End-of-week top gold news

Friday, 24-Apr-2015

Nikos Chrysoloras & Eleni Chrepa (Bloomberg) Greece Moves to Seize Public-Sector Funds as IMF Payment Due “The Greek government issued a decree that forces local governments to transfer all cash balances to the central bank, as debt to the International Monetary Fund and month-end salary payments come due . . . The decree effectively confiscates those cash reserves, currently held in commercial banks, and transfers them to the Bank of Greece.”

Note: With Greece hurdling toward default, expect the extraordinary measures to get ever-more onerous. They may look to the depositors in Greek banks next, which would likely send them into the streets. This could re-ignite safe-haven interest in gold.

(Business Standard) Gold imports may rise 89 pc to 100 tonnes in April: GJF “India’s gold imports is likely to rise more than 89 per cent at 100 tonnes this month compared with last year, mainly due to weakness in international prices and easing of restrictions by the RBI, an industry body said.”

Note: India has imported 286.2 tonnes gold in the first 3-months of the year, more than twice the 137.5 tonnes they imported in Q1 last year.

Eddie Van Der Walt (Bloomberg) Russia Returning to Gold With Biggest Purchases in Six Months “After a two-month hiatus, Russia’s appetite for buying gold is back. The nation increased foreign reserves of bullion to 39.8 million ounces, or about 1,238 metric tons, as of April 1 . . . The 30-ton purchase was the most since September.”

Note: Just when you thought Russia was tapering its gold purchases, they return with a vengeance.

Myra P. Saefong (MarketWatch) A ‘Grexit’ will send gold to $1,400 by year’s end “The risk of a Greek exit from the eurozone will help lift gold prices to $1,400 an ounce by the end of the year, according to Capital Economics. . . It would be a mistake to believe that the country is a “‘special case’ and that other members are very unlikely to follow [Greece] out of the door,” he said.”

Note: I think the upside potential could be significantly higher if contagion occurs, and the gains could come much more quickly than many seem to be expecting.

Jasmine Ng, Joseph Deaux & Eddie Van Der Walt (Bloomberg) The Mystery of China’s Gold Stash May Soon Be Solved “China’s push to challenge U.S. dominance in global trade and finance may involve gold — a lot of gold. . . . The People’s Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons, says Bloomberg Intelligence, based on trade data, domestic output and China Gold Association figures. A stockpile that big would be second only to the 8,133.5 tons in the U.S.”

Note from MK: This article suggests that China may disclose its current gold reserves soon in conjunction with its bid to convince the IMF to include the yuan in its SDR (Special Drawing Rights) currency basket. China sees that as a step toward legitimizing the yuan as an international reserve currency and as a challenger to the dollar. Also this morning, Mining Weekly reports that the United States exported 83% more gold in the fourth quarter of 2014 when compared to the previous quarter. Switzerland (29 tonnes) and Hong Kong (24 tonnes), two stations along the West to East gold pipeline, were the primary recipients with Shanghai probably the ultimate destination. So the United States remains one of China’s suppliers though it is unclear where that gold is being sourced domestically. China keeps buying gold wherever, whenever it can.

Meenakshi Sharma & A. Ananthalakshmi (Reuters) After slow start, gold demand picks up on Akshaya Tritiya “After a sluggish start, gold purchases in India picked up momentum during the Akshaya Tritiya festival, usually one of the busiest gold buying days, industry officials said. Indians are the world’s biggest consumers of bullion and Akshaya Tritiya celebrated on Tuesday is one of the most auspicious times to buy gold along with Diwali and Dhanteras. Gold imports had more than doubled in March to 125 tonnes from 60 tonnes a year before as traders anticipated healthy demand.”

Note: Gold sales rose in India anywhere from 15 to 25%, depending on region.

Eddie Van Der Walt (Bloomberg) Swiss Gold Exports Show Asia Buying More as Investors Sell Bars “China and India helped buy up investors’ biggest gold sales in more than a year. Gold exports to China from the refining hub of Switzerland almost doubled to 46.4 metric tons in March, the most among monthly data starting in January 2014, according to the Swiss Federal Customs Administration. Shipments to India more than doubled to 72.5 tons as imports from the U.K. climbed sixfold.”

Note: The flow of physical gold from weak hands in the West to strong hands in the East has been going on for some time now, and all those tonnes aren’t coming back.