http://hat4uk.wordpress.com/2013/05/15/gold-drops-again/
http://harveyorgan.blogspot.com/2013/05/another-goldsilver-raiddealer-comex.html
GOLD PRICE: Another caning for the shiny metal, only 1,394 theories as to why.
In case you haven’t been following it, gold fell off a cliff when the FTSE opened this morning, from $1427 to $1409. It then flatlined at that price, until the NYSE opened….at which point it dropped another $17. Not that I’m suggesting any conspiracy here – but then the time zones are implicated. And The Slog did say last week that Friday falls in the past had been followed by further attacks the following week.
Who knows what this means, presages or secretes. However, earlier today I did post a Smoke Signals on the subject of oil-price manipulation. And I did end that piece as follows: ‘So then, that’s the stock markets, the gold price, the Libor rate, and the price of oil being fixed against us….as The Slog suggested quite some time ago.‘
A gold fall in nine hours of $35 isn’t just counter-intuitive in the current global context, it is the equivalent of Manchester United shares halving in price as a result of winning a record 20th Premiership League title.
Our socio-economic lives – and financial resources – are being shafted by a rich minority so tiny, with a minimum of organisation we could round up the lot of them in half an hour….and shoot them all in ten minutes. But on the whole, we’d rather watch Eastenders in the UK. Or Koh-Lanta in France, How To Live With Your Parents (For the Rest of Your Life) in the US, and perhaps even Salvados in Spain.
So it really is our fault after all. Allegedly.
http://harveyorgan.blogspot.com/2013/05/another-goldsilver-raiddealer-comex.html
Wednesday, May 15, 2013
Another gold/silver raid/Dealer Comex gold falls to 1.676 million oz (52.3 tonnes)/another increase in gold deliveries at Comex equal to 8.58 tonnes/Turmoil in Japanese bond market/Troubles continue for Barrick/3 big misses in USA figures today/
Gold closed down $12.10 to $1396.50 (comex closing time). Silver fell by 69 cents to $22.67 (comex closing time)
In the access market at 5 pm gold and silver are the following :
gold: $1394.20.
silver: $22.63
We had another of our patented gold/silver raids today. As long as the regulators just sit there, nothing can be done about this massive manipulation.
At the Comex, the open interest in silver fell by only 509 contracts to 144,666 contracts despite silver's fall on Tuesday. The silver OI is holding firm at elevated levels . The open interest on the gold contract fell by 1372 contracts to 443,806 as we still have dumb paper players willing to take on the crooked bankers. With gold's big fall in price on Tuesday, one would have thought that the OI would have fallen further. The gold deliveries for May rose considerably today at 8.58 tonnes and this is an off month for gold. In silver we continue to see the total number of ounces standing rise above the quantity that stood on first day notice. The number of silver ounces, standing for delivery in May fell a tiny 40,000 oz now stands at 17.360 million oz. ( On first day notice: 14.860 million oz.)
Again, at the Comex, gold is departing as investors are frightened to death of a confiscation similar to what happened at MFGlobal or Refco. Tonight, the Comex registered or dealer gold plummeted to 1.676 million oz or 52.13 tonnes. The total of all gold at the comex rose slightly but still well below the 8 million oz at 7.975 million oz or 248.0 tonnes of gold.
The GLD for a change reported a huge loss in gold inventory of 4.52 tonnes of gold. The SLV inventory of silver remained constant.
In other physical news, yesterday we reported that Indian dealers have only received 10% of the gold that they have bought. Today, it seems that only 1.4 tonnes of gold has been brought into the Shanghai Gold exchange and many are waiting for their metal.
Yesterday afternoon, we brought you the story on gold leaving New York and entering South Africa. The demand for Krugerrands is huge and no doubt supplies have run out in South Africa and thus the need to import gold.
There are two stories on this topic today.
In India, we have a story on the physical price of gold is 40$ higher per oz than the spot price and this premium has doubled in the last few days.
Tonight, more problems for Barrick as Seeking Alpha has brought to us a great commentary on this company's woes.
On the paper side of things, we see that GDP form Europe fell across the Eurozone. Bourses reacted with glee as they expect Europe to engage in further QE.
Japan saw it's 10 year bond yield rise to .89% another .03% rise from yesterday.
The bond market over there was close to calling another halt.
In the USA we had 3 big figures out today and all misses:
i) industrial production
ii) the empire manufacturing index
iii) capacity utilization
also auto deliquency loans continue to rise (24% rise y/y)
We will go over these and other stories but first.....................
Let us now head over to the comex and assess trading over there today:
The total gold comex open interest fell by only 1372 contracts from 445,178 down to 443,806 with gold falling by $12.10 on Tuesday. One would have thought that the OI would have contracted further. The front non active delivery month of May saw its OI rise by 9 contracts down up to 906. However we had 1 delivery notice filed on Tuesday. Thus we gained 8 contracts or 800 additional gold ounces will stand for delivery in May. The next active contract month is June and here the OI fell by 8,809 contracts to 200,477 as most of these paper players rolled into August. June is the second biggest delivery month in gold's calender and first day notice is less than 3 weeks away. The estimated volume today was good at 221,005 contracts. The confirmed volume yesterday was also good at 205,289 contracts.
