The global attack on cash and gold continues, according to Reuters: Axis Bank Ltd, India's top importer of gold, has suspended the bank accounts of some bullion dealers and jewelers after two of its executives at a branch were arrested over alleged money laundering. The move is likely to curtail imports by the world's second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.
Mid-Week Trivia: How many of the Caribbean islands are inhabited?
Jim Sinclair: Modi in all probability has killed himself due to what he has already done to the currency in India. I have a home in India. Having lived there on and off for quite a few years, I can assure you gold is as much a spiritual factor as an economic item to Indians. Modi will not confiscate gold outside of some proven limited tax situations. I see this as misinformation.
The People’s Bank of China’s gold holdings are not a proxy for Chinese gold demand, according to BGASC: The People’s Bank of China reported that it added no gold in to its reserves in November. It was the second month in 2016 that the PBOC did not add any gold to reserves. Chinese foreign reserves fell $69 billion in November after falling $48 billion in October.
The PBOC has been reporting its gold reserves monthly since July 2015 after not updating its gold holdings since 2009. China has added about 185 tons of gold to its reserves, bringing its total to 1,843 tons, the fifth most of any nation. China’s pace of gold acquisition, however, has slowed in 2016 as Chinese foreign reserves, including her holding of U.S. Treasuries have fallen.
Spencer Campbell/General Manager at Kaloti Precious Metals: The precious metal is ending 2016 on the ropes as investors price in the Fed’s probable move next week, pushing bond yields higher amid the likelihood of further hikes in 2017. A gauge of the dollar has climbed since the U.S. election, while the S&P 500 and the Dow Jones Industrial Average are at all-time highs amid speculation President-elect Donald Trump’s policies will spur growth. Investors are also assessing the European Central Bank’s decision on Thursday to tweak its bond buying.
Paul Garvey/Perth: A campaign by the West Australian government-owned Perth Mint to pressure rival refiners not to process Australian gold in India was based on “wildly hypothetical and misleading figures” and risked “damaging reputational consequences” for the federal and state governments, according to heated correspondence sent to senior figures by a major international gold refiner.
The series of letters to WA governor and Perth Mint chair Kerry Sanderson, Australia’s then-High Commissioner to India Patrick Suckling and Perth Mint chief executive Richard Hayes also criticize the Mint for lobbying against the Indian refining plans of rivals at the same time the Mint itself was profiting from the export of unrefined Australian gold worth hundreds of millions of dollars to India for refining.
The Australian revealed in October that the Mint had sent at least 17 tonnes of unrefined Australian gold to India to take advantage of import rebates offered by the Indian government. It was also revealed that the Mint had been dragged into Indian court hearings examining the alleged routing of the rebate scheme by other parties.
The Dubai Gold and Commodities Exchange (DGCX) today signed a Memorandum of Understanding (MoU) with the Chinese Gold and Silver Exchange Society (CGSE) in Hong Kong. As leading markets for precious metals trading, this collaboration will enable both DGCX and CGSE to deepen their penetration into emerging markets and further develop the precious metals markets in Asia and the MENA region.
Sibanye Gold to Acquire Stillwater Mining for US$2.2 billion/The Northern Miner: Sibanye Gold (JSX: SGL), the largest producer of gold from mines in South Africa and among the top ten gold producers globally, will pay US$2.2 billion to acquire Stillwater Mining (NYSE: SWC), the only U.S. miner of platinum group metals
Biman Mukherji: Gold investors have rushed to the exits since Donald Trump’s surprise victory in the U.S. presidential election, dragging prices to a nine-month low. Now Chinese retail buyers are stepping in to take advantage of the low prices.
Gold sellers in Hong Kong, where mainland Chinese often buy gold, report an increase in purchases, some of it for weddings around this month. Some of the buying is also because of the Lunar New Year period next month, a time when buying normally picks up. Changes in buying patterns in China are felt in the world-wide because it is the world’s top gold consumer, accounting for about 30% of global demand.
The surge in buying in China is providing a layer of support to gold prices, which are under pressure from expectations that the U.S. Federal Reserve will raise interest rates next week, a move that would likely boost the dollar. A stronger dollar tends to weigh on gold as it is priced internationally in dollars and becomes more expensive for foreign buyers when the currency appreciates.
Our sales are up by around 20%-25% in the past one month,” said Alex Cheung, manager at Hong Kong’s Wo Shing Goldsmith, a large retailer, adding that sales had largely been disappointing in previous months this year. “People are now more willing to buy because of the low prices.”
It isn't only jewelry buyers flocking to shops, but also Chinese grandparents who want to buy gold bars as gifts for their grandchildren, said Mr. Cheung. Gold is trading at around $1,167 an ounce, a level last seen in early February this year. Gold reached its peak this year in early July at $1,375 a troy ounce. The slide in prices of the precious metal surprised analysts, most of whom had predicted gold to skyrocket if Mr. Trump won because of uncertainty about his policies. But investors pulled out of the haven asset on hopes that Mr. Trump’s policies would benefit the economy.
Increased Chinese demand for the precious metal has prompted banks to charge a premium of $30 a troy ounce for customers who want to secure deliveries quickly. Such premiums haven’ hit that level in three years.
“Most of the demand is coming from investors, motivated either out of fear of the uncertain times ahead and increased [U.S. dollar] strength or seizing what they perceive to be an opportune moment to buy,” said Padraig Seif, chief executive of Finemetal Asia Ltd., a large Hong Kong-based bullion dealer.
