Thu, 26th November 2015

Anirudh Sethi Report


Archives of “precious metal” Tag

Forget Pulses !Indian Loves to Eat Gold

Domestic gold demand has increased 13 per cent to 268.1 tonnes for the third quarter ended September from 238.2 tonnes in the year-ago period, aided by the softening of prices.

Demand grew 5.8 per cent in value to Rs 62,939 crore compared with Rs 59,480 crore in the third quarter of 2014, The World Gold Council (WGC) said in a report.

“A softening of prices at the beginning of the quarter led to the consumers buying in advance for the festive and wedding season ahead,” WGC managing director India, Somasundaram PR, said. 

Jewellery demand rose 15 per cent to 211.1 tonnes from 184.2 tonnes a year ago.

“Although, jewellery demand continues to dominate, at 211 tonnes jewellery volume for the quarter almost equalled the previous peak of 213 tonnes in the third quarter of 2008, growth was broad-based with both jewellery and investment demand up 15 per cent and 6 per cent, respectively, signifying the continuing reliance on gold in household portfolios and trust in its long-term prospects,” Somasundaram added.

Total investment demand rose 6 per cent to 57 tonnes from 54 tonnes last year. “The gold schemes recently announced by the Prime Minister have also increased consumer choices on gold and created a more conducive environment where one can hold gold,” he said.

Platinum prices stumble to 7-year low

Precious metal prices are bouncing around like bucking broncos today. Ride them at your own peril.

Platinum prices have fallen to a 7-year low amid a similarly wild, volatile session to that being endured by gold

The shiny silvery metal is down 1.5 per cent today at $872.5 per ounce, a level not seen since December 2008.

But it’s not been a steady march south. The price jumped 1.8 per cent in less than half an hour during afternoon trading in London to $883.5, before quickly giving up almost of all its sudden gains and falling back to $872.5.

The price of platinum is down 6.9 per cent so far this week, putting it on track for its worst week of losses since September 2011.

The volatility comes on a Thursday packed with speeches from five Fed governors. Since the Fed’s surprisingly hawkish October meeting and last Friday’s bumper payrolls report, market expectations of a December rate hike have soared.

This has weighed on precious metal prices, which offer no yield, a shortcoming that is thrown into starker relief when the yields of other assets, such as US government bonds, are rising.

Platinum has suffered the added pain of the Volkswagen emissions fixing scandal, which has the potential to dent the sale of diesel cars and thereby diminish a key source of platinum demand – diesel catalytic convertors.

Russia is on Course to Global Platinum Domination

Platinum bar - finished produce of the Krastsvetmet non-ferrous metal plant, one of the world leaders of precious metal industry, based in Krasnoyarsk, SiberiaRussia could change the balance of power on the global platinum market thanks to its ambitious projects aimed at developing mines and building processing plants in Zimbabwe, the OilPrice news site reported.

Russian companies are currently building a platinum complex estimated to cost $3 billion.

The work is going according to schedule and the project, made public in September 2014, is expected to enter its second phase in the spring of 2016.

The speed and scope of cooperation are said to have major implications for global platinum market.

“Russia domestically controls 30 percent of global platinum and palladium output. And Zimbabwe’s mines represent the world’s fourth-leading source of these metals – meaning that Russian control in the African nation could create a stranglehold on this market,” the media outlet noted.

Russia also reportedly hopes to expand cooperation with Harare to include diamonds, gold and natural gas.

The London Silver Fix Is Officially Dead

The 117-year-old London silver fix, the global benchmark for the price of the precious metal, will be shut down on August 14 

The move follows increased regulatory scrutiny into bullion market price-setting, which is controlled by a handful of banks.

Deutsche Bank last month resigned its seats on the silver and gold fixes, after failing to find buyers. That left just two banks on the silver fix, HSBC and Bank of Nova Scotia.

In a statement the London Silver Market Fixing Limited said:

The period to 14 August 2014 will provide an opportunity for market-led adjustment with consultation between clients and market participants.

The London Bullion Market Association has expressed its willingness to assist with discussions among market participants with a view to exploring whether the market wishes to develop an alternative to the London Silver Fixing.

Gold rush in Japan as tax rise looms

A landmark increase in Japan’s sales tax has led to a rush for small gold bars as retail investors pile into the precious metal to avoid next week’s rate rise.

Tanaka Kikinzoku Jewelry, a precious metals specialist, reported that sales of gold ingots across seven of its shops are up more than 500 per cent this month, as customers rush to take advantage of the current 5 per cent rate of consumption tax before it rises to 8 per cent on 1 April.

At the company’s flagship store in Ginza on Thursday, people queued for up to three hours to buy 500g bars worth about Y2.3m ($22,500). March has been the busiest month in Tanaka’s 120-year history.

