gold – praag.org

Cecil John Rhodes’ days are numbered

After a week of student protest, UCT vice-chancellor Max Price has given up on the statue of colonial war criminal and génocidaire Cecil John Rhodes. Price says it should be moved from its “pride of place, at the focal point of the campus”.

In an attempt to stop the protests, Price yesterday announced a fast-track plan for the controversial statue, hated by both black and white.

But Price’s appeasement gesture will do little to quell the spread of black protests against lack of “transformation” and “racial equality”. SRC president Ramabina Mahapa described the new plan as “meaningless”.

Using the hashtag #Rhodes SoWhite, students in Grahamstown yesterday staged a demonstration too about the slow pace of transformation and lack of inclusiveness at Rhodes University.

The chairman of the Higher Education Transformation Network, Lucky Thekisho, singled out the North West and Stellenbosch universities as white scourges.

The three different campuses of North West University needed to be unified so that resources could be more equally spread, while student initiations were a racially divisive issue at Stellenbosch, he said.

UCT students began protesting 10 days ago after a political science student, Chumani Maxwele emtied a bucket of faeces over the statue of Rhodes.

Maxwele has told The Times he wants to end the division between black and white students at UCT and to eradicate whiteness which is still rampant at the institution.

Price defended Rhodes and said “This will not compromise our ability to record and debate the role Rhodes played in the city’s and continent’s history.”

Nine former presidents of the UCT SRC have written an open letter to the university council expressing their support for the removal of the statue.

Heritage Western Cape spokesman Andew Hall said the statue was an “icon of national heritage”. The provincial government has appealed to “stakeholders from the heritage committee” and “laws” in an effort to stop the removal.

The province has never sought input from any so-called stakeholders when it summarily trashed and removed Afrikaner monuments in Cape Town.

“It cannot just be broken down. The university will have to get a permit before making any changes to it and they will have to recommend what needs to happen with the statue. Without appeals, the process could take 30 days,” Hall declared.

The DA’s coloured federal chairman Wilmot James, a former dean of humanities at UCT, confirmed that Rhodes was a war criminal. “Cecil John Rhodes did awful things as part of his colonial project,” he said. Wilmot nevertheless tried to defend Rhodes’ “contribution to education”.

Rhodes started the British war effort, supported by troops from several regions in the British Empire, including blacks, the Australian colonies, Canada, India and New Zealand, to plunder the rich Boer republics where gold had just been discovered in the nineteenth century.

For this purpose concentration camps for white Afrikaners were set up in which almost 30 000 Afrikaner women and children perished. Black British troops were ordered to rape white Afrikaner women and girls.

It formed part of the British “Scorched Earth” policy which included the systematic destruction of crops and slaughtering of livestock, the burning down of churches, homesteads and farms, and the poisoning of wells and salting of fields.

Will Russia remonetize in gold?

The “perfect-storm” of geopolitical instability, diplomatic isolation, severe currency depreciation, and economic decline now confronting Russia has profoundly damaged Moscow’s international standing, and possibly for the long-term.

Yet, it is precisely such conditions that may push the country’s leadership into taking the radical step that will secure its world-player status once and for all: the adoption of a gold-exchange standard.

Though a far-fetched idea at first glance, many factors suggest that remonetization in gold may be a logical next step for Moscow.

First, for years Moscow has been expressing its unwillingness to remain at the monetary mercy of the US and its NATO allies and this view has been most vehemently expressed by President Putin’s long-time economic advisor, Sergei Glazyev.

Russia is prepared to play strategic hardball with the West on the issue: the governor of Russia’s central bank took the unusual step last November of presenting to the international media details of the bank’s zealous gold-buying spree.

The announcement, in sharp contrast to that institution’s more taciturn traditions, underscores Moscow’s outspoken dismay with dollar hegemony; its timing suggests coordination with the top rungs of government to present gold as a possible currency-war weapon.

Second, despite international pressure, Russia has been very wary of the sell-off policies that led the UK, France, Spain, and Italy to unload gold over the past decade during unsuccessful attempts to prop up their respective ailing economies — in particular, of then-Prime Minister Gordon Brown’s sell-off of 400 metric tons of the country’s reserves at stunningly low prices.

Moscow’s surprise decision upon the onset of the ruble’s swift decline in early December 2014 to not tap into the country’s gold reserves, now the world’s sixth largest, highlights the ambitiousness of Russia’s stance on the gold issue. By the end of December, Russia added another 20.73 tons, according to the IMF in late January, capping a nine-month buying spree.

Third, while the Russian economy is structurally weak, enough of the country’s monetary fundamentals are sound, such that the timing of a move to gold, geopolitically and domestically, may be ideal. Russia is not a debtor nation. At this writing in January, Russia’s debt to GDP ratio is low and most of its external debt is private.

Physical gold accounts for 10 percent of Russia’s foreign currency reserves. The budget deficit, as of a November 2014 projection, is likely to be around $10 billion, much less than 1 percent of GDP. The poverty rate fell from 35 percent in 2001 to 10 percent in 2010, while the middle class was projected in 2013 to reach 86 percent of the population by 2020.

