Bloomberg: China May Become The Third-largest Holder Of Gold GDX, TNR.v, MUX, GDX

  

  Here it comes and a lot of people will be taken totally by surprise. Record buying of Gold by China last year will be translated in the much higher Gold holdings by PBOC. Bloomberg reports that these holdings could surpass now those of Italy and France - Jim Rickards talks about the announcement by Chinese Central Bank of 5,000 t of Gold holdings in the nearest future. It will be the game changer and puts Gold solidly into the investment game as well. Yesterday shock with Jobs numbers can be the sign of the real state of US Economy and it means that FED does not have any real exit strategy from QE permanent state. In another news Royal Mint in UK has run out of gold coins due to the exceptionally high demand.

U.K. Royal Mint Runs Out of Sovereign Gold Coins on Demand

Peter Schiff: Gold & Dollar - An Imaginary Recovery Does Not Create Real Jobs

"Huge miss in Jobs numbers with only 74k created vs estimated well north of 200k can not be just dismissed as a blip in the data. Peter Schiff discusses that FED can not really Taper now, there is no real recovery and FED does not have the exit strategy. Gold is waking up to these developments. What if this data is the real state of the economy? Once people will realise how wrong is the expectation about the recovery Gold will go straight up. COMEX data shows that Gold shorts will be in trouble very soon."

Bloomberg:

China Seen by Bloomberg Industries Boosting Bank Gold Reserves

By Debarati Roy

China may have vaulted ahead of Italy and France last year to become the third-largest holder of gold, according to a Bloomberg Industries report.

Assets were probably about 2,710 metric tons, compared with the last reported holdings of 1,054 tons in April 2009, according to the report. Italy’s holdings are 2,451.8 tons, and France owns 2,435.4 tons, according to the World Gold Council data. The U.S. is the biggest holder with 8,133.5 tons.

China’s central bank probably added 622 tons last year after reserves increased 380 tons in 2012, according to the report by Kenneth W Hoffman, senior metals and mining analyst at Bloomberg Industries.

“Based on conversations with officials in China and Mongolia, it’s evident that China feels they want as much gold as much as the U.S.,” Hoffman said in a telephone interview from Skillman, New Jersey. “The refiners in Switzerland have been talking about melting gold after the selloff in London and shipping them to Hong Kong and then from Hong Kong can be traced to China.”

Assets in exchange traded funds backed by bullion fell by more than 869 tons in 2013, according to Bloomberg data, after prices fell 28 percent, the most since 1981.

“Gold has been moving from the west to the east this year,” Hoffman said

The Asian nation’s consumption of jewelry, bars and coins rose 30 percent to 996.3 metric tons in the 12 months that ended Sept. 30, while usage in India, the second-biggest buyer, gained 24 percent to 977.6 tons, according to the London-based World Gold Council."

Eric Sprott 2014 Sends Gold North of $2,000 and Silver Over $50 GLD, MUX, TNR.v, GDX

 

  Gold has started new year with the bang and is solidly up from the retest of the low in 2013. Bearishness in the sector is another reason for the big turn around and equity markets are taking a breather now as well. Great Rotation from Bubbles into the Real Assets could be just in the beginning. The action next week will be very important for Gold and Silver markets and Gold mining shares.

Albert Cheng: Gold Markets Move East | McAlvany Commentary 

  Albert Cheng the head of World Gold Council in China discusses the Gold market in China and how Gold has became the foundation for wealth preservation and saving.

KWN: “The Most Remarkable News In The Gold & Silver Markets” 

 "King World News has published very interesting long term charts for Gold, Silver and Gold Mining Shares."

Albert Cheng: Gold Markets Move East | McAlvany Commentary GLD, MUX, TNR.v, GDX, SLV

  Albert Cheng the head of World Gold Council in China discusses the Gold market in China and how Gold has became the foundation for wealth preservation and saving.

KWN: “The Most Remarkable News In The Gold & Silver Markets” 

 "King World News has published very interesting long term charts for Gold, Silver and Gold Mining Shares."

Bloomberg: London Gold Vaults Are Virtually Empty

"Bloomberg quite suddenly provides some really interesting information about the state of the gold market and ongoing manipulations around it these days. Could the reports about JPMorgan being Net Long Gold now be correct in the end?"

