Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1199.30 down $5.30 (comex closing time)
Silver: $16.28 down 9 cents (comex closing time)
In the access market 5:15 pm
Gold $1199.30
Silver: $16.29
Gold/silver trading: see kitco charts on the right side of the commentary.
Following is a brief outline on gold and silver comex figures for today:
At the gold comex today, we surprisingly had a poor delivery day, registering nil notices served for 0 oz. Silver comex filed with 0 notices for nil oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 243.65 tonnes for a loss of 60 tonnes over that period. Lately the removals have been rising!
end
In silver, the open interest rose by 1301 contracts with Friday’s silver price up by 20 cents. The total silver OI continues to remain extremely high with today’s reading at 172,711 contracts. The front April month has an OI of 175 contracts for a gain of 5 contracts. We are still close to multi year high in the total OI complex despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.
We had 0 notices served upon for nil oz.
In gold, the total comex gold OI rests tonight at 392,635 for a gain of 1,689 contracts with gold up by a considerable $11.00 on Friday. We had 0 notices served upon for nil oz.
Today, we had a huge withdrawal of 1.75 tonnes in gold at the GLD/ Gold Inventory rests at 734.29 tonnes
In silver, / /we have a huge addition of 2.39 million oz of silver at the SLV/ and thus the inventory tonight is 324.230 million oz
We have a few important stories to bring to your attention today…
1. Today we had the open interest in silver rise by a huge 1,301 contracts despite a small rise in price on Friday (20 cents). The OI for gold rose by only 1689 down to 392,635 contracts as the price of gold rose by a considerable $11.00 on Friday.
(report Harvey/)
2. Koos Jansen reports on a huge 40 tonnes of gold demanded by China in the first week of April. (equals SGE withdrawals). Also Koos reports on volume rising at the International SGE. Leverage here is zero as all settlements are in physical.
3.Greece paid the iMF on Thursday. On Friday, it was announced that the ECB increased its ELA to Greece by 1.2 billion euros up to 73.2 billion euros as more depositors fled. Today, the London’s Financial times has reported that Greece has decided that it will withhold the IMF payment in May and June so it can pay its pensioners. Also the reform package submitted by Greece is totally offside on its pension reform and on privatization.
(courtesy London’s Financial times/Zero hedge)
4. James Turk reports that gold is basically out of stock in London as it moves into backwardation again.
(James Turk, Rory Hall,Dave Kranzler IRD)
5. Bill Holter delivers another outstanding commentary on confidence and collateral
(Bill Holter)
6. China rejects Taiwan’s application into the AIIB.
(London’s Financial Times)
7. Bank de Monte de Paschi di Siena in trouble again today, being offside with loans to Nomura in that phony deal orchestrated a few years ago
(Reuters)
8. Russia lifts its ban on selling missiles to Iran. It also states that the move by the west to isolate Russia will be fruitless
(zero hedge)
we have these and other stories for you tonight
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest rose by 1689 contracts from 390,946 up to 392,635 with gold up by $11.00 on Friday (at the comex close). We are now in the active delivery month of April and here the OI rose by 8 contracts up to 2,470. We had 0 contracts filed upon on Friday so we gained 8 contracts or 800 oz will stand for delivery in April. The next non active delivery month is May and here the OI rose by 27 contracts up to 484. The next big active delivery contract month is June and here the OI rose by 851 contracts up to 264,543. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 67,984 (Where on earth are the high frequency boys?). The confirmed volume on Friday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 133,703 contracts. Today we had 0 notices filed for 0 oz.
And now for the wild silver comex results. Silver OI rose by a huge 1301 contracts from 171,410 up to 172,711 despite the fact that silver was up by only by 20 cents, with respect to Friday’s trading . We are now in the non active delivery month of April and here the OI rose to 175 for a gain of 5 contracts. We had 0 notices filed on Friday so we gained another 5 contracts or an additional 25,000 silver ounces will stand in this delivery month of April. The next big active delivery month is May and here the OI fell by 4,090 contracts down to 80,824 . The estimated volume today was poor at 18,396 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 67,099 contracts which is excellent in volume. We had 0 notices filed for nil oz today.
