Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Commodity Markets Analysis - Central Banks to Curtail Plans to Sell Gold

Commodities / Gold & Silver Sep 06, 2007 - 09:31 AM GMT

By: Gold_Investments

Commodities Gold
Spot gold was trading at $683.50/684.00 an ounce as of 1215 GMT.

Gold has continued to show strength in Asian and European trading. Gold is being supported by a weaker dollar and near record oil prices again. The continuing uncertainty in the financial markets is likely to be leading to an increase in safe haven buying as well.


China and US Treasuries
Ambrose Evans-Pritchard, the International Business Editor of The Telegraph (UK) reports that "a sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable.

Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of U.S. Treasuries by $48 billion since late July, with falls of $32 billion in the last two weeks alone.
"This comes as a big surprise and it is definitely worrying," said Hans Redeker, currency chief at BNP Paribas.

"We won't know if China is behind this until the Treasury releases its TIC data in November, but what it does show is that world central banks are in a hurry to get out of the US. They don't seem to be switching into other currencies, so it is possible they are moving into gold instead. Gold is now gaining momentum across all currencies and has broken through resistance at 500 euros," he said.

While there is no clear evidence that China is diversifying into gold, it seems likely that this is the case as they have clearly stated their intentions in this regard.

China and Gold
Much commented was the recent Chinese government investment of $3 billion in New York-based buyout firm Blackstone Group LP through the soon-to-be-formed State Investment Co.. But as important, if not more so, is the People's Bank of China statements that they will diversify into what they have termed 'strategic' resources and metals including gold. In April, The Wall Street Journal reported that People's Bank of China Vice Governor Xiang Junbo reiterated this intention. Some Chinese economists are urging Beijing to quadruple its gold reserves to 2,500 tonnes from the current 600 tonnes. Tan Yaling, an economist at the Bank of China, backed the call for higher gold reserves to "help the government prevent risks and handle emergencies in case of future possible turbulence in the international political and economic situation".

Interestingly, a mere 5% Chinese allocation to gold would be very small in the light of the fact that Greece has 80% of its reserves by value in gold, Portugal 79%, Italy 66%, Germany 63%, Netherlands 56% and France 56%. Some of this gold may have already been leased onto the market. Thirty years ago China held 95% of its foreign reserves in gold. Today, China's gold reserve only accounts for 1.3% of total reserves. A figure well below the average minimum 3%-5% adopted in many other countries. China with an estimated gold reserve of 600 tonnes has a fraction of that believed held in the U.S. with some 8,500 tonnes, the world's largest holder.

This Chinese demand is not solely governmental and there is a significant increase in private demand for jewellery and investment. It is often forgotten that the Chinese gold market was only opened in 2002 and that was the first time in over 50 years (since 1949) that Chinese individuals could buy gold in jewellery or bullion format. With the huge increase in volatility in the Chinese stock market and fears of a crash, many of their huge and growing middle classes and nearly some 500,000 plus millionaires (in 2004 Merrill Lynch & Co estimated that there were more than 300,000 mainland Chinese with a net worth over $1 million, excluding property) will diversify partly into gold.

Conclusion
Bloomberg reported overnight that the German Bundesbank does not have any plans to sell any gold. German Finance Minister Peer Steinbrueck said his discussions with members of the Bundesbank's board show that Germany's central bank has no intention to sell some of its gold reserves. Steinbrueck spoke on German ARD television, answering questions sent in from viewers via podcast.

The global credit crisis will likely lead to many western central banks curtailing gold sales. Meanwhile there is increasing demand from the Chinese central bank and also what are termed "tier 2" central banks: Russia, Argentina, South Africa.

Gold Lease Rates
Gold lease rates has increased significantly in recent months. Bullion banks are thus seeking higher rates of return on the bullion they lease out and this is a further sign of robust physical demand.
This is important to keep an eye on.
http://www.lbma.org.uk/2007gofo.htm

Silver
Spot silver is trading at $12.22/12.24 an ounce (1215 GMT).

PGMs
Platinum was trading at $1274/1280 (1215 GMT).
Spot palladium was trading at $330/3346 an ounce (1215 GMT).

Forex and Gold
The USD remained under pressure overnight, following yesterday's fall against major currencies and gold after the ADP employment report for August came in much weaker than expected, leaving markets nervous about Friday's non-farm payrolls report. Dollar selling intensified after pending home sales also disappointed with sales falling by a dramatic 12.2% over the month of July, painting an even bleaker picture of the outlook for the U.S. housing sector and economy in general. Markets had expected a fall of 2.2%. This further convinced markets that the Fed will cut interest rates at its meeting on 18 September.

The euro climbed almost a cent on the back of the data, holding its gains overnight with the poor housing data contributing to a sharp fall in equity markets. The mood on Wall Street was not helped by a relatively upbeat Beige Book, which stated that there was little evidence so far in the real economy (ex housing) of the recent distress in financial markets. With risk aversion picking up again the yen also benefited as carry traders were exited yet again. This risk aversion will ultimately benefit the Chinese yuan, the Norwegian krone, the Singapore dollar, the Japanese yen, the Swiss franc and gold.

Oil
Oil prices continue their quite and steady rise towards the all time record high of 78.77 USD reached on Aug 1. U.S. crude climbed to $76.29 a barrel by 1000 GMT. London Brent crude was up 51 cents at $74.85 a barrel. While U.S. supply worries and hurricane threats were cite, high oil prices continue to be fundamentally a result of a very tight global supply/demand equation in oil. Many analysts have ignored oil's recent and continuing strength and this is another important and fundamental factor supporting gold.

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold Investments
Tower 42, Level 7
25 Old Broad Street
London
EC2N 1HN
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@goldinvestments.org
Web www.goldinvestments.org

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Fair Use Notice: This newsletter contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of financial and economic significance. At all times we credit and attribute the copywrite owner and publication.
We believe this constitutes a 'fair use' of any such copyrighted material as provided for in Copyright Law. The material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for economic research purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

Gold Investments Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules