Gold
is higher in most currencies today except for the Aussie and Kiwi dollars; silver
has risen by some 1% in US dollars and is higher against all currencies.
Asian equities were mixed with the Nikkei higher (+0.41%) and the Hang Seng
lower (-0.29%). European equities are mixed with tentative gains being seen
in the BE 500 and the Stoxx 50.
Silver U.S. Dollars – 40 Year (Weekly)
European sovereign debt yields are flat but Greek 10 year debt has risen 8
basis points to 10.88%. The Japanese 10 year rose 3 basis points overnight
but remains near historic lows at 1.32%.
Commodities
are also mixed with NYMEX crude oil down 0.25% to $87.27 and Brent up 0.28%
to $99.47 a barrel.
Silver Spot (USD) and CFTC CEI Silver Total Open Interest/ Futures Only
– 5 Years (Daily)
Gold
Bullion Considered as Collateral by International Clearing House –
LCH.Clearnet
A
further sign of how gold bullion is increasingly seen as not only a safe
haven asset and a currency but also a financial asset, is news that the
LCH.Clearnet is giving further consideration to a plan to accept gold bullion
as collateral. They may accept gold bullion as collateral against margin
positions on a range of asset classes and derivatives in the international
financial markets.
LCH.Clearnet
have been considering allowing gold as collateral since October 2009 and the
move by the CME and JP Morgan to allow physical gold as collateral may have
made their plans in this regard more concrete. "We’re looking at
it closely,” David Farrar, LCH.Clearnet Director of Commodities told
CNBC (see News). “It’s something that, subject to regulatory
approval, we’d look to introduce later this year."
LCH.Clearnet
(previously known as the London Clearing House and the Paris based Clearnet)
is an independent financial clearing house, serving major international
exchanges and trading platforms, as well as a range of OTC markets. Its main
business is in Europe and it is the largest over-the-counter interest rate
swap clearer. In December 2009, LCH.Clearnet began guaranteeing trades
between banks and their buy side clients in the $342 trillion interest-rate
swaps market.
LCH.Clearnet
clears for a large number of commodity, derivative and equity exchanges. It
clears a broad range of asset classes including securities, exchange traded
derivatives, energy, freight, interbank interest rate swaps, and euro and
sterling denominated bonds and repos.
The
nominal value of European government bond and repo trades cleared by the
LCH.Clearnet group in 2010 increased by 28% year on year, a record fuelled by
increased demand as banks seek to manage their counterparty risk exposures.
The total nominal value of fixed income trades alone cleared by LCH.Clearnet
during 2010 reached EUR137 trillion, equating to over EUR500 billion in
nominal value cleared daily.
Also
in 2010, LCH.Clearnet launched the first clearing service for under pressure
Spanish government bonds and repos. A notional value close to EUR700 billion
was cleared during the year.
John
Burke, director and head of fixed income at LCH.Clearnet said recently that
“at times of market stress, clearing becomes increasingly
important" and that “maintaining liquidity and managing collateral
are top of the list of priorities for banks.”
With
counterparty and sovereign risk remaining elevated, gold is no longer being
seen simply as a commodity. Rather, it is increasingly viewed by market
participants as an important asset and a currency with no counterparty risk.
We are gradually seeing the monetisation and indeed the
’financialisation’ of gold, as gold is gradually being reincorporated
into the modern financial and monetary system.
Keynes’s
‘barbaric relic’ is becoming less barbaric by the day. However,
the man in the street remains completely unaware of this trend as it
continues to be ignored by mainstream media and its implications not
realised.
Gold
Gold
is trading at $1,352.64/oz, €990.15/oz and £839.11/oz.
Silver
Silver
is trading at $29.39/oz, €21.51/oz and £18.24/oz.
Platinum
Group Metals
Platinum
is trading at $1,840.00/oz, palladium at $819/oz and rhodium at $2,450/oz.
News
(South
China Morning Post) --
The Chinese Gold & Silver Exchange Society may trade Hong Kong's
first-ever yuan denominated gold contracts next month, said its president
Haywood Cheung.
(Xinhua
via COMTEX) -- Gold price closes higher in Hong Kong
The gold price
in Hong Kong closed up 48 HK dollars at 12,563 HK dollars per tael on
Tuesday, according to the Chinese Gold and Silver Exchange Society.
The price is equivalent to 1,355.30 U.S. dollars, up 5.17 U.S. dollars a troy
ounce at latest exchange rate of one U.S. dollar against 7.781 HK
dollars.
(Bloomberg) -- China could be the
“next big buyer” of gold driven by both institutional and retail
investors, Credit Suisse Group AG analyst Tom Kendall said in a speech in
Cape Town today.
“If
you’re sitting there in China with money in a deposit account,
you’re losing between 1-2 percent a year through inflation,” he
said. “But if you look at the growth of gold in renminbi terms, there
are clearly some strong reasons for Chinese to be buyers of
gold.”