The total silver Comex OI surprisingly only fell by 509 contracts from 145,175 down to 144,666 with silver's fall in price of 37 cents yesterday. The front active silver delivery month of May saw it's OI fall by 31 contracts down to 586. We had 23 delivery notices filed yesterday so we lost 8 contracts or a 40,000 oz will not stand for delivery in May. The next delivery month for silver is June and here the OI rose by 9 contracts to stand at 378. The next big active contract month is July and here the OI surprisingly rose by 295 contracts to rest tonight at 78,731. The estimated volume today was good, coming in at 57,292 contracts. The confirmed volume on Tuesday was also good at 45,973.
In the access market at 5 pm gold and silver are the following :
gold: $1394.20.
silver: $22.63
We had another of our patented gold/silver raids today. As long as the regulators just sit there, nothing can be done about this massive manipulation.
At the Comex, the open interest in silver fell by only 509 contracts to 144,666 contracts despite silver's fall on Tuesday. The silver OI is holding firm at elevated levels . The open interest on the gold contract fell by 1372 contracts to 443,806 as we still have dumb paper players willing to take on the crooked bankers. With gold's big fall in price on Tuesday, one would have thought that the OI would have fallen further. The gold deliveries for May rose considerably today at 8.58 tonnes and this is an off month for gold. In silver we continue to see the total number of ounces standing rise above the quantity that stood on first day notice. The number of silver ounces, standing for delivery in May fell a tiny 40,000 oz now stands at 17.360 million oz. ( On first day notice: 14.860 million oz.)
Again, at the Comex, gold is departing as investors are frightened to death of a confiscation similar to what happened at MFGlobal or Refco. Tonight, the Comex registered or dealer gold plummeted to 1.676 million oz or 52.13 tonnes. The total of all gold at the comex rose slightly but still well below the 8 million oz at 7.975 million oz or 248.0 tonnes of gold.
The GLD for a change reported a huge loss in gold inventory of 4.52 tonnes of gold. The SLV inventory of silver remained constant.
In other physical news, yesterday we reported that Indian dealers have only received 10% of the gold that they have bought. Today, it seems that only 1.4 tonnes of gold has been brought into the Shanghai Gold exchange and many are waiting for their metal.
Yesterday afternoon, we brought you the story on gold leaving New York and entering South Africa. The demand for Krugerrands is huge and no doubt supplies have run out in South Africa and thus the need to import gold.
There are two stories on this topic today.
In India, we have a story on the physical price of gold is 40$ higher per oz than the spot price and this premium has doubled in the last few days.
Tonight, more problems for Barrick as Seeking Alpha has brought to us a great commentary on this company's woes.
On the paper side of things, we see that GDP form Europe fell across the Eurozone. Bourses reacted with glee as they expect Europe to engage in further QE.
Japan saw it's 10 year bond yield rise to .89% another .03% rise from yesterday.
The bond market over there was close to calling another halt.
In the USA we had 3 big figures out today and all misses:
i) industrial production
ii) the empire manufacturing index
iii) capacity utilization
also auto deliquency loans continue to rise (24% rise y/y)
We will go over these and other stories but first.....................
The total gold comex open interest fell by only 1372 contracts from 445,178 down to 443,806 with gold falling by $12.10 on Tuesday. One would have thought that the OI would have contracted further. The front non active delivery month of May saw its OI rise by 9 contracts down up to 906. However we had 1 delivery notice filed on Tuesday. Thus we gained 8 contracts or 800 additional gold ounces will stand for delivery in May. The next active contract month is June and here the OI fell by 8,809 contracts to 200,477 as most of these paper players rolled into August. June is the second biggest delivery month in gold's calender and first day notice is less than 3 weeks away. The estimated volume today was good at 221,005 contracts. The confirmed volume yesterday was also good at 205,289 contracts.
The total silver Comex OI surprisingly only fell by 509 contracts from 145,175 down to 144,666 with silver's fall in price of 37 cents yesterday. The front active silver delivery month of May saw it's OI fall by 31 contracts down to 586. We had 23 delivery notices filed yesterday so we lost 8 contracts or a 40,000 oz will not stand for delivery in May. The next delivery month for silver is June and here the OI rose by 9 contracts to stand at 378. The next big active contract month is July and here the OI surprisingly rose by 295 contracts to rest tonight at 78,731. The estimated volume today was good, coming in at 57,292 contracts. The confirmed volume on Tuesday was also good at 45,973.
