Chinese, Russian and Swiss gold data

Three more recent articles which I have published on sharpspixley.com look at massive silver ETF and institutional buildup, latest Russian gold reserve figures, Swiss gold exports and China cutting back on gold imports.  Click on titles to view full articles:

Is Russian Central Bank reducing its gold purchases?

The latest gold reserve figure from The Russian central bank shows the addition of 9.33 tonnes of gold to the nation’s forex reserves in July, back to the lower levels seen earlier in the year. Does this indicate a trend to lower accumulations?

Swiss gold exports re-distributed as Chinese imports curtailed

There has been a drastic change in the latest destination figures for Swiss gold exports with China apparently curtailing gold imports, but the UK taking pride of place as a destination due to the rise in Gold ETF deposits.

 

Enormous silver ETF inflows. Is it about to take off?

Massive flows of silver bullion into ETFs and Mutual Funds over past 2-3 months suggest something very positive may be afoot in future silver price movement

 

Largish sale from GLD but gold price still consolidating

 Gold Today –New York closed at $1,281.20 yesterday after closing at $1,279.20 Wednesday. London opened at $1,281.00 today. 

Overall the dollar was stronger against global currencies early today. Before London’s opening:

         The $: € was stronger at $1.0695 after yesterday’s $1.0766: €1.

         The Dollar index was stronger at 99.94 after yesterday’s 99.46

         The Yen was weaker at 109.18 after yesterday’s 109.03:$1. 

         The Yuan was weaker at 6.8867 after yesterday’s 6.8837: $1. 

         The Pound Sterling was weaker at $1.2787 after yesterday’s $1.2833: £1.

Yuan Gold Fix
Trade Date Contract Benchmark Price AM 1 gm Benchmark Price PM 1 gm
      2017    4    21

     2017    4    20

     2017    4    19    

SHAU

SHAU

SHAU

/

285.30

286.11

/

285.23

285.75

$ equivalent 1oz @    $1: 6.8867

       $1: 6.8837

       $1: 6.8854

      

  /

$1,289.11

$1,292.45

/

$1,288.79

$1,290.8

Please note that the Shanghai Fixes are for 1 gm of gold. From the Middle East eastward metric measurements are used against 0.9999 quality gold. [Please note that the 0.5% difference in price can be accounted for by the higher quality of Shanghai’s gold on which their gold price is based over London’s ‘good delivery’ standard of 0.995.]

 The Shanghai Gold Exchange was trading at 285.10 towards the close today. This translates into $1,282.64.

All three global gold markets are in line with each other. At this moment in time, we don’t see that the three are leading or following each other, but the closeness of prices tells us that arbitrageurs are doing a very professional job of smoothing out the gold markets across the world. New York closed $1.44 below Shanghai’s closing yesterday and today. London opened at a $1.46 discount to Shanghai in line with New York. This is the closest we have ever seen them.

LBMA price setting:  The LBMA a.m. gold price was set today at $1,281.50 from yesterday’s $1,279.90.  

The gold price in the euro was set at €1,198.00 after yesterday’s €1,191.05.

Ahead of the opening of New York the gold price was trading at $1,284.15 and in the euro at €1,200.59. At the same time, the silver price was trading at $17.99. 

Silver Today –Silver closed at $18.01 yesterday after $18.14 at New York’s close Wednesday.

 Price Drivers

The dollar is recovering against other currencies today with gold rising in the dollar. Technically gold is sitting on support, while still consolidating.

France

With the French elections taking place this weekend, after another terror attack the mood in the world remains dark. The French polls are reminding us of the polls before the U.S. election, so we do not rate their abilities too highly. There is always a danger that we get so used to the dark side of the world that it becomes a ‘new normal’ but we do expect such attacks [in Paris today] to affect voters in France. Next week could see two euro-skeptics in the run-off for the Presidency.

Expectations too high

Currency markets are behaving in an unpredictable fashion at the moment as are markets.