April initial standings
April 13.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
32.15 oz (Brinks) l kilobar
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
40,097.741 oz (HSBC
No of oz served (contracts) today
0 contracts (nil oz)
No of oz to be served (notices)
2470 contracts(247,000) oz
Total monthly oz gold served (contracts) so far this month
686 contracts(68,600 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
oz
Total accumulative withdrawal of gold from the Customer inventory this month
219,997.0 oz
Today, we had 0 dealer transaction
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: nil oz
we had 1 customer withdrawal
i) Out of Brinks: 32.15 oz
total customer withdrawal: 32.15 oz
we had 1 customer deposit:
i) Into HSBC: 40,097.741 oz
total customer deposit: 40,097.741 oz
We had 1 adjustment
Out of the HSBC vault:
202.886 oz leaves the customer vault and heads to the dealer vault of HSBC.
Today, 0 notices was issued from JPMorgan dealer account and 10 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (686) x 100 oz or 68,600 oz , to which we add the difference between the open interest for the front month of April 2470) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the April contract month:
No of notices served so far (686) x 100 oz or ounces + {OI for the front month (2470) – the number of notices served upon today (0) x 100 oz which equals 315,600 oz or 9.816 tonnes of gold.
we gained 8 contracts or an additional 800 oz will stand for delivery in this April contract month.
Total dealer inventory: 567,535.971 or 17.65 tonnes
Total gold inventory (dealer and customer) = 7,833,538.194 oz. (243.65) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 60 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real. I cannot see continual additions of strictly kilobars.
end
And now for silver
April silver initial standings
April 13 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
1,387,174.86 oz (CNT,HSBC,Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
1,258,474.07 (JPM,CNT)
No of oz served (contracts)
0 contracts (nil oz)
No of oz to be served (notices)
175 contracts(875,000 oz)
Total monthly oz silver served (contracts)
315 contracts (1,575,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
548,169.5 oz
Total accumulative withdrawal of silver from the Customer inventory this month
8,117,267.5 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawals:
total dealer withdrawal: nil oz
We had 2 customer deposits:
i) Into JPM<: 1,200,224.07 oz
ii) Into CNT: 58,250.000 oz ????
total customer deposits: 1,258,474.07 oz
*this is the 4th day in a row that we had a huge deposit silver arrive at JPMorgan customer side.
We had 3 customer withdrawals:
ii) Out of HSBC: 122,678.26 oz
iii) Out of CNT: 1,204,476.300 oz
iii) Out of Scotia; 60, 020.300 oz
total withdrawals; 1,387,174.86 oz
we had 1 adjustment:
i) Out of JPMorgan vault:
287,729.70 oz leaves the dealer at jPM and enters the customer side of JPMorgan.
Total dealer inventory: 62.947 million oz
Total of all silver inventory (dealer and customer) 174.939 million oz
.
The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (315) x 5,000 oz = 1,575,000 oz to which we add the difference between the open interest for the front month of April (175) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the April contract month:
315 (notices served so far) + { OI for front month of April(175) -number of notices served upon today (0} x 5000 oz = 2,450,000 oz standing for the April contract month.
we gained an additional 25,000 silver ounces standing in this April delivery month.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.com orhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
April 13.2015: we had a withdrawal of 1.75 tonnes of GLD/Inventory at 734.29 tonnes
April 10/we had no change in inventory at the GLD/Inventory at 736.04 tonnes
April 9.2015 we have a huge addition of 2.98 tonnes of gold inventory/GLD inventory tonight stands at 736.04 tonnes
April 8.2015:no changes in the GLD/Inventory 733.06 tonnes
April 7. we had another withdrawal of 4.18 tonnes of gold at the GLD/Inventory rests at 733.06 tonnes
April 6. no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 2/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 1/2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
march 31.2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
March 30/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes.
March 27/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
March 26 we had another huge withdrawal of 5.97 tonnes of gold. This gold is heading straight to the vaults of Shanghai, China/GLD inventory 737.24 tonnes
April 13/2015 / we had a loss in inventory of 1.75 tonnes of gold at the GLD/Inventory stands at 734.29 tonnes
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD : 734.29 tonnes.
end
And now for silver (SLV):
April 13.2015: a huge addition of 2.391 million oz of silver at the SLV/Inventory rests at 324.230 million oz
April 10/ no changes in silver inventory at the SLV/Inventory rests at 321.839 million oz
April 9/2015 no changes in inventory at the SLV/Inventory rests at 321.839 million oz/
April 8.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz
April 7.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz
April 6. we had a small withdrawal of 136,000 oz/inventory tonight rests at 321.839 million oz
April 2/2015: no changes in inventory/SLV inventory rests this weekend at 321.975 million oz
April 1.2015: we had a huge withdrawal of 1.913 million oz of silver from the SLV vaults/Inventory 321.975 million oz
March 31.2015: no changes in inventory at the SLV/Inventory at 323.88 million oz
March 30.2015: no changes in inventory at the SLV/inventory at 323.888 million oz.
