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Sat, 30th July 2016

Anirudh Sethi Report

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Archives of “GOLD” Tag

Emerging Markets:An Update

EM ended last week on a soft note, due in large part to the attempted coup in Turkey.  Weakness in the lira spilled over into wider EM weakness in thin Friday afternoon market conditions.  The situation in Turkey has calmed, and so EM may gain some limited traction this week.  However, that calm will likely be very fragile and so we retain a defensive posture with regards to EM.
Central Bank of Turkey meets Tuesday and is expected to keep the benchmark rate steady at 7.5%.  However, it is expected to deliver another 50 bp cut to the overnight lending rate from 9% currently.  Inflation moved back above the 3-7% target range in June, and so the bank will have to play it cautiously, especially in light of the current political uncertainty. 
Poland reports June industrial and construction output, retail sales, and PPI Tuesday.  Central bankers appear mixed on the policy outlook right now.  If the economy continues to soften, we expect the MPC to tilt more dovish in H2.  Next policy meeting is September 7, and the decision will depend on how the economy looks over the next couple of months.
Malaysia reports June CPI Wednesday, which is expected to rise 1.8% y/y vs. 2.0% in May.  After last week’s surprise 25 bp cut, this data point doesn’t have much relevance.  However, if the inflation trajectory remains benign, further rate cuts are likely in H2.  The next policy meeting is September 7, and another cut then is possible.

Saxo Bank Says : Chinese retail investors have ‘taken over silver’

Is China’s army of retail investors behind some of the recent surge in silver?

That’s the view of Saxo Bank, which reckons the recent advance of the Devil’s metal mirrors that seen in steel rebar and iron ore earlier this year

Silver has advanced more than 10 per cent over the past week and hit $21 an ounce for the first time since 2014 on Monday. In the year to date it is up more than 40 per cent, outpacing gold, another safe haven asset.

Saxo says the pick up in trading volumes on the Shanghai Futures Exchange over the past week and the decline in open interest suggest Chinese retail investors have “taken over silver for now”.

“As long this continues, we are likely to see bigger daily price swings with the Asian session seeing most of this,” Saxo said in a note to clients.

Commodity trading in China surged earlier this year as retail investors, high net worth individuals and yield hungry wealth mangers piled into the sector, using it as a quick and easy way to place leveraged bets on the outlook for the domestic economy.

$20 Silver? James Turk Says Real Bull Market Doesn’t Even Begin Until Silver Takes Out $50 High!

With Gold and Silver Prices Breaking Out In a HUGE Upside Move, London Analyst James Turk Joins A Crucial Metals & Markets to Break It Down:
You Haven’t Seen Anything Yet – Real Move Begins After Silver Takes Out the $50 High…

In the Final Blow-Off Top, You Won’t Sell Your Gold and Silver For Dollars…

  • $20: We’re Very Close to Breaking Out Here in Silver.  Is it Time to Pile In?
  • Deutsche Bank Trading at 25% of Book Value- What is the Market Pricing In?
  • THIS is Why You Want to Maximize Your Exposure to Gold and Silver
  • James Turk Explains Why He Is “So Bullish On Gold and Silver Here, Particularly Silver Bullion” 
  • Silver Will Ultimately Take Out $50 High, That’s When the REAL Silver Bull Market Begins!  

“Atomic Bomb In the Works for July”: Someone VERY BIG Is Standing For Gold & Silver!

Someone very real and VERY BIG is standing for gold.  This “someone” would not be bribed to go away last month and does not look like they will go way this month!
Who is this long who all of a sudden cannot be bribed to stand down?
Looking specifically at silver, we have a true potential atomic bomb in the works for July…

For more than three years we have watched the COMEX very closely. The initial clue to begin watching were the waterfall events where the amounts of paper gold and silver sold simply dwarfed what was being mined. I have said many times after the smackdowns, “first, no one has this much (gold or silver), second, no trader would ever sell in this fashion and destroy the price he will receive for the sale. Clearly the sales were done to affect price downward”. Each time I have written on this topic and suggested it would ultimately end with a delivery default I have been trolled. It looks very much like we will soon find out a default of delivery is not only possible but highly probable.

Starting with gold, last month (May) saw 221,000 ounces stand for delivery. This amount actually grew during the month which is highly unusual as the amount standing has ALWAYS dropped during delivery periods, this is the first time to my knowledge that the amount standing actually increased.

 For comparison, May 2015 delivered only 2,500 ounces. Looking back at June of 2015, the amount standing on first notice day was 509,000 ounces. The final amount delivered was 295,000. As I have written and questioned before, who would fully fund their account 100% to take delivery …and then “go away”? The answer of course is someone willing to accept a “premium” as a bribe to not take delivery.

This June as you know does look to be quite interesting. The initial amount standing was 49.119 tons or over 1.5 million ounces. The amount dropped on day two by about 4 tons but has since gained back nearly all of it to stand at 49.11 tons. (If I am not mistaken, this month is the largest month of gold contracts ever standing for delivery.) Over 40 tons have already been served so we know these longs could not be persuaded to “go away”. We have seen no evidence of delivery for March, April or May. If we add these together with June, we have 65.813 tons standing with only 51.12 tons of registered gold.

