Russia overtakes China in gold reserves race to end US dollar dominance Published time: 26 Feb, 2018 09:47

https://www.rt.com/business/419820-russia-outpaces-china-gold/

Report: Soros Unloads All Investments in Major Financial Stocks; Invests Over $130 Million In Gold

Πηγή: SHFTplan
By Mac Slavo
August 16 2012

In a harbinger of what may be coming our way in the Fall of 2012, billionaire financier George Soros has sold all of his equity positions in major financial stocks according to a 13-F report filed with the SEC for the quarter ending June 30, 2012.

Soros, who manages funds through various accounts in the US and the Cayman Islands, has reportedly unloaded over one million shares of stock in financial companies and banks that include Citigroup (420,000 shares), JP Morgan (701,400 shares) and Goldman Sachs (120,000 shares). The total value of the stock sales amounts to nearly $50 million.

What’s equally as interesting as his sale of major financials is where Soros has shifted his money. At the same time he was selling bank stocks, he was acquiring some 884,000 shares (approx. $130 million) of Gold via the SPDR Gold Trust.

When a major global player with direct ties to the White House, Wall Street, and the banking system starts off-loading stocks and starts stacking gold, it suggests a very serious market move is set to happen.

While often lambasted for his calls to centralize global banking, increase government intervention in the economy and his support of what he has called an “emergence of the new world order,” if there’s anyone with an inside track of where things are headed next it’s Soros.

Soros, who has written extensively of a coming global paradigm shift in his book The Crash of 2008 and What It Means, calling the current economic and political model ”an end of an era,” has recently suggested that the financial and economic situation across the world is so serious that Europe could soon descend into chaos and conflict. He also notes that the world is entering “one of the most dangerous periods in modern history”, and foresees violent riots in America and a brutal clamp-down by the government that will dramatically curtail civil liberties.

This is an individual who not only predicted the collapse of 2008 and took action to insulate himself, he also proposed the various fixes that governments in Europe and the US would eventually implement in order to stave off a deflationary depression. In his aforementioned book he suggested that central banks infuse the system with massive amounts of monetary expansion, but also warned that not injecting enough money would simply extend the onset of deflation and printing too much could lead to hyperinflationary currency collapse.

Based on recent activity in Soros’ US held accounts, it seems that governments and central banks have failed at those efforts to stabilize the system. As such, Soros is getting out of those companies which are most at risk should the financial system buckle like it did in 2008 and he’s shifting his assets into what may be the only asset class left standing when it’s all said and done.

What Happens to Greece’s Gold when They Exit the Eurozone

Πηγή: GoldSeek
By Julian D. W. Phillips
August 1 2012

Will Greece Exit the Eurozone?

With Germany’s leaders telling us that the exit from the Eurozone by Greece no longer holds terror for them, we understand that they are prepared for such an eventuality. As the E.U. leader’s representatives went to Greece this week to see the progress on the implementation of structural reforms and the austerity measures, it became clear to all that while we must wait for the results from them, Greece is failing in its efforts and further financing will be held beck for now, at least. Adding to the woes in Greece, there is little agreement within their Parliament. The Greek government is itself a broad mix of conservatives and Socialists.

In turn, the leaders of the European Commission, theInternational Monetary Fund and the European Central Bank, known as the troika, are increasingly divided among themselves. That is creating even more uncertainty as Greece and the rest of Europe head for yet another showdown, renewing doubts about how long Athens can remain within the Eurozone.

Greece’s lenders say they will not finance the country any further unless it meets its goals. But many experts say that the targets were never within reach and that pushing three increasingly weak Greek governments to comply has only profoundly damaged the economy. The belief in many quarters including in the Finance Ministry in Germany is that the exit of Greece from the Eurozone is almost certain now.

Officials from the troika overseeing the Greek bailout, the International Monetary Fund, the European Central Bank and the European Commission in Brussels, say privately that they doubt the country will be able to meet its official target of bringing its debt down to 120% of economic output by 2020. Greece must make the €3.1 billion in bond payments to the central bank on Aug. 20.

The European Commission reaffirmed that the next tranche of aid to Greece would probably not be disbursed until September, putting the country at greater risk of running out of money to pay salaries and pensions.

At the end of last week, the European Central Bank cut off a crucial source of cash for Greek banks, saying that it would stop accepting Greek government bonds as collateral for low-cost loans until the E.U. completes its report, which is not expected until late August at the earliest. Greek banks must now borrow from the Greek Central Bank at a higher interest rate, from a fund with limited means; if it runs out Greece would have to start printing drachmas.