March 27. we had a huge withdrawal of 1.439 million oz leave the SLV/Inventory rests this weekend at 323.888 million oz
March 26.2015; no change in silver inventory/SLV inventory 325.323 million oz
March 25.2015:no change in silver inventory/SLV inventory 325.323 million oz
April 13/2015 we had a huge addition in inventory at the SLV of 2.391 million oz/ inventory rests at 324.230 million oz
end
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now for the first time into the negative to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 7.9% percent to NAV in usa funds and Negative 78.0% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.6%
Percentage of fund in silver:38.0%
cash .4%
( April 13/2015)
Sprott data: will update later tonight
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.49%!!!!! NAV (April 13/2015)
3. Sprott gold fund (PHYS): premium to NAV falls -.39% to NAV(April 13/2015
Note: Sprott silver trust back into positive territory at +0.49%.
Sprott physical gold trust is back into negative territory at -.39%
Central fund of Canada’s is still in jail.
end
And now for your more important physical gold/silver stories:
Gold and silver trading early this morning
(courtesy Goldcore/Mark O’Byrne)
Safety Deposit Box Heist in London Reminder of Need For Insurance and Top Level Security
By Mark O’ByrneApril 13, 20150 Comments
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– One week on and police appear no nearer to catching those responsible
– Crime only seems more audacious with every new detail that emerges
– CCTV has given tantalising glimpse of the six men who went into vaults
– Many victims of Hatton Garden robbery had all their wealth uninsured in safe deposit boxes
– UK as a jurisdiction has not been very secure in recent years, with numerous high-profile heists in London
– Shows vital importance of insurance for boxes and bullion storage
– Diversification on every level is key, including how and where bullion is stored
The highly-organised Easter weekend safety deposit boxes raid at a facility in Hatton Garden, London, demonstrates once again that holding tangible assets outside of the fragile banking system is a risky exercise, if the manner in which those assets are stored is not thoroughly secure and fully insured.
While many of those who stored valuables in the boxes were jewellers, reports are emerging of how some of the victims had their entire life savings, including cash and bullion, in boxes which they believed to be secure. Many had no insurance partly because they could not afford the extra cost and partly because they were convinced their property was secure in the Hatton Garden facility.
“The robbery was reported on Tuesday but by Friday we had still not been told whether our stuff had been taken” said one jeweller who asked to remain anonymous. “I had £350,000 worth of cash and jewels and I was in a terrible state”.
“By Friday, some of us owners had had enough and each paid the staff at the building £100 to have a look at the list of boxes missing. Mine was fine but a friend had his life savings completely stolen, worth £500,000.”
There appears to have been a shocking lapse in security surrounding the Easter weekend heist. The security lapse reflects badly both on the company and on the police.
“On Friday it emerged the Met received a call on Good Friday and were told an intruder alarm had gone off – but decided it did not require a response. Officers are now investigating why the call was given a grade that meant no police response was deemed necessary,” according to the BBC.
An alarm was reported to police but no response was deemed necessary. Yesterday, this decision was described as ‘totally incompetent’ by ex-head of the Flying Squad, John O’Connor.
Local residents reported loud drilling over the weekend. “I heard drilling late on Thursday but thought it was workmen after we had a huge power cut. When I heard the news, I realised it was the gang drilling into the vault,” said John Han.
Further questions are being asked regarding the competence – or worse – of the Met over why CCTV footage was not released in the critical period following the discovery of the robbery which may have helped to identify the thieves who may have left the country by now.
The footage was released by the Mirror newspaper on Saturday. “The Met Police said it had already recovered the footage ‘at the earliest opportunity’, but declined to comment on why it was only released after being published by the newspaper,” adds the BBC.
For our clients, the how of owning gold is important as the why and the manner in which bullion is stored is as important a consideration as the necessity to own bullion.