(Bloomberg)
-- Gold-Silver Ratio Drops to Lowest Since December 2006
The ratio of
gold to silver dropped to the lowest level since December 2006 as speculation
the global economic recovery is strengthening eroded demand for the yellow
metal as a protector of wealth.
One
ounce of gold bought as little as 45.88 ounces of silver today, according to
Bloomberg News calculations. Bullion for immediate delivery was little
changed at $1,350.97 an ounce at 12:34 p.m. in Singapore after fluctuating
between a gain of 0.2 percent and a loss of 0.2 percent. Silver traded at
$29.405.
“With
the recent bout of economic optimism in the markets, demand for gold as a
hedge against uncertainty is reduced,” said Ong Yi Ling,
Singapore-based investment analyst with Phillip Futures Pte. “Hence,
gains in gold could be capped. On the other hand, silver may benefit more
from the economic recovery” as industrial use increases.
Hedge-fund
managers and other large speculators decreased net-long positions in New York
gold futures in the week ended Feb. 1, U.S. Commodity Futures Trading
Commission data showed.
Speculative
long positions, or bets prices will rise, outnumbered short positions by
151,194 contracts on the Comex division of the New York Mercantile Exchange,
the commission said in its Commitments of Traders report. Net-long positions
fell by 9,395 contracts, or 6 percent, from a week earlier.
Asian
stocks gained after U.S. consumer borrowing rose in December for a third
consecutive month. Adding to further evidence of economic recovery,
Japan’s current account surplus widened in December, the Finance
Ministry said in Tokyo today.
(Reuters)
- Anglogold says $1,500 gold possible in 2011
Top African
gold producer Anglogold Ashanti expects record gold prices to be sustained in
2011, with the precious metal between $1,300 and $1,500 an ounce, its chief
executive said on Monday. "I certainly believe they are sustainable. The
fundamentals are very strong," Mark Cutifani told Reuters on the
sidelines of an African mining conference in Cape Town. "I believe it
will trade north of $1,300 and there is a good chance it will go through
$1,400 and even possibly $1,500. The $1,300-$1,500 an ounce range would be
the most likely outcome this year," he said.
(Bloomberg)
-- Austrian Mint Stops Selling 5 Euro Coin On High Silver Price
The Austrian
Mint has stopped selling its 5-euro silver coin because of the high price for
the metal, it said on its website.
The
mint’s 5-euro circulation coin, whose December issuance shows the
“Pummerin” bell of Vienna’s St. Stephen’s Cathedral,
contains 8 grams of silver.
Based
on the spot price of $29.47 per troy ounce, the market value of the metal
used for the coin is $7.58, or 5.56 euros, exceeding the coin’s face
value, according to Bloomberg calculations.
(Bloomberg)
-- S. Africa May Consider ‘Use It Or Lose It’ Mine Rights
Approach
South
Africa’s Mines Minister Susan Shabangu said she may consider “a
use it or lose it” approach to mine exploration rights because of
inadequate exploration despite the issue of a large number of rights.
Shabangu
spoke at the Mining Indaba conference in Cape Town today.
(CNBC)
-- London Clearing House Considers Gold as Collateral
LCH.Clearnet,
a leading independent clearing house, is considering a plan to accept gold
bullion as collateral against margined positions. London is the world’s
largest market for over-the-counter gold trading.
"We’re
looking at it closely,” confirms David Farrar, LCH.Clearnet Director of
Commodities. “It’s something that, subject to regulatory
approval, we’d look to introduce later this year." The Financial
Services Authority (FSA) is the regulator of the financial services industry
in the UK. A source, close to the situation, tells CNBC that nothing is
currently pending before the FSA at this time on this matter.
This
follows an announcement by J.P. Morgan that it will become “ ... the
only tri-party collateral manager to accept physical gold as collateral to
satisfy securities lending and repo obligations with counterparties.”
And according to spokesman Chris Grams, the CME accepts allocated gold at the
JP Morgan vault in London as collateral against any asset class position an
investor might have at the CME.
Why is
this move important? Market watchers say it adds credibility to the argument
that gold is an alternative asset, a type of alternative currency.
Banks
are always looking at their scarce resources including, cash and gold.
Leveraging an increasingly valuable gold inventory would be a natural next
step, and likely welcome extension of that process.
“There
will be a substantive benefit for all firms active with gold bullion and / or
LME registered warrants,” says Mike Frawley, Newedge Group Global Head of
Metals. “It is the direction of the overall market to use warehouse
receipts and / or bullion for margin purposes.”
And,
he says as the London Metals Exchange (LME) gets closer to launching its
over-the counter (OTC) contracts for gold traded in London, it will be
important for the gold community to lever its existing stores for margin
purposes. And perhaps in the process, ease the transition to a more
transparent, over-the-counter gold market
Mark O’Byrne
Goldcore
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