The IMF, which indicated in March it won’t commit more money to Greece, will make a decision on its next disbursement in late August at the earliest based on the troika’s findings, said two fund officials familiar with the situation in recent days. The IMF has signalled to European officials that it will stop paying further rescue aid to Greece, bringing the country closer to insolvency in September. It’s “already clear” to the E.U. that Greece won’t reach the 120% target. Missing the targets means Greece would need between €10 billion and €50 billion in additional aid, a potential outcome that the IMF is not prepared to accept. The possibility that Greece could exit the 17- member monetary union has been voiced this year by European officials who consider the fallout from such a scenario would be the lesser evil against a seemingly perpetual crisis.

Greece’s economy shrank 3.5% in 2010 and 6.9% in 2011 and is expected to contract 7% this year, a decline reminiscent of the Great Depression of the 1930s. Unemployment is at 22.5% and expected to rise to 30%, while Greece’s main retailers’ association warned on Monday that sales were expected to drop 53% this year.

Greece, which held consecutive elections in May and June as public opposition to spending cuts grew, risks running out of money without the disbursement of €4.2 billion due last month as the first instalment of a €31 billion transfer.

The statements above and the increasingly ‘anti’ stance against Greece brings its exit to center stage. So it is sensible to look at what happens to it 111 tonnes of gold it holds in its Gold and Foreign Exchange reserves currently.

Where’s Greece’s Gold?

The 111 tonnes of gold owned by Greece is in one of three central banks and perhaps spread throughout the three. These banks are the Bank of England, the Banque de France and the U.S. Federal Reserve. We are of the opinion [the Bank of International Settlements would never disclose the facts] that Greece’s gold was first used in some of the over 500 tonnes of gold/currency swaps executed two years ago and unwound last year by the B.I.S.

We believe, further, that these swaps were undertaken by nations finding it difficult to raise new loans at reasonable interest rates. The gold/currency swaps were undertaken as part of the collateral creditors required to facilitate new loans. As such their value went far beyond the market price of the gold involved.

When Greece required a generous bailout from E.U. creditors we were led to believe that part of the collateral, to be forfeited on default, was the 111 tonnes of gold owned by Greece. It is this gold that is now in danger of being lost to the nation now.

The fact that it is not in the country has allowed it to be possessed by central banks outside the country that would not hesitate to hand the gold over, on default by Greece.

Why a Nation’s Gold is Not Held at Home

It may come as a surprise that the bulk of the world’s central banks do not hold their nation’s gold in vaults at home. It has been this way for most of the last century. While the reputations of the three central banks are impeccable, nevertheless, with the world in the financial state it is in now, it seems a matter of prudence that gold should not be in the possession of foreign central banks. After all when push comes to shove, possession is nine tenths of the law.

This became a worry last year to Venezuela who is not the darling of the U.S. at the moment. Its gold was held in several central banks, including the bank of England. President Chavez, on the advice of his central bank decided to repatriate Venezuela’s gold. It was a cumbersome exercise but it was done and is now held in Venezuela out of the reach of those unhappy with its nationalization policies. After all there is always a case to be made for creditors whose assets have been seized to be given recourse to the country assets held outside the country. This is an increasing danger in a world where the value of sovereign debt is in doubt in so many countries.

One of the key reasons for holding gold is to be able to sell it to provide the nation with access to international trade and loans, when its creditworthiness and its currency are unacceptable outside the country. By holding the gold outside the country that gold may well have been appropriated by other nations. We have seen of late this happen to Iran, all of whose foreign assets have been frozen with attempts being made to freeze its oil exports. Whether justified or not, the vulnerability of a nation’s assets should be a factor considered by the government and central bank of every nation. To allow their assets to be vulnerable to seizure is an act of imprudence to say the least.

Should Greece forfeit its gold as a consequence of its default, then it will be, we expect, at market prices only. The ability to use its value far above its price by way of collateral in gold swaps to facilitate loans and lower interest rates will have been lost entirely. We believe that it is part of a central banker’s duty to handle their nation’s assets to the full benefit of the nation. That requires that the gold be in its own possession not in the hands of others who may seize it because of a policy disagreement no matter how serious it may be perceived.

If Greece Leaves Then What Next?