Comex gold/May contract month:
We had 1 customer deposit today:
i) Into HSBC vault: 75,751.525 oz
total customer deposit: 75,751.525 oz
We had two customer withdrawals today:
i) Out of HSBC: 43,990.395 oz
ii Out of Scotia: 64.30 oz
1864 contracts x 100 oz per contract or 186,400 oz (served) + 897 notices or 89,700 oz (to be served upon) = 276,100 oz or 8.58 tonnes of gold.
This is extremely high for a non active month. We gained 800 additional gold ounces standing for the May comex gold contract today.
The big June delivery month will surely be exciting to watch judging by the huge demand for gold in May. We will watch what happens with JPMorgan with respect to its customer gold remains (now at 9.25 tonnes of gold) and the entire comex dealer gold close its nadir at 1.676 million oz.(52.13 tonnes)
Back on April 25, in the aftermath of the latest epic precious metals takedown, we reported that something odd had happened: overnight, total Eligible gold held in the vaults of JPM dropped by 65%, or 260.8k ounces in one day, to a record low of only 141.6K ounces. Contrast that with the 2 million Eligible ounces the JPM vault at the basement of 1 CMP held when it reopened.
Since that moment, many were curious if this may not be the start of the proverbial "run on the vault", and whether JPM's COMEX holdings could actually run out, and if so what happens then. And finally: is the dramatic plunge in gold related to any of this (and certainly to the Bundesbank's repatriation of NY Fed gold for the next five years)? In the ensuing days, JPM's Eligible gold fluctuated in a tight range, until today, when another 22,780 oz were withdrawn from Blythe Masters' metals cellar, bringing JPM's eligible gold to a fresh record low of only 137,377 troy ounces.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/JGB eligible 5.14.jpg
But this is only half the story: the details are as always behind the scenes.
Because what the chart above does not show is how, quietly, JPM managed to keep its eligible inventory constant even in light of various withdrawal demands.
The chart below looks at the relative moves in JPM Eligible and Registered gold, starting with the massive withdrawal day, April 25. What is immediately obvious is that the only reason JPM's eligible gold hasn't plunged, is due to the periodic "adjustments" out of Registered into Eligible gold, which on essentially all days in the past three weeks netting out, and for every ounce converted into eligible, one ounce was removed from registered gold.This also explains why even with the three distinct sizable withdrawal days, of 24K, 57.9K, and 22.8K on May 2, May 8 and May 14.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/JPM Eligible net Reg.jpg
Incidentally, when asked about the rationale behind such seemingly arbitrary reclassifications, and warrant cancellation of registered gold into eligible gold, a market surveillance analyst at the CME replied as follows:
...the adjustment column does reflect the issuance and cancellation of warrants, but it can be used for other purposes as well. Anything that is not received or withdrawn would be reported in the adjustment column.
In other words, JPM and the Comex have full liberty to adjust what is eligible and what is registered, at will, and can thus easily replenish inventory even when it is about to run out.
And run out, it almost would have.
Because if one ignores the 100k or so ounces of Registered gold that were reclassified to replenish eligible inventory, JPM's eligible gold would, as of right now, be down to a negligible 36,931 ounces, or just over 1 ton!
At that point JPM would be down to one withdrawal request away from declaring force majeure on its eligible gold holdings, and all the unpleasant consequences that this would entail for future delivery requests.
Orders For Gold Go Unfilled In Asia
by Russ Winter
Considering the rush of gold orders in mid to late April, it is understandable that there would be some temporary delays in delivery. However, we’re now into mid May and sources indicate those same orders are still unfulfilled. So it begs the question: Where’s the gold?The Shanghai Gold Exchange has an enormous appetite for physical gold, so much so that it’s absorbing all world production month after month — even before the April fire sale. A month’s production averages about 230 tonnes. Gold Miner Pulse, which tracks the numbers from the Shanghai Gold Exchange, reports that during the week of April 22 only one tonne has been delivered to the exchange. Since May 1, it has received only 0.3 tonnes.
The Economic Times of India reports a similar story. Furthermore, many Indian jewelers said compared to last year they expected gold sales will be up 30 % to 50% during the Akshaya Tritiay holiday on May 13 due to the lower price of gold.
Good news for silver bulls. Last month, Japan will increased silver use for solar by 1.5 million ounces to 5 million ounces ["Dowa Boosts Silver for Japan Post-Quake Solar Demand"]. That’s if it can get delivery.
http://winteractionables.com/?p=2397
(Click to enlarge)
May 15/2013
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
44,054.695 (HSBC, Scotia)
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| 75,751.525 (HSBC) |
No of oz served (contracts) today
|
7 (700 oz)
|
No of oz to be served (notices)
|
897 (89,700)
|
Total monthly oz gold served (contracts) so far this month
|
1864 (186,400)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
nil
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 538,242.18 oz |
We had huge activity at the gold vaults.
The dealer had 0 deposits and 0 dealer withdrawals.