Collapsing oil prices serve only to intensify the monetary attractiveness of gold. Given that oil exports, along with the rest of the energy sector, account for 45 percent of GDP, the depreciation of the ruble will continue; newly unstable fiscal conditions have devastated banks, and higher inflation looms, expected to reach 10 percent by the end of 2015. As Russia remains (for the foreseeable future) mainly a resource-based economy, only a move to gold, arguably, can make the currency stronger, even if it does limit Russia’s available currency.

In buying as much gold as it has, the country is, in part, ensuring that it will have enough money in circulation in the event of such fundamental transformation. In terms of re-establishing post-oil shock international prestige, a move to gold will allow the country to be seen as a more reliable and trustworthy trading partner.

The repercussions of Russia on a gold-exchange standard would be immense. Above all, it would mean the first major schism in the world’s monetary order. China would quite likely follow suit. It could mean the threat of a severe inflation in the United States should rafts of unwanted dollars make their way back across the Atlantic — the Fed’s ultimate nightmare. Above all, the country will avoid the extreme debt leverages which would not have happened had Western capitals remained on gold.

“A gold standard would be politically appealing, transforming the ruble to a formidable currency and reducing outflows significantly,” writes Dr. Enrico Colombatto, economics professor at the University of Turin, Italy.

He notes that the only major drawback would be that the imposed discipline of a gold standard would deprive authorities of discretionary political power. The other threat would be that of a new generation of Russian central bankers becoming too heavily influenced by the monetary mindset of the European Central Bank (ECB) and the Fed.

As Alisdair MacLeod, a two-decade veteran of off-shore banking consulting based in the UK, recently wrote, Russia (and China) will “hold all the aces” by moving away from any possible currency wars of the future into the physical gold market. In his article, he adds that there is currently a low appetite for physical gold in Western capital markets and longer-term foreign holders of rubles would be unlikely to exchange them for gold, preferring to sell them for other fiat currencies.

Mr. Macleod cites John Butler, CIO at Atom Capital in London, who sees great potential in a gold-exchange standard for Russia. With the establishment of a sound gold-exchange rate, he argues, the Central Bank of Russia would no longer be confined to buying and selling gold to maintain the rate of exchange. The bank could freely manage the liquidity of the ruble and be able to issue coupon-bearing bonds to the Russian public, allowing it a yield linked to gold rates. As the ruble stabilizes, the rate of the cost of living would drop; savings would grow, spurred on by long term stability and lower taxes.

Foreign exchange also would be favorable, Mr. Butler maintains. Owing to the Ukraine crises and commodities crises, rubles have been dumped for dollar/euro currencies. Upon the announcement of a gold-exchange, demand for the ruble would increase. London and New York markets would in turn be countered by provisions restricting gold-to-ruble exchanges of imports and exports.

The geopolitics of gold also figure into Russia’s increasingly close relations with China, a country that also has made clear its preference for gold over the dollar. (Russia recently edged out China as the world’s top buyer of the metal.) In the aftermath of the $400 billion, 30-year deal signed between Russian gas giant Gazprom and the China National Petroleum Company in November 2014, China turned its focus to the internationalization of its own gold market. On January 15, 2015, the Shanghai Gold Exchange, the largest physical gold exchange worldwide, and the World Gold Council, concluded a strategic cooperation deal to expand the Chinese gold market through the new Shanghai Free Trade Zone.

This is not the first time the gold standard has been seen as the ultimate cure for Russia’s economic problems. In September 1998, the noted economist Jude Wanninski predicted in a far-sighted essay for The Wall Street Journal that only a gold ruble would get the the country out of its then-debt crises. It was upon taking office about two years later, in May 2000, that President Putin embarked upon the country’s massive gold-buying campaign. At the time, it took twenty-eight barrels of crude just to buy an ounce of gold. The gold-backed ruble policy of those years was adopted to successfully pay down the country’s external debt.

As a pro-gold stance is, essentially, anti-dollar, speculation about how the US would react raises the question of whether an all-out currency war would follow. The West would have to keep Russia regionally and militarily marginalized, not to mention kept within the confines of the Fed, the ECB, and the Bank of England (BOE).

Nor is that prospect too far-fetched. As Dutch author Willem Middelkoop has written in his 2014 book The Big Reset: War on Gold and the Financial Endgame,

A system reset is imminent. Even before 2020 the world’s financial system will need to find a different anchor. … In a desperate attempt to maintain this dollar system, the United States waged a secret war on gold since the 1960s. China and Russia have pierced through the American smokescreen around gold and the dollar and are no longer willing to continue lending to the United States. Both countries have been accumulating enormous amounts of gold, positioning themselves for the next phase of the global financial system.

Source: Von Mises Institute

Germany’s Bundesbank resumes gold repatriation

The Bundesbank successfully continued and further stepped up its transfers of gold last year. In 2014, 120 tonnes of gold were transferred to Frankfurt am Main from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York. “Implementation of our new gold storage plan is proceeding smoothly. Operations are running very much according to schedule,” said Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank.

