Gold slides in Asia, China announces 12 tonne gold acquisition in January

FEBRUARY 11, 2019

Gold slid in Asia overnight following China’s yuan lower in a less than auspicious beginning to the Year of the Pig. It is now trading at $1306 and down $8 on the day. Silver is down 11¢ at $15.75. The downward trend carried over to European trading and into the New York open. Gold once again finds itself perilously close to the $1300 level where it found support last week.

The South China Morning Post reports this morning that China added to its gold reserves for the second straight month acquiring another roughly 12 tonnes of the metal. “China,” says the Post, “has joined a global central bank gold rush in the last two months by increasing its official gold reserves, even though the purchase remains modest compared to the volume of the mainland’s foreign exchange reserves, according to data released by the People’s Bank of China on Monday.” (Please see our Chart of the Day below)

Quote of the Day
“The Fed will be forced to participate as avoiding deflation will be the number 1 priority – not the profitability of the banking sector. Investors should contemplate a brave new world of negative Fed Funds, negative US 10y and 30y bond yields, 15% budget deficits and helicopter money. Sounds ridiculous, doesn’t it? What I said in 2006 sounded ridiculous too.” – Albert Edwards, Society Generale

Chart of the Day

Chart note: “Central bank net purchases reached 651.5t in 2018, 74% higher year over year,” says the World Gold Council in its year-end gold demand report. “This is the highest level of annual net purchases since the suspension of dollar convertibility into gold in 1971, and the second highest annual total on record. These institutions now hold nearly 34,000 tonnes of gold. Heightened geopolitical and economic uncertainty throughout the year increasingly drove central banks to diversify their reserves and re-focus their attention on the principal objective of investing in safe and liquid assets.”

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