Greece will, we believe have to leave the European currency entirely, just as Argentina did in the nineties. After all, the massive loss of creditworthiness will necessitate a devaluation of the currency. That won’t happen by continuing to use the euro. A glance at history shows that in this case it is possible that a value of 50% of the Euro be attributed to the Drachma. In addition there will have to be a block put on capital exports from Greece. After that we would expect to see a “Financial Drachma” [ort whatever name the Greek central bank gives it] in addition to a “Commercial Drachma” instituted in Greece as Capital and Exchange Controls are put in place to protect what’s left of the financial viability of Greece.

The “Commercial Drachma” would be used for normal trade activities of import and export of good and for tourism. The “Financial Drachma” would be for capital flows both in and out of the country. We may well go into more detail once these events have happened, but for now let’s leave it as a currency that could easily fall by another 30% against the “Commercial Drachma” [say 35% of the exchange rate value of the euro]. In another article, we may well paint the huge advantages to Greece of operating such a system.

In addition we may well see a system of “debt Conversion” being instituted within Greece to incentivize investment into Greece for infrastructural development and other projects that would benefit the nation.

Guns And Gold: The Trading Strategy For Our Times

Πηγή: Seeiking Alpha
Dec 7 2011

“Guns and Gold” has become widely accepted as a wise trading strategy during the current high-volatility markets. Recent interviews with a top Goldman Sachs (GS) gold analyst and the CEO of the Smith & Wesson Holding Corporation (SWHC) document the growth of this new investment strategy.

Analyst Ian M. Preston follows gold and resources for Goldman Sachs, and he observes that gold producers are raising their dividends to attract investors back from gold ETFs like the iShares Gold Trust (IAU), the SPDR Gold Shares (GLD) or the Market Vectors Gold Miners ETF (GDX), making their ROE stronger as gold prices are expected to scratch the $1,900 mark in 2012.

"The competition for major gold companies is not between themselves. They have to give a bit of return than what you can achieve just simply having gold in an ETF," Preston said in an interview published December 6.

"You’ve got to be able to not only grow earnings in an improving gold price, but in our view you’ve also got to give a return to investors."

Preston says Newmont Mining Corp. (NEM) has already implemented a dividend linked to gold's rapid price increases. He also says other major producers are raising their dividends significantly, aiming to provide investors with 2.5% to 3% levels of yield.

"[Newmont Mining has] linked the dividend to where the prevailing gold prices — I mean, I think that’s a clear signal that they want to make it very easy, very transparent for an investor," Preston said. "And the share price response for Newmont post that announcement has actually been very positive."

Other precious metal mining stocks mentioned in this interview include the Barrick Gold Corporation (ABX), Eldorado Gold (EGO), Goldcorp (GG) and Newmont Mining (NEM) traded in the U.S.

The report also includes Kingsgate Consolidated (KCN.AX), Newcrest Mining (NCM.AX), Perseus Mining (PRU.AX) and St.Barbara Limited (SBM.AX), which are traded in Australia, and Toronto Stock Exchange companies Teranga Gold (TGZ.TO) and Alacer Gold (ASR.TO).

Gun consumption is not far behind the growth rate of the price of gold. P. James Debney, the CEO of Smith & Wesson (SWHC), notes that data from the National Instant Criminal Background Check System, or NICS, shows strong year-over-year growth, indicating Americans are buying more firearms than ever before.

Further, NICS data for background checks reached record highs in November 2011, and is 18% greater than 12 months before, according to the latest data available on the Federal Bureau of Investigation’s website.


“If you take the primary indicator, which is NICS, the background checks performed through the FBI when a consumer purchases a firearm, that number has had very strong year-over-year growth that has continued even after the surge period that occurred in late 2008 and into 2009, reflecting strong growth in the firearms industry,” Debney said. “Couple that with trends toward concealed carry, which we believe are driven by the need for self-protection in the current environment, where municipalities have fewer funds available to support the current need. We believe the result is that people are generally taking responsibility for protecting themselves.”

These interviews suggest a profitable investment strategy for 2011. As gold coins and ammunition become the popular stocking stuffers this December, the “Guns and Gold” investment portfolio may become the trade of the year.

Russia exploration could bag $1.6 billion a year: Kinross

Πηγή: yahoonews
By Kiryl Sukhotski and Aleksandras Budrys (Reuters)

Oct 18 2011

MOSCOW (Reuters) - The largest foreign investor in Russia's gold sector believes Russia could more than triple investment in geological exploration to $1.6 billion.

Kinross Gold Corp also handed the government a list of measures required to achieve the increase, its chief executive told Reuters on Tuesday.