The Bundesbank took advantage of the transfer from New York to have roughly 50 tonnes of gold melted down and recast according to the London Good Delivery standard, today’s internationally recognised standard. “We also called on the expertise of the Bank for International Settlements for the spot checks that had to be carried out. As expected, there were no irregularities,” said Mr Thiele.

According to its new gold storage plan, unveiled in January 2013, the Bundesbank will be storing half of Germany’s gold reserves in its own vaults from 2020 onwards. This necessitates a phased transfer to Frankfurt am Main of 300 tonnes of gold from New York and all 374 tonnes of gold from Paris.

Since the transfers began in 2013, the Bank has relocated a total of 157 tonnes of gold to Frankfurt am Main – 67 tonnes from Paris and 90 tonnes from New York. This is equivalent to roughly 23% of the total quantity to be transferred.

The Bundesbank assures the identity and authenticity of German gold reserves throughout the transfer process – from when they are removed from warehouses abroad until they are stored in Frankfurt am Main. As soon as the gold was removed from the warehouse locations abroad, Bundesbank employees cross-checked the lists of bars belonging to the Bundesbank against the information on the bars removed. Finally, once they arrived in Frankfurt am Main, all the transferred gold bars were thoroughly and exhaustively inspected and verified by the Bundesbank. When all the inspections had been concluded, no irregularities came to light with regard to the authenticity, fineness and weight of the bars.

The gold community paid great attention to the decision of the German Bundesbank to “bring German gold home”. At the beginning of 2013, the Bundesbank announced it would repatriate 300 tonnes of gold stored in the US by 2020. It is well behind schedule, citing logistical difficulties. Yet diplomatic difficulties are more likely to be the chief cause of the delay, especially seeing as the Bundesbank has proven its capacity to organise large-scale gold transports. In the early 2000s, the Bundesbank incrementally repatriated 930 tonnes of German gold held by the Bank of England.

Source: BUBA

Austria mulling gold repatriation

The Austrian state audit court says the central bank should address the concentration risk of storing 80% of its gold reserves with the Bank of England, Standard reports, citing draft audit report.

The court has advised the central bank to diversify storage locations, and contract partners, Bloomberg reported.

The Austrian central bank is currently reviewing gold storage concept, and doesn’t rule out relocating some of its gold from London to Austria.

Standard cited unidentified central bank officials.

The gold reserves of the Oesterreichische Nationalbank (OeNB) and their deposits in the UK and in Switzerland are a recurring theme in political discussions.

Especially after the example of the Deutsche Bundesbank the Austrians are serious about bringing gold home.

Given the “high concentration of risk in the Bank of England” the bank is also reviewing the “actual spread of the storage locations”.

Austria has 280 tons gold reserves, according to 2013 annual report, but only a small part (17 percent) is kept in Vienna, while 80 percent of the reserves are located in London, and three percent in Switzerland.

In comparison, the German Bundesbank has 3400 tons of gold, about half of it in the United States.

The decision was taken to resettle half of the gold to Germany.

Swiss reject gold reserve increase

Swiss voters rejected two closely watched referendums on Sunday that would have forced the central bank to buy up massive amounts of gold and introduced strict new limits on immigration, in a result that could bolster its economic ties to the European Union.

Proposed by the right-wing Swiss People’s Party out of concern that the Swiss National Bank has already sold too much gold, the measure would have compelled the SNB to boost its gold reserves to 20% from around 8% currently. Switzerland already holds the most gold per capita in the world.

An initial analysis of the voting trend from Swiss broadcaster SRF showed voters were likely to have turned down the “Save our Swiss gold” initiative.

A report from Bloomberg said the measure was voted down by a margin to 78-22.

If Swiss voters had approved the measures, it would have severely complicated policy at a time when the central bank is trying to defend a 1.20 euro cap on the Swiss franc imposed at the height of the euro crisis.

Earlier this month, gold futures went on a wild ride after polling data showed an advantage in favor of votes against measure. Previous polls had shown about an even split among voters.

Swiss were also set to reject a separate initiative that aimed to cut annual immigration by three-quarters from current levels in order to reduce the strain on Switzerland’s natural environment, and a third referendum aimed at scrapping a tax perk for wealthy foreigners was also set to be defeated.

Over the last several months, the price of gold has been declining sharply, with the precious metal currently near mu tli-year lows.

Source: Business Insider

As Dutch move gold out of US, French and Swiss call to follow

The financial crisis in Europe is prompting some nations to repatriate their gold reserves to national vaults. The Netherlands has moved $5 billion worth of gold from New York, and some are calling for similar action from France, Switzerland, and Germany.

An unmatched pace of money printing by major central banks has boosted concerns in European countries over the safety of their gold reserves abroad.

The Dutch central bank – De Nederlandsche Bank – was one of the latest to make the move. The bank announced last Friday that it moved a fifth of its total 612.5-metric-ton gold reserve from New York to Amsterdam earlier in November.

