Gold and Silver = September 2 , 2013 - Comex data for registered and eligible gold . India's troubles and where gold fits into the equation...Manipulations start off Asia's trading day !

http://globaleconomicanalysis.blogspot.com/2013/09/india-in-trouble-and-gold-at-heart-of-it.html

Monday, September 02, 2013 1:09 AM

India in Serious Trouble (and Gold at the Heart of It)

Last week India's trade minister, Anand Sharma, came out with a laughable suggestion: RBI should consider monetizing gold.

 India’s central bank should look into the possibility of monetizing gold holdings, trade minister Anand Sharma said on Thursday, in the latest proposal aimed at combating a yawning current account deficit that has hammered the rupee.

It was not immediately clear whether Sharma was referring to the 557.7 tonnes of gold the Reserve Bank of India (RBI) holds in its own reserves, or gold in private hands. He did not give more details of how the proposal would work.

India has the world’s third largest current account deficit (CAD), which is approaching nearly $90 billion, driven in large part by a huge appetite for gold imports. The deficit has helped undermine the rupee, the worst performing major currency since May.

Any talk of using the country’s gold to help meet India’s international obligations revives memories of a 1991 balance of payments crisis—when India flew 47 tonnes of gold to Europe as collateral to avoid a sovereign debt default.

In comments published by The Hindu newspaper last week, David Gornall, chairman of the London Bullion Market Association, said India could raise $23 billion by swapping gold for a payable currency for a period of its choice, while remaining the long-term holder of the gold.

Free Money?

I am not sure which is sillier 1) proposing selling gold or 2) Proposing India could get $23 billion in free money by swapping gold while retaining ownership.

India Might Buy Gold From Citizens to Ease Rupee Crisis

Reuters picked up on this story in an equally convoluted report India Might Buy Gold From Citizens to Ease Rupee Crisis

 India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

A pilot project will be launched soon, a source familiar with the Reserve Bank of India's (RBI) plan told Reuters, although the idea was met with some scepticism.

India has the world's third-largest current account deficit, which is approaching nearly $90 billion, driven in a large part by appetite for gold imports in the world's biggest consumer of the metal. That has played a major role in driving the rupee to a record low.

"We will start a pilot project among some banks where we will allow them to buy back gold from individual households," the source, an official familiar with the central bank's plan, said. "This will start soon, we have discussed (it) with banks."

Radical Plan With Scant Details

Somehow India wants to buy gold from citizens, and it also wants to sell it (or sell gold bonds supposedly backed by gold). Details are scarce but it safe to conclude that the scheme is preposterous no matter what it is.

Pater Tenebrarum at the Acting Man blog pinged me with this comment "The Indian government is instituting one stop-gap measure after another. Buying gold from its citizens? For rupees? Don't make me laugh...Indians buy gold to get out of the rupee"

Stop-Gap Measures 

In his post covering Stop-Gap Measures by India's Government, Tenebrarum stated ...

 It also seems likely to us that some traders are worrying that India's government might do something stupid about its gold reserves or the gold held by its citizens. This worry is definitely justified, as India's government has so far done nothing but institute stop-gap measures to halt the slide of the rupee and the deterioration of the country's current account. Not a single step has been taken that would actually be required: bold reform is needed, but it is politically unpopular. And so the government takes one useless emergency measure after another – and it is definitely eying gold as the next vehicle to do something stupid with.

Should India try something with gold, it is perfectly safe to conclude no matter what the plan is, the plan will fail.

Mike "Mish" Shedlock

Emerging market troubles - bond land....

Asian bonds tumble below par in capital flight

Submitted by cpowell on Mon, 2013-09-02 04:49. Section: Daily Dispatches

By David Yong
Bloomberg News
Sunday, September 1, 2013

http://www.bloomberg.com/news/2013-09-02/asian-bonds-tumble-below-par-in...

SINGAPORE -- Asia dollar-denominated bonds have dropped below par for the first time since 2011 as investors pull money out of the region amid concerns that growth is slowing and as currencies from the rupee to rupiah plunge.

» read more

02 SEPTEMBER 2013

Gold Opens On the US Globex Trade With a Sharp Zig Zag Headfake

"Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes..."

Kurt Vonnegut, God Bless You Mr. Rosewater


"Like a boil that can never be cured so long as it is covered up but must be opened with all its ugliness to the natural medicines of air and light, injustice must be exposed, with all the tension its exposure creates, to the light of human conscience and the air of national opinion before it can be cured."

Martin Luther King, Letter From a Birmingham Jail

Just in case you were running with stop loss orders set too tightly, there was a nice zig zag open on the NY Globex in the gold futures trade.

SP 500 stock futures were goosed sharply higher, up to minor resistance.

01 SEPTEMBER 2013

Potential Claims Per Deliverable 

(Registered) Ounce Remains Elevated On the Comex

Potential claims against deliverable supply on the COMEX remains elevated at about 52 per ounce as the Exchange muddled through the end of the August delivery period.

The claims spread out over every available ounce stored at COMEX warehouses, whether it is for sale or not, is also high at 5.46 per ounce.   There is an incentive to store one's bullion in a registered COMEX warehouse because one does not have to go through the re-evaluation process and expense if they decide to sell their gold bullion there.

It will take higher prices to encourage eligible bullion into the deliverable category.  

http://www.silverdoctors.com/gold-trader-prepare-for-whipsaws-as-the-bulls-try-to-defend-1400/

From Tekoa Da Silva, Bull Market Thinking:
Following a mild sell-off in gold this week, coupled with a sharp step-back in miners, one of the world’s top gold traders and recent interview guest, Gary Savage, shared some powerful charts and commentary on what investors can expect going into next week.

Speaking to the sell-off, Gary noted that, “Now that gold has broken its daily cycle trend line I think we can assume that the daily cycle decline has probably begun. My best guess is that we will see gold drop into this week’s employment report and test the support zone and intermediate trend line between $1340-$1350.

(click to enlarge)

We knew this was coming, as gold will enter the timing band for a daily cycle low on Monday, so no one needs to freak out. That being said, daily cycle declines need to make traders freak out in order to reset sentiment and prepare for the next leg up.

So I suspect what is going to happen is that the bulls will try to defend that $1400 level for a few days, followed by a very scary $30-$40 crash day that will bring gold back down to that support zone and a final daily cycle low possibly on the employment report or the following Monday.

(click to enlarge)

The bullish percent chart is also suggesting it’s time for a minor rest. It hasn’t reached levels indicative of an intermediate top yet (80%-90%), but the big surge off the bottom needs to pull back and consolidate before the next push higher.

(click to enlarge)

*****