The nature of bullion ownership and having insurance is absolutely vital.
We operate a system of bailment and as such customers’ precious metal investments are held in custody, directly in their name. Customers can view the contents of their storage account at any time by visiting the GoldCore website and reviewing the contents, bar numbers and location of their holdings in their account. Reconciliation between the internal GoldCore client holdings which can be seen online and with our storage partners is done on a daily basis.
Clients are able to review the assets under their subaccounts based on their unique subaccount number. Their assets are always fully insured through the storage providers.
GoldCore works with an independent audit company, Inspectorate International, who audits the assets held in GoldCore’s secure storage locations. This is done bi-annually and the results of this audit are shared with every customer that has assets in secure storage with GoldCore.
Every participant in the international bullion market requires adequate insuranceto cover loss, damage and indeed theft.
This applies to mining companies, refineries, mints, financial institutions, bullion transporters and storage specialists.
The insurance of precious metals vaults and storage depositories is predominantly underwritten by specialist risk underwriters operating through the international insurance market such as Lloyd’s of London.
Our clients’ bullion holdings are covered by ‘all risk’ insurance underwritten by specialist ‘specie’. This insurance agreement, which is governed by English law, covers precious metals and other valuables against physical loss, damage, theft or disappearance up to the value of $50 million for any one loss in any one location. The agreement can be viewed by GoldCore clients.
It is vital to ensure that your bullion provider and its storage partners have adequate insurance cover. With low cost bullion providers generally comes low levels and inadequate cover.
Diversification and owning bullion in the safest vaults in the world and in the safest jurisdictions in the world is key.
A safety deposit box in a facility in one’s own jurisdiction would play an important role in this type of diversification. It is important to have access to an allocation of one’s gold in the event of an international crisis causing a temporary disruption to access to an overseas vault or indeed capital controls or problems in the banking system and international payments system.
We believe, however, that such an allocation should always be insured and it should be just large enough to meet emergency requirements or an intended small-scale sale. The bulk of one’s bullion should be stored in highly secure specialised, professional bullion vaults.
We provide fully insured bullion storage service in the safest vaults in the safest jurisdictions in the world, such as those operated by Loomis International in Zurich (formerly Via Mat International) and Brink’s in Singapore.
The jurisdiction in which one stores larger allocations of gold is also important. London has seen a number of high profile jewellery and gold heists in recent years. This is somewhat understandable given the concentration of wealth in London but at the same time such events are virtually unheard of in other international financial hubs like Zurich or Singapore.
Allocating a small proportion of one’s wealth to physical gold is of vital importance in these days of geopolitical tension, desperate monetary experimentation by central banks and gargantuan unpayable global debt. At the same time, one needs to consider very carefully how one stores this gold.
The experience of many of the unfortunate safe deposit box holders at Hatton Gardens demonstrates that one cannot take security for granted. In the coming months and years, as the current monetary insanity comes to its logical conclusion, bullion will become a highly desirable target of both criminal elements and bankrupt governments.
Hence the need to own it in the safest ways possible.
Vital importance of nature of ownership and insurance is covered in our must read guide
How To Store Gold Bullion – The Seven Key Must Haves
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,197.85, EUR 1,136.72 and GBP 820.54 per ounce.
Friday’s AM LBMA Gold Price was USD 1,201.90, EUR 1,133.49 and GBP 820.58 per ounce.
Gold climbed 1.1% percent or $13.10 and closed at $1,208.20 an ounce on Friday, while silver rose 1.79 percent or $0.29 closing at $16.49 an ounce. Gold finished up 0.57 percent for the week in dollar while silver slipped 1.49 percent. Gold in euros was over 3 percent higher and in sterling gold was over 2 percent higher for the week.
Gold prices in Singapore were off 0.3 percent at $1,204.16 an ounce near the end of day trading. Comes U.S. gold for June delivery was unchanged at $1,204.30 an ounce.
Gold made a sharp reversal higher last week despite the stronger dollar and buoyant record hitting stock markets and this is bullish for the coming months.
On Friday, Federal Reserve Bank of Richmond president Jeffrey Lacker said he continued to favour a rate increase at the June policy meeting, suggesting some of the recent forecast-missing US data was weaker because of unseasonably adverse weather.
The yellow metal shrugged off the hawkish comments finishing up on Friday. The next FOMC meeting is scheduled April 28-29th.