It was done in an effort to redistribute the gold stock in “a more balanced way,” and to boost public confidence, the bank explained.

“With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the bank said in a statement. “In addition to a more balanced division of the gold reserves…this may also contribute to a positive confidence effect with the public.”

Dutch gold reserves are now divided as follows: 31 percent in Amsterdam, 31 percent in New York, 20 percent in Ottawa, Canada and 18 percent in London.

Meanwhile, Switzerland has organized the ‘Save Our Swiss Gold’ referendum, which is taking place on November 30. If passed, it would force the Swiss National Bank to convert a fifth of its assets into gold and repatriate all of its reserves from vaults in the UK and Canada.

“The Swiss initiative is merely part of an increasing global scramble towards gold and away from the endless printing of money. Huge movements of gold are going on right now,” Koos Jansen, an Amsterdam-based gold analyst for the Singaporean precious metal dealer BullionStar, told the Guardian.

France has also recently joined in on the trend, with the leader of the far-right National Front party Marine Le Pen calling on the central bank to repatriate the country’s gold reserves.

In an open letter to the governor of the Banque de France, Christian Noyer, Le Pen also demanded an audit of 2,435 tons of physical gold inventory.

Germany tried and failed to adopt a similar path in early 2013 by announcing a plan to repatriate some of its gold reserves back from the US and France.

The efforts fizzled out this summer, when it was announced that Germany decided to leave $635 billion worth of gold in US vaults.

Germany only keeps about a third of its gold at home. Forty-five percent is held in New York, 13 percent in London, 11 percent in Paris, and only 31 percent in the Bundesbank in Frankfurt.

The real reason the Netherlands repatriated its gold

In what could definitely be called a stunning move, the Netherlands has announced it has repatriated in excess of 120 tonnes of gold from the vaults of the Federal Reserve in New York to the Dutch Central Bank in Amsterdam. Officially a move made to rebalance the locations where the gold is being stored, one cannot ignore the fact that the Netherlands only repatriated a large part of the gold which was stored in New York and it did not touch the gold stored in Canada and London.

Additionally, it’s not just ‘some’ gold being brought back home, no, the total amount is 122.47 tonnes or almost 4 million ounces with a market value of $5B. This will reduce the exposure of the Dutch Central Bank to the US financial system as now just 31% of its gold is being stored in the vault of the Fed, coming down from 51%. We have the impression this won’t be the last repatriation as the Dutch Central Bank is keeping its shipping route secret ‘in case more gold needs to be repatriated’.

So what was the main reason why the Netherlands brought the shiny precious metal back home? The central bank wants you to believe it’s just an ordinary decision, but believe it or not, the only reason for this move was to restore the confidence of the public in the Central Bank. By publishing this statement, the Dutch Central Bank basically admits that holding gold increases the public trust in the central bank as an institution, and that’s an statement which should not and cannot be underestimated as it basically means that only physical gold can be trusted and that the gold should be stored inside the country. ‘He who owns the gold makes the rules’ once again seems to be up-and-coming again.

The best place to store your gold is obviously in your own back yard, and it looks like the Netherlands aren’t agreeing with the Germans which also wanted to repatriate most of its gold which was stored in the vaults of the Federal Reserve. However, after bringing just a fraction of its gold back to Berlin, Germany publicly stated it would not repatriate any more gold as it ‘fully trusts the Federal Reserve as an institution’ and ‘the Americans are taking good care of their gold’. That’s obviously a bogus reason as the Fed obviously wasn’t suddenly taking better care of the gold than a year before. It’s also interesting to notice that the Netherlands and Germany used a different approach. Whilst Germany was boasting about its attempt to repatriate the gold, the Netherlands chose the ‘stealth’ way and repatriated it first before announcing it.

This strategy isn’t surprising as the Dutch always have been quite savvy. Keep in mind it was one of the most powerful nations right after the middle ages when the VOC really ruled the world shipping five times more goods to and from Asia than its main competitor in Great Britain. This savvy business mind is still in place and we wouldn’t be surprised if the Netherlands would be the frontrunner in a worldwide move to repatriate gold.

Keeping the German repatriation story in mind, the Netherlands are basically giving the Federal Reserve the finger. Unlike Germany, it does not trust the Federal Reserve more than its own central bank and it prefers to ‘sit’ on the gold in Amsterdam rather than store it in a foreign nation. This is a huge policy shift which cannot be underestimated, especially not if you look at all pieces of the puzzle.

As you know, China is still buying gold like crazy and was recently joined by Russia which has bought more gold every month since the beginning of this year. People were fast to dismiss this increased interest in gold as those were ‘special’ countries. Well, that argument is no longer valid. Germany wanted to repatriate its gold last year (but came under pressure to drop its plan), the Netherlands have now successfully repatriated almost 4 million ounces of gold, and there’s a Swiss referendum which asks the opinion of its citizens to increase the gold holdings once again. It’s unlikely the Swiss will approve this proposal as the latest polls show 38% in favor and 47% against the proposal with approximately 15% undecided voters.