Russia, sitting on huge mineral resources, has been working to introduce changes to its laws to attract foreign investment, and on Monday held a meeting of the Foreign Investment Advisory Council made up of chief executives of multinational companies.

Foreign equity investment in mines is restricted by the Russian subsoil legislation, under which deposits containing enough gold or copper to merit major investment are considered strategic. Foreigners are barred from controlling them.

Low incentive to explore is another barrier.

Tye Burt, President and CEO of Kinross, presented proposals on Monday within the framework of a meeting of the advisory council chaired by Prime Minister Vladimir Putin.

"The opportunity is very large and I believe that it is a matter of time that major exploration companies follow us into Russia," Burt told Reuters Insider television.

Toronto-based Kinross, , has been operating in Russia for more than 15 years, is developing the Kupol and Dvoinoye deposits in Russia's far eastern Chukotka peninsula and has so far invested over $2.2 billion in them.

"Russia has an unparalleled opportunity to significantly increase domestic exploration and mining investment, as well as the potential to become a world center for mining finance," the paper said.

For this the government has to make some "relatively minor improvements to existing legislation", and provide greater protection and predictability for investors, it said.

Burt said to encourage an increase in foreign investment the government should ensure miners would get a fair chance to develop a deposit discovered under exploration license.

"Ensuring continuity (from exploration license to development permits) is critical," he said.

Another step should be reducing the amount of government permits required for ownership of strategic deposits.

"Currently, for example, owning more than 10 percent of a strategic deposit requires federal approval," Burt said.

"The government is underway increasing the threshold to 25 percent, but we believe there is room for increasing even further... Perhaps 51 percent could be attractive."

He said these issues have been discussed with the Russian government. "The government response has been very positive."

Kinross also suggested that Russia should provide tax incentives to investors, switching from revenue and royalty-based taxation to profit-based taxes.

GOLD PRICE TO RISE

Burt said that he saw the gold sector as an attractive investment as Kinross expected a further rise of gold prices.

"From a demand perspective investors see a safe haven for their investment and dollars are continuing to move into gold. On the supply side, global production has been in decline from 2001 ... and it is predicted to resume its decline," he said.

Burt declined to give a specific price forecast. "We believe it could be significantly higher in the near future," he said.

Burt said Kinross planned to invest $350 million in its two Russian projects in the next 2-1/2 years and to start the Dvoinoye mine by the middle of 2015.

"We are spending aggressively on exploration in the area around Kupol and around Dvoinoye. We have an exploration budget of approximately $20 million annually, he added.

"These are our plans for the near term. For long term we are open to joint ventures, but currently we have no specific plans," Burt said.

The Gold Price Conspiracy Uncle Sam Doesn't Want You to Know About

Πηγή: Money Morning
By BY PETER KRAUTH, Global Resources Specialist

Oct 5 2011

Is it really so preposterous to believe the United States and Europe would conspire to keep pole position in the global financial system?

I don't think so - and neither does China.

That much was revealed in a diplomatic cable recently uncovered by Wikileaks.

According to the 2009 cable from the U.S. embassy, China believes the United States and Europe have, as a matter of policy, suppressed the price of gold to discourage its use as a reserve currency.

And there's a pretty compelling case to be made for a gold price conspiracy.


The Gold Price ConspiracyThe cable summarized several commentaries in Chinese news media sources on April 28, 2009.

"The U.S. and Europe have always suppressed the rising price of gold," it reads. "They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency."

According to the cable, China believes that by building its gold reserves, it can not only safeguard itself against the declining value of the dollar, but encourage central banks around the world to expand their gold purchases, as well.

"China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold," the cable said. "Large gold reserves are also beneficial in promoting the internationalization of the RMB."

Now, if all we had were the Chinese claiming the U.S. and Europe were suppressing gold prices, it would be easy to disregard as superficial propaganda.

But in fact, there's evidence that supports this claim.

In the decade between 1999 and 2009, central banks - dominated by the West - were net sellers of gold in every single year. And that's despite the fact that gold in that time soared from $250 an ounce to $1,200 per ounce - a nearly 400% gain.

Then there's the infamous "Brown Bottom."

Between 1999 and 2002, Gordon Brown, then U.K. Chancellor of the Exchequer (and later Prime Minister), decided to sell nearly half of his nation's gold reserves. At the time, just the advance notice of these substantial sales drove gold's price down from $282.40 an ounce to $252.80.

Those gold sales yielded an average price of $275 an ounce, raising a total of $3.5 billion. Today, those 395 tons of gold would be valued more than $19 billion.