Concerns about the health of the world’s number 2 economy, China, has been highlighted by poor economic data. Chinese exports fell 15 percent in March while import shipments dropped at their highest rate since the 2009 global financial crisis.
This is a shock and suggests that global economy is vulnerable to a slow down. The trade balance falling from $60.6 billion in February to $3.1 billion in March. Economists had $43.4 billion forecasted. The World Bank cut their Chinese economic growth forecasts for 2015 from 7.4 percent to 7.1 percent, and 2016 from 7.2 percent to 7 percent.
In late European trading, gold was trading down 0.66 percent at $1,199.42 per ounce. Silver was off 0.74 percent at $16.34 per ounce. Platinum also slipped 0.69 percent at $1,159.20 per ounce.
Breaking News and Award Winning ResearchHere
end
Two important points today:
1. Gold demand from China (Mainland) amounted to 40 tonnes this past week.
2. The international gold contract is now blooming in volume.
Koos Jansen explains the International Gold exchange for us:
(courtesy Koos Jansen)
Posted on 11 Apr 2015 by Koos Jansen
Shanghai International Gold Exchange Comes To Life
In September 2014 the Shanghai Gold Exchange (SGE) launched its International Board, the Shanghai International Gold Exchange (SGEI). After a slow start, the volume of the physical SGEI kilobar contract (iAu99.99) has transcended all other SGE contracts in week 15 (April 6- 10).
The primary goals for the launch of the SGEI was to facilitate gold trading in renminbi, improve price discovery in renminbi and internationalize the renminbi. The Chinese consider gold as an indispensable component of China’s financial market and for the renminbi to internationalize the renminbi-gold market has to internationalize. It could be that the spike in trading volume of iA99.99 was an incidental burp, it could also be we’re witnessing the Chinese international gold exchange entering its adolescence.
In any case, the chairman of the SGE, Xu Luode, has been very clear about his intentions with the SGEI. A few snippets from Xu…
December 2013:
The Shanghai Gold Exchange chairman Xu Luode said he considers the construction of an offshore gold exchange international gold market in the Shanghai Free Trade Zone, for the cross-border use of renminbi, it will be launched for the international offshore investors… The industry comments that it will be a tool to promote the internationalization of the renminbi, …
…the goal is to build Shanghai into an international gold exchange trading market with global influence.
May 2014 (direct quote):
The Chinese gold market is an important force, a positive energy in the international gold market but its influence does not correspond to its mass and scale. Last year China’s domestic gold mines produced 428 tonnes; at the same time China imported 1540 tonnes of gold, adding up to nearly 2000 tonnes. China’s import volume is significant but China’s influence on the price of gold is very small. Real influence still lies in the West. Data such as Non-farm payroll, or even a speech could impact the gold market in a big way. In this sense, the mass and scale of China’s gold market and its influence in the international gold market does not match. Through the SGE international board Chinese pricing power will increase.
Foreign investors can directly use offshore yuan to trade gold on the SGE international board, which is promoting the internationalization of the renminbi. The international board will form a yuan-denominated gold price index system named “Shanghai Gold”. Shanghai Gold will change the current gold market “consumption in the East priced in the West” situation. When China will have a right to speak in the international gold market, pricing will get revealed. New York prices gold through bidding whereas in London the gold price is fixed by five banks. However the London gold fixing price is now being questioned since these five banks are price-fixers while at the same time they are also the market’s most important participants.
China is fully qualified and may become the world gold market’s very important first class player.
February 2015 (direct quote):
The Chinese government regards the gold market as an indispensable component of China’s financial market and attaches great importance to its growth and development.
… As national efforts to internationalize the renminbi reach their crescendo, China’s domestic gold market is facing an auspicious window and timing for pursuing its internationalization and greater openness.
… China, India, Dubai and Singapore all enjoy vibrant trading scenes and comparative advantages; however, in the eyes of many investors, the influence wielded by the Asian markets is still very limited as a whole. Using the International Board as a launch pad, China’s gold market will embrace greater openness and foster stronger ties with its neighbors and, together, elevate the trading and pricing influence of Asia in the world’s gold market.