We had 1 customer deposit today:
i) Into HSBC vault: 75,751.525 oz
total customer deposit: 75,751.525 oz
We had two customer withdrawals today:
i) Out of HSBC: 43,990.395 oz
ii Out of Scotia: 64.30 oz
We had 1 adjustment and it was a biggy!!
Out of the JPMorgan's vault*: 160,049.704 oz was adjusted out of the dealer account and back into the customer or eligible account. The JPMorgan customer vault increases to 297,426.75 oz today or 9.25 tonnes
Out of the JPMorgan's vault*: 160,049.704 oz was adjusted out of the dealer account and back into the customer or eligible account. The JPMorgan customer vault increases to 297,426.75 oz today or 9.25 tonnes
Tonight the dealer inventory dramatically falls tonight at a low of 1.676 million oz (52.13) tonnes of gold. The total of all gold rises slightly at the comex resting tonight at 7.975 million oz or 248.0 tonnes.
The CME reported that we had 7 notices filed today for 700 oz of gold.
To calculate the quantity of gold ounces that will stand, I take the OI standing for May (904) and subtract out today's notices (7) which leaves us with 897 notices or 89,700 oz left to be served upon our longs.
To calculate the quantity of gold ounces that will stand, I take the OI standing for May (904) and subtract out today's notices (7) which leaves us with 897 notices or 89,700 oz left to be served upon our longs.
Thus we have the following gold ounces standing for metal in May:
1864 contracts x 100 oz per contract or 186,400 oz (served) + 897 notices or 89,700 oz (to be served upon) = 276,100 oz or 8.58 tonnes of gold.
This is extremely high for a non active month. We gained 800 additional gold ounces standing for the May comex gold contract today.
The big June delivery month will surely be exciting to watch judging by the huge demand for gold in May. We will watch what happens with JPMorgan with respect to its customer gold remains (now at 9.25 tonnes of gold) and the entire comex dealer gold close its nadir at 1.676 million oz.(52.13 tonnes)
end
* zero hedge discusses JPMorgan's customer gold account. This was prior to today's addition of 160,049.704 oz coming from the registered side of things i.e. JPM adjusted 160,049.704 oz out of its dealer account and into it's customer account:
PM Eligible Gold Plunges To New Record Low, And Why It Could Have Been Much Worse
Tyler Durden
Since that moment, many were curious if this may not be the start of the proverbial "run on the vault", and whether JPM's COMEX holdings could actually run out, and if so what happens then. And finally: is the dramatic plunge in gold related to any of this (and certainly to the Bundesbank's repatriation of NY Fed gold for the next five years)? In the ensuing days, JPM's Eligible gold fluctuated in a tight range, until today, when another 22,780 oz were withdrawn from Blythe Masters' metals cellar, bringing JPM's eligible gold to a fresh record low of only 137,377 troy ounces.
But this is only half the story: the details are as always behind the scenes.
Because what the chart above does not show is how, quietly, JPM managed to keep its eligible inventory constant even in light of various withdrawal demands.
The chart below looks at the relative moves in JPM Eligible and Registered gold, starting with the massive withdrawal day, April 25. What is immediately obvious is that the only reason JPM's eligible gold hasn't plunged, is due to the periodic "adjustments" out of Registered into Eligible gold, which on essentially all days in the past three weeks netting out, and for every ounce converted into eligible, one ounce was removed from registered gold.This also explains why even with the three distinct sizable withdrawal days, of 24K, 57.9K, and 22.8K on May 2, May 8 and May 14.
Incidentally, when asked about the rationale behind such seemingly arbitrary reclassifications, and warrant cancellation of registered gold into eligible gold, a market surveillance analyst at the CME replied as follows:
...the adjustment column does reflect the issuance and cancellation of warrants, but it can be used for other purposes as well. Anything that is not received or withdrawn would be reported in the adjustment column.
In other words, JPM and the Comex have full liberty to adjust what is eligible and what is registered, at will, and can thus easily replenish inventory even when it is about to run out.
And run out, it almost would have.
Because if one ignores the 100k or so ounces of Registered gold that were reclassified to replenish eligible inventory, JPM's eligible gold would, as of right now, be down to a negligible 36,931 ounces, or just over 1 ton!
At that point JPM would be down to one withdrawal request away from declaring force majeure on its eligible gold holdings, and all the unpleasant consequences that this would entail for future delivery requests.
end
Silver:
May 15.2013: May silver:
| Silver |
Ounces
|
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory | 101,801.99 oz (Delaware,Brinks) |
| Deposits to the Dealer Inventory | nil |
| Deposits to the Customer Inventory | 214,163.714 (CNT,Delaware) |
| No of oz served (contracts) | 21 (105,000) |
| No of oz to be served (notices) | 565 (2,825,000 oz) |
| Total monthly oz silver served (contracts) | 2907 (14,535,000 oz) |
| Total accumulative withdrawal of silver from the Dealers inventory this month | 204,097.65 |
| Total accumulative withdrawal of silver from the Customer inventory this month | 1,434,919.2 |
Today, we had huge activity inside the silver vaults.
we had 0 dealer deposits and 0 dealer withdrawals.