Prime Minister Shinzo Abe has embarked on a series of radical reforms dubbed Abenomics in an attempt to weaken the yen and boost the ailing Japanese economy, prompting investors to buy gold as a hedge against the spectre of higher inflation.

Investors are being drawn to the metal not just because of higher taxes, said Itsuo Toshima, an adviser to pension funds.“Slowly and steadily, people are preparing for the worst, which is the failure of Abenomics.” Read More 

Gold mine measure ‘to reflect true costs’

Gold is being mined by some of the world’s biggest producers at costs that are higher than the price of the precious metal, according to a new measure that may become a benchmark of industry efficiency for companies and investors.

Several miners reporting earnings in recent weeks have revealed “all-in sustaining costs” of production of more than $1,200 per troy ounce, the price to which gold dropped this year. Some have shown an AISC of more than $1,400. Gold ended last week at $1,314 per ounce, having fallen more than 5 per cent during the week.

The AISC measure intends to show more clearly the full costs of getting gold out of the ground. Its adoption comes as this year’s sharp fall in the price of the precious metal has put the industry under more pressure than it has known for almost a decade and heightened investors’ interest in miners’ true profitability. Read More 


Gold jewellery exports nosedived 70 per cent year-on-year to $ 441.41 million in July on account of shortage of precious metal and limited inventory in domestic market.

In July last year, the exports stood at $ 1.5 billion, according to the data provided by the Gems and Jewellery Export Promotion Council (GJEPC). “The drastic fall in exports of gold jewellery is mainly due to shortage of raw-material for jewellery manufacturing. This was because the government had taken steps to curb gold imports,” said GJEPC Chairman Vipul Shah.

Gold medallions and coins exports have also witnessed a sharp decline of 63.3 per cent to $ 112.83 million in July 2013 compared to a year-ago period. However, silver jewellery exports saw a robust jump of 184 per cent to $ 109 million during the period under review. The country’s total gems and jewellery exports fell about 17 per cent to $2.49 billion, the council said.

India is the largest importer of gold, which is mainly utilised to meet demand of the jewellery industry. The major markets for the country’s jewellery exports are the US, Europe, Middle-East, Hong Kong and Japan. During April-July 2013, the gems and jewellery exports declined 14.3 per cent year-on-year to $11 billion. Read More 

Citi: “No Gold Company… Will Generate Free Cash Flow At Current Gold Prices”


Via Citi,


Companies are trying to adjust by cutting capex, exploration and corporate costs. But we also notice that most of the global gold cost curve is burning cash at spot levels. Further cuts are needed in the coming 12 months to make ends meet.


We view this as a return to normal for global gold equities. Given the ‘price taker’ nature of the industry, the next decade will see high-cost asset disposals, reduced capital budgets, lower exploration expenditure and balance sheet recapitalisation as companies try to survive in a lower gold price environment…


…as China seems to be showing the world, we will see supply reductions occurring at the same time as the rolling over of ‘peak suppression’ of the gold price and the precious metal will realize its real fiat-numeraire-based value.

Rupee seen rising 4 percent in 12 months: Reuters poll

The battered rupee will remain under pressure against the U.S. dollar over the next year as a wide current account deficit and policy inaction dissuades foreign investment into the country, a Reuters poll showed.

The rupee is expected to trade at 59.0 in a month and 58.0 in six months, before reaching 57.5 in a year from now. That would be just over 4 percent stronger than the 60.0 it was trading at earlier on Thursday.

Still, that would mark only a modest rebound for emerging Asia’s worst performing currency so far in 2013.

The rupee has lost over 8 percent so far this year and has practically been on a one-way street since mid-2011. It hit an all-time low of 60.76 last week.

The U.S. Federal Reserve’s signal that it plans to cut back on its latest stimulus spending has hurt risky assets widely across Asia but has hammered the rupee the most due to India’s fiscal imbalances.

“We’ve been pretty cautious on the Indian rupee for a while now,” said Dominic Bunning, foreign exchange strategist at HSBC.

“It is going to be difficult for Asian countries to attract foreign flows and especially for India where the current account deficit is wide which creates dollar demand.”

The rupee has mostly tracked the country’s current account deficit, which has ballooned to a record high of 4.8 percent of gross domestic product in the fiscal year ended in March, driving overseas investors out of the country.

In what could be a vicious cycle, a weaker rupee will only add to concerns over funding that current account deficit, as India is one of the largest importers of crude oil and the biggest consumer of gold from abroad.

Policymakers have introduced curbs on the precious metal such as raising taxes on imports and ruling out credit, in the hopes that it will help reduce India’s import bill.

The Reserve Bank of India, handicapped by meagre reserves of $290 billion, which is enough to cover only seven months of imports, has been reluctant to sell too many U.S. dollars. Read More