Chinese Gold Demand And The World Gold Council’s Estimates GLD, MUX, TNR.v, GDX

  Alasdair Macleod provides very good explanation for the difference between Eric Sprott calculations and WGC estimates, which are dramatically underestimating the real demand for Gold from China this year.

Peter Schiff: On Taper, China's Bombshell Announcements For Treasuries, Dollar And Gold GLD, MUX, TNR.v, GDX

 "Peter Schiff talks about the bombshell of the year - China has announced the Mother Of All Tapering -  PBOC Says No Longer in China's Interest to Increase Reserves. China is ready to reduce its balance sheet and they do not have to sell any US Treasuries - during the operation Twist they have used the golden opportunity and rolled over the long term treasuries into the shorter maturities. China can just allow US to repay maturing US Treasuries. We do not think here that they will accept Bitcoin. They have made this announcement after the record buying of Gold and some people are estimating that official Gold reserves are much higher than officially recognised today."

China, India, Turkey and Thailand Buying Record Amount of Gold - What Do They Know The Others Don't? GLD, MUX, TNR.v, GDX

Finance And Economics:

Chinese gold demand and the World Gold Council’s estimates

Alasdair Macleod – 22 November 2013

There is considerable disagreement about Chinese gold demand, with delivery figures on the Shanghai Gold Exchange and import/export figures for Hong Kong suggesting the real totals are far higher than those published by the World Gold Council and Thompson-Reuters GFMS.

Recently Eric Sprott of Sprott Global Resource Investments Limited tackled this issue andwrote an open letter to the WGC pointing out that import/export figures show far higher levels of gold demand than the WGC’s estimates for Asia, particularly China, Hong Kong, Thailand, India and Turkey. The response is not on the WGC website, though it appears to be partially quoted elsewhere.

It seems that Sprott and the WGC are trying to do two different things. Sprott is interested in how much gold is actually taken into a country net of exports, irrespective of its use category, taking the view that there can be no more accurate estimate of overall gold demand, irrespective of how it is used. The WGC is trying to identify how much gold is used for specific purposes, which given the opaqueness of the market means they will never track all of it down. Crudely put it is top-down versus bottom-up.

To see how different the results can be let’s look at the solid figures for China and Hong Kong for the first nine months of 2013 which are set out in the table below, before comparing the result with that of the WGC.

Chinese mainland
Shanghai Gold Exchange delivered		1,671.6
HK exports to China		164.9
Less Chinese exports to HK	264.9	_______
Net imports into China		1,571.7
Hong Kong
Total imports		1,926.2
Less exports to China	164.9
Less re-exports to China	1,077.5
Less exports to rest of the world	46.0
Less re-exports to rest of the world	78.8	_______
Net imports into HK (vault storage)		559.0
Total identified imports for China and Hong Kong		2,130.7

All these are published figures which we can assume to be accurate. Mainland China does not release import/export statistics for gold but we know what has been physically delivered through the Shanghai Gold Exchange, the monopoly physical market, and we know what Hong Kong imports exports and re-exports. We can also be reasonably certain that these figures exclude off-market government transactions, such as direct purchases from the mines of all China’s gold production, given that Chinese-refined bars are never seen in circulation. Exports from Hong Kong refer to gold processed into a materially different form from that imported, typically jewellery; so exported to the Mainland they are additional to SGE deliveries. Re-exports refers to imports re-exported with no material processing, and therefore can be assumed to be bullion trans-shipped and destined for the SGE, ignoring for simplicity’s sake that some may have bypassed the SGE and been sent directly to private buyers. Exports and re-exports to the rest of the world obviously must be deducted.

The conclusion is that between them gold absorbed by private sector purchases in Hong Kong and China amount to at least 2,130.7 tonnes in the first nine months of this year, or 2,841 tonnes annualised. This compares with the WGC’s estimates from their quarterly Gold Demand Trends of only 818.6 tonnes for the same period, or 1,091.5 annualised. Given the hard evidence of Hong Kong and SGE statistics it appears that the WGC’s figures substantially understate the true position. Furthermore, any analysis of gold demand will fail to account for the increase in gold ownership not constrained by national boundaries.