Swiss Gold Referendum

The main takeaway here is not that 47% of the people are against increasing the gold reserves, but that 38% is strongly in favor of backing the Swiss Franc with Gold and an additional 15% might consider it. We are sure that a better explanation of the proposal would reduce the amount of opponents. Additionally, a lot of nay-sayers are voting against the party which proposed the idea and aren’t necessarily against the renewed gold standard.

This gold repatriation isn’t an isolated case. All signs are pointing in the direction that several central banks are now getting increasingly interested to increase their gold holdings and to have the gold inside the country instead of somewhere else. The Dutch repatriation is the first step, but we expect more pieces of the puzzle to fall into place soon. Very soon.

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Ukraine’s gold has vanished

The disappearance of Ukraine’s gold has been confirmed, and perhaps it is time to refresh the “unconfirmed” story that a little after the current Ukraine regime took power the bulk of Ukraine’s gold was taken to the United States.

The NY Fed has still not answered requests for a comment as to whether Ukraine’s gold has been redomiciled at the gold vault located some 80 feet below Liberty 33.

According to recent data, the value of Ukraine gold should be $988.7 million. That is the value of gold proportion of gold in gold reserves is 8%. If you believe Gontareva, it turns out there is a mere $123.6 million in gold remaining.

The figure is fantastic, considering that the amount of gold at the end of February (when the new authorities have already taken key positions) was $1.8 billion or 12% of the reserves.

In other words, since the beginning of the year gold reserves dropped almost 16 times. Gold stock in February were approximately 21 tons of gold, the presence of which was once proudly reported by Sergei Arbuzov, who led the NBU in 2010-2012. So what happened to 20.8 tons of gold?

Explaining the dramatic reduction in the context of the hryvnia devaluation through gold sales is impossible. After all, 92% of the reserves of the National Bank is in the form of a foreign currency that is much easier to use to maintain hryvnia levels and cover current liabilities. Besides since March the international price of gold has plummeted. Selling gold under such circumstances is a crime. In fact it would be more expedient to increase gold reserves through currency conversion in precious metals.

As history shows, the reduction of the gold reserves in the context of an acute political crisis is usually preceded by the collapse of the state.

From iskra-news

Tonight, 07-03-2014 around at 2:00 am, an unregistered transport plane took off took off from Boryspil airport. According to Boryspil staff, prior to the plane’s appearance, four trucks and two cargo minibuses arrived at the airport all with their license plates missing. Fifteen people in black uniforms, masks and body armor stepped out, some armed with machine guns. These people loaded the plane with more than forty heavy boxes.

After this, several mysterious men arrived and also entered the plane. The loading was carried out in a hurry. After unloading, the plateless cars immediately left the runway, and the plane took off on an emergency basis.

Airport officials who saw this mysterious “special operation” immediately notified the administration of the airport, which however strongly advised them “not to meddle in other people’s business.”

Later, the editors were called by one of the senior officials of the former Ministry of Income and Fees, who reported that, according to him, tonight on the orders of one of the “new leaders” of Ukraine, all the gold reserves of the Ukraine were taken to the United States.

In an interview on Ukraine TV, none other than the head of the Ukraine Central Bank made the stunning admission that “in the vaults of the central bank there is almost no gold left. There is a small amount of gold bullion left, but it’s just 1% of reserves.”

Russia stockpiles gold

Russia has taken advantage of lower gold prices to pack the vaults of its central bank with bullion as it prepares for the possibility of a long, drawn-out economic war with the West.

The latest research from the World Gold Council reveals that the Kremlin snapped up 55 tonnes of the precious metal – far more than any other nation – in the three months to the end of September as prices began to weaken.

Vladimir Putin’s government is understood to be hoarding vast quantities of gold, having tripled stocks to around 1,150 tonnes in the last decade. These reserves could provide the Kremlin with vital firepower to try and offset the sharp declines in the rouble.

Russia’s currency has come under intense pressure since US and European sanctions and falling oil prices started to hurt the economy.

Revenues from the sale of oil and gas account for about 45pc of the Russian government’s budget receipts.

The biggest buyers of gold after Russia are other countries from the Commonwealth of Independent States, led by Kazakhstan and Azerbaijan.

In total, central banks around the world bought 93 tonnes of the precious metal in the third quarter, marking it the 15th consecutive quarter of net purchases. In its report, the World Gold Council said this was down to a combination of geopolitical tensions and attempts by countries to diversify their reserves away from the US dollar.

By the end of the year, central banks will have acquired up to 500 tonnes of gold during the latest buying spell, according to Alistair Hewitt, head of market intelligence at the World Gold Council.

“Central banks have been consistently adding to their gold holdings since 2009,” Mr Hewitt told the Telegraph. In the case of Russia, Mr Hewitt said that the recent increases in its gold holdings could be a sign of greater geopolitical risk that has arisen since it seized Crimea sparking a dispute with Ukraine and the West.