We had 2 customer deposits:
Into HSBC: 86,372.310 oz
Into Scotia: 1,188515.24 oz
total customer deposit; 1,274,887.55 oz
We had 4 customer withdrawals:
1) Out of HSBC: 86,382.31 oz
We had 2 customer deposits:
Into HSBC: 86,372.310 oz
Into Scotia: 1,188515.24 oz
total customer deposit; 1,274,887.55 oz
We had 4 customer withdrawals:
1) Out of HSBC: 86,382.31 oz
ii) Out of Brinks: 52,484.79 oz
iii) Out of JPMorgan: 621,488.90 oz
iv) Out of Scotia: 1019.60
total customer withdrawals: 761,375.60 oz
iii) Out of JPMorgan: 621,488.90 oz
iv) Out of Scotia: 1019.60
total customer withdrawals: 761,375.60 oz
we had 1 adjustments today
i) Out of the JPM vault: 1,149,275.70 oz was adjusted out of the dealer and into the customer.
i) Out of the JPM vault: 1,149,275.70 oz was adjusted out of the dealer and into the customer.
Registered silver at : 43.902 million oz
total of all silver: 165.514 million oz.
The CME reported that we had 21 notices filed for 105,000 oz. To calculate the number of ounces that will stand in silver, I take the OI standing for May (586) and subtract out today's notices (21) which leaves us with 565 notices or 2,825,000 oz
Thus the total number of silver ounces standing in this active delivery month of May is as follows:
2907 contracts x 5000 oz per contract (served) = 14,535,000 + 565 contracts x 5000 oz = 2,825,000 oz ( to be served) = 17,360,000 oz.
we lost 40,000 oz of silver standing for May today. The total standing for silver is superb for May.
Thus the total number of silver ounces standing in this active delivery month of May is as follows:
2907 contracts x 5000 oz per contract (served) = 14,535,000 + 565 contracts x 5000 oz = 2,825,000 oz ( to be served) = 17,360,000 oz.
we lost 40,000 oz of silver standing for May today. The total standing for silver is superb for May.
GLD loses more physical today - first loss in a few days.....
Now let us check on gold inventories at the GLD first:
May 15.2013: (as of 6 pm est)
may 14.2013:
May 10.2013:
May 8.2013:
May 15.2013: (as of 6 pm est)
Tonnes1,047.13
Ounces33,666,434.30
Value US$47.457 billion
may 14.2013:
Tonnes1,051.65
Ounces33,811,468.47
Value US$48.465 billion
May 13.2013:
Tonnes1,051.65
Ounces33,811,468.47
Value US$48.364 billion
May 10.2013:
Tonnes1,051.65
Ounces33,811,468.47
Value US$48.222 billion
May 9.2013:
Tonnes1,054.18
Ounces33,892,812.62
Value US$49.641 billion
May 8.2013:
Tonnes1,051.47
Ounces33,805,784.75
Value US$49.598 billion
selected news and views.....
Von Greyerz: watch for hyperinflation!!
Von Greyerz: Stock market rise amid economic collapse signals hyperinflation
Submitted by cpowell on Wed, 2013-05-15 00:00. Section: Daily Dispatches
8p ET Tuesday, May 14, 2013
Dear Friend of GATA and Gold:
Gold fund manager Egon von Greyerz tonight tells King World News that the rise of stock markets amid the collapse of the real economy is an indicator that hyperinflation is coming. An excerpt from the interview is posted at the King World News blog here.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Gold Anti-Trust Action Committee Inc.
end
Exactly what I have been stating to you for many years:
\
(courtesy Bill Kaye/Kingworldnews)
\
(courtesy Bill Kaye/Kingworldnews)
Gold-rigging banks are looting GLD and selling to Asia, fund manager Kaye says
Submitted by cpowell on Wed, 2013-05-15 02:57. Section: Daily Dispatches
10:55p ET Tuesday, May 14, 2013
Dear Friend of GATA and Gold:
The same banks that rigged the LIBOR interest rate are rigging the gold market and looting the exchange-traded fund GLD, moving the fund's gold out of London to Asia at a carefully arbitraged profit, fund manager William Kaye tells King World News tonight. An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
Indian premiums today amid shortage of metal:
(courtesy Bloomberg/GATA)
Gold Anti-Trust Action Committee Inc.
end
Indian premiums today amid shortage of metal:
(courtesy Bloomberg/GATA)
Indian gold premiums double amid fears of cut in supply
Submitted by cpowell on Wed, 2013-05-15 14:56. Section: Daily Dispatches
Gold Premiums in India Jump as Central Bank Curbs May Cut Supply
By Swansy Afonso
Bloomberg News
Wednesday, May 15, 2013
Bloomberg News
Wednesday, May 15, 2013
MUMBAI -- Gold premiums in India, the world's biggest buyer, more than doubled on speculation that government restrictions on bullion imports by banks to rein in a record current-account deficit would reduce supplies.