Estimates of China’s demand also exclude government purchases of gold in foreign markets, and gold that may have been acquired and imported by wealthy Chinese from foreign locations without going through Hong Kong or the SGE. So without taking into account these extra factors China and Hong Kong’s combined imports from the rest of the world exceeds all other mine supply by at least 580 tonnes on an annualised basis.

It now becomes clear that without significant leasing by Western central banks total Asian demand could not be satisfied at current prices, because there is no evidence of material selling by existing holders of above-ground stocks, with the exception of ETF liquidation which is minor compared with the amounts involved."

Frank Holmes: Dressed to the Nines with Gold GLD, MUX, TNR.v, GDX

  

  CS. After Janet Yellen's testimony fundamental picture for Gold is very bright, QE is assured "until the economic data will justify the opposite". Even after The Taper, we will have the credit expansion in the monetary base ongoing and, maybe, velocity will increase finally with money flowing through financial system. 

  Question of Taper is still more than open - with Bernanke in office until Jan 31, 2014 we are very doubtful that he will make any decision on part of the FED. With Janet Yellen coming into the picture we can expect even more accommodation until economy will provide the clear signs of improvement in the real economic growth. The main take out for us from Janet Yellen's testimony is that "There Are No Bubbles And More To Be done." 

  In all normal circumstances Gold will be flying over $2000 long time ago, but we do not have the luxury of free markets with "The FED's 100-Year War Against Gold." Market can not be manipulated forever, particularly when underlining Demand is growing with the suppressed Gold price. China and other Asian countries are more than happy to accumulate cheap Gold and it is flowing from The West To The East at the disturbing record rate. COMEX is running on fumes now and LBMA banks are exposed to the Gold Bank Run with all-time-high leverage of 69 owners per ounce of deliverable Gold.

  In all normal market circumstances the Gold chart above will provide a good formation for the higher prices with Bullish free white candles coming out from the very important support - which can confirm the higher low -  and momentum indicators turned to the Upside. The reason for it is the US Dollar chart below with very strong Bearish Reversal candle formed last week. Despite very weak data from Europe US Dollar was not able to overcome the reversal so far and its momentum indicators are turning Down. The follow up next week will be very important.

  There are a lot of calls for Gold to go down to $1000 level and it could be another very good contrarian indicator. Basically all the events are confirming the ongoing US Dollar debasement case: reduced buying by foreigners of US Treasuries, record level of buying US Treasuries by the FED. Taper talk - which means less Bid from FED for USTs, less demand in the market and higher interest rates and Janet Yellen on the mission with More To Be Done. Debt Ceiling debate entertainment is coming back very soon and Raised Debt Ceiling Does Mean More Debt, whatever spin you would like to put on it.

  Frank Holmes provides another insight into the drivers behind the Gold market this days. There is no surprise that China is taking the central stage in this developments.

RJ Wilcox: China’s Central Bank Gold Reserves are Growing Rapidly GLD, MUX, TNR.v, GDX

"We are monitoring the situation with Gold demand from China as it is the main driver for the Gold market now. So far this demand has backed Gold to withstand the numerous attacks in the paper market to allow Janet Yellen to implement even more aggressive easing polices at the FED. 

  Rising Gold price indicates FIAT currency debasement, pushes real interests up, which economy and fiscal budget can not sustain at the moment. These official Gold holdings numbers are already out of date and the question is how much Gold China really already holds now and you can add to it the state level encouragement for citizens to accumulate Gold in China."

Brutal Past 24 Months For Precious Metals Investors, Nearing A Bottom – Rob McEwen MUX, TNR.v, GLD, GDX, SLV, CU

“The past 24 months for precious metals investors has been brutal, but I feel like we’re nearing a bottom,” McEwen said on the call. “We had a brief and explosive rally in August, which I see as a good indication of a potential for large gains going forward.

“And despite a decidedly ugly mood amongst investors, analysts and market commentators, I believe it is an excellent time to be a contrarian,” he added."

U.S. Global Investors:

Dressed to the Nines with Gold

November 15, 2013

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

While paper gold is getting the cold shoulder in the West, the Love Trade buyers in the East are wrapping their arms around all the physical gold they can get their hands on.