Overall, the World Gold Council said that global demand for gold was down 2pc year-on-year to 929 tonnes in the third quarter amid signs that buying in China, one of the main markets, had tailed off. Jewellery demand in the quarter ending in September was down 39pc to 147 tonnes, signalling weaker consumer sentiment in the world’s second-largest economy.

However, demand for gold in India has rebounded sharply since the election earlier this year of prime minister Narendra Modi. Demand for jewellery in the world’s most populous democracy grew by 60pc year-on-year to 183 tonnes in the third quarter.

Gold prices have fallen about 7pc since October to trade at around $1,160 per ounce and the asset class is expected to post its second straight yearly loss. The precious metal has bounced since hitting a four-year low at the beginning of the week but sentiment remains weak despite the World Gold Council’s latest outlook.

Source: The Telegraph

Shares fall and gold rises as global worries mount

Shares across the world fell sharply on Friday, pushing a global index to a six-month low, as investors worried about the prospect of a widespread economic slowdown while U.S. monetary stimulus nears its end.

Assets which depend on economic growth, such as shares and oil, have been hit by a raft of weak indicators from Europe at a time when other big economies, including China, Japan and Brazil face their own hardships.

Meanwhile, the U.S. Federal Reserve is set to wind down later this month the asset purchase programme which has boosted markets over the past two years. Many observers doubt the recent stimulus measures unveiled by the European Central Bank will make up for it.

Brent crude futures tumbled to their lowest since 2010 while gold, seen as a safe asset at times of uncertainty, was headed for its best week in nearly four months.

“There has been a barrage of negative thoughts on growth and growth assets,” Stewart Richardson, a partner of macro hedge fund, RMG Wealth Management, said.

“I believe we’re entering a bear market. We’ve been trying to be short equities and we’ve been focusing our shorts in Europe and small caps,” he said, referring to bets that shares in those markets will keep falling.

The MSCI All-Country World index .MIWD00000PUS fell 0.6 percent to its lowest level since April 18 at 404.50 points, taking its loss since the start of the week to 1.6 percent.

The index, which is eyeing its third consecutive weekly fall, has retreated by nearly 7 percent since testing an all-time high last month.

A string of dismal data from Germany and other large euro zone economies in recent weeks has fed anxieties about a possible recession in the region while the jury is still out on the European Central Bank’s proposed policy response.

The ECB’s covered bond buying programme, a key part of the bank’s latest package, has yet to kick in and some investors remain doubtful it will be sufficient to shore up growth and inflation in the currency bloc while the Fed reins in its own stimulus.

Adding to jitters about monetary policy expectations, St. Louis Federal Reserve Bank President James Bullard said he was concerned by a disconnect between the market’s view of the Fed’s rate-increase path and the central bank’s own view.

Financial markets have constantly expected much slower tightening by the Fed than U.S. central bank policymakers’ own projections.

The concerns on global growth hit oil prices hard. European benchmark Brent crude oil fell 1.1 percent at $89.08, having hit its lowest level since December 2010 at $88.11.

Gold, steady at $1,223.20, retained gains from a four-day rally and was headed for its best week in nearly four months.

Wall Street stocks had slumped 2 percent on Thursday, with the S&P 500 index .SPX hitting a two-month closing low. The CBOE volatility index .VIX, a measure of investor anxiety, rose to highs not seen since early February.

“If U.S. stocks jumped back today, then the market could go back to the same habit of assuming everything will be alright. But if they fall big for two days in a row, markets will be clearly entering a whole new phase,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp. – Reuters

China Gold Congress in Beijing

The China Gold Congress is currently in full flight in Beijing. The three day Congress is China’s biggest gold industry event of the year, drawing in participants from across the Chinese and international gold sectors including central banks, mining companies, bullion banks and refiners.

The event, co-sponsored by the World Gold Council (WGC) and the China Gold Association, showcases China’s gold industry and acts as a focus point for what is now the world’s largest gold market in terms of demand and product innovation.

Discussions and forums during the event cover everything from reserve asset management for the official or central banking sector, through to investment products and mining supply. One of the key themes this year is the internationalisation of the gold market.

China’s gold market accounts for one third of global demand, and according to the WGC, is expected to grow another 20% cumulatively from now until the end of 2017.

In what is still a very centrally planned economy despite many market related reforms, nearly all reported gold activities in China flow through the Shanghai Gold Exchange (SGE) in one form or another.

Both the China Gold Association and the Shanghai Gold Exchange were established with government backing and their growth and success reflect a very deliberate pro-gold strategy on the part of the Chinese Government.

Even though the China Gold Association is a non-for-profit member association, it still primarily acts as a conduit and coordination group between the government and the gold producers.

The Shanghai Gold Exchange is the government’s second central hub in China’s gold market.

SGE approved refiners take in production from China’s fragmented gold mining industry and in imports from Hong Kong and other countries.

The gold then flows through the Exchange after which SGE deliveries flow out to the banking sector, the official government sector, and additionally to the jewellery and technology industries.

The development of the Shanghai Futures Exchange also provides an additional venue for hedging and gold price discovery.