Equity markets are too high and not for the right reasons as the U.S. recovery is still moderate and not such that gives rise to the current record highs we are seeing. Likewise in Europe with its tentative recovery. The IMF has increased its forecasts for the coming years. We would like to see more reasons and sustainability before endorsing such opinions. There are too many potential events that could disturb such a positive picture. What we do draw from the global scene is that the environment remains positive for gold.

China

When we see China reporting an increasingly robust economy we see a nation that is doing its best to be a separately, self-sustaining economy with supplies coming from countries not under U.S. influence. We do not see the U.S. and China working interdependently with each other in the future. China will walk its own road.

Russia

Russia continues to publicize the gold it buys, with last month’s purchases just below 25 tonnes. We do believe that China continues to build up its reserves in its institutions and through its agencies, but for whatever reason, has decided not to be open about this.

Gold ETFs

Yesterday saw sales of 6.513 tonnes from the SPDR gold ETF but no change in the Gold Trust. Their holdings are now at 854.25 tonnes and at 204.36 tonnes respectively.

Since January 6th 2017 47.20 tonnes have been added to the SPDR gold ETF and the Gold Trust.

Julian D.W. Phillips 

GoldForecaster.com | SilverForecaster.com | StockBridge Management Alliance 

Russia may have to sell gold to boost current account

Apologies to readers of lawrieongold but hospitalisation and lack of typing precision, both as a result of stroke, have been somewhat limiting my article output.  For the record here’s an article I published on sharpspixley .com which may be of interest to those looking at gold supply/demand.

A report in Pravda suggests that the lower oil prices and the implementation of Western sanctions in particular have been having a particularly adverse impact on Russia’s current account and it may now become necessary for the country to sell some of its gold reserves and diamond stocks to counteract a growing deficit.

Regarding gold, Russia is vying with Australia to be the world’s second largest producer of the yellow metal – indeed some projections suggest it could become the world’s largest gold miner within the next ten to fifteen years. The Russian Central Bank has also been the world’s largest official gold buyer in recent months.  It is also the world’s No. 1 producer of diamonds mining around 25% of the global total.

Now whether this reported necessity to sell gold and diamonds is going to affect the country’s foreign reserves is not certain from the report.  We seem to recall a similar statement  a couple of years ago, but since then Russia has continued to buy gold for its reserves – indeed it is reported to have taken 16.5  additonal tonnes into its Central Bank holdings in September, bringing the total to over 1,540 tonnes, worth over US$60 billion at current gold prices.  This is the world’s sixth largest national official gold holding.

We will need probably to wait another 3 weeks or so for any official confirmation that Russia may be starting to dip into its official gold reserves to help reduce debt, or perhaps cutting the level of its central bank’s gold buying, or finding the gold from other stockpiled sources.  Russia currently mines around 22.5 tonnes of gold a month.

Is Russia really on the ropes: Could it sell its gold?

Is Russia really on the ropes: Could it sell its gold?

By Lawrence Williams

The problem with most of those delighting in Russia’s apparent comeuppance for what the West views as its expansionary destabilising tactics in Crimea and Donbass is that they aren’t Russian.  They assume Russians will act like Americans or western Europeans to a financial crisis and come rushing back, cap in hand, to beg forgiveness, return Crimea to its Ukrainian masters and withdraw any troops it may, or may not,  have in Donbass.  They should perhaps listen instead to Sergey Lavrov, the highly plausible and cultured Russian Foreign Minister who comments that Russia has survived such adversities in the past, and come out stronger as a result.

Yes, Lavrov is talking to his, and his masters’,  own political book but he also has a point.  Look at President Putin’s domestic popularity ratings.  They are riding at levels any western politician would give his or her eye teeth for.  Russians are a proud people who feel they were taken to the cleaners by the West pre-Putin during the break-up of the Soviet Union and now have a strong leader in charge who is putting Russia back on the map as a world power.

Russia is not a rich nation by any standards.  True there are some exorbitantly rich individuals and a growing middle class but the bulk of the population remains very poor by Western standards and feels it has nothing to lose anyway.  Those featuring in the Western media as suffering horrendously because their low interest dollar loans may now drive them into bankruptcy as the ruble dives against the dollar are but a minute fraction of the population.  The huge majority of Russians don’t have mortgages or dollar loans and while resultant inflation may eat into what little they do have, as Lavrov points out, they’ve been there before and come out stronger.

