Looks like something big is about to take place on the Comex as Registered Gold inventories declined a whopping 73% in one day. This is a very suprising update as Comex Gold inventories haven’t experienced much movement over the past few months.
Well, this all changed today as a stunning 201,345 oz (73%) of the total 275,325 oz of Registered Gold was transferred to the Eligible Category today:
Gold output has peaked in this commodities cycle, according to mining industry leaders and analysts who say few big projects will reach the point of production amid falling prices.
The lack of new assets and declining output at existing mines is expected to curb gold supply, a glimmer of hope for surviving producers of the precious metal in an industry coming to terms with a rush of investment when prices were far higher.
Kelvin Dushnisky, president of Barrick Gold, the world’s largest gold miner by annual output, said: “Falling grades and production levels, a lack of new discoveries, and extended project development timelines are bullish for the medium and long-term gold price outlook.”
Gold has been one of the commodities hit by the worst environment for mining in more than a decade. The price has declined more than 40 per cent from its 2011 peak, to a level where many gold miners struggle to recoup the costs of extraction.
This year some had expected gold to be under pressure from higher interest rates in the US, after the Federal Reserve began to tighten monetary policy last month.
However the gold price has risen 2.7 per cent so far in 2016, while stock markets around the world have tumbled. A controversial investment with a variety of competing theories for what determines the price, gold has provided comfort for investors who see the inert metal as a haven amid economic and political turmoil.
Miners hope limits to fresh gold supply will increase the chances of longer-term recovery.
India’s gold import in December 2015 is estimated to have crossed 100 tonnes following sharp increase in demand for the precious metal during the first and the last week of the month when prices fell sharply world over.
With 105 tonnes of estimated imports in December, total gross import in 2015 crossed 900 tonnes which was 25 per cent more than 2014. In terms of value, it was up about 12 per cent at around $35 billion, as December import bill was around $3.7 billion. India imported $31.17 billion worth gold in 2014.
Sudheesh Nambiath, lead analyst, GFMS Thomson Reuters said, “Gold demand increased in December when prices were at the lowest level in 2015, and as retailers increased their inventory to optimum levels. Our estimate for December import is 107 tonnes.” In 2015, just over 700 tonnes gold was net import as rest was duty-free imports for re-export after value addition.
Despite sharp spurt in quantity imported, import bill went up by only 12 per cent because of low prices ininternational market. Average international gold price fell by 8 per cent in 2015 while the price oscillated in a $246 range. In other words, gold prices in international market fell by nearly 20% from the annual high. The import bill low also because more imports took place when prices fell below $1,100 per ounce.
On the other hand, significant increase in import of unrefined or dore gold happened at a premium pricing, which at times was a percentage over the LBMA price. Its share in total supply increased from some 15% to 30% in 2015. Mostly dore is imported at a premium over the LBMA gold PM price because of heavy competition at sourcing, given the 2 per cent differential that refiners in excise-free zone enjoy. Dore gold import in net gold purity terms was more than 200 tonnes as per estimates of GFMS Thomson Reuters.
Gold import in November was 98 tonnes. In March and August 2015, gold import had crossed 100 tonnes mark as prices were lower, according to GFMS.
China’s largest bank is buying the lease on Deutsche Bank’s huge London gold and silver vault, enlarging its footprint in the city’s bullion market, according to reports.
ICBC Standard Bank, which took a controlling stake in London-based Global Markets business last year, has also applied to become a clearing member of the London gold and silver over-the-counter business.
The Chinese and South African lender is aiming to fill the gap left by Western banks, which are retreating from commodities to cut costs and reduce regulatory burden.
“They [ICBC Standard Bank] have taken on the lease for the vault,” Reuters quoted a source as saying.
Currently, five banks – JP Morgan, HSBC, Bank of Nova Scotia, Barclays and UBS – settle daily bullion transactions between dealers, amounting to more than $5 trillion-worth of metal each year in the London over-the-counter market.
These banks are shareholders of the London Precious Metals Clearing company. They will decide whether to accept or reject ICBC Standard Bank’s application within the next few months.
Amid ongoing efforts by Indian authorities to monetize (read confiscate) the citizenry’s precious metals (which we most recently detailed as an utter failure here and here), it appears the current suppressed low prices for gold have reignited demand and thus smuggling. Following the biggest seizure of smuggled gold earlier this year, The Guardian reports a 42-year-old-man, claiming to be a government official, was caught smuggling$15,000 of gold bars (hidden in his rectum) after police noted him “walking suspiciously.”
India is trying to persuade rich temples to deposit some of their gold hoards with banks to revive a plan to recycle tonnes of the precious metal and cut gold imports, sources said.
The scheme has only attracted about one kilogramme in a month, prompting the government to nudge temples through banks to hand over their treasures, the sources said, but at least one temple said it was still unconvinced by the plan.
India is the world’s second-biggest consumer of gold after China and the country’s insatiable appetite meant imports of the precious metal accounted for 28 per cent of India’s trade deficit in the year ending March 2013.
In a bid to reduce the economically crippling imports, Prime Minister Narendra Modi launched the much-publicised scheme to tap a pool of more than 20,000 tonnes of gold lying idle in homes and temples. “Convincing retail consumers is not an easy task, it takes time,” said a senior official with a state bank, who declined to be named. “We;re planning now to focus on institutions like temples.”
But Mumbai’s two-century-old Shree Siddhivinayak temple, which is devoted to the Hindu elephant-headed god Ganesha, said it remained unconvinced about the benefits. India’s temples have collected billions of dollars in jewellery, bars and coins over the centuries, hidden securely in vaults, some ancient and some modern.
Mr Modi wants temples to deposit some of this with banks, in return for interest and cash at redemption. The government would melt the gold and loan it to jewellers.
India’s economic affairs secretary Shaktikanta Das said in a Twitter post on Friday that: “No one will be coerced to monetise their gold,” adding that the scheme was entirely voluntary and certain media reports to the contrary were false.
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.
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 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.