In China gold is money and is accepted as such by the general population.

There really does not seem to be a debate about this in Chinese government circles, and another part of the government’s strategy has been to advocate the increased innovative usage of gold by the Chinese banking sector.

This is quite a simple strategy for the government to implement since the four big Chinese commercial banks and many other Chinese banks are state-controlled.

Gold is now used widely in the banking sector in structured products, as gold collateral, and in gold leasing. The presence of the Chinese bullion banks in the market via the Shanghai Gold Exchange (SGE) provides the necessary liquidity that is turning the Exchange into a world player on the global gold market.

For example, the large Chinese banks such as Industrial and Commercial Bank of China (ICBC), Bank of China and Agricultural bank of China all offer gold accumulation plans to the investing public and the WGC estimates that these products currently represent between 100 and 200 tonnes of gold. The large banks are also active in gold trading on a proprietary basis via the SGE.

Earlier this year, ICBC via its purchase of some of Standard Bank of South Africa’s assets had been rumoured to be interested in buying a seat on the London gold fixing panel when Deutsche Bank left the panel, but a buyer of this seat never materialised.

ICBC is not yet a market making member of the London Bullion Market Association (LBMA), which would be a prerequisite to becoming part of the gold fixing panel, but given that the Chinese gold market is beginning to overtake that of London in terms of physical flows and probably price formation, there may not be a need for ICBC to bother being such an active participant in the London market as gold business continues to migrate to the East.

The Chinese government is also responsible for granting gold import licenses to international bullion banks and has supported the establishment of the Shanghai free trade zone where a gold trading platform has been set up for international banks and trading houses.

In fact, in an announcement that coincides with the China Gold Congress today, the Shanghai Gold Exchange just announced that it is launching an internationally tradable yuan denominated physical gold contracts to be traded in the free trade zone for the popular retail 1kg gold bar, the Good Delivery 12.5kg (400 oz) bar popular with central banks, and a smaller 100 gram bar contract.

The US based CME Group that runs the Comex gold futures exchange also appears to have used this week’s China Gold Congress to announce the launch of their competitor product in the form of a 1kg gold contract to be traded in Hong Kong.

With increased regulatory scrutiny on the London gold and silver fixings and what looks like a defensive attempt by the LBMA in London to protect their proprietary gold and silver price discovery auctions via the recently introduced CME/Thomson platform for silver and probably soon to be introduced similar CME platform for gold, it will be interesting to see how the Chinese government’s pro-gold strategy pans out.

We may soon see global gold hub wars between London and New York on the one hand and the increasingly powerful eastern hubs of Singapore, Shanghai and Beijing on the other.

Source: GoldCore

Will Scotland get their gold if they vote ‘Yes’?

An independent Scotland could lay claim to a part of the United Kingdom’s 310-tonne gold reserves if votes go in favour of the “Yes” campaign this month, with ownership of Britain’s bullion hoard up for negotiation along with other assets.

“The distribution of the UK’s assets in the event of Scottish independence would be subject to negotiation between an independent Scottish Government and the continuing UK government,” a spokesman for the United Kingdom Treasury said on Monday.

The United Kingdom, whose reserves are worth 7.84 billion pounds ($12.6 billion) at today’s prices, is currently the world’s 18th largest official sector gold holder.

A decision to break away from the United Kingdom when Scotland’s voters go to the polls on Sept. 18 would be followed by negotiations with London over a raft of assets, including the pound and North Sea oil.

Supporters of Scottish independence over the weekend took their first opinion poll lead since the referendum campaign began, with a YouGov survey for the Sunday Times newspaper putting the “Yes” to independence campaign on 51 percent against the “No” camp on 49 percent.

Former British Prime Minister Gordon Brown has faced persistent criticism for disposing of almost 400 tonnes of the United Kingdom’s gold via a series of auctions between 1999 and 2002, when prices were at their lowest in around 20 years.

Gold prices surged over the following decade, topping out in September 2011 at $1,920.30 an ounce, nearly five times their end 2002 level.

Brown returned to frontline politics this year to campaign for the preservation of Scotland’s 307-year old union with England.

Source:Reuters

Canada moves gold of Switzerland, Netherlands, Sweden to unknown location

In just three months, on November 30, the Swiss will vote in a federal referendum on the future of the country’s gold reserves.

The referendum has arisen through a popular initiative called ‘Save our Swiss gold initiative’. In Switzerland, citizens can propose changes to the Swiss constitution through a mechanism called a popular initiative, even if parliament is against the proposal.

The ‘Save Our Swiss Gold’ initiative is set to highlight the important issue of sovereign gold reserves and who has possession and controls them. It may lead to an important debate about each country’s national patrimony and their gold reserves.

The ‘Save Our Swiss Gold’ initiative is proposing the following:
– rules to prevent the Swiss National Bank (SNB) selling any more of the country’s gold reserves
– to direct that the SNB must keep a minimum of 20% of its reserves in gold, and
– to require that all Swiss gold must be stored in Switzerland.