You have to admit, it doesn't make a whole lot of sense to sell a solid asset whose price is moving steadily higher each year - especially when the United Kingdom's debt problem then wasn't nearly as bad as it is today.

The answer: Because there's a conspiracy afoot.


Gold Dust on The Fed's HandsHere's more damning evidence.


A U.S. District Court this year ordered the U.S. Federal Reserve to disclose to the Gold Anti-Trust Action Committee (GATA) the minutes of an April 1997 meeting of the G-10 Gold and Foreign Exchange Committee, as compiled by an official Federal Reserve Bank of New York.

And it's a bombshell. The minutes suggest that officials from the G-10 governments and their central banks were, in fact, conspired to synchronize their policies to affect the gold market.

It turns out that U.S. policymakers aren't just worried about preserving the dollar's role as the world's main currency reserve. They're also worried about the effects higher gold prices could have on the nation's debt burden.

The minutes include comments by a U.S. delegate identified only as "Fisher," which is likely Peter. R. Fisher, head of open market operations and foreign exchange trading for the New York Fed.

Fisher, the minutes say, made the case that rising gold prices would increase U.S. debt.

Fisher "explained that U.S. gold belongs to the Treasury. However, the Treasury had issued gold certificates to the Reserve Banks, and so gold also appears on the Federal Reserve balance sheet," the minutes say. "If there were to be a revaluation of gold, the certificates would also be revalued upwards; however [to prevent the Fed's balance sheet from expanding] this would lead to sales of government securities. So the net benefit to Treasury would need to be carefully calculated, since sales of government securities would expand the public portfolio of government securities and hence also expand the Treasury's debt-servicing burden."

Indeed, Fisher's remarks are an open acknowledgement that the United States has an interest in suppressing the price of gold.

So, clearly, there is a growing body of evidence that Western governments, central banks, and even some of the largest investment banks have a vested interest to subdue the price of gold. Furthermore, they've already acted on behalf of that interest.

But now the tide is turning. The dollar and the euro are on the ropes and emerging markets have been steadily increasing their gold purchases.

While authorities in developed countries are making it more difficult for investors to build gold holdings, large China and other developing markets are doing just the opposite. They're actually encouraging their populations to adopt physical gold and gold investments like futures and exchange-traded funds (ETFs).

So I think it's high time the average Westerner looked to the East for cues on wealth preservation and their attitude towards gold.

Gold hedge book set to grow for first time after 11 years

Πηγή: Business Day
By ALLEN SECCOMBE
Oct 5 2011


Forecast shows that for the first time since 1999 there will be a net increase in the global gold hedge book as more gold is sold into forward contracts

FOR the first time since 1999 there will be a net increase in the global gold hedge book as more gold is sold into forward contracts, according to a forecast by precious metals consultancy.

The June quarter marked the second consecutive quarter of net hedging, bringing to an end 11 years of net dehedging by gold producers opting for greater exposure to the spot gold price.

Producers lock in future gold prices for a number of reasons, including loan agreements with financiers who want guarantees that debts can be repaid.

With the rising gold price over the past decade , most gold company shareholders have demanded exposure to the gold price, which in many cases overtook hedge positions, which meant that producers were selling hedged gold well below the prevailing price.

GFMS forecast that 2011 would be the first year of net hedging since 1999, adding 1-million ounces to the global hedge book, which takes into account what gold producers around the world are doing with forward sales contracts.

In the second quarter of the year, there was net hedging of 190000oz of gold, bringing the global book to 5,07-million ounces.

"It would be wrong to assume, however, that general attitudes to hedging amongst major gold mining companies have changed," GFMS said in a report yesterday.

"In the face of a strongly rising gold price, the pressure is currently still on company management from investors to retain full exposure to rising prices," the report said.

South African gold producers, who are amongst the largest in the world, are firmly against hedging their gold production.

AngloGold Ashanti spent $6bn closing an 11-million ounce hedge book but CEO Mark Cutifani said last October that the company would have lost out on $10bn if the contracts had remained in place.

An argument has been made that investors in gold companies might want them to lock high prices in by setting up forward contracts for fear of a sharp retraction in the gold price from recent record highs.

"In the long run you can’t beat the spot price," Gold Fields CEO Nick Holland said in August when asked whether there was pressure on the company to start locking in the gold price. "There’s a litany of people who’ve lost billions of dollars for gold companies … and guess what, they were ahead of the game for 10 years and then what happens, they lost it all in the last two years," he said.