The fees jewelers pay dealers for bars jumped as high as $40 an ounce today from $17 to $18 yesterday, Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said by phone from Kolkata. The Reserve Bank of India on May 13 limited imports by banks on a consignment basis to only those required to meet the genuine needs of exporters.
The biggest slump in prices in three decades last month led to shoppers crowding retail outlets across India to buy jewelry and coins, deepening concern that the nation's current-account deficit, the broadest measure of trade, would widen from an all-time high. The rush to buy bullion caused a shortage of physical supplies, prompting importers to charge a hefty premium over London prices, according to Bamalwa.
"Banks have refused to deliver any gold except ordered previously, and bullion dealers are not accepting fresh orders," Bamalwa said. "Whether the bankers and dealers will find another route to import and how they will go about it, it is very unclear." Any impact from the restrictions is expected to be transitory and overall volumes will be determined by underlying demand, UBS AG said in an e-mail on May 8.
The central bank issued a notice imposing the curbs after the trade deficit widened in April to $17.8 billion from $10.31 billion in March as gold and silver imports more than doubled to $7.5 billion from a year ago.
Gold imports have been a cause for concern and shipments need to be cut to 700 tons a year, said Chakravarthy Rangarajan, chairman of Prime Minister Manmohan Singh's economic advisory council. Demand may decline if prices remain stable, he said at a conference in New Delhi today.
Bullion entered a bear market in London last month as investors sold the metal in favor of riskier assets on speculation that the global economy was recovering. That sparked a buying frenzy from India to China and Turkey. Still, the price fell for a fifth day today and is off to its worst start to the year since 1982, losing 16 percent.
Gold for immediate delivery dropped 1.1 percent to $1,409.37 an ounce at 6:55 p.m. in Singapore and is 27 percent below the record $1,921.15 reached in 2011. Futures tumbled to 25,270 rupees per 10 grams on the Multi Commodity Exchange of India Ltd. (MCX) on April 16, the cheapest since September 2011. The June-delivery contract fell 0.9 percent to 26,479 rupees today.
India's government will start selling inflation-linked bonds from June 4 as it seeks to wean away investors from gold as a bet against inflation, according to a finance ministry statement. The bonds may act as a substitute for some demand, Rangarajan said.
"Any of the measures taken by the government will not be able to curb the demand for gold because Indians have been buying gold for centuries, not in the last three or four years," Bamalwa said. "A century-old habit cannot die away in a span of one to two years."
About 60 percent to 70 percent of gold demand is from rural areas, where most buyers are unaware of other avenues for saving money and have limited access to bank accounts, he said. It may be four to five years before inflation-linked bonds become a popular investment tool, he said.
The government may refrain from raising import duties as it could fuel smuggling and illegal trade, Bamalwa said. India tripled the tax since January last year to 6 percent to cut buying and Finance Minister Palaniappan Chidambaram attributed the current-account deficit to a “passion” for gold. The deficit widened to $32.6 billion in the last quarter of 2012.
Imports may jump to 900 tons in 2013 from 860 tons last year because of the price decline, Bamalwa said.
"Gold will be at least 10 percent more expensive than international prices after the curbs on banks," Pankaj Parekh, vice chairman of the Gems & Jewellery Export Promotion Council, said in an interview in New Delhi. "Even at higher prices, the demand will not fall and people will continue to buy."
end
What the Indian gold buyers are up against:
(courtesy Times of India/Srinivas)
India's gold buyers, smugglers will have last laugh on government
Submitted by cpowell on Wed, 2013-05-15 15:11. Section: Daily Dispatches
Government, RBI Are Again Getting It All Wrong on Gold
By Nidhi Nath Srinivas
The Times of India, Mumbia
Wednesday, May 15, 2013
The Times of India, Mumbia
Wednesday, May 15, 2013
The Indian consumer -- that's us -- is currently Public Enemy No. 1. We are apparently responsible for leaving the nation's balance sheet in a shambles with our insatiable lust for gold.
If the government and the Reserve Bank of India (RBI) had their way, anyone spotted buying gold would be flayed. Luckily, we are still not that sort of country.
But both are doing everything possible to punish us. We can't wear our own jewellery above Rs 1 lakh on an overseas holiday. We can't buy coins easily. The paperwork at a jewellery store is designed to turn away everyone except the most determined. The higher customs duty intends to make gold prohibitively expensive.
Plus, jewellers are being bludgeoned out of business. They can't import gold. Gold will be rationed through government-owned banks, which will cater only to "genuine" demand. And they are being threatened with draconian laws.
Are we really to blame? Who started the gold coin culture in India? Not the family jeweller, not the consumer. It was the government and RBI that encouraged high-street banks, and even the post office, to start peddling gold coins about five years ago.