This would require repatriation of Swiss gold since some of the Swiss gold reserves are stored abroad.
The Swiss National Bank (SNB) are against the proposal but were forced last year, in reaction to the popular campaign, to reveal the storage locations of the Swiss gold.

In April 2013, Thomas Jordan, SNB President, confirmed that 70% of Switzerland’s gold is in Switzerland, 20% is at the Bank of England, and 10% is stored with the Bank of Canada, and that this mix of holdings had been in place for more than a decade.

Since the Swiss hold a total of 1,040 tonnes of gold reserves, this would mean that there are 104 tonnes of Swiss gold at the Bank of Canada and 208 tonnes in the Bank of England. Jordan’s explanation of the foreign gold storage was that it provided “adequate regional diversification and good market access”.

Since the Bank of England specialises in the custody of gold on behalf of numerous foreign central banks, it’s not surprising then that the SNB stores gold at the Bank of England.

What is surprising is that the SNB still holds gold at the Bank of Canada, since the Bank of Canada is a legacy custodian of other countries’ gold and appears to have stopped storing other nations sovereign gold in recent years.

When the Bank of Canada was asked earlier this year as to how many foreign central banks it acts as gold custodian for, it confirmed that it currently acts as gold custodian for only four foreign central banks, but that due to confidentiality, it was unable to disclose the identity of the national account holders.

However, its known from other sources that both the Netherlands and Sweden also hold some of their gold reserves at the Bank of Canada.

The Federal Reserve Bank of New York holds 1,536 metric tons of German gold, nearly half of Berlin’s reserves.
This enormous hoard of gold is stored in the fifth subfloor of the bank’s building on Liberty Street, 25 meters
80 feet) below street level, and 15 meters below sea level. Or is it? The Germans want to know and
want it back, as do the Swiss and other nations.

The Dutch central bank, De Nederlandsche Bank, has stated previously that most of its gold reserves are held at the Federal Reserve Bank in New York, the Bank of England, and the Bank of Canada, with less than 10% stored in the bank’s own headquarters in Amsterdam.

The Swedish Riksbank has also stated recently that its gold is stored in a number of foreign locations, such as the Federal Reserve, the Bank of England but also the Bank of Canada.

The identity of the 4th foreign central that stores gold at the Bank of Canada is unclear, but it may be the Bank of England or the Federal Reserve, since both banks historically held gold accounts with the Bank of Canada.

Given that Canada sold nearly all of its own substantial gold holdings a number of years ago, it seems like an anomaly that the Bank of Canada in Ottawa is still holding gold on behalf of other countries. Most countries that had held gold in Ottawa repatriated it long ago.

Citizens of Switzerland, the Netherlands and Sweden should be concerned that some of their nation’s gold is in custody with a bank that is no longer a specialist in gold custody and that did not even see fit to maintain its own gold reserves.

They should also be concerned about the secrecy and lack of transparency regarding their gold, especially given that the Bank of Canada’s remaining custody gold has recently been moved to an unknown destination.

The Bank of Canada’s headquarters on Wellington Street in Ottawa is currently undergoing an extensive multi-year renovation which required the Bank to vacate the building last year, and empty it’s entire contents, including the gold stored in the subterranean vault.

Whatever gold was still in the vault, that runs from Wellington Street on one side of the building out as far as Sparks Street on the other side, has now been relocated elsewhere.

Where the gold has been moved to is unknown since the Bank of Canada won’t comment.

The upcoming Swiss gold referendum will be very interesting and will highlight and focus minds on why the SNB vigorously defends the need to keep some of its gold reserves in Canada, especially given that the Ottawa gold is now on the move.

Owning allocated and segregated physical coins and bars is best in Hong Kong, Singapore and Zurich, investors say.

Gold worth R1,2 billion goes ‘missing’ at Rand Refinery

Rand Refinery, processor of about a third of the world’s gold since 1920, found $113 million (R1.2 billion) less physical metal than the company had booked in its accounts after adopting a new computer system.

The refinery in Germiston, a town 20 kilometres east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today.

That’s worth about $113 million at today’s price of $1,296 an ounce.

Rand Refinery’s shareholders, including AngloGold Ashanti, Sibanye Gold and Harmony Gold Mining, agreed to lend the company 1.2 billion rand to help make up the difference.

Howard Craig resigned as chief executive officer in May and has been replaced by Mark Lynam, who is being assisted by management consultant Accenture in sorting out the issue.

Gold miners send bullion at about 80 percent purity to the refinery, which then treats it and boosts this to close to 100 percent.

Rand, Africa’s biggest processing facility for the metal, has refined almost 50,000 metric tons of gold since 1920, according to its website.

The miners, customers of the refinery, have received the prices they were expecting, leading them to conclude it’s most likely an accounting problem rather than theft, James Wellsted, a spokesman for Sibanye Gold, said by phone.

AngloGold, Sibanye and Harmony made loss provisions of about $92 million between them as a result of the lost ounces.

Rand Refinery has been unable to finalise its results for the year ended September 2013 because of the issue, it said.

Source: Bloomberg News