ounce.
Japan
has a vending machine for every 32 people, according to Bloomberg
calculations. The nation posted 5.15 trillion yen in vending machine sales in
2009, about 45pc more than the$42.9bn revenue in the United States, according
to the Japan Vending Machine Manufacturers Association.
Germany's
Ex Oriente Lux AG, which says it was the first to install a gold-vending
machine, operates 11 machines domestically and five abroad, including in
Spain and Italy. TG- Gold-Super-Markt installed its first gold bar vending
machine at Frankfurt Airport in June 2009, while a similar machine was
unveiled at Abu Dhabi's Emirates Palace hotel in May, 2010.
The
most expensive item available in Rokugawa's machine yesterday was a
quarter-ounce gold coin issued by the Canadian central bank, retailing for
about $410. Rokugawa declined to say how much gold would be kept in the
machine at any one time.
Prices
will be updated once a day and relate to the gold market price, Rokugawa
said. Gold for immediate delivery has gained in each of the last 10 years,
rising 30pc in 2010.
The
metal's biggest one-day jump in the last 12 months was 3.3pc and the biggest
decline was 4.1pc.
Silver
coins will range from 15.5 grams to 62.2 grams, or 2 troy ounces, in weight,
according to the company's catalogue distributed at the opening event.
Precious
metal coins from the central banks of China, Australia, and Canada will be on
offer, the catalogue showed.
Rokugawa
may expand the business to platinum and other precious metals in time, he
said.
The
entrepreneur said he was encouraged by the gold-vending business in Europe,
which has seen client numbers climb since introduction in 2009.
Ex
Oriente Lux, which makes bullion vending machines under the "Gold to
Go" brand, said in September it planned to more than triple the number
of the devices in operation. The company, which is based in Reutlingen in
Germany is selling gold bars and coins weighing from 250 grams (8.8 ounces)
to as little as 1 gram and updates the price of bullion every 10 minutes.
(Bloomberg)
(Reuters)
-- Platinum 'resilient' despite gold, oil selloff
NYMEX platinum
and palladium futures diverged in Wednesday trading, with palladium slipping
more than $9, but platinum inching up despite pressure from price drops in
market drivers gold and crude oil. Platinum for April delivery, the active
month, settled at $1,828.60/oz, up $4.40 from Tuesday's settlement, and was
trading at $1,838/oz at 328 p.m. EST (2028 GMT), after achieving an earlier
high at $1,840/oz and coming off a session low at $1,824.90/oz. On the other
hand, March palladium settled at $810.55/oz, down $13 from Tuesday's
settlement, but it recovered in after-hours trading and was changing hands at
$815.90/oz at 328 p.m. EST (1528 GMT). It had earlier reached an intraday
high of $828.75/oz. "Platinum was very resilient today," a trader
told Platts, in the face of pressure from a technical selloff in gold and
crude oil. NYMEX March crude futures pared earlier gains and were 13 cents
lower at $90.64/barrel midday Wednesday after the US government reported US
crude stocks at the NYMEX delivery point at Cushing, Oklahoma, hit an
all-time high.
(Bloomberg)
-- Turkey Gold Imports 11.12 Tons in January, Exchange Data Show
Turkey’s
gold imports reached 11.12 metric tons in January, the biggest monthly figure
since July, the Istanbul Gold Exchange said in a report on its website. The
country imported no silver in January, the data show.
(Editors
note: Rather than no silver whatsoever being imported it is likely that the
data provided to Bloomberg was incorrect).
Happy
Chinese New Year in the Year of the Rabbit (Kung Hei Fat Choi).
Mark O’Byrne
Goldcore
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