Banks did their job so enthusiastically that, soon, buying a gold coin was easier than opening an account. It was the government that had okayed exchange-traded funds that allow punters to buy limitless gold on paper. The government and RBI blessed gold loan companies as microfinance by another name.
Neither pondered the impact of these moves on consumer behaviour and the economy. Imported coins don't create local jobs, don't allow local value addition, and don't open opportunity to earn foreign exchange through exports. Yet they were promoted aggressively.
Well, the chickens have come home to roost. Now that the marketing is clearly a huge success and we have learnt to appreciate even the tiny 5-gram coin, it is too late to complain.
Moreover, why should the government and RBI complain? Petrol is the largest item on our import bill at $125 billion. But no one is suggesting we shut down car factories and go back to the tonga and cycle-rickshaw.
As C. Rangarajan, the prime minister's economic adviser, says in his overview of the economy, "Oil is a big factor in our strained external payments but by no means the surprising one." We have accepted that petrol is vital for modern life.
Cooking oil is the third largest item on our import bill. Till the early 1960s, no one in India had tasted palmolein. Even after it was introduced by Indira Gandhi in ration shops, consumers shunned it. Forty years later it is India's top-selling oil. The government's marketing efforts paid off. We have acquired a taste for it and spend a cool $10 billion annually.
In both cases, the government has accepted that we urgently need these sources of energy. Instead of trying to beat down consumer demand, the government is trying to find other solutions to augment petrol and cooking oil supply. That is wise.
So why does this wisdom blow a fuse when it comes to gold? Senior economists, policymakers, and the RBI all have acknowledged that gold is popular because it is the only asset that the poor can one day aspire to buy. There is nothing in the market that can replace it.
More important, gold in India is about the daughter's share in family wealth, the perfect wedding gift, our idea of beauty and high status. It is part of our cultural DNA. It makes us who we are. A five-fold rise in prices in as many years has not dented our willingness to spend on it.
Ideally, the government should embrace this love and find ways to use it profitably. Dubai doesn't produce any gold. Yet it has been able to promote itself as the ultimate destination for buying and trading gold.
London doesn't produce gold either. But it has always been the hub for price discovery and has some of the safest vaults on the planet.
All this takes gumption and a farsighted vision of what gold can really do for the economy.
Instead, the government and RBI are treating us like addicts. They are hoping that giving us the cold turkey will set things right. But you can never fight human nature. Clampdown on gold will be like the prohibition on liquor in Gujarat. Consumers and smugglers will have the last laugh.
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As we reported on yesterday, many orders for gold are unfilled.
It is interesting that the Shanghai has received only 1.4 tonnes of gold and yet many are waiting for their stuff.
(courtesy Russ Winter/Winteractionables)
by Russ Winter
Considering the rush of gold orders in mid to late April, it is understandable that there would be some temporary delays in delivery. However, we’re now into mid May and sources indicate those same orders are still unfulfilled. So it begs the question: Where’s the gold?The Shanghai Gold Exchange has an enormous appetite for physical gold, so much so that it’s absorbing all world production month after month — even before the April fire sale. A month’s production averages about 230 tonnes. Gold Miner Pulse, which tracks the numbers from the Shanghai Gold Exchange, reports that during the week of April 22 only one tonne has been delivered to the exchange. Since May 1, it has received only 0.3 tonnes.
The Economic Times of India reports a similar story. Furthermore, many Indian jewelers said compared to last year they expected gold sales will be up 30 % to 50% during the Akshaya Tritiay holiday on May 13 due to the lower price of gold.
Haresh Soni, chairman of the All India Gem and Jewellery Trade Federation, said banks and trading houses importing gold are getting only 10 percent of their orders as the demand has surged sharply after a sudden slide in gold prices last month. ‘If they place order for one tonne, for instance, then they are getting only around 100 kg,’ Soni said. "Oh, wait. I get it now. You deal with real market demand by declaring a defacto force majeure. Meanwhile, the paper market continues on unimpeded. Could the Comex and LBMA be next for force majeure?Paul Craig Roberts’ theory is that the raid of the Comex was done in conjunction with the buying of GLD shares in the washout. The banksters get the physical gold by delivering to the GLD 100,000 share lots, which was then supposedly shipped off to Asia, according to Roberts. However, I think the real reason for the raid was to send leased gold back to the Federal Reserve, that in turn must continue to return gold to Germany. I predict additional official sources, such as central banks, also want their gold back — and much quicker than Germany’s seven-year delivery window. What the masters of the universe didn’t predict was the huge demand coming out of China and India. Now, the response is to choke those buyers from real product.