"If you’re long enough in this business you’ll see the same mistakes being made. When gold gets to a certain level some people will hedge. As far as I’m concerned, it won’t be us," Mr Holland said.

GFMS said gold companies were still reducing their hedge books but "there were a limited number of new hedges entered into during the (June) quarter". Five companies increased the number of contracts in their hedge positions.

Australia’s Alkane Resources agreed a 90000oz forward sale to protect against revenue risk at one of its projects. It agreed to a strike price of A$1600 an oz. The current price for Australian producers is around A$1700/oz.

Yesterday, the gold price fell by 2% to $1620/oz after US Federal Reserve chairman Ben Bernanke said it could take steps to support the US economy, Reuters reported .

Renewed safe-haven buying of bullion evaporated the day after its biggest daily gain in a month. The metal fell early in a broad financial market decline on concern about a the European debt crisis, the news agency said.

Mr Bernanke said Federal Reserve policy makers were "prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability", Reuters said .

When gold gets to a certain level some people will hedge.

Qatar plans $10bn investment in gold producers, why not silver too?

Qatar Holdings will invest a total of $1bn in European Goldfields, including $600mn to finance operations in Greece, where the London-based firm has a permit to mine gold, the chief executive of the sovereign wealth fund said yesterday.

Πηγή: Silverseek
By Peter Cooper, Arabian Money

Oct 3 2011

So the news is out that Qatar is planning a $10 billion investment in gold producers, according to The Daily Telegraph today citing banking sources. The ArabianMoney investment newsletter published last week is already there with a comprehensive report on how its readers can achieve this exposure.
On Sunday the nation’s sovereign wealth fund Qatar Holdings confirmed rumors that it is set to invest $1 billion in European Goldfields which is developing a large mine in Greece and publicly quoted in London. Some commentators interpreted this as a rescue plan for Greece but access to physical gold at low cost is the real reason.

Gold study

Bankers who put the deal together said the Qataris had commissioned a ’systematic and detailed study of the gold sector’ and like European Goldfields mainly for its chairman Martyn Konig who is a 30-year veteran of the sector, exceptionally qualified to lead their expansion into gold.

He is going to pursue acquisitions in Africa and Russia and not in the US where the Telegraph says ‘valuations are too high’. Qatar Holdings has just bought a 9.9 per cent stake in European Goldfields with Credit Suisse advising them.

Far from seeing the recent correction in the gold price as the end of the bull market, the Qataris clearly think there is life in this bull yet, and are apparently planning acquisitions spread over years rather than months, weeks or days.

This will be music to gold investors who have blazed a trail in emerging markets like Jim Sinclair in Tanzania. It also shows a new twist in the gold investment game. For obtaining gold sector assets at reasonable prices now entails taking more risk and all assets in this sector will be driven higher in value over time.

Powerful investors

That a financial force like Qatar is backing gold surely heralds much higher prices for the metal itself as this scale of investment in the narrow gold market tend to have a self-fulfilling impact, particularly when followers join in from the Middle East and elsewhere.

Somebody asked why the Qataris are not looking for silver mines? Well silver tends to be produced as a by-product of large copper mines and they are very expensive and closely held. That makes it far more difficult to ramp up silver production than gold, and with silver reserves already less than a hundredth those of gold the price implications are interesting to say the least.

But who knows the Qataris may have plans for the silver market too. With $10 billion Qatar could take a third of the global silver market and exercise the domination of the Hunt Brothers in 1980. Could history repeat itself again?

"Surprising" Rally for Gold despite "Vulnerability" on Futures Market, "Greece is Bankrupt"

Πηγή: Goldseek
By Ben Traynor, BullionVault

Oct 3 2011

U.S. DOLLAR gold bullion prices began the week strongly, climbing to $1663 per ounce Monday morning London time – a 2.4% gain on Friday's close – while stocks and commodities fell and government bonds rose following news that Greece's second bailout agreed less than three months ago is unlikely to be enough.

Silver bullion prices also rose, climbing to $31.43 per ounce – 4.9% above where they ended last week.

"Surprisingly gold and silver has been rallying in a very thin market," said one Hong Kong bullion dealer this morning.

"If there is no more fund liquidation in the beginning of a new quarter, and given that doomsday is just a few weeks from us, is the safe haven property of precious metals back in fashion again?"

The net long position of bullish minus bearish contracts held by noncommercial – so-called speculative – gold futures and options traders on New York's Comex exchange fell by more than 20% in the week ended September 27, according to data published Friday by the US Commodity Futures Trading Commission.