There is a strong feeling in Russia, no doubt promulgated by state controlled media, that the current financial crisis has been orchestrated by the U.S.-led West with sanctions and it views the rapid collapse of the oil price – the other major contributor to the nation’s economic problems – as also being politically driven by the U.S. and its ally Saudi Arabia.  Instead of dividing opinion against the Russian Government this looks so far to have only united opposition to the West, ans support for President Putin’s policies,  amongst the Russian general public.

And as for Russian gold.  The country has been building its gold reserves at a strong rate and there is little or no indication that it plans to sell any of this to relieve the strain on the ruble, but is far more likely to run down its foreign currency reserves before it even looks at selling gold as an option.  We are pretty sure that the Russian Central Bank has actually continued to buy gold in November and we should have the latest figures on this at the end of this week.  However the really sharp decline in the ruble against the dollar has only happened over the last week or so, so perhaps the November figures will not be a good guide to the very latest Russian Central Bank gold buying policy.

But the West should tread warily.  Russia is convinced of the view that the downfall of the Yanukovych Presidency in the Ukraine was totally orchestrated by the U.S. and its allies when it became apparent that he was leaning towards retaining economic ties to the Russian Federation rather than the EU.  Much of Russia’s subsequent response to ‘protect’ the ethnic Russians in Crimea and more recently in Donbass has been down to this, plus the perception in Moscow that the new Ukrainian government was anti-ethnic Russian and was to be dominated by ultra-right wing fascist leaning political groups (which is incorrect, although the right wing elements are still a powerful force and their militia involvements may well be largely responsible for the failure of the various ceasefire agreements in the southeast).  There was also the real fear, – there still is –  that the new Ukrainian government will push to join NATO and advance that alliance’s military presence right up to the south west Russian border.  Russia sees NATO encroachment as a major threat to it militarily, while the West regards the changes in the Ukraine and it joining the EU as integral part of the process of bringing true Western style democracy to Eastern Europe, while many within the western alliance would look upon expanding NATO as an important part of this.

Was it ever thus?  In the olden days the Crusades pitted Christian Western Europeans against Arab Muslims for the control of the Holy Land.  Nowadays it is not religious rivalries, but political dogma which drives such adventures and there is a real danger here that both the West and Russia will talk each other into military conflict as each side ups the ante to gain perceived political advantage.

Russia’s President Putin has a strong-man image to maintain, while the USA’s President Obama also feels the need to project his country’s strength of commitment to Europe, but this theatre is a long way from American soil so his fellow Americans don’t feel threatened.  But President Putin does feel threatened. NATO in the Ukraine is Putin’s Cuban missile crisis.  (Ironic given that the 50 year break in relations between the US and Cuba looks about to end.  It should also be noted that the 50 years of sanctions against Cuba never even brought that tiny nation to its knees!)  Putin thus sees NATO in Ukraine as a step too far by the West and it seems to this observer unlikely that a Western-initiated economic war against Russia will deter him from keeping at least a part of Ukraine on side – and if this requires an escalation of military involvement he would certainly have ground and supply advantage.

One strongly hopes it will not come to this.  The potential for escalation is enormous.  Maybe a Federal solution for the Ukraine is the answer, although the current government is strongly opposed to what it sees as fragmentation of its control – but even a Federation seems unlikely to get Crimea back.

The long and the short of it is that Western sanctions are unlikely to bring Russia to its knees.  Its economy was in a worse mess in 2008/9.  The declining ruble creates problems, but Russia has been building trade alliances with friendly states – notably China and its former satellites – and is taking other measures to avoid having to trade in U.S. dollars and the long term result here may well be yet another contributor to global reserve currency reform, perhaps over the next decade or so.  Russia sees having strong gold reserves as a key element in any future reserve currency realignment which it why this observer feels it unlikely it will dip into its gold reserves to any significant extent as a method of trying to arrest the ruble’s fall.  Indeed it has already stated it is willing to sell its currency reserves to do this.