Good news for silver bulls. Last month, Japan will increased silver use for solar by 1.5 million ounces to 5 million ounces ["Dowa Boosts Silver for Japan Post-Quake Solar Demand"]. That’s if it can get delivery.
http://winteractionables.com/?p=2397
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Seeking Alpha highlights the problems that Barrick gold is facing:
(courtesy Seeking alpha)
Barrick Gold (ABX) has had a rough ride on the share market recently; its woes are of course driven by the weak gold price of late, but are exacerbated by a plethora of issues that continue to put the hand breaks on the performance of this gold mining company. Barrick accounts for more than 10% of the holdings of the Market Vectors Gold Miners ETF (GDX) which is viewed as a benchmark for the gold mining sector in general. The chart shown below illustrates the underperformance of Barrick Gold when viewed in the context of its peers in this sector ETF.
(Click to enlarge)
GDX data by YCharts
Barrick Gold lost its place at the top of the leader board of largest gold mining companies to Goldcorp (GG) recently but holds on to number two with a market capitalization of $20.5B at the time of writing. The forward P/E is listed as low as 5.7 on Yahoo.com and 6.0 on Morningstar.com. The production guidance for 2013 has been stated as 7M to 7.4M ounces of gold and according to the latest reserve statement Barrick Gold controls proven and probable reserves of about 140M ounces of gold.
Replenishing 7+ million ounces of gold per year is no mean feat and has conceivably contributed to the mounting pressure on this mining giant. Interestingly, Goldcorp only produces 2.4M ounces and has reserves of 67M ounces. Barrick has obviously seen the signs on the wall and last year attempted to divest the interest in African Barrick (ABGLF.PK). However, this sale fell through when Barrick could not agree on a price with would-be suitors from China. Presently, another Chinese entity is indicating an interest in three of Barrick's Australian operations. Jinyu International Mining controls more than 80% of Australian-listed Norton Gold Fields (NGLDF.PK) and have shown that they are shrewd negotiators when they initiated this position. It will be interesting to see how dealings between Barrick and Norton Gold Fields proceed.
Barrick carries a substantial debt burden of over $14B which puts the company at a significant disadvantage in comparison to its peers. The debt to asset ratio at the end of 2012 was 0.27 (Goldcorp: 0.03) and the debt to equity ratio was 1.07 at the end of 2012 (Goldcorp: 0.37). A recent sale of $3B in debt was received reasonably well by the market despite a credit rating cut by Standard & Poor's at the end of April. The high debt is the result of a number of costly business decisions which are weighing on Barrick's balance sheets. The closure of the hedge book in 2009 comes to mind or the $4.4B write down of assets acquired as part of the overvalued Equinox takeover. While these issues have been put to rest, others continue to plague the company.
The construction of the Pascua Lama mine appears to have turned into a make-or-break exercise for Barrick Gold. Cost overruns and delays in delivering the project have been well documented here on Seeking Alpha and elsewhere. The conclusion of this saga is by no means foregone which has been emphasized by Jamie Sokalsky, President and CEO of Barrick Gold, who openly mentioned the possibility of shelving the project all together in the Q1/2013 earnings call on April 24. The uncertainty surrounding this project and the financial weight it carries by now will put a damper on the share price for some time to come.
As much as the Pascua Lama story is old news for investors, there have been two news items lately that provide more reason to worry for investors caught in a long position in Barrick Gold.
- Only a few days ago Barrick announced the resolution of a lingering conflict with the government of the Dominican Republic, host of the Pueblo Viejo mine that Barrick (60%) operates in JV with Goldcorp (40%). Government officials had been demanding a greater slice of the pie than originally agreed; and judging by the published outcome of negotiations so far, they are about to get what they have asked for. This of course means a smaller slice for Barrick Gold (and Goldcorp). Details are yet to be hammered out but the published headlines indicate that the Dominican Republic is set to receive an additional $1.5B over the 25 year life of mine with the majority of the additional earnings brought forward to 2013-2016. Obviously, this arrangement benefits the present government that has just come into power and will now have substantially more money to play with during their legislative period. It also begs the question of how future governments will interpret the example set by these recent negotiations.
- The New Zealand Superannuation Fund has sold their holdings in Barrick Gold citing concerns with regards to Barrick's business ethics. While their holding was worth only $2M the damage lies in the message sent by this action. A similar decisions was taken by theNorwegian pension fund in 2009. Barrick goes to a lot of effort to portray the company as a responsible corporate citizen. The reality is often shown to differ by the alternative media; the decision by the two pension funds is certain to lend more credibility to the voices painting Barrick in a very unfavourable way.
Times are tough for gold miners at the moment. However, while some of Barrick's peers are putting their head down and work through the slump it seems that Barrick is unable to generate positive momentum. A fellow writer here on Seeking Alpha stated that he would not touch Barrick with a pick axe. At this point in time we would like to second this call; we would not use a blunt stick or a wet fish either.
The downtrend for gold-related investments is presently still firmly in place. We are waiting for signs of this trend to turn before considering any investments in this particular market segment. However, we believe that there are better opportunities in the waiting than Barrick Gold once a bottom has been reached.
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