…All products listed on the Exchange are denominated in renminbi. As more market participants gather to trade on the Exchange, and onshore investors and domestic funds become more intertwined with offshore investors and offshore funds, the sphere of influence of trading prices on the Exchange will gradually expand from nearby regions to the whole world and, at the same time, renminbi-denominated gold benchmark price will emerge as another financial index of global significance.
As a reminder, from PBOC Governor Zhou Xiaochuan in 2004:
Despite the declining function of gold as currency in the world, the activeness and development of investment activities with gold as the target indicate that gold still has a strong financial nature and remains an indispensable investment tool. In major financial centre’s in the world, the gold market – together with the money market, securities market and FX market – constitutes the main part of the financial market.
In the chart below we can see the weekly trading volumes of the most traded SGE contracts – Au99.95, Au99.99, Au(T+D) – and the most traded SGEI contract – iAu99.99.
The largest spike in volume was on April 8, when total iAu99.99 volume was 31 tonnes for the day (counted unilaterally). Which is still far below the COMEX, where 382 tonnes in gold futures were traded on April 8, though, COMEX gold is leveraged more than 20:1.
Note, the SGE contracts can be traded by international members of the SGEI, and domestic members of the SGE are allowed to trade SGEI contracts. Though, a limited number of members of the SGE can trade iAu99.99 and are allowed to import this gold from the Free Trade Zone into the mainland. No international SGEI member can export the gold from the SGE (mainland) to abroad. For more information read The Workings Of The Shanghai International Gold Exchange.
SGE Withdrawals
Unfortunately we don’t know who is exactly trading the iAu99.99 contracts, international or domestic members. Nor do we know if the traded gold is withdrawn from the vaults, and if withdrawn, if it’s subsequently imported into the mainland or exported from the Shanghai Free Trade Zone. Based on data released in February and low iAu99.99 volume we could be fairly sure SGEI trading didn’t substantially distort our proxy of Chinese wholesale gold demand, SGE withdrawals. From SGE Withdrawals In Perspective:
For now, the SGE withdrawal distortion ratio is at most 0.0246 (3/122). Measuring Chinese wholesale gold demand conservatively would be
SGE withdrawals – (0.0246 X SGEI volume)
However, now SGEI volume is surging it’s hard to say if this “distortion ratio” is still usable. If the volume is surging the trading pattern can also be changing. We have to wait for new information on withdrawals to come out (believe me I’m trying to get it out) before we can continue to make accurate estimates of Chinese wholesale gold demand measured by SGE withdrawals. Until then, the significance of SGE withdrawals from week 14 is unsure.
The most recent SGE withdrawal data is from week 13 (March 30 – April 3), when SGEI volume hadn’t peaked. In week 13 withdrawals from the vault of the Chinese bourse accounted for 40 tonnes, year to date 647 tonnes have been withdrawn. 647 tonnes corrected by 0.0246 as distortion ratio is 641 tonnes, which is up 9 % from 2014. According to my estimates China has net imported over 450 tonnes year to date.
So much for now on the Chinese gold market, keep you posted!
Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com
Early Monday morning trading from Europe/Asia
end
(courtesy GATA)
Gold-Backed SDR “Is Quite Likely To Happen”, LSE’s Lord Desai Warns
As many are increasingly coming to terms with the ‘obvious failure of fiat currency’, the inevitavble question arises “what next?” Earlier this year, we discussed the possibility of a Chinese- or Russian-currency backed by gold, amid the increasing calls (domestically and abroad) for an end to USD Reserve hegemony; but this weekend, as Bloomberg reports, Lord Meghnad Desai, chairman of The Official Monetary and Financial Institutions Forum, stated that IMF Special Drawing Rights (SDR) should contain some gold to help stabilize the currency.
As Bloomberg reports,
“A bit of gold” could help stabilize SDRs,Lord Meghnad Desai, chairman of Official Monetary and Financial Institutions Forum, says at precious metals conference in Dubai.
“We could ask that gold be nominated as part of the SDR. That is one thing I think is quite likely to happen”
This will be easier if China increases its official gold holdings.
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This is not the first time such a suggestion has been made…(as JC Collins of PhilosophyOfMetrics.com detailed)
The Coming SDR Gold Standard
Sometimes what at first appears to be conflicting information is anything but, and what was originally considered to be opposing forces or ideals can quickly become unified for the greater good.
There has been much discussion and division over whether the world was moving towards a multilateral super-sovereign reserve currency by way of the Special Drawing Right of the International Monetary Fund or towards a new gold standard by which all currencies would be valued once again on gold.