Speculative net longs fell to 158,754 100-ounce contracts – the lowest level since May 2009, and equivalent to 494 tonnes of gold bullion – as the number of short positions rose while long positions decreased.

"The continuation of the decline in speculative longs indicates the increased caution with which participants are approaching the gold market," says Marc Ground, commodities strategist at Standard Bank.

"Taken together with the increase in speculative shorts – which are currently at relatively high levels – gold appears to have returned to the vulnerability of several weeks ago."

As a percentage of all open interest, speculative net longs fell to 19.2% – the lowest level since the week ended 18 November 2008, when the figure was 12.3%. The price of gold bullion at the PM London Fix that day was $738 per ounce – it has not been lower since.

The gross tonnage of gold held to back shares in the SPDR Gold Trust (ticker GLD) – the world's largest gold ETF – also fell last week, following a sharp rise that started towards the end of August.

The GLD held just under 1232 tonnes of gold on Friday – down from 1252 tonnes a week before.

"The continued mix of default fears and economic slowdown are likely to trigger further pockets of cash generating long liquidation," warns a note from Swiss gold bullion refiner MKS.

Despite the outflows, Friday's GLD holdings were less than one tonne below the amount held on 6 September, the day the gold price hit its all-time intraday high of $1920 per ounce.

"To be clear, physical demand right now is not just decent, it is exceptionally strong," noted UBS precious metals strategist Edel Tully last week.

The CFTC data also show a sharp drop in speculative net long silver positions – together with a corresponding fall in net short positions held by commercial traders (including miners, refiners and bullion banks) who take the other side of that trade.

In Europe meantime, the Greek government announced Sunday that it expects to miss deficit targets agreed earlier this year with its 'troika' of creditors – the European Central Bank, European Union and International Monetary Fund – despite announcing fresh austerity measures.

Greece now expects its deficit is to be 8.5% for 2011 – compared to the 7.6% forecast on which a second bailout worth €109 billion was agreed in July.

"Greece is bankrupt," says Michael Fuchs, deputy parliamentary floor leader for Chancellor Merkel's Christian Democratic Union party.

"Probably there is no other way for us other than to accept at least a 50% forgiveness of its debts."
Private sector banks agreed in July to accept a 21% write-down in the value of their Greek debt holdings.

"I am warning in the most forceful way against any material revision [of July's agreement]," said Deutsche Bank chairman Josef Ackermann on Sunday.

Ackerman is also head of the International Institute of Finance, which agreed the terms under which private creditors would undertake a bond swap.

"If we reopen the voluntary accord of July 21, we will not only lose precious time but quite possibly also private investor support...the impact of such a move will be incalculable."

Over in China meantime – the world's second-largest source of private gold bullion demand – manufacturing growth accelerated in September, according to official data published Saturday.

China's purchasing managers index (manufacturing) rose to 51.2 – up from 50.9 for August (a figure above 50 indicates sector expansion).

Here in Europe, data published today show German manufacturing grew slightly last month, with PMI rising to 50.3 from 50.0 last month.

For the Eurozone as a whole, however, manufacturing activity continued to contract, with the PMI coming in at 48.5 – down from 49.0 in August. Here in the UK, manufacturing PMI rose to 51.1 – up from 49.4 for August.

Ben Traynor Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

China buys gold, challenges US dollar

China plans to let its currency trade freely on international markets by 2015

Πηγή: ALJazeera
By Chris Arsenault

13 Sep 2011

WikiLeaks cables allege that China is buying gold to weaken the US dollar's supremacy as the world's reserve currency.

China is shifting some of its massive foreign holdings into gold and away from the US dollar, undermining the dollar's role as the world's reserve currency, accoding to a recently released WikiLeaks cable.

"They [the US and Europe] intend to weaken gold's function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the US dollar or Euro," stated the 2009 cable, quoting Chinese Radio International. "China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold."

The cable is titled "China increases its gold reserves in order to kill two birds with one stone". Taken together with recent policy announcements from Chinese banking officials, it may signal moves by China to eventually replace the US dollar as the world's reserve currency.

Last week, European business officials announced that China plans to make its currency, the yuan, fully convertible for trading on international markets by 2015. Zhou Xiaochuan, governor of China's central bank, said the offshore market for the yuan is "developing faster than we had imagined" but there is no definitive timetable for making the currency fully convertible. Presently, the yuan cannot be easily converted into other currencies, because of government restrictions.

China's gold holdings are small compared to other major economies. It has 1,054 tonnes, the sixth-largest reserves in the world, according to data from the World Gold Council.