Guyana Reports Record Gold Production of 700,000 Troy Ounces/AP: Georgetown, Guyana — Officials in Guyana say the South American nation will post record gold production this year. Natural Resources Minister Raphael Trotman says production has surged 22 percent over last year to nearly 700,000 troy ounces. About 270,000 troy ounces are produced by Canadian miner Guyana Goldfields and Australia's Troy Resources. The rest comes from a group of smaller mines.
Big Drop in South Africa Platinum Output, according to Frik Els: On Friday, palladium and platinum prices continued to drift lower with Nymex contracts for March delivery down slightly to exchange hands for $736 and $934 an ounce respectively. While gold is down nearly $180 an ounce since Donald Trump's victory in the U.S. presidential elections and silver and platinum have, both dropped, palladium has gained more than 10% over the same period. Measured from its January low palladium is up more than 56%.
Platinum has underperformed the precious metals complex and now trades only 7.7% for the better in 2016 following a 28% slide over the course of last year. Together Russia and South Africa control between 70% and 80% of the world’s supply of PGMs, with the latter dominating platinum and rhodium output. Statistics released on Thursday show South African PGM production fell by 5.7% year on year and 4.5% month on month in October, but a new note from Capital Economics sees the fall in output doing little to support prices.
Copper Price Jump: China Concentrate Imports Hit Record: In overnight trade on Friday copper for delivery in March, the most active contract, was exchanging hands for $2.6575 per pound ($5,858 a tonne), up 1.2% from Thursdays close on the Comex market in New York.
While China's copper imports surged 31% to 380,000 tonnes in November compared to October, shipments were down 18% year on year. Concentrate imports however hit an all-time high last month of 1.76 million tonnes. Year to date shipments are up 31% year on year at 15.4 million tonnes.
Adrian Day, CEO of Adrian Day Asset Management, commented on this by saying, “The correction, based on dollar’s rally following the Trump victory, has run its course, at least temporarily, and gold is due for a bounce. Once the Fed’s rate hike is over with, gold will likely see a relief rally.”
Jeff Berwick: In the wake of the Italian referendum results and Matteo Renzi’s subsequent resignation, the level of uncertainty in Italy continues to grow both inside the country and among foreign investors.
As many expected, Banco Monte dei Paschi’s shares fell sharply on the news of Renzi’s defeat. And markets reacted in risk off fashion much like they did post-Brexit, with European stocks, US futures and the Euro all rising in response to the news. I’s likely to stay that way until some sense of calm returns to the market.
Pete: I will continue to offer on-shore storage in the US of Precious Metals in a certified vault. All Swift wires from Italy will be handle with appropriate speed and diligence We can offer large quantity of bullion bar and I will buy back anything that sell to you.
Rio de Janeiro: Brazil's antitrust body has slapped five banks with fines worth a combined 183.5 million Brazilian Dollars (54 million U.S. dollars) for creating a cartel to manipulate exchange rates, official sources announced Thursday. CADE, an office in charge of preventing economic abuse, announced that it had hit Barclays, Citicorp, Deutsche Bank, HSBC and JPMorgan Chase with the fines for participating in anti-competitive activities. The ruling is linked to an investigation begun in Switzerland, Britain and the United States in which 15 companies have been accused of manipulating exchange rates. The fines so far handed down in this case have reached almost 6 billion U.S. dollars.
ZeroHedge: Having observed the economic chaos to emerge as a result of India’s shocking Nov. 8 demonstration announcement, and perhaps confident it can do better, today president Nicolas Maduro of Venezuela, Latin America’s most distressed economy, mired in an economic crisis and facing hyperinflation, likewise shocked the nation when he announced on state TV that just like India, Venezuela would pull its highest denominated, 100-Bolivar bill (which is worth about two U.S. cents on the black market), from circulation over the next 72 hours, ahead of the introduction of new, higher-value notes, as large as 20,000.
President Nicolas Maduro of Venezuela is rumored to have over 100 armed men around him at any given time. I think on the 16th when the paid bodyguards find out what they’re being paid is worthless El President will cease to exist and Venezuela will again be under Military Rule.
Thieves in France steal dozens of kilos of gold in armored van raid, according to The Guardian: Police are combing fields and towns in south-east France in a search for four thieves who stole dozens of kilograms of gold from an armored van before setting cars on fire near a major motorway. The thieves, in two cars, surrounded the van and forced it off the A6 road between Paris and Lyon on Monday, a spokesman for the national gendarmerie said. They then seized the gold, locked the two security workers in the back of the van and set one of their own cars on fire before fleeing, according to the spokesman.
The spokesman said dozens of kilograms were stolen. With gold selling for more than $37,000 (£30,000) a kg, the value of the haul could be more than £700,000.
Friction and Gravity/Keith Weiner: The big story this week is the silver manipulation lawsuit. We remain flabbergasted that people think the price of a commodity could be suppressed by 75% (or a lot more, by some allegations) for years. We also note that the anger is not on the part of silver buyers. It’s would-be sellers who are upset. They wanted to sell at higher prices, and they allege the banks beat them to it, and the price fell before they could unload.
Mid-Week Trivia Answer: Less than 1% of the Caribbean islands are inhabited. There are thousands of islands but only a scant few have the gift of fresh water.