COMEX Registered Silver Owners Per Ounce Jump To Record Leverage

Something very interesting took place in the COMEX Registered silver inventories last week.  There were two very large transfers of silver from the Registered to the Eligible category.  What makes these two large withdrawals so interesting is that the Registered silver inventories are now at a record low.

The first large transfer of silver was reported on June 1st, in which 2.5 million oz (Moz) were taken out of the CNT Depository and another 410,000 oz from HSBC.  Nearly 3 Moz of silver were transferred out of the Registered inventories in one day:

COMEX Silver 060116

Mervyn King’s Alarmist Warning: “All China’s Assets In The US Might Be Annulled”

What is it about former central bankers who first destroy the fiat system with their monetarist policies, only to go into retirement, and preach the virtues of the one compound they spend their entire professional careers trying to destroy: gold. To be sure, when it comes to polar reversals of opinion, nobody comes even remotely close to Alan Greenspan: the former Fed chairman who is not only instrumental in launching the “Great Moderation”, which unleashed the current unprecedented global debt wave which will lead to unprecedented disaster sooner or later, has in recent years become one of gold’s biggest advocates as demonstrated most recently in “Greenspan’s Stunning Admission: “Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It.”

Now it’s the turn of his former colleague at the Bank of England, Mervyn King, who in an interview with the WGC’s Gold Investor monthly, pours cold water over Bernanke’s “explanation” that gold is merely a tradition, and says the following: 

“I am very struck by the fact that over many many years, central banks, governments and individuals have always, despite the protestations of economists, held some gold in their portfolio. Obviously, there is no high running return, but when unexpected things happen, particularly when governments rise and fall, then gold is a means of payment that everyone is always prepared to accept. And I think that’s why even central banks have always had a role in their portfolios for gold,” he adds.”

Read More 

A Few Questions To Those Who Slam Gold

Gold is perhaps the most maligned asset class in the world.

On an almost weekly basis the financial media mocks Gold and publishes articles claiming it is a terrible investment.

It’s rather odd, as less than 1% of investors actually owns Gold. Why is it so important to trash an asset class that almost no one actually owns?

Actually, forget that question, I’d like to see answers to these questions instead…

If owning Gold is such a bad idea…

·      Why are Central Banks buying it?

·      Why do we rank countries based on the Gold reserves they own?

And finally…

If the goal for Central Banks is to generate inflation… why is owning Gold stupid?

George Soros jumps on gold miners’ rally

Shares of gold miners have more than doubled this year, crushing the 20 per cent gain in the precious metal and prompting investors such as billionaire George Soros to increase their bets on the sector.

Soros Fund Management bought a 1.7 per cent stake in miner Barrick Gold in the first quarter, worth $263.7m, according to a filing on Monday. Shares in the Canadian-listed company have surged 139 per cent so far in 2016.

As gold does not pay a yield like bonds or offer a divided like some equities, the precious metal has benefited from the current low and negative interest rate environment. A weaker tone for the US dollar after peaking in late January has also spurred a solid rebound in commodity prices.

Gold miners have also spent the last four years writing down billions of dollars in assets and cutting costs to reduce their debts after gold prices tumbled from their 2011 peak. Barrick Gold has cut its debt by nearly a third over the past 15 months.

“They’ve gone through a bad few years (the gold mining companies) but they seem to come out the other side,” said David Govett, head of precious metals at broker Marex Spectron. “They’re easier to trade and you don’t get the ridiculous fluctuations we see in the commodity price sometimes.”

World Gold Council : Gold demand at record levels in Q1 2016 – up 21% YOY

The World Gold Council today releases its Gold Demand Trends Q1 2016 report [http://www.gold.org/supply-and-demand/gold-demand-trends], which is the leading industry resource for data and opinion on global gold demand. Our quarterly publication examines demand trends by sector as well as geography and this report focuses on the patterns of demand seen in the first three months of 2016.

 The key findings from Q1 are as follows: 

·         Overall demand for Q1 2016 increased by 21% to 1,290t, up from 1,070t in Q1 2015.

·         Total consumer demand was 736t down 13% compared to 849t in Q1 2015.

·         Global investment demand was 618t, up 122% from 278t in the same period last year.

·         Global jewellery demand fell 19% to 482t versus 597t in the first quarter of 2015.

·         Central bank demand dipped slightly to 109t in Q1 2016, compared to 112t in the same period last year.

·         Demand in the technology sector fell 3% to 81t in Q1 2016.

·         Total supply was up 5% to 1,135t in Q1 2016, from 1,081t in the first quarter of 2015. Mine supply was up 8% to 774t.

15 % of gold in India comes via smuggling

India’s gold imports could hit a record high this year amid widespread smuggling to sidestep government levies on overseas shipments, Australia and New Zealand Bank, Asia’s biggest shipper of physical gold, said on Wednesday.

The forecast by the bank’s head of precious metals, John Levin, runs counter to tallies that show gold imports in decline in the world’s second-biggest gold market after China.

Mr Levin said he expects 15 per cent of India’s gold this year to be “smuggled in” or arrive via “other unofficial channels” to beat a 10 per cent levy imposed by the government.

Mr Levin also said more semi-refined gold, known as gold dore, was being imported from overseas mining companies because of a lower government levy. The import duty on gold dore is 8.5 per cent.

“You could see a record amount of gold going into India this year,” Mr Levin said, “A lot through unofficial channels and a lot of it going in as semi-refined gold.”