Dollar's dilemma

Buying gold and allowing the yuan to be traded freely would weaken the US dollar's dominance as the international reserve currency. The move would have major implications, making it more expensive for the US government to borrow money and to run perpetual trade and budget deficits.

"The US is used to having the position of having the key reserve currency, but others are eager to replace it," said Josh Aizenman, a professor of economics at the University of California and president of the International Economics and Finance Society.

As a reserve currency, the US dollar is the default for international transactions. If, for example, a South Korean company wants to buy wine from Chile, chances are they will carry out the transaction in dollars. Both companies must then purchase dollars to conduct their business, leading to greater demand. The value of global commodities, such as oil, is also generally demarcated in US dollars.

Being a reserve currency allows the US to borrow at low interest rates, as central banks around the world are eager to buy US government debt. "Any country that can finance its expenditures by printing money or selling bonds is essentially getting a free lunch," Aizenman told Al Jazeera.

With China's apparent change of heart, that "free lunch" now might come with a hefty tab. Given the massive US trade deficit, average Americans might be sent to the restaurant's kitchen to wash dishes if the dollar loses its status as the world's reserve currency.

"China, until recently, was focusing on buying the US dollar through bonds," Aizeman said. Since the economic crisis, the US dollar has dropped compared to other major currencies, particularly the Swiss franc, Canadian dollar and Brazilian real. This leaves China in a bind, analysts said.

Currency reserves

In March 2011, China held $3.04tn US dollars in reserves, Xinhua news agenecy reported. It is the largest holder of US treasuries, or government debt, with $1.166tn as of June 30, 2011, according to the San Francisco Chronicle. Thus, major devaluation of the dollar would hurt China, as it would be left holding wads of worthless paper.

"If you owe the bank $100, that's your problem. If you owe the bank $100m, that's the bank's problem," American industrialist Jean Paul Getty once remarked, in a parable that sums up China's predicament.

"China is locked into a position where they cannot sell a big portion of their dollar reserves overnight without hurting themselves," Aizenman said. "It is too late for now to diversify rapidly the stock they have already accumulated."

The answer: Buy gold. Everyone seems to be doing it. The value of the glistening commodity, useless for most practical purposes, increased almost 400 per cent, from less than $500 an ounce in 2005 to about $1,900 in September.

"Gold has risen in value because of uncertainty in the world economy," said Mark Weisbrot, the co-director of the Centre for Economic and Policy Research, a think-tank in Washington. "Normally, gold would rise due to high inflation. It is a store of value that increases if there is inflation. But in this case it is going up because nobody knows where else to put their money."

In the WikiLeaks cable, China alleged that "the US and Europe have always suppressed the rising price of gold", but neither Weisbrot or Aizenman think such a policy is taking place or even possible.

Presently, China places strict controls on its currency, limiting foreigners from doing business in the yuan or trading it on foreign exchange markets. That could change in the next five years, according to governor Xiaochuan's recent announcement.

By owning such large reserves of US currency, and through controlling the yuan, China can keep its currency lower than it would be if it floated freely. This makes Chinese exports cheaper.

The relationship, in which Chinese investment in US government bonds allows low interest rates for Americans to buy Chinese products, has worked well for the last 15 years. In 2010, the US ran a $273.1bn trade deficit with China.

"We pay our debts in dollars so we can print money to pay our international debts," Weisbrot told Al Jazeera. Because of the dollar's status as a reserve currency, the US "can run trade deficits indefinitely" while borrowing internationally without serious repercussions, giving the world's largest economy a "big advantage", he said.

If gold, the yuan, or a combination of other currencies replaced the dollar, the US would lose that advantage.
Without a replacement in the near term, nothing will replace the dollar as the world's reserve currency in the next five years at least. But nothing lasts forever. "When they [China] want the dollar to fall, they will let it," Weisbrot said. "The dollar will fall eventually but that could be a long time away."

The fate of the dollar notwithstanding, a separate WikiLeaks cable outlines some of the broader ambiguities of the world's most important economic relationship, or "ChinAmerica", as it has been dubbed by historian Niall Ferguson.

"No one in 1979 would have predicted that China would become the United States' most important relationship in thirty years," the cable stated. "No one today can predict with certainty where our relations with Beijing will be thirty years hence."

WORLD OFFICIAL GOLD HOLDINGS International Financial Statistics, March 2011

Πηγή: World Gold Council


World Official Gold Holdings as of Mar2011 IFS