In the third quarter, gold jewelry demand was at the highest level since 2010. Buying out of love in the East was significantly higher during the first nine months of the year compared to demand the same time last year, according to the World Gold Council (WGC). As the chart shows, buyers in Hong Kong and China went on a shopping spree for gold jewelry, as demand rose 40 percent and 35 percent, respectively, on a year-to-date basis in 2013 compared to the same period last year.

click to enlarge

Another way to look at the strong demand coming from the East is to compare it to Western demand. As you can see below, so far in 2013, the East purchased 5 times more gold bars, coins and jewelry than the West. Together, Chindia purchased a whopping 1,500 tonnes in physical gold in nine months.

click to enlarge

It's important to note that despite the government's efforts to stop Indians from buying gold, jewelry demand in India was still about 12 percent higher in the first nine months of 2013 compared to same time frame last year. The buying continued despite the fact that premiums were above the international price of gold.

Indian gold demand did weaken in the third quarter, as consumers were discouraged from loading up on the yellow metal through official channels. Residents faced a depreciation of the rupee, the tight restrictions, and confusing regulation, as gold bullion imports were tied to a fixed level of exports, says the WGC.

An emphasis should be placed on gold demand recorded by “official channels," as “gold entering the country unofficially through India's porous borders helped to meet pent-up demand," according to the WGC.

While traveling in India, I'm anticipating that I'll gain tacit knowledge on this topic. I'm eager to learn how locals think the government will contain its current account deficit that has weighed on the economy. It seems the slowdown in GDP per capita has created a short-term setback for gold, but when the economy picks up, there should be ready buyers lined up outside the gold shops.

Dressed to the Nines in Gold
What's interesting about gold demand today is that more and more investors around the world are buying higher-end, more expensive gold. Specifically in China, 24-karat gold jewelry and ‘four nines' gold gained market share in the third quarter, says the WGC.

‘Four nines' is named for the almost pure gold content of 99.99 percent; in comparison, 24-carat jewelry has a purity of 99.95 percent. According to the WGC, ‘four nines' gold is “unique to China and has proved to be most popular with consumers in lower tier markets and rural areas, again reflecting the investment qualities offered by such jewelry," says the WGC.

I point this out because investors should take note of the emerging trend for luxury goods as a result of growing incomes in emerging markets around the world.

Take the buying of high-end products such as Chanel and Louis Vuitton bags, Rolex watches, and Chow Tai Fook jewelry in China, for example. From 2009 to 2012, the luxury-goods sector grew by 41 percent, due primarily to “lavish spending by rich Chinese and aggressive gift giving," according to research from CLSA. Looking over the next five years from 2013 though 2018, the middle class in China will increasingly be participating in this boom, as “income levels pass critical inflection points for spending on luxury items," says CLSA.

Jewelry is only one of many luxury items that has been seeing significant growth year after year. CLSA finds that from 2009 to 2012, jewelry sales increased 115 percent in Hong Kong and 172 percent in China.

click to enlarge

So even as hearts beat fast for gold in the East, the yellow metal continued to lose its luster in the West. According to Bloomberg's precious metal mining team, gold ETF holdings have fallen nearly 30 percent since the all-time peak earlier this year. It's no surprise that the selling has been a big contributor to the decline in gold prices in 2013.

The good news is that gold ETF redemptions are no longer the main driver of gold prices. You can see below how the selling out of gold ETFs holdings has been slowing, but the metal has not followed the same path. Instead, gold has moved sideways over the past few months, with the price “supported at about $1,200 to $1,300 an ounce," says Bloomberg. We believe this shift provides an opportune time to buy, especially with the tremendous physical demand continuing to emanate from the East.

click to enlarge

Earlier this week, The Wall Street Journal asked several “gold enthusiasts" and me about our case for gold investing. Reporter Lindsay Gellman highlighted many of gold's important attributes, including inflation protection and diversification, and discussed one of the most important points I often make about gold: Make sure you allocate only 5 to 10 percent of your portfolio to gold and gold stocks, and have the discipline to take profits.

You can read the article here."