Positions have taken up defense on both sides and all waited to see which side was going to be right. Were the BRICS countries going to overthrow the western banking cabal? Was the US dollar going to inflate into oblivion? Was the SDR going to become the new reserve currency? Was a new gold standard going to be implemented instead?
So many questions with no clear outline or determinations on what exactly was going to happen.
I have contested all along that the SDR was going to become the super-sovereign reserve currency of the emerging multilateral financial system. The supporters of a new gold standard have found this idea unworkable because gold is considered to be the only method of creating stability within the larger architecture of the global financial system.
But what if everyone is right? Or more correctly, what if all the obvious points and leverage of each potential system can be utilized to create the larger macro stability from which the multilateral will inevitably emerge?
In the post Renminbi is Already a De Facto Reserve Currency, I discussed how the Chinese currency was being internationalized and would be added to the SDR basket valuation.
This basket is currently made up of four currencies, being the US dollar, the Japanese yen, the Euro, and the British pound. Adding the renminbi to the basket is both important and necessary for any changes to the global financial architecture.
But this theory has never accounted for the importance obviously placed on gold and the manipulation and mass movement of the precious metal which has taken place over the last few years.
No doubt the gold moving east has a lot to due with balancing old sovereign bond debts and building up reserves to support the renminbi denominated contracts which have just begun at the Shanghai Gold Exchange.
But this doesn’t fully explain the demand by other countries for gold, such as Russia and India, or even Germany demanding its gold back from the United States.
But nether does a gold standard fit the facts as all participating countries and economies have stated in official publications and speeches that a new gold standard is unworkable and the SDR provided the best opportunity moving forward to balance the financial structure of the world.
In posts such as:
The Rise of the World Empire
Everything Will Be SDR Compliant
The Days of July – BRICS Still Seek SDR Solution
The Arcane SDR Supra-Sovereign Asset
I have attempted to explain and describe how the BRICS countries are aligned with the larger macro mandates of the SDR multilateral system and do not plan on overthrowing the western banks. It is in fact a situation where the western and eastern banks are all controlled by the Bank for International Settlements.
It is interesting that over the last few days even certain conspiracy theorists which have been promoting the overthrow of the western banking cabal are now stating that the BIS and its central bank system will remain.
In most of my more esoteric posts I explain how the human mind seeks out division and from that division is born conflict. Once symbols of division have been established it is almost impossible to shift the thinking of each position to see or observe a larger or more unified macro picture.
But once that realization is made the conscious thought pattern of all things takes a leap forward and what was once hidden in plan site becomes clearly visible and clarity resumes.
As we move closer to the end of this year and the ultimate point of transition to the multilateral, it is important to continue studying and observing the patterns which are taking place on the micro level. These proxy resource wars and attempts to consolidate resources under regional currencies before the larger macro consolidation takes place will likely taper off as agreements are made and positions relinquished.
The US Congress will pass the required legislation to enact the 2010 IMF Code of Reforms which will allow for the necessary changes to the Executive Board of the IMF to take place. This will also allow for the SDR basket to be opened and the renminbi and gold will be added to the overall valuation.
So once completed, the SDR basket valuation will consist of the following stores of value:
US Dollar
Japanese Yen
British Pound
Euro
Renminbi
and Gold.
From this point we need to study and observe the massive amount of Sovereign Wealth Funds which litter the background of the international financial architecture.
Energy exporters and pacific rim economies which have undervalued currencies have been pouring investment into SWF’s. These funds are in a perfect position to promote the use of the SDR as a unit of account and store of value.
In the coming months and years you will see Sovereign Wealth Funds begin to purchase large amounts of SDR denominated bonds and securities. This is likely where the solution to the derivatives issue will be found. Somewhere in between Sovereign Wealth Funds and SDRM – Sovereign Debt Restructuring Mechanism, will be found the answer.
This will be the “reserve dollar” exit strategy for central banks and national treasuries.
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Interested readers can study the following paper published by the University of Glasgow, titled Adding Gold into the Valuation of the SDR.and Collins encourages a strong review of the following document onFINAL+Vision_Sovereign_Wealth_Funds. Especially section three, titled Sovereign Wealth Funds, Special Drawing Rights, and the New Global Financial Architecture.
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As we